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Thread: The US Recovery

  1. #571
    Resident Curmudgeon Military Professional Gun Grape's Avatar
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    Quote Originally Posted by Doktor View Post
    Who said the ceiling must be raised?
    The 14th Amendment of the US Constitution and SCOTUS rulings such as the 1935 case Perry v. United States,

    “by virtue of the power to borrow money ‘on the credit of the United States,’ the Congress is authorized to pledge that credit as an assurance of payment as stipulated--as the highest assurance the Government can give, its plighted faith.”
    Its called Tourist Season. So why can't we shoot them?

  2. #572
    Senior Contributor Doktor's Avatar
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    Quote Originally Posted by Gun Grape View Post
    The 14th Amendment of the US Constitution and SCOTUS rulings such as the 1935 case Perry v. United States,
    What budget?
    No such thing as a good tax - Churchill

    To make mistakes is human. To blame someone else for your mistake, is strategic.

  3. #573
    Global Moderator Defense Professional JAD_333's Avatar
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    Quote Originally Posted by Gun Grape View Post
    Yea because our Navy is only bigger than the next 19 navies combined. Our Air force is the largest in the World. The US Navy has the second largest Air Force in the world.

    I think we will be safe even if we continue to cut the budget for a few more years.
    This is not to say you aren't right that we will be safe for a few more years of budget cuts, but how in the world did you come up with our navy being larger than the next 19 countries combined when China and Russia combined have more warships than we do. https://en.wikipedia.org/wiki/List_o..._with_warships

    If you were to say "more powerful" that might be true.

    As to whether we would be safe with more budget cuts, I suppose we can agree on that specific point, but safety isn't the only consideration. As our military weakens, which is happening due to cuts, our adversaries abroad are more likely to ignore our threats. Also, we'll have to adjust our foreign policy accordingly, and our ability to protect our interests abroad will certainly be weakened.

    Then there is the momentum factor. A shrinking military is not so easy to turn around, and as we saw in the 1980s, pretty expensive to fix. We're being penny wise and pound foolish by at least not maintaining a steady military budget. It will cost us dearly down the line.
    Last edited by JAD_333; 29 Aug 15, at 19:27.
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  4. #574
    Global Moderator Defense Professional JAD_333's Avatar
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    Quote Originally Posted by DOR View Post
    Were you not aware that the GOPer controlled House refused to raise the debt ceiling – in other words, refused to honor constitutional obligations to repay debts incurred over many years – unless a plan to cut $2.4 trillion over ten years was enacted?

    And, were you not aware that the resulting downgrading of the Government's credit rating added billions to the cost of servicing debt, thus making it harder to usefully support the economy?

    And, were you not aware that such a drastic reduction in economic demand during the worst financial and economic crisis since the 1930s was the opposite of what would help the economy stabilize?

    Let's not muddle the argument. No. Congress was not refusing to raise the debt ceiling. It was holding back on a raise to get the president to agree to spending reductions. In the end, Obama came up with a mutually acceptable solution--the sequester. My point has nothing to do with the mechanics of how we got there, but that the solution diminished economic growth to the extent that it is reducing military spending. Think GDP.

    And no, raising the debt ceiling is not a constitutional requirement. It's a discretionary constitutional power. Why can't a Congress desiring to decrease government spending use that power to force the executive to agree to budget cuts? That's what it was all about, wasn't it? So isn't the resistance of the executive equally to blame? Are you forgetting we have three separate branches of government?

    You're over blowing the credit rating thing. Only one of 6 key rating services had the US listed below the top rating of AAA, and that is S&P at the next highest rating AA. That has not cost the US anything but a momentary loss of face. If it had caused US bond yields to raise, I would agree with you. That did not happen. So where are you getting that it cost "billions of dollars"?
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  5. #575
    Senior Contributor DOR's Avatar
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    JAD_333,

    I don't think it was a coincidence that the top three credit rating agencies downgraded the US at the same time as the debt ceiling and budget votes. Moody's rerated government debt to “negative” in June 2011. S&P downgraded in August, and Fitch in November.

    From late July to the beginning of August – the middle of the crisis – the effective Fed Funds rate nearly tripled, from 0.06% on July 25th to 0.17% on August 1st. Yes, the numbers are small, but that was no coincidence. By the end of the year the rate stablized at double the pre-crisis amount (0.12%) and for most of the next year it was higher than that level.

    That adds to the cost of servicing debt, and given the size of the debt, “adding billions to cost of servicing debt” seems like a reasonable guessestimate.

  6. #576
    Resident Curmudgeon Military Professional Gun Grape's Avatar
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    Quote Originally Posted by JAD_333 View Post
    This is not to say you aren't right that we will be safe for a few more years of budget cuts, but how in the world did you come up with our navy being larger than the next 19 countries combined when China and Russia combined have more warships than we do. https://en.wikipedia.org/wiki/List_o..._with_warships
    When world Navies are counted/compared only Destroyers and above are counted. Blue water stuff that can project power.

    As to whether we would be safe with more budget cuts, I suppose we can agree on that specific point, but safety isn't the only consideration. As our military weakens, which is happening due to cuts, our adversaries abroad are more likely to ignore our threats. Also, we'll have to adjust our foreign policy accordingly, and our ability to protect our interests abroad will certainly be weakened.

    Then there is the momentum factor. A shrinking military is not so easy to turn around, and as we saw in the 1980s, pretty expensive to fix. We're being penny wise and pound foolish by at least not maintaining a steady military budget. It will cost us dearly down the line.
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    Its called Tourist Season. So why can't we shoot them?

  7. #577
    Global Moderator Defense Professional JAD_333's Avatar
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    Quote Originally Posted by DOR View Post
    JAD_333,

    I don't think it was a coincidence that the top three credit rating agencies downgraded the US at the same time as the debt ceiling and budget votes. Moody's rerated government debt to “negative” in June 2011. S&P downgraded in August, and Fitch in November.

    From late July to the beginning of August – the middle of the crisis – the effective Fed Funds rate nearly tripled, from 0.06% on July 25th to 0.17% on August 1st. Yes, the numbers are small, but that was no coincidence. By the end of the year the rate stablized at double the pre-crisis amount (0.12%) and for most of the next year it was higher than that level.

    That adds to the cost of servicing debt, and given the size of the debt, “adding billions to cost of servicing debt” seems like a reasonable guessestimate.
    The best we can say is "maybe". The federal fund rate is the rate charged to depository institutions who trade balances at the Fed for overnight lending. It often moves a few basis points in reaction to demand. You may have the better part of the argument considering the timeframe you gave, but in any case the cost is borne by the banks not the government. So I'm not convinced the debt limit fight cost us "billions". I'm open to a little education if I'm not seeing something here.
    To be Truly ignorant, Man requires an Education - Plato

  8. #578
    Global Moderator Defense Professional JAD_333's Avatar
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    Quote Originally Posted by Gun Grape View Post
    When world Navies are counted/compared only Destroyers and above are counted. Blue water stuff that can project power.
    Changing the rules on me. I suspected you were talking in terms of power projection. On that basis, I agree. However, my primary point is that cuts impact GDP, as well as have an impact on defense readiness and force modernization: Just a few examples affecting the navy:

    (2) Investment accounts will be particularly impacted by sequestration in FY 2014. Without Congressional action or mitigating circumstances, the reductions imposed by sequestration and the limitations from not having an FY 2014 spending bill will compel us to:

    · Cancel planned FY 2014 procurement of an SSN, an LCS and an AFSB; also, delay an SSN planned for FY 2015 procurement. Each of these would further worsen the reduction in fleet size that sequestration would compel us to make over the long term.

    · Delay the planned start of construction on the first SSBN(X) from FY 2021 to FY 2022. This would cause us to be unable to meet U.S. Strategic Command presence requirements when the Ohio-class SSBN retires.

    · Cancel procurement of 11 tactical aircraft (4 EA-18G Growler, 1 F-35C Lightning II, 1 E-2D Advanced Hawkeye, 2 P-8A Poseidon, 3 MH-60 Seahawk) and about 400 weapons, exacerbating future sequestration-driven reductions in our capabilities to project power despite Anti-Access/Area Denial (A2/AD) threats.

    · Delay delivery of USS Gerald R. Ford (CVN-78) by two years, extending the period of 10 CVN in service, and lowering surge capacity.

    · Delay the mid-life overhaul of USS George Washington (CVN-73) scheduled for FY 2016. http://cno.navylive.dodlive.mil/2013...ration-part-1/
    The chart you posted below doesn't rally show the changing dynamics of US military spending compared to the other countries shown. Our spending has been higher relative to those countries for years, but we would need to know how the aggregate compares to years going back a decade or more to draw any conclusions. Also the US number is distorted by wartime spending and may decrease in FY15 and beyond as a result of winding down ops in A-stan.

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  9. #579
    Resident Curmudgeon Military Professional Gun Grape's Avatar
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    Quote Originally Posted by jad_333 View Post
    changing the rules on me. I suspected you were talking in terms of power projection.
    No I'm not changing the rules. When the Defense Dept counts TROTW ships that is the formula they use. When the Navy talks about a 300 ship Navy thats the platforms they use. Only Wiki counts patrol boats and corvettes.



    The Navy talks about wanting to build a 300 ship Navy. If we count all the boats the Navy has in service today, instead of blue water warships we already have around 430


    On that basis, i agree. However, my primary point is that cuts impact gdp, as well as have an impact on defense readiness and force modernization: Just a few examples affecting the navy:
    But how much of that actually happened? None of it. In fact instead of cancelling those aircraft we added more. Same with the ship building programs. And the George Washington.

    Lots of doom and gloom from the Flag ranks to try to protect their kingdoms.

    Lets be honest. We could cut budgets 10% across the board and still get the same stuff done.
    Last edited by Gun Grape; 30 Aug 15, at 17:57.
    Its called Tourist Season. So why can't we shoot them?

  10. #580
    Global Moderator Defense Professional JAD_333's Avatar
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    Quote Originally Posted by Gun Grape View Post
    No I'm not changing the rules. When the Defense Dept counts TROTW ships that is the formula they use. When the Navy talks about a 300 ship Navy thats the platforms they use. Only Wiki counts patrol boats and corvettes.

    The Navy talks about wanting to build a 300 ship Navy. If we count all the boats the Navy has in service today, instead of blue water warships we already have around 430
    Noted. You successfully rearranged my neurons, although the key ones seems to be dying off.




    But how much of that actually happened? None of it. In fact instead of cancelling those aircraft we added more. Same with the ship building programs. And the George Washington.

    Lots of doom and gloom from the Flag ranks to try to protect their kingdoms.

    Lets be honest. We could cut budgets 10% across the board and still get the same stuff done.
    Here we get into a speculative area. I know the tendency is to wave off doomsday projections by the chiefs with the flags-want-to-protect-their-kingdoms response, which is often true, but surely not always. How can it be demonstrated that the top navy guy is doing that in this case? The chiefs are also responsible for making sure forces are adequate to fulfill their missions, and that would include identifying trends that have not yet, but will in the future, make it harder or impossible to carry out those missions. Of course, we can always reduce mission requirements to fit the force, but we can't keep on cutting the force and keep the mission the same. Maybe we can, as you believe, cut 10%. I'm not convinced, not because I disagree with you, but because I haven't seen any objective analysis to support it. You got some?
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  11. #581
    Senior Contributor Doktor's Avatar
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    You guys really had to spend that much on F-35 and the new bomber?
    No such thing as a good tax - Churchill

    To make mistakes is human. To blame someone else for your mistake, is strategic.

  12. #582
    Global Moderator Defense Professional JAD_333's Avatar
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    Quote Originally Posted by Doktor View Post
    You guys really had to spend that much on F-35 and the new bomber?
    I'm not touching that one. There's a massive thread here dealing with all thing F-35. You might find this interesting reading. http://foxtrotalpha.jalopnik.com/pie...and-1592445665
    To be Truly ignorant, Man requires an Education - Plato

  13. #583
    Senior Contributor DOR's Avatar
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    JAD_333,

    The Fed Fund rate is what the Fed charges banks, but it also is the top monetary policy tool available to the government. It influences such a wide range of other interest rates, and so quickly, that it has no peer.

    When the Fed Fund rate rises, and others follow, the cost of borrowing goes up for everything from mortgages (new and floating) to credit cards, auto loans and the government’s own borrowing. The government alone pays . . . I’ll say billions . . . for each uptick, and the rest of the economy pays even more.

    That directly hits economic growth, which is why it is such a useful policy tool. Considering the timeframe, kicking the economy in the balls at a time when it was already rolling on the ground in pain is hardly a responsible policy decision.

  14. #584
    Global Moderator Defense Professional JAD_333's Avatar
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    Dor:

    I got some education. Thanks.

    I'm still going to contend with your "hardly a responsible policy decision" charge. By its nature, partisan politics produces standoffs that cost the government money. Just to cite one example. every attempt to close a tax loophole meets with partisan resistance until finally a compromise is struck.

    Meanwhile. millions in tax revenue are lost. On every measure before Congress there are different points of view. The political process would become a farce if everyone went along with a measure simply because doing so would save the government money.

    In any case, the money lost due to the brief Fed funds rate increase has already been made up many more times by cuts in the Federal budget that came out of GOP resistance to raising the debt ceiling.
    To be Truly ignorant, Man requires an Education - Plato

  15. #585
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    What kind of loopholes are they trying to close?

    I've often wondered if a greatly simplified tax system wouldn't work out better in the long run. I don't think this has a chance of happening without a drastic change in our style of selecting our decision-making government officials, but I suspect that the simpler the tax system, the less waste we'd have.

    Silliness: When I read "The political process would become a farce..." I did chuckle. Whaddyamean, "would become?" In a nation ruled by television celebrities, we've been there for a long time already!

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