US Debt Limit concerns

[Guest VAL9000]

Your right the question is do we want gov't to spend 25%+ of GDP (like Europe) or do you want to spend 18 to 20% like we have historically spent.  The reason for the tax increases is to support the 25%+ spending.  This is the reason Repubs don't want to increase taxes is to support the 18-20 model not the 25+ model.  Once you determine the model you want, then you can ask who pays for it.  The President is combining the issues to push his 25% plan by at first taxing the rich.  As to Boles Simpson, this is not the President's plan.  If it was, how do you explain his budget proposal?  If I have learned one thing about Obama, it is watch his actions not his words.  He is very good smooth talker.

 

I don't want to wade too far into the political debate here, but this doesn't really resonate with what I've read.  A significant chunk of today's deficit comes from the wars and the Bush-era tax cuts.  That's well over 3 trillion dollars, or about 25% of the total deficit.  This is a different measure than the one you quote, but the point is the same,  namely - how can a party that supports this level of spending / revenue reduction for a solid decade turn around and spout off on prudent spending and measured debt increases?  I mean, these are the same group of people who approved a debt limit increase almost every year for eight straight years.  Where was this fiscal ideology then?

 

It's pretty clear to me that the republicans are using their control over the debt ceiling to wrangle what they can out of the political situation.  This isn't necessarily bad or unexpected but let's not get crazy and start to think that there's some kind of grand political ideology at work here.  This is just unbridled opportunistic politics.  ... politics which happen to invade my otherwise pleasant work day and completely screw up the markets, but I'm ok with that because I don't believe there is any choice except to raise the debt ceiling.  And once that happens, I'll spend my days counting money made.

 

[Packer16]

Good points.  All I am pointing out is there is logic in what is being done by both sides and in the end we need to decide how much of GDP we want the gov't to spend (on wars, social programs or whatever else).  We all have to do this a personal level and the gov't in long-term has to do the same.

 

Packer

[rjstc]

  Another question that comes from this. No matter which way they go. Whether they raise taxes one way or another or cut spending. Does it sound like a big sucking sound coming out of the economy? How does it affect what is a pretty weak recovery?

[Tim Eriksen]

VAL9000

You are using the word deficit when you should be using debt.  The deficit relates to each year.  The debt is the total over time.  You are correct about how much the national debt rose during Bush's time in office.  You do miss one important point.  The Republicans in office during Bush's time starting spending too much which is why they loss support among their base.  The new class of Republicans (i.e. recently elected), which is a large number, is unlikely to do that.  They were elected on the basis that they would not support additional spending or taxes.  So it is not the same people who made the decisions for eight straight years.  Same party yes, same people in office, not really. While some Republicans in Washington are certainly acting out of opportunism, typically those who have been there for a long time, you would be wrong to not see that a large group is acting out of political ideology.   

 

The comments about whether spending should be 25% or 20% are exactly on target.  That is the real debate.  Under Bush it was at 19 to 20% until 2009 (which is only partially his) where it jumped to 25%.  Do we as a country want it to stay at that level of revert to 20%?

 

The sad part is that both parties are still short of where they need to be.  They need to realize that recessions cause reduced receipts and increased expenditures, thus big deficits.  When they have surpluses, and they need to have them to offset the fiscal impact of deficit years, they need to pay down debt (not cut taxes (Republican) or increase spending (Democrats)) so they can better manage their long term finances.  Just like us, the government needs to save in the fat years to better survive in the lean years. 

 

Should the debt limit be the vehicle to have this debate?  Probably not.  However, if the Republicans weren't using the debt limit to have the debate I doubt we would be having the same level of debate (and clarifying the differences between the two parties).  We cannot run trillion dollar deficits very long without severe consequences. 

[zarley]

Only a few months ago (April) the spending in question was passed with overwhelming Republican support.

 

House vote:  Y-260 vs N-167

http://www.govtrack.us/congress/vote.xpd?vote=h2011-268

 

Senate vote:  Y-81 vs N-19

http://www.govtrack.us/congress/vote.xpd?vote=s2011-61

 

How many of the Republicans currently waving their hands about the debt are among the 200+ Republicans who voted for that spending?  If I had to guess, I'd guess most of them (e.g., Cantor and Boehner).  They're acting in bad faith and putting the financial system in peril with their behavior. 

 

 

[Guest VAL9000]

You are using the word deficit when you should be using debt.  The deficit relates to each year.  The debt is the total over time.  You are correct about how much the national debt rose during Bush's time in office.  You do miss one important point.  The Republicans in office during Bush's time starting spending too much which is why they loss support among their base.  The new class of Republicans (i.e. recently elected), which is a large number, is unlikely to do that.  They were elected on the basis that they would not support additional spending or taxes.  So it is not the same people who made the decisions for eight straight years.  Same party yes, same people in office, not really. While some Republicans in Washington are certainly acting out of opportunism, typically those who have been there for a long time, you would be wrong to not see that a large group is acting out of political ideology.   

Tim, you're right, I used the wrong word!  Sorry about that - I meant debt.  And you're right, it's not the same group of people so we shouldn't expect the same behaviour..

 

The sad part is that both parties are still short of where they need to be.  They need to realize that recessions cause reduced receipts and increased expenditures, thus big deficits.  When they have surpluses, and they need to have them to offset the fiscal impact of deficit years, they need to pay down debt (not cut taxes (Republican) or increase spending (Democrats)) so they can better manage their long term finances.  Just like us, the government needs to save in the fat years to better survive in the lean years. 

I couldn't agree with you more on this.  It seems that there's a basic lack of understanding when it comes to how the business cycle works.

 

Alright I'm going to exit this debate.  I said my bit and I'm happy to have others who are more politically knowledgeable hash this out :D