P.S. You should also take a look at the debt to GDP ratio. In the 30's it was much lower than today. So, there was more spending room in the 30's that does not exist today.

seems to me that your analogy has a serious flaw. The WWII threat was existential. It was a crisis that had to be met with all effort possible. However, it was a crisis that would end at which time the massive government deficit would go away and normal times would return.

Does it really matter what the motivation for the spending was? If there hadn't been a war, but the US governemnt had still spoent at the same level, wouldn't the effect have been the same? (Perhaps even more positive as the spending might have been on costructive additions to suciety versus weapons and munitions?)

P.S. You should also take a look at the debt to GDP ratio. In the 30's it was much lower than today. So, there was more spending room in the 30's that does not exist today.

This is really the biggest problem. The room to maneuveur has been limtied by 30 consecutive years of deficit increases...
However the GDP to debt ratio in 1945 was 109%. What did it take to move that down to 34% (what it was in 1980)
35 years of High taxation. A generally robust growing economy during that period.. The people who fought WWII also sacrificed personnally to pay off the debt... What level of sacrifice do you think the American public is prepared to accept?

Defiant:

However, what we do have is the President belittling and regulating business to death, in other words he is not bussiness friendly. That results simply in a no confidence vote from businesses and thus they are holding their assests. If that stooge would give the slightest hint of being pro-business they in turn would start investing in their businesses as they normally do and that would bring back workers.

We still have the problem of cheap labor and as much as you and I would love for businesses to just stay with US workers they are in the business of making money so we need our gov't to level the playing field with foreign countres that love

to undercut us, plain and simple, and until those two things happen we will be hurting for a while.

How do you hold these two thoughts in the same mind? How exactly is this to be accomplished:

so we need our gov't to level the playing field with foreign countres that love to undercut us, plain and simple,

without government regulation or intervention?.
Indeed this exodus of US employment happened because of the 20 year trend to "get government" off the backs of people that started with Reagan.
You either believe that deregulation and freeing the markets will benefit the economy OR you recognize that it really hasn't worked out so well since it was deregulation that lead US corporations to seek production out of the country. And exported the jobs with it...

Maybe you could also illustrate specifically how Obama has been sop anti-business. What specific regulation has his administration brought in that is inhibiting business? And please, be specific. Point to specific laws that have been passed in the last three years that have in some way inhibited business? Surely by far the greatest the greatest inhibition to business in the last 4 years has been inability to raise investment loans or capital. And that was a result of the housing and financial services crashes....
All brought on by the rush to deregulate the financial services sector and lower mortgage requirements... You know,. limiting government....
Why on earth is the general policy that got the mess started the answer for fixing it?

Sacrafice for a good cause is one thing but to sacrafice for and incompetent President and his destructive policies is a whole other thing. Let him take that damn Obamacare off the table, lets have the gov't for once show some financial responsibility. You can ask us to sacrafice but how much is enough, 60%, 70%, 80%, 90%, how much is enough, and in what God's name do you think it will stop the spending, there has never been a decrease in Federal spending, so before we chase good money after bad, why don't you tell me how much is enough of our paycheck.
BTW according to our constitution where is state's rights in this, remember the forefathers and beware of a strong central gov't, geeee I wonder why they gave that warning.
If you want to sacrafice like 1945 can our business's have the same regulations as then, oh, darn, I guess not, eh?
I wouldn't compare 1945 to now and tell us to sacrafice, that's a ridiculus comparison.

OBAMACARE, if not so important why are business's getting waivers.

defiant

I can't really believe you are even trying to compare, sometimes percentages are good in this case they don't tell the story, now do they?

Here's the thing Defiant. Sweden has managed to remain peaceful, and independent for a very long time. Their decisions about their foreign policy and the interests of Sweden seem to have worked out for them quite well without having to make an investment in military that they can't afford.
They are a strong exporter, have a strong industrial sector and high tech sector... And have maintained a very high standrd of living for a very long time.
That they can do this without a large investment in military begs the question, has the big investment in the military really beenfitted those who over invested?
Eisenhower warnd the US that the military industrial complex was out of control in the 50's Today the US has everything you talk about militarily, outspending the entire rest of the world put together. And yet, that force of arms is largely impotent in helping sovle the current conundrum your nation inds itself within. (And it can be argued didn't generate a positive return in a fair number of events. )
In fact, its contributed largely to the current conundrum.. Simply put, Sweden has paid for the military it wants and can afford. The US has not. THose weapons were paid for on borrowed money. Iraq and Afghanistan wars were paid for on borrowed money.
How long do you think your nation can continue to support the arsenal you';ve listed? Will Tea Partiers pay their fair share of tax to pay for the weapons?

Look Rick, I am not like you and this global economy, I am for the US first. China pays 2 bucks a day and undercuts us not to mention they regluate their currency to hinder ours. So in essence this is economic war, internationally. So be it, lets put a 20% tax on imports from foreign nations so we can compete fairly. China has no problem dumping toxics into the environment that we cannot, so if they want to play this game fine, but we can make them pay at the border and if it leads us into a trade war with China or other similar nations, fine, we are 1/3 China's income, they will hurt too. This is what I want to do unless your lovely countries like Norway and Sweden cann convice China to quit dumping toxins in the environment, or pay decent wages or keep their currency in line, maybe you should send a military task force down there to comply, I won't hold my breath.

rickyp wrote:defiant

I can't really believe you are even trying to compare, sometimes percentages are good in this case they don't tell the story, now do they?

Here's the thing Defiant. Sweden has managed to remain peaceful, and independent for a very long time. Their decisions about their foreign policy and the interests of Sweden seem to have worked out for them quite well without having to make an investment in military that they can't afford.
They are a strong exporter, have a strong industrial sector and high tech sector... And have maintained a very high standrd of living for a very long time.
That they can do this without a large investment in military begs the question, has the big investment in the military really beenfitted those who over invested?
Eisenhower warnd the US that the military industrial complex was out of control in the 50's Today the US has everything you talk about militarily, outspending the entire rest of the world put together. And yet, that force of arms is largely impotent in helping sovle the current conundrum your nation inds itself within. (And it can be argued didn't generate a positive return in a fair number of events. )
In fact, its contributed largely to the current conundrum.. Simply put, Sweden has paid for the military it wants and can afford. The US has not. THose weapons were paid for on borrowed money. Iraq and Afghanistan wars were paid for on borrowed money.
How long do you think your nation can continue to support the arsenal you';ve listed? Will Tea Partiers pay their fair share of tax to pay for the weapons?

Well, then you know what the next time a Saddam invades a coutry or extremists threaten your border, or a muscled up Russia is getting angry, or now maybe China who is arming up with the money made off of us, we will call you for help. Or when China decides to take Taiwan back, you going to go help that country. Everybody can limit their military when the US is around, if we reduce to nothing, then you might have to invest more, but I don't see people like you doing what's right when it is needed. You are type of appeasers that cause HItler to get so far, not to mention others, so I wouldn't sit there all smug, saying maybe the US should limit their weapons if they can't afford them and turn the money over to people who don't want to work with the entitlement programs like your counry. Hey, we have a problem with Mexican cartels can you help us and send some of your military over to help the carnage on the southern border? Yea that's what I thought.

Well with regard to Monte's criticique, Ricky answered it probably better than I could have so I won't repeat his arguments. I do think anytime you are trying to justify present polikcy by pointing to similar circumstances in the past,, you run into the problem that there are always differences between the past historical situation and the present one. Whether you can isolate the differences and show that they are not relevant is difficult. Still I would like conservative economists to explain what happened to our economy in WWII

Defiant I am with you with regard to your "fair" trade arguments.

That's interesting that you (and probably Ricky) think that you've answered my critique. I don't think you guys answered it at all. I wonder whether that is a common experience. I've read Ricky's answer again and my position hasn't changed. Are you willing to read my critique again?

My critique isn't about what happened during WWII. My critique is partially based on what happened after WWII, which is that we didn't have about 1/3th of our population with government guaranteed free health care for the rest of their lives and no way or plan to pay for it.

rickyp wrote:However the GDP to debt ratio in 1945 was 109%. What did it take to move that down to 34% (what it was in 1980) 35 years of High taxation. A generally robust growing economy during that period.. The people who fought WWII also sacrificed personnally to pay off the debt... What level of sacrifice do you think the American public is prepared to accept?

I would be quite happy with the levels of taxation the nation accepted between 1945 and 1980: chart, though I believe even the Tea Party aren't asking for such steep tax cuts.

mach

I would be quite happy with the levels of taxation the nation accepted between 1945 and 1980: chart, though I believe even the Tea Party aren't asking for such steep tax cuts.

You are confusing taxation levels with government revenue.
Look up the tax rates between 1950 and 1980 and you will be astounded as to the marginal rates of taxation.

freeman

Defiant I am with you with regard to your "fair" trade arguments.

As am I. One of the reasons you should be critical of the 8 years of Reagan is the overwhelming trend to "free trade" that really wasn't free. Your country paid for it in spades when,, in return for short term corporate profits US corporations started to move manufacturing over seas. Neo-mercantilist nations grew industry in their countries at the expense of the US domestic manufacturing sector.
But Defiant, in making this stand, you are taking a position in antithesis to the right wing mantra about govenrment involvement in the economy or industrial strategy. It was the US' unilateral tearing down of tarrif barriers, regulatory barriers and taxation policy that provided the neomercantilists the path into the US to attract all those jobs. At the same time the neo-mercantilists were subsidizing the nascent industries that attracted production from US corporations...
So you had US corporations and the govenrment participating in free trade, and the other side simply taking advantage of their wild eyed, idealistic willingness to abandon the US long term interests to a philosophy of non-involvement in industrial strategy. It was harikiri.

As for your arguements about the US military and its role as policeman of the world. I'm not arguing with you am I? All I'm saying is if you want to assume that role, and those responsibilities and the cost that goes with it, pay for it. Now. Not with debt that your children and grandchildren will still be paying down. In WWII, an enormous debt was assumed. All that economic activity had the added effect of driving the US economy out of years of negtive growth and establish a positive trajectory for the economy. (And Ray, any spending could have accomplished this. Instead of tanks people could have been manufacturing pre-fab houses and roads ....They still would have been employed, and spending their money. Industries still would have been fed on government debt. )
Ray wants to argue that this (WWII) is somehow a special one off.
Your defence of unpaid for military expense shows that it really isn't. Since 1980 the US ran deficits that included military expense. I won't argue that either the expense of WWII or the expense since 1980 was unnecessary.(Although based only on the wasteful practices of the military beauracracy and cost plus contracting I'll bet a lot was ...) It doesn't really matter. But both have to eventually be paid for and the people who fought WWII knew that. They assumed taxation rates that topped out at 93% (highest marginal rate) in the 1950s and 84% (highest marginal rate in 1960s) . (note this is tax rate Mach, not total revenue. ) They assumed the necessary taxation levels to pay off their accumulated debt. It took 30 years to get to about 34% of GDP from 109%.... Then, instead of continuing the trend, Reagan started adding to the accumulated debt again. He didn't think that the military (or other expense) needed to be paid for....

The simplistic Grover Norquist and Tea Partiers seem to feel there is a free lunch at the end of everything. And that cutting spending is the only necessarry answer. That would be true if it really were spending only that got you into the mess since 2000. It isn't.

routine increases in defense and domestic spending account for only about 15 percent of the financial deterioration, according to a new analysis of CBO data.

The biggest culprit, by far, has been an erosion of tax revenue triggered largely by two recessions and multiple rounds of tax cuts. Together, the economy and the tax bills enacted under former president George W. Bush, and to a lesser extent by President Obama, wiped out $6.3 trillion in anticipated revenue. That’s nearly half of the $12.7 trillion swing from projected surpluses to real debt. Federal tax collections now stand at their lowest level as a percentage of the economy in 60 years.

Big-ticket spending initiated by the Bush administration accounts for 12 percent of the shift. The Iraq and Afghanistan wars have added $1.3 trillion in new borrowing. A new prescription drug benefit for Medicare recipients contributed another $272 billion. The Troubled Assets Relief Program bank bailout, which infuriated voters and led to the defeat of several legislators in 2010, added just $16 billion — and TARP may eventually cost nothing as financial institutions repay the Treasury.

source:
http://www.washingtonpost.com/business/economy/running-in-the-red-how-the-us-on-the-road-to-surplus-detoured-to-massive-debt/2011/04/28/AFFU7rNF_story.html

In 1992 Standard and Poors downgraded Canada's rating to AA+ just as they have recently done for the US. It took 15 years of surpluses to move Canada's accumulated debt (94% of GDP) to 30%. That included a roaring economy, austere spending by government and fairly high tax rates... The US isn't really in that bad of shape, although the stinky economy makes it tough. Your accumulated debt is about 74% of GDP (right?) .Now, thats a helluva difference from 2000 when it looked like the US would have its debt totally erased by 2010.... but thats what you got when Bush cut taxes so much.
If Grover Norquist was right and only good things come with tax cuts how come this happened?

When Reagan cut taxes in 81 to historically low rates, he then raised them when revenues fell too far... He at least remembered the lessons of the greatest generation...that you have to pay for what you use... Bush and his accolytes never did. They ran around saying "the surpluses belong to the people". He forgot that the debt did too.

rickyp wrote:You are confusing taxation levels with government revenue.
Look up the tax rates between 1950 and 1980 and you will be astounded as to the marginal rates of taxation.

I would not be astounded at all--any more than I am astounded by the significant upticks in revenue (both on an absolute basis and as a percentage of GDP) following the Reagan tax cuts in 1981 and the Bush tax cuts in 2001. Go figure.

Nor am I at all confused (despite the Obama administration's best efforts to confuse me). We can quibble about marginal tax rates and how taxes are distributed, but since our government collects nearly all of its revenue from taxes, government revenue as a percentage of GDP is a very good metric of the overall average tax rate. That rate is currently quite high from a historical perspective, yet still insufficient to cover our current spending. That suggests to me that we have a spending problem rather than a revenue problem (which is, I believe, the point the Tea Party seem to want to make).

http://www.taxpolicycenter.org/briefing ... evenue.cfm

Then you won't have a problem looking at the source of that taxation? 36% was payroll taxes (in 2008).
Why is that interesting? Because conservatives often spout that half of Americans don't pay income taxes and want this to suggest that half pay no taxes at all...
(Why it is cheering to know that half of Americans earn too little to be taxed on income, I don't understand.)

But lets deal with this other myth you claim with out substantiation.The significant uptick in revenues after the Reagan tax cuts. (one of the problems i have with conservative And democratic idelogues is that when faced with facts they ignore them or reinvent them... Reagans revenue shortfalls after tax cuts have been known, well since they happened. Ron raised tax rates because of the shortfall so it was by his one admission a plan that didn't work. And yet, somehow the myths survive.)
If it worked out the way you describe, why did he then increase taxes right away? By the way, I like the name of Reagans tax increases...bolded below.

■

The Reagan administration proved willing to raise taxes when the ill effects of the 1981 tax cut became apparent-a move the Bush administration shows no interest in considering. The 1981 tax cut was followed a year later by a tax increase, in the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). The revenue costs of ERTA, minus the revenue increase in TEFRA, amounted to about 2.1 percent of GDP. On this basis, the Bush tax cuts are approximately the same size as the Reagan tax cuts.

source: http://taxpolicycenter.org/briefing-boo ... reagan.cfm

The reason was that tax revenues didn't exceed expenditures. And didn't increase the way you suggest.
http://www.whitehouse.gov/sites/default ... f/hist.pdf
You can have a look on page 26 (page 21 in index, 26 by pdf) of the linked government reports.
In raw numbers Reagan ran deficits, and adjusted for inflation, revenue was down or flat when tax decreases were brought in... (He can claim to have run surpluses versus the budget later in his term, but the budgets forecast deficits in real spending.)

http://www.whitehouse.gov/sites/default ... f/hist.pdf

And the problem Mach, is if you have ONLY a spending problem, then you are well and truly screwed.
Why?
Because govenrment spending is part of the economy and does create economic activity. When you curtail that spending you curtail economic activity. And one of the important things right now is reviving the economy.(Don't be.leive me, then listen to all the congressmen with signifcant military industy in their districts and they'll be saying the same thing. Many of them republicans...)
SInce a significant portion of your populace (the part with all the money) is now taxed at a rate lower than since post WWII since 2001 and the BUsh tax cuts, there seems to be room to add revenue without altering the economic picture. Why? Because the indications are that these people aren't reinvesting their tax savings in the US Or spending it. Sicne they don't seem to want to use the money or involve it in economic activity to help the economy move...perhaps taxing them won't affect the economy.? Its a reasobnably cretain bet that the revenue earned by reverting back to the pre-Bush tax era for the welathy will have only one result and thats reducing your deficits.
A balanced apporach, which is what S&P were plumping for, will both affect the economy the least and reduce the deficit the most....