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Post 24 Feb 2011, 1:41 pm

danivon wrote:
Doctor Fate wrote:A complete donkey would know better than that, which explains your difficulty--you've not got that much sense. I complained about spending under GWB and have always been in favor of a balanced-budget amendment (which could only be violated during a time of declared war--not actually seen in some time here).
Yeah, you complained all the way to the polling booth when you voted for the guy again in 2004, and later for other GOP candidates afterwards. I recall the many, many posts that you wrote about how terrible the deficit spending was, and how you opposed the 'Surge' which would cost even more.


Sorry, the only choice in 2004 was the Crown Prince of Pomposity or Bush. It wasn't that tough. Kerry is someone who knows how to spend money and how to marry into it, but he's not so keen on paying taxes (see his yacht debacle) or cutting costs.

I did not like Bush's expansion of Medicare. I didn't support his work with Kennedy. I didn't support much that he did--but he was better than Gore or Kerry would have been.

In this country, we get two choices. We can vote for someone else if we want, but it is always a wasted vote (see history of third party Presidential candidates). If my choices are a liberal Democrat who will massively expand entitlements and raise taxes or a mushy Republican who won't, I'm not picking the Democrat.
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Post 24 Feb 2011, 4:32 pm

Doctor Fate wrote:And, when one is borrowing 40% more than one is taking in, it is reasonable to expect a certain amount of economic growth. Again, I would ask--is 4% return on 40% borrowed at what, 5% interest (??), a good deal? It seems like short-term thinking--and, contra you, there has been NO long-term plan presented.
The fact that you can't be bothered to find out what the current interest rate is speaks volumes.

Your figures are also a bit out as well. You compare the deficit as a proportion of taxation against the growth rate as a proportion of GDP. Apples and Pears, my dear.

4% GDP growth now is not bad, considering how recently you were in recession (and a recession that knocked about 6% off GDP. Remember that the UK's last quarter showed contraction of an annualised 1.6%, so you are actually doing 5.6% better than we are. What's more, 4% annual growth is cumulative, whereas the deficit is linear.

I believe we can borrow more freely than you think, can plan for debt reduction for the long term once we have a stable economy, and that you see Reds under every sodding bed.


Please show me anything in the President's budget or future projections that looks like a serious debt reduction plan.[/quote]As I said, it's pretty simple. Growth now means that GDP is higher later, that tax receipts go up even if rates remain the same, and that spending can fall back naturally.

Cutting too fast too early risks sending the economy back into recession, reducing tax receipts and putting pressure on spending, making it actually harder to deal with the deficit. Oh, and it screws up the private sector economy and costs jobs. But hey, you work in a cushy insulated part of the economy. Those of us who work in the actual commercial world are the ones who get affected in a recession, not you priests.
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Post 25 Feb 2011, 12:34 pm

dan
Remember that the UK's last quarter showed contraction of an annualised 1.6%, so you are actually doing 5.6% better than we are.

Whats really scary is that the current fetish in the US to cut government spending replicates the failing UK strategy. And yet no one in the US seems to be bothered by the results in the UK, nor has the example of the Uk been brought forward as a cautionary tale.
Scary? Becasue of the seeming inability to learn from the experience of others...
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Post 25 Feb 2011, 1:25 pm

rickyp wrote:dan
Remember that the UK's last quarter showed contraction of an annualised 1.6%, so you are actually doing 5.6% better than we are.

Whats really scary is that the current fetish in the US to cut government spending replicates the failing UK strategy. And yet no one in the US seems to be bothered by the results in the UK, nor has the example of the Uk been brought forward as a cautionary tale.
Scary? Becasue of the seeming inability to learn from the experience of others...


What is really scary is that Dan has brought it up and you can't seem to understand that there is a difference. The health of the dollar and our capacity to borrow go hand in hand with our capacity to keep running our government. If confidence wears thin about our capacity to handle our debt, disaster ensues. The UK, as marvelous as it is, is not the world's superpower.
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Post 25 Feb 2011, 1:38 pm

Oh, FFS, Steve. Look at our comparative stats over the past 10 years.

While we didn't have such a bad time during the dotcom/9-11 blip (no periods of contraction), after that we match you pretty well. We had growth (and slightly higher) at the same time. We went into recession just behind you. We came out of recession just after you.

The divergence comes recently - your recovery continued, and ours followed about a quarter or two behind, until the last quarter when the initial impact from the policies of the new government kicked in. We just had the revised figures today, and they are slightly worse than was first estimated. The annualised rate of contraction was 2.4%.

What is actually scary is that you seem to think that 'the economy' measured by GDP, employment, trade, output etc.. is the same as 'the government' and it's capacity to borrow. They are different. And they are interdependent. But for the citizens of a country, the wider economy is more important than the government's balance sheet.

And what you are talking about regarding confidence in our borrowing is also rubbish. Our borrowing rate is low, our credit rating is still at the top, and we have not had a problem with government bond issues. It is not 'investor' confidence in our government that is the concern, it is consumer and industry confidence.
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Post 25 Feb 2011, 2:05 pm

danivon wrote:The divergence comes recently - your recovery continued, and ours followed about a quarter or two behind, until the last quarter when the initial impact from the policies of the new government kicked in. We just had the revised figures today, and they are slightly worse than was first estimated. The annualised rate of contraction was 2.4%.


If you had cancer, would you be thrilled if your white blood count went down for a week? Would you declare yourself cured?

In other words, you are engaging in short-term thinking. Our economy is experiencing modest growth as a result of record-breaking spending. I would expect to get more bang for the buck.

Furthermore, the President projects to borrow at least another $11T over the next decade. I am not saying we HAVE to stop borrowing ALL money tomorrow. I am saying that this is not a plan and it is not leadership. It is a road map to insolvency.

What is actually scary is that you seem to think that 'the economy' measured by GDP, employment, trade, output etc.. is the same as 'the government' and it's capacity to borrow. They are different. And they are interdependent. But for the citizens of a country, the wider economy is more important than the government's balance sheet.


No, I don't. What I do know is that the country owes as much as it's GDP. I know that we are borrowing 40 cents of every dollar we spend. I know that no entity can do that for long and survive. What is scary is that you are fine with it--and so is the President.

And what you are talking about regarding confidence in our borrowing is also rubbish. Our borrowing rate is low, our credit rating is still at the top, and we have not had a problem with government bond issues. It is not 'investor' confidence in our government that is the concern, it is consumer and industry confidence.


So, if China, for example, decides to stop buying our notes tomorrow, that's not a problem? If they won't unless promised a higher rate of return, that's not a problem?

No country can borrow its way to prosperity, particularly while doling out the cash to unions and local governments along the way.
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Post 28 Feb 2011, 3:02 pm

Doctor Fate wrote:
danivon wrote:The divergence comes recently - your recovery continued, and ours followed about a quarter or two behind, until the last quarter when the initial impact from the policies of the new government kicked in. We just had the revised figures today, and they are slightly worse than was first estimated. The annualised rate of contraction was 2.4%.


If you had cancer, would you be thrilled if your white blood count went down for a week? Would you declare yourself cured?

In other words, you are engaging in short-term thinking. Our economy is experiencing modest growth as a result of record-breaking spending. I would expect to get more bang for the buck
No, I am thinking medium term. Your growth is modest but steady, which bodes well for the future. Ours looked like it was modest but steady, but then headed the wrong way, and that raises concerns not just about the near future, but the longer term.

I'm sure you are aware of how over time a small difference in growth rates (or interest rates, or inflation rates), makes a big difference over the longer term. It is you who is thinking short term expecting 'more bang for the buck' within a couple of years of coming out of recession.

Furthermore, the President projects to borrow at least another $11T over the next decade. I am not saying we HAVE to stop borrowing ALL money tomorrow. I am saying that this is not a plan and it is not leadership. It is a road map to insolvency.
One minute you are saying how much stronger you are than the UK, as if that explains our recent divergence on GDP, the next you can't afford to borrow.

That would be roughly a doubling of debt. But with inflation and GDP growth, it would not be a doubling of the debt as a proportion.

No, I don't. What I do know is that the country owes as much as it's GDP. I know that we are borrowing 40 cents of every dollar we spend. I know that no entity can do that for long and survive. What is scary is that you are fine with it--and so is the President.
You don't need to do it for long. Just until you recover the lost growth and the pressure on spending (and the effect of tax collection) recedes.

By the way, it's common for people to owe multiples of their annual income. It's how people get a mortgage (not even sub-prime ones)

So, if China, for example, decides to stop buying our notes tomorrow, that's not a problem? If they won't unless promised a higher rate of return, that's not a problem?
Sure, it would be a problem. But China needs America as much as anything, as an export market. It's not only China buying your debt, though. A lot of American investors are buying US government debt.

No country can borrow its way to prosperity, particularly while doling out the cash to unions and local governments along the way.[/quote]How do companies become prosperous, Steve? They start out by borrowing. They issue shares or seek investment (which are borrowing), and use that to expand. America started as a nation with massive debt. It came out of WWII with massive debt. I doubt the Civil War was cheap. Those debts were large, but yet the USA was able to become prosperous - partly as a result of those expensive wars - despite the large debts hanging over it. You can do it, Steve, have faith in your countrymen!
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Post 01 Mar 2011, 1:45 am

Doctor Fate wrote:No country can borrow its way to prosperity, particularly while doling out the cash to unions and local governments along the way.


That's right you can't borrow your way to prosperity, you can however invest (eg go into debt) to increase future revenues which will make it possible to repay the debt and have something left over. That's the basic idea behind credit.
Of course you are right that it's not investing if you subsidies industries or social programs which are fundamentally flawed eg always cost more than they generate revenue.
That no one in your country is willing to touch the big social programs or military spending is the problem and it can't be solved by stopping public investment in infrastructure or by eliminating public services, it can only alleviate the symptoms of the core problems SHORTERM.
Basically you are shafted (as are we all) as long as we vote politicans into power who don't have the stones to tackle the real problem, but prefer it to close public libraries or reduce police forces to show how serious they are about saving money.
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Post 01 Mar 2011, 6:54 am

I agree that you have to tackle the biggest expenditures which are defense, social security, medicare, and medicaid. There is an interesting article in the morning's WSJ on duplication in government. Per a GAP report just released (as mandated by conservative Republican Tom Coburn as part of the deal to lift the debt ceiling), there are:

15 different agencies overseeing food safety
20 different programs for the homeless
80 programs for economic development
82 programs to improve teacher quality (spread across 10 different federal agencies)
80 programs to help the disadvantaged with transportation
47 for job training and employment
56 to help people understand finance

So many of these programs can be merged or consolidated (or eliminated if you are a true conservative) to both save money and reduce confusion. Many of the programs have conflicting rules.

We should at least grab the low hanging fruit.
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Post 01 Mar 2011, 7:52 am

Ray Jay wrote:I agree that you have to tackle the biggest expenditures which are defense, social security, medicare, and medicaid. There is an interesting article in the morning's WSJ on duplication in government. Per a GAP report just released (as mandated by conservative Republican Tom Coburn as part of the deal to lift the debt ceiling), there are:

15 different agencies overseeing food safety
20 different programs for the homeless
80 programs for economic development
82 programs to improve teacher quality (spread across 10 different federal agencies)
80 programs to help the disadvantaged with transportation
47 for job training and employment
56 to help people understand finance

So many of these programs can be merged or consolidated (or eliminated if you are a true conservative) to both save money and reduce confusion. Many of the programs have conflicting rules.

We should at least grab the low hanging fruit.


Don't think that that constitutes low hanging fruit. I believe it would cost major political will and lots of wheeling and dealing to reform those. That political capital should rather go towards the big hunks. After that you can do stuff like that.
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Post 01 Mar 2011, 8:17 am

The lowest hanging fruit would seem to be military spending. But its sancrosanct.

In his remarks at Monday's hearing, Scott Amey, general counsel for the nonprofit watchdog group Project on Government Oversight (POGO), testified that "contract award dollars have increased from approximately $200 billion in fiscal year 2000 to over $535 billion in fiscal year 2010." Meanwhile, however, "contract administration and oversight have decreased because the acquisition workforce is stretched thin," he said.


http://www.pogo.org/pogo-files/testimon ... 10228.html
 

Post 01 Mar 2011, 8:51 am

This is all quite simple...

You take total government expenditures and subtract total income. That amount is the amount that needs to be reduced. That reduction is split equally between all budgets based upon the percentage of total budget.

Or, as we say in our house... Nobody gets what they want, but it is equal...
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Post 01 Mar 2011, 9:06 am

GA, as the philosopher Jagger put it, as long as everyone tries sometimes and gets what they need ...

I just wanted to reignite the polite discussion between Danivon and Dr. Fate,

Danivon, where I cringe at your approach is what happens if we spend the next several years with $1 trillion deficits and only have anemic growth of say 1% per annum. In other words, the massive federal spending is insufficient to truly ignite the economy because it is generally unproductive (because it is mostly transfer payments and pay offs to political rent seekers). If you do the math, our national debt increases so quickly relative to our GDP that the Republic is effectively in trouble. I don't think that you have adequately addressed the risk of the Keynesian approach.
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Post 01 Mar 2011, 11:57 am

GA - blanket proportional cuts are simple, sure. But sometimes simple is not the best way to go about it. Say it's a 10% across the board cut. That includes a 10% cut to the VA. But say that the VA budget is under more pressure because more vets are coming out of current conflicts who need care etc, which was promised to them when they entered service should they need it. And that the cost of that care is going up faster than general inflation as well, increasing the cost further.

Would a 10% cut be acceptable if it meant that the VA had to renege on promises to people who put their lives on the line for the country?

At the same time, some budgets could probably be cut by far more just by simplifying the bureaucracy and streamlining organisation, with no effect on the service it's been set up to support/provide.
 

Post 01 Mar 2011, 12:18 pm

That is exactly what I am saying. I am willing to accept a cut on budget areas that are in accordance with my way of thinking as long as it is equally cut across the board.