Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

[unofan]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

Now you economists can help me here, but it seems for every manufacturing job sent oversees means USD's taken out of circulation of the US economy.

Except, once again, we aren't really losing manufacturing jobs overseas, we're losing them to robots.

The trade deficit has been shrinking, and oil makes up approximately half the deficit. Once China allows their currency to float, much of the rest will disappear with it.

The obvious problem with protectionist policies is that they harm everyone else. Sure, steel tariffs may protect 10,000 jobs in pennsylvania. But they cost 100,000 jobs everywhere else since construction of everything from buildings to roads to cars slows due to higher steel prices. And yes, I'm making up the numbers, but the principle illustrated is proven.

 

[Kepler]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

And frankly in a post cold war, where international travel, trade and relations are at an all time high...your military sector is easily the most wasteful and fruitless spending at the federal level.

Geriatric medicine is probably worse from a cost-benefit analysis.

The military private sector could be incredibly lucrative if we cut down on buying our own stuff and sold to everybody else. Get a little regional conflict cooking between China and India and sell to both sides. Iran and Israel is another missed opportunity. Maybe revive the Hun vs the Bear, the Classic Rock of suicidal land warfare. After they partially destroy each other Halliburton could clean up on reconstruction contracts.

We do the same thing today, but it's an internal income redistribution scheme moving money from middle class taxpayers to upper class majority shareholders in Lockheed Martin. Switch it up so it's Ahmed, Tevye, Sing and Ping paying our companies to build tanks to destroy banks and then banks to collect money for tanks.

It's also a good idea because then they never learn how to build them themselves. "The hand that you hold is the hand that holds you down." The Brits kept their second empire humming for 200 years doing that.

 

[huskyfan]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

people may be stupid but markets are always smart. let them go. lower taxes, cut the wasteful spending, make a business friendly environment.

 

[blockski]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

Well, screw it, then. The economy collapsed, so I guess Congress is off the hook. Spend away!

6% spending growth is ridiculous. The economy will never grow that fast, and compounding is a remoreseless master. Decisions are not made in a vacuum. So the economy collapsed. You know what? Life sucks - deal with it. The government shouldn't try to get in the business of papering that over that with quick-fix solutions (stimulus, auto bailouts, TARP, extended unemployment benefits, etc) to try to maintain everyone's standard of living. Everyone needs to tighten their belts - including those who rely on the government for entitlements, employment, or contracts. I work for a company that does a ton of defense work, so for me personally, it would be great if spending continued at present levels - right up until the point that the debt and inevitable inflation killed the whole economy.

This is why I bring it up - your laundry list of programs you object to (TARP, auto bailouts, stimulus, UI) aren't the primary drivers of that spending growth at all. They're the difference between the 5.9% growth in 01-07 and the 6.1% growth between 08-10. What's more is that those programs actually prevented the GDP side of the equation for being even worse than it could be.

If you had listed medical costs, social security, and interest on the debt, then I could take your point more seriously. Instead, you've listed off a bunch of targets that aren't even the problem.

Should the government be in the business of entitlements? That's debatable, but there's no question in my mind at all that the government should be in the business of preventing economic collapse.

 

[5mn_Major]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

Except, once again, we aren't really losing manufacturing jobs overseas, we're losing them to robots.

The trade deficit has been shrinking, and oil makes up approximately half the deficit. Once China allows their currency to float, much of the rest will disappear with it.

The obvious problem with protectionist policies is that they harm everyone else. Sure, steel tariffs may protect 10,000 jobs in pennsylvania. But they cost 100,000 jobs everywhere else since construction of everything from buildings to roads to cars slows due to higher steel prices. And yes, I'm making up the numbers, but the principle illustrated is proven.

Ding, ding.

Let them have the steel jobs and then go sell the engineering services to build the roads, offer the retailer for them to drive to and sell them the case of Coke which was the reason they hopped in the car to begin with...

 

[Bakunin]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

government spending at all levels has been increasing at almost the exact same rate as it was 2001-2007, and it's been the shrinking GDP growth (and thus, shrinking tax revenue) that brings on the deficits.

Why is it ok for spending to be increasing at the same rate it was in '01-'07? If private citizens spent like gov't did (ignoring their income completely), they'd be filing for bankruptcy en masse.

We simply cannot continue spending in excess of revenue - the difference has to be borrowed and financed by T-bill buyers (read: foreign investors). Do you think they will continue to accept the paltry yields on our bonds in perpetuity? If we don't get our fiscal house in order - and soon - the Chinese et al will stop buying our debt (and I'd be remiss to ignore the fact the Chinese are p*ssed at the Fed's QE2 money printing). If that happens, consumer interest rates (and the cost of servicing US debt) will skyrocket. You think times are bad now? Wait 'til the 2 yr and 10 yr yields shoot over 5% to attract reluctant buyers and double the cost of servicing the debt. When that happens (and it will eventually), you can say goodbye to a few hundred billion more per year on debt interest payments.

The simple fact of the matter is the longer we wait to try to fix this problem, the more difficult it will be to actually do it (bigger debt = bigger debt payments and a smaller remaining pool of money).

As for future spending to cut, it's obvious: defense and entitlements make up the vast majority of the federal budget. To solve this problem, nothing can be sacred - the budget knife will have to hit all areas. To pay down the debt (and not just get rid of the deficit), tax revenue will have to go up - and that will only happen through some combination of economic growth and higher tax rates / eliminated tax credits/deductions.

 

[Bob Gray]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

Why is it ok for spending to be increasing at the same rate it was in '01-'07? If private citizens spent like gov't did (ignoring their income completely), they'd be filing for bankruptcy en masse.

We simply cannot continue spending in excess of revenue - the difference has to be borrowed and financed by T-bill buyers (read: foreign investors). Do you think they will continue to accept the paltry yields on our bonds in perpetuity? If we don't get our fiscal house in order - and soon - the Chinese et al will stop buying our debt (and I'd be remiss to ignore the fact the Chinese are p*ssed at the Fed's QE2 money printing). If that happens, consumer interest rates (and the cost of servicing US debt) will skyrocket. You think times are bad now? Wait 'til the 2 yr and 10 yr yields shoot over 5% to attract reluctant buyers and double the cost of servicing the debt. When that happens (and it will eventually), you can say goodbye to a few hundred billion more per year on debt interest payments.

The simple fact of the matter is the longer we wait to try to fix this problem, the more difficult it will be to actually do it (bigger debt = bigger debt payments and a smaller remaining pool of money).

As for future spending to cut, it's obvious: defense and entitlements make up the vast majority of the federal budget. To solve this problem, nothing can be sacred - the budget knife will have to hit all areas. To pay down the debt (and not just get rid of the deficit), tax revenue will have to go up - and that will only happen through some combination of economic growth and higher tax rates / eliminated tax credits/deductions.

Don't you know, federal spending is not constrained by reality, the laws of physics, or anything else known to man, let alone the example of household spending constraints.

 

[LynahFan]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

This is why I bring it up - your laundry list of programs you object to (TARP, auto bailouts, stimulus, UI) aren't the primary drivers of that spending growth at all. They're the difference between the 5.9% growth in 01-07 and the 6.1% growth between 08-10. What's more is that those programs actually prevented the GDP side of the equation for being even worse than it could be.

If you had listed medical costs, social security, and interest on the debt, then I could take your point more seriously. Instead, you've listed off a bunch of targets that aren't even the problem.

Should the government be in the business of entitlements? That's debatable, but there's no question in my mind at all that the government should be in the business of preventing economic collapse.

I didn't object to those items because they were driving spending increases. I objected to those items because they were "quick fixes" that IGNORED the real spending drivers.

So I think we're on the same page.

 

[MattS]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

Why is it ok for spending to be increasing at the same rate it was in '01-'07?

It's ok because blockski agrees with the bailout spending. He's just like most people. They all agree that we spend too much, but can't stand it when talk of cutting, or in this case not spending, their pet programs no matter what the cost. There is always a reason for spending to be OK. Beside, didn't you get the memo that the world would collapse if the US gov't did nothing during this resession? Conquest, war, famine, and death were at our doorstep!

 

[MinnFan]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

As far as the bailouts go, they are a long way from being paid off. Heck, the GM IPO won't even cover half of the bailout.

 

[blockski]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

Why is it ok for spending to be increasing at the same rate it was in '01-'07? If private citizens spent like gov't did (ignoring their income completely), they'd be filing for bankruptcy en masse.

Did I say it was?

I'll save you the trouble: no, I did not.

What I am saying is that there are two distinct issues here: long term spending growth (represented by the chart from '01-'07) and the economic malaise we're in now (represented by the chart from '08-'10).

The first issue is a long-term problem, but it was also a rather small problem that could easily be fixed (back in the Bush years) with relatively painless tax cuts and/or spending cuts.

The primary focus of the second problem is the sluggish economy. Here's where the bailouts come in- without those bailouts, the economy would be much worse, hence our deficit/debt problem would be much larger.

I didn't object to those items because they were driving spending increases. I objected to those items because they were "quick fixes" that IGNORED the real spending drivers.

So I think we're on the same page.

Yes, I think so. Like I said above, those were indeed quick fixes - but I don't think anyone really asserted they would fix everything. Those programs were triage for the economy.

It's ok because blockski agrees with the bailout spending. He's just like most people. They all agree that we spend too much, but can't stand it when talk of cutting, or in this case not spending, their pet programs no matter what the cost. There is always a reason for spending to be OK. Beside, didn't you get the memo that the world would collapse if the US gov't did nothing during this resession? Conquest, war, famine, and death were at our doorstep!

You can't seriously lump "bailouts" and "pet programs" together. The bailouts, as distasteful as they might have been, were a one-time deal meant to keep our economy afloat. Anything you might call 'pet programs' certainly wasn't a bailout and likely is part of regular ol' spending - which is part of a different problem. It's also likely that those 'pet programs' aren't really the issue, unless the pet programs you refer to are medical costs, social security, etc - programs that are so large and serve so many people that they can't really be labeled as anyone's 'pets.'

Here's why I support the bailouts - because the economy would be far worse without them. We would have faced complete economic collapse. Given the choice of bailing out those companies or complete economic doom, I'll take the bailouts. How about you?

 

[Tundra]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

This is why I bring it up - your laundry list of programs you object to (TARP, auto bailouts, stimulus, UI) aren't the primary drivers of that spending growth at all.

If you had listed medical costs, social security, and interest on the debt, then I could take your point more seriously. Instead, you've listed off a bunch of targets that aren't even the problem.

But it is. stimulus $862billion (tax cuts, credits, benefits etc...) $700billion TARP, $716billion national spending (war on terror) etc...
we'll ignore the real unfunded liability of $5trillion guarantees we made for housing related assets for the banks. And the $2trillion toxic assets bought by the Fed.

I think all the able bodied unemployed should be conscripted into our military or civil support and sent to Afghanistan if they want to extend unemployment checks. + no need for bonuses for recruitment, man power is plenty and cheap and we lower unemployment numbers.

I've hard time taking this post seriously when pundits are focused more about the FUTURE debt problems from social security and medical care costs. it's a red herring, misdirection, worst of the worst deflection of the current problems, government over spending, inept regulations and regulators and greed is good mentality.

Social security has $2trillon surplus.. so it's not going broke anytime soon.
Medical cost is going up 8%? /yr vs what 3%/yr for defense spending?
So the simplest solution is to cap it and when the inflation of healthcare goes up like housing did 20%/yr. instead of making it affordable by guaranteeing the loans for over priced houses (medical services) we need to cap the open-ended government commitment.

I've yet to see our regulators/congress/bankers take full responsibility for the current mess we're in, it's always, we didn't see it coming, we didn't have enough resources, we didn't have the power, we followed the rules, we only care about making money for ourselves and our shareholders....

 

[MattS]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

You can't seriously lump "bailouts" and "pet programs" together. The bailouts, as distasteful as they might have been, were a one-time deal meant to keep our economy afloat. Anything you might call 'pet programs' certainly wasn't a bailout and likely is part of regular ol' spending - which is part of a different problem. It's also likely that those 'pet programs' aren't really the issue, unless the pet programs you refer to are medical costs, social security, etc - programs that are so large and serve so many people that they can't really be labeled as anyone's 'pets.'

Here's why I support the bailouts - because the economy would be far worse without them. We would have faced complete economic collapse. Given the choice of bailing out those companies or complete economic doom, I'll take the bailouts. How about you?

My fault. I didn't mean to imply they were/are the same in this context. When I use the term "pet" I was meaning that as a term for a program that people support because think will help them the most. For you, in this context, it's bailouts. For others it might be SS, or defense spending or what have you.

I am just pointing out that you and lots and lots of people (at times myself) get caught up in what they think is OK for spending. You think the bailouts were OK and that was the only way to go. You think it's OK to spend more than we have because it would be worse without it. For other people, say the old, think we have to spend more on SS because they deserve it. Still, other's think we need to spend more on defense, because of the nasties that are out there in the world or because their jobs depend upon it.

Bottom line is spending is spending. One can always justify it if they work hard enough at it. Some heart sting to tug, or some reason why we will all be better off. We have been doing too much of it and it needs to stop. The gov't might possibly have held off a depression for the time being. But we have learned nothing. It seems to me that we are hell bent on creating another boom economy based on some unsustainable growth pattern that in another 5 years we be back to the same place just with a bigger deficit. The new motto..."We need to cut spending but only if it doesn't effect me!"

 

[Tundra]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

Did I say it was?

I'll save you the trouble: no, I did not.

What I am saying is that there are two distinct issues here: long term spending growth (represented by the chart from '01-'07) and the economic malaise we're in now (represented by the chart from '08-'10).

its related. the growth (GDP, gov spending especially local/state) came from easy monetary policy and leverage of the housing market. Wealth effect from house prices, GDP job creation (construction, loan officer, investment bankers, lawyers etc...), And higher government revenue from income, property, sales taxes.

We're deleveraging and yet to keep our economy from totally stalling we are injecting liquidity (via more debt or printing money: easier monetary again for the banks/investors) ... only problem is all that money isn't going to the borrowers but instead kept by the banks to shore up their balance sheet (deleverage) and to make money for themselves using interest carry trade (save our financial system).

So most of the money has been going to shore up the banks. simple solution would be full employment via ww2 methods: conscription, price control. full employment for war on terror and maybe build out the railroad, about $2-3 trillion stimulus

Well this guy was totally wrong about Ireland. although maybe Irish will eventually come out better off than us.

http://ezinearticles.com/?Ireland-Vs-US---Budget-Deficit,-Unequal-Rules&id=3105477

Just as Ireland was courting Silicon Valley in the United States for its technology sector to relocate, it also adopted US banking standards - or the lack thereof. The result was that both the US and Irish markets collapsed at the same time for much the same reasons and both will take the slow road back to recovery. Ireland may have the last laugh, however.

The European Union has rules regarding member countries debt to GDP ratios with a ceiling set at 3% before sanctions set in. In light of recent economic developments the EU wisely decided to give extensions to five member countries; the UK, Ireland, Greece, Spain and France, all with deficits now above the EU ceiling. Last year Ireland's deficit was 2.5% but this is expected to quickly rise to about 11% by the end of 2009 and 13% in 2010.

 

[pirate]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

The problem in America right now is the companies who really make the money right now don't produce anything of value. That really is what Elizabeth Wareen is saying.

I'm not saying she has never said that, but her views on the role of her new profit-bashing machine have not included comments on the value of the products produced by American companies...that I am aware of. If she did I would think there are a few US companies that would disagree with her and she should be removed from her perch immediately.

She's back in her ivy cocoon within 2 years.

 

[MinnFan]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

Social security has $2trillon surplus.. so it's not going broke anytime soon.
Medical cost is going up 8%? /yr vs what 3%/yr for defense spending?
So the simplest solution is to cap it and when the inflation of healthcare goes up like housing did 20%/yr. instead of making it affordable by guaranteeing the loans for over priced houses (medical services) we need to cap the open-ended government commitment.

SS actually paid out more than it took in last year. It has a surplus of IOUs, but I don't think those are worth too much.

The issue with capping Medicare payments is that you are going to get delays in care since you are no longer covering costs and docs aren't going to take new patients. (see Mass., Canada, etc). Not saying we shouldn't cap it, but people have to be aware of the effect it will have.

 

[MinnFan]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

California and Texas provide a good study of models of gov't

 

[Bakunin]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

Social security has $2trillon surplus

...a surplus held in gov't bonds that have to be paid for by present/future tax revenue. In other words, there is no social security surplus.

Of course, I'm sure the Fed solution to this one is the same as it is for everything else: Bernanke snaps his fingers and makes a few hundred billion dollars appear out of thin air in the misguided belief that there are no consequences whatsoever for doing that (such as a devalued currency, angry trading partners, and future inflation).

Blocksi - I don't believe the spending problem could have easily been fixed in the Bush years - the economic growth during his presidency was clearly a mirage in hindsight given the housing bubble that was being inflated at the time. Strangely, you cling to the notion that interventionist government "saved" us from a bigger calamity. I would contend that same interventionist government took us down that road in the first place by fiddling endlessly with monetary policy - a policy that helped create the dot-com bubble of the '90s and the real estate bubble of the '00s. With QE1 behind us and QE2 underway, I can only imagine what the next asset bubble will be - my initial guess is emerging markets. The money has to flow somewhere, and the returns are to be had in places like Brazil, India, and China. I'm sure those governments are all thrilled at the prospect of a wave of dollars flooding their capital markets.

 

[ScoobyDoo]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

The Baby Boomers, the most selfish generation to grace the planet, have now started getting their government written Social Security and Medicaid checks. Bankruptcy is inevitable. They drove us to it while they've been in power, and now they're going to finish the job.

 

[Bob Gray]

Re: Obama XVII: Do You Take Your Tea Party with One Sugar or Two?

The Baby Boomers, the most selfish generation to grace the planet, have now started getting their government written Social Security and Medicaid checks. Bankruptcy is inevitable. They drove us to it while they've been in power, and now they're going to finish the job.

We don't agree often, but we do here. Time to batten down the hatches.