Let Us Talk Politics

[gumbycross]

Me and my friends have been talking quite a bit about the debt ceiling and such and I'm just curious on what some of your views might be on the issues and the over all issues that would came if the debt ceiling isn't raised. It seems obvious that it would be in the US best interest to raise the debt ceiling unless we want to look like we can't pay our debts.

Thoughts?

http://www.cnn.com/2011/POLITICS/07/24/debt.talks/index.html?hpt=hp_t1

[mcm1610]

Fuck the debt ceiling. We don't need it. Only one other country has one. It's stupid.

That said, what the fuck, Repubs. You're holding the economy hostage because of a) Tea Partiers who pledged to never for any reason vote to raise the debt ceiling, the view that any tax increase is the worst thing ever, led by Mr. Super-Serious Eric Cantor, and c) either a false belief or a fake belief in trickle-down economics, that cutting taxes on the wealthy and corporate is the way to boost the economy when it's as close to proven as an economic theory can be that it simply does not work.

Know how we got out of the Great Depression? The world's largest government stimulus bill, named "World War II". As that dude in Sicko said, "If you can have full employment by killing Germans, why can't you have full employment by building hospitals, by building schools, recruiting nurses, recruiting teachers? If you can find money to kill people, you can find money to help people!"

Not really applicable, but I find this graph hilarious.

http://motherjones.com/kevin-drum/2011/07/fun-numbers

Then there's this article from the Onion:

http://www.theonion.com/articles/congress-continues-debate-over-whether-or-not-nati,20977/

WASHINGTON—Members of the U.S. Congress reported Wednesday they were continuing to carefully debate the issue of whether or not they should allow the country to descend into a roiling economic meltdown of historically dire proportions. "It is a question that, I think, is worthy of serious consideration: Should we take steps to avoid a crippling, decades-long depression that would lead to disastrous consequences on a worldwide scale? Or should we not do that?" asked House Majority Leader Eric Cantor (R-VA), adding that arguments could be made for both sides, and that the debate over ensuring America’s financial solvency versus allowing the nation to default on its debt—which would torpedo stock markets, cause mortgage and interests rates to skyrocket, and decimate the value of the U.S. dollar—is “certainly a conversation worth having.” "Obviously, we don't want to rush to consensus on whether it is or isn't a good idea to save the American economy and all our respective livelihoods from certain peril until we've examined this thorny dilemma from every angle. And if we’re still discussing this matter on Aug. 2, well, then, so be it.” At press time, President Obama said he personally believed the country should not be economically ruined.

And then this Mother Jones article:

http://motherjones.com/kevin-drum/2011/07/40-less-government-will-be-fun

40 Percent Less Government Will Be Fun!

— By Kevin Drum

So suppose the debt-ceiling deadline passes. Nothing to worry about, right? There's still enough money for Social Security, Medicare, interest payments, military payrolls, and veterans benefits, isn't there? That's more or less true, but unfortunately, that's all there's money for. (continued at link)

All I do is read political stuff when I'm at a computer.

[almightyseancore]

the economy is a lie.

the government will always take it from you, regardless of what it's "worth".

how can we be in debt when we're the ones that print the money? who do we owe?

shit's a joke.

[gumbycross]

how can we be in debt when we're the ones that print the money? who do we owe?

Its sounds like we owe Asia. We owe Asia a lot for the simple fact we keep borrowing money from them we dont have.

I agree with you on the debt ceiling Matt. I don't know why we have it and what the point is to keep raising it and no one can realllly give me a viable excuse why either. All I know is that we have it and we need to raise it so that social security gets paid, so the soldiers get paid and so we don't default on our debts and spend this country into an even deeper recession then it already is. Just raise it already.

[mcm1610]

That's the spirit!

We as a nation owe ourselves money, other countries money, contracted corporations money, investors, etc.

http://www.marketoracle.co.uk/Article1571.html

With international markets, people simply buy up dollars so that our money has value, but there's so much more to it than that. Housing is an easy example: you buy a house using a mortgage. The bank turns around and sells your debt. Some investment bank/hedge fund buys up debt like this, then turns around and sells it again to someone else, some speculator.

To say it's all "a lie" is laughably simplistic. It's all intangible, especially in a digital age, but it's certainly there.

[mcm1610]

how can we be in debt when we're the ones that print the money? who do we owe?

Its sounds like we owe Asia. We owe Asia a lot for the simple fact we keep borrowing money from them we dont have.

I agree with you on the debt ceiling Matt. I don't know why we have it and what the point is to keep raising it and no one can realllly give me a viable excuse why either. All I know is that we have it and we need to raise it so that social security gets paid, so the soldiers get paid and so we don't default on our debts and spend this country into an even deeper recession then it already is. Just raise it already.

I agree with everything until the bolded statement. I, and many people with similar views, don't believe you can "spend" yourself INto recession. To boost an economy, money has to move somehow.

Actually, let me clarify. You can spend yourself into a recession if you're an idiot. Privately, you'd do that by having thousands of dollars in credit card debt you can't pay off. Publicly, the government would have to have ruined its reputation so badly that no one will let us owe them money, which doesn't affect future spending. Those that we owe money to would just call in the bills from past spending.

[gumbycross]

Ha meant to say send haha. I agree with spending moving the economy as well. That's why I feel extending the bush tax cuts is a joke and this supposive tax cap is a joke as well. When businesses get a tax break they do what any other intelligent person would do, they fucking save. The truth is taxes need to be raised and things need to be cut (medicare and medicad) sad but true. To get the country back on track everyone has to take a hit. Clinton did this in has term and we actually ended with a surplus of money. Bush came in with his tax cuts for the 2% and this tickle down economy bullshit theory and 2 wars and whose getting the blame? Not Bush.

[gumbycross]

Its sounds like we owe Asia. We owe Asia a lot for the simple fact we keep borrowing money from them we dont have.

I agree with you on the debt ceiling Matt. I don't know why we have it and what the point is to keep raising it and no one can realllly give me a viable excuse why either. All I know is that we have it and we need to raise it so that social security gets paid, so the soldiers get paid and so we don't default on our debts and spend this country into an even deeper recession then it already is. Just raise it already.

I agree with everything until the bolded statement. I, and many people with similar views, don't believe you can "spend" yourself INto recession. To boost an economy, money has to move somehow.

Actually, let me clarify. You can spend yourself into a recession if you're an idiot. Privately, you'd do that by having thousands of dollars in credit card debt you can't pay off. Publicly, the government would have to have ruined its reputation so badly that no one will let us owe them money, which doesn't affect future spending. Those that we owe money to would just call in the bills from past spending.

We're just afraid of ruining our A1 credit.

[gumbycross]

Boehner is a fucking idiot. From looks of the little rebuttal he felt he had to make tonight after the presidents speech. He is the only one who sounds like a child.

[GradedOnACurve]

Boehner is a fucking idiot.

This

[kurtz]

Here's a more recent article about who we owe and how much. (Matt's was from '07)

http://globalpublicsquare.blogs.cnn.com/2011/07/21/who-owns-america-hint-its-not-china/?hpt=hp_bn2

Hong Kong: $121.9 billion (0.9 percent)

Caribbean banking centers: $148.3 (1 percent)

Taiwan: $153.4 billion (1.1 percent)

Brazil: $211.4 billion (1.5 percent)

Oil exporting countries: $229.8 billion (1.6 percent)

Mutual funds: $300.5 billion (2 percent)

Commercial banks: $301.8 billion (2.1 percent)

State, local and federal retirement funds: $320.9 billion (2.2 percent)

Money market mutual funds: $337.7 billion (2.4 percent)

United Kingdom: $346.5 billion (2.4 percent)

Private pension funds: $504.7 billion (3.5 percent)

State and local governments: $506.1 billion (3.5 percent)

Japan: $912.4 billion (6.4 percent)

U.S. households: $959.4 billion (6.6 percent)

China: $1.16 trillion (8 percent)

The U.S. Treasury: $1.63 trillion (11.3 percent)

Social Security trust fund: $2.67 trillion (19 percent)

It's still the same conclusion though. We owe ourselves the majority.

[kurtz]

I don't know if this has been brought up before, but are we allowed to just forgive the debts owed to say, the US Treasury?

[mcm1610]

I don't know specifically, but we can just decide that the debt ceiling means nothing and keep racking up debt.

[bruins4ever]

I don't know specifically, but we can just decide that the debt ceiling means nothing and keep racking up debt.

In theory yes, until a country decides that they want to get paid and decides to call in the payment and the USA can't pay it. But yes, Boehner is an absolute idiot. He's dragged his feet on this entire thing. Hasn't it already been proven that the tax cuts didn't actually increase employment? Company's don't immediately head out and hire a shit ton of people because they owe less money, most of the time it's saved as someone in this thread said earlier. The potential downgrade of the credit rating is somewhat scary as the economy see's the American bond as the safest investment you can make, so while there likely wouldn't be a massive depression or hit to the economy because of it, it would definitely shatter some confidence in what is a weak market.

Which is precisely why I think the concept of a perpetually growing economy is bullshit. The economy is an idea, it's not a tangible thing, and it's constricted because of the nature of our world. It's not infinite, so in what way would it make sense that the economy (which is a social construct) could just continue to grow unimpeded? I dunno, the whole situation is laughable.

[bruins4ever]

the economy is a lie.

the government will always take it from you, regardless of what it's "worth".

how can we be in debt when we're the ones that print the money? who do we owe?

shit's a joke.

Well, you can't just print money on a whim like that (even though that is what is happening) forever. It leads to hyperinflation which is a problem. Money only has value if people believe that it has value, and since it's not commodity money or backed by a commodity (ie. gold standard or money in the form of something that isn't paper or plastic) and if you continue to print money to pay off debts, suddenly the concept of it's value falls apart. Debt is owed to a wide number of places, a lot of it is held by the American public (mortgages) and some is owed to other countries (China, Japan, etc.) It's all quite convoluted.

[jerseydave77]

I don't know specifically, but we can just decide that the debt ceiling means nothing and keep racking up debt.

Both sides are being disingenuous in the debate. Dems need to acknowledge there is a need for reform because our current system isn't sustainable. Republicans need to admit the tax code is broken - how corps profiting billions can get billions back in tax rebates (after the public bailed them out to much sacrifice) is unforgivable.

There is a need for a debt ceiling since right now over 30% of the Federal budget is going into paying interest on the money owed. It is sinful. If we had kept the national debt in check to begin with then we wouldn't be in a situation where we are talking about raising taxes or cutting social services.

The amount of dishonesty and unrealistic expectations on both parties is what drives me to be an Independent. Mix in some fucking Libertarians or Tea Partiers and I want to hide under a rock. The blame game is obnoxious in a moment when political posturing is so damaging.

Anyway, I have no expectations that anyone will do the right thing and I'll continue to pay my bills and taxes like always and more or less throw my hands in the air that the last decent politician I voted for was Bill Bradley.

[mcm1610]

I don't know specifically, but we can just decide that the debt ceiling means nothing and keep racking up debt.

In theory yes, until a country decides that they want to get paid and decides to call in the payment and the USA can't pay it. But yes, Boehner is an absolute idiot. He's dragged his feet on this entire thing. Hasn't it already been proven that the tax cuts didn't actually increase employment? Company's don't immediately head out and hire a shit ton of people because they owe less money, most of the time it's saved as someone in this thread said earlier. The potential downgrade of the credit rating is somewhat scary as the economy see's the American bond as the safest investment you can make, so while there likely wouldn't be a massive depression or hit to the economy because of it, it would definitely shatter some confidence in what is a weak market.

Which is precisely why I think the concept of a perpetually growing economy is bullshit. The economy is an idea, it's not a tangible thing, and it's constricted because of the nature of our world. It's not infinite, so in what way would it make sense that the economy (which is a social construct) could just continue to grow unimpeded? I dunno, the whole situation is laughable.

Read up on Fareed Zakaria. He argues that China isn't out to fuck the US because the Chinese economy relies so heavily on it. Also, like we've shown in this thread, we owe ourselves most of the money, so if the UK called in it's 2% that we owe them, we could probably do that without destroying ourselves. But why would the UK do that? It would ruin economic ties between the two nations. But back to China, they rely on our purchasing of their goods so much that they actually adjust their exchange rates based on how our dollar floats. Most nations have a floating currency and China does not, they artificially value their dollar based on other currencies, and mostly want to make their goods attractive to us.

I'm getting lost in my own thoughts, but the point is that while the "American Century" is probably nearing it's end, we're not disappearing, even if we can't get out of our own way politically. We're still the largest economy, so the rest of the world benefits from our economic activity. That's why only idiots are actually rooting for us to tank.

[mcm1610]

I don't know specifically, but we can just decide that the debt ceiling means nothing and keep racking up debt.

Both sides are being disingenuous in the debate. Dems need to acknowledge there is a need for reform because our current system isn't sustainable. Republicans need to admit the tax code is broken - how corps profiting billions can get billions back in tax rebates (after the public bailed them out to much sacrifice) is unforgivable.

There is a need for a debt ceiling since right now over 30% of the Federal budget is going into paying interest on the money owed. It is sinful. If we had kept the national debt in check to begin with then we wouldn't be in a situation where we are talking about raising taxes or cutting social services.

The amount of dishonesty and unrealistic expectations on both parties is what drives me to be an Independent. Mix in some fucking Libertarians or Tea Partiers and I want to hide under a rock. The blame game is obnoxious in a moment when political posturing is so damaging.

Anyway, I have no expectations that anyone will do the right thing and I'll continue to pay my bills and taxes like always and more or less throw my hands in the air that the last decent politician I voted for was Bill Bradley.

Right, but you don't balance a budget in a shit year just like you don't balance it in a fantastic year. So to say, "we need to cut the deficit now!" is ridiculous while we sit idle as an economy. Get out of the immediate problems (which don't include the deficit, but rather getting people back to work and back to consuming) and THEN you can fix the deficit. You don't undo the national debt in the short term, so to overreact and cut every government program in the now is a terrible, terrible idea.

Anyway, I'm with you on the disgraceful political parties. I can't see myself ever joining a party.

[bruins4ever]

In theory yes, until a country decides that they want to get paid and decides to call in the payment and the USA can't pay it. But yes, Boehner is an absolute idiot. He's dragged his feet on this entire thing. Hasn't it already been proven that the tax cuts didn't actually increase employment? Company's don't immediately head out and hire a shit ton of people because they owe less money, most of the time it's saved as someone in this thread said earlier. The potential downgrade of the credit rating is somewhat scary as the economy see's the American bond as the safest investment you can make, so while there likely wouldn't be a massive depression or hit to the economy because of it, it would definitely shatter some confidence in what is a weak market.

Which is precisely why I think the concept of a perpetually growing economy is bullshit. The economy is an idea, it's not a tangible thing, and it's constricted because of the nature of our world. It's not infinite, so in what way would it make sense that the economy (which is a social construct) could just continue to grow unimpeded? I dunno, the whole situation is laughable.

Read up on Fareed Zakaria. He argues that China isn't out to fuck the US because the Chinese economy relies so heavily on it. Also, like we've shown in this thread, we owe ourselves most of the money, so if the UK called in it's 2% that we owe them, we could probably do that without destroying ourselves. But why would the UK do that? It would ruin economic ties between the two nations. But back to China, they rely on our purchasing of their goods so much that they actually adjust their exchange rates based on how our dollar floats. Most nations have a floating currency and China does not, they artificially value their dollar based on other currencies, and mostly want to make their goods attractive to us.

I'm getting lost in my own thoughts, but the point is that while the "American Century" is probably nearing it's end, we're not disappearing, even if we can't get out of our own way politically. We're still the largest economy, so the rest of the world benefits from our economic activity. That's why only idiots are actually rooting for us to tank.

There's no way China would just pull the rug out. It would cause ripples far across the global economy that I don't think anyone could possibly predict. A strong US economy means a strong Chinese economy. I was more thinking along the lines of a hypothetical situation if someone decided to call back debt. I actually enjoy reading Fareed on CNN when I see his articles.

It's just a very strange situation, and I think if anything it's helping a lot of people to at least pay attention to a thing they may not have ever thought about, even though most of the rhetoric is completely retarded.

[mcm1610]

ALL of it is retarded. The whole situation is, and the terrible political situation it highlights is pathetic. I was reading something the other day comparing it to the situation leading up to Shay's Rebellion and that in some political circumstances (the rebellion, slavery around the Civil War), there just isn't a possible way to compromise and one side in fact does have to just beat the other. This person said today's shithole seems like one of those situations. Compromising on some half-assed bill doesn't get us anywhere but back in the same place, so either we raise it and dramatically fix the problem, or don't raise it, crash ourselves and rebuild, we have to do one or the other.

[bruins4ever]

ALL of it is retarded. The whole situation is, and the terrible political situation it highlights is pathetic. I was reading something the other day comparing it to the situation leading up to Shay's Rebellion and that in some political circumstances (the rebellion, slavery around the Civil War), there just isn't a possible way to compromise and one side in fact does have to just beat the other. This person said today's shithole seems like one of those situations. Compromising on some half-assed bill doesn't get us anywhere but back in the same place, so either we raise it and dramatically fix the problem, or don't raise it, crash ourselves and rebuild, we have to do one or the other.

Now what would your idea for fixing the problem be? I'm a huge proponent of cutting spending and raising taxes. It HAS to be a two pronged approach. You kinda can't have one without the other, as I don't think either will make a sizable dent in the problem. It's quite pathetic with the amount of political posturing and unwillingness to compromise. It honestly seems as though there's no room to work with one another because both sides are so brazenly stubborn, it's completely destroyed any chance of a compromise.

I hate that the Republicans are so against tax increases. It's become a total squeeze on the middle class. When you've got something like 5% of the population holding 90% of the wealth and paying zero taxes, there's a severe problem.

[mcm1610]

ALL of it is retarded. The whole situation is, and the terrible political situation it highlights is pathetic. I was reading something the other day comparing it to the situation leading up to Shay's Rebellion and that in some political circumstances (the rebellion, slavery around the Civil War), there just isn't a possible way to compromise and one side in fact does have to just beat the other. This person said today's shithole seems like one of those situations. Compromising on some half-assed bill doesn't get us anywhere but back in the same place, so either we raise it and dramatically fix the problem, or don't raise it, crash ourselves and rebuild, we have to do one or the other.

Now what would your idea for fixing the problem be? I'm a huge proponent of cutting spending and raising taxes. It HAS to be a two pronged approach. You kinda can't have one without the other, as I don't think either will make a sizable dent in the problem. It's quite pathetic with the amount of political posturing and unwillingness to compromise. It honestly seems as though there's no room to work with one another because both sides are so brazenly stubborn, it's completely destroyed any chance of a compromise.

I hate that the Republicans are so against tax increases. It's become a total squeeze on the middle class. When you've got something like 5% of the population holding 90% of the wealth and paying zero taxes, there's a severe problem.

With my Econ degree, I'm a pretty firm Keynesian. You don't want to raise taxes in a recession, but cutting programs is conservatively at least equally bad to do. I firmly, firmly believe it is worse.

When you tax, you're taxing people who may not be thriving, but they're surviving. When you cut spending, you're ripping the rug out on people who need it. You're underfunding education, crippling the future generation. You're cutting Medicaid/Medicare, Welfare, Unemployment, and other things that people desperately depend on to survive. Most importantly, though, you are reducing the impact of the single largest actor in the economy. Whether you agree with it or not, no single entity spends as much money as the federal government currently does, so by cutting $3 trillion, you're immediately sucking that money and it's cyclical impact out of the economy.

There's also the elasticity of taxes vs. spending. By cutting spending, you've lost that dollar spent. By raising taxes, people don't cut that money out as lost in the same exact manner. It gets substituted by less savings, but maybe $.80 still gets spent because you still need to eat and buy gas, etc.

People like to argue that FDR's programs didn't get us out of the Great Depression, so federal spending failed. What pulled us out of the GD? World War II. What was WWII? The largest stimulus bill anyone could have imagined with federal spending through the roof for 4 or 5 straight years.

If we could keep taxes consistent and not cut them as soon as we have a boom year, my ideal situation would be to spend us out of this recession with plenty of stimulus, then recoup it later. The obvious problems come in having the faith that we can actually rebound out of this and that our leadership will stick with the plan and not squander the recovery and never recoup that spending. That's what boom years are for, though: reducing the debt, not cutting taxes. Clinton saw that. Bush... well...

[steventangent]

yeah

[mcm1610]

See, even those trying to milk the economy for everything the rest of us got think spending cuts are a terrible plan.

http://jaredbernsteinblog.com/austerity-warning-135-when-did-masochism-become-a-viable-economic-policy/

From a new research note from Goldman Sachs (no link):

“A review of the spending and tax data at the federal, state, and local level suggests that a significant part of the weakness in economic activity in 2011 so far is due to fiscal retrenchment. In the first quarter, the Commerce Department estimates that spending cuts at the federal, state, and local level subtracted 1.2 percentage points from the annualized pace of real GDP growth; moreover, the expiration of the “Making Work Pay” federal tax cut and hikes in state taxes probably offset most, if not all, of the boost to disposable income from the temporary payroll tax cut.

In the second quarter, the fiscal policy impact was probably smaller, but still negative. Indeed, monthly data on defense spending, state and local employment, and state and local construction all show a clear downward trend for 2011 so far.”

It’s not clear which budget plan, if any, we’ll end up with. But unless we want to start posting naughts on the GDP, we’d better be sure spending cuts are as backloaded as possible. Nothing should start in 2012 and probably not in 2013 either. That won’t matter at all to the deficit, but it could matter a lot to the unemployment rate.

[mcm1610]

I should write for these economic blogs! This is what I've been saying for months now in my class and in discussions.

---

The risks of reaching a deal

http://www.washingtonpost.com/blogs/ezra....r ss=ezra-klein

“The problem is that aggregate demand is very weak from consumers and businesses. If government cuts spending in the near term, raises taxes in the near term, that would be a drag on growth,” says Gus Faucher, director of macroeconomics for Moody’s Analytics. He distinguishes “good” and “bad” deficit reduction: The good kind would reduce government spending when the economy is stronger, which would reduce long-term interest rates and free up more money for the private sector to spend and invest. By contrast, the bad kind of deficit reduction “would focus on cutting spending right now, while the economy is still weak.”

Similarly, authorities such as the International Monetary Fund have dismissed (pdf) the idea that austerity measures would help an economy such as the United States’ in the short term, pointing out that few cases exist where sharp cuts led to fast growth in countries where employment was robust, interest rates were high (so the monetary authorities could compensate for the cuts), and exports were strong — conditions that don’t apply to the United States. More normally, they concluded, “a fiscal consolidation equal to 1 percent of GDP typically reduces GDP by about 0.5 percent within two years and raises the unemployment rate by about 0.3 percentage point.”