Slashdot Mirror

The economy is running on the afterburners of deficit spending. If the economy is running the best ever, shouldn't we be running a surplus or at least a shrinking deficit? Borrowing money to stimulate the economy certainly "works" but at the expense of greater interest payments. That's why responsible governments shrink the deficit in good times.

In FY 2018 the federal deficit was 3.9 percent of GDP.

This year, FY 2019, the federal government in its latest budget has estimated that the deficit will be 4.7 percent of GDP.

https://www.usgovernmentdebt.u...

https://www.sacbee.com/opinion... - Caifornia makes up 13.3% of the United State's GDP https://blogs.voanews.com/all-... and holds 15.34% of all state debt going by the numbers I'm looking at here https://www.usgovernmentdebt.u... . I would certainly agree that the state has a liability problem (one of what I would consider to be one of the state's two key problems) but the scope of it isn't as big as the author tries to make it seem.

https://www.nytimes.com/2018/0... - So an article about how our governor is trying to get California ready for another recession is bad? That sounds like a plus for California. Hopefully the governor of Texas is planning for another dip in their essential oil market.

https://www.nytimes.com/2018/1... - The only really damning thing here is mentioning our high cost of living (the other major problem I'd say the state has). This certainly needs addressing and is likely already cutting into our economic growth in places like the valley but it is hardly a doomsday scenario.

https://www.investors.com/poli... - This is just dumb fear mongering with gems like...
"The carbon emissions laws and other regulatory overreach kill jobs and hope for many." So our record unemployment isn't real?
"The state's gas tax is the nation's highest, some 30 cents to a dollar per gallon above the national average." Oh heavens! Wait, doesnt every other first world nation have gas taxes far in access of what California has?
"Businesses won't hire more workers and invest in growth due to confiscatory state and local taxes and complex and contradictory regulatory regimes. Hundreds of striving small businesses face bullying and high fees from state agencies." Once again, current massively low unemployment rate. We also generated 20 percent of the country's GDP growth last year, so no, this is not a problem.
"California has become the modern equivalent of the Southern Confederates of 1860. Antipathetic to federal law, and seeking its own coalition with foreign governments via trade and environmental and immigration policy." HAHAHAHAHA. Right, we're a bunch of slave holding degenerates willing to dissolve the union so we can own people. What an apt comparison for the incredibly small amount of international outreach California has done.

"Not to mention my personal hope that high-state tax states (CA, like NY, MA, and my state of MN) *don't* get to wriggle out from under the state-tax-writeoff cap put into law last year. Because previously - being able to write off the high endemic state taxes - meant that RED STATES were essentially subsidizing your (our) social giveaways, which was/is bullshit. ...but I'm sure they're all just conservative publications funded by the Koch brothers, right?"

Are you referring to this? https://www.forbes.com/sites/m...

Well much like your self I can't find proper numbers on what the results are expected to be but I would anticipate it will not be the wonderful put down to blue states you want it to be. When have you heard of the South generating economic prosperity for our country? Only when they used to own people. All they do now is offer cheap American labor because they're that destitute. How about the bible belt? Well they have some reasonably solid agriculture whose backbone is illegal immigrant labor. Thankfully for them Trump is

California earners are going to keep earning

Maybe you're right (by draining the money from other states, leaving them with less ability to pay taxes for single payer health).

OTOH, according to https://www.usgovernmentdebt.us/compare_state_spending_2017bH0a CA's per capita state debt is pretty high. (Not as high as that of DC and NY, though.)

President Donald Trump on Monday signed a $716 billion defense policy bill

For perspective please note that the defecit in 2017 was $665 billion. So for all practical purpose we are borrowing the entire defense budget and in the process spending more money than China, Russia, Saudi Arabia, India, France, the UK, and Japan COMBINED. Call me crazy but I'm pretty sure we could put a good chunk of that money to better use.

As opposed to the $1 trillion+ spend on FWEEEEE STUFFZZZ!!!?

President Donald Trump on Monday signed a $716 billion defense policy bill

For perspective please note that the defecit in 2017 was $665 billion. So for all practical purpose we are borrowing the entire defense budget and in the process spending more money than China, Russia, Saudi Arabia, India, France, the UK, and Japan COMBINED. Call me crazy but I'm pretty sure we could put a good chunk of that money to better use.

Seven out of ten dollars spent by the Federal Government goes to non-defense, non-corporate, non-religious spending.

Having a large economy doesn't necessary mean you have a healthy economy. You also have the largest debt of any state in the union at over 700 billion.

In absolute terms, the debt is the largest of any state, but of course, that is entirely expected because the total California economy is the largest of any state. In terms of debt as a percentage of GDP, California is about in the middle in terms of ordinal ranking as well as being very close to the aggregate percentage of all states combined.

The highest tax rate, one of the highest homeless population in the country, and the fastest shrinking middle class. You know the ones that actually pay all those taxes.

Well, that's a nice populist sentiment that is not necessarily supported by actual numbers. Looking at slightly old (from 2015) numbers, half of all income tax revenue in California comes from those in the top 1% of income earners. For 2003 to 2014, all years except for one saw at least 40% of total income tax revenues coming from the top 1% of income earners.

An a complete and total dependency of surrounding states for water.

Well, sort of but not really. California uses about 40 million acre-feet of water per year. About 10% comes from the Colorado River system. One third comes from ground water. Another third comes from the Sierra snowpack. The rest comes mostly from in-state reservoirs.

Stalking you, hardly. You just seem to float to the top but not to worry. After this post I'm applying a -2 freak award to you. I will never have to see your crap again.

https://www.statista.com/stati...

http://www.latimes.com/politic...

https://www.usgovernmentdebt.u...

I really like this one.

http://www.usdebtclock.org/sta...

Wisconsin has a worse debt-to-GDP ratio than California.

The President does not have the authority to set taxes or spending.. That's the job of Congress... which has been in republican hands for the past six of the last eight years. So which party has the white house isn't really going to make that much difference, since the white house isn't setting that policy. reducing taxes on Billionairs, though - that lands on Congress. Just one thing about POTUS Trump - you and I pay more taxes than he did. I don't have billions. I guess I don't have "a very good brain" like Mr. Trump. I sure didn't pick the right daddy to leave me money, anyway.

Also, I believe the debt is closer to 20 trillion than 50, and also the majority was spent in the administration prior to Mr. Obama's, but wasn't accounted for until after the G. W. Bush administration left office. That's what happens when you go fight two unnecessary wars on the nations credit card - the bill comes due eventually.

Current Debt

Russia has a $20 billion budget deficit its looking to plug. Facebook, LinkedIn,Google and Twitter can plug a nice big chunk of it.

Er, 'For FY 2016 the federal budget estimates that the [US] federal debt will increase by about $1 trillion. That's about $250 billion more than the official “deficit.”' http://www.usgovernmentdebt.us...

So the US government must be 50 times as hungry for extra revenues as the Russian government. Furthermore...

"On January 26, 2016, debt held by the public was $13.62 trillion or about 75% of the previous 12 months of GDP. Intragovernmental holdings stood at $5.34 trillion, giving a combined total gross national debt of $18.96 trillion or about 104% of the previous 12 months of GDP". https://en.wikipedia.org/wiki/...

Meanwhile Russia's national debt is 9.7 trillion. Oh, what's that you say? That's in rubles? So what's it in dollars? Oh, I see: about $151 billion. Gee, that's awful - that's nearly one percent of the US national debt. Those Russians are in real hot water now! http://www.nationaldebtclocks....

It's because China is using a protectionist practice.

Western scholars figured out the problem with this practice hundreds of years ago. Problem is - it screws with your money supply something fierce. You end up having to radically manipulate your money supply, and you wind up with deflation and endless stimulus spending. Japan did the same thing in the 70's and 80's, and they've been paying for it over the last two decades (stagflation in the 90's-2000's, deflation since then.) China's turn is coming up soon.

https://en.wikipedia.org/wiki/...

I'm happy to learn more about this, but I am a bit sceptical about your conclusions. (Not the least of which is the general religious undertone of economic schools of thought.)

Firstly, the US is mostly free trade, and yet we've had to do stimulus spending for the last six-or-seven years. I don't really see the difference on that dimension.

Secondly, although the US isn't in a deflation cycle, we *almost* are. Checking the monthly inflation rates shows negative inflation for several months of 2015, and fairly low inflation for the last couple of years. Despite massive stimulus spending, despite the government spending trillions more than revenue over the last decade, we're *still* not up to the generally-accepted-healthy value of inflation of 2.5%.

There's recent evidence that depression and deflation aren't empirically linked, so it's no longer clear to me that deflation is as bad as everyone makes it out to be.

And finally, your analysis may be correct but myopic in that it doesn't take into account other factors such as employment. The US could be in a good financial situation and also on the precipice of revolt. If enough people are unemployed and *can't* find a job, if enough people drop from middle-class to poor-class, then there would be a great deal of unrest.

We're 'kinda seeing that now. Productivity is up, overall profits are up, but for the vast majority of Americans wages have remained stagnant. All the profits go to the upper echelons, so it *seems* like we're doing fine financially when in reality a lot of people are miserable.

I'm not an economist, I'm only trying to figure out this stuff on my own. Some aspects of "current economic theory" don't seem to make sense.

Can you explain why unemployment (or more accurately, the labor force participation rate isn't a priority in your analysis?

Seriously, back then we convinced people to pay like 5% of GDP for a moonshot. Today we can't get them to a single percent.

That may be because our National Debt in 1969 was below 30% of the GDP, whereas today it approaches 120%.

And at times the UK debt was over 200% of GDP:

* https://en.wikipedia.org/wiki/File:UK_GDP.png
* https://en.wikipedia.org/wiki/United_Kingdom_national_debt

How was it solved? By growing the the economy so the denominator for the ratio got bigger faster than the numerator.

But austerity is in fashion now, and that smothers demand (which makes companies less willing to hire people and make things). The more austerity the worse growth becomes:
* http://krugman.blogs.nytimes.com/2012/02/18/austerity-and-growth/
* http://krugman.blogs.nytimes.com/2012/04/24/austerity-and-growth-again-wonkish/
* http://krugman.blogs.nytimes.com/2015/07/10/austerity-and-the-greek-depression/

Seriously, back then we convinced people to pay like 5% of GDP for a moonshot. Today we can't get them to a single percent.

That may be because our National Debt in 1969 was below 30% of the GDP, whereas today it approaches 120%.

The interest rate on that debt was 4%. Today it's under 2%.

And nobody has ever won an election by focussing on debt-to-GDP ratio.

and then those poor babies have to send 15% to the government.

Dunno, what you are talking about, my taxes combined reach 50% — and I sure as heck do not work on Wall Street.

You really aren't a Wall Street type.

Wall Streeters get paid via something called "carried interest" which is basically an extremely successful hack of the tax code. It doesn't count as salary, it counts as an investment, and as such it qualifies for the capital gains tax rate of 15%.

Seriously, back then we convinced people to pay like 5% of GDP for a moonshot. Today we can't get them to a single percent.

That may be because our National Debt in 1969 was below 30% of the GDP, whereas today it approaches 120%.

and then those poor babies have to send 15% to the government.

Dunno, what you are talking about, my taxes combined reach 50% — and I sure as heck do not work on Wall Street.

Borrowing, who cares? Federal government spending is on auto-pilot to increase dramatically over the coming decades. When the feds run out of borrowing capacity, they will have no where else to turn but to raid people's investments. We are just as bad as the Greeks. We don't want to pay for our government, either.

http://www.usgovernmentdebt.us...

Obama has not deficit spent at twice the rate of GWB, but, instead, has slowed deficit spending. See the slope of the deficit chart over the past 13 years. It's most informative. You'll learn several things, namely that GWB and the republicans (remember, they started with a super-majority IIRC) put in motion actions that doubled our debt in 8 years. Another thing to note about said debt is that Obama inherited 2 wars from GWB and the republicans, as well as the prescription medicare piece, which were all unfunded and added to the deficit during his term. The last thing to note is that after his first year, in 2010, the slope starts to decline. Everything before that is GWB/repub doing.

Now for the 2008 economic bubble crash - this was not merely the result of the housing bust. If you bought that, I have some ocean front property in Montana to sell you. The housing bust was the trigger, the real cause was CDS's, which were banned until 2001, when Republicans, under the guise of removing "excessive" regulation, undid the last major piece of legislation enacted to prevent a repeat of the 1929 stock market crash. CDSs are essentially bets on whether something will go up or down, nothing more, and nothing less. IOW, it's gambling. AIG was left holding the bag, and that's when everything crashed. You could also consider it a Ponzi scheme if you'd like. As long as the music keeps playing, everyone gets to "reap" the rewards. But at some point, the music stops, and everything crashes back down to reality. Goldman Sachs, naturally, with government backing and a substantial presence of former partners in the regulatory pieces of government, kept its "rewards", and managed to take out a competitor at the same time.

Have you bothered to look at what Obama has done during his short time in office? It dwarfs what Reagan and the Bushes did.

1. I would hardly call slightly more "dwarfing."
2. Obama actually had an economic downturn to deal with, largely created by Reaganomics. Bailouts, stimulus, etc. Bush and Reagan had huge economic booms, such as the dotcom boom. Yet, still ran a massive deficit.
3. I'm tired of the double standard. Tax and spend is always evil... when it is a democrat doing it. Teatards spend days solid ranting about how immoral and harmful to the economy it is when Obama runs a deficit, and yet completely forgive when Republicans do it, both in the past and present.