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Obama says he cannot guarantee Social Security checks will go out on August 3

He had to spend in order to stabilize the crap economy that Bush left him. You think Republicans don't spend? Are you forgetting the 2 wars, the Medicare drug plan, and the Bush tax cuts for the rich, none of which were paid for? ANd who passed TARP? Here's a hint, it wasn't Obama. Maybe you should just quit at this point. You lose.
Well no, he did not have to do what he did to stabilize the economy. Other countries employed different strategies and are much better off for it. Nobody thinks that Republicans don't spend... they think Obama is much worse. TARP?? LOL Bush passed it, & Obama was staunchly behind it. Were he not, he could have chosen not to spend the money. Of course, he did spend the money and the vast majority of it has already been paid back.
 
So Obama isn't holding the country in any financial hostage game? It's just the Republicans here? These faux cuts over 10 years amount again to pissing in the ocean.

No. Cutting spending during this stage of the recovery is some kind of sick joke. You see, once the labor market slack begins to tighten up, the deficit will naturally contract without any new legislation. But as the labor market currently stands, fiscal consolidation will go dollar for dollar in terms of output (GDP) reductions i.e. you cut spending by $500 billion, and GDP falls by that same amount. Therefore, it is critical that the debt ceiling be raised ASAP. Otherwise the bond market will begin to play a different tune.

so SS will be paid, he lied about this.

Just because the trust fund will receive the interest payments/repayments for the scheduled debt that is owed, there is no guarantee that S.S. recipients will receive 100% of their scheduled payments. If it goes this way, something like 70% of the nominal payments would most likely be the result.
 
I'll keep asking, perhaps someone will tackle this question.....



Given all the revenue the government collects each month, who will be paid before the seniors, veterans, and military?



Anyone?
Interest on debt obligations will be paid first. Not sure if there is even a legal requirement that the others be paid - maybe the military.
 
No. Cutting spending during this stage of the recovery is some kind of sick joke. You see, once the labor market slack begins to tighten up, the deficit will naturally contract without any new legislation. But as the labor market currently stands, fiscal consolidation will go dollar for dollar in terms of output (GDP) reductions i.e. you cut spending by $500 billion, and GDP falls by that same amount. Therefore, it is critical that the debt ceiling be raised ASAP. Otherwise the bond market will begin to play a different tune.
That's the Keynsian theory... actual research has shown the opposite. That meaningful and permanent cuts can have a stimulative effect on the economy. If deficit reduction is to occur in a down economy, spending cuts are the single best approach.
 
This is the true debate right here. When one studies economics it becomes apparent that economists are sort of like psychologists, in the sense that they have different schools of thought.

The true debate shouldn't be on the specifics of this deal. The debate should be fought over the validity, the evidence or lack of, Keynsian Theory.

I don't know much about this theory, only a very little. I was taught that the value of dollar in this model is determined by how fast the dollar goes through the economy. This is why you see commercials for debit and credit cards. Sure, the first reason is to advertise the services these cards present, but the second is to push people to use plastic. This inevitably speeds the process at which the dollar is rotated through the economy, thus strengthening the value of the dollar.

Also, if I remember correctly credit is required in this perception of our economy. Credit allows people to spend more, thus speeding up the transfer of money through the economy.

It is with this evidence, that I think it is apparent that Obama believes in Keynsian Theory. He wants to raise the debt ceiling so he can spend more, starting the cycle of the dollar through the economy, and his mind, will strengthen the currency.

The problem is he hasn't realized that this is a school of thought. There are others, that have substantial evidence to show that their school of thought is more accurate.

I was taught a more traditional approach to macroeconomics. I was taught during a recession you cut taxes, this increases the spending power of corporations, thus keeping consumption at a decent level, to the point that maybe they could still hire.

It should be noted, that in both of these views consumption is key. The higher the consumption, the better the economy performs. We are now in a state of saving resources, at least that is what I feel like. Instead of going out and having dinner at a restaurant, I feel more and more people are cooking their own dinners.

I feel like throwing more money in the economy isn't going to get people to consume more. It will probably do the opposite. Seeing the government throw money at the problem, their confidence in our government is going to decrease, resulting in more hording of resources, which in both models isn't good.

We as a people have to think very carefully on how to perceive the economy. Should it be the keynsian school of thought, or others? That is the true debate, not exactly what program you are going to cut, or where you are going to put said resources.
 
No. Cutting spending during this stage of the recovery is some kind of sick joke. You see, once the labor market slack begins to tighten up, the deficit will naturally contract without any new legislation. But as the labor market currently stands, fiscal consolidation will go dollar for dollar in terms of output (GDP) reductions i.e. you cut spending by $500 billion, and GDP falls by that same amount. Therefore, it is critical that the debt ceiling be raised ASAP. Otherwise the bond market will begin to play a different tune.


So we should choke hold folks, and small businesses with spending and tax increases with non producing government jobs to get us out of a recession? I may not have the financial background you do, but this doesn't make much sense to me.



Just because the trust fund will receive the interest payments/repayments for the scheduled debt that is owed, there is no guarantee that S.S. recipients will receive 100% of their scheduled payments. If it goes this way, something like 70% of the nominal payments would most likely be the result.


So on august 2nd, folks will get about 70% if no deal is passed?
 
If you government is responsible for unemployment, you must want them to hire people. Just saying . . . . :coffeepap
 
governor's cuomo's approach:

"we have the worst business tax climate in the nation, period, our taxes are 66% higher than the national average"

"the costs of pensions are exploding... a 476% increase and its only getting worse"

"the state of new york spends too much money, it is that blunt and it is that simple"

"an unsustainable rate of growth and it has been for a long time"

"not only do we spend too much, but we get too little in return"

"the large government we have is all too often responsive to the special interests over the people"

"new yorkers are voting with their feet, two million new yorkers have left the state over the past decade"

"what does this say, it says we need radical reform, it says we need a new approach, we need a new perspective and we need it now"

"this is a fundamental realignment for the state"

"the old way wasn't working anyway, let's be honest"

"we want a government that puts the people first and not the special interests first"

"what made new york the empire state was a not a large government complex, it was a vibrant private sector that was creating great jobs"

"and that's what's going to make us the empire state again"

"at the heart of this state is business"

"we have to relearn the lesson our founders knew and we have to put up a sign that says new york is open for business, we get it, and this is going to be a business friendly state"

"we are going to have to confront the tax situation in our state, property taxes in this state are killing new yorkers, thirteen of the sixteen highest tax counties are in new york when assessed by home value"

"westchester county has the highest property taxes in the united states, nassau county has the second highest"

"it has to end, it has to end this year"

"we have to hold the line on taxes for now and reduce taxes in the future, new york has no future as the tax capital of the nation, our young people will not stay, our business will not come"

"put it simply, the people of this state simply cannot afford to pay any more taxes, period"

"we have to start with an emergency financial plan to stabilize our finances, we need to hold the line and we need to institute a wage freeze in the state of new york, we need to hold the line on taxes, we need a state spending cap and we need to close this $10 billion gap without any borrowing"

GOVERNOR ANDREW M. CUOMO STATE OF THE STATE ADDRESS | Governor Andrew M. Cuomo

the gub aint just talkin, either

Cuomo budget: $10 billion deficit cut, no new taxes, layoffs likely

and that sophisticated new york audience is going wild

Andrew Cuomo approval sky-high, new poll suggests - Jennifer Epstein - POLITICO.com

say what you will, the democrat governor of new york has demonstrated more leadership than any american politician i can recall in quite awhile

there are a lot of others, many democratic---rahm in chicago, quinn in springfield, moonbeam in sacto, malloy in dark blue connecticut, the state legislatures of MA and IL and NJ...

we'll see what results cuomo's cruel austerities bring

we're already seeing school districts in wisconsin, freed from collective bargaining constraints, suddenly shopping around for health care coverage, saving millions and turning district deficits into surpluses overnite

Union curbs rescue a Wisconsin school district | Byron York | Politics | Washington Examiner

Appleton Area School District retains WEA Trust for insurance | Appleton Post Crescent | postcrescent.com

we're seeing states and municipalities across the country trying a broad array of reforms and solutions, many creative and hopeful

we will judge in time by the results they deliver
 
That's the Keynsian theory... actual research has shown the opposite.

You mean that study cpwill has been trying to pass off? :lamo It in no way reflects our current situation. Keynesian theory is what has been used by every administration since 1945. Even the Volker move in the early 1980's is textbook Keynesian prescription to inflation!

That meaningful and permanent cuts can have a stimulative effect on the economy. If deficit reduction is to occur in a down economy, spending cuts are the single best approach.

Maybe in 10-15 years. But in the short term, real output will decrease, dollar for dollar, in terms of budget cuts. You would have to understand the mechanism for which the federal government occurs deficits and how a persistent negative current account balance will necessarily cause the demand for (essentially!) risk free assets to increase.

But hey, you have already considered such aspects of the macro-economy prior to engaging in the discussion... right?;) The data is here; without a valid understanding of macro-theory, it will be meaningless.
 
If you government is responsible for unemployment, you must want them to hire people. Just saying . . . . :coffeepap



Actually no, no I don't Government employees produce nothing. I'd rather the government lower taxes on my business so I can hire more folks to continue to improve and sell my product.


\
 
So we should choke hold folks, and small businesses with spending and tax increases with non producing government jobs to get us out of a recession? I may not have the financial background you do, but this doesn't make much sense to me.

It's very easy to understand. In the absence of real growth and normalized lending, government spending is buoying the market. Cut it by 44%, and out comes the rug from under the market's feet. What Goldenboy is saying, in simple terms, is that once people are actually all working again, the deficit will recede naturally, as GSEs and such will slowly become redundant.

...of course, I'd still rather the debt ceiling not be raised and pay the penalty. But only because I have far less faith in the federal government's ability to meaningfully reduce deficits in the long term. :cool:


You mean that study cpwill has been trying to pass off? :lamo It in no way reflects our current situation. Keynesian theory is what has been used by every administration since 1945. Even the Volker move in the early 1980's is textbook Keynesian prescription to inflation!

...eh. It's also textbook monetarist.

Sorta depends on "which" Keynesianism you mean.
 
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usa today, june 13:

The federal government's financial condition deteriorated rapidly last year, far beyond the $1.5 trillion in new debt taken on to finance the budget deficit, a USA TODAY analysis shows.

The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.

Medicare alone took on $1.8 trillion in new liabilities, more than the record deficit prompting heated debate between Congress and the White House over lifting the debt ceiling.

Social Security added $1.4 trillion in obligations, partly reflecting longer life expectancies. Federal and military retirement programs added more to the financial hole, too.

U.S. funding for future promises lags by trillions - USATODAY.com

61.6 trillion dollars and growing by 5.3 per year

if something isn't done imminently to fundamentally reform our budgets (like cuomo, like the wisconsin school districts), then our big 3 federal programs (and state pensions too) will simply cease to exist as we know them for our next generation

ie, there's not enough revenue in the milky way to make em right

spin, anyone?
 
It is with this evidence, that I think it is apparent that Obama believes in Keynsian Theory. He wants to raise the debt ceiling so he can spend more, starting the cycle of the dollar through the economy, and his mind, will strengthen the cur
To a keynsian, deficit reduction is an economy killer. Perhaps that's what explains Obama's unwillingness to strike a deal (despite the rhetoric) or why some of his spending cuts go into effect in 2035.
 
Actually no, no I don't Government employees produce nothing. I'd rather the government lower taxes on my business so I can hire more folks to continue to improve and sell my product.


\

There's no evidence this would have business hire more. As we can see presently, business is generally making good profits, but not hiring at the moment. Evidence has been produced previously to show that tax cuts and tax increases really have little to no effect on the hiring.

There is much written on this, so you can do your own search if you like, but I will post this for you so you know I have looked as well:

Prevailing conservative wisdom dictates that businesses need tax cuts—and investors need capital gains tax cuts—to get the economy moving. But two very well-executed articles on wages and taxes published recently suggest that targeting tax cuts at business executives may do little to improve the dismal unemployment picture.

[Check out a roundup of political cartoons on the economy.]

The Washington Post offers a startling analysis of income disparity, noting that the gap between the very rich and the rest of us has grown dramatically in the past few decades, reaching current levels that have not been seen since the Great Depression. In 2008, the Post reports, the top one-tenth of one percent of earners took in more than a tenth of the personal income in the United States. But the moneyed class is not dominated by professional athletes or big-name artistic performers or even hedge fund managers, the Post found. Instead, it is due to a big increase in executive compensation, even as real wages for some of their workers have dropped:

Corporate Tax Cuts Don't Stimulate Job Growth - Susan Milligan (usnews.com)
 
It's very easy to understand. In the absence of real growth and normalized lending, government spending is buoying the market. Cut it by 44%, and out comes the rug from under the market's feet. What Goldenboy is saying, in simple terms, is that once people are actually all working again, the deficit will recede naturally, as GSEs and such will slowly become redundant.

But we have the examples of TARP, the Stimulus, QE1 and 2 which are all examples of this thinking and unemployment has went up.
 
So we should choke hold folks, and small businesses with spending and tax increases with non producing government jobs to get us out of a recession? I may not have the financial background you do, but this doesn't make much sense to me.

It would not make sense to me either. But lets consider real fiscal stimulus e.g. public works. Assume that the federal government decided to build a giant wall that sits on the border of Mexico and the U.S. Do they build it? Of course not! They will simply contract it out to the lowest bidding private companies who will then hire more workers, lease/purchase more machinery, set contracts for materials, purchase more insurance, etc.... Such an endeavor would circulate income throughout the macro economy creating real paychecks for people who have a lofty desire to spend (this is America). As long as these specific earners spend 50% of their income on domestic goods, every $1 spent via government will lead to $2 in total income/output/expenditure (you take your pick).

Tax increases with 9.2% unemployment is out of the question. Down the road, it will be critical to raise revenue to the point where it falls in line with the historical average of 18.5% (it is at 15%). But until the labor market shows some real positive momentum, tax cuts are as likely to lead to recession as spending cuts.

So on august 2nd, folks will get about 70% if no deal is passed?

They should get about 2/3 at best. On a per dollar basis, it is more along the lines of 57%, but the elderly population is the largest single voting demographic (with any meaning). Appeasing these voters is critical for job security if you are a politician:)
 
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But we have the examples of TARP, the Stimulus, QE1 and 2 which are all examples of this thinking and unemployment has went up.

I realize that -- but those are individual programs, with mixed results. We're talking about an across the board, 44% cut in government spending, period....which, in times of poor economic growth, takes on some importance.

I'd also like to reiterate that I would prefer the debt ceiling not raised, for the reasons I mentioned above. I acknowledge that the cut in spending will shock the economy. But that seems almost preferable to the long-term alternative, providing the government doesn't get its stuff together.

The difference between mine and Goldenboy's opinion is that he believes the government is savvy enough to raise the debt ceiling now, and begin legitimate long-term uninterrupted austerity in 2012 or some such thing. I don't share his faith, and would rather burn the whole house down immediately :)
'
Still, if the government actually does what he says it will do, I would be satisfied.
 
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You mean that study cpwill has been trying to pass off? :lamo It in no way reflects our current situation. Keynesian theory is what has been used by every administration since 1945. Even the Volker move in the early 1980's is textbook Keynes
Which study was that? I've read numerous studies, all of which specifically address the current situation.The one that comes to mind came out of Harvard. Is that the same as cpwill's?
 
It's very easy to understand. In the absence of real growth and normalized lending, government spending is buoying the market. Cut it by 44%, and out comes the rug from under the market's feet. What Goldenboy is saying, in simple terms, is that once people are actually all working again, the deficit will recede naturally, as GSEs and such will slowly become redundant.

...of course, I'd still rather the debt ceiling not be raised and pay the penalty. But only because I have far less faith in the federal government's ability to meaningfully reduce deficits in the long term. :cool:




...eh. It's also textbook monetarist.

Sorta depends on "which" Keynesianism you mean.

But if you don't raise the debt ceiling and the US defaults, interest rates will rise on the existing debt - thus RAISING the debt by leaps and bounds.
 
But if you don't raise the debt ceiling and the US defaults, interest rates will rise on the existing debt - thus RAISING the debt by leaps and bounds.

Raising the interest rate? Yes.

Make it a little harder to pay back the debt? I guess.

By leaps and bounds? No.

As it stands, interest payments represent a pretty small part of receipts. There'd have to be a truly massive global US bond dump for it to be a big problem....and there won't be.
 
I feel that we are at one of the most important crossroads we have had to face as a country.

Assuming what was said earlier is correct, we have been abiding by Keynsian Theory since 1945. This I feel sheds light to the true purpose of taxing the wealthy. Tax codes usually implement percentages, which means if you are dealing with a larger principle you are going to collect more money. Conservatives look at taxing the rich as wealth distribution, but I do not think that is what the administration is doing. It is using the surplus of cash to spend, keeping consumption and driving money through the economy, following the principles of Keynsian Theory.

The problem in my eyes, is we are dealing with a debt that has never been accumulated this much before. The assumption is that Keynsian Theory is sustainable at all points in time. It is very possible this is a financial outlook that is sustainable for a certain period of time, until the system collapses on itself.

In either case, this crossroad is going to be an economic experiment on Keynsian Theory. Knowing this administration, they are going to follow this perception for as long as they can. They are going to keep spending, and probably, keep borrowing. People in history will examine the decisions that are going to be made now. And they will have in their economic books hard evidence on whether or not Keynsian Theory is sustainable or not.

I can not assume that this outlook on our economy is sustainable in all points of time. That is an assumption that has literally no evidence to back it up. It is childish to think, "It has worked for the past 60 some years, it has got to work now!" It is sort of like driving an off road four wheeler, and assuming that there is no terrain possible that can conquer your four wheeler. You base this assumption with all the land you have conquered in the past. It's faulty logic.

And so I conclude that even though I think Obama has done a good job at least keeping what we have, he has to be put out of office. Sticking by Keynsian Theory this blindly is going to ultimately lead to bad results.

However, when the new president is given the black folder of The Presidency, is he going to be forced to continue what has been done? It could very well be possible we have crossed the point of no return, in which case, it wouldn't really matter who we elect.
 
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I realize that -- but those are individual programs, with mixed results. We're talking about an across the board, 44% cut in government spending, period....which, in times of poor economic growth, takes on some importance.

O.K. we agree there. Other than I'll say the programs were in the big picture, failures.

I'd also like to reiterate that I would prefer the debt ceiling not raised, for the reasons I mentioned above. I acknowledge that the cut in spending will shock the economy. But that seems almost preferable to the long-term alternative, providing the government doesn't get its stuff together.

Agree.

The difference between mine and Goldenboy's opinion is that he believes the government is savvy enough to raise the debt ceiling now, and begin legitimate long-term uninterrupted austerity in 2012 or some such thing. I don't share his faith, and would rather burn the whole house down immediately :)
'
Still, if the government actually does what he says it will do, I would be satisfied.

They are savvy enough but there is no way they would do it.
 
But if you don't raise the debt ceiling and the US defaults, interest rates will rise on the existing debt - thus RAISING the debt by leaps and bounds.

We are NOT going to default.
 
Raising the interest rate? Yes.

Make it a little harder to pay back the debt? I guess.

By leaps and bounds? No.

As it stands, interest payments represent a pretty small part of receipts. There'd have to be a truly massive global US bond dump for it to be a big problem....and there won't be.

I guess it all depends on whether the dollar weakens or strengthens from technical default?!?! Since the debt we are talking about is in dollar terms, paying back fixed amounts in weaker (inflated) dollars would make things easier for those in hock. But, then again economic activity would tank instantanously, thereby reducing reducing real national income(s).

You would think a default would lead to a general price increase...... But...

You would think that tens of trillions of dollars of debt would not allow a general increase in prices when people are out of work in hordes...
 
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