Thread: Barack Obama vs. Mitt Romney: Self-restraint in an age of rage

geno,

In a perfect world, perhaps. But when's the last time "later" didn't translate to "never" in domestic politics?

there IS a deadline, ie you'll see the rates tick up-- suddenly republicans have less money for tax cuts and dems have less money for entitlements.

in any case, i have rather more confidence in the political system. clinton, hw, and hell, even reagan enacted meaningful deficit control/deficit reduction measures.

(BTW, the political idea of "deficit reduction now because we can't do it later" is different from the nominal republican economic argument, but i suspect is closer to what well-educated republicans -really- believe. bill gross at pimco, for instance, says this all the time-- before going back to the first boilerplate economic argument about how lower deficits will magically drive up economic growth.)

bonehead,

You have to turn your back on the democrats and the republicans. You also have to get enough people to step out of the political trenches and do the same. Only when that happens you can give D.C. the badly needed enema.

the entire voting structure is built against third parties. one needs to change the structure first, in essence have both parties split off into two parties almost simultaneously, for there to be any reasonable hope of that happening.

it's not going to happen any time soon.

much more realistic is changing the goalposts of the party, ie doing a Clinton.

Originally Posted by dalem

Right. You keep saying that. How does that get you your bonetopia?

-dale

Bonetopia is not a destination, its a journey.
In the mean time you can bet that when either/both parties start losing ground to a third party they will no longer take their voting blocks for granted and will start to play ball with the voters again. Voters really do have some power in the process. They need to flex those voting muscles more often and reach for the KY less often.

Originally Posted by astralis

JAD,

the reason why they can wait is because there's no pressing financial need for us to cut now. the market responds to worrisome debt loads by increasing the cost for a nation to borrow (to reflect the increased risk).

Underline "pressing financial need". Speaking from a financial point of view, you might have a case. From political point of view you'd be well advised not to bring that argument to the debate. A lot of people would look at you like you were from Mars. Or, at best, they would see it a stalling tactic by the other side.

Cutting Federal spending goes beyond pure financial considerations. It's tied to philosophical issues, namely whether or not the Federal government is too involved in people's lives and whether or not it is stepping too heavily on states rights.

... the market has not only said that the US debt is not worrisome in the short-to-medium term, investors also indicate that in a sea of economic instability the US is a relative safe bet.

You have the cart in front of the horse. Yes; investors see US bonds as a safe bet for now, but it doesn't follow that favorable investor sentiment is a substitute for getting our financial house in order, even if rates are low. At some point investors are going to flee US bonds for other investments and then we'll have to offer higher rates to tempt them back, and that means our interest cost will go up.

For every 1% rise in rates interest cost on the debt jumps $160 billion/yr. That's 32 times what we would raise by adopting the Buffett rule, or nearly 1/2 of what we would take in if the Bush tax cuts were allowed to expire. What we should be doing is cutting spending now so we can lower our annual deficits and reduce the need for tax increases. By not cutting spending, we are running the debt up faster.

The debt is currently projected to swell another $4 trillion and reach $20 trillion by 2016--just 4 years from now. If we wait for the economy to return to normal before we start cutting the budget, there's no telling where the debt will be by then. We simply don't know when the economy will return to normal, and when it does our interest cost could be so high that even deeper cuts and stiffer tax increases will be needed to reduce the deficit to a manageable level.

So, even if you discount the political issues, the financial argument for holding off on spending cuts is mighty iffy. Whose brainchild is this?

the stock market principle of "buy low, sell high" makes sense in this context. it does not mean it's an excuse to "do nothing".

No, it doesn't, and yes, it is.

Originally Posted by astralis

bonehead,



the entire voting structure is built against third parties. one needs to change the structure first, in essence have both parties split off into two parties almost simultaneously, for there to be any reasonable hope of that happening.

it's not going to happen any time soon.

much more realistic is changing the goalposts of the party, ie doing a Clinton.

I know something of this nature is not going to be an overnight process, but am not interested in quick fixes. I want a long term solution. Sure the process is against a third party but a few (two ATM?) independents are still in congress so its not impossible. There are already quite a few fence sitters i.e. swing voters who are ripe for the picking. Congressional approval ratings are very low so there are even those in the trenches that might be open for a real change in how things are done. I think there are enough fed up and disenfranchised voters that would be receptive, not to a polished high dollar smear campaign with no substance, but to a candidate that in detail,clearly lays out what they intend to do to fix what ails this country. Sooner or later enough of those people will get in office and really be able to do the things they were put in office for. Sooner or later congress will have to return to representing all the people and not just the people holding bags of money.

Originally Posted by bonehead

You have to turn your back on the democrats and the republicans. You also have to get enough people to step out of the political trenches and do the same. Only when that happens you can give D.C. the badly needed enema.

Ah...I see a candidate for the Tea Party in you.

Originally Posted by JAD_333

Ah...I see a candidate for the Tea Party in you.

Sure. As soon as they start supporting union labor I will come over and kick the tires.

JAD,

Cutting Federal spending goes beyond pure financial considerations. It's tied to philosophical issues, namely whether or not the Federal government is too involved in people's lives and whether or not it is stepping too heavily on states rights.

republicans aren't really using the philosophical argument, however; they know that it is not overly popular. so instead, they've redefined the financial crisis as being debt-driven-- which it is not.

Yes; investors see US bonds as a safe bet for now, but it doesn't follow that favorable investor sentiment is a substitute for getting our financial house in order, even if rates are low. At some point investors are going to flee US bonds for other investments and then we'll have to offer higher rates to tempt them back, and that means our interest cost will go up.

every republican said that the stimulus spending and healthcare would have driven up interest rates by now; instead they've gone down. they predicted massive inflation by now-- that hasn't happened. i haven't seen a cogent response to this. "for some reason it's not happening now but oh, just you wait!" is not a logical argument.

What we should be doing is cutting spending now so we can lower our annual deficits and reduce the need for tax increases. By not cutting spending, we are running the debt up faster.

cutting spending in a weak economy tends to aggravate the recovery, so one ends up shooting oneself in the foot. please refer to cameron's austerity policies and the British debt.

So, even if you discount the political issues, the financial argument for holding off on spending cuts is mighty iffy. Whose brainchild is this?

theoretically, keynes.

what you advocate now is called neo-classical economics, and was tried by BOTH hoover and roosevelt in the last Great Depression. it failed, horribly.

keynesianism popped up as the response to neo-classical economics and largely met with success where it was tried (Germany inadvertently, the US more deliberately). monetarism popped up as another successor to keynes-- but as bernanke has shown, we've followed all of monetarism's precepts to the hilt and it has failed.

practically, there are many good centrist arguments out there for spending now and cutting later. friedman throws a new one out every two weeks or so.

Originally Posted by bonehead

Bonetopia is not a destination, its a journey.
In the mean time you can bet that when either/both parties start losing ground to a third party they will no longer take their voting blocks for granted and will start to play ball with the voters again. Voters really do have some power in the process. They need to flex those voting muscles more often and reach for the KY less often.

Right. The Third Party Journey. Some day, votes will find you!

And on that day, what will bonetopia look like?

-dale

Originally Posted by astralis

JAD,

republicans aren't really using the philosophical argument, however; they know that it is not overly popular. so instead, they've redefined the financial crisis as being debt-driven-- which it is not.

Asty:

I didn't say Republicans. I had in mind anyone who believes the Federal government is overreaching.

every republican said that the stimulus spending and healthcare would have driven up interest rates by now; instead they've gone down.

That's not exactly accurate. Interests rates are being held down by the Fed Reserve and its infusion of fresh money into the system.

they predicted massive inflation by now-- that hasn't happened. i haven't seen a cogent response to this. "for some reason it's not happening now but oh, just you wait!" is not a logical argument.

Again, not accurate. Inflation in basic necessities is stiff, e.g., groceries and the like; slow demand in some other sectors has prompted lower prices, which is why inflation remains officially low. And I am one of those 'illogical' people who thinks inflation will take off when the economy recovers. IMO, those who think otherwise are living on another planet.

cutting spending in a weak economy tends to aggravate the recovery, so one ends up shooting oneself in the foot. please refer to cameron's austerity policies and the British debt.

Well, then explain why the recovery is about to stall again, and we haven't had a budget cut worth writing home about.

what you advocate now is called neo-classical economics, and was tried by BOTH hoover and roosevelt in the last Great Depression. it failed, horribly.

Hoover's mistake was raising taxes, particularly on the rich. Sound familiar?
He also jacked tariffs. He too had a stimulus program (Hoover Dam). In fact, FDR built on what Hoover started.

FDR prolonged the depression in his second term with policies aimed at controlling prices and wages. The economy was in recovery when he implemented a non-competition and wage increase policy drove prices up so high consumers could not afford them. FDR's policies prolonged Depression by 7 years, UCLA economists calculate / UCLA Newsroom

keynesianism popped up as the response to neo-classical economics and largely met with success where it was tried (Germany inadvertently, the US more deliberately). monetarism popped up as another successor to keynes-- but as bernanke has shown, we've followed all of monetarism's precepts to the hilt and it has failed.

Where is Alexander Hamilton when we need him? (Said tongue in cheek.)

practically, there are many good centrist arguments out there for spending now and cutting later. friedman throws a new one out every two weeks or so.

I know the argument. It gets a workout in business too. Borrow to conserve cash to keep the lights on until business gets better. It works, but there's one small detail that escapes those who want to apply it to government: you have to cut spending wherever you can. The government is not doing it that way because some people believe it might stall the recovery. Instead we are borrowing to keep all things constant. That's a cost that will come back to bite us down the road, because when the bill comes due, you know who is going to have to pay and if you-know-who is paying that bill, you-know-who is not consuming what makes industry hum.

BTW, do you trust Friedman? His judgement seems to me to be clouded by personal political leanings.