Democrats & Liberals Archives

The Only Way

The Republicans have tried to blame the Democrats for the longest time for our current situation.

So, I’d like to to tell them this: Put a clean debt limit vote in front of them, and let’s see who will and will not vote to maintain America’s full faith and credit. Then we’ll know who to blame. The Republicans have already rejected it once before. Let’s see if they do again.

It's pretty simple: who made this a controversy? Who decided that it was alright to attempt to play political football with this debt limit? Who continues to make demands, even as the clock winds down, and the warnings come up?

You can throw the rationalizations at me left and right, but at the end of the day, this would have never happened under the Democrats, and that would have been a good thing. There are some places where responsibility should overrule politics, and this is one of them.

As for getting the necessary measures to bring our fiscal house into order, I would say this: This is a democracy, and as such we ought to be cooperating over the long haul to do this, not being forced in rushed, panicked negotiations like this to come up with the shape of our economy and and our fiscal policy. It may make for good political theatre, and it might impress the Tea Partiers, but it's not good for the country.

We need to put this mess behind us, and it won't take much more than ten or twenty minutes, and that's even if you read the bill.

But by doing that, we will keep interest rates low, America's currency a medium of world exchange, our bonds a bastion of economic security, and our deficit manageable.

There is no excuse for this, and there never was. Extortion and hostage taking are the tools of a party that does not trust our democratic and republican system to function.

Just pass the damn debt ceiling increase, put this fiasco behind you. Don't make it any worse for you than it already is. Don't show the people how unworthy you are of the responsibility you have been given.

But don't take my word for it:

"[W]e knew shutting down the government in 1995 was not going to work for us. It helped Bill Clinton get reelected. I refuse to help Barack Obama get reelected by marching Republicans into a position where we have co-ownership of a bad economy," McConnell said. "It didn't work in 1995. What will happen is the administration will send out notices to 80 million Social Security recipients and to military families and they will all start attacking members of Congress. That is not a useful place to take us. And the president will have the bully pulpit to blame Republicans for all this disruption."

"If we go into default he will say Republicans are making the economy worse," he concluded. "And all of a sudden we have co-ownership of a bad economy. That is a very bad position going into an election. My first choice was to do something important for the country. But my second obligation is to my party and my conference to prevent them from being sucked into a horrible position politically that would allow the president, probably, to get reelected because we didn't handle this difficult situation correctly."

Republicans will own this catastrophe, like they owned the last one. Remember how that went? Is hemming the Democrat in really worth it, if it practically destroys your party in the meantime?

The reality is, if we default, it will not be because we ran out of creditors willing to pay us, or because their premium for lending to us had gone sky-high. It will be because of the political actions of the Republican Party, which voted unanimously in the House to refuse to raise the ceiling. Historians will trace the crisis back to that event, to the campaign promises and plots of Republicans beforehand. Whether or not they can spin the near term, the transition from recovery to ruin will be marked by the deliberate policy decision of the Republican Party.

The good news is, it only takes one vote to keep this blame from settling on the GOP's shoulders.

At the end of the day, if you don't want to be blamed for a disaster, don't go around tempting fate. You can always explain a decision that went contrary to political principle. You can't wish away the results of a bad decision, especially not one like this. Lincoln didn't default. Andrew Johnson didn't default. Warren G. Harding and Calvin Coolidged didn't default. Hoover didn't default, for all his other dumb moves. Eisenhower didn't default. Nixon didn't default. Ford didn't default. Reagan didn't default. Bush Sr. didn't default, and Bush Jr. didn't either.

No Republican in history, no matter what their position or ambition ever took this country this close to the brink of ruin and bankruptcy.

Have Republicans become so stupid, so obstinately opposed to listening to anybody else that they will now fail their responsibility where over a hundred and fifty years worth of Republican have not?

Just pass it. It's the only way to get this through, and get it through quick. There's no point in taking any more unnecessary risk. The Republicans shouldn't wait until this crisis really starts, and our economy starts taking a pounding to get off their buts and do what they should have done in the first place.

The only way for the Republican Party to survive this debt negotiation in any recognizeable form is to approve the debt ceiling increase. There will be heat to fade, but then, at least, you won't have seared into people's memory the greatest economic disaster of all time. The Republicans can recover from failing to fulfill campaign promises a lot easier than failing to carry out their responsibilities.

Posted by Stephen Daugherty at July 16, 2011 3:34 PM
Comments
Comment #325870

The most important thing is that no matter what, the debt ceiling will be increased 1 month from now. There’s no way our political system will tolerate the results of the overnight elimination of nearly half of government spending. If we do pass the Aug 2 deadline, I’d give Boehner, Cantor & the rest of the gang no more than a week before they cave into the pressure and increase the limit. The only problem will be the everlasting repercussions of such a scenario.

Posted by: Warped Reality at July 16, 2011 4:39 PM
Comment #325877

Stephen, When is enough, enough. What do we do next year raise the debt limit again? We have to stop with the reckless spending. The time is now, people don’t believe your liberal BS anymore. What is the Democrats plan? What is Obama’s plan?

Posted by: KAP at July 16, 2011 5:21 PM
Comment #325878

How would the seneraio of Cantor/Boehner caving in later, as compared to now, effect anything?

Don’t they call this Political Posturing? The world is not looking to see us raise our debt limit, they are looking to see if we tighten our belt.

Let’s say the belt is the debt limit. Do we let it out like a fat grandpa after the Thanksgiving meal, or do we notch it up to take in the slack?

Posted by: Weary Willie at July 16, 2011 5:24 PM
Comment #325881
What is the Democrats plan? What is Obama’s plan?

Cut the deficit by $4T. Unfortunately, the GOP is not up to the task.

How would the seneraio of Cantor/Boehner caving in later, as compared to now, effect anything?

It would ruin the trust between our creditors and us. They would charge a vastly higher interest rate to lend us money in the future. This is because we would have failed to make legally obligated payments (also known as a default) and now pose an enhanced risk to lenders.

Posted by: Warped Reality at July 16, 2011 5:48 PM
Comment #325882

Warped, Cut the deficit by $4T, And how do they think the democrats are going to do that? Unfortunitly it is impossible for democrats to do that unless they make drastic cuts in entitlements and raise taxes drastically. That amount is almost what Obama and company have spent since he took office. It took eight years for Bush to do it.

Posted by: KAP at July 16, 2011 6:10 PM
Comment #325884

I agree that we need to raise the ceiling, but it is also good to get some binding promises from Obama.

Obama is good at making promises but not very good at keeping them. He will demagogue the issue, given the chance. We need to make sure it is clear that Obama is the one who is making it necessary to raise the ceiling and get him on the record admitting that he grew the government too fast and too big. We need to go back to a smaller governmental interference.

Obama says he wants to cut the size of government, but what is he willing to cut?

What has Obama taken OFF the table:

- his $1 trillion health-care reform,
- $128 billion in unspent stimulus funds (these are among the things that Obama couldn’t spend, because he didn’t understand what “shovel ready” meant)
- $53 billion high-speed rail proposal, spending on “green” jobs and student loans etc.

These are all NEW spending, things that Obama created within the last years. If he won’t agree to talk about his own increases, what is he planning to cut?

SO, indeed, Obama has agreed to cuts. He is as trustworthy as when he said you could keep your current healthcare and that his reforms would reduce costs.

Posted by: C&J at July 16, 2011 6:57 PM
Comment #325885

SD writes; “We need to put this mess behind us, and it won’t take much more than ten or twenty minutes, and that’s even if you read the bill…”

Really, put the mess behind us as we have done over 70 times in the past. I would rather kick some asses down the road than continue to kick the debt limit can down the road.

I know, I know…the left needs to get the limit increased so they can continue spending. Americans are in no mood for more spending. It will stop here…or never.

Posted by: Royal Flush at July 16, 2011 7:02 PM
Comment #325886

Warped Reaslity, We can meet our obligation. Fear mongering is the problem. Eliminate the problem.

A currency based on gold and silver is a constitutional requirement! How about an honest discussion about that?

Posted by: Weary Willie at July 16, 2011 7:09 PM
Comment #325887

W/o trying to blame anybody, just look at this chart - http://online.wsj.com/article/SB10001424052702304203304576447851522775530.html?mod=WSJ_hp_mostpop_read#project%3DDEBTPUBLIC0711%26articleTabs%3Dinteractive

Isn’t it just frightening? The debt has almost doubled in three years and the trend is almost straight up. How much more can we stand?

I am afraid that Obama wants to use the crisis to permanently make government bigger. He would make us more like France, Italy or Germany. This is not a terrible thing, but it means less dynamism, slower growth and permanently higher unemployment. In a world where we need to compete with China, this won’t do. Europe gets a free (or at least a discount) ride on American security. Who will give us such a deal?

Posted by: C&J at July 16, 2011 7:13 PM
Comment #325889

Thanks for the chart C&J. Add another $2.5 trillion and it’s a stright line to HELL.

Posted by: Royal Flush at July 16, 2011 7:31 PM
Comment #325893
Isn’t it just frightening? The debt has almost doubled in three years and the trend is almost straight up. How much more can we stand?

Debt was higher in the ’40s and we survived. Obviously, it’s not a good idea for such high debt-to-GDP ratios to be tolerated for extended periods, but short-term jumps are OK as long as we take measures to shrink debt after the crisis. Another reason why the recent debt buildup isn’t as bad as it looks is because of the negative real interest rate on government debt. Despite the low interest rate; myriads of investors still clamor for an opportunity to buy our debt.

Warped Reaslity, We can meet our obligation. Fear mongering is the problem. Eliminate the problem.

A currency based on gold and silver is a constitutional requirement! How about an honest discussion about that?

Not in my Constitution. What clause are you talking about? Article 1 Section 8 authorizes Congress to coin money, but says nothing regarding the composition of that money. Section 10 prohibits the states from declaring anything but gold or silver as currency. In any case, I fail how to see how this relates to the debt ceiling.

Posted by: Warped Reality at July 16, 2011 8:08 PM
Comment #325896

Warped said, “but short-term jumps are OK as long as we take measures to shrink debt after the crisis.”

When was the last time this happened Warped?

Posted by: Phil at July 16, 2011 9:10 PM
Comment #325897

KAP-
It’s just rhetoric.The Republican plan is so harsh that even the Ryan Budget would fail it.

The Republicans were reckless to get us into this mess, and now they’re trying to take the same reckless approach to getting out of it. But you know what? Screwing something up takes less care than putting it back together again. And Republicans have spit in the face of everybody who’s asked them to be more careful.

Weary Willie-
Give me a break. They’re looking to see if we make our payments on time. They’re wondering whether politics in American has gotten so ****ed up that they can safely invest in our nation and its currency.

I don’t think, with your folksy metaphors that you quite grasp the consequences of suddenly yanking a hundred billion dollars, much less the amount we’ll be short, out of the American economy. If we have a GDP of about 14-15 billion dollars a year, and all of a sudden, a few hundred billion goes missing from that, that’s instant recession, right there. That gets felt everywhere. Then you add interest rates on top of that. In a market where it’s already hard to get a home loan or a car loan on favorable terms, you’re about to make it harder.

And what? To win a political fight. You’re trying to extort a political victory that your election results did not justify.

And what do you think? If your House fails to pass a deal of any kind, if it sits on its hands as all hell breaks loose, what do you think will happen to the party, to the movement, if that’s where your loyalty lies?

The word conservative used to mean slow to change, careful, not making wild-ass guesses about things, but sticking to what was provable and plausible. What about your average right winger nowadays does this actually describe?

The thing that offends me most about Republican leaders nowadays is their lack of care, their lack of responsibility, their lack of competence. When I was a kid, I never heard of such self-destructive stunts. It’s only as today’s Republicans have gotten into power that it seems like the party and its movement have gone over the cliff.

And I’m sick of it. I’m sick of worrying. I’m sick of finding more grey hairs on my head than my age justifies. I never thought, ten years ago, that we’d ever be stupid enough to get ourselves in another quagmire. I went to college believing that if I got my degree, there would be a job waiting for me out there, that I could make my name and make my fortune by hard work and intelligence. I never thought I’d see another American disaster with a death toll in the thousands. I never thought that we’d be facing a situation anything like the Great Depression.

I don’t oppose the Republicans because I think conservatives overall are evil or immoral. I oppose them because their leaders, and the system they’ve created seem to be eating away at the very supports of my nation’s greatness, of my nation’s pride, prestige, fiscal finances, economy, and the whole thing is so self-contained that the leaders don’t even begin to consider that what they do, and continue to do, may be leading this country into decline and disaster.

I don’t care if in a few years, the Republicans come back again, and things divide between us. But by God, let that be a Republican Party that has learned to be careful, to be truly conservative in the old sense of the word again. Let this fever of radicalism, of arrogant unwillingness to take any counsel but their own pass, and let them remember that they’re equals among us.

Until then, I support efforts to replace Republicans with Democrats, because as imperfect as they are, they have a tendency to work to preserve and improve the state of the country and the economy, and they at least concern themselves with how they appear to others.

Posted by: Stephen Daugherty at July 16, 2011 9:20 PM
Comment #325898

Royal Flush-
This is about saving the face of the Party that put us on this trajectory, not actually confronting the problem. As I indicated through my link, RF, your people’s own budget couldn’t meet the conditions your party set for finances as a price for a debt limit increase.

How much worse do you want to screw this country up?

Posted by: Stephen Daugherty at July 16, 2011 9:25 PM
Comment #325899

Stephen, Who controled congress from 2006-2010? Those who controled congress in that time frame helped. Like I said what has the democrats put on the table except tax hikes on the rich which wouldn’t even put a dent in the deficit. Only real cuts in spending. CUT, CAP,and BALANCE. BOTH PARTIES ARE TO BLAME FOR THE MESS WE ARE IN, when are you going to admit that? When your party comes up with some concret plans to cut spending and not the BS that your party has been pushing for the last 5 years then and only then will I take You serious.

Posted by: KAP at July 16, 2011 9:37 PM
Comment #325901

I had promised myself that I would not respond to SD in the blue column, but do to his state of despair, I believe it is my responsibility, as a caring conservative, to console him.

SD says to Weary Willie, with feelings of despair:

“The thing that offends me most about Republican leaders nowadays is their lack of care, their lack of responsibility, their lack of competence. When I was a kid, I never heard of such self-destructive stunts. It’s only as today’s Republicans have gotten into power that it seems like the party and its movement have gone over the cliff.”

Yes Stephen; but the thing that offends the 20% of liberal socialists in America, is creating jubilation among the 60% of conservative thinking Americans, so I guess all things balance out. Wasn’t it the induction of secular humanism into our schools (50 years ago) that took personal responsibility out of the teaching arena?

“And I’m sick of it. I’m sick of worrying. I’m sick of finding more grey hairs on my head than my age justifies. I never thought, ten years ago, that we’d ever be stupid enough to get ourselves in another quagmire. I went to college believing that if I got my degree, there would be a job waiting for me out there, that I could make my name and make my fortune by hard work and intelligence. I never thought I’d see another American disaster with a death toll in the thousands. I never thought that we’d be facing a situation anything like the Great Depression.”

Well Stephen, if you had worked on a degree that would actually give you a career, instead of a liberal arts degree, you might have been able to make your fortune. But, I must admit, it looks bad for those socialist with the liberal arts degrees, who had planned to make their fortunes off the backs of the taxpayers. Cuts in government spending are bound to affect the bank accounts of of big government liberals. But, aren’t you being a little over dramatic about the Great Depression?

“I don’t oppose the Republicans because I think conservatives overall are evil or immoral.”

Yes you do; now you’re lying like your messiah…

“I oppose them because their leaders, and the system they’ve created seem to be eating away at the very supports of my nation’s greatness, of my nation’s pride, prestige, fiscal finances, economy, and the whole thing is so self-contained that the leaders don’t even begin to consider that what they do, and continue to do, may be leading this country into decline and disaster.”

Stephen, what we have here is a “what came first, the chicken or the egg” situation. You claim the conservative ideals are the reason the greatness of the nation is eaten away. But, the Constitution (of which you reject) was based upon conservative Judeo-Christian ideals and the great economy we have been able to accomplish over the past 250 years is based upon conservative capitalist ideals. In fact socialism didn’t rear its ugly head in America until the late 1800’s. So your whole premise is wrong; in reality it has been the socialist agenda that has brought America to the point of “eating away at the very supports of my nation’s greatness, of my nation’s pride, prestige, fiscal finances, economy, and the whole thing is so self-contained that the leaders don’t even begin to consider that what they do, and continue to do, may be leading this country into decline and disaster.”

Posted by: Conservativethinker at July 16, 2011 10:04 PM
Comment #325902

Warped

Debt was higher in the 1940s because we were fighting the biggest war in the history of the world. It was a existential emergency in which many millions of people died. Beyond that, when the war was over, we could stop spending. With today’s debt run up, there is no end in sight. There will be no VE or VJ day.

Stephen

I know you like to play the blame card and you think that somehow Republican never again should be allowed in power. The American people disagreed with you in 2010, so get over it. You are so 2008. The country has moved on; you might want to join the rest of the United States.

Now, as adults, let’s look at the problem. We have a debt that is truly scary. We cannot continue to pile it on. It doesn’t matter if you want to blame someone else. It is your, my and our problem. We cannot keep on spending like we have been. Republicans have spent too much and Democrats have spent too much. We all need to stop.

Posted by: C&J at July 16, 2011 10:07 PM
Comment #325903

“How much more can we stand [debt]?

As Warped pointed out, substantially more if history is a guide. What was the result of the extraordinary debt of WWII: the final crushing blow to the Great Depression and a half century of strong economic growth. What was the result of Reagan’s debt tripling and tax cuts: a robust economy. What has been the result of Japan’s extraordinary federal deficit over the past twenty years: an economy with full employment, one of the highest standards of living the developed world and a continuing trade surplus. If there is a criticism of Japan, it has been that it should have done more and sooner.

On the other hand, Clinton’s Deficit Reduction Act of 1993, which reined in federal expenditures and increased taxes, resulted in a booming economy.

The one size fits all mentality when it comes to federal deficits and debt just doesn’t jibe with history. The economic circumstances of the time and the monetary system in place at the time dictates the best policy.

The arguments about federal deficits and taxes should be less about them, per se, and more about their relationship to the problems of the economy.

Posted by: Rich at July 16, 2011 10:07 PM
Comment #325904

Phil,

When was the last time this happened Warped?

The best example occurred from 1945 until 1980. Using the WSJ graphic linked by C&J, we can see the debt decrease from over 100% of GDP to a tolerable 25% of GDP. Another example can be found during the late’90s.

Like I said what has the democrats put on the table
As I said earlier, Obama proposed $4T in deficit reductions including substantial cuts to entitlement programs for the elderly. Posted by: Warped Reality at July 16, 2011 10:08 PM
Comment #325906

RIch

See above to Warped.

I know the Obama likes to compare himself to the great presidents and pretend that he faces unprecedented challenges, but even really out-of-touch liberals cannot really believe the the world at war, a war that destroyed large parts of the world, killed many millions and put millions of Americans in uniform, is like the problem we have today.

And as I mentioned above, when WWII ended, we could stop spending. When will this end? We had VE day and VJ day. Will Obama give us VD (victory over debt)day? When will that be? When will the spending stop?

Posted by: C&J at July 16, 2011 10:14 PM
Comment #325907

Warped, What entitlements do the elderly have? If you say SS WRONG, Medicare, WRONG. I’ve paid into both for over 40 years.

Posted by: KAP at July 16, 2011 10:21 PM
Comment #325911

“As I said earlier, Obama proposed $4T in deficit reductions including substantial cuts to entitlement programs for the elderly.”

Posted by: Warped Reality at July 16, 2011 10:08 PM

Did Obama present these cuts in writing, or was it just talk?

Warped, when you use debt vs. GDP, you are simply playing with numbers. GDP changes continuously, but debt continues to rise. If I owe $100k and my income goes up or down, it does’nt change what I owe. If I took the extra income and paid it on my debt, then my debt would go down, but government never pays down the debt. If they do, it is happening at the same time they are spending SS funds; so debt is continually growing and any amount of money paid on it is nothing more than “fuzzy math”.

Posted by: Phil at July 16, 2011 10:38 PM
Comment #325915
Did Obama present these cuts in writing, or was it just talk?

It doesn’t matter because the GOP rejects such cuts. It would be foolish for Obama to present the cuts in writing unless he was certain they would be implemented. Otherwise, the GOP would just use the proposed cuts to attack Obama.

when you use debt vs. GDP, you are simply playing with numbers.

Wow, you have no idea what you are talking about. If I have $10M of debt, then I have a big problem. If Bill Gates owes $10M of debt, he has no problems. If Greece has $.5T in debt, they have a problem. If the US had only $.5T in debt, we’d have no problems. Understand?

Maybe it would be better for us to ask, why is it such a problem for the US to have so much debt? What negative effects can result from having so much debt? I know the answer, but do you?

I’ll eliminate the obvious answer that does not apply to our situation, a Greek-style default. Unlike Greece, we more than enough tax revenues to pay our interest payments and *hint* lenders are more than willing to buy our debt for next to nothing so that we may continue to operate our government.

Posted by: Warped Reality at July 16, 2011 11:20 PM
Comment #325917

In a negotiation, nothing is agreed to until everything is agreed to.

Posted by: phx8 at July 17, 2011 12:18 AM
Comment #325935

“Unlike Greece, we more than enough tax revenues to pay our interest payments..”

More importantly, our debt is in our own sovereign currency. Greece’s debt is in Euros. Greece must obtain Euros to pay the interest and principal. Much different situation. A debt trap for Greece.

Posted by: Rich at July 17, 2011 2:06 PM
Comment #325938

Warped says, “Wow, you have no idea what you are talking about. If I have $10M of debt, then I have a big problem. If Bill Gates owes $10M of debt, he has no problems. If Greece has $.5T in debt, they have a problem. If the US had only $.5T in debt, we’d have no problems. Understand?
Maybe it would be better for us to ask, why is it such a problem for the US to have so much debt? What negative effects can result from having so much debt? I know the answer, but do you?
I’ll eliminate the obvious answer that does not apply to our situation, a Greek-style default. Unlike Greece, we more than enough tax revenues to pay our interest payments and *hint* lenders are more than willing to buy our debt for next to nothing so that we may continue to operate our government.”

I’ll tell you what do know Warped; 0.43 cents of every dollar we spend is borrowed from China; which means, it doesn’t matter what our GDP is, we are going further in the hole every month. And you ask this question, “why is it such a problem for the US to have so much debt?” It matters, because we are borrowing money that my kids, grandkids, great grandkids, and great-great grandkids will have to pay back. Perhaps you have no problem with saddling your decedents with this debt, but I do. Plus the fact, we are only talking about the here and now; but each year that goes by, America are going further and further into debt. Obama has increased our debt by almost 35% since he entered office; if we don’t stop the spending, what will it be when he is sent back to Chicago in 2012?

“Unlike Greece, we more than enough tax revenues to pay our interest payments and *hint* lenders are more than willing to buy our debt for next to nothing so that we may continue to operate our government.”

What happens when those interest rates increase, what does that do to our debt? Why should we have to borrow 43% of our spending? What’s wrong with living within our means? I find your juggling of numbers and figures very similar to the same things said by crooked politicians who want more money for entitlement programs. It’s a very basic situation and those on the left want to make it sound difficult; it is a simple as we can spend what we don’t have!

Posted by: Phil at July 17, 2011 2:29 PM
Comment #325948
I’ll tell you what do know Warped; 0.43 cents of every dollar we spend is borrowed from China

I think you meant 43 cents, which is certainly disturbing if it continues over the long term.

And you ask this question, “why is it such a problem for the US to have so much debt?” It matters, because we are borrowing money that my kids, grandkids, great grandkids, and great-great grandkids will have to pay back. Perhaps you have no problem with saddling your decedents with this debt, but I do. Plus the fact, we are only talking about the here and now; but each year that goes by, America are going further and further into debt. Obama has increased our debt by almost 35% since he entered office; if we don’t stop the spending, what will it be when he is sent back to Chicago in 2012?

It depends whether the money was well spent or not. That is a debatable question. Sometimes it is better to borrow money now to make a purchase rather than to wait. Take infrastructure investments for example or the money we borrowed in the ’30s & ’40s to fight the Great Depression & WWII. I believe you are a new commenter (welcome to Watchblog), so maybe you don’t know this already, but I’m on the young side (21 years old). I fully know that I’ll be dealing with this debt for the rest of my life, which hopefully will be a long period of time.

What happens when those interest rates increase, what does that do to our debt?
It creates quite a problem. Fortunately, we can monetize our debt because we control the printing press (another privilege Greece doesn’t have; thank you Rich for the reminder), but we shouldn’t rely on inflation to afford our debts due to its impact on the economy. However, when you look at the contraceptive, the low interest rates (negative in real terms) of the past few years, you should realize that the recent rise in debt isn’t as bad as you think.
Why should we have to borrow 43% of our spending? What’s wrong with living within our means?
There’s no reason that we have to borrow so much; it’s just that it made sense to exploit those low interest rates. However, you are correct that for the long-term it is important for government to live within its means. This will mean cutting spending on entitlements and defense as well as increasing revenues. We’ve weathered short-term borrowing binges before, we’ll survive this one fine as well if we follow the track laid out by Obama. A debt to GDP ratio above 60% isn’t a good idea over the long term, which is why we should work on reducing that number by growing GDP and shrinking our nominal debt by running surplus budgets. Posted by: Warped Reality at July 17, 2011 4:58 PM
Comment #325951

Warped, you are correct; I meant $0.43 or just 43 cents of every dollar. My bad.

So do you think we are spending money wisely? I don’t think so; I think we are wasting money.

The interest rates do create a problem, but the printing of money creates an even greater problem. The printing of money devalues the dollar and causes prices to increase. The devalued dollar drives the price of oil up, which in turn inflates the prices of everything else.

You believe we will succeed if we follow the track laid out by President Obama. I voted for him, but have been very disappointed. He has not taken the lead, IMO; he has allowed the Democrats in Congress to set the course and I didn’t care for that very much. I wish he would take the lead and propose a solution. I am not a Democrat and I am not a Republican; I would be considered an independent. And right at this time, a very disappointed independent.

Posted by: Phil at July 17, 2011 5:28 PM
Comment #325954
So do you think we are spending money wisely?

This is the 15 trillion dollar question. There are definitely areas where money is spent foolishly, but there are also plenty of places where money is well spent, but we don’t spend enough of it. Our entitlement programs and defense spending generally belong to the former category, and they make up the majority of our budget. However, the rise in the debt that Obama is responsible for is due to the rise in discretionary spending, which I think on the whole is mostly well-spent. Keep in mind that Obama & Congressional Democrats are responsible for only a fraction of the recent rise in debt. The economic downturn, ‘01 & ‘03 tax cuts as well as the military spending in Iraq & Afghanistan are much larger shares.

The interest rates do create a problem, but the printing of money creates an even greater problem. The printing of money devalues the dollar and causes prices to increase. The devalued dollar drives the price of oil up, which in turn inflates the prices of everything else.
Whether one is worse than the other is highly dependent on the situation at hand. Sometimes inflation is better than the alternatives. During a liquidity trap, inflation might be the only cure for the economy. Posted by: Warped Reality at July 17, 2011 5:50 PM
Comment #325955

The concern of conservatives over the debt is amazing considering that it was their supply side economics, tax cuts and unfunded defense buildups and wars that got us into this situation in the first place.

The Reagan-GH Bush administrations ran unprecedented deficits increasing debt held by the public from $789 billion in 1981 to $3.0 trillion (48.1% of GDP) in 1992. There was a breather under Clinton when taxes for upper incomes were increased and government expenditures were reduced. The budget had a surplus and payments were actually made reducing the national debt. But, GW Bush and his Republican Congress started the deficit engine up again with extraordinary tax cuts in 2001-2003, doubling the national debt during his term. The last Bush budget of 2008-2009 was the largest deficit budget in history ($1.4 trillion).

During this period, wealth inequality surged with the wealthiest capturing a disproportionate share of national income and equity. Middle class wages stagnated and it became increasingly dependent upon debt. Guess who was holding all those debt instruments? Guess who got bailed out when the equity supporting those instruments went bust? It wasn’t the bottom 90% of the population. With all the conservative talk about the evils of income re-distribution, you would think that the rich have been losing money. In fact, the effect of conservative supply side, trickle down, policies has been just the opposite. National income has been redistributed upward. The middle class gains of the post war years have been wiped out.

Now come the conservatives again and want to do something about this horrible deficit problem that they created. So, what are they proposing? Reversing the tax cuts, cutting back on defense, wars, re-imposing financial regulations, assisting main street with unemployment, jobs, etc. Not on your life. The problem can only be solved by cutting back on entitlements that the middle and lower classes count on for retirement. Yep, health care and pensions are the problem. Too bad that working Americans have been paying a premium in their payroll taxes for the baby boomer retirements. Can’t do anything about that health care inflation that will cause Medicare to require subsidy from the general fund in the foreseeable future.

At some point in time, the middle class will wake up and begin to take a hard look at what has really happened and what is being proposed.

Posted by: Rich at July 17, 2011 6:19 PM
Comment #325957

Rich

In 2006 we had record revenues. Indeed, if not for the spending that increased under Bush, the budget would have been balanced. Blame Bush.

But that doesn’t make a practical difference now. With the revenues we WOULD have raised with the tax rates set at the 2000 levels (when the budget was in surplus) we would STILL run a deficit today because spending has increased so much. If we had the tax rates of 2000 AND the economic growth rates of 2000, we would STILL have a deficit because spending has increased so much. IF we had the tax rates of 2000, the economic growth AND we had no troops deployed in Iraq or Afghanistan, we would STILL have a deficit.

Spending has really gotten out of hand. Blame the Republicans if you want, but CUT IT BACK. In fact, why don’t Democrats make it their business to cut back the ostensibly evil spending. If indeed the spending is the result of Republican policies, Democrats should enjoy the cutting.

Posted by: C&J at July 17, 2011 6:57 PM
Comment #325964

“During a liquidity trap, inflation might be the only cure for the economy.”

Warped,

A liquidity trap prevents inflation. It is when monetary policy is ineffective in stimulating borrowing and increasing the money supply. Debt=money in our monetary system. The Fed has been “pushing on a string” to induce borrowing without much success. It has lowered its rates to virtually zero, increased the base money supply and bank reserves to stimulate borrowing without much success. The amount of credit (debt) expansion has been insufficient to meet the Fed’s inflationary target.

The problem is that we are in a balance sheet recession. The collapse of housing equity and stagnant wages have put a large section of the economy underwater. People are saving, deleveraging, not taking on new debt. Banks are not lending under the circumstances. That’s a good thing individually. On an aggregate basis, it is bad for the economy as a whole. Supply and potential output far exceed demand. Richard Koo presented a very readable and short summary of the problem in testimony before Congress. It is worth reading. http://www.house.gov/apps/list/hearing/financialsvcs_dem/richardc.koo.pdf


Posted by: Rich at July 17, 2011 7:56 PM
Comment #325965

Amazing… wasn’t it Dick Cheney who said “deficits don’t matter”?

Why do you Repuglicans only care about the debt when Democrats are incharge? Where was your outrage when Bush was President?

Posted by: Aldous at July 17, 2011 8:15 PM
Comment #325967

Most conservatives who write on WB do admit both parties are at fault for this mess. It’s getting the liberals to admit it that the democrats are at fault to, that is the problem, Aldous. One example Stephen D. will never admit Democrats helped to cause the problem.

Posted by: KAP at July 17, 2011 8:46 PM
Comment #325968

KAP,

eh? I don’t remember this happening when Bush was President.

“Most conservatives who write on WB do admit both parties are at fault for this mess.”

Can you show me post from WB that state this during Bush’s time?

Seems to me this sudden concern for dual responsibility only crops up when you lose the Presidency.

Posted by: Aldous at July 17, 2011 9:02 PM
Comment #325969

Probably could from some of my coments back in 2007, 2008, 2009. Just give me some time to search. I also know C&J have, Aldous

Posted by: KAP at July 17, 2011 9:56 PM
Comment #325979

KAP-
I already have admitted many times that liberals contributed. What I’m not going to do is accept equal blame, since the Republicans led on the issue. They don’t get to advocate for things for years, and then turn around, hand the policies to somebody else, and blame them for the deficits and the debt.

C&J-

In 2006 we had record revenues.

Probably due to the very housing bubble that would cause the crisis over the next two years. Never the less, even before that crisis, job creation was at record lows (even compared to Carter’s), and most of the growth in the economy went to expanding the bank accounts of the richest folks, rather than any kind of shared prosperity.

It isn’t merely that the Republicans started spending more, it’s that they didn’t tax anybody to pay for this increased spending. They didn’t tax anybody to pay for the wars. They didn’t tax anybody anymore to pay for the new Medicare Benefits. This is what responsible spenders do: either offset from other spending, or raise new revenues.

Whatever excuse Republicans might have for not doing that, the effect is plain. It’s not simply a spending problem, nor is it just a revenue problem. No, it’s a problem of spending what you don’t intend to pay for. Republicans knew what they were doing, or should have. If they had matched offsets or new taxes to the new spending, we wouldn’t be further in debt by so much. Obama’s inheriting that deficit from your people, along with the economic problem that counts for much of the deficit.

Posted by: Stephen Daugherty at July 18, 2011 12:50 AM
Comment #325982

kap

“Just give me some time to search.”

don’t waste your time with trolls.

Posted by: dbs at July 18, 2011 5:23 AM
Comment #326106

Stephen

Are you familiar with the application of the doctrine of joint and several liability? It means that one party can be held responsible for the whole liability of the group. Lawyers like it because they can go after the guy with the most money, even if he didn’t do much.

You apply this to Republicans very well. If ANY Republicans are nearby, you give them nearly all the blame. Democrats controlled 2/3 of the government power base from 2006-2008. From 2008-2010, they controlled 3/3. They still control 2/3. In addition, the media is very sympathetic.

Indeed, both sides contribute to the problem … and BTW successes. I am just curious. The problems created since 2006, how much of that do you attribute to Democrats? A rough percentage will do.

For your reference - during the “good times” of the late 1990s, Republicans controlled 2/3 of the government. I bet you give them no credit for that. They controlled 2/3 of the government 2001-2 and then 3/3 from 2002 - 2006.

Posted by: C&J at July 19, 2011 6:31 PM
Comment #330893

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