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Political Discussion Thread (With Rules)


Simon

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1 hour ago, megaplayboy said:

We can run deficits of that size indefinitely because our economy is likely to grow faster than the debt, at that pace.  Larger GDP = more tax revenue = adequate funds to service the debt.  Oversize deficits are a problem because they make the debt grow faster than the GDP does.  But there are plenty of successful countries that regularly run modest deficits with no problem.

 

 

The problem isn't adequate funds to service the debt.

 

The problem is that you are assuming that other countries will be willing to continue to loan us trillions of dollars indefinitely at affordable interest rates no matter what happens.

 

 

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The current American administration will not be running modest deficits. It's significantly cut tax revenue while significantly boosting defense spending. It's also not a matter of other countries calling in American loans. They're unlikely to do so as that would greatly destabilize international economies. It's that America is already paying a lot in interest on those loans, which also contributes to the deficit. If the government doesn't boost revenue or cut spending, it will have to borrow more money to cover expenses, which means more debt, and more interest paid, in an ever-growing spiral. While if the United States defaults on those loans, other countries won't risk lending them more money.

 

This government is ideologically opposed to raising taxes. If they won't reduce defense spending the only place to get more money is to take it out of social services -- health care, education, social security, welfare, unemployment insurance, other programs to benefit the poor -- which many in the Republican Party have already stated they favor.

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BTW in case anyone isn't keeping track, the national debt of the United States exceeded $22 trillion back in February. Two-thirds of that is owned by the American public. IOW the American government isn't paying it down, its citizens are, from their investments, retirement funds, etc. They're also the ones who would be hurt most if the US government defaults on its debts. https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124

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36 minutes ago, Lord Liaden said:

The current American administration will not be running modest deficits. It's significantly cut tax revenue while significantly boosting defense spending. It's also not a matter of other countries calling in American loans. They're unlikely to do so as that would greatly destabilize international economies. It's that America is already paying a lot in interest on those loans, which also contributes to the deficit. If the government doesn't boost revenue or cut spending, it will have to borrow more money to cover expenses, which means more debt, and more interest paid, in an ever-growing spiral. While if the United States defaults on those loans, other countries won't risk lending them more money.

 

This government is ideologically opposed to raising taxes. If they won't reduce defense spending the only place to get more money is to take it out of social services -- health care, education, social security, welfare, unemployment insurance, other programs to benefit the poor -- which many in the Republican Party have already stated they favor.

 

Both parties are addicted to spending.  Raising taxes won't help because that money (and more) will immediately be spent.

 

I can tell because I've been paying into social security for over 3 decades and all of that money is already gone.  Not a cent of what I was promised has been saved.  It's entirely dependent on current year tax revenue.

 

I honestly feel like we could raise IRS revenues to 5 trillion a year and we would still run a deficit after a year or two.  It's quite easy to spend money that you haven't earned and our government has been proving that for decades on end.

 

It's always the same old drum beat.  Sorry we did such a crappy job with this program.  What we need to do it right is MORE of your money and MORE control over your life.  Then we'll do it right...

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4 hours ago, Lord Liaden said:

The current American administration will not be running modest deficits. It's significantly cut tax revenue while significantly boosting defense spending. It's also not a matter of other countries calling in American loans. They're unlikely to do so as that would greatly destabilize international economies. It's that America is already paying a lot in interest on those loans, which also contributes to the deficit. If the government doesn't boost revenue or cut spending, it will have to borrow more money to cover expenses, which means more debt, and more interest paid, in an ever-growing spiral. While if the United States defaults on those loans, other countries won't risk lending them more money.

 

 

A tiny nit-pick on an otherwise excellent point.

 

The US bonds aren't subject to being "called in". They mature on a set schedule.

 

However the average time length of a US bond from the time it is issued until the day it matures and has to be paid back is only 69 months.  https://www.quandl.com/data/USTREASURY/MATDIS-Maturity-Distribution-and-Average-Length-of-Marketable-Interest-Bearing-Public-Debt

 

That means the $22 trillion has to be refinanced on a very rapid time frame as the old Treasury bonds mature and those bondholders have to be repaid then new Treasury bonds have to be sold to someone who is willing to buy them.

 

That isn't exactly the same as if countries could simply call in the debt (which the US government doesn't have the money to repay). But the effect would rapidly be much the same if other countries chose to not purchase new US bonds. The US government still wouldn't have the money to cover its obligations: it would just be a slower rolling crisis as bonds matured each month and not enough new loan money came in to the US Treasury so the old bondholders could be paid off.

 

 

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5 hours ago, archer said:

 

 

The problem isn't adequate funds to service the debt.

 

The problem is that you are assuming that other countries will be willing to continue to loan us trillions of dollars indefinitely at affordable interest rates no matter what happens.

 

 

If we're running smallish deficits, why not?  We're not the only first world country to engage in deficit spending.  It's kind of the norm, actually.

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1 hour ago, megaplayboy said:

If we're running smallish deficits, why not? 

 

The problem is that you are assuming that other countries will be willing to continue to loan us trillions of dollars indefinitely at affordable interest rates no matter what happens.

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12 minutes ago, archer said:

 

The problem is that you are assuming that other countries will be willing to continue to loan us trillions of dollars indefinitely at affordable interest rates no matter what happens.

There's a world of difference between needing to sell a trillion a year in bonds and 50 billion in bonds.  50 billion is 5 percent of a trillion, and 0.25% or less of the current national debt.  The GDP grows at 1-2% per year.  If the debt is growing at a rate slower than the GDP, then the debt-to-GDP ration will actually go down over time, not up.  The raw number matters a lot less than the ratio.   

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According to the US Congressional Budget Office, the projected federal budget deficit for the United States in the year 2019 is $897 billion. That's up from $779 billion in 2018. Every projection I've seen assures that deficit total will continue to rise over the next few years.

 

We are a long way from "modest deficits."

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I don't care as much about the size of the deficit as much as what it is used for.  Basic economics shows that deficit spending can be used to boost economic performance through investments in workforce and infrastructure.  This increases economic efficiency overall and increases demand, thereby paying for themselves at least partially.  Conversely, supply side economics, with which we have been experimenting since the eighties and of which the recent tax giveaway is only the most recent example, has been conclusively proven not to work.  When given massive tax breaks, corporations buy back their stocks, and wealthy people dabble in real estate.  (Seriously, I work closely enough with some wealthy people to see that they literally can't think of things to do with their figurative piles of cash.)  These only increase income inequality and impede economic growth.

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2 hours ago, Lord Liaden said:

According to the US Congressional Budget Office, the projected federal budget deficit for the United States in the year 2019 is $897 billion. That's up from $779 billion in 2018. Every projection I've seen assures that deficit total will continue to rise over the next few years.

 

We are a long way from "modest deficits."

Sure.  My point is that the fact of a deficit matters less than its magnitude does.  We shouldn't obsess over "balancing the budget" so much as "reducing the deficit to a manageable level".  

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On ‎4‎/‎7‎/‎2019 at 9:44 PM, archer said:

Conspiracy theorists keep their Ginsburg death claims alive

https://thehill.com/regulation/court-battles/437661-conspiracy-theorists-keep-their-ginsburg-death-claims-alive

 

She's alive! She's dead! She showed up in public! The photos of her in public are doctored!

 

Fun for everyone!

 

Weekend at Ruthie's

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2 hours ago, megaplayboy said:

Sure.  My point is that the fact of a deficit matters less than its magnitude does.  We shouldn't obsess over "balancing the budget" so much as "reducing the deficit to a manageable level".  

 

I hope you're patient, then, 'cause a manageable level is fading in the rear-view mirror.

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4 hours ago, Old Man said:

I don't care as much about the size of the deficit as much as what it is used for.  Basic economics shows that deficit spending can be used to boost economic performance through investments in workforce and infrastructure.  This increases economic efficiency overall and increases demand, thereby paying for themselves at least partially.  Conversely, supply side economics, with which we have been experimenting since the eighties and of which the recent tax giveaway is only the most recent example, has been conclusively proven not to work.  When given massive tax breaks, corporations buy back their stocks, and wealthy people dabble in real estate.  (Seriously, I work closely enough with some wealthy people to see that they literally can't think of things to do with their figurative piles of cash.)  These only increase income inequality and impede economic growth.

 

But using a budget deficit constructively is severely hampered when a big and growing portion of the budget goes to paying interest on the national debt. The US isn't in a position to keep increasing the deficit. And almost every economist I read points out that it's not necessary. The economy was already strong and growing, it didn't need further stimulus. Certainly not at the cost of adding to the debt burden, which the (unneeded) Trump tax cuts have exacerbated.

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Of course it didn't need further stimulus.  The tax cut was nothing more than a giveaway to the GOP paymasters.  They hardly even bothered to pretend that trickle down would help average Americans at all.  Trump made the blatantly ridiculous claim that it would cause GDP to grow 6%, which (surprise!) has not occurred; otherwise there was just a frantic rush to get it passed before Christmas.

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We could spend a ton of money to refurbish our crumbling infrastructure and bring it up to 21st Century standards.  While we worry about deficits and whether we have the money to do, well, anything at all, China is steadily working on its massively ambitious Belt and Road Initiative, an international infrastructure project which may wind up costing as much as 8 Trillion(with a T) by mid-century.  The last really ambitious infrastructure project in the US was in the 1950s, when the interstate highway system was built--the inflation adjusted cost of that project today would be over half a trillion.  It would be good for the citizens of the country to remember that 1) we can accomplish really big things when we decide to; and 2) such projects tend to redound to the benefit of our nation and its economic health.  

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13 hours ago, Old Man said:

Basic economics shows that deficit spending can be used to boost economic performance through investments in workforce and infrastructure.

We're past 22 trillion in debt and it certainly doesn't seem like any of the money is going to workforce and infrastructure improvements.  Every time the government wants to siphon off a massive load of cash for infrastructure projects the money just seems to evaporate.

 

Also, basic economics would show that if I make $30,000 a year, but am currently $220,000 in debt I'm in bad !@#$ing shape.

 

That's basically where we are now.

 

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5 hours ago, archer said:

Will Trump Pick Cain if He is Able?

 

GOP senators hope not.

 

https://thehill.com/policy/finance/438127-gop-senators-urge-trump-not-to-pick-cain-for-fed

 

Personally I'm more dubious over him for his bizarre 9-9-9 tax plan back when he ran for president than for his sexual harassment problems.

 

How about his pledge to not sign any bills into laws if they were more than 3 pages long?  Oy!

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