The Debt

[Yrael]

The budget deal that they passed does have the promise of substantial military cuts, which is the wrong place to make them IMO (The wars in Iraq and Afghanistan cost ~1 Trillion over 8 years, which is less than the democrats spent in the 8 months after their election in 2008).

Also, China is looking to dethrone the US as the world's superpower, especially in the southeast asia region, though I don't think they will be successful since there is enormous economic stress caused by their economic bubble which will burst in the next few years. In addition, their "population control" programs have skewed their population to a heavily male, quickly aging population which will not be able to keep their economy growing.

As it is, we need to see major reforms in all the welfare programs, as well as a restructuring of the tax code, and an end to "baseline" accounting. I would also like to see a committee of honest, small government congressmen and women (oxymoron right?) go through the US code and recommend for elimination as many of the useless red tape laws as they can find.

[Creator]

This is technically a no-win situation regardless of what your political persuasions are.

In order to balance the budget-- and I mean truly balance it to where the government is only spending as much as it's collecting in taxes-- we'd have to cut the defense budget by almost 40%, cut Social Security and welfare by 45%, and generally cut 1/3rd out of government spending in just about every other area, meaning laying off over well over a million government employees. Such a drastic move would utterly collapse the economy. So there is literally no way to balance the budget unless you want a national (and possibly global) depression.

Then again, increasing the debt limit (or even continuing with the limit we have) ultimately makes the budget situation even more impossible, and creditors know this. Which is why we have now been downgraded to a AA+ credit rating, and unless something drastic changes in the next 2 years, it will go down again. We are in a hole we can't climb out of. Increasing the debt limit only puts off the problem temporarily. Even if we were to cap the debt limit at its current levels, the stock market would STILL collapse as a result of that action.

The only real solution would be to slowly cut government spending over 12 or 15 years. It would continue to slow down the economy, but it wouldn't be as painful as cutting it all at once. There is no compromise that can fix this problem, because this problem was created via a combination of Democratic AND Republican stupidity over the last 20 years.

[macheteman]

honestly, i think we should completely get rid of social security and welfare etc. it really isn't the government's job to make sure you save money for your retirement, or even to guarantee that you survive. it IS the government's job to protect its people from invasion from without, and crime from within, to offer a just judicial system, and to maintain relationships with other countries and between provinces.

don't get me wrong, i think that healthcare, social security and things like that are fabulous if a country has the resources to field them. but the USA, as we are all well aware, does not.

[Gil-Estel]

The role of the government is one open for debate obviously. But that is an whole other debate and it has been held on numerous occasions. Nonetheless an interesting one. Basically I see the whole budget dilemma for any country as the situation in a family. You have to do what you can do, but cut that what isn't necessary. Sounds simple, but turns out to be not. The biggest cut can be made on emotions I guess, since every cut is guided by emotions, making it very difficult to make an honest decision.

[sickofpalantirs]

We need to raise revenue.  How exactly to go about that, I don't know.  Full Employment for a start.  Keynesian Economics maybe?

[macheteman]

The role of the government is one open for debate obviously. But that is an whole other debate and it has been held on numerous occasions. Nonetheless an interesting one. Basically I see the whole budget dilemma for any country as the situation in a family. You have to do what you can do, but cut that what isn't necessary. Sounds simple, but turns out to be not. The biggest cut can be made on emotions I guess, since every cut is guided by emotions, making it very difficult to make an honest decision.

very good point GE. right now 56% of the USA budget goes to social security, medicade, and welfare. we could cut more than half the spending by getting rid of those programs. my remarks on government responsibilities was to somewhat explain why i think those should go.

[Creator]

We need to raise revenue.  How exactly to go about that, I don't know.  Full Employment for a start.  Keynesian Economics maybe?

"Revenue" is the government bureaucratic code-word for "taxes". Keep than in mind whenever you hear politicians talk about "raising revenues". They do that because nobody wants to hear the 't' word. The government has no other way of making money. Not because they don't have the resources to be productive, but because the government is so utterly wasteful and incompetent with their money that they are incapable of generating any sort of ROI or managing their income properly. If you want to argue that point, ask me how much money the City of Long Beach charges their police department for an oil change.

The only way to "raise revenue" for the government without increasing taxes is for the economy to improve. The more money people make, the more they produce in taxes, and the more income the government receives. Of course, if the government can't balance their budget, then no amount of incoming taxes can possibly resolve the problem...

The role of the government is one open for debate obviously. But that is an whole other debate and it has been held on numerous occasions. Nonetheless an interesting one. Basically I see the whole budget dilemma for any country as the situation in a family. You have to do what you can do, but cut that what isn't necessary. Sounds simple, but turns out to be not. The biggest cut can be made on emotions I guess, since every cut is guided by emotions, making it very difficult to make an honest decision.

very good point GE. right now 56% of the USA budget goes to social security, medicade, and welfare. we could cut more than half the spending by getting rid of those programs. my remarks on government responsibilities was to somewhat explain why i think those should go.

This would be an utter disaster on so many levels. I don't completely disagree with your premise that government babysitting has gone way too far-- but to just cut it all out of the budget would be absolutely catastrophic. It would mean hundreds of thousands of government employees laid off, which means a massive flood of job competition on an already strained job market. Those government employees don't just disappear; they have families and lives to support. They ultimately have to find work like everyone else.

Then there is the consideration of how many people who are dependent on welfare and medicaid. If a 70-year old woman living on a shoestring government check suddenly doesn't have that check next month, how is she going to pay for food and medication? Not everyone on welfare is a lazy bum who refuses to work. You can't cut aid indiscriminately or the toll in human suffering would be enormous.

The only real solution in that situation would be to make bureaucracy more efficient by eliminating waste and streamlining processes. But an efficient bureaucracy is sort of an oxymoron to begin with.

As I said, there's really no way out of this mess other than some sort of significant technological breakthrough that will jumpstart the economy. For example, a new source of fuel.

[sickofpalantirs]

"Revenue" is the government bureaucratic code-word for "taxes". Keep than in mind whenever you hear politicians talk about "raising revenues". They do that because nobody wants to hear the 't' word. The government has no other way of making money. Not because they don't have the resources to be productive, but because the government is so utterly wasteful and incompetent with their money that they are incapable of generating any sort of ROI or managing their income properly. If you want to argue that point, ask me how much money the City of Long Beach charges their police department for an oil change.

Yes.  Taxes=revenue.  I know that.

The only way to "raise revenue" for the government without increasing taxes is for the economy to improve. The more money people make, the more they produce in taxes, and the more income the government receives. Of course, if the government can't balance their budget, then no amount of incoming taxes can possibly resolve the problem...

Actually yes, enough incoming taxes to balance the budget would solve the problem.  If the economy hadn't tanked and the bush tax cuts expired we would be significantly closer to the balanced budget.  I just finished running 11 miles over two cross country practices so I don't feel like researching the exact figures now.

[Air Power]

I think his point is that, if the government doesn't place a balanced budget as a priority, then no matter how much money they get in taxes, they will spend more.  If the income goes up, the expenditures will go up even more.

[Creator]

I think his point is that, if the government doesn't place a balanced budget as a priority, then no matter how much money they get in taxes, they will spend more.  If the income goes up, the expenditures will go up even more.

Precisely my point. And the higher taxes go, the more the economy slows down, requiring increased tax rates just to maintain government income levels. The less money people have to spend, the less money goes into the economy. Then again, cutting taxes can (sometimes) actually INCREASE government revenue because it frees up consumer money to fuel the economy, which in turn generates more wealth, resulting in equal or increased returns in taxes. It sometimes blows my mind how even people who have studied economics their whole lives still think raising taxes fixes problems like this.

I challenge anyone to point to one time in history when raising taxes in and of itself stimulated an economy. It has never worked, ever. Sometimes extenuating circumstances like war necessitate higher tax rates, but the industry boon created by a large-scale war happens not because of the taxes but because of the necessity for mass production, which (usually) creates jobs. More than that, extensive wartime requires mass mobilization of a major country's resources and ALWAYS creates new technology, which helps maintain the economic boon after a war ends. That's a simplistic explanation, but taxes are still only a part of that equation and don't really solve anything.

Government spending on a massive scale also doesn't stimulate the economy unless it's spent on industry development and in a very precise way, other than just providing handouts in the form of "stimulus" money. Increasing competition by providing technology-based grants is a more effective means. Both this administration and the previous administration have failed catastrophically on both counts. Bush's defense spending DID actually bring a strong boon to the defense industry, but that's only a fragment of the economy so it doesn't hold anything up.

Please don't misinterpret me; I'm not against taxes. They're important. Nobody likes them, but we need them. The problem is the government is utterly incompetent with managing its revenues. I don't trust the government with the money I already give them. Why would I want to give them more of my money when they can't handle the money they have? That makes no sense.

It really is just a mess.

[mille1212]

I agree with pretty much all of this.

The policies of this administration have failed on a massive, massive scale.  To argue otherwise is just simply silly.  They took a bad problem and made it ten times worse.  They pushed their agendas through with reckless abandon, at times with no regard to the democratic process, and definitely against the will and opinions of the majority of its citizens.  They've been on the wrong side of American opinion on just about every major issue from almost the beginning of his presidency.  I've never seen anything like it in my lifetime.  They doubled down against the will of the American people and lost their gamble.  I don't see how any Democrat can recover from this fact politically and I say that from an Independent Voter standpoint. 

They have proven themselves to be incompotent and untrustworthy in my opinion.  And, here lies the problem.  There is simply no confidence remaining that Obama or the Democrats in power can solve any of these issues.  Their solution is to keep spending.  As bad as all of the mistakes are though, its the lack of confidence in his leadership abilities that's the real killer in my opinion.  That has the potential to topple us over into another recession.

Nothing personal.  Just an opinion of a independent voter.

I think his point is that, if the government doesn't place a balanced budget as a priority, then no matter how much money they get in taxes, they will spend more.  If the income goes up, the expenditures will go up even more.

Precisely my point. And the higher taxes go, the more the economy slows down, requiring increased tax rates just to maintain government income levels. The less money people have to spend, the less money goes into the economy. Then again, cutting taxes can (sometimes) actually INCREASE government revenue because it frees up consumer money to fuel the economy, which in turn generates more wealth, resulting in equal or increased returns in taxes. It sometimes blows my mind how even people who have studied economics their whole lives still think raising taxes fixes problems like this.

I challenge anyone to point to one time in history when raising taxes in and of itself stimulated an economy. It has never worked, ever. Sometimes extenuating circumstances like war necessitate higher tax rates, but the industry boon created by a large-scale war happens not because of the taxes but because of the necessity for mass production, which (usually) creates jobs. More than that, extensive wartime requires mass mobilization of a major country's resources and ALWAYS creates new technology, which helps maintain the economic boon after a war ends. That's a simplistic explanation, but taxes are still only a part of that equation and don't really solve anything.

Government spending on a massive scale also doesn't stimulate the economy unless it's spent on industry development and in a very precise way, other than just providing handouts in the form of "stimulus" money. Increasing competition by providing technology-based grants is a more effective means. Both this administration and the previous administration have failed catastrophically on both counts. Bush's defense spending DID actually bring a strong boon to the defense industry, but that's only a fragment of the economy so it doesn't hold anything up.

Please don't misinterpret me; I'm not against taxes. They're important. Nobody likes them, but we need them. The problem is the government is utterly incompetent with managing its revenues. I don't trust the government with the money I already give them. Why would I want to give them more of my money when they can't handle the money they have? That makes no sense.

It really is just a mess.

[SomeRandomDude]

The big problem is that both parties are inept, and we don't have a viable third option, because the American people are to obsessed with the two-party system and friggin' tactical voting.

[Yrael]

We need to raise revenue.  How exactly to go about that, I don't know.  Full Employment for a start.  Keynesian Economics maybe?

Keynesian economics doesn't work. The theory is that for every dollar of money the government spends, that dollar will generate some multiplier of wealth. However, it completely ignores two things: A) That taxes will deduct a percentage from that multiplier, and B) The government will go into debt, which must be repaid at some point.

Governments cannot create wealth, since they do not offer a "service" so to speak but rather serve a function. That being said, economic theory states that lowering taxes will also cause a mulitplier of wealth, since there is more money circulating the economy. What lowering taxes also does, however, is create a better business environment (the US currently has one of the higher corporate tax rates in the world), which can attract more wealth to the country.

Ronald Reagen used tax cuts to turn around the economy in the 80s, he still ran up a large deficit because they were accompanied by defense increases to run the Soviet Union into a corner, but the government took in a highly increased level of revenue and the economy began a boom that lasted until the 90s.

[Creator]

The big problem is that both parties are inept, and we don't have a viable third option, because the American people are to obsessed with the two-party system and friggin' tactical voting.

Exactly. As horrible as the Democrats have been, the Republicans really have nothing inspiring to offer. They're basically still the same party they were when Bush was in charge, except smaller and more defiant. In this case that's not a bad thing because it's putting a door-stop in these insane Democratic policies, but it doesn't mean they're going to do any better if they're the majority. Saying "no that's a bad idea don't do it" isn't the same as saying "I've got a better idea", and they just don't have any.

We need to raise revenue.  How exactly to go about that, I don't know.  Full Employment for a start.  Keynesian Economics maybe?

Keynesian economics doesn't work. The theory is that for every dollar of money the government spends, that dollar will generate some multiplier of wealth. However, it completely ignores two things: A) That taxes will deduct a percentage from that multiplier, and B) The government will go into debt, which must be repaid at some point.

Governments cannot create wealth, since they do not offer a "service" so to speak but rather serve a function. That being said, economic theory states that lowering taxes will also cause a mulitplier of wealth, since there is more money circulating the economy. What lowering taxes also does, however, is create a better business environment (the US currently has one of the higher corporate tax rates in the world), which can attract more wealth to the country.

Ronald Reagen used tax cuts to turn around the economy in the 80s, he still ran up a large deficit because they were accompanied by defense increases to run the Soviet Union into a corner, but the government took in a highly increased level of revenue and the economy began a boom that lasted until the 90s.

That's a great way to sum it up. Democrats like to say that Reagan's policies created a large deficit that had to be fixed by Bill Clinton's wonderful liberal economic moves, thus proving that conservative economic policies don't work and that the Democracts were right all along. This could not be farther from the truth.

As you said, Reagan took the mess that Jimmy Carter left HIM and turned it around. The deficit happened because we had to outproduce Russia to win the Cold War, and we did. The cost of that was a large national debt, but the debt wasn't nearly as out of control as it is now simply because we were still maintaining a stable economy, which was why it was even POSSIBLE for Clinton to balance the budget by the end of his time in office. Clinton did a good job of that. Unfortunately, he also championed the Community Reinvestment Act, which was directly responsible for paving the way to the housing market crisis that caused the CURRENT financial nightmare.

The point of that is, tax cuts do benefit the economy as a whole, even if they mean reduced government revenue short-term. Typically within 6 months to a year, tax cuts rebound in the form of increased government income, as Reagan proved. He used that income to bury the USSR war machine, but the principle is still sound and so is conservative economics.

People also love to argue that Bush's Jr.'s "conservative policies" helped create this mess, further 'proving' that Republican budgeting doesn't work. But people who say that think Bush's economic policies were conservative. They weren't. In fact his economic policies-- short of the tax cuts at the beginning of his first term-- absolutely sucked. Unlike Reagan, Bush didn't cut government spending ANYWHERE. So he cut taxes but he didn't reduce spending. That's like pouring less water in a leaky bucket hoping it will stop leaking. In fact, spending skyrocketed because of the Afghan and Iraq wars, so in addition to pouring less water, he also punched some more holes in the bottom. Defense agencies start sprouting up like mushrooms and absorbing money as though it was infinite. That's not conservative economics, that's irresponsibility.

So the economy crashed right as the national debt was ballooning and Bush had no idea what to do.

And then spend-happy Obama comes in declaring he will save us by...spending more money? Uh, ok. Oh look, now we've had our credit rating dropped because everyone knows we can't possibly pay our bills. Good job, President.

As I said before, there's very, very little that can be done to fix this other than slowly cut spending over an extended period of time while simultaneously cutting taxes and plugging regulation loopholes. That, and drilling every single source of oil on American ground to reduce our spending on foreign fuel. That'd help.

Either that or invent fusion-powered cars.

[Yrael]

I don't know if you noticed Creator, but the forums linked two of the words in your post to cards on the database lol.