Because NOTHING happened in 2011Quote:
Originally Posted by GGT
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Because NOTHING happened in 2011Quote:
Originally Posted by GGT
More selective memory and revisionist history? :rolleyes:Quote:
Originally Posted by RandBlade
How much was spending cut by in 2011? In which departments. Please feel free to show comparative figures in 2010/12Quote:
Originally Posted by GGT
Hmmm, maybe we go back to the Clinton era tax rates...if we also go back to the Clinton era spending? Deal?
Sign me up to that :up:
Still waiting for GGT to come back with what was cut in 2011. From the sound of it, it must have been a heck of a lot. I must have missed it with my selective memory so can you fill in the gaps until she returns?
http://business.financialpost.com/20...ricas-economy/
Political consequences of such a stunt?
Yeah, just mint a coin to get around the pesky congress critters...like THAT wont bite you in the ass.
Economic consequence probably would be the overnight evaporation of the status of the US dollar as a reserve currency.Quote:
Originally Posted by Aimless
"Myth 1 & 2" would be facts not myths.Quote:
Originally Posted by Aimless
1. Why? Assuming the govt's spending/payments continue in much the same way as they always have I mean.Quote:
Originally Posted by Hazir
2. Is it that easy to find a suitable reserve currency overnight?
1. The dollar would collapse and hyperinflation would ensue. Confidence would evaporate from the American economy and interest rates would soar. Best case scenario: major recession to make '08 looks like a hiccup. Worst case scenario: Before long Americans look enviously upon the Greeks.
2. It will happen, has happened before.
Their argument is that those are myths (more or less) because the money won't be injected directly into the US economy.Quote:
Originally Posted by RandBlade
Which would work great if we were idiots who couldn't see 2 steps ahead. We're not.Quote:
Originally Posted by Aimless
It makes no difference if the money is injected directly or indirectly (and this is still pretty direct) as the money will still be injected. Money supply will increase which will increase inflation
However the biggest issue isn't just money supply but confidence. Once the printing presses are turned on like that investors will pull money out of the USA crashing the dollar (and the economy). A plummeting dollar will make imports more expensive (oil and so much more) causing further increases in inflation.
How will the supply of actively circulating money be increased immediately and significantly by placing a trillion dollar platinum coin in bank? How would the consequences of minting such a coin compare to the consequences of hitting the debt ceiling or defaulting?
If the government creates money and spends it (rather than borrowing it from existing money) then the supply of currency is expanded. Just because there's an intermediate step doesn't make it any better than a helicopter drop.Quote:
Originally Posted by Aimless
The consequences would be worse than hitting the ceiling and not defaulting by practically any other means, it'd be quite comparable to defaulting (which would also crash the currency and thus create inflation).
But hang on. We already have a huge thriving system of creating and spending money that doesn't "exist". Moreover, the US has already weathered more real increases in the actively circulating money supply in the past three years without anything resembling hyperinflation. Thirdly, why would this constitute govt. creating and spending money in a particularly disruptive way? All that would happen is that the govt. would not have to bother with raising the debt "ceiling". In practice it is equivalent to congress raising the debt ceiling and the govt. continuing to do business as usual. It would be far less disruptive than actually hitting the debt-ceiling or making the concessions apparently required to avoid that.Quote:
Originally Posted by RandBlade
One might argue that creditors and investors will worry about the govt's freedom to engage in more deficit spending but why would they worry more about that than about the alternatives currently available?
I'm not suggesting for even a moment that this would constitute good policy, but it seems to be a reasonably unreasonable solution answer to an unreasonable threat.
I believe idea was that the surpluses (excluding Medicare and Social Security) were likely to mostly continue, so why should the government hoard money from taxpayers. Given the smaller-government ideological bent, it made sense. But the "operating budget" of the US got out of whack due to the wars, a major recession and the election of a Democratic president willing tap the debt markets to fuel a spending spree.*Quote:
Originally Posted by EyeKhan
*It's worth pointing out that he's willing and able to tap the debt markets to such an extraordinary degree because of the recession making the market for US debt so cheap.
Because our current fiscal trajectory is a lot worse than gambling. Debt crises like ours are easy to spot in advance, but debt crunches tend to happen fast.Quote:
Originally Posted by GGT
Not true. Not even the government itself can under our system without cost merely create money with no recourse. Even Quantitative Easing has its recourse - which turning on the printing press does not.Quote:
Originally Posted by Aimless
Because again none of these were remotely equivalent to merely printing $1 trillion. The link even itself rolls its eyes at the idea of printing $16trillion but apparently $1 trillion is safe. No.Quote:
Moreover, the US has already weathered more real increases in the actively circulating money supply in the past three years without anything resembling hyperinflation.
Printing money to finance government expenditure is against the law in all major economies for a reason. To do this would be against US law. To break that do it would destroy all faith and credit in the whole structure we have.Quote:
Thirdly, why would this constitute govt. creating and spending money in a particularly disruptive way?
Not true again. There is a major point of principle that the government has to (one way or another) raise its funds. In practice if the debt ceiling is raised then its raised from loans with creditors, not just printed.Quote:
All that would happen is that the govt. would not have to bother with raising the debt "ceiling". In practice it is equivalent to congress raising the debt ceiling and the govt. continuing to do business as usual. It would be far less disruptive than actually hitting the debt-ceiling or making the concessions apparently required to avoid that.
No they would worry that the dollar is now worthless as an infinite amount of currency can just be printed to fund unlimited expenditure. Any dollar-denominated assets would not be worth what they say.Quote:
One might argue that creditors and investors will worry about the govt's freedom to engage in more deficit spending but why would they worry more about that than about the alternatives currently available?
I'm not suggesting for even a moment that this would constitute good policy, but it seems to be a reasonably unreasonable solution answer to an unreasonable threat.
Turning on the printing press is the way of the Weimar Republic.
An interview on a right-wing editorial page with the Republican speaker of the House, but still illuminating due to the general bias the media has when reporting on this to portray the Republicans as "radical" or "obstructionist".
Quote:
OPINION | January 6, 2013, 6:21 p.m. ET
The Education of John Boehner
Leverage for the next clash: GOP willingness to let the spending sequester take effect.
By STEPHEN MOORE
What stunned House Speaker John Boehner more than anything else during his prolonged closed-door budget negotiations with Barack Obama was this revelation: "At one point several weeks ago," Mr. Boehner says, "the president said to me, 'We don't have a spending problem.' "
I am talking to Mr. Boehner in his office on the second floor of the Capitol, 72 hours after the historic House vote to take America off the so-called fiscal cliff by making permanent the Bush tax cuts on most Americans, but also to raise taxes on high earners. In the interim, Mr. Boehner had been elected to serve his second term as speaker of the House. Throughout our hourlong conversation, as is his custom, he takes long drags on one cigarette after another.
Mr. Boehner looks battle weary from five weeks of grappling with the White House. He's frustrated that the final deal failed to make progress toward his primary goal of "making a down payment on solving the debt crisis and setting a path to get real entitlement reform." At one point he grimly says: "I need this job like I need a hole in the head."
The president's insistence that Washington doesn't have a spending problem, Mr. Boehner says, is predicated on the belief that massive federal deficits stem from what Mr. Obama called "a health-care problem." Mr. Boehner says that after he recovered from his astonishment—"They blame all of the fiscal woes on our health-care system"—he replied: "Clearly we have a health-care problem, which is about to get worse with ObamaCare. But, Mr. President, we have a very serious spending problem." He repeated this message so often, he says, that toward the end of the negotiations, the president became irritated and said: "I'm getting tired of hearing you say that."
With the two sides so far from agreeing even on the nature of the country's fiscal challenge, making progress on how to address it was difficult. Mr. Boehner became so agitated with the lack of progress that he cursed at Senate Majority Leader Harry Reid. "Those days after Christmas," he explains, "I was in Ohio, and Harry's on the Senate floor calling me a dictator and all kinds of nasty things. You know, I don't lose my temper. I never do. But I was shocked at what Harry was saying about me. I came back to town. Saw Harry at the White House. And that was when that was said," he says, referring to a pointed "go [blank] yourself" addressed to Mr. Reid.
Mr. Boehner confirms that at one critical juncture he asked Mr. Obama, after conceding on $800 billion in new taxes, "What am I getting?" and the president replied: "You don't get anything for it. I'm taking that anyway."
Why has the president been such an immovable force when it comes to cutting spending? "Two reasons," Mr. Boehner says. "He's so ideological himself, and he's unwilling to take on the left wing of his own party." That reluctance explains why Mr. Obama originally agreed with the Boehner proposal to raise the retirement age for Medicare, the speaker says, but then "pulled back. He admitted in meetings that he couldn't sell things to his own members. But he didn't even want to try."
Mr. Boehner is frustrated that Republicans were portrayed by the press as dogmatic and unyielding in these talks. "I'm the guy who put revenues on the table the day after the election," he says. "And I'm the guy who put the [income] threshold at a million dollars. Then we agreed to let the rates go up, on dividends, capital gains as a way of trying to move them into a deal. . . . But we could never get him to step up," Mr. Boehner says with a shrug. Negotiations with the White House ended in stalemate when "it became painfully obvious that the president won't cut spending."
Once the talks broke down, the eventual scaled-back deal with no spending cuts was brokered by Vice President Joe Biden and Senate Minority Leader Mitch McConnell, with Mr. Boehner on the sidelines. He says that after the tax package passed the Senate, the House Republican caucus debated two alternatives. One was to amend the Senate bill by attaching spending cuts, and the other was to vote up or down on the Senate bill.
"We were already off the cliff," he says of the rushed Jan. 1 vote, and he feared that a no vote would do "serious damage to the economy." He denies twisting arms to win passage. Even though a majority of Republicans voted no, and he took flak from conservative groups as a sellout, "in the end, most of our members wanted this to pass, but they didn't want to vote for it."
In hindsight, what does he think was his biggest strategic mistake? "What I should have done the day after the election was to come out and say: The House has done its work. The House passed a bill that replaced the sequester with real spending cuts. The House passed a plan extending all of the current tax rates. We passed a budget. We call upon the Senate to do their work."
The left has been crowing that it walked away with the crown jewels and forced Republicans to cave on their "no new taxes" principle. Mr. Boehner sees things differently: "The law of the land was that all of the rates were going up January 1, period. So the question was, were we going to cut taxes by $3.7 trillion."
He's no cheerleader for the final deal—he derides the special-interest corporate-tax provisions as containing "an awful lot of garbage" and grouses about "extending unemployment without further reforms"—but he defends it as the best bad outcome that could have been expected: "Who would have ever guessed that we could make 99% of the Bush tax cuts permanent? When we had a Republican House and Senate and a Republican in the White House, we couldn't get that. And so, not bad."
Where does the fiscal debate go from here? The speaker is adamant on two points: First, Republicans won't be agreeing to any more tax increases during the next two years. "The tax issue is resolved," he says, and it will be discussed only in the context of a broader debate about tax reform—specifically, lower rates. He dismisses the president's declaration that any future budget cuts will have to be "balanced" with more tax hikes.
Second, Mr. Boehner says he won't engage in any more closed-door budget negotiations with the White House, which are "futile." He adds: "Sure, I will meet with the president if he wants to," but House Republicans will from now on proceed with establishing a budget for the year following what is known as "regular order," and they will insist that Harry Reid and Senate Democrats pass a budget—something they haven't done in nearly four years—before proceeding.
The real showdown will be on the debt ceiling and the spending sequester in March. I ask Mr. Boehner if he will take the debt-ceiling talks to the brink—risking a government shutdown and debt downgrade from the credit agencies—given that it didn't work in 2011 and President Obama has said he won't bargain on the matter.
The debt bill is "one point of leverage," Mr. Boehner says, but he also hedges, noting that it is "not the ultimate leverage." He says that Republicans won't back down from the so-called Boehner rule: that every dollar of raising the debt ceiling will require one dollar of spending cuts over the next 10 years. Rather than forcing a deal, the insistence may result in a series of monthly debt-ceiling increases.
The Republicans' stronger card, Mr. Boehner believes, will be the automatic spending sequester trigger that trims all discretionary programs—defense and domestic. It now appears that the president made a severe political miscalculation when he came up with the sequester idea in 2011.
As Mr. Boehner tells the story: Mr. Obama was sure Republicans would call for ending the sequester—the other "cliff"—because it included deep defense cuts. But Republicans never raised the issue. "It wasn't until literally last week that the White House brought up replacing the sequester," Mr. Boehner says. "They said, 'We can't have the sequester.' They were always counting on us to bring this to the table."
Mr. Boehner says he has significant Republican support, including GOP defense hawks, on his side for letting the sequester do its work. "I got that in my back pocket," the speaker says. He is counting on the president's liberal base putting pressure on him when cherished domestic programs face the sequester's sharp knife. Republican willingness to support the sequester, Mr. Boehner says, is "as much leverage as we're going to get."
That leverage, he reasons, is what will force Democrats to the table on entitlements. "Think of it this way. We already have an agreement [capping] discretionary spending for 10 years. And we're already in our second year of it. This whole discussion on the budget over the next several months is going to be about these entitlements."
Given the bruising of the past several weeks, Mr. Boehner is surprisingly optimistic about getting a deal done on corporate and personal income-tax reform. "The president understands the need for tax reform," he says. "The president admitted . . . in the first meeting that we needed to do tax reform, and he was for a tax reform process that would lower rates."
Mr. Boehner sees Republicans with two goals: lowering tax rates and closing loopholes, as happened in 1986, and equalizing tax rates between small businesses and large corporations. His optimism that Democrats will agree to that framework seems Pollyannish since they are now advocating closing loopholes to raise revenues—without lowering rates.
The driving passion for Mr. Boehner in these fiscal debates is his conviction that trillion-dollar deficits are sapping the country of its energy and prosperity. When I ask him when the impact of this debt will start to be felt, he says: "It's already here today. It's killing our economy. It's causing investors to sit on their cash. They're afraid to invest. It's a wet blanket on top of our economy."
He sees debt as almost a moral failing, noting that when he grew up in a "little middle-class, blue-collar neighborhood" outside of Cincinnati, "nobody had debt. It was unheard of. I just don't do debt."
Mr. Boehner says that the only way to build long-term economic growth is to reduce the nation's debt through entitlement and tax reform. But can such a deal be achieved with a president who doesn't even think that Washington has a spending problem? "He believes in the power of government," Mr. Boehner answers. "I believe in the power of the American people. It is really that simple." And really that difficult.
Mr. Moore is a member of the Journal's editorial board.
http://online.wsj.com/article/SB1000...234902106.html
Here's to hoping the Republicans finally man up and actually force spending cuts. Ie cuts that scale back federal budget to no greater than 20% of GDP.
It would be a lot easier to take Republicans seriously if they put up a web site dedicated to spending cuts they endorse.
The problem is - Republicans have done that and its not been very successful for them. Paul Ryan and Rand Paul both issues plans with *specific* cuts. Of course the media howled they were going to kill babies and throw seniors over a cliff. Of course the more spineless Republicans ran from the plan. And *of course* Democrats used it as an opportunity attack Republicans. This is why politicians hate getting into specifics because they paint giant targets on their back. And rarely does it work out in their favor.Quote:
Originally Posted by Being
What matters is votes. What matters is preventing anything else from getting done until the budget is gutted and entitlement reform is a reality. The Republicans own the House of Representatives right now, if they were serious about fixing this country they would refuse to pass a budget that wasn't balanced. They would refuse to kick the can down the road and they would refuse to make deals on the automatic cuts.
Sadly I think the chances of that happening are under 1% :(
http://roadmap.republicans.budget.house.gov/Quote:
Originally Posted by Being
Agree or disagree with the plan itself, but the Democrats have done nothing close to this in terms of making a bold proposal that involves hard choices.
Lots of talk about spending and ways of changing the revenue stream, but not one word about cuts. I call them Democrats with higher standards.Quote:
Originally Posted by Dreadnaught
20%? Where'd you get that figure from? Pull it out of your backside?Quote:
Originally Posted by Lewkowski
How about instead of suggesting we get immediately back to the 1940s, how about to start with we reverse the mess that Bush Jr made and Obama has exacerbated and get it back to below 30% like it was when Clinton left office?
http://blogs-images.forbes.com/joshb...GDP-chart1.png
It is a pretty bad sign that the current spending percentage now is higher than it was in WWII :rolleyes:
That's not necessarily a fair comparison. After all, they're buying a great many things of greater value with the extra money, eg. the world's best healthcare, education and aircraft carriers for an additional 160 million people with a higher average age.
The extra people doesn't make a difference since we're talking percentage. If you were to compare actual spending I'm sure even in real terms its well, well over 100% of what was '45 GDP.
Sorry, I misunderstood what you meant by saying "nothing happened". I was referring to what happened after the 2010 congress (Tea Party and extreme right wing radicals) used the debt ceiling as a blunt instrument to push their political agenda. That's when the US lost its AAA credit rating for the first time in history....Quote:
Originally Posted by RandBlade
Would that include spending at the Pentagon, CIA, FBI, Immigration, ATF, Veterans Affairs and general "military"....as well as NASA and NOAA, R & D and satellite systems?Quote:
Originally Posted by Veldan Rath
What's that got to do with today's politicians using our debt ceiling as reckless and foolish bargaining chip? :confused:Quote:
Originally Posted by Dreadnaught
Yep. I can live with that as a minor reset point and work from there.Quote:
Originally Posted by GGT
See I can compromise...can you?