# Triple A Status



## TxllxT

I would like to know what you think of the US being in danger to get stripped of its Triple A Status. Being an outsider of American politics I just don't understand why polticians like to play with fire (this fire: sparking a worldwide economic chaos) so much. These politicians *do* sense the implications, or don't they?


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## kv466




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## Aramis




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## Almaviva

TxllxT said:


> I would like to know what you think of the US being in danger to get stripped of its Triple A Status. Being an outsider of American politics I just don't understand why polticians like to play with fire (this fire: sparking a worldwide economic chaos) so much. These politicians *do* sense the implications, or don't they?


They do sense the implications, it's just that they don't care for the implications. All that they care for, is doing enough political posturing to please their bases so that they can get re-elected.

In my opinion politicians of ALL parties and ALL political orientations have uniformly these three items as their top three priorities:

1. Get re-elected
2. Get re-elected
3. Get re-elected

The real interest of the people and the nation may, with luck, come as a distant fourth.

I'd love to see a constitutional amendment making of all political offices a 1-term deal. No more re-elections. Like this, they might actually start working for the people instead of just working for their own re-elections.


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## Guest

Almaviva said:


> They do sense the implications, it's just that they don't care for the implications. All that they care for, is doing enough political posturing to please their bases so that they can get re-elected.
> 
> In my opinion politicians of ALL parties and ALL political orientations have uniformly these three items as their top three priorities:
> 
> 1. Get re-elected
> 2. Get re-elected
> 3. Get re-elected
> 
> The real interest of the people and the nation may, with luck, come as a distant fourth.
> 
> I'd love to see a constitutional amendment making of all political offices a 1-term deal. No more re-elections. Like this, they might actually start working for the people instead of just working for their own re-elections.


And their constituents seem all too often more than happy to enable these politicians in such behavior. Thanks to government handout programs and earmarks, Americans have come to enjoy the largesse their political sugardaddies send back to them. Not for nothing did the founding fathers eschew pure democracy, mistrusting the mass voice of the general public. Unfortunately, they assumed a more virtuous political class that would protect our system of government from the fickle swayings of the masses. They hoped for politicians that would look to the best interests of the country, not merely the best interests of their constituents, with the understanding being that sometimes, what people want may not necessarily be in the best interests of a society as a whole. Hence the problems in Greece - despite the fiscal insolvency of the country, and their needing to be bailed out, the citizens still think they should have all the benefits they once enjoyed. They don't understand that when you have lost your job, been turned out on the streets, and can't rub two pennies together, it might be time to switch your diet from caviar to beans.


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## Guest

Almaviva said:


> They do sense the implications, it's just that they don't care for the implications. All that they care for, is doing enough political posturing to please their bases so that they can get re-elected.
> 
> In my opinion politicians of ALL parties and ALL political orientations have uniformly these three items as their top three priorities:
> 
> 1. Get re-elected
> 2. Get re-elected
> 3. Get re-elected
> 
> The real interest of the people and the nation may, with luck, come as a distant fourth.
> 
> I'd love to see a constitutional amendment making of all political offices a 1-term deal. No more re-elections. Like this, they might actually start working for the people instead of just working for their own re-elections.


I once thought term limits were the answer, but now I don't. Instituting term limits will no more prevent these behaviors in politicians than locking up an alcoholic will cure them of their addiction. Politicians will merely promise all the benefits from the very beginning. The political parties will gain more power, because they will be the only constant in electoral politics. And we often talk about how we crave experience in our higher elected officials - but how would they gain such experience when they could only be elected to one term for any office?

The better option is to limit the ability of politicians to direct funds to their constituents for purely political motives. The less government can handout (essentially buying votes), the less power these politicians will have to influence people to keep them in office, and they will have to rely on actually doing their job.

I, for one, would like to see a return of senators being chosen by state legislators, rather than popular vote. That extra layer of insulation between the politician and the constituent would limit some of this. And it would also return some power back to the states, decentralizing it.


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## Almaviva

DrMike said:


> I once thought term limits were the answer, but now I don't. Instituting term limits will no more prevent these behaviors in politicians than locking up an alcoholic will cure them of their addiction. Politicians will merely promise all the benefits from the very beginning. The political parties will gain more power, because they will be the only constant in electoral politics. And we often talk about how we crave experience in our higher elected officials - but how would they gain such experience when they could only be elected to one term for any office?
> 
> The better option is to limit the ability of politicians to direct funds to their constituents for purely political motives. The less government can handout (essentially buying votes), the less power these politicians will have to influence people to keep them in office, and they will have to rely on actually doing their job.
> 
> I, for one, would like to see a return of senators being chosen by state legislators, rather than popular vote. That extra layer of insulation between the politician and the constituent would limit some of this. And it would also return some power back to the states, decentralizing it.


I understand the downsides of term limits, but there are upsides as well. We got into such a distorted political environment that maybe a temporary measure with term limits for a couple of decades (with a provision for expiration of the measure or reassessment at the end of that period), would be a good idea in order to clean up the mess and restore some sanity to our political process. In terms of experience, we could increase the duration of terms, and we could stagger the terms so that more experienced members of Congress would be able to guide the newcomers. Say, 8 years for Congress, with overlap every four. But no re-elections. These guys would start to worry a bit more about having a good and productive term and going down in history as great representatives/senators rather than spending three fourths of their time plotting for their next election, and having re-election as the background engine of their agenda all the time. We'd give the president a 6-year term with no re-election.


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## samurai

DrMike said:


> I once thought term limits were the answer, but now I don't. Instituting term limits will no more prevent these behaviors in politicians than locking up an alcoholic will cure them of their addiction. Politicians will merely promise all the benefits from the very beginning. The political parties will gain more power, because they will be the only constant in electoral politics. And we often talk about how we crave experience in our higher elected officials - but how would they gain such experience when they could only be elected to one term for any office?
> 
> The better option is to limit the ability of politicians to direct funds to their constituents for purely political motives. The less government can handout (essentially buying votes), the less power these politicians will have to influence people to keep them in office, and they will have to rely on actually doing their job.
> 
> I, for one, would like to see a return of senators being chosen by state legislators, rather than popular vote. That extra layer of insulation between the politician and the constituent would limit some of this. And it would also return some power back to the states, decentralizing it.


@DrMike, Could you give us a better description of "handouts" as you might conceive of them? Would these include social welfare and safety- net programs such as Medicare and Medicaid, Social Security, Unemployment Benefits, etc.? I think this would provide a better basis on which to discuss some of your assertions. 
After all--by definition--everything in the political arena must be done for a political reason, unless you're one of those "bleeding heart, pie in the sky" type of liberals, of whom I don't think there are too many left {no pun intended} at least not anymore. How does one go about determining anybody's--be they politician or not--purity of motive or heart in motivating what they do? If I could believe in God, I suppose I would say that He or She had that ability. But in the day to day dog eat dog world, whether it's inside or outside of D.C., I think its almost impossible for us "mere mortals" to deliver such a judgement about our fellow human beings.


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## Almaviva

samurai said:


> @DrMike, Could you give us a better description of "handouts" as you might conceive of them? Would these include social welfare and safety- net programs such as Medicare and Medicaid, Social Security, Unemployment Benefits, etc.? I think this would provide a better basis on which to discuss some of your assertions.
> After all--by definition--everything in the political arena must be done for a political reason, unless you're one of those "bleeding heart, pie in the sky" type of liberals, of whom I don't think there are too many left {no pun intended} at least not anymore. How does one go about determining anybody's--be they politician or not--purity of motive or heart in motivating what they do? If I could believe in God, I suppose I would say that He or She had that ability. But in the day to day dog eat dog world, whether it's inside or outside of D.C., I think its almost impossible for us "mere mortals" to deliver such a judgement about our fellow human beings.


I can't speak for Dr.Mike but I think by handouts he means both entitlements and earmarks, basically any kind of spending that a politician votes for or approves in order to favor a subgroup of constituents rather than the nation as a whole. 
Dr.Mike, a liberal? You have the wrong person.


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## TxllxT

samurai said:


> @DrMike, Could you give us a better description of "handouts" as you might conceive of them? Would these include social welfare and safety- net programs such as Medicare and Medicaid, Social Security, Unemployment Benefits, etc.? I think this would provide a better basis on which to discuss some of your assertions.
> After all--by definition--everything in the political arena must be done for a political reason, unless you're one of those "bleeding heart, pie in the sky" type of liberals, of whom I don't think there are too many left {no pun intended} at least not anymore. How does one go about determining anybody's--be they politician or not--purity of motive or heart in motivating what they do? If I could believe in God, I suppose I would say that He or She had that ability. But in the day to day *dog eat dog *world, whether it's inside or outside of D.C., I think its almost impossible for us "mere mortals" to deliver such a judgement about our fellow human beings.


_Homo homini lupus _: 'Man to man a wolf' is an old saying of the Romans. I notice in the US an abyssmal gap between having one's head hanging in a cloud of believing in 'God's own country' and other patriotic boostersayings, while underneath that cloud  at one's feet) the dogs have gone wild.


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## Guest

samurai said:


> @DrMike, Could you give us a better description of "handouts" as you might conceive of them? Would these include social welfare and safety- net programs such as Medicare and Medicaid, Social Security, Unemployment Benefits, etc.? I think this would provide a better basis on which to discuss some of your assertions.
> After all--by definition--everything in the political arena must be done for a political reason, unless you're one of those "bleeding heart, pie in the sky" type of liberals, of whom I don't think there are too many left {no pun intended} at least not anymore. How does one go about determining anybody's--be they politician or not--purity of motive or heart in motivating what they do? If I could believe in God, I suppose I would say that He or She had that ability. But in the day to day dog eat dog world, whether it's inside or outside of D.C., I think its almost impossible for us "mere mortals" to deliver such a judgement about our fellow human beings.


There is no way of divining a person's purity of heart or motives. That is why you construct a system that controls for such things. You make it proof against personal ambition. Unfortunately, much of those firewalls built into our system of government have been smashed. We now allow such broad interpretations of every little word in the Constitution that they have essentially begun to lose all meeting.

I'm talking about welfare programs. I'm talking about Social Security. I'm talking about Medicare and Medicaid. I'm talking about military contracts that the military doesn't want, but it boosts the economy in Senator So-and-so's state to build an item that is useless. I'm talking about Senator So-and-so sending money back to his state to build numerous structures, all with his name on it, before he is even dead (want an example? How many things have the name Robert C. Byrd attached to them - and then go look when they were named. I'll bet at least 90% were BEFORE he was dead). I'm talking about bridges to nowhere. I'm talking about stimulus money coincidentally going disproportionately to states that supported Obama. I'm talking about Obamacare waivers going to companies that actively supported its passage. I'm talking about government leaders negotiating with unions using our tax dollars, up until now not requiring teachers to pay anything towards their pensions or health care costs. I'm talking about incumbent politicians enacting campaign "reform" that curiously ties the hands of challengers seeking to unseat incumbents. I'm talking about every pissant congressman thinking they need to go on a taxpayer-funded "fact-finding mission." Why the hell do we have all the different bureacracies around that are supposed to be providing them with such essential information?

A study published last year by John Kitchen of the U.S. Treasury and Menzie Chinn of the University of Wisconsin, entitled "Financing U.S. Debt: Is There Enough Money In The World - And At What Cost," states that by 2020, at our current rate of borrowing, we will need the rest of the world to invest roughly 20% of their collected GDP to finance our debt. This isn't a revenue problem - there aren't enough millionaires and billionaires in this country to provide that kind of revenue. This is a problem of out of control spending by politicians who use every conceivable expenditure to bolster their political careers.


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## Chi_townPhilly

At the risk of "piling on:"

Doubtless I'm repeating myself by just saying- maybe we should do what so many individual states require themselves to do- and that is to insure that annual Federal spending not exceed annual Federal revenue. (I would allow for a common-sense exception in the event of a _Congressional Declaration of War_ [e.g.: World War II])

However, the "Balanced Budget Amendment" is not likely to be embraced in the forseeable future, because one of the two political parties is intransigently opposed to it. (No points for guessing which one.)

The truly pernicious aspect of amplified federal spending is that the spending comes to pass, and the perception is "somebody else" is underwriting it. Problem is (and this especially applies to those younger than Dr. and me) the "somebody else" will, increasingly, be you.

[Kind of reminds me of a "card-playing" quote, attributed to infamous 1919 World Series fixer Arnold Rothstein. He's supposed to have said (something like) "Every casual card-game has a "'patsy,' the identity of whom becomes clear after the first few hands. If after this time, you are unable to recognize the 'patsy' it can only mean that YOU are the 'patsy.']


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## mmsbls

Chi_townPhilly said:


> Doubtless I'm repeating myself by just saying- maybe we should do what so many individual states require themselves to do- and that is to insure that annual Federal spending not exceed annual Federal revenue. (I would allow for a common-sense exception in the event of a _Congressional Declaration of War_ [e.g.: World War II])
> 
> However, the "Balanced Budget Amendment" is not likely to be embraced in the forseeable future, because one of the two political parties is intransigently opposed to it. (No points for guessing which one.)


I have never read a macroeconomist who doesn't think a balanced budget amendment is a bad idea. Yes, Democrats don't like it, but Republicans seem to abhor balancing the budget as well. At least when Democrats raise spending, they try to raise taxes as well. Republicans raise spending and cut taxes enough to produce huge deficits (Reagan and Bush II). Admittedly Reagan did raise taxes (he holds the US record for presidents), but his tax breaks for the wealthy hurt revenues.

I do think we need to reduce spending (mostly on Medicare and Defense - the two most out of control areas). I also think we clearly need to increase taxes. The huge question is when to do both things. Everyone I read says that demand is the issue, and cutting government spending will significantly reduce demand. Increasing taxes can reduce demand as well although cutting taxes on the wealthy will have less effect. The ideal policy seems to be first get the economy moving and later deal with the deficit (assuming it doesn't take 5 years to get the economy moving again).


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## Chi_townPhilly

mmsbls said:


> I have never read a macroeconomist who doesn't think a balanced budget amendment is a bad idea.


Hope it's not too flippant for me to say that it takes a certain level of detached theoretical academe to say that living within one's means is a _bad idea_. Makes me wonder... what part of "you cannot establish security on borrowed money" do they *not* understand?!

Is the crux of the debate a dispute between whether it's more accurate to say government overspends, or to say government's under-financed? I don't want to put words in anyone's mouth- but if these are the choices, no one need guess which proposition _I_'d be more inclined to accept.


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## mmsbls

Chi_townPhilly said:


> Hope it's not too flippant for me to say that it takes a certain level of detached theoretical academe to say that living within one's means is a _bad idea_. Makes me wonder... what part of "you cannot establish security on borrowed money" do they *not* understand?!
> 
> Is the crux of the debate a dispute between whether it's more accurate to say government overspends, or to say government's under-financed? I don't want to put words in anyone's mouth- but if these are the choices, no one need guess which proposition _I_'d be more inclined to accept.


I don't think it takes an academic to think of such a common place idea. Actually a large percentage of Americans (and presumably others) *DO* establish security on borrowed money. They borrow to purchase a house. Over time that house often becomes their main source of wealth. I'm not sure why people so often say that only governments can or should borrow money.

But the main reason macroeconomists don't like balanced budget amendments is that it precludes governments from purposely running a _short term_ deficit to spur economic growth during recessions. They certainly don't like _continued_ deficits, and they especially don't like continually increasing debt that grows as a percentage of the GDP.

Deficits are fine as long as during periods of economic growth we reduce them to manageable levels as happened during Clinton's presidency but did not happen during Reagan's and Bush II's.

As far as spending and raising revenue, I want our government to both spend and tax at the right level. That level would allow the economy to increase at a reasonable rate, require taxation such that everyone pays their proper share, and fund government programs that maximize the welfare of the citizens. Obviously the proper level of all three of these can be debated. It is not really about reducing taxes or increasing spending. It's about finding the best level for both.


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## Guest

mmsbls said:


> I don't think it takes an academic to think of such a common place idea. Actually a large percentage of Americans (and presumably others) *DO* establish security on borrowed money. They borrow to purchase a house. Over time that house often becomes their main source of wealth. I'm not sure why people so often say that only governments can or should borrow money.
> 
> But the main reason macroeconomists don't like balanced budget amendments is that it precludes governments from purposely running a _short term_ deficit to spur economic growth during recessions. They certainly don't like _continued_ deficits, and they especially don't like continually increasing debt that grows as a percentage of the GDP.
> 
> Deficits are fine as long as during periods of economic growth we reduce them to manageable levels as happened during Clinton's presidency but did not happen during Reagan's and Bush II's.
> 
> As far as spending and raising revenue, I want our government to both spend and tax at the right level. That level would allow the economy to increase at a reasonable rate, require taxation such that everyone pays their proper share, and fund government programs that maximize the welfare of the citizens. Obviously the proper level of all three of these can be debated. It is not really about reducing taxes or increasing spending. It's about finding the best level for both.


The problem, as I see it, goes beyond merely striking the proper balance between spending and taxing. Americans, I believe, are a generally giving people. We give a lot. We are not heartless. We send money to other nations when they have experienced a crisis. We make charitable donations. When we see a worthy cause, we are willing to part with our substance.

The annoyance over tax rates, and the seemingly incessant calls to raise them (to whatever a supposed reasonable, fair rate is) tire us. No matter how high they are, someone always thinks they aren't quite high enough. And we seem to be seeing an ever shrinking return on those tax dollars.

To put it in simpler terms - my wife has an aunt that never quite seems to be able to make ends meet. My wife's parents, on the other hand, have been very fortunate. As a result, over the years, they have freely helped her aunt out. And for the most part they have done so without a word of complaint. But recently, there has been some questionable actions on her aunt's part. After asking for money to help cover expenses, they then learned that her aunt and family had gone on a fairly expensive vacation. And bought a new car. Later, they had major damage done to their bathroom from a leaky pipe. Again, my wife's parents were more than willing to help cover the majority of expenses in the repairs. Once the job was done, they were quite surprised to see that her aunt had spared no expense in re-doing the bathroom, using materials and craftsmanship more appropriate for a house at least 4 times the value of her modest home in rural west Tennessee. And so the giving money to the aunt has become more strained.

I question why, for example, my property taxes should increase to pay for school systems where teachers receive pensions and health care for which they have to contribute little or nothing - whereas these expenses consume a significant portion of my income. I question why so much money must go into welfare programs, when I just read a report from the Department of Energy telling me that more than a few households that would be considered poor contain more than 1 refrigerator (I myself have only 1), more than 1 color TV, frequently have game consoles such as Xbox or Playstation. I wonder why, when the housing bubble burst, I continued to pay my mortgage payment, in addition to paying my taxes, which went to people like my cousin in California, who bought more house than he could afford with an interest-only loan, then when the bubble burst, looked for the government to bail him out.

Barack Obama himself stated in a debate that the level of revenue that tax rates brought in was irrelevant to how high they should be. He said that even if lower rates brought in more revenue, what was more important was raising them to be more "fair," to spread the wealth around. In my own life, there have been numerous times I have been more than happy to relinquish more money when I knew that the return was worth it. I think most people are feeling that government raising taxes doesn't accomplish more - it wastes more. And we are sick of this idea of the government "letting" us keep more of our money. It is our money. We earned it. The government was created to serve us. We are not created to serve the government. The U.S. government, as it was originally created, was a creation that would cease to exist were the electorate to disappear. Today, it is an entity unto itself, that exists for its own perpetuation, and would continue along its merry path were the population of the country outside of D.C. suddenly to drop off the face of the planet.


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## Guest

Maybe somebody can explain this to me - what the hell is the point of a debt ceiling? Every time we hit it, the politicians vote to raise it. Why bother even putting any kind of debt ceiling there in the first place? And what is the point in raising it by $2 trillion? From what I have seen of the estimates, assuming we continue on our present course of spending, and if Obama is re-elected, we'll be having this same debate in no time. So for all his talk of not wanting to just kick the can down the road, that is really what he is planning - to kick it down the road until his hypothetical 2nd term, when he won't have to worry about re-election.

The same fundamental principle is at play here as in the immigration debate. Democrats here claim that you have to cut spending (at least theoretically, maybe 10 years down the road) and raise taxes (immediately). You can't cut spending alone. Same with immigration. You have to do "comprehensive" immigration reform, not just seal the border. The problem is, the American people no longer believe they will do the tough things - cut spending, seal the border. Those promises are always later down the road, for some other politician to tackle - which they won't. Remember the deal Bush I made with Democrats that sealed his political fate by turning his back on his "no new taxes" pledge? He made a deal to raise taxes immediately, in return for Democrats cutting spending in the future. He raised the taxes, but the Democrats never cut the spending. If you have ever watched old Popeye cartoons, Democrats play the part of Wimpy - "I will gladly pay you Tuesday for a hamburger today." Or better, they constantly play the Lucy to the GOP's Charlie Brown, always promising they will hold the ball (spending cuts) in exchange for tax increases, but always pulling the ball away.


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## Ukko

Yeah, them blanketty-blank Democrats. The Bush-Cheney Gang did a pretty good job of ignoring-them-while-blaming-them, and their successors have really talented spin doctors for staying that course. Obama should forget getting anything meaningful out of Congress, and concentrate on developing a way to sanitarily **** into the wind.


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## Guest

Hilltroll72 said:


> Yeah, them banketty-blank Democrats. The Bush-Cheney Gang did a pretty good job of ignoring-them-while-blaming-them, and their successors have really talented spin doctors for staying that course. Obama should forget getting anything meaningful out of Congress, and concentrate on developing a way to sanitarily **** into the wind.


Wear a Tyvek hazmat suit.


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## mmsbls

DrMike said:


> Maybe somebody can explain this to me - what the hell is the point of a debt ceiling?


As far as I can tell, there is no point. I think it's a political ploy to pretend that politicians (both Democrats and Republicans) will do something about getting our fiscal house in order. In the past almost no one knew about the ceiling or the many times it was raised. The problem with the ceiling is that it can lead to a situation like now when refusing to raise the ceiling can cause enormous damage. We should simply eliminate the ceiling. It clearly only causes harm.



DrMike said:


> The same fundamental principle is at play here as in the immigration debate. Democrats here claim that you have to cut spending (at least theoretically, maybe 10 years down the road) and raise taxes (immediately). You can't cut spending alone.


Obama is at least suggesting *both* spending cuts and tax increases. Republicans are refusing to raise taxes. The deal that Obama has offered is heavily (I think too heavily) weighted toward spending cuts at a time when (as I understand economists saying) spending cuts will hurt the economy more than tax increases on the wealthy. I don't understand why the Republicans don't take this compromise. They are getting much more than Democrats, and the Democrats control 2/3 of government.

I worry that we will not enact significant deficit reduction because the Republicans are unwilling to compromise. Politics has always been about compromise, but they seem willing to let this opportunity go to waste.


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## samurai

So as not to "balance the budget" primarily by taking from or cutting already decimated programs designed to help the less fortunate among us, why don't we finally end the longest war in American history, thereby also saving future American casualties among our brave service men and women? I think we have given far more than the full measure of our *blood* and treasure in this effort. As a senator once said in relation to another seemingly endless war--in both casualties and money--let's just declare victory and bring our people home already. It's been 10 years, which is longer than our involvement in the First and Second World Wars. 
I mean, when is *enough* *enough*? And how much money would we then be able to apply to the current deficit debacle?


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## science

DrMike said:


> Barack Obama himself stated in a debate that the level of revenue that tax rates brought in was irrelevant to how high they should be. He said that even if lower rates brought in more revenue, what was more important was raising them to be more "fair," to spread the wealth around.


When was this?


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## samurai

science said:


> When was this?


I'd like to know this also and even if he had said that, we'd need to know the overall context in which it was uttered.


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## Guest

science said:


> When was this?


April 16, 2008 Democratic Presidential Debate.

Charles Gibson asked Obama: All right. You have, however, said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, "I certainly would not go above what existed under Bill Clinton," which was 28 percent. It's now 15 percent. That's almost a doubling, if you went to 28 percent.

But actually, Bill Clinton, in 1997, signed legislation that dropped the capital gains tax to 20 percent. . . . And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down.

So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

To which Barack Obama responded: Well, Charlie, what I've said is that I would look at raising the capital-gains tax for purposes of fairness....[And as to higher rates bringing in less revenue], well, that might happen or it might not. It depends on what's happening on Wall Street and how business is going.... ...And if we can stabilize that market and we can get credit flowing again, then I think we'll see stocks do well, and once again I think we can generate the revenue that we need to run this government and hopefully to pay down some of this debt.

You can read the entire transcript here.


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## science

DrMike said:


> April 16, 2008 Democratic Presidential Debate.
> 
> Charles Gibson asked Obama: All right. You have, however, said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, "I certainly would not go above what existed under Bill Clinton," which was 28 percent. It's now 15 percent. That's almost a doubling, if you went to 28 percent.
> 
> But actually, Bill Clinton, in 1997, signed legislation that dropped the capital gains tax to 20 percent. . . . And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down.
> 
> So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?
> 
> To which Barack Obama responded: Well, Charlie, what I've said is that I would look at raising the capital-gains tax for purposes of fairness....[And as to higher rates bringing in less revenue], well, that might happen or it might not. It depends on what's happening on Wall Street and how business is going.... ...And if we can stabilize that market and we can get credit flowing again, then I think we'll see stocks do well, and once again I think we can generate the revenue that we need to run this government and hopefully to pay down some of this debt.
> 
> You can read the entire transcript here.


I don't think he meant what you think he meant.


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## Guest

science said:


> I don't think he meant what you think he meant.


Ah, so now we can't take the great orator at his word?


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## Guest

mmsbls said:


> As far as I can tell, there is no point. I think it's a political ploy to pretend that politicians (both Democrats and Republicans) will do something about getting our fiscal house in order. In the past almost no one knew about the ceiling or the many times it was raised. The problem with the ceiling is that it can lead to a situation like now when refusing to raise the ceiling can cause enormous damage. We should simply eliminate the ceiling. It clearly only causes harm.
> 
> Obama is at least suggesting *both* spending cuts and tax increases. Republicans are refusing to raise taxes. The deal that Obama has offered is heavily (I think too heavily) weighted toward spending cuts at a time when (as I understand economists saying) spending cuts will hurt the economy more than tax increases on the wealthy. I don't understand why the Republicans don't take this compromise. They are getting much more than Democrats, and the Democrats control 2/3 of government.
> 
> I worry that we will not enact significant deficit reduction because the Republicans are unwilling to compromise. Politics has always been about compromise, but they seem willing to let this opportunity go to waste.


Obama is only suggesting spending cuts. From everything we have heard, he has yet to lay out anything concrete. Republicans have spelled out specifically what they want to do. Democrats and Obama haven't given anything specific since that joke of a budget Obama proposed at the beginning of the year that even his own party couldn't vote for. Now he speaks in vague poll-tested generalities, and prattles on about tax breaks for private jets, which wouldn't even bring in enough revenue to finance the amount of debt we accumulate in one day. Any cuts Democrats and Biden have proposed won't kick in for 10 years. In the first year, all they have conceded to cut is $2 billion. Do you know how fast we blow through $2 billion these days? And you call that serious spending cuts? Like I said - Democrat compromises always consist of immediate tax hikes coupled to down the road spending cuts that never materialize.


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## science

DrMike said:


> Ah, so now we can't take the great orator at his word?


In my opinion, you're not interpreting his words fairly.

If your point is just, "Can we trust everything he says," the answer is "of course not." He's a politician. During the campaign, he talked about changing NAFTA. I knew that was nonsense; so should have everyone.

But in this case, he's just saying that whether revenues go significantly up or down depends on the economy, not on the tax structure. He's also saying that that tax structure should be restructured to make it more fair. The first point is unarguable (at least if we're going to be honest: there is no reasonable tax structure that will bring in as much during a recession as it does during normal times); the second is a reasonable opinion.


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## Guest

science said:


> In my opinion, you're not interpreting his words fairly.
> 
> If your point is just, "Can we trust everything he says," the answer is "of course not." He's a politician. During the campaign, he talked about changing NAFTA. I knew that was nonsense; so should have everyone.
> 
> But in this case, he's just saying that whether revenues go significantly up or down depends on the economy, not on the tax structure. *He's also saying that that tax structure should be restructured to make it more fair.* The first point is unarguable (at least if we're going to be honest: there is no reasonable tax structure that will bring in as much during a recession as it does during normal times); the second is a reasonable opinion.


Could you please explain to me what exactly would be "more fair" for a liberal in terms of tax policy? For crying out loud, the top 1% in this country already pay more than the bottom 90% in income taxes alone. And how many people middle class and below even pay capital gains taxes? How many in the middle class and below pay corporate income taxes? The much reviled Bush tax cuts actually made the whole system even more progressive than it was before - i.e. the top income earners pay an even higher proportion of the income taxes than they did prior to the Bush tax cuts.

How can our high taxes not be hurting us in a recession? Look at our corporate tax rate - it is nearly 40%! In comparison, in China it is 25%. In Europe, the average is 25%. Canada has a corporate tax rate of 15%. What moron WOULDN'T be sending their business overseas? But we have to keep our tax rate high, because it is more fair? Let me ask you - right now, with unemployment at 9.2%, what do you think more Americans - especially the unemployed ones - would like to see: corporations being forced to pay their "fair share," or a lower tax rate that encourages more job growth in this country that will provide jobs to those unemployed Americans?


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## mmsbls

DrMike said:


> Barack Obama himself stated in a debate that the level of revenue that tax rates brought in was irrelevant to how high they should be. He said that even if lower rates brought in more revenue, what was more important was raising them to be more "fair," to spread the wealth around.


You gave part of the quote. The full reply is:

"Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness. We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year -- $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That's not fair. And what I want is not oppressive taxation. I want businesses to thrive, and I want people to be rewarded for their success. But what I also want to make sure is that our tax system is fair and that we are able to finance health care for Americans who currently don't have it and that we're able to invest in our infrastructure and invest in our schools. And you can't do that for free."

Obama did not say he wanted to "spread the wealth". The last part _can_ be read as spreading the wealth around, but I think that's a mistake. Infrastructure benefits the wealthy much more than the average person since they use it much more (mostly in business). Schools obviously benefit everyone. There could be a debate as to whether health care for those who don't have it benefits society or poor people more. Overall his stated uses for the additional tax income seem to benefit people roughly equally - not just the poor.

Capital gains are a form of income. I should pay the same tax whether I make money by farming, research, capital gains, or any other method. That is the "fair" that Obama meant.

Incidentally, Obama specifically called out hedge fund managers. They earn money based on managing others' money. The income they make _is not capital gains_, but because our government apparently *really* likes hedge fund managers, they are taxed at a much lower level than others who earn money in that tax bracket. I'm guessing _very_ few people would call that close to fair.


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## mmsbls

DrMike said:


> Obama is only suggesting spending cuts.


I greatly applaud his and other democrats _suggesting_ spending cuts. Republicans have stated they would never consider tax increases. They ought to suggest tax increases as a way to help balance the budget.

Democrats are willing to compromise. Republicans are not. This a a large diverse country which appears roughly split between the liberal and conservative agendas. if the Republicans care about the deficit, they should step up and push a balanced proposal.

In the past decade the wealthy have benefited doubly by a society that has given almost all economic productivity gains to them and most tax reductions to them as well. We need to start balancing the budget. Restoring the tax rates on the wealthy to pre-Bush levels is a reasonable component.


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## mmsbls

DrMike said:


> Let me ask you - right now, with unemployment at 9.2%, what do you think more Americans - especially the unemployed ones - would like to see: corporations being forced to pay their "fair share," or a lower tax rate that encourages more job growth in this country that will provide jobs to those unemployed Americans?


Quite honestly, I think unemployed Americans would rather see corporations and wealthy paying higher taxes with those taxes used as a stimulus program to create jobs (similar to the 2-3 million created by the last stimulus package). The economists I hear say that demand does not exist; therefore, lowering taxes will not produce the effect that it might in a different economy. They suggest government deficit spending to revive the economy now, and deficit measures to reduce our debt once the economy is moving again. (I know, I know, I know, the idiots in office - both Republicans and Democrats - would probably use the resulting sound economy to start increasing the deficit again. I don't know how to fix that.)

Unfortunately, none of us are macroeconomists with decades of studying government policy as it applies to deficits and recessions. I try to understand their views, but I don't have quite the background yet. The media does a *horrible* job conveying the macroeconomists views.


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## Guest

mmsbls said:


> I greatly applaud his and other democrats _suggesting_ spending cuts. Republicans have stated they would never consider tax increases. They ought to suggest tax increases as a way to help balance the budget.
> 
> Democrats are willing to compromise. Republicans are not. This a a large diverse country which appears roughly split between the liberal and conservative agendas. if the Republicans care about the deficit, they should step up and push a balanced proposal.
> 
> In the past decade the wealthy have benefited doubly by a society that has given almost all economic productivity gains to them and most tax reductions to them as well. We need to start balancing the budget. Restoring the tax rates on the wealthy to pre-Bush levels is a reasonable component.


As soon as you can tell me of the last time Democrats made good on promised spending cuts to anything but defense, then I'll give your argument due consideration. Bush 41 made a compromise with Democrats - he would back tax increases if they would cut spending. Taxes went up. Spending didn't go down. Even the much talked about fiscal responsibility under Bill Clinton was passed by a Republican-held Congress. So again, if you can show me that the Democrats have a credible record of following through on non-defense spending cuts - especially cuts in entitlement programs - then I'll start taking seriously the president's nebulous and vague references to what is on the table. And it would be nice if they could agree to cuts that would actually begin during their time in office, as opposed to promising spending cuts 10 years from now.


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## mmsbls

@DrMike: Thanks for being so tenacious in defending your views. You are one (maybe 1.1) against several. It's sort of you against the world. I actually think you make many good points, and I do understand the view of many that the government is taking from them and squandering some significant amount. I enjoy hearing from those with differing opinions because I generally know the arguments on my side already.


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## Couchie

I enjoy how this same argument pops up once a month like clockwork, continues fruitlessly for several pages, then is locked.


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## samurai

@ DrMike, Exactly which social service programs do you see as "over the top" in terms of their *generosity *to people who are still below the poverty line in the richest country in the world? Maybe aid to mothers so they can feed their babies, veterans who have been kicked to the curb since they returned home unemployed after serving multiple deployments in Iraq and Afghanistan, or is it just Medicare and Food Stamps that draw your disapproval? And put a number on it, please--just how many billions of dollars do you want these "wasteful" programs gutted by?


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## Guest

samurai said:


> @ DrMike, Exactly which social service programs do you see as "over the top" in terms of their *generosity *to people who are still below the poverty line in the richest country in the world? Maybe aid to mothers so they can feed their babies, veterans who have been kicked to the curb since they returned home unemployed after serving multiple deployments in Iraq and Afghanistan, or is it just Medicare and Food Stamps that draw your disapproval? And put a number on it, please--just how many billions of dollars do you want these "wasteful" programs gutted by?


Your question is so blatantly slanted as to make me look like some monster for even considering cuts in any program - so I choose to not respond until you can phrase the question in a less demagoguing way. You imply that every dollar spent in these programs is essential to stave off death for poor souls. Would it were so.


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## science

DrMike said:


> Could you please explain to me what exactly would be "more fair" for a liberal in terms of tax policy? For crying out loud, the top 1% in this country already pay more than the bottom 90% in income taxes alone. And how many people middle class and below even pay capital gains taxes? How many in the middle class and below pay corporate income taxes? The much reviled Bush tax cuts actually made the whole system even more progressive than it was before - i.e. the top income earners pay an even higher proportion of the income taxes than they did prior to the Bush tax cuts.
> 
> How can our high taxes not be hurting us in a recession? Look at our corporate tax rate - it is nearly 40%! In comparison, in China it is 25%. In Europe, the average is 25%. Canada has a corporate tax rate of 15%. What moron WOULDN'T be sending their business overseas? But we have to keep our tax rate high, because it is more fair? Let me ask you - right now, with unemployment at 9.2%, what do you think more Americans - especially the unemployed ones - would like to see: corporations being forced to pay their "fair share," or a lower tax rate that encourages more job growth in this country that will provide jobs to those unemployed Americans?


Did you concede the other points in the post?


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## science

DrMike said:


> Your question is so blatantly slanted as to make me look like some monster for even considering cuts in any program - so I choose to not respond until you can phrase the question in a less demagoguing way. You imply that every dollar spent in these programs is essential to stave off death for poor souls. Would it were so.


Yes, would it were. Then we could re-enslave them properly. Make them beg for charity.


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## Guest

science said:


> Yes, would it were. Then we could re-enslave them properly. Make them beg for charity.


Yes, as opposed to the slavery which now entraps them, where welfare becomes multi-generational, and where we do nothing to try and encourage them to improve their situation. The safety net has become a pit they can't climb from.

Way to totally read into my motives what isn't there. Because yeah, I totally want to enslave people - no, wait, I forgot - the DemocratIC party was the party of slavery, of opposition to lynching laws, of Jim Crow.
My statement was that I wish that money that went to help the poor actually did, and wasn't simply thrown away in fraud and waste.


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## mmsbls

DrMike said:


> As soon as you can tell me of the last time Democrats made good on promised spending cuts to anything but defense, then I'll give your argument due consideration.


This seems like a great time for Republicans to enact significant spending cuts. Obama has suggested a package that includes large cuts. The Gang of Six (or seven) in the Senate are pushing a proposal for large cuts across the board. I'm not sure I fully understand their tax modifications (cuts in rates, broadening the base, overall increase in taxes), but the cuts are much larger than the tax increases. Now I don't know if these packages will get through the Senate, but supposedly there are at least 50 senators favoring the package.

The Republicans can lock in these cuts through legislation (Democrats will have to vote for it). Instead they seem bent on ignoring everything if there are any tax increases of any kind. I think it would be a hugely wasted opportunity. Politics is never (or probably hardly ever) all or nothing.


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## Guest

science said:


> Did you concede the other points in the post?


Nope. I was just selective in what I spend my time rebutting.


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## Guest

mmsbls said:


> This seems like a great time for Republicans to enact significant spending cuts. Obama has suggested a package that includes large cuts. The Gang of Six (or seven) in the Senate are pushing a proposal for large cuts across the board. I'm not sure I fully understand their tax modifications (cuts in rates, broadening the base, overall increase in taxes), but the cuts are much larger than the tax increases. Now I don't know if these packages will get through the Senate, but supposedly there are at least 50 senators favoring the package.
> 
> The Republicans can lock in these cuts through legislation (Democrats will have to vote for it). Instead they seem bent on ignoring everything if there are any tax increases of any kind. I think it would be a hugely wasted opportunity. *Politics is never (or probably hardly ever) all or nothing.*


Really? What compromises with Republicans were included in the health care bill? How many Republicans were included in the drafting of that bill? How many of their amendments to it were allowed to come to a vote? Don't say the public option - the opposition to that was bipartisan.


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## samurai

@DrMike, All I was asking of you was to provide specific examples and dollar amounts of the "fraud and waste" you claim are taking place in the traditional safety-net programs that people such as myself support. I have never called you or thought of you as a "monster" just because we might disagree on this--or any other topical issue.
However, if this is going to devolve into that kind of personal exchange, then I'm out. Thanks for the two-way conversation and fruitful exchange of ideas; it's what makes this country so great!


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## Guest

samurai said:


> @DrMike, All I was asking of you was to provide specific examples and dollar amounts of the "fraud and waste" you claim are taking place in the traditional safety-net programs that people such as myself support. I have never called you or thought of you as a "monster" just because we might disagree on this--or any other topical issue.
> However, if this is going to devolve into that kind of personal exchange, then I'm out. Thanks for the two-way conversation and fruitful exchange of ideas; it's what makes this country so great!


Your question was phrased to play on emotions - drawing images of women trying to feed their children and injured soldiers forgotten by their country. The type of phrasing that is calculated to bias in advance any answer I gave - forcing me to defend what you have framed as indefensible. And I rejected the premise of your question.

But I would ask this - how can we afford to not make cuts now? Better to continue to make promises we can't fulfill, and end up like Greece, with our hands held out to the international community for a bailout? Are we creating an entitlement bubble, ready to burst? Let me ask you - why should social security checks not go out on August 3rd if no agreement is reached? I thought Social Security was fully solvent for many more years, with all that money safe in a lockbox? Really, it is just a giant ponzi scheme. Medicare is on a course to insolvency in even less time. Experts have testified before Congress to that fact. Our current level of borrowing means that by 2020, we will need to borrow 20% of global GDP. And you think that some spending cuts now would do more harm?


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## mmsbls

DrMike said:


> Really? What compromises with Republicans were included in the health care bill? How many Republicans were included in the drafting of that bill? How many of their amendments to it were allowed to come to a vote? Don't say the public option - the opposition to that was bipartisan.


As far as I know the answer is: yes, really. If you think there were not compromises in the health care legislation, why did it take so incredibly long? And I'm not arguing that Republicans had a significant role. Unless you live in a totalitarian government, politics is about compromise.

But I still say the Republicans (and the country) are missing a great opportunity. You may feel taxes should not be raised on the wealthy (actually I'm not sure what you believe on that specific issue), but would you now take a deal where there was roughly 3.5 - 4 billion in debt reduction with the vast majority being spending cuts?


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## Almaviva

Couchie said:


> I enjoy how this same argument pops up once a month like clockwork, continues fruitlessly for several pages, then is locked.


 Couchie, I was about to say, no worries, this time the discussion is proceeding in a very high level, we shouldn't have to lock the thread. Then I read the next few posts, and oops, things are heating up. You may be right after all. But I hope not.

I really don't see a reason why we shouldn't be able to maintain the civilized tone. We're all well educated, cultured, polite, mature, and friendly folks. These discussions are interesting, they improve my understanding of several issues, thanks to very good points made by many on one side, and by brave and solitary Dr. Mike on the other side.

I think if people routinely participate in these discussions, it's because they see some value and some interest in them. Sincerely, I think that these discussions only thrive because of Dr. Mike here (and in rare occasions, CTP). If we didn't have these conservative members, we wouldn't have the discussions, because it would be a bunch of people preaching to the choir (not fun).

So, I do encourage you all to treat our good Dr. Mike nicely. He's kind of an essential part of this. Seriously. You all know that I'm almost at the mirror opposite point of the political spectrum from Dr. Mike's point, but I respect his willingness to debate these points with us, and come on, guys, it's not an easy position for him and it must be frustrating for him to have to fend off some stones coming from multiple directions at certain times.

So, as long as we can all agree to treat our good Dr. Mike with the respect that all members here deserve, these discussions will proceed nicely.

All right, a moderator shouldn't take sides. But in this case that often ends up by something like ten against one, it is fair to take that one's side.


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## samurai

Once again, DrMike, I'll ask you: How much and out of which safety net programs do you want to cut. Everybody in their right mind is against waste and fraud, at least among the voting public--of which you and I are members. It's like being for apple pie and motherhood: how can any fair minded person be against them? So, that's not the issue on the table. However, if you want to play *the selective rebuttal game,* then there can be no more dialogue or discussion between us. 
As regards your accusation that I engaged in hyperbole, I would just say this: before the New Deal and the safety net programs it ushered in, some of those scenarios painted by you did actually happen--in this--the richest nation the world has ever known. And what program can you cite where there occurs no wastage or fraud? As to our being able to keep our promises to our own people--*American* *citizens*--perhaps if we got out of Afghanistan already we could save millions of dollars--and countless American lives--and use that money to help our own people who need help here and now. In no program ever devised by human beings will *every dollar* go to helping the people it is designed to help, as there is always overhead involved. Should we pare down the waste and fraud as much as possible--*OF* *COURSE!* Put a number and address to it and then there can be a meaningful conversation--both here, and more importantly--in Washington, D.C.


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## StlukesguildOhio

I'm talking about government leaders negotiating with unions using our tax dollars, up until now not requiring teachers to pay anything towards their pensions or health care costs.

As a teacher I pay more into my retirement than anyone on Social Security. Currently federal social insurance taxes are imposed equally on employers[5] and employees,[6] consisting of a tax of 6.2% of wages. I pay 10.5 % into my State Retirement Program. As with Social Security, the employer matches this contribution. Skyrocketing medical costs, however, have led to changes including a .5% increase contribution each year until the rate of 13-15% has been reached (the legislature is still arguing over this) with no increase on the part of the employer. Health care is a sizable expense... albeit not as expensive as in it is for some employees... but this is one of the benefits of a job which pays frequently far less than jobs in the private sector with an equal education and experience.


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## samurai

Here's a news flash for all the anti-union people: We union members are *TAXPAYERS *also!


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## StlukesguildOhio

Yes, as opposed to the slavery which now entraps them, where welfare becomes multi-generational, and where we do nothing to try and encourage them to improve their situation. The safety net has become a pit they can't climb from.

I think that a good many if not a majority recognize that there is waste and fraud involved in Welfare and Food Stamps and other government handouts. But there is waste and fraud involved in the military budget, and nearly everywhere else. Personally I fume over those who have repeated children in spite of the inability to support them... and are fully supported by tax dollars. What is the alternative? Forced sterilization? Generational Welfare. Again how do we counter this? Time limits? Required "work for pay" ala the old WPA and required schooling seems to be a logical solution... excepting those legitimately unable to work.

However... there seem to be two major problems right now that dwarf all the rest in terms of the budget. The first is the rocketing cost of medical care. We need to come to terms with this... but we are confronted by the special interests of the big pharmaceuticals and medical research and the belief that medical care should be for profit. If we believe that everyone should be entitled to proper medical care should it not be socialized or under government control the same as other amenities that we deem to be the right of every citizen: police and fire protection, military, sewers, education, etc...?

The second problem is that of the redirection of the blame for the current shortfall in federal, state and local coffers. Politicians keep pointing the finger at "overpaid" federal/state/local employees: teachers, firemen, police, highway workers, building inspectors etc... The reality is that the real-estate crash is the primary source of the problem. When a houses that were once valued at $100,000 are suddenly valued at $50,000 or $35,000 it is obvious that the tax dollars being taken in are also going to fall. But its not the bankers who are at fault... it's the teachers making an average of $45,000 or $50,000 a year after 15 years and a Masters Degree. Or its the Police Officer or Firefighter risking his or her life for a similar salary.

Alama suggested a Constitutional Amendment limiting congress to a single term. I favor a constitutional amendment banning all political parties.


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## Almaviva

StlukesguildOhio said:


> Alama suggested a Constitutional Amendment limiting congress to a single term.


Who is this guy Alama? I agree with him. He must be a really nice guy.


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## StlukesguildOhio

Count Almaviva, on the other hand, had a few moral lapses.:lol:


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## Almaviva

StlukesguildOhio said:


> Count Almaviva, on the other hand, had a few moral lapses.:lol:


Who is that? I wouldn't know. My Almaviva is the wine.


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## Chi_townPhilly

*Rant*



mmsbls said:


> Actually a large percentage of Americans (and presumably others) *DO* establish security on borrowed money. They borrow to purchase a house. Over time that house often becomes their main source of wealth. I'm not sure why people so often say that only governments can or should borrow money.


I sort of let this slide awhile- in the hopes that this thread would have some sort of diminuendo- but since the discussion is proceeding along anyway, I think the following points need to be clarified:

Any attempt to analogize an individual's sensible acceptance of a mortgage obligation to governmental borrowing fails to withstand scrutiny on many levels.

My wife and I are paying a mortgage. Without getting into the details, we are about one-third of the way through it. We didn't take on any gimmicks (e.g.: ARM or interest-only components) and the end of term is timed to occur before our anticipated retirement. The "security" we get from this arrangement is only as certain as the anticipated income that we expect to generate going forward. So, in a very real way, we (and lots of other mortgage-holders) aren't fully secure, yet. Furthermore, if there are any reversals in our income, there will be very real consequences. _In extremis_, forfeiture of the residence is one of those potential consequences.

As me and my wife make our monthly payments, our debt goes down each month. The US government, on the other hand, is paying the minimum (service to existing debt) _and is continually seeking to borrow more, besides!!_ Now, my wife and I (like the US government) have the potential to raise our "debt ceiling" (e.g.: with a home-equity loan) [n.b.: we have NO intention of ever doing so], but if we were to do this, the responsibility to repay that obligation would stay with me and my wife. This contrasts markedly with US government, where the debt-burden is so huge that the existing generation AND the generation that is currently maturing has no reasonable prospect of resolving that debt.

Personal debt carries personal responsibility- a responsibility freely accepted over the years, with eyes wide open (if one is sensible). In contrarity, governmental debt has been an exercise in SHIRKING responsibility- and the longer it is shirked, the more painful it will be when the margin-call comes due.


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## Guest

By way of clarification:
In the past I have attempted to respond to each and every point raised in these discussions, which quickly became a daunting task, as I count at least 5 responses to my posts since I last logged on. As I would respond to each, each would then hit me with even more follow ups. I don't have the time to continue to do this. At best, I will be selective in what I choose to respond to. If you think I am simply dodging your questions - well, so be it. I can only devote so much time to this. And right now I have to get two kids ready for pre-school.


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## mmsbls

DrMike said:


> By way of clarification:
> In the past I have attempted to respond to each and every point raised in these discussions, which quickly became a daunting task, as I count at least 5 responses to my posts since I last logged on. As I would respond to each, each would then hit me with even more follow ups. I don't have the time to continue to do this. At best, I will be selective in what I choose to respond to. If you think I am simply dodging your questions - well, so be it. I can only devote so much time to this. And right now I have to get two kids ready for pre-school.


I was wondering when that would happen. It's a rather daunting task.


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## science

DrMike said:


> Nope. I was just selective in what I spend my time rebutting.


Well then.


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## mmsbls

Chi_townPhilly said:


> I sort of let this slide awhile- in the hopes that this thread would have some sort of diminuendo- but since the discussion is proceeding along anyway, I think the following points need to be clarified:
> 
> Any attempt to analogize an individual's sensible acceptance of a mortgage obligation to governmental borrowing fails to withstand scrutiny on many levels.




Your point is that there are differences between an individual and a country borrowing money. I agree. My point was that both _can_ benefit from doing so. You apparently agree that individuals benefit. Macroeconomists feel strongly that countries ought to borrow at certain times. Those economists do not believe that countries should borrow excessively to endanger their financial standing. I do not either. You and I apparently agree on that as well.


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## Guest

mmsbls said:


> I was wondering when that would happen. It's a rather daunting task.


Yes, and as I attempted to devote time to responding to each and every reponse, I found I would lose patience, and get more heated in my responses. So in the interest of doing my part to not let these things flame out of control, I will simply be selective in what I think I can respond to without letting it monopolize my day.

So in reality, I think I am going to follow CTP's example and be more selective in responding, and not feel I need to respond to everything. I apologize to those whose questions go unanswered. You can infer whatever you like from it, but it really just boils down to me not having enough time to answer everything.


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## Guest

mmsbls said:


> As far as I know the answer is: yes, really. If you think there were not compromises in the health care legislation, why did it take so incredibly long? And I'm not arguing that Republicans had a significant role. Unless you live in a totalitarian government, politics is about compromise.
> 
> But I still say the Republicans (and the country) are missing a great opportunity. You may feel taxes should not be raised on the wealthy (actually I'm not sure what you believe on that specific issue), but would you now take a deal where there was roughly 3.5 - 4 billion in debt reduction with the vast majority being spending cuts?


The compromises in the health care legislation were to bring on board some moderate Democrats that were uneasy about voting for it. And most of the compromises happened behind closed doors without Republican participation. It took so long because Democrats were feeling heat from their constituents back home, and were worried about voting for it - especially not knowing what all was in the legislation.

I am assuming you made a mistake in your final sentence, as I don't think anybody would be too excited about a mere 3.5-4 BILLION in debt reduction. But the new Gang of 6 deal doesn't actually specify where the cuts come from. It is another statement with broad generalizations.

Here is what I would do.
Propose a short term plan - raise the debt ceiling by $500 billion, and tie it to specific cuts. The agree to revisit the issue in 6 months. If the agreed upon cuts have been made, showing good faith, then talks can commence about tax reform measures, raising the ceiling further, and additional cuts. For once, lets have the cuts come first and then we can decide whether the tax increases are necessary. That is a win for both sides. The GOP gets some real spending cuts, which they want. And if the cuts are made, then the Democrats can come back and say that they upheld their end of the bargain and proved they were willing to make cuts, putting the onus on Republicans to then agree to some revenue increases.


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## mmsbls

DrMike said:


> I am assuming you made a mistake in your final sentence, as I don't think anybody would be too excited about a mere 3.5-4 BILLION in debt reduction. But the new Gang of 6 deal doesn't actually specify where the cuts come from. It is another statement with broad generalizations.
> 
> Here is what I would do.
> Propose a short term plan - raise the debt ceiling by $500 billion, and tie it to specific cuts. The agree to revisit the issue in 6 months. If the agreed upon cuts have been made, showing good faith, then talks can commence about tax reform measures, raising the ceiling further, and additional cuts. For once, lets have the cuts come first and then we can decide whether the tax increases are necessary. That is a win for both sides. The GOP gets some real spending cuts, which they want. And if the cuts are made, then the Democrats can come back and say that they upheld their end of the bargain and proved they were willing to make cuts, putting the onus on Republicans to then agree to some revenue increases.


Yes, that reminds me of the supposed Dirk Dickson quote, "A billion here, a billion there, and pretty soon you're talking real money."

Your plan seems reasonable. If the future were solely up to me, I would immediately raise the debt ceiling so the economy is not hurt, focus on jobs and raising the economy in the short term (probably deficit spending because I don't know any other way at this point - perhaps my ignorance), and later (but relatively soon) make spending cuts and raise taxes. I understand that politically that's a problem.

If I were convinced that the US standard of living for poor, middle class, and rich people would best be increased in the mid (couple of years) to long term by keeping taxes low and reducing spending now, I would strongly support that.


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## mmsbls

*Your Solution to Taxes and Spending*

This thread has included general discussions about what to do with the deficit, taxes, and spending. I'd like to know what people think in somewhat more specific terms. The following budget numbers were taken from a proposed 2011 budget so the values should give a good sense of what the US spends on various broad categories. I have also included some CBO projections for certain categories. All numbers are in billion US$.

Social Security 730 
CBO Projection: 2011 - 4.5% GDP, 2035 - 5.8% GDP, afterward slow decline to 5.5%

Health 788 
(mostly Medicare, Medicaid)
CBO Projection: 2011 - 4.8% GDP, 2040 - 10% GDP, 2060 - 15% GDP

Security 895
(Defense, Homeland Security,
wars, etc.)

Non-defense Discretionary 520

TARP 297

Other Mandatory 619
(unemployment, welfare, etc.)

Interest 251

Obviously to suggest a real budget requires tremendous knowledge of many things we individually do not have (perhaps most importantly - what would be the effect of various changes?). I'd be interested in seeing what people here would propose in general terms for the various categories as well as for future taxes. I'm not interested in a number but more a rough change.

My budget:
Social Security - modest changes. Possible changes: small reduction in COLA, increasing age of beneficiaries (not so happy with this), means testing, and increase maximum salary for payroll taxes. Must ensure program is solvent.

Health - Significant changes. Must reduce benefit spending in major way. I personally favor a single payer plan with strong recommendations from doctors on what procedures are not necessary. Also huge change to preventative medicine. I feel pretty ignorant here.

Security - Large changes. End all wars. Bring vast majority of foreign based soldiers home. Reduce spending to perhaps $300 billion or so and demand NATO steps up.

Non-defense Discretionary - small changes. maybe cap most programs for a few years, then have modest increases. Obviously some areas could be cut.

TARP - done.

Other Mandatory - No Change.

Taxes - Raise rate on wealthy back to Clinton rate. Vastly reduce deductions (increase tax base). Eventually raise rate on everyone back to Clinton rate (if necessary for balancing budget). If increasing tax base allows lower tax rates (as Gang of Six propose), then lower rates. But tax revenue should increase (if necessary for spending).

My only requirements are - 1) major reductions in health and security spending and 2) no change to most programs in Other Mandatory.

There's a lot here, and I'm clearly over my head in making knowledgeable budget changes. Others want to make suggestions? Even if you only want to address some areas, I'd be interested.


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## Guest

StlukesguildOhio said:


> Alama suggested a Constitutional Amendment limiting congress to a single term. I favor a constitutional amendment banning all political parties.


Surely you, as a union member, can understand the draw towards coming together as a group for collective power. What is a political party but a union of like-minded voters? Drawn together for the purpose of protecting their interests in the world of politics. So why should we ban them? Because they squash the voice of independents, and those who don't want to join a party? Because they start to put party interests over the good of the country? But wouldn't the interests of people be overlooked were they not able to unite under political parties?


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## Guest

@mmsbls:
I also appreciate the tone you have taken in this discussion, and your striving to debate the issues while still keeping things civil.


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## Guest

Almaviva said:


> Who is this guy Alama? I agree with him. He must be a really nice guy.


I think it was a typo - I actually think what he meant to say, instead of Alama, was "A llama . . ." Personally, I haven't met too many politically savvy llamas in my time, but you never know what you will see in the world of politics. Of course, I understand a large number of llamas were involved in producing "Monty Python and the Holy Grail."


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## Almaviva

mmsbls said:


> Yes, that reminds me of the supposed Dirk Dickson quote, "A billion here, a billion there, and pretty soon you're talking real money."
> 
> Your plan seems reasonable. If the future were solely up to me, I would immediately raise the debt ceiling so the economy is not hurt, focus on jobs and raising the economy in the short term (probably deficit spending because I don't know any other way at this point - perhaps my ignorance), and later (but relatively soon) make spending cuts and raise taxes. I understand that politically that's a problem.
> 
> If I were convinced that the US standard of living for poor, middle class, and rich people would best be increased in the mid (couple of years) to long term by keeping taxes low and reducing spending now, I would strongly support that.


Kudos. This is one of the most reasonable posts I've seen in these debates.


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## Guest

A new CNN poll shows 66% approval of the GOP Cut, Cap, and Balance plan. But Obama will veto it, should it happen to pass the Senate.


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## science

DrMike said:


> A new CNN poll shows 66% approval of the GOP Cut, Cap, and Balance plan. But Obama will veto it, should it happen to pass the Senate.


That's a remarkable poll coming from a networked "owned" by Democrats.

Edit: I couldn't find it. I'll look for it again tomorrow. If you happen to see this and are in a helpful mood, could you link to it?


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## Chi_townPhilly

*It's a minor carp, but...*



mmsbls said:


> Yes, that reminds me of the supposed Dirk Dickson quote, "A billion here, a billion there, and pretty soon you're talking real money."


The gist of this text is attributed to the late Illinois Senator *Everett McKinley Dirksen*. It's true that the line is apocryphal... but there are numerous _non_-aprocryphal quotes from Dirksen that sounded the tocsin to institutionalized deficit spending.

My native state doesn't make 'em like Dirksen anymore... 
or if they do, they're probably fleeing to other places, just as I have.


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## Guest

science said:


> That's a remarkable poll coming from a networked "owned" by Democrats.
> 
> Edit: I couldn't find it. I'll look for it again tomorrow. If you happen to see this and are in a helpful mood, could you link to it?


http://washingtonexaminer.com/blogs/beltway-confidential/2011/07/two-thirds-americans-support-house-cut-cap-and-balance-plan
That link takes you to a quick summary, but it also contains a link to the actual poll results.


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## mmsbls

DrMike said:


> http://washingtonexaminer.com/blogs/beltway-confidential/2011/07/two-thirds-americans-support-house-cut-cap-and-balance-plan
> That link takes you to a quick summary, but it also contains a link to the actual poll results.


Like many such polls, it's difficult to understand exactly what the public wants. More specifically, you can get a very general sense of their wishes, but the details don't make sense.

I think it's clear that the public wants both spending cuts and tax increases in an effort to reduce the debt.

66% reported yes to the question:
In some proposals, Congress would raise the debt ceiling while cutting between two trillion and four trillion dollars in government spending over the next ten years and raising taxes on some businesses and higher-income Americans. Would you favor or oppose this proposal?

Other questions clearly show the desire for significant spending cuts with tax increases. For example, 73% favor "Increasing the taxes paid by people who make more than 250 thousand dollars a year."

My problem comes with more details. The public does not favor cutting spending on the only areas that really help:
Cutting defense spending - 52% oppose
Cutting pensions and benefits for retired government workers - 68% oppose
Cutting the amount the government spends on Medicaid, the federal health program for the poor - 77% oppose
Cutting the amount the government spends on Social Security - 84% oppose
Cutting the amount the government spends on Medicare, the federal health program for the elderly - 87% oppose.

If you take all the answers seriously, you would conclude that the public wants to decrease the debt by reducing some spending (maybe non-defense discretionary) and _vastly_ increasing taxes to pay for all the other things they don't want to cut. I doubt that's true. Mostly I think the public does not understand the situation well.


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## science

Dr. Mike, thanks for posting the poll (http://i2.cdn.turner.com/cnn/2011/images/07/21/rel11b.pdf).

It looks like Dr. Mike is basing his evaluation of it on #23, which does not ask specifically about the plan he mentioned, but just gives a vague description (an important point: it did not mention taxes). If we looked only at #21 and #22, we'd get a completely different conclusion. All told, this looks a lot like a poll a Democrat would have made up.

I doubt Obama has the willpower to stand up to the GOP on this (he's caved on nearly everything else, even when he had the votes), but if he does, and this poll is accurate, it looks like the public is behind him.


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## Guest

science said:


> Dr. Mike, thanks for posting the poll (http://i2.cdn.turner.com/cnn/2011/images/07/21/rel11b.pdf).
> 
> It looks like Dr. Mike is basing his evaluation of it on #23, which does not ask specifically about the plan he mentioned, but just gives a vague description (an important point: it did not mention taxes). If we looked only at #21 and #22, we'd get a completely different conclusion. All told, this looks a lot like a poll a Democrat would have made up.
> 
> I doubt Obama has the willpower to stand up to the GOP on this (he's caved on nearly everything else, even when he had the votes), but if he does, and this poll is accurate, it looks like the public is behind him.


Actually, question #23 refers specifically to the Cut, Cap, and Balance plan. Here is the wording:
"In another proposal, Congress would raise the debt ceiling only if a balanced budget amendment were passed by both houses of Congress and substantial spending cuts and caps on future spending were approved. Would you favor or oppose this proposal?"


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## science

I saw it before I posted. I don't think it's as specific as you think it is.


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## Almaviva

Although I'm not following this as closely as I should, in my understanding most of the opposition to the Cut, Cap, and Balance plan is that the economy may need focused spending in the future to fend off recessions (it's economically unsound to write a balanced budget requirement into the Federal Constitution, unlike in State constitutions) and the other problem is that it is not a clean proposal like it may seem, but allows some vested interests to hop in by writing into the Constitution some rather unsavory things like protecting some loopholes and permanently gutting some social programs. So it is ideological and lobby-driven rather than meant to protect the interests of the nation and the people. We shouldn't allow our constitution to fall prey to these vested interests. It is not the place for these things. Not to forget all the deceitful posturing because EVERYBODY (including the authors of this plan) knows that the chances that it will pass the Senate are 1 in one million therefore they're just wasting everybody's time instead of working towards a pragmatic solution. I mean, politics as usual, and meanwhile, screw the American people. I find this all profoundly irresponsible, and another example of why our polarization is costing us our previous position as world leaders, and is likely to make of us a second-rate nation in a few more years.


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## science

The 14 Amendment is also a problem, even if that act were to pass somehow. 

It is becoming daily more probable that we will not have a deal, and Obama's administration will have to use it.


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## Almaviva

Section 4 of the 14th amendment establishes the validity of all United States public debt. I'm not a constitutional scholar by any means, so please clarify the issue for me. Recognizing a debt as valid doesn't mean one necessarily has the means to pay it back. That's how people end up in bankruptcy agreements. They recognize a debt, declare themselves unable to pay it at the time, establish some sort of plan, have some of it erased... 

So, is the 14th amendment enough justification for the Administration to unilaterally increase the debt ceiling without congressional approval?


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## science

I don't think anyone knows for sure. In context it was passed to prevent former Confederates from complaining about their taxes contributing to paying the Union war debts. 

Maybe an easier to get forgiveness than permission kind of situation. I think the GOP would secretly like it, because they could campaign on how bad Obama was to do such a thing. The banks will be happy because they get their money. And I can't guess how Democrats will feel. 

Godwilling, though, Obama's done breaking his back for the GOP. Unlikely of course. He'll fold on this, as the GOP knows.


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## Guest

Almaviva said:


> Section 4 of the 14th amendment establishes the validity of all United States public debt. I'm not a constitutional scholar by any means, so please clarify the issue for me. Recognizing a debt as valid doesn't mean one necessarily has the means to pay it back. That's how people end up in bankruptcy agreements. They recognize a debt, declare themselves unable to pay it at the time, establish some sort of plan, have some of it erased...
> 
> So, is the 14th amendment enough justification for the Administration to unilaterally increase the debt ceiling without congressional approval?


Here is the wording of section 4: "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

The key phrase there is "authorized by law" as the constitution is very clear as to which branch of government has the authority to make law. Furthermore, it references only the public debt. From what I have read, the amount that we have to pay to service our public debt each month can easily be payed with the revenue we generate monthly. The only issue will be how all the other government programs will be funded. That will be what the Treasury has to decide. They have to make our debt payments, which they can. They will then have to decide what other programs take priority. So there really isn't a threat of a default. The government is constitutionally mandated to honor our public debt. Everything else is up in the air, but not the debt.


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## Guest

Here's a point of principle which I hope DrMike or others want to debate:

"Successful countries have well-funded and well-functioning governments."

Can anyone deny this point? And with that point in mind, can the current hyper-vigilant response to the moderate US fiscal crisis (while the more serious underlying problems remain unaddressed) be seen as anything other than a mindless charade and distraction from the real problems we face?

Here's another point worth considering:

"An external deficit will kill you faster than a fiscal deficit."

I think even a casual glance at recent events will confirm that this maxim is generally true. Japan has a much larger fiscal deficit and debt, but no crisis because they enjoy a consistent trade surplus. While Greece had weak fiscal discipline, it was their external deficit which drove their fiscal deficit into crisis. Any number of countries on solid fiscal footing got clobbered by their external deficit, including Thailand, Indonesia, Argentina, etc, etc. Russia 1998 is perhaps the only recent clear counter example of a country with a fiscal crisis but no external crisis.

The US would be much better off if it staged a hyper-vigilant response to the trade deficit instead of the fiscal deficit. By moving the US from a deficit of 5% of GDP to neutral or even a surplus of GDP you would (a) boost GDP by 5% or so; (b) stop the ongoing wealth drainage out of the US; (c) increase demand for domestically produced goods, create jobs and ENCOURAGE INVESTMENT (no sound businessperson is going to invest where it doesn't make sense). And (d) take pressure off the fiscal outlook.

One more no-brainer before sleep:

"The US pays 2.4 times the OECD average for a health care system which delivers lower than average results - US life expectancy is below the OECD average and FALLING."

With US health care sector around 7.5% of GDP, achieving OECD norms would greatly reduce pressure on the US fiscal outlook. Admittedly ObamaCare was a poor step in the right direction, but it was a step in the right direction - a direction his opponents castigated him mercilessly for.

Since most OECD countries have better health care systems than the US, we can learn from just about any of them. About half of the more successful countries have socialized medicine, the other half don't but keep costs (and health care profits) on a very short leash. Given the inherent complexity of health care as a "good", it is very hard for free markets to deliver optimal results, as the embarrassingly bad US health care system amply demonstrates.

My general point is that there are lots of things DC could be doing besides driving the US economy over the cliff by drastically curbing fiscal spending in the middle of a deep recession. I suppose the Republicans want to paint themselves as the responsible party in all this. Also, maybe the Republicans are hoping that by going nuts over the fiscal deficit now, people will forget that it was core Republican policy - i.e. reduced government regulation and reduced taxation - which got us into this mess in the first place. (Sadly it's working)

Despite all the confusion, economics is really pretty simple. A country governed by sound economic policy generally shows results within three to five years. The anemic and turbulent fallout of Bush-era tax cuts and deregulation is proof in itself that deregulation and reduced taxation are not the elixirs of economic growth the Republicans seem to believe.

Moreover, there is no law which says that emerging economies must grow faster than developed economies. The fact that China and others are growing so much faster than the US is largely a reflection of the fact that they currently enjoy much sounder economic management.

The US, as long as it focuses on its fiscal problems and ignores its underlying problems will only continue to suffer poor economic performance - including an increasingly likely double-dip recession - and ironically make its fiscal outlook further deteriorate.


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## Ralfy

The high credit rating is given by organizations that also gave similar ratings to investments which in turn are the source of the U.S. economic crash in 2008. Thus, the ratings are overstated and do not reflect the position of an economy that essentially went through four decades of trade deficits and has accumulated almost $60 trillion in total debt, including around $14 trillion in national debt (more than $70 trillion if future liabilities are included), as well as banks exposed to over $370 trillion in unregulated derivatives. That is also why the 2008 crash and subsequent economic crashes are inevitable.

Why the high ratings? Ratings agencies will protect their clients and thus given favorable marks to what are questionable investment packages.

About the other points, having to raise the debt ceiling is inevitable because the U.S. economy is based heavily on continuous borrowing and spending. That is why total borrowing, not just for government but also for households and private corporations, had been going up significantly since 1981, and why something like 70 pct of economic activity is based on consumer spending. In addition, even as tax rates are generally the same as that of other economies, U.S. citizens and corporations benefit significantly from tax breaks, but together with the rest of an economy dependent on what is essentially a propped-up dollar, the military and the government have to dominate other countries in order to receive cheap goods and resources and to ensure that the dollar remains strong. That is why the two major drivers of government deficit include tax cuts and war costs, with the government borrowing significantly to pay for public services and something like 40 pct of war costs funded through foreign loans.

Finally, the only way out of this problem is for everyone to cut down heavily on spending. For example, the U.S. has less than 5 pct of the world's economy but has to keep borrowing to buy 25 pct of world oil production to power up a third of all passenger vehicles. If it is likely that no one--citizens, government, and corporations--will cut down on spending, then chronic economic problems are inevitable.


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## science

Ralfy, the US has about 5% of the world's people, but about 20% of its economy.


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## dmg

Almaviva said:


> In my opinion politicians of ALL parties and ALL political orientations have uniformly these three items as their top three priorities:
> 
> 1. Get money from lobbyists.
> 2. Get money from lobbyists.
> 3. Get money from lobbyists.
> 4. Get re-elected to get even more money from lobbyists.
> 
> The real interest of the people and the nation may, with luck, come as a distant fifth.


Fixed that for you. I do not think they even care about re-election anymore. If you're given enough to retire on from big corporations, why would you?


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## Almaviva

dmg said:


> Fixed that for you. I do not think they even care about re-election anymore. If you're given enough to retire on from big corporations, why would you?


 Oh, but they do care. Power is sweet. Money + continuous power = win-win. And we the people are the losers.


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## science

They're supposed to want to be re-elected. That's a good thing. The bad thing is that we re-elect them many times even after we know they're corrupt. The people are the losers, but we are victims of ourselves as much as we are victims of the politicians. 

All things considered, I'd say we're lucky we're not taken advantage of more often than we are.


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## TxllxT

The US is on the brink of defaulting. I saw on the Dutch news, the BBC & CNN that even the Republicans themselves are acting as a house divided. As the Good Book says: A house divided will not stand. I'm scared that among those Republicans there are quite a lot of people who really welcome a catastrophy of apocalyptic extent: they think it would clear the air. Have these ultra-conservatives got that far, that they are able to steer the helm of the US towards their goal?


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## Aksel

TxllxT said:


> The US is on the brink of defaulting. I saw on the Dutch news, the BBC & CNN that even the Republicans themselves are acting as a house divided. As the Good Book says: A house divided will not stand. I'm scared that among those Republicans there are quite a lot of people who really welcome a catastrophy of apocalyptic extent: they think it would clear the air. Have these ultra-conservatives got that far, that they are able to steer the helm of the US towards their goal?


It's on Norwegian news (it's second only to the shootings the World Championships in swimming, which I guess makes it third) as well, and the newspapers are getting more and more anxious. All are worried that the US will default, something that will have a massive effect on the world economy, now including Norway (we came out of the last recession largely undamaged).


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