Looking On The Bright Side

9 Responses to “Looking On The Bright Side”

1. BluedogCatcher writes
   April 2nd, 2009 12:48 pm

   Eight years of Bush needing Congress to vote on raising the debt ceiling every six months = GOOD

   Two months of Obama trying to repair the mess Bush made = BAD

   Okay. Got the memo.

2. Bob K writes
   April 2nd, 2009 1:02 pm

   BDIT. That’s all you’ve got to say. That’s all you can say.

   As for me, I have a very long and vocal record of standing against Bush’s spending, so the hypocrisy charge doesn’t stick.

3. Sean Braisted writes
   April 2nd, 2009 3:26 pm

   The Republicans submit a budget that radically changes the tax code in favor of the wealthy, eliminating inheritance taxes, capital gains taxes, and reduces the top marginal tax rate to 25%; privatizes medicare; and freezes discretionary spending…and this is Obama light?

   The problem is you can’t realistically cut spending to match our revenues without laying off millions of Government workers, and blowing up the social safety net just when the Americans need it the most. I too wish the Republicans would submit such a budget, but even they aren’t that stupid.

4. Bob K writes
   April 2nd, 2009 3:30 pm

   If we can’t, by your admission, get revenues to match spending, why do you expect that people will want to continue to fund our debt? At some point, a system propped up by debt collapses under its own weight. Go look at the California housing market to see the result.

5. Mark Rogers writes
   April 2nd, 2009 3:37 pm

   Bob,

   The economic plan of President Obama is based on dynamic scoring, something that Democrats always believed didn’t work when applied to tax cuts but apparently works when applied to rail lines to Las Vegas and other porcine investments.

6. spaz writes
   April 2nd, 2009 4:09 pm

   How come it is ok for private business to run deficits and have debt, but not the government?

7. Sean Braisted writes
   April 2nd, 2009 4:10 pm

   Bob,

   Sorry, I was actually referring to the here and now, as in, its impossible (or at least not wise) to match revenue to spending during a deep recession when countless more people than normal are reliant on the social safety net to keep them afloat.

   From what I understand, we had met revenues to spending about a decade ago. But, in all likelihood, the downfall of our nation’s status as superpower will be the decades worth of sky-high deficits.

8. Mark Rogers writes
   April 2nd, 2009 5:14 pm

   Spaz,

   No one is suggesting that the federal government cannot or should not have some debt. But the problem we face is that the President’s plans will result in additional trillions in debt. This raises the question of whether the proposed stimulative impact will counter the inevitable inflation and other costs for this policy.

   The assumption underlying the President’s plan seems to be that this is what worked in the Great Depression and that we only need to follow the same steps.

   The problem is that the New Deal didn’t end the Depression and it did not prepare America for industrial dominance in the post-war era. It was rearmament and the full economic mobilization that brought us out of the Depression and our successes after the war owed much to the lack of foreign competition thanks to the devastation of WWII.

   Put simply, it is not at all certain that, like the French military from 1870 through 1940, we are well prepared to fight the last war. And that turned out so well for the French.

9. Bob K writes
   April 2nd, 2009 6:11 pm

   Spaz,

   It is okay for private industry, people, and governments to have debt. Affordable debt. The third highest expense in the budget, nearly a half-trillion dollars last year was interest on the debt.

   We are currently at insanely low levels interest rates. If we go just to normal levels we’re going to see the cost of the annual interest on the debt become the most expensive item in the budget. If the Fed misses the timing on cutting back on the money supply, we’ll zoom right past normal interest rates into hyper-inflation. We don’t even have to go to Argentina territory to have a serious problem. If we get to just 12% to 15% levels we saw thirty years ago, over 50% of tax receipts will go to paying interest on the debt. We only bring in about 2.2 Trillion in taxes right now, and I’m sorry to break it to you, actual tax receipts as a result of new tax increases will woefully underperform expectations. That’s always the case–especially in an economic downturn.

   Now, going back to your private/public question, let’s look at our budget as if the government was a household. When you’re at a point where 40% of your income goes to pay the monthly minimum on your visa bill and you’re still running up the Visa because your expenses exceed income, you think you might have a problem? We’ve basically got an ARM loan on our national debt. If we’re smart we’re locking in the debt into lots of 10 and 30 year notes. I’ll have to check the numbers to see if we are, but when public debt comes up for refinancing after we get out of this temporary period of stimulative interest rates, we could get seriously screwed with higher interest payments.

   That’s why China basically told us no more. They’re afraid that we’re going to “default” on our loans by purposefully devaluing the dollar. That’s a tricky tightrope walk to pull off even if we do it right. On top of that, one thing I guarantee you we’ll see if we try that is that the rest of the world will pick something other than the dollar to be a reserve currency.

   We already can’t afford what we’re buying and it’s just getting worse.