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Obama sending Congress $4T budget replete with new spending, taxes

LagerHead said:
Entitlements are not THE problem. They are A problem, among many.



I would at least cut every single one of those, and eliminate several.
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Good for you, but it misses the context of why it was presented.

People (voters) repeatedly show they have no real commitment to cutting the deficit, as the chart reveals.
 
SlevinKelevra said:
Good for you, but it misses the context of why it was presented.

People (voters) repeatedly show they have no real commitment to cutting the deficit, as the chart reveals.
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People repeatedly don't vote on budgets.
 
LagerHead said:
People repeatedly don't vote on budgets.
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Say what you will about the abysmal members of Congress, but (most of them) are still people. And they vote based on the "promises" they made to their constituents they represent. Those constituents said "You better not cut MY _X__"
 
SlevinKelevra said:
It's nice that you just admitted that caring for our veterans is the result of liberal brainwashing.
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Keep digging that hole deeper showing how little you know about the budget of the United States and making Gruber look brilliant
 
SlevinKelevra said:
Say what you will about the abysmal members of Congress, but (most of them) are still people. And they vote based on the "promises" they made to their constituents they represent. Those constituents said "You better not cut MY _X__"
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They vote based on what will buy them the most votes and based on the orders received from the lobbyists and corporations who fill their election coffers. I guess you could have basically been saying the same thing using slightly different wording.
 
Crovax said:
Most of that is entitlement spending, you could argue whether or not that is in the scope of the federal govt but that conversation would be about half a century to late. I favor pragmatic solutions over rhetoric.
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Yes, most of that is entitlement spending which is why it remains on budget being funded by IOU's as trillions have been spent in the past and is gone now. It should be removed from the budget but politicians like the slush fund just like they will love ACA's slush fund as well
 
LagerHead said:
They vote based on what will buy them the most votes and based on the orders received from the lobbyists and corporations who fill their election coffers. I guess you could have basically been saying the same thing using slightly different wording.
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It is about self preservation and keeping a job for life. Power is created by creating dependence and that is what entitlement spending has done. Term limits will solve much of this
 
Crovax said:
You are talking about the symptom not the disease. Sure dropping our 483 billion deficit to 300 billion would help but long term it doesnt fix anything
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It was just a starter number. And since we cant cure the disease, we might as well manage the symptoms.
 
ttwtt78640 said:
Imagiine that - yet another Obama "budget" that increases federal spending and taxes. ;)
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I know... shocker right? :mrgreen:

Conservative said:
Very good post, thank you. What I wanted to point out is that there are Obama supporters here giving him credit for reducing the deficit and what I pointed out is that he has no interest in reducing the deficit but only spending more money to implement his commitment to transform this country into a European economic model. He is nothing more than a big spending, irresponsible, incompetent individual whose goal is to continue creating dependence and thus a permanent liberal leadership in D.C.
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The sheeple liberals and progressive love him. We should count ourselves lucky that the spending is slowing down a bit and the debt issue will be kicked down the road to hopefully - one day - be addressed by a serious adult. Who that is, I don't know.

Crovax said:
Our debt/gdp ratio cant hold like this forever and ss, medicare and medicaid will be underfunded in a few years.

Its a fact that fixes are needed and why would you waste time on a short term fix
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Kick the can down the road mentality. It's near a Washington institution.

jonny5 said:
It was just a starter number. And since we cant cure the disease, we might as well manage the symptoms.
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Agreed... but I can't say I much care for the management methodology or style.
 
LagerHead said:
Entitlements are not THE problem. They are A problem, among many.



I would at least cut every single one of those, and eliminate several.
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for 2014 entitlements cost 2.4 trillion and we had 3.0 trillion in taxes. How can you fund the rest on 600 billion when the defense budget itself is just around 600 billion.
 
jonny5 said:
It was just a starter number. And since we cant cure the disease, we might as well manage the symptoms.
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We can cure it just both sides have vested interests in not doing so.
 
Crovax said:
We can cure it just both sides have vested interests in not doing so.
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And that is our fault. The politicians just reflect our priorities because that's the way we vote. If you want streamline government, then you need to convince voters that it is the right thing to do.
 
Conservative said:
It is about self preservation and keeping a job for life. Power is created by creating dependence and that is what entitlement spending has done. Term limits will solve much of this
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Which is why we will never get term limits. Anyone who thinks one of these powermongers is going to vote themselves out of the honey pot is beyond naive.
 
Crovax said:
for 2014 entitlements cost 2.4 trillion and we had 3.0 trillion in taxes. How can you fund the rest on 600 billion when the defense budget itself is just around 600 billion.
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By using politician math. To them 1-2-3-4-5-6 somehow comes out to a positive number. Of course, we're just not smart enough to understand that.
 
Conservative said:
Very good post, thank you. What I wanted to point out is that there are Obama supporters here giving him credit for reducing the deficit and what I pointed out is that he has no interest in reducing the deficit but only spending more money to implement his commitment to transform this country into a European economic model. He is nothing more than a big spending, irresponsible, incompetent individual whose goal is to continue creating dependence and thus a permanent liberal leadership in D.C.
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That argument is an easy to make, all we have to do is evaluate actual spending vs. wanted spending (i.e. go back through Obama's submitted wants going back to 2009.)

The major source of contention will then become our economic model. If we can show well that our model is based in dependence on government spending, then it is elementary to suggest Obama is just further sliding the scale towards higher levels of dependence. Dependence equates to votes.

But we already know what is permanent from DC these days from ole (D) and (R.) Elections based upon the promise of less contribution to the treasury in taxation, more spending from the treasury in dependence, or some terrible combination of the two.
 
Conservative said:
It is about self preservation and keeping a job for life. Power is created by creating dependence and that is what entitlement spending has done. Term limits will solve much of this
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I, too, used to think that Term limits could be a panacea for less corruption and more accountability. Then I came to wonder how much it would really improve the Federal govt. Would we just be replacing current puppets with new puppets?
 
OrphanSlug said:
Overall principle to keep in mind with these things is the perspective of spending and taxation as percentages of GDP.

GDP for 2014 is estimated at $17.4 Trillion, the estimate for 2015 seems to be close to $18.2 Trillion which seems ambitious to me given how far off the CBO usually is. Spending for 2104 seems to be somewhere in the $3.65 Trillion range (20.9% of GDP) with revenues being somewhere in the $3.0 Trillion range (17.3% of GDP.) Political gridlock over the 112th and 113th Congresses allowed for the gap in spending and revenues to close, but it also put us in an awkward position to handle spending in our economic model that is now entirely dependent upon continued spending increases. Unfortunate consequence of economic policy devoid of economic principles. But at the end of the day Obama does not get to claim he cut the deficit, political gridlock did more for that than any spending intentions Obama has proposed at any point during his Presidency.

Obama's spending / taxation changes plan for 2015 has several flaws. One that ambitious GDP growth estimate for 2015 over 2014. According to the CBO we are looking at an almost 5% jump in GDP for this year. Might happen but we have enough economic indications that growth might continue to slow down. Assume for a moment we see a 3% growth for this year and that equates to $17.9 Trillion for 2015 GDP. That would mean that Obama spending wants becomes 22.3% of GDP (or higher and roughly the 2010 percentages in spending to GDP.) And that is a two way street, meaning if GDP growth under-performs then odds are revenues under-performs and we see deficits inch back upwards. Also, Obama's plan destroys us getting Total Debt below 100% of GDP.

The good news is much like previous Obama spending / taxation desires he now faces an all Republican 114th Congress who will most likely ignore the budget / taxation requests and we see another round of "class warfare" type mic time. In the end I suspect that spending will still inch upwards from the $3.65 Trillion 2014 number but probably not to the extent that Obama would have liked. Continued gridlock will be the story for the next 2 years, that will include budget constraints, but still increases year on year.

You also have to keep in mind that politically Republicans will talk about fiscal irresponsibility *so long as* political opposition controls the White House. Now, assuming that 2016 is favorable to Republicans where they keep Congress for the 115th and get a Republican President then they will go on a spending spree. Odds are just with a marginal GDP growth for 2015 and 2016 we will eclipse spending more than $4 Trillion in a year anyway in spending as a percentage of GDP perspective. 2016 seems to be the target for that to happen regardless of political gridlock or the economy at the time. If Republicans go with the normal mantra of tax cuts and wealth protection route in 2016 at the same time as these high 20% ('ish) spending as a percentage of GDP they will inflate the deficits as well putting a strain on the cost of debt. Right about the time debt becomes more expensive again.

Seems to me we need a real fiscal conservative to come in and decide what spending we can live without. And that is extremely unlikely given today's political climate and this weak, debt based, and prone to bubble and pop economic model we run.
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I would just like to note that when we talk about government spending as a percentage of GDP that tends to obscure the fact that government spending is a component of GDP. We must remember that the GDP figure we see can be dramatically effected (for political purposes) by increased government spending. For example, if Gross Consumption, Investment and Net Exports remain unchanged year to year a 2% increase in government spending will show a 2% increase in GDP even though the only thing that happened is that the government handed out more money.
 
Lutherf said:
IFor example, if Gross Consumption, Investment and Net Exports remain unchanged year to year a 2% increase in government spending will show a 2% increase in GDP even though the only thing that happened is that the government handed out more money.
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Close, but not quite.

Federal spending is around 20% of the US GDP. A 2% increase in federal spending is a 0.4% increase in GDP.
 
SlevinKelevra said:
inflation, a larger population to service, and negative real interest rates.
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LOL !!

How would this budget help '' service " more people ?

And how does it help the middle class and American consumers ?
 
Monte said:
I, too, used to think that Term limits could be a panacea for less corruption and more accountability. Then I came to wonder how much it would really improve the Federal govt. Would we just be replacing current puppets with new puppets?
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The difference being you wouldn't have to deal with those incompetent puppets forever like you do now.
 
Visbek said:
Close, but not quite.

Federal spending is around 20% of the US GDP. A 2% increase in federal spending is a 0.4% increase in GDP.
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Hell, then why not increase Federal spending to 40 percent of GDP ?

It would according to you equate to higher GDP numbers.
 
Lutherf said:
I would just like to note that when we talk about government spending as a percentage of GDP that tends to obscure the fact that government spending is a component of GDP. We must remember that the GDP figure we see can be dramatically effected (for political purposes) by increased government spending. For example, if Gross Consumption, Investment and Net Exports remain unchanged year to year a 2% increase in government spending will show a 2% increase in GDP even though the only thing that happened is that the government handed out more money.
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Correct, in macro economic terms GDP = C + I + G + NE (Ex - Im) or GDP is equal to Consumer Spending on Goods and Services (C) + Investment made by Industry (I) + Government Domestic Spending (G) + Net Exports (or Exports - Imports, NE.) In our case NE is still not positive the last time I looked.

Our issue is handling the fundamentals of the economic cycle. There is a point on the cycle where it makes sense for government spending (G) to increase in a way as to influence investment made by industry (I) and start to compensate for consumer spending on goods and services (C.) That is a matter of handling aggregate demand deficiencies in an economy, or deal with recessions and handling the recovery points of the cycle.

To your example if we can show GDP is on the rise faster than increases in government spending then we can safely assume that consumer spending and investment by industry is starting to increase. What we are seeing is a split in behavior from 2009 to 2013 and then 2014 to projected numbers out to 2020. Between 2009 and 2013 we saw elevated spending from $3.51 Trillion in 2009 to $3.61 Trillion in 2011 and back down to $3.52 Trillion for 2014. We have not spent below $3.45 Trillion nor gone above $3.6 Trillion during the time period. But spending as a percentage of GDP has seen us fall from 24.4% in 2009 to 20.3% in 2014. So it is then safe to say we are dependent upon that government spending to push GDP upwards but it does not represent all our growth.

For this thread what Obama is proposing is an increase in spending back towards the 22.3% range (or higher) with dubious suggestions on increasing tax revenues from overly optimistic GDP growth numbers. That is a big potential problem if GDP growth ends up just as you suggest, only pushed upwards by the government spending part of the equation where all other elements of the equation go stagnant year on year. It means tax revenues cannot possibly go up enough to cover the increased spending. If the increased spending does not equate to handling aggregate demand deficiencies then it means we add to Total Debt via Debt held by the Public from increased deficits *and* we see a rough recovery slow down even further. Or, more dependence and debt as the OP suggests.
 
Crovax said:
Our debt/gdp ratio cant hold like this forever....
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Actually, it can. A 100% debt-to-GDP ratio causes no issues whatsoever, as long as the government has sufficient revenues to make interest payments. The claims that a 100% ratio impedes an economy are false.


ss, medicare and medicaid will be underfunded in a few years.
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Medicaid is funded directly by the federal and state governments. By definition, it cannot be "underfunded."

SS and Medicare are pay-as-you-go systems, which are funded by payroll taxes. For decades, payroll taxes have brought in more revenues than they spent, and for many years the surplus went into a trust fund. What will happen in a few years, if we don't adjust things, is that payroll taxes won't cover those costs.

However, this is pretty much just sleight of hand. Taxes are taxes are taxes, and there's nothing magical about payroll taxes, except that we've struck this arrangement to make people pay for these services out of wages rather than all forms of income. It's like a man saying he's dying of thirst, because he wants to drink only from the empty glass in front of him, and he refuses to drink from the full mug next to it.

That said, yes SS and Medicare will take up larger shares of the budget, and we really ought to do something about it. The real issue in that regard is factors like the rising cost of medical care for the elderly, and demographic bubbles that are beyond our control.
 
OrphanSlug said:
Correct, in macro economic terms GDP = C + I + G + NE (Ex - Im) or GDP is equal to Consumer Spending on Goods and Services (C) + Investment made by Industry (I) + Government Domestic Spending (G) + Net Exports (or Exports - Imports, NE.) In our case NE is still not positive the last time I looked.

Our issue is handling the fundamentals of the economic cycle. There is a point on the cycle where it makes sense for government spending (G) to increase in a way as to influence investment made by industry (I) and start to compensate for consumer spending on goods and services (C.) That is a matter of handling aggregate demand deficiencies in an economy, or deal with recessions and handling the recovery points of the cycle.

To your example if we can show GDP is on the rise faster than increases in government spending then we can safely assume that consumer spending and investment by industry is starting to increase. What we are seeing is a split in behavior from 2009 to 2013 and then 2014 to projected numbers out to 2020. Between 2009 and 2013 we saw elevated spending from $3.51 Trillion in 2009 to $3.61 Trillion in 2011 and back down to $3.52 Trillion for 2014. We have not spent below $3.45 Trillion nor gone above $3.6 Trillion during the time period. But spending as a percentage of GDP has seen us fall from 24.4% in 2009 to 20.3% in 2014. So it is then safe to say we are dependent upon that government spending to push GDP upwards but it does not represent all our growth.

For this thread what Obama is proposing is an increase in spending back towards the 22.3% range (or higher) with dubious suggestions on increasing tax revenues from overly optimistic GDP growth numbers. That is a big potential problem if GDP growth ends up just as you suggest, only pushed upwards by the government spending part of the equation where all other elements of the equation go stagnant year on year. It means tax revenues cannot possibly go up enough to cover the increased spending. If the increased spending does not equate to handling aggregate demand deficiencies then it means we add to Total Debt via Debt held by the Public from increased deficits *and* we see a rough recovery slow down even further. Or, more dependence and debt as the OP suggests.
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I've also got a problem with "Aggregate Demand" since it counts government spending twice. It's counted directly one time and then it's also counted as a function of Consumption.
 
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