Federal Deficit To Soar
Will all of you liberals who rightfully hammered Bush for running up the deficit please comment on this?
The economy growing weaker, President-elect Barack Obama said Tuesday that recovery efforts will trump deficit concerns when he takes office in January. Yet he pledged a “page-by-page, line-by-line” budget review to root out unneeded spending.
The president-elect set no goals for reducing the federal deficit — now in record territory and headed ever higher — an obvious contrast to Monday’s announcement that he hopes to create a recession-busting 2.5 million jobs by 2010.
Well, a deepening recession is probably the only time the government should ignore the deficit. I mean, if everyone’s trimming spending, from consumers to businesses to local, state and federal governments, where is the money going to come from to stimulate new growth?
Posted by .(JavaScript must be enabled to view this email address) on November 25, 2008 at 1709 hrs
But do they—dare I say it?—either extend the Bush tax cuts or do additional cuts and let the people and businesses work this out, OR do we look to the government to spend, er, I mean invest in all sorts of things, and expect them to spend their way out of this, whoops, I mean to develop the solution themselves?
Posted by hsgbdmama on November 25, 2008 at 1743 hrs
But wasn’t one of the campaign issues, and I quote.. “to NOT continue the FAILED Bush economic policies of the past 8 years!!”
So how is doing more of the same - you know - spending gazillions of dollars that we don’t have going to make things better if spending gazillions of dollars that we don’t have is what got us here in the first place?
Posted by .(JavaScript must be enabled to view this email address) on November 25, 2008 at 1927 hrs
He’s spending those gazillion dollars on hope, JJ. You can’t put a dollar value on that.
Posted by HeatherRadish on November 25, 2008 at 1948 hrs
And change, don’t you forget change!!!
Posted by hsgbdmama on November 25, 2008 at 2013 hrs
Since many of you simpletons cannot think independently of your ideology, and so assume since I’m not a conservative hack I must be a liberal hack, I’ll comment.
Our current overal economic situation is one of the two - the other being a war - where it is, in my opinion, acceptable to run deficits.
The problem is that, thanks to the Bush administration, which ran deficits for reasons above and beyond the wars in Iraq and Afghanistan, running bigger deficits at this point is kind of like supporting a budget that increases structural deficits when the one you have is already enormous (as Owen has).
Or, better yet, taking out a credit card at Abercrombie and Fitch when you make $24K and owe $15K on other credit cards.
At this point, however, considering the outstanding credentials of the people advising him and the circumstances facing us, I am willing to give him a chance to see if this works. I hope these deficits do not include further short-term bailouts to companies that neither need nor deserve them, but rather go towards measures that could improve economic growth on a wider basis in the long term, such as (badly needed) infrastructure improvements.
So, in a nutshell, I’ll give him a year or two to see what happens.
Posted by .(JavaScript must be enabled to view this email address) on November 25, 2008 at 2123 hrs
Like ATV said, I’m okay with running deficits while fighting wars and to provide economic stimulus in the event of a recession, and only then if you’re willing to let government run surpluses in the good times to pay for those things. Ideally, government would run modest surpluses ahead of time and then could use those savings when stimulus is necessary. Otherwise, I’m absolutely opposed to the notion of government borrowing/bonding unless it’s for a capital improvement.
Sadly, our recent presidents and Congresses have been insatiable political whores who have borrowed money for everything under the sun.
I’ll give Obama the benefit of the doubt for awhile. He’s been handed a fairly bad hand by the Bush administration and previous Congresses. And hopefully this Congress can resist the urge to pork up any stimulus package that Obama requests. But I’m not holding my breath for that.
Posted by Recess Supervisor on November 25, 2008 at 2218 hrs
And hopefully this Congress can resist the urge to pork up any stimulus package that Obama requests.
STOP! STOP! STOP! That made me squirt milk out of my nose. You’re quite the comedian
Posted by Owen on November 25, 2008 at 2224 hrs
My opinion… Liberals are not REALLY against many of the things that happened during the Bush administration. They were merely being opportunists finding something to criticize and condemn him for.
Like the patriot act. I’ve never observed liberals having a problem with sacrificing peoples freedoms in the interest of ‘safety’. But it was a great weapon to attack Bush on.
Same with spending. Liberals love spending. The criticism levied upon Bush for spending was just more opportunism. The hypocrisy was always astounding to me.
Just one mans perspective….
Liberals won’t see it the same way. With their proclivity to rationalize everything with emotion-based thinking, the ends justifying the means no matter what the means were always works for them if its their ends being arrived at. The hypocrisy is never apparent to them. Emotional thought processes are not very objective in that regard.
Posted by .(JavaScript must be enabled to view this email address) on November 25, 2008 at 2300 hrs
I was listening to Gerald Celente of the Trend Institute and they have an amazing prediction record. He correctly predicted the crash of 2008, among other things. He is now predicting that in 2009, the whole economic system will collapse. A few months ago, I would have thought he was a nut case, but now days, I am not so sure. We are spending trillions of dollars and all of it is in debt, just in the past few months. If people stopped loaning the U.S. government money or demand payment, what is the U.S. going to do? They are already starting printing more money and that is going to cause very serious problems.
He also sees a revolt over taxes as federal, state and local taxes keep going up.
It will be an interesting few years.Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 0251 hrs
“Stimulus” is not a magical incantation. There is no amount of money that will get us out of trouble, and worsening a deficit will not help now, it will hurt. The way out is to allow the productive elements of the economy to retain their strength, not to drain them of money in order to shovel more money at the unproductive elements.
The words Obama used were a complete tip off to what is going on with his economic advisers behind the scenes. Obviously he is facing serious oppostion to his expansive government plans from his own advisers. His blurb about fiscal responsibility after a recovery is meant as to appease them.
Infrastructure is one of the worst possible uses of deficit money, ATV.
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 0555 hrs
Infrastructure is one of the worst possible uses of deficit money
How so, BBB?
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 0605 hrs
Infrastructure improvements would be good if done properly - by the private sector. NOT the government. Start building energy infrastructure like oil and gas rigs, refineries, and nuke plants as an example. Not only would we get jobs out of that, but we would also gain energy steps toward energy independence and also PRODUCTION at the end of it. Maybe the gov’t could help by giving some loans and by expediting the licensing approval, but they should mostly get out of the way.
This isn’t the 30’s we don’t need that many new roads, and do you really think that the Feds and the States have done a bang-up job at managing roads and bridge bids and funds and maintenance?
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 0737 hrs
After further review, I think Barack Obama is going to be George Bush’s third term.
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 1056 hrs
We have a fiat money system, pjr. It’s not an inherent evil as some would believe, but it does carry with it some general rules. The most basic is that the value of the currency is determined by the production ability of the nation issuing the currency.
When we borrow money someone else is lending us money. Their willingness to lend us that money depends on how much they believe we will pay them back with currency that is worth something. We could pay all our debts tomorrw by simply printing more currency. That would cure a debt problem, but would leave us all with worthless currency. Why? Because we have not increased our production, only our money supply.
Now look at infrastructure paid for by deficit spending. We are immediately increasing the money supply without generating a corresponding ability to produce more and pay back the loan. The same is true of military spending and other economically non-productive spending. They cannot be sustained by deficit spending without an eventual currency devaluation. Eventually such spending is constrained by the ability of the productive economy to pay for them, either because we make conscious decisions to limit such spending, or we devalue the currrency thus lowering the real level of the spending.
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 1234 hrs
BBB, here is my point.
The current bailout/stimulus/tarps, are from my perspective nothing more than a double or nothing bet.
We hope that people will not default on mortgages or buy new homes.
We hope, from what I understand from yesterday’s proclamation that people will continue to rack up more credit card debt.
We hope that there will continue to be buyers of our paper that props up our fiat money system.
It just seems to me that infrastructure development allows for a greater multiplier affect through the market for goods and services system than simply pumping more money into a financial system that produces nothing more than interest rate charges and fees as far as I can tell.
The current approach is nothing more than ramping up a Ponzi scheme by paying current obligations with future obligations.
Where is the deleveraging in this scenario?
All we are doing is putting the eggs in a different basket. And it is bigger one based on more debt.
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 1258 hrs
The problem with multiplier effect theory is that we are already at a level of debt/GNP then we have ever been. People are not lending and borrowing because there really is less worthwhile to lend and borrow for than we have grown accustomed to. We badly need the recession and need to get rid of the economy’s dead weight.
Stimulus now is simply going to go to bad companies and people making bad decisions at the cost of future growth in decent companies.
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 1317 hrs
I should have written higher level of debt to GNP then we have ever been in comment 17.
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 1320 hrs
I was referring to the multiplier effect of a dollar moving through the system and stimulates consumer spending and in the case of infrastructure development actually produces something that would, or at least is planned to, make us more efficient/productive and competitive in the global market place. As you well know, more debt in and of itself won’t do that.
Yep on the debt/GDP ratio and the current efforts of the Administration and Congress.
Here’s the thing, the idea of a laissez-faire approach to our economic/financial woes seems to be something that is not even on the radar screen.
If we are going to do something, whether you or I like it or not, I would prefer infrastructure development to the current approach.
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 1344 hrs
I would prefer we find the bottom first, at which point it will be much easier and less painful to climb out.
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 1413 hrs
I would prefer we find the bottom first, at which point it will be much easier and less painful to climb out.
I agree…
The fact is that people’s willingness to spend money and go about purchasing and engaging in commerce is the driver of our economy.
This economy rises and falls partly on tangibles but mostly on fear by consumers. Most people have money to spend, Most people have not lost their jobs, most people are salaried making just as much money as they ever have… They are just afraid to spend it.
I’ll admit that I’m even doing the same. I’ve had a record year, as has our company. I have been planning several very large purchases and the ONLY reason I’ve held off on them is because I keep thinking “what if” the bad economy starts to affect our business (it hasn’t yet, but that fear exists)
Most people are the same way. People have money to spend, they are just scared and are not spending it.
Contrary to what all the demagogue’s like Barack Obama were preaching over the summer, MOST people are not in trouble. But they are scared none-the-less.
Now that the election is over, the fear-mongers who were crying doom and gloom for political advantage will shut the f up and stop propogating hysteria.
People are ready to invest, people are ready to re-enter the markets, but everyone is just waiting to find the bottom. The quickest recovery will come if we can hit a noticeable bottom, not continue to muddy the water bailing out companies and screw with the value of the dollar with the government spending money it doesn’t have. Its a mess with the stock prices of many of the largest institutions in this country are now not reacting to market fundamentals they are fluctuating based on speculation of who’s going to get a bailout and who isn’t. Its a mess and no one can see bottom with all this government intervention and proposal for intervention.
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 1523 hrs
The only way the bottom becomes the bottom is when there is an uplift of the economy, and that only happens when consumers and businesses become confident enough to spend money.
You are right. Not everyone is doing badly. Many are doing fine but they are choking up on the prospect that they might loose their jobs and have no way of knowing if they are going to keep their jobs.
What gives people confidence is seeing people going back to work. The private sector is dumping out people onto the job market and so that is not the solution.
Therefore the government becomes the employer of last resort. We need infrastructure so what better way to generate jobs. It’s not just a bunch of guys grabbing a pick and shovel, it is orders for construction machinery and building products.
Right now it is the only way out of the hole. If government does nothing the hole gets deeper and we literally dig our way to China.
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 1922 hrs
No, Keith. Spending more money will not make economy better and infrastructure is a net job loser, not an employer.
Seeing the government spend money will not make anyone with money and a brain confident. What will make people confident is the knowledge that the currency will not be devalued. What will make people confident is the knowledge that the prices they are seeing are real, and not a government propped up fiction. What will make people confident are business entities that have a decent balance sheet and turn a real live genuine profit making something that people actually want. What will make people confident is the knowledge that their money may be going to an entity that stands a reasonable chance of producing sufficiently to give a return on their investment.
If government does what it is proposing to do all of the above are made far worse; and the problems, which are real, are ignored and get proportionately far worse. Some of us don’t subscribe to the fiction that there is nothing fundamentally wrong with the economy and that all we need do is expand the policies that led to the problems in the first place.
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 2002 hrs
Let me be a bit clearer.
This is not a matter of seeing the government spend money, this is seeing people spend the money they earn on the revitalization projects.
If you note, this is not strictly the government spending money. What we have are contractors and machinery manufacturers being able to get the revenue show they can show the profit and pay their workers. You don’t get profit without revenue, and right now with strangled credit transactions that lead to revenue are getting tougher to do.
What led to this “problem in the first place” was…
1) Conducting a war and reducing taxes at the same time
2) Passing a massive drug entitlement program and denying the government any bargaining power.
3) Collapse of our markets thanks to the subprime ponzi scheme
4) Poorly paid workers who turned to credit to sometimes keep up with the Jones but mostly to make up for layoffs or medical disasters
5) See 4—income disparity. A consumer based economy needs consumers.
and
6) Failure to invest in our own country. Sometimes known as infrastructure.
Probably not quite what you had in mind.
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 2048 hrs
Well let’s see, Keith. 1 is childish and wrong. 2. is partially right in that it is more massive government spending for something unproductive, although this particular program is no more or less offensive than a thousand other government programs. 3. is generally correct, but the cause goes back to the early 1990’s and is not really particular to housing, although housing is another unproductive expenditure. 4. is wrong. People are now more highly paid and on average living a lifestyle far in excess of that lived 30 years ago, and more importantly, far in excess of what they actually produce. 5. A consumer based economy is not a sustainable economy, the point people have been trying to tell you. 6. Infrastructure is not investment. The moment you hear a politician use the word “investment” you can stop listening. They are about to speak on something of which they know little. Secondly our infrastructure has never been better. The fact that executives and employees of companies that have made a living off the government have no end to their greed does not make our infrastructure crumbling.
Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 2104 hrs
1. Is a fact, nothing no other administration has done because having a war and cutting taxes is childish and wrong.
2. The thousands of other programs did not cost as much—added up together—than this one program, besides that this was a blatant give-away to GOP buddies.
3. Refer to http://folkbum.blogspot.com/2008/11/abcs-of-market-collapse.html
4. This is an insult to the middle class. Productivity has grown over the past 30 years while middle class incomes have been stagnant.
5. If I had my druthers I would have not wanted it to be so, but this is where the captains of American industry have been driving us through advertising and use of media, good socialists all I’m sure
6. Wonder where you got that from? Here’s what the experts—The American Society of Civil Engineers—http://www.asce.org/reportcard/2005/index.cfm—have to say:ASCE estimates that $1.6 trillion is needed over a five-year period to bring the nation’s infrastructure to a good condition. Establishing a long-term development and maintenance plan must become a national priority.
they been giving the infrastructure failing grades for years as have a majority of experts who look at the issue.
Damn right it’s investment, but not in Catoland where few of us live or choose to live.Posted by .(JavaScript must be enabled to view this email address) on November 26, 2008 at 2136 hrs
#6 - Keith… “expert” perhaps. Objective… Not so much.
Why don’t you go ask a car saleman if its time to trade in your vehicle… You’ll never hear a no.
Ironic that the ASCE has a picture of the I-35 bridge collapse on their home page amongst talk of “failing infrastructure” when the I-35 collapse was a DESIGN FAILURE!!!
Now THERE’S irony!
Posted by .(JavaScript must be enabled to view this email address) on November 27, 2008 at 1351 hrs
Oh, and to boot… How about that Hoan bridge collapse. ANOTHER DESIGN FAILURE!!!
So lets just cut the crap about the trendy politician hype issues and deal with real problems.
Posted by .(JavaScript must be enabled to view this email address) on November 27, 2008 at 1354 hrs
Among other things, Keith, i am in fact a civil engineer.
Posted by .(JavaScript must be enabled to view this email address) on November 29, 2008 at 1741 hrs
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