Do our leaders know that the deficit is NOT unsustainable?

[Freeper]

cthulu2016 (7,375 posts)

Do our leaders know that the deficit is NOT unsustainable?


 
Last edited Sat Mar 9, 2013, 01:09 PM USA/ET - Edit history (3)

I really wonder. Does President Obama know that there isn't a deficit problem? Do Democrats in Congress? Do Republican leaders in congress?

We are not spending too much. We are not taxing too little. Our current policies are fine... or rather, they would be fine if we had a normal rate of GDP growth.

That part of our deficit that is unsustainable is caused entirely by the fact that the economy crashed circa 2008 and has grown only slowly since.

Yes, at 1% growth going forward the deficit is unsustainable. But at 1% growth going forward the United States of America itself is unsustainable. At 1% the banking system is unsustainable, the housing market is unsustainable, employment and education and the freaking fire department is unsustainable.

If we assume the US will never recover from the crash of 2008 then the entire going concern we call America is unsustainable. In that scenario the deficit is the least of our worries!

And if we do recover, in GDP growth terms, then there is nothing wrong with the deficit. With healthy but unextraordinary GDP growth the deficit would be growing slower than GDP, and a deficit growing slower than GDP is sustainable. (A literally balanced budget is a pointless and quite probably counter-productive goal. What matters is that the ratio of debt to the size of the economy not be growing.)

All policy should be geared toward increasing GDP (and employment).

The reason the deficit is unsustainable today is because of efforts to fight the deficit.

How could both sides have thought the stimulus in 2009 had to be balanced against the deficit... as if the two things were opposed rather than aligned? Are all our leaders just unable to take any problem seriously?

If the 2009 stimulus had been $2 trillion (my suggestion at the time) the deficit would be less of a problem today than it is. That magnitude of increased government spending was the fiscally responsible course in 2009... it was what an actual deficit hawk would have called for.

(The long-term deficit picture is a different matter, but that is entirely about healthcare costs and can only be solved with things pertaining directly to healthcare costs—most likely single-payer and the rationing of care that must attend single-payer.)

I do not expect people to believe that the deficit would disappear as a problem if all our policies stayed the same while GDP returned to normal, but it is true.

And don't take my word for it. Professor Krugman tries (for the umpteenth time) to explain it:

...it’s highly misleading just to focus on the raw deficit numbers (ONE TRILLION DOLLARS), for two reasons. First, fluctuations in the deficit tend to be driven by the business cycle; when the economy slumps, revenues fall and some kinds of expenditure, like unemployment benefits, rise. You want to take out these “automatic stabilizers” when assessing the underlying state of the budget.

Second, we don’t have to balance the budget to have a sustainable fiscal position; all we need is to ensure that debt grows more slowly than GDP.

So CBO is now out with its latest report on automatic stabilizers. It estimates that in fiscal 2013 these stabilizers will amount to $422 billion, accounting for just about half of a projected $845 billion deficit. So the cyclically adjusted deficit will be $423 billion.

How does this compare with the deficit consistent with fiscal sustainability? Well, there’s about $11.5 trillion in federal debt in the hands of the public. A reasonable, indeed fairly conservative guess is that nominal GDP will in future grow by 4 percent per year, half from real growth and half from inflation. This means that the sustainable deficit is 4 percent of $11.5 trillion, or $460 billion. Hey, we’re there!

...

http://krugman.blogs.nytimes.com/2013/03/09/gone-deficit-gone/

http://www.democraticunderground.com/10022482332

If anyone believes for a second that if we raised taxes that it would help one bit is insane.
What happens when we raise taxes is the idiots in DC see more money coming in so for every new dollar projected to come in they plan on spending 3 more dollars. Then in 6 months they say the tax hikes weren't big enough, rinse and repeat.

Until the morons in DC learn to balance a freaking check book we are doomed.

[DumbAss Tanker]

the economy crashed circa 2008 and has grown only slowly since.

Now I wonder what could be causing that...

 

[Freeper]

Now I wonder what could be causing that...

 

The rethuglicans is what. 

[Carl]

You just can not be that stupid without working on it.

[Celtic Rose]

This is like somebody saying "It is okay for me to keep using credit cards with $100,000 in debt because I know I'll get a 2% raise each year."

[Tucker]

I read it earlier and it made my head hurt. As a public service to CC, I left it alone, hoping that it would die a quick death.

[GOBUCKS]

This is like somebody saying "It is okay for me to keep using credit cards with $100,000 in debt because I know I'll get a 2% raise each year."

That reminds me.

Dennis the Menace has entirely disappeared.

I can think of three reasons. In order of likelihood:

1) Opened another month's worth of credit card statements, turned on the gas, and took a nap.

2) Finally flipped out so badly he was committed involuntarily.

3) Shut it down out of embarrassment at becoming a prominent DUmmy.

Without Dennis, the DUmp boobyhatch has become as deserted as the Old DU.

[98ZJUSMC]

I read it earlier and it made my head hurt.

It does now, too.  Teh stoopid is on the verge of going supernova with this (D)Ummy.  I half expected it to say:  huh-huh-huh the US can just get a payday loan, huh-u-huh-u-huh...

[Bad Dog]

It is just spouting Krugman's insane theory which basically is more debit plus more taxes equals a robust economy.  His latest idiocy is that we can print as much money as we want & the rest of the world has to go along with it (and they bitch about Republicans bullying the rest of the world).  If Krugman were right, I see no reason to have taxes at all since the govt. can just print up whatever they need every year.

[98ZJUSMC]

A reasonable, indeed fairly conservative guess is that nominal GDP will in future grow by 4 percent per year, half from real growth and half from inflation.

Your lightbringer has barely hit 2% much less 3%, that is, before it was adjusted down Unexpectedly! Just who do you think this inflation you wish for, hits the hardest?  Why do you hate the poor?

[Delmar]

cthulu2016 (7,375 posts)

Do our leaders know that the deficit is NOT unsustainable?

Your leaders, cthulu#, the dolts in charge of the democrat party, believe that crap.  Nobody with any brains believes it.  Money does not grow on trees.

[NHSparky]

We are not spending too much. We are not taxing too little. Our current policies are fine

DUmmies,

Let me put this in terms you can (or at least SHOULD) be able to understand.

If your house was run like the government, you'd have an annual income of roughly $60,000 a year (or about 10,000 bags of Cheetos and 10 lbs. of so-so weed.)  HOWEVER, you'd be spending nearly $100,000 per year, not all of it very wisely.  As if that wasn't bad enough, you'd have debt (not assets, mind you--pure DEBT) of nearly $450,000.  Looking ahead, that debt in 4 years would be somewhere on the order of $600,000.  In 10 years, close to $1,000,000, and no change in income.

As yourself again, DUmmies--do YOU see a problem with this?

[Freeper]

DUmmies,

Let me put this in terms you can (or at least SHOULD) be able to understand.

If your house was run like the government, you'd have an annual income of roughly $60,000 a year (or about 10,000 bags of Cheetos and 10 lbs. of so-so weed.)  HOWEVER, you'd be spending nearly $100,000 per year, not all of it very wisely.  As if that wasn't bad enough, you'd have debt (not assets, mind you--pure DEBT) of nearly $450,000.  Looking ahead, that debt in 4 years would be somewhere on the order of $600,000.  In 10 years, close to $1,000,000, and no change in income.

As yourself again, DUmmies--do YOU see a problem with this?

They would simply demand more income and spend more.
That's what the government is doing.

[Tucker]

As Bela Pelosi said, "We don't have a spending problem. We have a revenue problem."

[dane]

That reminds me.

Dennis the Menace has entirely disappeared.

I can think of three reasons. In order of likelihood:

1) Opened another month's worth of credit card statements, turned on the gas, and took a nap.

2) Finally flipped out so badly he was committed involuntarily.

3) Shut it down out of embarrassment at becoming a prominent DUmmy.

Without Dennis, the DUmp boobyhatch has become as deserted as the Old DU.

He's not entirely disappeared, but posts in the men's group more often than anywhere else now.  His latest adventure is boxing lessons, paid in advance and probably on the well-used credit card.

[GOBUCKS]

He's not entirely disappeared, but posts in the men's group more often than anywhere else now.  His latest adventure is boxing lessons, paid in advance and probably on the well-used credit card.

Thanks!! I've never looked at the DUmp "Men's" group. Didn't know they had any. So here's a current thread:

Thu Dec 8, 2011, 07:26 AM
Countdown_3_2_1 (834 posts)

If you could date a totally hot celeb who would it be?
Time and space have no meaning for this question.

http://www.democraticunderground.com/111420

Thu Dec 8, 2011, 08:30 AM
LuvNewcastle (2,910 posts)

4. Jake Gyllenhaal

Thu Dec 8, 2011, 09:47 AM
William769 (29,757 posts)

6. john stamos

Response to Countdown_3_2_1 (Original post)
Thu Dec 8, 2011, 04:51 PM
Behind the Aegis (27,009 posts)

7. Justin Hartley!

Thu Dec 8, 2011, 11:23 PM
Fearless (11,967 posts)

9. Hmm... Jake Gyllenhaal or Ryan Reynolds.

The DUmp Men's Group is just a nest of queers.

OK - Back to the deficit.

[Tucker]

The DUmp Men's Group is just a nest of queers.

And the DUmp's womenz group is....

[shoes off the couch]

That reminds me.

Dennis the Menace has entirely disappeared.

I can think of three reasons. In order of likelihood:

1) Opened another month's worth of credit card statements, turned on the gas, and took a nap.

2) Finally flipped out so badly he was committed involuntarily.

3) Shut it down out of embarrassment at becoming a prominent DUmmy.