The Sequester

[DOR]

Blaming China's purchase of T-bills for the US (personal, corporate, governmental) spending binge is like blaming the corkscrew for the hangover.

Yes, it is a facilitator.
No, no one held a gun to your head and forced you to drink the entire bottle at one sitting.

[zraver]

JAD,



what you're telling me is that obama's accepted the Republican premise of a unchained/superlative CPI...but the GOP refuses to even negotiate because Obama didn't completely surrender to the GOP position beforehand.

is this correct?

The GOP gave him 600 billion in tax increases, Obama's premise is 2.5 dollars of cuts for each dollar in new revenue. Yet we do not have 1.5 trillion in cuts to match the 600 billion that Obama has already got from the GOP.

[astralis]

z,

The GOP gave him 600 billion in tax increases, Obama's premise is 2.5 dollars of cuts for each dollar in new revenue. Yet we do not have 1.5 trillion in cuts to match the 600 billion that Obama has already got from the GOP.

those tax increases were the partial expiration of the bush tax cuts, and as such, obama can argue quite rightly that this was not connected to a new republican compromise on deficit reduction. it would have happened anyway without republican support, and the revenue increase would have been significantly greater.

ironically, the GOP tried to calm their own troops down after the partial expiration by saying that obama, at his moment of greatest strength, caved on a big portion of the bush tax cut.

[astralis]

DOR,

Yes, it is a facilitator.
No, no one held a gun to your head and forced you to drink the entire bottle at one sitting.

cheap credit during a boom time has predictable results.

an ideal economic policy, not that this usually happens fast enough in a democratic system, should have recognized this and raised taxes during the boom times. that would have reduced the credit temptation and put our finances in a better situation so that we could afford tax cuts when the inevitable recession hits.

[zraver]

z,



those tax increases were the partial expiration of the bush tax cuts, and as such, obama can argue quite rightly that this was not connected to a new republican compromise on deficit reduction. it would have happened anyway without republican support, and the revenue increase would have been significantly greater.

ironically, the GOP tried to calm their own troops down after the partial expiration by saying that obama, at his moment of greatest strength, caved on a big portion of the bush tax cut.

And its still 600 billion in new revenue with no matching cuts.

[JAD_333]

Oh oh, White House tours cancelled on account of sequester.

The Sequester's Unkindest Cuts : The New Yorker

[JAD_333]

Obama should be more careful if he wants the fallout of the sequester to be blamed on the GOP. Many of the White House claims of dire consequences are falling victim to the truth.

• Obama is exaggerating. Saying the sequester would mean letting criminals go is a stretch.

For starters, Obama’s comment conjures images of prison gates being thrown open and inmates flooding out. That’s not the case. When the New York Times asked the Justice Department about the sequester’s impact on prisons, a spokeswoman said that the Bureau of Prisons "does not intend to let anyone go on March 1 because of the cuts." The spokeswoman said that instead, personnel could be furloughed and that vocational education programs and others might be curtailed to meet sequester requirements.

Meanwhile, there are plenty of ways to cut back prosecutions without letting criminals go. A U.S. attorney’s office could save money by slowing its uptake of new cases and focusing instead on clearing its backlog of existing cases. Or it could scale back investigations that haven’t even produced any "criminals" yet.

Finally, we shouldn’t gloss over the reality that, by framing it as he did, Obama ignored the bedrock of America’s criminal justice system -- that people are innocent until proven guilty. The cuts Obama is talking about would affect the investigatory and trial stage, when an individual’s criminality hasn’t yet been proven. At most, the sequester would force prosecutors to let "suspects" or "targets" go.

6 Obama administration sequester claims shot down by fact checkers - POLITICO.com

[DOR]

astralis,

On a hot Saturday afternoon, a bottle opener in my backyard has predictable results.

In any kind of reasonable political environment, W wouldn’t have given away Clinton’s surpluses, but would have used them to prepare for the next time the economy tanked. But, “It’s not the government’s money; it’s your money” has a better political tone.

[dalem]

But, “It’s not the government’s money; it’s your money” has a better political tone.

Not to mention being true, ya big fat commie.

-dale

[GVChamp]

astralis,

On a hot Saturday afternoon, a bottle opener in my backyard has predictable results.

In any kind of reasonable political environment, W wouldn’t have given away Clinton’s surpluses, but would have used them to prepare for the next time the economy tanked. But, “It’s not the government’s money; it’s your money” has a better political tone.

Why would he have done that? We were coming at the tail end of the Great Moderation where many people were suggesting that a recession might never happen again. I don't think Australia or Canada were hard-hit by the current global recession, either, for the record. Why would Bush save up trillions of dollars for an event that he had no reason to think would happen?

[astralis]

GVChamp,

why would he have done that? We were coming at the tail end of the Great Moderation where many people were suggesting that a recession might never happen again. I don't think Australia or Canada were hard-hit by the current global recession, either, for the record. Why would Bush save up trillions of dollars for an event that he had no reason to think would happen?

because a leader with foresight would have used that money to shore up the obvious generational change which we're just starting now-- the inevitable aging of the Boomers and the increase in SS/medicare costs. gore, for all his faults as a candidate (and boy, did he have a ton)-- was right about the SS lockbox, although he should have gone further.

bush justified his massive tax cut of 2001 in part due to greenspan, whom said the surplus would be more beneficial in the private market.

to the extent that i blame bush, i could forgive him for pushing that-- he IS a republican, after all. but after 9/11, certainly by 2002, it was clear that the war combined with the recession combined with the tax cut had made the surplus disappear-- and he should have reversed course.

[GVChamp]

GVChamp,



because a leader with foresight would have used that money to shore up the obvious generational change which we're just starting now-- the inevitable aging of the Boomers and the increase in SS/medicare costs. gore, for all his faults as a candidate (and boy, did he have a ton)-- was right about the SS lockbox, although he should have gone further.

bush justified his massive tax cut of 2001 in part due to greenspan, whom said the surplus would be more beneficial in the private market.

to the extent that i blame bush, i could forgive him for pushing that-- he IS a republican, after all. but after 9/11, certainly by 2002, it was clear that the war combined with the recession combined with the tax cut had made the surplus disappear-- and he should have reversed course.

This doesn't answer my question. DOR said he should have kept the Clinton surpluses for the time when the economy tanked, except this would have been unreasonable given what we expected at the time.

It also wasn't clear at the time that we were going to have a protracted jobless recovery or a war that lasted a decade. Either way, the debt held by the public WAS stabilized as a proportion of the GDP. He was not exactly "drunken debt-spender" that everyone thought he was, and both Reagan and his father blew WAY bigger holes into the budget than he did.

Anyways, what exactly would you have Bush do during his years to shore up finances in preparation for baby-boom retirement? The aging of the population is not a one-time event, so he would have to essentially pre-pay for decades and decades worth of medical care, which does not make sense to me. Since the increased health care costs are permanent, it only makes sense to raise taxes to pay for them.

Also, economically, you cannot pre-pay these expenses, either. We cannot buy up insulin now and save it for 2050, for instance. What we need to do is have the Baby Boomers stop building so many houses and instead build more factories so we could have a more capital-intensive economy in the future, that could produce more with fewer workers.

But if you want to talk about restructuring the capital supply of America in a major way, you're talking about the government INCREASING its deficit spending, because you can't trust the private sector to make good capital decisions. And that's why governments are supposed to spend more during a recession, IE, run up a deficit, because they are absorbing all that extra savings.

That's my initial impression, anyways.

[dalem]

to the extent that i blame bush, i could forgive him for pushing that-- he IS a republican, after all.

Can a Democrat ever lower taxes?

-dale

[JAD_333]

astralis,

On a hot Saturday afternoon, a bottle opener in my backyard has predictable results.

In any kind of reasonable political environment, W wouldn’t have given away Clinton’s surpluses, but would have used them to prepare for the next time the economy tanked. But, “It’s not the government’s money; it’s your money” has a better political tone.

Any conclusion drawn from the so-called Clinton surpluses is highly suspect. How can they be called surpluses when in all 4 years they reportedly occurred the national debt actually increased?

[astralis]

GVChamp,

This doesn't answer my question. DOR said he should have kept the Clinton surpluses for the time when the economy tanked, except this would have been unreasonable given what we expected at the time.

by 2002 this was no longer unreasonable. after all, right after 9/11 rumsfeld was already pushing to do iraq vice afghanistan. by 2002 it was pretty clear we'd be going into iraq.

anybody with any sense knew that this would be an expensive venture, although the administration did its best to play the potential costs, both human and monetary, down. recall that bush's second tax cut came AFTER 9/11, too.

in this case i would actually have used a monetarist approach depending on the Fed vice the keynesian spending + tax cut approach.

Anyways, what exactly would you have Bush do during his years to shore up finances in preparation for baby-boom retirement? The aging of the population is not a one-time event, so he would have to essentially pre-pay for decades and decades worth of medical care, which does not make sense to me

he could have left tax rates the same. the money didn't need to GO anywhere, after all.

it's true that population aging is not an one-time event and in any case would/will need higher taxes to even keep the same level of service we have now, but had the surplus not been blown our short/medium-term economic situation would have been considerably better.

of the approximately 11.8 trillion/75% in GDP of debt we hold now, the bush tax cuts have been estimated to cost from 1.5 trillion-2.8 trillion, depending on how optimistic you are about the effect of the cuts on the overall economy.

But if you want to talk about restructuring the capital supply of America in a major way, you're talking about the government INCREASING its deficit spending, because you can't trust the private sector to make good capital decisions. And that's why governments are supposed to spend more during a recession, IE, run up a deficit, because they are absorbing all that extra savings.

the government need not increase its deficit spending to restructure capital supply. the fed, for instance, can make borrowing more expensive; moreover, the government could institute higher tax rates, especially on the wealthy, where most of the hot capital is getting used.

it's not to say that we can't 'trust' the private sector to make good capital decisions, because for the most part it does this more efficiently than government; but there are SOME times where it's pretty clear that the government will do better.

for instance, during a pretty obvious bubble, or during a recession.

according to keynesian theory, government should reduce deficits during good times and increase deficits during bad; this may mean higher taxes when you're experiencing a boom-- which will reduce hot capital and the deficit-- and more spending/less taxes during a recession.