The 112th Congress - The first Orange-American to be elected Speaker

[Kepler]

Re: The 112th Congress - The first Orange-American to be elected Speaker

If Obama doesn't offer a serious counterproposal, we will be assured of a couple things: 1) the Dems will do nothing but rip on the GOP for attempting to cut spending (and they'll do it in the usual fashion of saying the GOP wants to starve the poor, kick old people out on the street, etc), and 2) the Dems will completely cede the issue of fiscal responsibility to the GOP for the 2012 campaign. If voters give a **** about that as much as they did in 2010, you can kiss the rest of Congress and the presidency goodbye (assuming of course that the GOP doesn't nominate a complete dolt - and that's assuming a lot with them).

Correct.

S l o w l y inflating our way out is probably a good 10-15% of the solution. Of course I'm sure every other western central bank has the same idea, and what is inflation if all currencies inflate at the same rate?

[ScoobyDoo]

Re: The 112th Congress - The first Orange-American to be elected Speaker

Bakunin, I'm comparing to Ryan's plan.

Ryan cuts $5.8 Trillion in government spending over the next ten years, relative to current policy path. It is a cut of $6.2 Trillion relative to the Obama budget.

http://politicalticker.blogs.cnn.com...get-breakdown/

From what I've see the Bush Tax Cuts nets 4.4 Trillion over 10 years. And the Defense Budget would go down by 400 billion a year to get to 2001 levels which is another 4 trillion in 10 years. So, I've saved 8.4 trillion which is more than Ryan has saved.

[Kepler]

Re: The 112th Congress - The first Orange-American to be elected Speaker

Take Ryan's plan, strip out his tax cuts, and take the Scooby Plan's defense cuts and repeal of Bush's tax cuts.

I just saved us $14.2 trillion.

Of course, $1.4 trillion per year only brings us back to roughly balancing the budget (the projected Pre-Kepler-Plan deficit will be $1.6 trillion in 2011), so the debt itself is untouched.

[Bob Gray]

Re: The 112th Congress - The first Orange-American to be elected Speaker

We'll agree to disagree, but I'd add if you begin with those assumptions then of course you are going to lose. Bankruptcy changes a lot of things. Put it this way -- defense spending is going to go down dramatically between now and 2025. It's only a question of whether it goes down like the US after WW1 or it goes down like the Russians after 1989.

We'll see. If Obama's proposal is just one more "kick the can down the road," then we can all boo him off the stage together.

What are we running in deficit, about 30% of the budget per year? That means raise revenues 15% and cut spending 15%. Or inflate our way out of it and have stagflation* that makes the Oil Shock look like a day at the beach.

* while this would be terrible, it would have the advantage of taking the rest of the world down with us. It would have the disadvantage that economic crises inevitably provoke political and military crises. Taiwan would look like a nice, ripe cherry to a Beijing regime about to go under.

Agreed. All spending will go down, it's just a matter if we manage it's decline in some fashion, or if the decision is made for us eventually by fiscal realities eventually. Everybody's untouchables in the budget will have to be touched substantially. No other approach will do enough and get support from both sides (if such a deal is possible with the quality of leadership on both sides of the aisle).

Taiwan's situation will gradually become more and more tenuous, as we are less able to project enough strength to keep the mainland at bay. That could be a real ugly situation.

[MinnFan]

Re: The 112th Congress - The first Orange-American to be elected Speaker

Bakunin, I'm comparing to Ryan's plan.

Ryan cuts $5.8 Trillion in government spending over the next ten years, relative to current policy path. It is a cut of $6.2 Trillion relative to the Obama budget.

http://politicalticker.blogs.cnn.com...get-breakdown/

From what I've see the Bush Tax Cuts nets 4.4 Trillion over 10 years. And the Defense Budget would go down by 400 billion a year to get to 2001 levels which is another 4 trillion in 10 years. So, I've saved 8.4 trillion which is more than Ryan has saved.

Thats if you repeal all of the Bush tax cuts. If you only do it for those making over $250K you get approx $70B per year. That leaves you a long ways off from filling the hole.

The rich aren't getting richer
Thought this was a great read. Basically shows that while the top X% of income earners wealth is increasing the people that comprise the top percentage is constantly changing. The wealth is being spread around.

[Kepler]

Re: The 112th Congress - The first Orange-American to be elected Speaker

Taiwan's situation will gradually become more and more tenuous, as we are less able to project enough strength to keep the mainland at bay. That could be a real ugly situation.

It could be, although I think Taiwan's current "just beyond our grasp" status is worth A LOT to a stable PRC regime. It's like Fiume for Italian irredentists or Roe v Wade for the GOP.

But the moment the Beijing regime feels threatened all bets are off.

[Bob Gray]

Re: The 112th Congress - The first Orange-American to be elected Speaker

It could be, although I think Taiwan's current "just beyond our grasp" status is worth A LOT to a stable PRC regime. It's like Fiume for Italian irredentists or Roe v Wade for the GOP.

But the moment the Beijing regime feels threatened all bets are off.

That's certainly another angle on it. I just tend to think that eventually, when China feels they're in a good enough position, they'll want to take back the island where the Nationalists all escaped to when they lost the battle for mainland China.

[unofan]

Re: The 112th Congress - The first Orange-American to be elected Speaker

Correct.

S l o w l y inflating our way out is probably a good 10-15% of the solution. Of course I'm sure every other western central bank has the same idea, and what is inflation if all currencies inflate at the same rate?

Inflation is the measure of the time value of money, it means a dollar tomorrow is worth less than a dollar today. Inflation is a battle with time, not other countries per se.

[Kepler]

Re: The 112th Congress - The first Orange-American to be elected Speaker

That's certainly another angle on it. I just tend to think that eventually, when China feels they're in a good enough position, they'll want to take back the island where the Nationalists all escaped to when they lost the battle for mainland China.

I wonder if taking Hong Kong wound up a net loss for them? I'm seriously unsure -- there's that balance between getting a larger slice of the pie but also shrinking the pie due to more oppressive policies. I read somewhere a long time ago that if the Soviets had simply let the Warsaw Pact countries have mixed rather than captive economies they would have wound up clearing far more off the more healthy trading partnerships, even with the smaller market share. The US has known this for 80 years in Central America.

[Bakunin]

Re: The 112th Congress - The first Orange-American to be elected Speaker

Of course, $1.4 trillion per year only brings us back to roughly balancing the budget (the projected Pre-Kepler-Plan deficit will be $1.6 trillion in 2011), so the debt itself is untouched.

The fact we're wringing our collective hands this much just trying to balance the budget shows us how far out of whack things have gotten. A balanced budget is only the first step; paying down the debt has to follow (unless you want to continue servicing $10T+ in debt in perpetuity; personally I think that's horribly reckless since we're not going to benefit from these low interest rates forever). There's also the unfunded entitlement bogeymen of Medicare and Social Security. Anyone who dares mentioning reforming the latter gets destroyed by AARP and their allies, which is sad because the ****ing program can be saved pretty easily if we cut benefits modestly and means test to some degree. Medicare will probably require some creative thinking to prevent that program from completely imploding.

As far as inflation goes, that is just another form of taxation - the only difference is that it's the monetary policy form of it rather than the fiscal. In any case, I don't trust the Fed to create or manage "gradual" inflation. The only thing they've shown themselves capable of is inflating bubbles. It's been about 30 years since we had a guy that really knew what the **** he was doing there.

[unofan]

Re: The 112th Congress - The first Orange-American to be elected Speaker

The wealth is being spread around.

But not as much as it is in other countries. Our income quintiles are less mobile than most other industrialized nations. More precisely, while someone in the bottom quintile might move up to the 2nd lowest or even the middle, they are unlikely to jump to the top one. And those that do move all the way up were generally in the bottom quintile only temporarily, such as when they went to grad school and their income dropped to near zero.

Also, I like how the National Review cherry picks stats throughout that article. For instance, they talk about quintiles throughout, but when talking about the rich getting poorer, the switch to a minute fraction - the top 1/100th of 1%, or .01%. Somehow I'm guessing the people who fell from that didn't fall all the way down to another quintile, except for maybe the lottery winners.

[unofan]

Re: The 112th Congress - The first Orange-American to be elected Speaker

Taiwan's situation will gradually become more and more tenuous, as we are less able to project enough strength to keep the mainland at bay. That could be a real ugly situation.

Taiwan's fine until the Chinese develop a true navy. They could wipe it off the earth with missiles/nukes, but they aren't even close to being able to invade it.

[Kepler]

Re: The 112th Congress - The first Orange-American to be elected Speaker

The fact we're wringing our collective hands this much just trying to balance the budget shows us how far out of whack things have gotten. A balanced budget is only the first step; paying down the debt has to follow (unless you want to continue servicing $10T+ in debt in perpetuity; personally I think that's horribly reckless since we're not going to benefit from these low interest rates forever).

Absolutely, although I would think that if we truly had a real balanced budget (say, running right at zero or only fractionally in the red for ten years) we'd have all sorts of healthy things going on in the rest of the economy that would bring us longterm economic benefits.

If we could get even a little into the black (permanently, not just a one time bookkeeping trick) and applied all surplus to paying down the debt we'd have a virtuous circle -- every year there would be less debt interest hence greater surplus hence greater pay down of the debt...

[Kepler]

Re: The 112th Congress - The first Orange-American to be elected Speaker

Taiwan's fine until the Chinese develop a true navy. They could wipe it off the earth with missiles/nukes, but they aren't even close to being able to invade it.

They could invade using chains of people, like ants.

[Bob Gray]

Re: The 112th Congress - The first Orange-American to be elected Speaker

Taiwan's fine until the Chinese develop a true navy. They could wipe it off the earth with missiles/nukes, but they aren't even close to being able to invade it.

I've read a number of articles in recent years regarding how China is significantly beefing up their navy. Certainly they are nowhere near a match for the U.S. and won't be at least for a good while, but they wouldn't need to be to go across the Formosa Strait and invade Taiwan. Certainly the Taiwanese wouldn't make it easy, but China's proximity to the situation would make it very challenging for the U.S. to stop such an invasion, especially as China's military modernizes and the technology gap between ourselves and China shrinks. I don't think it's likely in the short term, but if things keep going the way they are, it's gradually will become a more viable option for China if it's willing to risk the casualties, international repercussions, etc. of such a move.