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Statesman
 
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Post 01 Mar 2011, 1:50 pm

GA
.
I am willing to accept a cut on budget areas that are in accordance with my way of thinking

probably everybody is....
But I'm pretty sure priorities differ.

RAYJAY what happens if you cut expendutres by 15% and the economy tanks, and tax reciepts tank with it?
Thats whats going on in the UK.
The solution to the problem must include economic growth and the wrong kinds of cuts to government spending could tank the economy right now.
Theres a new report by Moody's Analytics that says the recent GOP proposal would cost 700,000 jobs. If thats even reasonably close then the budget cuts would probably halt the economic growth and you'd actually create a larger deficit due to decreased tax reciepts and increased UI...
I think its all a question of timing and priorities. (Kind of the heart of keynes)
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Post 01 Mar 2011, 3:06 pm

RJ - Since the end of the recession, US growth has averaged at about 3% per year. It's currently 2.8%. NABE projections for this year and next are over 3%.

3% a year is not bad - you've nearly restored GDP to the level it was at before the crash already. So how likely do think it is that you'll see only 1% over the next several years, and if you think it is likely, why?

At it's peak, the deficit was about 11% of GDP and $1.4Tn. If GDP grows by 3%, and the deficit goes is stuck at $1Tn even then, then after 10 years the deficit will be 6% of GDP.
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Post 01 Mar 2011, 3:16 pm

Green Arrow wrote: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.
That's very generous of you, but it doesn't account for the difference between discretionary and mandatory spending, or for the clear likelihood that some areas are more 'soft' that others.

Say, a 10% cut in some efficient areas (and there will be some, that are more efficient than others) of government would hit services directly, while a 25% cut in bloated areas would have no effect outside redundancies.

I'm not prejudging which areas these are, and it's not a matter of politics until you start naming them, but it strikes me that practicality should overrule simplistic idealism.

It also ignores which areas have recently seen large expansion recently. Why should budgets that are small and haven't grown by 30% in the last decade be cut by the same proportion as those that did?
 

Post 01 Mar 2011, 6:18 pm

Exactly why this would only happen if the Government could not agree on a course of action. EVERYONE gets a reduction. This forces the different sides to work it out or have drastic cuts.

PS I don't care how big or small the budget is. A percentage is a percentage.
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Post 02 Mar 2011, 12:08 am

Faxmonkey wrote:
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.


However, the handwriting is on the wall: our interest payments continue to increase at a pace that we cannot "invest" our way out of. It's not so far down the road (before the end of the decade) that we will pay more in interest than in defense. I don't care who you are, that should scare you.

That no one in your country is willing to touch the big social programs . . .


Let's see what the GOP budget for 2012 is. I think it's due in April. The rumor is they are going to propose some entitlement reform.

The Democrat Demagogue Watch will be fun. Who will be the first and how long will it take? My guess is Schumer and 10 minutes (from the time the GOP budget proposal is leaked).

Now, keep this in mind--the Democrats, for the first time in decades, did not pass a budget last year for this year. That's why the continuing resolution debate is going on right now.
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Post 02 Mar 2011, 12:13 am

danivon wrote:RJ - Since the end of the recession, US growth has averaged at about 3% per year. It's currently 2.8%. NABE projections for this year and next are over 3%.


Is there anything approaching a balanced budget in Obama's 10 year projections?

How are the "investments" being made going to bear long-term fruit?

At it's peak, the deficit was about 11% of GDP and $1.4Tn. If GDP grows by 3%, and the deficit goes is stuck at $1Tn even then, then after 10 years the deficit will be 6% of GDP.


The deficit is more than that this year, so . . .

What we have in the US is an absolute abdication of Presidential leadership.