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S&P's $2 Trillion Math Mistake
Last friday Moody's S&P announced that they had downgraded the U.S.'s credit rating (leading to a pretty huge discussion on Slashdot I might add). Since then more interesting news has come out, suraj.sun writes "In a document provided to Treasury on Friday afternoon, Standard and Poor's (S&P) presented a judgment about the credit rating of the U.S. that was based on a $2 trillion mistake. After Treasury pointed out this error — a basic math error of significant consequence — S&P still chose to proceed with their flawed judgment by simply changing their principal rationale for their credit rating decision from an economic one to a political one. S&P incorrectly added that same $2.1 trillion in deficit reduction to an entirely different baseline where discretionary funding levels grow with nominal GDP over the next 10 years. Relative to this alternative baseline, the Budget Control Act will save more than $4 trillion over ten years — or over $2 trillion more than S&P calculated. S&P acknowledged this error — in private conversations with Treasury on Friday afternoon and then publicly early Saturday morning. In the interim, they chose to issue a downgrade of the U.S. credit rating."
We have huge discussions on Slashdot I might add
sysadmins and parents of newborns get the same amount of sleep.
More lies...the debt will INCREASE by almost 8 trillion over the next 10 years. And probably more than that I can guarantee you! The S&P should have downgraded us a loooonnnggggg time ago.
And sorry it is no ones fault but ours.
regardless of the math, S&P's reasoning is sound. let's not try to find scapegoats, please. the U.S. is hurtling at full speed towards a deficit meltdown, and quibbling over S&P's math doesn't change the fact that the country needs to come to terms with it ASAP.
Somebody correct me if I'm wrong, but at current spending levels, cutting $4T over 10 years still has us running a deficit. Considering that this deal was politically the best we could do, it's easy to agree with S&P's pessimistic view of our political budget woes.
"Ask not what your country can do for you." --John F. Kennedy
There was a time when people worried about who had the largest nuclear arsenal.
This kinda reminds me of that "1000 vs 10,000" nuclear weapons discussion. Everybody is dead after 1000 bombs go off. It isn't like 10,000 bombs are going to kill you that much more.
The point being the economy is still going down the tubes...
It was S&Ps rating system that the banks gamed with repackaged mortgages in the first place. Fuck um.
How long before the media points that out? Think they will?
Yeah, these are the same people that gave mortgage backed securities a AAA rating right up until it was blindingly obvious that they were wrong.
Their math was wrong, but they said too bad, we will cancel it anyways just because our debt is too high.
Fix your damn over spending! The rest of the world has too!
The total debt US has is way too high anyway, if a person had same sort of debt load they would be insolvent.
US is ofcourse not alone in the list of countries where the debt is too high, and still many of those other countires have high credit ratings too.
And yes credit rating companies are bad at basic math skills as expected by their previous ratings, but that does not mean that US should have any credit raiting above "Do not lend money at any cost"
S&P in their report had essentially 2 issues:
a) They had questions about the budget strategy over the medium term.
b) They believed that political risk in the United States had increased substantially.
Given that we had 50+ US congressmen arguing that a sovereign default was either no big deal or desirable I can't see how one can disagree with (b). Political risk has substantially increased.
(a) is more questionable. The US economy is very large and the US ultimately does own a printing press. But the United States because of political divisions is simply unwilling to engage in the actions required to end high unemployment nor willing to reduce the government to the size needed if we intend to maintain a much lower labor participation rate than we had been.
So I can see both sides for (a), but (b) is the big factor. I think the Obama administration in trying to attack S&P based on secret conversations is simply failing to address the depth of the real problem. Whether their story is true or not, S&P is not wrong to notify investors that treasuries have risks they did not have 5 years ago.
And of note, Moody's still gives the US Government it's highest Aaa rating.
Taco,
If you can't tell Moody's from S&P, you probably shouldn't be commenting on the issue.
Moody's still rates the US as AAA, as does Fitch.
http://krugman.blogs.nytimes.com/2011/08/07/i-heard-it-through-the-baseline/
http://www.treasury.gov/connect/blog/Pages/Just-the-Facts-SPs-2-Trillion-Mistake.aspx
The downgrade was going to happen with or without a math error. The financial sector did not like the game of chicken that Congress played with the economy and now is being punished. Of course, the rest of us suffer too, but what is a little collateral damage. All the fat-cats had their short sales scheduled last week.
Aren't they the same fucks that gave banksters such as AIG AAA+ ratings before the bailouts? Remember the banksters crying for help and threatening to crash the economy? What bullshit. I wouldn't be surprised if this was all orchestrated as part of the North American Union plan.
did they use people who work for Verizon call centers who can't even do basic math?
The thing is most of the countries that do still have a AAA rating have a higher debt as % of GDP and higher debt per capita than the US does. I think the whole world (except China, and a few others) are in trouble if the US is considered to be in trouble.
Moody's hasn't dropped the rating. They have, though, warned sternly that they will if things don't look better which is what that story is saying.
I would argue that the mere fact that the threat of a default was bargaining chip on the table makes a downgrade justified.
Either the last month was all empty rhetoric or it wasn't. The fact that the threat of forcing a default elicited significant concessions proves that it was considered a legitimate risk and therefore, a downgrade makes sense.
"S&P still chose to proceed with their flawed judgment"
The judgement is not flawed ... AT ALL. With the revised GDP numbers from previous years, America does not deserve an "AAA" rating. However, neither do most other countries with a "AAA" rating.
But seriously, just GET OVER the fact that America is not fundamentally economically sound.
Every one complaining about S&P sounds like a 4-year whining about having their favorite toy taken away. S&Ps downgrade didn't place the America into the current position they're in. Lack of fiscal management from 1980 onward, did.
Someone somewhere has to provide the US with a wake up call about its current track. I don't think anyone would fundamentally argue that. Should the downgrade have happened? Maybe. But the Politicians are deeply split, and as such a downgrade is a reflection on how the world looking in through the window sees things.
I think it needs to be borne in mind about the US that its just come out of a Gov that held all three arms of the executive. And it seems at least to me to have been highly ineffective given it had the opportunity to deliver things it wanted to. Now, its not got all three parts, and life is very much tougher.
The downgrade itself should not have been said to be economic if you present figures that far out. Is the world to place its faith and planning around bad mathmatics? Seriously? If the people looking in through the windows can't count, and yet they can cause trillions to be wiped out by the waves they start in their tsunami of reckless stupidity, maybe they should be brought to book.
Finally, one of the aspects of the wide angle lense thrown over the whole thing is the abuse of the Tea party. I'm not sure why. They are vocally speaking about a think I hear from many Americans I meet, that being that actually they personally feel the Government has indeed become too large, and is indeed actually not doing things how they see or think it should. And in this, a very democratic thing is happening. That voice is holding a place at the table and getting a say. It may be that had the old way stayed as was, that voice may not have been at the table at all. Now, me personally, I can take or leave the tea party. But I don't see any harm in someone at the table fighting for some curbs in the US, because as far as I can see, that deficit is cripplingly bad. And the wider question probably needs asking of your US representatives. 'Why is it the Tea Party are getting to raise this issue - when you should have been dealing with this years ago'. And thats the question that should be posed to anyone Tea party bashing.
It seems to me that its not really that the Tea party bunch are so bad. Its that the rest are near their equals in the stakes of being so poor.
I'm an Anglophile. I hope the US gets back on its feet soon. The world needs you.
We`re all equal
The countries that can gloat are: Australia, Austria, Canada, Denmark, Finland, France, Germany, Guernsey, Hong Kong, Isle of Man, Liechtenstein, Luxembourg, Netherlands, Norway, Singapore, Sweden, Switzerland, and the United Kingdom
Forgive us for gloating that we have a higher credit rating in the UK, its just about the first chance we've had to gloat about anything related to our economy since 2008. I know that this probably won't last long - they probably just haven't got round to downgrading us yet!
I dont get it.
One of the critical point is that S&P obviously believes that the deal made has unreasonable restrictions for future budget decisions, like the tax politics.
On the other hand i have never seen any political party so unwilling to accept (and clean up) the mess they made as the Republicans. Everybody knows the explosion of the deficit has nothing to do with Obama, it is the consequence of 2 wars at the same time started without specific goals, running over a decade, and insufficient results up to now.
So while the publically stated goals of the tea party may be understandable to me (everybody *sees* that things need to change), there is a significant difference between saying "we spend less" and "we just dont pay, even if we are obliged". The latter does not solve *any* problem (even if the right problem is stated), but destroys the trust of the insitution lending the money.
To say it in a analogy: If you have ordered something a restaurant, its not an option to say: "oh, i just dot pay this and dont eat it". Thats what they suggested. Obviouls there is significant difference to just not ordering something.
as well as all other rating companies and all those who lend them a ear.
Maybe Computers will never be as intelligent as Humans.
For sure they won't ever become so stupid. [VR-1988]
Smoke and Mirrors. Cowards and Crooks. Liars and Lawyers. Fiction and Falsehoods. Deception and Deceit.
I wonder which agency carries the most weight though. I suspect it is S&P, though I'm not sure.
We have a huge cultural problem. Most people don't care about any of the important things. Of the people who care, fewer still are educated. Of the people that are educated, many are polarized in to incompatible philosophies. This is leading to paralysis. I hate to say it, but more and more the idea of dividing the union just makes more sense. The belief that the Federal government should be doing all that it does makes the US too big and too diverse to govern in a reasonable way.
I don't mean any of this in a doom and gloom kind of way, just saying I think it makes a lot more sense. Everybody knows the US is majorly divided on how we should do just about everything, largely based on geography.
If I can just reach out with my words and touch a butthole, just one, it will all be worth it.
I'm sure we'll hear a lot of political ideology in today's comments, but I just wanted to remind folks that S&P reputation isn't that stellar. S&P and Moody's used mathematical models to rate mortgage backed securities as safe as governmental bonds back in 2007. Then about 90% of those bonds were then rerated as junk bonds which forced a large sell off.
I also want to remind folks that the treasury bond yield rates are the lowest they have ever been with a yield rate of 0.01 for 1 month, and 3.82 for 30 year. A downgrade by S&P may force the government to raise the yield rates on these treasury bonds in order to maintain current levels of borrowing (by the government). So keep all this in consideration while we debate the merits of a fox guarding the hen house.
These comments are my own and do not necessarily reflect the views or opinions of my employer or colleagues...
Please somebody google the news "Standard & Poor's Clarifies Assumption Used On Discretionary Spending Growth" over the last two days from multiple places.
"Some of the activities they undertook contributed to the prevailing mood of the time!"
Did they entirely fail to see it coming? "Well, they're not so sure about that...".
Go Gregory Brothers!
http://www.youtube.com/watch?v=-fTh2GffJsM
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
You seem to be implying that S&P is secretly acting on behalf of the Democratic Party in support of President Obama's re-election campaign, which I find to be an interesting point of view.
The rest is even more confusing.
WALSTIB!
He says the government's performance is sure not AAA, but he'd rate the debt as AAA.
Remember: Ratings on bonds is supposed to be how likely they are to default. Nothing has changed that makes the US more likely to default.
http://www.cnbc.com/id/44056326
Please see their original report and press release. Here are some quotes from the August 5th press release:
"The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy."
"Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act. "
Their explanation didn't suddenly switch to political. It was there all along, yet so few pundits chose to focus on it.
Years?
I know people like to talk about futures and about entitlements and this and that. But I would like to see the cancelled checks. What did we literally write checks for over the last 4 years. Sorted by amount, application, and area of responsibility. Does anyone have that chart? How often is it updated?
The math on this doesn't matter a whole lot. The fundamental problem is that the US is addicted to borrowing and has no credible plan to stop. Forget about paying it off, there's no realistic way to stop borrowing more anytime soon.
The reaction to this decision is mostly emotional and not rational. Warren Buffet had this to say: "I can go out drinking all night, but if I've got a printing press, my debt is good." ... yeah, see. THAT right there is the heart of the problem. "Print more money" is not a legitimate way out of debt. It's what banana republics do, like Zimbabwe under Mugabe (and it worked out so well for them). This is not an AAA debt, and people are only pretending it is because they have so much personal wealth tied up in it that the reality will be bad for them financially.
-- "So they told me that using the download page to download something was not something they anticipated." - Bill Gates
But it's not just a question of finance, it's a political issue
From the point of view of an outsider, the situation was that a routine Debt Ceiling adjustment, which had happened many times before without issue became a barginning position of a relatively small group of people who, as far as I can tell, used it as a way of scoring political points for the Tea Party while at the same time scoring points against the President.
From what I can tell, that isn't going to change, in fact I can only see it getting worse, I think the Tea Party will do exactly the same again next time because they've seen how effective it is as barginning point, even if a Republican gets the presidency next time because from what I can work out, although the Tea Party occupy the similar political space as the Republicans and the Republicans are currently dependant on the Tea Party to maintain it's majority in the house they aren't directly links and don't have much control over the Tea Party organisation.
These comments are my personal opinions and do not necessarily reflect the opinions of the other voices in my head.
entire world knew that it was aeons past the time it needed to be downgraded, and the joke was on the 'standard agencies' that were, for some reason, unwilling to do that downgrade for a long time now.
it is just saving face. reason does not matter. even as of this moment, american federal reserve bank keeps printing money.
Read radical news here
I heard Robert Reich make that point weeks ago on NPR. Here's one of several rants on the topic: http://www.businessinsider.com/why-sp-has-no-business-downgrading-the-us-2011-8
Our political situation is horrible, and shows no signs of becoming better. The Tea Party dominates the GOP, and the Democratic president folds faster than a house of cards whenever they do something stupid.
Let me break it down to the most basic of concepts:
Democrats want the government to spend more. The TEA Party wants the government to spend less.
Who do you think is right here?
There is no "I disagree" mod for a reason. Flamebait, Troll, and Overrated are not substitutes.
Currently the US's debt is right around 100% of GDP. That means the US owes an amount equal to roughly its total economic output for a year at current levels.
Ok, well as an individual, I have a much higher load. I have a debt load of near 200% of GSP. I earn about $50,000 per year gross. My only debt is my mortgage, but on that I owe around $100,000. So I owe twice what I make, gross, and more of course if you want to count it net once you've taken out the 33%ish of money that gets withheld from my paycheck for taxes, retirement, insurance, and so on.
Now am I suggesting that the government should get more debt? No, but your comparison is rather off base. Individuals and companies tend to have much heavier debt loads.
In reality none of these rating agencies have any credibility, don't forget, Lehman Brothers, AIG and all other financial institutions that completely failed all had top ratings by these companies.
Moody's, Standard & Poor's, and Fitch Ratings all maintained at least A ratings on AIG and Lehman Brothers up until mid-September of last year. Lehman Brothers declared bankruptcy Sept. 15; the federal government provided AIG with its first of four multibillion-dollar bailouts the next day.
Why do people care what these rating agencies say? The market is a much better rating agency than any establishment out there, the market downgrades USD all the time, it's not a surprise, you can't have vendor financed economy, you can't have consumption without production, you can't have "jobless recovery", you can't have stimulus creating jobs that are meaningful in that they reduce the trading deficit, you can't have debt that is constantly growing while real production is shrinking 10% a year (that's because GDP is overestimated year to year, because real inflation is around 13% but a much smaller deflater is used, some 2% CPI).
You cannot have an equitable economy with 18% unemployment or underemployment, 40% finance industry, 10% government industry, 50 million people on SS and under 11% manufacturing (probably mostly military and value added assembly from imported parts.)
You just can't have 50 billion dollars/month trade deficit, where you consume 50billion dollars/month more from imported goods, produced elsewhere, while exporting printed paper and not at least an equal amount of goods. It's not possible to do this forever, and USA has been doing it for a very long time because it's exporting inflation because USD is so called "reserve currency", so other governments make a huge mistake of buying and stockpiling it by inflating their own currencies.
The debt is the crisis, not maintaining the debt ceiling, which could have been beginning of a solution.
If you want to see somebody who has real credibility on this issue, on the issue of financial institution ratings in USA, look no further than my sig. Now that guy predicted and explained in vivid detail exactly how the financial industry was going to collapse and how the housing bubble would burst and most importantly he understood the underlying principles behind these events and explained them.
Here are his thoughts on this S&P downgrade, and if you care to listen to an opinion of somebody with credibility, that would be it.
You can't handle the truth.
Giving the govt more money produces about the same results as giving a crack whore more money.
Anyone that proposes raising taxes I consider a complete idiot. I cannot think of a poorer return on investment.
Taco,
If you can't tell Moody's from S&P, you probably shouldn't be commenting on the issue.
Moody's still rates the US as AAA, as does Fitch.
Nitpick: Moody's doesn't have a "AAA" rating. There top rating is "Aaa".
So what you're saying is, the difference between Moody's and S&P is that one is case-sensitive and one is not?
I'm an economist, you case-insensitive clod!
Strike while the irony is hot! -- The Freethinker
The CBO assumed discretionary spending will grow at the rate of inflation. S&P assumed it grows with GDP. Both of these are perfectly valid assumptions (if any complaint is to be made, they're both too optimistic since historically the growth in discretionary spending has far exceeded both measures); a legitimate alternate choice of economic models is not an error. This is the Obama administrations typical "all reasonable experts agree" tactic of painting legitimate differences in opinion as disengenuous.
As for S&P's "acknowledgement", it was more along the lines of "we just reported your long term unfunded obligations are $211 trillion and you lack the political will or ability to do anything about it. And you want to have an argument over whether it's really $211 trillion or $209 trillion? If it's that improtant to you, we'll use your numbers, but you're completely missing the point here."
S&P downgrade is correct of-course, but it's nowhere near enough of a downgrade of US debt, which is all junk and will never be repaid in anything of any value.
Many believe that Tea Party got a win out of this debt ceiling deal, but that's just not true. The Win would have been if there was no debt ceiling hike at all, instead it's a loss, with the concessions being completely irrelevant. 2 Trillion spending cuts that are not real cuts, they are a so called 'cut' from a 9 Trillion base increase!
What kind of a cut is it, when the spending goes up by 7Trillion anyway? That's ridiculous, anybody arguing that's a cut is either mentally challenged or is a liar, or both (a politician).
Any actual cuts are about 25Billion this year. That's all, and that pocket change, less than a rounding error in the budget. The 2 Trillion is scheduled for cuts after next Congress is elected, but that means there will be no way to force the cuts either, and since the US economy is in recession, has been in recession and never left the recession based on real inflation numbers, by which the GDP should have been reduced (13% instead the fake 2% CPI). The reason this so called 'recovery' was jobless is because it was never a recovery in the first place.
Recovery would have allowed the economy to restructure bad debts, remove a bunch of dead weight from the economy, liquidate assets to repay debts and allow economy to start growing in private sector, which is the only sector that reduces trade deficit and creates meaningful jobs that can reduce the trade deficit. Any government created 'jobs' are welfare with a work condition attached to it, it doesn't produce anything.
There is no win in this deal, there is only loss for American and World economy. American - because it means depression continues and worsens, credit dries out and debt is monetized, USD is destroyed and US consumer is left without products to buy at all.
World - because USA CAN be an economic engine producing things the world needs, but instead USA CHOOSES to be a drag on the world, starting wars and building weapons instead of building cheap, high quality consumer goods to exchange for in the global markets.
US debt rating is junk, the debts won't be repaid, the USD will be hyper-inflated because US government does not have the political courage to do the right thing and cut government spending, which means stop Wars, SS, Medicare, government programs, cut government departments, cut income taxes, allow more business with less regulations of products and labor. There is no way this will be done politically, instead the politics of this thing will bring USD to its logical conclusion and US economy to an unfortunate situation, which will take hundreds of years to get out of.
You can't handle the truth.
The new standard: we're all poor.
You might want to check up on some of the interviews the S&P highers-up have been giving since the downgrade. While the statement that S&P released with the downgrade gave lip service to the idea of raising revenues as well as cutting spending, the S&P biggies themselves have spent 'way more time talking about cutting spending than raising revenues.
Discussion System prefs link: http://slashdot.org/users.pl?op=editcomm
I happen to be on the side of "spend less", but it is a perfectly legitimate opinion to want to spend more AND collect more. The Democrats aren't advocating raising spending while lowering taxes. Frankly, that sounds like what the Repubs did under Bush II.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
The market has pretty much given up on the ratings companies and many market participants now do their own rating.
Finally! A year of moderation! Ready for 2019?
Sorry to break it to you - but this isn't a fault of the freshman "tea party" - it is failed fiscal policy that has been going on for 30+ years. Pointing fingers at people that have been in congress for 7 months for decades of overspending is bullshit. The worst started with Reagan and has been accelerated by Obama. But don't let reality cloud your agenda.
Hate and ignorance can be a bitch to understand at times.
Every time I start to have faith in humanity, I ruin it by driving to work between 7 and 8 am.
Exactly. To eliminate the trillion dollar deficit with taxes, the average family would have to pay an extra $10,000 every year and there is no guarantee that spending won't simply increase along with the taxes like it has before. The only solution is for the government to live within its means.
Having Standard & Poors downgrade the creditworthiness of the United States, and warn it about further downgrades, is a little like having the Catholic Church lecture scout leaders on the proper behavior toward boys. http://news.yahoo.com/why-congress-standard-poors-deserve-other-092005860.html
I laughed; but, I still don't know if it is funny or just plain sad.
Having to work for a living is the root of all evil.
Imagine a man making the right decision for the wrong reason. For example, when picking out a card with the correct solution to the math problem "2 + 2", this man picks out the card that reads "4" because it has a blue background and it matches the eyes of the woman giving the test.
Was his judgmentment flawed? Sure.
Did he have the right answer? Sure.
Would you trust his informed opinion on matter relating to math? I hope not.
(Not to mention you have to go back further-arguably to the Eisenhower administration-if you want to find a time and place that the US had sound fiscal management. But neither that assessment nor the question of how just how bad the the current predicament for the US is makes much difference to my pedantry over whether the S&P has flawed judgment.)
You don't like to pay taxes? Then go to Somalia. No taxes there. Nothing much else there, either.
Somalia - the Right Wing Paulite Libertarian Paradise.
Go there, today.
--
BMO
I'm sure we'll hear a lot of political ideology in today's comments, but I just wanted to remind folks that S&P reputation isn't that stellar. S&P and Moody's used mathematical models to rate mortgage backed securities as safe as governmental bonds back in 2007. Then about 90% of those bonds were then rerated as junk bonds which forced a large sell off.
Only because the bank deliberately gamed the system to hide the fact that they were lending way beyond the Basel rules. Don't blame the ratings agencies or the governments - it's all the greedy bankers' fault.
Hate to rain on your parade but the GDP of China is only just less than one half of that of the USA. And, collectively, the EU beats even the US for a similar land area / population (if you take into account populations, for instance, they are about equal depending on the measure you take).
And, more damning for your post, the second you raise tax, that second number starts to dwindle - economic numbers aren't static and isolated - play with one and ten others drop which makes you overall worse off. Raise taxes in the US, companies move to cheaper countries, or offshore more, or get rid of US staff, all of which destroy the amount of tax you have coming in.
And even if you DOUBLED tax, it would still take approximately 5 years to fix ASSUMING NOTHING ELSE CHANGED and everyone just accepted doubled-tax without so much as raising an eyebrow. In reality, the knock-on effect would be to cripple the economy entirely because it almost works on a kind of exponential scale - double tax and you lose three-quarters of your income.
But then, armchair economics is much more fun than reality, isn't it? Especially when you convince yourself that your armchair in the best because it was "Made in the USA"...
We can all agree that S&P shouldn't be trusted, but if bond buyers still trust them we're screwed...
Ken
1) Total debt, United States of America, Inc. ~$1.4 trillion
You're an order of magnitude off. The US public debt is about $14.5 trillion.
bump
Having to work for a living is the root of all evil.
Yes, because the position of the Democratic party (and all Democrats) is that basic. "SPEND MORE!"
It must be a simpler, more straightforward world in which you live.
Most every Democrat I've heard has talked about the desire to do some spending cuts in combination with some array of revenue increases. Sometimes they differ in what they think should be cut or protected (Medicare, Social Security, defense, whatever), which can then lead to internal disagreements among Democrats that might make it look like the entire party doesn't want to cut anything; the same holds for revenue increases, I'd say. I'd hope that over time they could come up with a plan that at least most Democrats could get behind that would be part spending cuts/reforms and part revenue increases.
On the Republican side, there are certainly some I've heard talk about the need to reform the tax code and (at least) start cutting out tax expenditures. I'd say that those Republicans are in the minority, mainly because of the no increased taxes pledge and the Tea Party pressure from the right of the party.
I wouldn't mind the "cut spending" pressure coming from the Tea Party if the people pushing hardest for that didn't also seem to be entirely incapable of compromise. Compromising isn't something to be frowned upon, it's how both parties could leave with a deal they might like (or at least dislike equally). As I see it, the Tea Party's anti-spending stance is one that we need - it's the execution that is lacking.
He does argue that cutting spending in the way that both parties seem intent on cutting spending will worsen an already weakened economy. But if the economy were stronger, he'd be fine with many of the cuts and, perhaps, suggest additional cuts. It isn't the general idea of spending cuts he's against. Rather he's opposed to diminishing one of the largest inputs to the economy during a time of severe economic contraction.
What amazes me is that any politician of any slant would think it's a great idea to allow the most wealthy people in society to escape from taxation at the point it is needed most.
(and the second largest isn't even a tenth the size of the US GDP)
And to post again, this is also false. For example, China has a GDP of $5.8 trillion, Japan has a GDP of $5.5 trillion and the list can go on. And last time I checked $5.8 and $5.5 trillion was well more than 1/10th of $14.6 trillion (2010 US GDP).
> Democrats want less government spending as a percentage of GDP [1]. The TEA Party wants to destroy government [2], unions [3], and the US economy [4].
FTFY.
Sources: [1] http://en.wikipedia.org/wiki/File:US_Federal_Debt_as_Percent_of_GDP_by_President.jpg
[2] http://www.contractfromamerica.com/Idea.aspx
[3] http://en.wikipedia.org/wiki/2011_Wisconsin_protests
[4] http://www.standardandpoors.com/ratings/us-rating-action/en/us/
Join the window installer's union, where prosperity is a brick throw away!
... sometimes is malice, not stupidity, the right explanation.
Let me break it down to the most basic of concepts:
Democrats want the government to spend more. The TEA Party wants the government to spend less.
Who do you think is right here?
In a global recession on the verge of depression? The Democrats, hands down.
Although 'the Democrats' misrepresents that side of the argument. Sane economists and a few lawmakers want to increase government stimulus. Some Democrats are stupid, however, and want to spend less, just not as much less as the Tea Party. The president, unfortunately, is among the latter.
Genocide Man -- Life is funny. Death is funnier. Mass murder can be hilarious.
Yeah, and God Forbid the people that can afford to give a little more to help the country that allowed them the opportunity to become wealthy in the first place actually do so. They didn't write those big bribe checks...oh, I'm sorry, campaign contributions... to have someone turn around and raise their taxes and cost them an extra percent a year. I mean, what is that, a few thousand dollars less a year? How will they ever survive?!
I'm all for spending cuts, but without taxes being raised on the wealthy, it's just more of the same BS. Tell the people living on 12 grand a year in the projects that it's time to tighten their belts so that the asshole speculators on Wall Street can get away with their ridiculously low effective tax rates. Oh, but I forgot, all that paper being traded back and forth "creates jobs". That's why these there's so many jobs out there now, right? That's why these companies are all sitting on record amounts of cash in the bank both here and abroad, meanwhile they're laying people off left and right...
This is just Part II of the extortion scheme that started with the bailouts as the rich try to snatch up an even bigger piece of the pie than they already have.
Democrats want the government to spend more. The TEA Party wants the government to spend less. Who do you think is right here?
A plague on both their houses!
From what I read here, outside of the USA, where the media are less partisan when covering internal US issues, the Democrats want the government to spend LESS, and the Tea Party wants the government to spend LESS too. They disagree a little on which parts of government should have most cuts.
Also, the Democrats want to increase taxes a little, to narrow the gap between government spending and income.
The Tea Party DO NOT want to increase taxes to narrow the gap.
Both are proposing that the government spend more than it raises.
Did I miss anything important?
Paul "Say no to feeping creaturism"
You really ought to try the internet.
For example: http://www.usgovernmentspending.com/
Join the window installer's union, where prosperity is a brick throw away!
Anybody who believes that these rating agencies are independent is fooling themselves. The question everybody should be asking, is, who is benefiting from this downgrade (directly or indirectly) and what is their connection with S&P?
You can't outlaw these fuckers, after all they provide a potentially valid service. But the public should be educated about their ties to other financial institutions and politicians should not let themselves be chased by them.
Free Manning, jail Obama.
In a US mortgage, the bank owns the house. That is why people can walk away from a mortgage in the US by leaving the house. Try that in the EU...
Anyway, US debt is NOT the same because if the US walks away from the debt, debtors can't just try to resell the white house or Florida to recover the money.
Mortgage is a very bad comparison.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
There is one answer to our problem. Secession. 49 of the US states (all except West Virginia) - secretly meet and agree to withdraw from the union. Form a new country: New American Democratic States. We'll be free from debt and get to start over again, fresh and hopefully keep a low debt profile this time. What about West Virginia- the only state left in the USA? Oh they'll probably default on the USA national debt. When this happens we can consider letting them join the NADS.
"That's the way to do it" - Punch
I'm fairly certain that this "error" found by the government was in S&P's arithmetic (or even in their data). I doubt that S&P was doing any actual mathematics for this report.
You can cut off your nose to spite your face.
Just because an action seems to play into the hands of Democrats doesn't mean that it was meant to benefit Democrats. It could be intended to hurt teabaggers (or even the congress in general) and only help Democrats by accident.
However, the idea that Wall Street is trying to treat Congress like a puppy that peed on the carpet should not be overlooked.
A Pirate and a Puritan look the same on a balance sheet.
In the worst case scenario USA will just print a few trillion dollars and discharge the debt. Of course, dollar will be devalued and the purchasing power of the money paid to retire the debt will be much less. But strictly speaking, your bond matured, you got the promised number of dollars. So how the hell can USA default?
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Except when it comes to defense. Which is a very large part of the budget.
1) Plan on gaining 100 pounds.
2) Gain 75 pounds.
3) Congratulations. You have a weight loss of 25 pounds.
Except for ending slavery, the Nazis, communism, & securing American independence, war has never solved anything.
You can run the numbers all you want, cook them every way but over-easy, and produce a powerpoint presentation of them that would make even the most die-hard quant choke. But at the end of the day, it's all about confidence. All those dollar bills in your wallet are only as valuable as we collectively agree they are. This can range from "Not worth the paper they're printed on" to "Holy shit, this is the best currency in the world!" But it all depends on confidence. U.S. currency (and bonds too, for that matter) has no real objective value.
The U.S. government takes in so much in revenue each year, and outlays so much in spending. Right now spending way outpaces revenue. Could that economy be balanced? Probably. But who knows what that balanced economy would even look like, or whether it would even work. Maybe even trying to balance the U.S. economy would turn the U.S. into a second-world country, hopelessly spiraling towards collapse. Maybe the U.S. economy is doomed to collapse no matter WHAT we do. In that kind of situation, what are those dollars worth? Who the fuck knows. It's all a question of how much confidence you have that the U.S. economy WON'T collapse, that the government WON'T default on its debts.
Right now, the world has a lot of confidence in the U.S. But recent political events put this seriously into question. Republicans have a vested interest in keeping the U.S. economy in the shitter through 2012 (to help their party's political ambitions). And, more importantly, they have shown their ability (and willingness) to best the Democrats politically at almost every turn. They have a great deal of party discipline and the determination to keep the U.S. economy down. This puts the chances of an ongoing, and possibly much more serious, recession as very high. S&P was just recognizing that fact, along with the fact that it's highly unlikely that either party at this point will ever be able to get the U.S. debt under control without some kind of default.
SJW: Someone who has run out of real oppression, and has to fake it.
Letting the Bush tax cuts expire would not have affected your lifestyle one iota. It certainly wouldn't have affected mine.
Warren Buffet has said that he's not taxed enough.
It's funny. Bush waged 2 wars with no way to pay for them, and people who say we need to pay for them are called socialists.
GFY.
--
BMO
No, the only people who are trying to reduce the deficit...let's blame them. It's the Tea Party's fault.
Except for ending slavery, the Nazis, communism, & securing American independence, war has never solved anything.
Unless just changed, those numbers are from 2003 and really out of date.
Belief is the currency of delusion.
Yes, you can no longer say "AMERICA FUCK YEAH!"
AMERICA FUCK YEAH!
I dunno, it still works when I try it.
William of Ockham had no beard. The most likely explanation is that it was chewed off by squirrels every morning.
In Washington, it you plan on increasing spending by $10 billion and you only increase it by $9 billion, you call that a $1 billion cut.
Except for ending slavery, the Nazis, communism, & securing American independence, war has never solved anything.
America circa 1940, Right Wing Paulite Libertarian Paradise. America circa 2010, Left Wing America Socialist paradise.
The fact that anyone still trusts S&P and their ilk is illustrative of the fact that emotion rules this game. They've proven with math that they know no more than anyone else.
"All you need to know about rating agencies is that in May 2010 Moody’s still rated Greece triple-A." - Mark Steyn
Life is hard, and the world is cruel
Default means not paying your loans.The Obama administration said that not raising the debt ceiling raised the possibility of default. But that didn't have to be true.
As long as you commit to paying government debt first, with tax revenue that's always coming in, you won't default. Unless your debt is incredibly out of control, even more so than now.
Except for ending slavery, the Nazis, communism, & securing American independence, war has never solved anything.
Democrats want the government to spend less and raise more revenue. The TEA Party wants the government to spend much less and raise no new revenue.
FTFY
Actually, some of the more radical elements of the Tea Party might want to take that even further:
The TEA Party wants the government to not exist--ushering in a bright fantasy utopia where we'll presumably repair our own roads, house our own prisoners, and allow corporations and the rich and powerful to do whatever the hell they want (power which they won't, of course, dare abuse or exploit).
SJW: Someone who has run out of real oppression, and has to fake it.
End these goddamn wars. Now. Yank (har) every single American solider home.
Next on the list - pull out of Korea. South Korea can take the North pretty easily. No need for us to be involved.
After these savings are realized, we can start to look at other things.
I am very small, utmostly microscopic.
... is simple.
"Import Taxes"
when it's cheaper for a US State to employ a Chinese company (Government) to build a bridge (While doing so create totally new companies JUST for the Iron smelting / making and building of the bridge) while giving 1000's of jobs to low skilled workers that fabricate it in China, Ship it over in pre assembled kit form that only needs a few 100 US workers to assemble the kit. you gotta think something is wrong...
http://www.nytimes.com/2011/06/26/business/global/26bridge.html?pagewanted=all
If you tax the import of things which can be made in America; Then more companies will find it more cost effective to hire US workers to make things.
More workers = more spending
more spending = more manufacturing
more manufacturing = more revenue for the government.
Laters Sol "Have you found the secrets of the universe? Asked Zebade "I'm sure I left them here somewhere"
You mean all of the politicians that refused to cut spending and tax the rich....
Why? The problem is not the rich. As others have noted here, you could seize every dime from them and still get nowhere close to solving the problem.
The problem is two things. The military budget is the smaller problem. There's some room to cut there, especially in bloated weapons procurement, pay policies, and having troops stationed where we don't need them.
But by far the biggest budget problem is us. The sainted "middle class". That's where the big spending is. We like to have our tax refunds and our EIC credits too. We cry "get spending under control!" right before we cry "but don't touch MY benefits!" Americans are largely hypocritical about government spending.
Life is hard, and the world is cruel
I'm all for spending cuts, but without taxes being raised on the wealthy, it's just more of the same BS
Total income tax for the year 2010 was about $900 billion. Total federal debt was $1,300 billion. So, if you double the income tax on everyone, not just the rich, income taxes would bring in another $900 billion. That leaves us still $400 billion in the hole.
If you were to also double corporate taxes, which brought in about $191 billion, you would be much closer. However, a corporate tax is really just a hidden sales tax. Corporations don't pay taxes, consumers do. Of course, since the US government can only tax corporations in the US, it's a sales tax for domestic goods only. This gives imported products an advantage over domestically produced products both here in the US and overseas. Why not just charge a sales tax on all non-necessity products (food and medicine could be exempt from sales taxes, for example).
Oh, but I forgot, all that paper being traded back and forth "creates jobs".
Yeah, it does. See, companies sell stocks to expand their business. When companies expand, they create jobs. Why is this so hard to understand? As for those "asshole speculators" you mention, these guys are one trade away from bankruptcy. If you think they make easy money, why don't you become one and give all of your profits to those poor families in the projects you mentioned?
I understand that you hate people who have more than you do, but you have to understand that there are those that have less than you do that are just as likely to hate you and come after YOUR property. On a world scale, you are extremely rich. You have a computer, Internet connection, running water, climate control and other luxuries that most in the world could only dream about. Why don't you give what you have to some poor person in Haiti, for example? This is what you are proposing we do to the rich in this country, right? As for your domestic debt problems, as I've pointed out above, math trumps you class envy.
There is no "I disagree" mod for a reason. Flamebait, Troll, and Overrated are not substitutes.
In the US a family of four with an income of up to $82k can qualify for free state provided health care for children. Why is the government providing free health care for families that are perfectly capable of paying for their own? There are many other entitlements like this that need to go away. We're talking tens and hundreds of billions that could be slashed and start eating away at the debt.
"A plan fiendishly clever in its intricacies"- Homer Simpson
Government: We planned to increase the budget deficit by $4 trillion next few years, but now we're only increasing it by $2 trillion! We cut spending by $2 trillion dollars!
S&P: You still increased spending. You didn't cut anything. You still spend almost twice as much as you make. You are no longer credible.
Government: Traitors! Terrorists! Hostage takers! Can't you idiots in private industry do math?
Pathetic. Even the slashdot title of this article is complete rubbish.
6th Street Radio @ddombrowsky
The economy is built on a set of beliefs. There are phrases like "consumer confidence", which show how subjective it all is.
And then there are the politicians who have to base their decisions on limited and conflicting information, while keeping their voters in mind.
It would be silly to suggest that S&P would have an objective analysis about the economy and the USA's financial status.
And it would be silly to suggest that politicians would really let this analysis influence their plans.
So, really, there's nothing to see here. Move along, move along!
I thought that way until a couple of days ago when I learned about the recession of 1920-21. (http://en.wikipedia.org/wiki/Depression_of_1920%E2%80%9321). Instead of the government borrowing and spending to boost the economy, they cut their spending so they could reduce taxes which put the economy back on track in less than a year. I haven't really done enough research to fully understand it, but I has made me think about my position a little harder.
Is 1563649 a prime number?
The US hasn't deserved its AAA rating for decades.
When all else fails, play the race card.
Almost feels like a Republican conspiracy.
No, that's the worms in your brain squirming around.
Just because they were wrong thousands of times before doesn't me that they can't be wrong yet again.
Time to offend someone
Intended or not, corporations saw Social Security as a excuse to drop employee pensions (and take the difference as profits). At one time, even "menial" workers got decent pensions as part of their employment package. After 30 years of downsizing, rightsizing, off-shoring and union-busting, most people's only options for retirement are to gamble what little savings they have on the stock market (we all know how that worked out) and fall back on Social Security for the rest. The problem is not the "entitled" poor and retired, it's the entitled corporations who have sucked this country dry and given nothing back.
Support Right To Repair Legislation.
I don't know where you got this quote, but it's wrong:
The TEA Party wants the government to not exist--ushering in a bright fantasy utopia where we'll presumably repair our own roads, house our own prisoners, and allow corporations and the rich and powerful to do whatever the hell they want (power which they won't, of course, dare abuse or exploit).
Allow me to fix it for you:
The TEA Party wants the federal government to follow the 10th Amendment and only do what is specifically enumerated in the Constitution--ushering in a bright utopia where the states will repair their own roads, house their own prisoners, and allow people to make their living without being encumbered by too much government interference. (of course regulating interstate commerce is a federal power spelled out in the Constitution. Business entirely within a state would be state regulated only)
There! It sounds much more reasonable when it's the truth and not just want you want to true so it backs up your preconceived opinion.
There is no "I disagree" mod for a reason. Flamebait, Troll, and Overrated are not substitutes.
Just because the government doesn't allocate capital as efficiently (strictly in terms of ROI, in dollars) as the private sector does, doesn't mean they don't allocate it in ways that are good for society. Schools, roads, healthcare, defense, etc... these are all things that the government does far better than the private sector, because their utility isn't measured by how much money they make.
How can you possibly believe that everything the private sector does is better than anything the government does?? They both have their place.
-- Let us endeavor so to live that when we pass even the undertaker shall be sorry. -- M. Twain
>Liabilities to yourself don't count.
Hear that Americans that expect to get a pension? As long as not paying you anything is an option, all is well in the land of the free!
Heck, don't worry about that, we can always just print you the money you're owed. Imagine how rich you'll feel with your $1M bill as you hand it over for some bread.
Have a nice day, and please argue in favor of our AAA rating. Remember, the US always pays its debts!
I might suggest that all politicians money, possessions, etc should be liquidated and put into the general budget when they take office, regardless of the economic situation at the time. That might result in a government that isn't entirely composed of the wealthy. But, I'm sure they'd find ways to squirrel it away in offshore accounts. (I know this isn't a reasonable solution, I'm really just ranting.)
And, more damning for your post, the second you raise tax, that second number starts to dwindle - economic numbers aren't static and isolated - play with one and ten others drop which makes you overall worse off.
Unless, of course, you're still on the part of the curve where raising taxes still increases revenue. In which case, it's not such a bad idea.
Besides, this argument that raising taxes will simply cause everyone to leave the U.S. is just ridiculous. I see no evidence whatsoever of that being the case. Sure a company can move, but once they get to their new location, they'll need infrastructure, security, healthcare, education etc etc for their employees and business, and soon enough, the tax rate will rise to pay for them. Giving companies low tax rates to attract them works in the short run, but in the long run just bankrupts your country (for example, look what happened in Ireland).
-- Let us endeavor so to live that when we pass even the undertaker shall be sorry. -- M. Twain
America, brother could you spare a dime?
I am Bennett Haselton! I am Bennett Haselton!
What's asinine is that the US still has a AA+ credit rating. WE ARE INSOLVENT! WE'RE THE LARGEST DEBTOR NATION! These credit ratings are a joke, plain and simple.
Income versus debt most of us have bigger debts in our houses and cars(nevermind college). This is just a bunch of noise to stick Obama with something and hide other shenanigans. Otherwise why complain about the debt now when it's been astronomical since Reagan and few said much of a word the whole time especially republicans.
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Well, first a positive note : America's not nearly as bad as most other nations that grace this planet. China, while currently better than America, isn't without debt problems. But America's better off than Europe when it comes to debt. Yet Europe is better behaved than Turkey & middle east, who are in worse shape despite massive influxes of money.
But still that would mean that on the average, Americans ... did never even intend to repay their debts. Welfare states were created, knowing full well they were doomed. People trading their income now, in the form of taxes, for health care, study help for their kids and pensions that won't come, except for the first ones who enjoyed these benefits.
And yet lots of generations had the option of turning the tide, and didn't. Not just in America, but in Europe, the middle east, and Asia, lots of people had the option of stabilizing the system by choosing to take responsibility instead of shoving the bill to their kids, and all chose wrong.
The real question is, now that the cat's out of the bag, how long do we pretend we can put it back in ? The system has failed, and while this obvious truth can still be denied, it will reassert itself soon enough. Though I do hope we can pretend a while longer, I have a family to take care of, and despite the rosy pictures implied in leftist and progressive propaganda if we simply take the money from the bankers, we all know that their promises of wealth, brotherhood and justice for all will turn into the wars, concentration and slaughter camps they turned into last time.
I would simply suggest to take the lessons of history to heart : when public opinion does not just jabber about evil bankers, but actually attacks them in numbers, do what millions of people forgot to do before world war 2 : run ! Run to a place with sufficient food, home produced food, without multiculturalism (which will soon be nothing but a fancy word for ethnic wars), and preferably a nation without military alliances. Stay far away from any large American city, get the fuck out of Europe (the EU, not Switzerland), get the fuck out of the middle east, get the fuck out of Africa, or if you must, at least stay out of Northern Africa and the Saharan countries.
I don't know who will rise, it depends on many factors. I guess it will be whichever decent nation manages to not get destroyed, and I frankly seriously doubt it will be China.
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She experienced the early Soviet Union first-hand. She saw how the alternative to our capitalistic system actually works in real life.
So she went to the other extreme.
I haven't really done enough research to fully understand it, but I has made me think ...
This is a sticky one. Austrian School Economists (eg: Libertarians) love this particular recession for that fact. However, this was a very unusual recession. It was almost certianly triggered by the end of WWI, and the Fed was brand new and made lots of rookie mistakes. Most importantly, it is the only example they can really find in 235 years of US history of this happening. Herbert Hoover tried the same Libertarian trick for the Great Depression, and it didn't work (to put it mildly). In fact, the recovery from the Great Depression tracked rather well with government expenditures.
In my book it is smarter to go with proven mainstream economic theory, rather than radical ideas that rely on cherry-picked examples and funding from rich folks who their ideas just happen to benefit disproportionally (amazing coincidence, that). Mainstream economists tell you that government really ought to act contrarian (eg: spend like mad during downturns, and slow spending way, way down during upturns). That attitude worked pretty well in the 90's, but this current Congress refuses to do it.
Fuck McGraw-Hill. They own S&P. Sell their stocks. If you don't own their stock, short-sell them. Tired of this tea-party downgrade bullshit.
Twitter: @dainsanefh
Of course using revenue to decrease the deficit is a good idea - that's what the tea party has been advocating all along. America takes in something on the order of 100 billion a month. What the democrats refuse to do is accept the fact that we cannot keep spending money faster than we recieve it. Something has to give, and the republicans (correctly in my opinion) said that it shouldn't be the people that have to pay more taxes, but the goverment needs to spend less (of the already large revenue) on things other than the debt.
The rest of the world has a budget. Senator Harry Reid (D-NV) hasn't allowed a budget for over 2.5 years. The US has been operating without a budget since 2 months in to President Obama's term (when he signed the 2009 Appropriations bill). I bet that has something to do with it - the biggest Government on the face of the Earth running for over 2 years without a budget.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Yes, because there are no import taxes. Or there are but they CANNOT BE RAISED for some mythical reason. No, jerkbag, is because companies into import/export control the congress and they pressure them to keep import taxes low.
No, sorry. Fair is fair. If you can't raise taxes on the rich, then you can't cut taxes on food and medicine. It's only fair.
Not every company sells stocks, Why is this so hard to understand?
No. That's not how it works. Also, big players don't gamble their own money. They work for banks and they gamble YOUR money. And when they lose, they demand the government to rescue them. Are you mentally challenged or have you been living on an island for the last 3 years?
No one said anything about hate. I don't hate people who have more than I do, I would just rather have them pay more. See, if you have a $4000 a month income and have to pay taxes, you really notice when taxes are raised. If you have a $ 400.000 a month income, you barely notice the tax raise. You don't need to do any sacrifices to pay those taxes, and still keep your same level of life.
I understand you are racist, it's ok, it's not your fault - since you were raised like that, it's not your fault to be a complete idiot. But you see, mexicans, puerto ricans, cubans, etc... they don't go to the US "AFTER YOUR PROPERTY!!!!!!", they go there to live the american dream, and work to have a decent living. The rest of the world don't hate you, americans, for what you have. They hate you because your biggest business (war) is what keeps them from having internet conection, running water, climate control, and other luxuries.
No. Please, stop putting words in someone else's speech. Raising the taxes on the rich is not about charity. It's about fairness. How many houses and cars do you need to live?
Let me put it another way: Someone who lives in a house across the street from central park, NY. And who has 1 car and 1 limo there, and a beach house in Malibu (with a couple nice convertibles) and a couple more around the country, and does shopping in Milano and Paris (flying in their own private jet, of course)...
That person doesn't have a problem. That person DID NOT bust his ass working on a mine, on a production line, or working in a construction 300ft from the ground. And, go figure, persons who work in mines, production lines, or construction DO NOT HAVE A CHANCE to be as rich as that guy from central park. None, they don't. And hey, when the guy from park avenue gets sick, he can get the best medical attention - not the working class guy. If the miner guy needs a new lung after years of mini
I knew posting it on /. would get me something intelligent to go on pretty quickly.
I'll confess that I heard about it from a radio show with hosts who are big fans of the Tea party, and hate Democrats with a passion. They also told me that President Hoover tried the alternate tactic for the Great Depression, and we all know how that turned out.
Thanks for setting me straight.
Is 1563649 a prime number?
All those dollar bills in your wallet are only as valuable as we collectively agree they are.
Well then, let's collectively agree they are worth a mansion and a yacht for each citizen, shall we ? As it turns out, the long term value of money is not the result of psychology, rather a simple division of the economic output of the country by the outstanding monetary base. If some guy in Washington keeps printing those bills, they will eventually drop to zero, no collective agreement needed.
But who knows what that balanced economy would even look like, or whether it would even work.
Yup, we should stick to what we know works: spending money that will be paid by the future generation. I can't see any reason why this can't go on for ever.
Sane economists and a few lawmakers want to increase government stimulus.
Yes, because government stimulus is working so well, right? Those keynesians are going "La, La, la, la, I can't hear you!" when confronted with the evidence.
Stimulus spending has failed miserably so far, time to act responsibly and acknowledge that you cannot spend your way out of debt.
Yes, but the constitution isn't really followed much anymore, is it? So the framework doesn't work very well anymore. It's no good having a federal government that can't act when it puts itself in to situations where it has to act. And it has done so by very loose (at best) interpretation of the constitution. We obviously can't make any kind of workable compromises under the current structure, and the people aren't served by half implementations that are broken from the start.
The people who wrote the constitution were very smart, and they did a very good job. We didn't maintain things so well, but they foresaw that as well, expecting us not to last as long as we did. There is nothing wrong with seeing that things aren't working, and making drastic changes. Even that was said by the writers of the constitution.
If I can just reach out with my words and touch a butthole, just one, it will all be worth it.
Can't we just all tune into Fox and MSNBC to hear this discussion? I am sure, regardless of what side of the political spectrum one may be on that one of those two networks will hash it out to everyone's liking, ad nauseum.
Its the voters who cannot do math. They are getting the politicians they ask for plus disastrous results too.
I think you're the first person I've seen so far who gets it. And you put it so eloquently, too. I hope you don't mind me shamelessly stealing your obese 8 year old example.
:(){
I don't know if anyone read it but someone recently placed a $1 billion bet against the US retaining their AAA rating. This level of bet does not require a longterm downgrade. It is likely this size of investment could easily be exploited quickly if rating was even called into question for a short period of time. The question is whether someone pressured or influenced S & P to make a $2 trillion math error in order to cause a temporary downgrade in order to exercise their position in the market. The fact is the US debt to GDP ratio is lower then many other developed countries as well as many who have and recently regained their AAA rating. Further the other credit rating firms Moody's and Fitch did not downgrade the US rating. Maybe my tinfoil hat is poisoning my brain but it sounds like conspiracy and market manipulation to me.
"Of all the things I've lost, I miss my mind the most." ~Ozzy Osborne
We don't have a wealth tax in america, we have a bracketed income tax. The "tax cuts for the rich" mantra is pure feldercarb. You have exactly the same loopholes and tax strategies available to you that the "wealthy" do. There is no "escape" from taxation. Corporations however do have a whole bunch of tax advantages that regualar citizens do not since (theoretically) the result of letting a corporation fail (or even make less profit) would be a reduction in job force and overall competitiveness resulting in a net loss of tax income due to the loss of employee income tax and additional unemployment benefit burden. Now that effectiveness (particularly in a global economy) is debatable (and complex). You can see by this paper (and the included chart) http://taxpolicycenter.org/UploadedPDF/1001547-Why-No-Income-Tax.pdf that very few of the "rich" are "escaping" taxes, and fully half of the population is paying no federal taxes at all (and they aren't the rich).
In a global recession on the verge of depression? The Democrats, hands down.
Although 'the Democrats' misrepresents that side of the argument. Sane economists and a few lawmakers want to increase government stimulus. Some Democrats are stupid, however, and want to spend less, just not as much less as the Tea Party. The president, unfortunately, is among the latter.
Increasing government stimulus won't do any good. Hoover tried everything, FDR tried everything, but none of it worked. It took WWII to finally get us out of that great depression. The more money stays out of the government's hands and in the private sector regarding jobs, the better chance the economy has to recover.
Or rather, the lack thereof. We're on day ~830 without a Federal budget. Nothing's been passed since mid-March, 2009 when President Obama signed the FY2009 Appropriations bill (which Harry Reid and Nancy Pelosi didn't take up until February 2009). Maybe S&P and a lot of the rest of the world is looking at Harry Reid's refusal to even address a budget as a fundamental sign that at least one part of the 3-step-dance that is the budgetary process is just going to sit on its hands and do nothing.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
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In America everyone is a private interest. We're not state owned slaves yet.
Except when it comes to defense. Which is a very large part of the budget.
Defense is 20% of the federal budget- about the same as Social Security and a little less than Medicare/Medicaid.
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Congress loves to claim savings but Congress uses Base Line Budgeting which allows the appearance of savings when in fact no cuts are made. Essentially they state this is what it will cost in the future so if we say we will spend less than that we have made a cut yet spending can still and usually does increase.
So when you see a Congressmen bemoaning about harsh/absurd/severe cuts to their favorite program (defense/social/etc) you need to understand the numbers they are using. The closest to real cuts that has been offered up is the Ryan plan and Obama went out of his way (childish immature method too) to lambast this to Ryan's face in a speech!
I know, some say, raise taxes. Well even if we did raise taxes like Obama and some in Congress wants we would not make up a hundred billion this year and stand to make up even less going forward. We could make taxes confiscatory about a certain limit and still not balance even this years budget. The simple problem is, they promised more money than other people even have. Top it off with the Affordable Healthcare Act (or whatever it is called, know that the names assigned to bills usually results in the opposite) is chock full of increases to taxes in 2013 and beyond.
Entitlements need to be changed completely. We simply give too many people money they don't deserve and we don't even try to prosecute real fraud (estimated at over 100b a year in Medicare alone). We need to raise retirement ages for everyone over under 50 by a year, under 40 by 2, 30 by 3 and 20 by 4. We also need to make it harder to qualify for social security. We need to chop a carrier group or two, get our bases out of countries rich enough to defend themselves, and end the war on drugs. Also, remove the taxation of profits earned overseas. Bring that money home.
Obama is wrong, it is all about spending. He is up over 25% from Bush alone. When tax revenue goes down is not the time for the government to ramp up spending, Keynesian spending (think government spending money to boost economies) has been shown to not work here nor in Europe yet they still persist in trying and when it fails they come up with hundreds of excuses). Increasing taxes only works if you can hope that those who have the money keep using as they are, but they won't. They will simply use their money where it is not taxed which means revenues go down. It happens time and time again.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
That makes sense but you are completely wrong. The deficit, in real dollars and as a fraction of the GDP, is expected to grow over the next 10 years. To say nothing of the debt, which is slated to increase very dramatically over that time. The defect reduction is indeed calculated by taking where we expected to be before the reductions and subtracting it form where we expect to be afterward.
The major issue is entitlement spending, which if nothing changes, would require us to raise the federal income tax rate to 50% for the average American in order to have a balanced budget 10 years from now. This is due to almost entirely to baby boomers who will become eligible for social security benefits at that time, so it's a number that is well known.
Only a complete idiot would look at the deficit reduction deal and conclude that it will make any difference in the long run. We need to either raise taxes dramatically, or raise the retirement age an cut benefits, or both. These ridiculous promises to cut "discretionary" spending are pointless and woefully inadequate.
Keep reading - the economy really didn't improve until NRA projects started and WW2 put people back to work on a massive scale.
Yes, because there are no import taxes. Or there are but they CANNOT BE RAISED for some mythical reason. No, jerkbag, is because companies into import/export control the congress and they pressure them to keep import taxes low
They are called tariffs. Do a little research and find out why they are bad idea.
No, sorry. Fair is fair. If you can't raise taxes on the rich, then you can't cut taxes on food and medicine. It's only fair.
Strawman much? So, you take a good plan, and then you try to add stuff to it to make it a bad plan so you can say, "See, this plan sux!" Yeah... won't fly.
Not every company sells stocks, Why is this so hard to understand?
Every company has investors, even if the only only investor is the one starting the business. I used stocks as an example. If you take money from economy through taxation or inflation, for example, there is less money to invest. With less investment into the economy, the economy doesn't grow. Seriously, you don't understand this? This is economics 101. It was the same class where they taught you about supply and demand.
No. That's not how it works. Also, big players don't gamble their own money. They work for banks and they gamble YOUR money. And when they lose, they demand the government to rescue them. Are you mentally challenged or have you been living on an island for the last 3 years?
I don't invest in the futures market. I can't afford to. It can make a whole lot of money. It can also lose a whole lot of money. I don't gamble. As for the "big players" that don't gamble my money, if they were to consistently lose money, they lose investors. If they lose investors, they go out of business.
And yes, I agree the bailouts were bullshit. Just as the "shovel ready" stimulus was bullshit. Most of bailouts were the fault of senators representing states with big insurance and banking presence. You know, Massachusetts, Delaware, New York. Which party represents those states?
No. Please, stop putting words in someone else's speech. Raising the taxes on the rich is not about charity. It's about fairness. How many houses and cars do you need to live?
As many as I want. You don't need a computer to live, yet here you are using one to post on slashdot. Do you realize that your computer could feed a village for over a month? So, if you want to be fair, why are you depriving that village of much needed food and sanitary water?
Let me put it another way: Someone who lives in a house across the street from central park, NY. And who has 1 car and 1 limo there, and a beach house in Malibu (with a couple nice convertibles) and a couple more around the country, and does shopping in Milano and Paris (flying in their own private jet, of course)...
That person doesn't have a problem. That person DID NOT bust his ass working on a mine, on a production line, or working in a construction 300ft from the ground.
How do you know? I know several "rich" people that started out song manual labor. I have an cousin that worked construction for about 20 years. He saved enough money to open his own custom home building business. He's now "rich" by most standards. I have another cousin that started out cleaning pools. He now owns several pool cleaning supply stores and offers a pool maintenance service. My uncle delivered ice cream in East Texas for years. He saved and started a lumber company, which paid for the land he lives on. That land has natural gas under it, so he doesn't have to work anymore. Although, he still does. He sells food to local area restaurants for a large food distribution network.
Maybe the people you know are working for a paycheck. The people I know are working for their future. There is a difference. It is possible to work your way out of whatever job you have now. We don't have a rigid class system
There is no "I disagree" mod for a reason. Flamebait, Troll, and Overrated are not substitutes.
What amazes me is that so many people think that raising taxes on 'the wealthy' will solve anything. I can't recall the site where I saw the calcs, but in a nutshell, even doubling the tax rate on everyone with over $250k of yearly income would do exactly two things to help our budget problems: Jack and Shit. The numbers are just that big.
"Gold still represents the ultimate form of payment in the world." - Alan Greenspan, 1999
I have been coming to Slashdot for a looong time. In the "old days," something like this wouldn't have been considered remotely relevant to the site. And if somebody actually posted it, 80% of the comments would be complaining that it shouldn't have been green-lit.
Now? Posts like this look just like every other political pissing-match forum. There is a reason I don't go to Reddit.
>Rich folks consume more, they pay more. easy math.
Sales taxes are regressive. They always have been. Don't just ask me, ask any economist.
http://www.investopedia.com/terms/r/regressivetax.asp
If I was rich, I'd be in favor of a sales tax. But I'm not. I've dealt with combined GST and PST in Ontario and it seems like highway robbery when you have "mere mortal" wages, especially when "high sales tax" for me is 7 percent while in the States.
>Undocumented laborers and their families consume, they pay. easy math.
A lot of undocumented workers /have been/ paying taxes in the hopes of establishing proof of residency in case immigration reform comes around. IRS doesn't care if you're here illegally.
>Buy something from out of the country - double the sales tax on importation to the country.
BUT BUT PROTECTIONISM!!! ASLDKFQTQ!!!
I agree that we should have tariffs to stop dumping and the general race to the bottom the American worker has to do in order to compete with 35 cent an hour wages in Bangladesh.
>Online shoppers that don't currently pay state sales tax - you'll still pay national sales tax.
It already exists. You're already supposed to be paying this. It's called Use Tax. Businesses keep track of this. Most consumers don't.
An income tax has been the most equitable way to "spread the pain" over the years.
We had a damn good economy in the 1950s with the income tax rates they had back then. We built interstates, schools, and hospitals with it. Now we have an infrastructure crumbling around our ears and wars we aren't paying for.
As of March 2011
Total War Funding by Operation
Assuming an annual level of the current Continuing Resolution (H.J.Res. 44/P.L. 112-4) and
based on DOD, State Department/USAID, and Department of Veterans Administration budget
submissions, the cumulative total appropriated from the 9/11 for those war operations, diplomatic
operations, and medical care for Iraq and Afghan war veterans is $1.283 trillion including:
â $806 billion for Iraq;
â $444 billion for Afghanistan;
â $29 billion for enhanced security; and
â $6 billion unallocated (see Table 1).
And instead of raising taxes to fund such shenanigans, Bush insisted on cutting taxes, and the "Fiscal Responsibility" whackos still insist on doing the same.
Because, you know, none of that war shit costs anything, obviously.
http://www.fas.org/sgp/crs/natsec/RL33110.pdf
--
BMO
Sane economists and a few lawmakers want to increase government stimulus.
I'm going to call you on this one. None of the plans - even the ones being pushed by the Tea Party - actually reduce spending. The "cuts" are reductions in planned spending increases. Even then, most of the "cuts" come toward the end of the 10-year time period, so short term there will still be plenty of government "stimulus".
I personally wish they had agreed to simply freeze federal spending at current levels until the economy catches up with spending. Politically, the Democrats could claim to not be cutting any programs and the Republicans could claim to be attacking the deficit and holding the line on taxes.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Obama's stimulus programs did nothing, and the bailouts ended up costing taxpayers. He even ignored his own debt commission. Hell, the Democrats have also been operating the country for two years straight without a budget.
Normal citizens, when they have a bad credit rating, try to get their rating back up by spending what they can afford, especially during times of economic hardship. For some reason, left-wingers think the correct response is to actually spend even more and then just tax successful people to make up the difference, as if the government suddenly is entitled to more of your money if you're more successful than others.
No "insider" would ever do something like this, right?
"I love my job, but I hate talking to people like you" (Freddie Mercury)
The class envy that liberals use to try to justify taxes is intellectually dishonest. Just because you don't like rich people and think they're greedy doesn't mean the government magically deserves more of their money. The people living on 12 grand a year in the projects aren't somehow entitled to their money either. Income redistribution has never led to a stable, long-term economy.
But please, keep on ranting about "the rich." Having money and being successful is greedy and something to feel guilty about!
http://www.youtube.com/watch?v=7GSXbgfKFWg
It's broke now.
Except for ending slavery, the Nazis, communism, & securing American independence, war has never solved anything.
I for one am sick of blue states subsidizing red ones. It's the wealthy, populous, urbanized blue states that by and large support the sparse, poor, rural red ones, in everything from social services to farm subsidies to defense contracts.
It's time for Blue America to take its ball and go home and leave Red America to rot.
Check out my world simulator thingy.
Debt is an industry too, just like oil and shit.
You're still looking at it from the wrong point of view. We use that money to keep these areas from turning into the slums of Rio or Mumbai, which in turn keeps property values up, which in turn benefits the property owners. This also keeps the crime from spiraling out of control and spilling out into the surrounding area, which unchecked would further lower property values, which would kill the businesses in these areas, adding to the number of people living in these depressed areas, which then pushes crime farther out, and the cycle continues...
In the end, keeping poverty under control is in their best interests. They can either spend a little today in the form of raised taxes or they can spend a lot later trying to turn their home into a fucking fortress and living like they do in Somalia, where every trip to the grocery store has to be planned tactically to avoid the roving gangs stopping people and shaking them down. We have evidence of this from all over the globe, we have seen where it all ends up if we start cutting people off and letting them twist in the wind and live the "dog eat dog" lifestyle the neocons seem to want so bad.
I mean, do people deliberately ignore the link between crime and poverty, or did a large portion of the population just become suddenly blind to that fact?
>Of course using revenue to decrease the deficit is a good idea - that's what the tea party has been advocating all along.
So explain why the "deal" was all cuts and no revenue.
>What the democrats refuse to do is accept the fact that we cannot keep spending money faster than we recieve it.
So explain the money we've been spending on wars that aren't giving us any ROI.
It's like talking to a creationist or something where cutting taxes during a war is a good idea and magically leads to a balanced budget.
--
BMO
> the long term value of money is not the result of psychology, rather a simple division of the economic output of the country by the outstanding monetary base
Agreed
> Yup, we should stick to what we know works: spending money that will be paid by the future generation. I can't see any reason why this can't go on for ever.
True we can't spend forever, but we also need to weigh in the problem of good and bad economies. It's most effective if the government softens the blow of bad economies, while saving money during the good times. This has been proven time and again from Hoover to 90's Japan. Now that we didn't save, the arguing goes into high gear, and nothing productive gets done. Seems prudent to slowly and surely, but not drastically and immediately, cut the deficit (unless you feel that we are in good times with a great economy - then by all means lets cut like crazy).
Everyone's original offer focused on the 4 trillion number S&P has been asking for a while. The only way the negotiations fail and the problem wouldn't get solved is if one side takes the position of not negotiating.
S&P is not a competent organization. The failure of all the rating agencies, not just Standard and Poor's, caused the present economic depression. The rating agencies rated derivatives AAA that were based on extremely shaky financing.
The 2008 economic shock was the greatest in over 80 years. The stimulus that was passed was marginal. It failed not because it was the wrong approach, it failed because it was a drop in a very large bucket with a hole in it.
Patch the hole (with real market regulation, and for god's sake get the Consumer Financial Protection Bureau off the ground), and give the economy a better boost, and you'll see results.
I realize that prescription is politically impossible, but it is the only way out. All other paths out of our troubles lead through a generation-long recession, or through war. (And this time, my money would be on civil war.)
Genocide Man -- Life is funny. Death is funnier. Mass murder can be hilarious.
I think you'll find that there is plenty of blame to go around. Government for not enforcing regulations, and repealing one that would have prevented the snafu. Rating agencies LOWERED their rating standards to make more money on mortgage backed securities. Even the SEC wanted to clean up the rating agencies back in 2003 citing anti-competitive behavior and conflicts of interest.
These comments are my own and do not necessarily reflect the views or opinions of my employer or colleagues...
Hey everyone worrying about the debt is being played - the US can borrow money at 1.25% that means the interest paid on a trillion of debt is 12.5Billion dollars, which is rounding error in the US budget - the US now pays less interest on debt than it did during Bush I. Also people fail to recall that if you borrow money to create assets, such as roads and infrastructure it is not the same as borrowing money to spend on hookers and blow - since that assets you create have some long term value. We, as a people, are getting played by the rich and the powerful - it is very sad to see this country getting played by a bunch of ultra-rich right wing plutocrats who create one phony crisis after another to scare us into enriching them further.
I see nothing in this article about S&P making a mistake and admitting it. I only see this quote from someone in the administration:
A senior Treasury official Saturday called S&P's move a "$2 trillion mistake" and said there was no justifiable rationale for the decision. "The magnitude of this mistake—and the haste with which S&P changed its principal rationale for action when presented with this error—raise fundamental questions about the credibility and integrity of S&P's ratings action," John Bellows, acting assistant secretary for economic policy, said in a blog on the Treasury's Web site.
How is this a story? A blog on the Treasury's website said the move is a "2 trillion mistake"?
Well at least that's the spin that the tea party would like you to believe.
You are not going to get any enlightenment from the highly politicized domestic debate about the debt crisis (and that's a loaded word, but it is probably accurate at this point). I'm a US / Canadian citizen, now living in Canada. The only way for Americans to get some perspective is to compare the key economic metrics to those of other developed nations in terms of taxation, spending and borrowing.
On the taxation side Americans have one of the lowest taxation rates among developed nations. US tax revenues as a percentage of GDP are around 24% (2009 data). Most other developed nations are over 30%. The only OECD countries with lower tax revenues (per GDP) are Turkey, Chile and Mexico. But Turkey's public debt is only 42% of GDP, Mexico's is 27% and Chile's is 9%; the US public debt is over 60% ( just central gov debt) or 90% (total public debt) as a percentage of GDP. For comparables, Denmark and Sweden's tax revenues per GDP are approaching 50%, France, Austria and Finland are in the mid-40% range, Germany and the UK (and EU average) are around 35%, Switzerland, Spain and Canada are around 30%. So from this, compared to other developed nations, the US takes in significantly less tax revenue as a proportion of its economic output.
On the spending side, in spite of high military, healthcare and public pension spending, the US public spending as a percentage of GDP is in about the middle to low end of the scale compared to other developed nations. Government spending as a percentage of GDP in the US is about 39%. This is comparable to Canada (39%), Norway (40%), Japan (37%), but is much lower than the UK (47%), Germany (43%), Italy (48%) and of course, Sweden and Denmark at 52%. So compared to other developed nations which have similar need to support the education, healthcare, public pensions, security, etc. of the population, the US spends less as a percentage of its economic output.
So the US takes in less tax revenue AND spends less as a proportion of economic output than comparable developed nations. The US has been able to do this because of its efficiency - the US (along with Norway and Switzerland) has led most other nation in GDP per capita - currently at around $47,000. This compares to Canada, Sweden and Germany around $38,000 and the UK, Japan and France around $35,000. So because the US generates more economic output per person, it can spend less and tax less. So what's the problem then?
Well one of the problems is the US dollar. The dollar has been the defacto fiat currency for generations. If you want to buy or sell something on an international market (particularly oil) the transaction will be denominated and closed in US dollars. Every country and company MUST have reserves of US dollars. This creates an artificial demand on the dollar and strengthens (inflates) it versus other currencies. The strength of the dollar has a lot of repercussions. On the plus side, it has encouraged direct foreign investments - other nations investing in the US economy, this is a good thing. The attractiveness of the dollar to investors has meant that much (over 60%) of the public debt is foreign held - that's not a good thing. It also contributes to a trade deficit - US goods are more expensive, so we export less, and foreign goods are cheaper so we import more. So as a result of an artificially high dollar, we produce less and spend more. The US has traditionally not worried too much about this because we have always been able to "move up" the value chain - that is, as lower value economic activity (jobs) has been shipped overseas, we have replaced this activity with higher valued economic activity - value added goods and services. We also lead the world in generation of intellectual property - thoughts, ideas and inventions.
Another problem is, other nations - most notably India and China are catching up. China and India are
If you aren't part of the solution, then there is good money to be made prolonging the problem
The difference between the old Republicans and the Tea Party is the Tea Party wants to keep the promises the Republicans have been making and breaking for the last 30 years.
I often don't like the choices people make, but I like the fact that people make choices. That's why I'm a conservative.
Those at the extremes tend to be impractical and even dangerous if implemented in real life.
Luckily, Atlas Shrugged hasn't been implemented. But "The Communist Manifesto," "Das Kapital," "What is to be Done?," "Quotations from Chairman Mao," and "Complete Collection of Kim Il Sung's Works" have, with the cost of about 100 million lives in less than one century.
Yeah - because the best people to manage an economy are people with no money or assets.
If you aren't part of the solution, then there is good money to be made prolonging the problem
A thousand Karma times, THIS.
Because the structural framework designed by 17th century plantation owners for a pre-industrial society are OBVIOUSLY relevant for a high technology, 21st century global economy.
If you aren't part of the solution, then there is good money to be made prolonging the problem
Some of the copyright laws (their duration) severely limit free speech, domain seizures, a lot of what TSA does (especially flights from one part of California to another), mandating the purchase of healthcare insurance, "free speech zones", and warrantless wiretaps. I can go on. I'm not trying to spout off a bunch of republican/conservative talking points. A lot of laws are passed that just don't fit in with the constitution, and a lot of regulations are imposed that go against the constitution. And ultimately, yes, everything can be rationalized with an "interpretation" of the constitution, some are a lot further stretches than others though.
If I can just reach out with my words and touch a butthole, just one, it will all be worth it.
It was in the Time article I read 15 minutes ago.
It doesn't hurt to be nice.
I had to rant a while back (also every day before and since, but this one day in particular). What I came up with is that they should all live in a big dormitory and wear dickies with a name badge. Public service indeed.
regardless of the math, S&P's reasoning is sound.
yep, they reason that their political friends on the right wing benefit most from anything that embarasses their political foes, so they pull wreckless stunts like this in order to try and force the abandonment of every progressive policy the U.S. has implemented in the last 100 years.
You can download the latest radio program here.
You can't handle the truth.
Allow me to fix it for you:
The TEA Party wants the federal government to follow the 10th Amendment and only do what is specifically enumerated in the Constitution--ushering in a bright utopia where the states will repair their own roads, house their own prisoners, and allow people to make their living without being encumbered by too much government interference. (of course regulating interstate commerce is a federal power spelled out in the Constitution. Business entirely within a state would be state regulated only)
There! It sounds much more reasonable when it's the truth and not just want you want to true so it backs up your preconceived opinion.
That's a very BOLD OPINION, but how much of an interstate highway system would we really have without the federal government? This libertarian "truth" you wish to edit into existence is a fucking fantasy.
Why would I argue in favor of something I don't agree with? And which has nothing to do with whether the US is technically insolvent?
Democrats want the government to spend more. The TEA Party wants the government to spend less.
You appear to have misunderstood, as that is not correct.
The Democrats want to cut the deficit by spending somewhat less, and increasing government revenues through taxation. The Republicans want to cut the deficit by spending considerably less, but not increasing government revenues through taxation.
It's not that the Republicans (the party I'm assuming you support) are necessarily wrong; it's hardly an obvious decision, as both approaches have all sorts of complicated repercussion. Unless you have a PHD in economics, frankly I don't trust your opinion on it any more than I trust my own.
They even do it here.
Can I light a sig ?
The "tax cuts for the rich" mantra is pure feldercarb.
The rich are paying less now on the same income than they were before George W Bush - I'd call that a tax cut for the rich. What would you call it?
We also eliminated the estate tax (although it is coming back in a weakened form) which is another tax cut for the rich (especially for trust fund kids who don't need any income and therefore don't pay any income tax).
All those dollar bills in your wallet are only as valuable as we collectively agree they are.
Well then, let's collectively agree they are worth a mansion and a yacht for each citizen, shall we ? As it turns out, the long term value of money is not the result of psychology, rather a simple division of the economic output of the country by the outstanding monetary base. If some guy in Washington keeps printing those bills, they will eventually drop to zero, no collective agreement needed.
Well, it is a little of both - like any measure of value.
To the guy wanting to buy a house, $100 should buy a house. To the guy wanting to build a house, $100 should buy a bucket of nails. The two meet somewhere in the middle, and that is the value of money.
In practice, your description is a good way to get a sense of where people will end up. However, how do you measure economic output without using dollars? If you measure economic output in dollars, then your definition of the value of the dollar is circular.
If all people did was make nails, and trade them for dollars, then the value of a dollar in nails would be trivially measured as you stated. However, the whole point of currency is allowing us to value financial transactions that are not obviously comparable (such as how many buckets of nails to pay your doctor for an operation, when he has no need for nails).
Only banks and central banks take money out of the economy when they write off loans or destroy it directly.
Um... no. When banks give out a loan, they give money to the borrower. The borrower, does something with that money. He might rent an office or buy raw materials. Either way, that money went somewhere. It was not "taken out of the economy".
Do governments add wealth to the economy?
When governments tax, they ARE taking money out of the economy. Let me explain:
Let's say I make clogs. You know, those wooden shoes? I buy a block of wood for $1.00, carve out some shoes and sell them for $10.00. What was the value of that wood when I bought it? That's right, $1.00. What was the value of the shoes I made with that wood? Yep, $10.00! So, in making those shoes, I added $9.00 to the economy that wasn't there before. I'll take my $9.00 and use it to pay for my house, feed my family or buy other products, all that are adding to the economy just like I am.
Now, let's say the government taxes me $1.00. How much money is added to the economy? Yes, $8.00. Of course, everyone else that makes money off my $8.00 will also have to pay taxes on their contribution to the economy.
Of course, the government will spend that money as well. Let's say they higher librarians. How much are those librarians adding to the economy? Zero. That's right. A librarian produces nothing. Yes, but we all love libraries and librarians. They add "value" to our lives so it's OK that we spend our tax dollars on them. But that's not the question. The question was "Do governments add wealth to the economy?" If anything, libraries take away from the economy. They prevent people from buying or "renting" books. Imagine, if there were no libraries, how many businesses would form to rent books, much like people do movies? Would you ever buy or rent a movie if you could go to the library and check it out for free? Of course not! How much has Blockbuster, Netflix and Red Box added to the economy? RedBox takes a movie they bought for, let's just say, $100, and rent it out 1000 times for a dollar a pop. They created $900 and paid the movie makers a cool Benjamin the would not have otherwise made.
OK, that was a bad example. Of course, librarians don't make anything. They provide a service to the taxpayer, even people that can not afford to rent or buy books. Information needs to be free! So, let's talk roads. Governments build roads, right? Well, they pay a company to build them, but it's still government money. OK, let's say a road is built. The government buys/takes land from a bunch of farmers and builds a road through that farmland. How much is that road worth? Well, the road is worth exactly what was put into it, concrete labor, etc. The road itself is worth nothing more because no one is going to pay to use it (let's assume it's not a toll road). It is worth nothing more than it was before it was built. As a matter of fact, the land that it is built on was growing vegetables. That farmer was taking a tractor with some diesel fuel and fertilizer and growing produce that was worth more than the materials he put into it. So, the road actually takes wealth AWAY from the economy.
But wait a minute, we like roads too! Yes, they are necessary, and they can be beneficial to the economy. Let's say a gas station gets built next to that road. Now that gas station makes more than the farmer did and wouldn't be there if it were not for the road. So, did the government add to the economy? No. The guy who built the gas station is adding to the economy. Government just built the road that allowed the guy to do so. Road maintenance is even worse. Sure, it's necessary, but it adds nothing to the economy that wasn't there before.
So, here is the answer: Government sets up the conditions that allows for the private sector to grow the economy. Sure, governments build infrastructure like roads, but those roads are worthless witho
There is no "I disagree" mod for a reason. Flamebait, Troll, and Overrated are not substitutes.
But it all depends on confidence. U.S. currency (and bonds too, for that matter) has no real objective value.
Does anything have objective value?
Money buys power. That accounts for the very many screwy things that the posts on this topic discuss.
It is also the reality that no one wants to deal with, mostly for reasons of ideology.
If you don't like strong corporations, you have to cut the government power. Otherwise, you are an ant attacking an elephant in a frontal assault, not a hope in hell of winning.
If you don't like the gov giving our tax dollars to , you have to cut the gov's power. Otherwise, ditto.
Wishes for honest politicians, fair and honest bureaucrats, citizens and Congressional representatives that vote for the long-term good of their country, while quite inspiring, are hopeless, clueless, self-indulgent, idealistic (in the sense of words and ideas being given primacy over external reality), and generally worthless except for producing lots of posts and benefiting the corporate advertisers who make all this possible.
"The Constitution, the WHOLE Constitution, and nothing but the CONSTITUTION."
If you'd take a mild point of criticism...
It really isn't a good idea to listen to shows (of any political stripe) that take the attitude that they know up front what the answer to everything is, and they just need to find the facts that support it. The only good information you can really get out of such is what they want you to believe today (and 90% of the time you could guess that).
Everybody has a certian bias, just in picking what topics to cover each day. That you have to learn to live with and account for. But it is pointless to even listen to folks who are interested in selling an ideology, rather than looing at *all* the facts of the situation, and following where they lead. This is a problem with every modern right-wing TV or Radio show I've seen, along with just about all the avowedly left-wing ones.
In particular, watch out for those that try to drum up conspiriacy theories and hate. Particularly those that work to dehumanize or deligitimate "Liberals" or "Conservatives". Such radio shows were instrumental in starting and organizaing the Rwandan Genocide, and this country has a history of partisan media touching off such things as well. So do your country a favor and don't listen.
It was S&Ps rating system that the banks gamed with repackaged mortgages in the first place. Fuck um.
How long before the media points that out? Think they will?
It was discussed on NPR today. Thing is though, it doesn't matter if S&P were incompetent or complicit in the past. It doesn't matter if S&P is right or wrong even. It doesn't matter if the media discusses it either. What matters is how people will react to the downgrade going forward.
S&P has a credible argument that the US debt should be downgraded until there is clear evidence that our political leaders are willing to act like adults and actually deal with the problem. Right now the US government is borrowing $0.40 of every dollar it spends. Worse, we have a bunch of idiotic congressmen willing to play a game of chicken with the full faith and credit of the US government. That is insane. S&P might be wrong but at least their argument has some reasoning behind it. Congress isn't thinking about anything except getting re-elected.
The TEA Party wants the federal government to follow the 10th Amendment and only do what is specifically enumerated in the Constitution--ushering in a bright utopia where the states will repair their own roads, house their own prisoners, and allow people to make their living without being encumbered by too much government interference. (of course regulating interstate commerce is a federal power spelled out in the Constitution. Business entirely within a state would be state regulated only)
What you are describing is antebellum America. You remember that don't you? It was that wonderful era of nullification crises, slavery, incredible poverty and, of course, ultimately a civil war that cost 600,000 lives.
So if you want to go back then, thinking you're going to be the head of a plantation with singing, happy darkies doing your bidding as you sip mint julips on the porch all day--well that's just fine. Just remember that the odds are about 99-1 that you'll end up a semi-starving poor piece of trash, living in squalor with no health care, no safety net if the crop fails, and no hope for ever improving your shitty station in life. Have fun in paradise!
SJW: Someone who has run out of real oppression, and has to fake it.
We the people need to create a new demand from politicians. Meet the claims you present, the demands we want, fix this country or we will kick you out. We the people are responsible to keep the government in check, we need to fire congress and get a new group of people in there, fire the president, the senate, the house. California needs to fire there state senate and governor. We need to have a zero torrence for lies and empty promises. In the real world if some company said they would do X if you hired them you expect X. If you don't get it you ask for a refund, fire them or otherwise. If my job let me do nothing I promised and keep my salary, I would be spending my days programming games and posting comments on slash dot. (Oh wait, I work for the government?)... All politicians should post a commitment of goods. Think of how quickly they would change if we replaced them on failure to live up to their commitment. It does not matter what the laws say, it does not matter what they claim, it does not matter, we the people have the right to change things either by demanding change through peaceful discussion, peaceful activation, or violent revolution. If the government is corrupt we the people are supposed to overthrow it. I do not believe in violence, so I say we pick a day say 6 months down the road, and set a task to the government to have us back on track or we strike. If 50 million people skipped 1 day of work, the government would have to wake up and do their job, that says we are not going to take any more. Once should be enough for 20 years of politicians doing what they are supposed to, but if not, we can strike until they step down and allow new people in that will fix it. Who is with me?
> Democrats want less government spending as a percentage of GDP [1]. The TEA Party wants to destroy government [2], unions [3], and the US economy [4].
FTFY.
Democrats want to cut spending? You know that cutting does not mean spend more, right? Take a look at Change.gov, Obama's website. Here are some snippets:
The Obama-Biden emergency plan would make $25 billion immediately available in a Jobs and Growth Fund to help ensure that in-progress and fast-tracked infrastructure projects are not sidelined, and to ensure that schools can meet their energy costs and undertake key repairs starting this fall. ... ... ... ... ...
Senator Obama pushed for $50 billion in loan guarantees to help the auto industry retool, develop new battery technologies and produce the next generation of fuel efficient cars here in America. Congress passed only half of this amount -- it is critical that the administration speeds up the implementation of the first half and that Congress move quickly to enact the second half.
Extend unemployment insurance benefits and temporarily suspend taxes on these benefits
Obama and Biden are calling for supplementing the recently passed LIHEAP funding to ensure that cold-weather states can cushion the impact of high energy prices for their residents this winter.
Provide $25 Billion in state fiscal relief to help avoid painful property tax increase
And that was only the top half of the page. You know, a billion here and a billion there, it soon adds up to real money! Spending more money is not cutting spending. It's just the opposite.
So you honestly believe that the TEA Party wants to destroy government? Wouldn't it be much more likely that they want a smaller government? Most TEA Partiers I've bet want a big military, a court system, the FBI and so on. What they don't want is farm subsidies, federal regulation of local schools and business that happens entirely within a state. Those that literally want to "destroy" the US Government are called "revolutionaries" and those guys are usually wearing a Che shirt. Hardly the typical TEA Partier.
And yes, the TEA Party wants to destroy unions, just as unions have destroyed many industries and governments in the US. Your job treating you unfairly? Quit! You bring up the Wisconsin protests, let me explain to you a few facts. First of all, the government workers and teachers in WI got a pretty sweet deal. Not only did they receive 100% health coverage and pension plans, but the union actually got to OWN the health insurance company that the teachers had to buy from. That's right, the Teacher's Union owned the insurance company that covered the teacher's union. The teachers, of course, would not have to pay a dime this coverage. So if , for example, the insurance company said, "We'll pay for name brand drugs, but raise your premiums by twice the cost", the teachers would be all for it. After all, they would get getting a benefit for zero cost to them. Why wouldn't they? WEA Trust is the insurance company. It was established and closely is associated with the Wisconsin Education Association Council (WEAC). Look it up.
What caused the WI protests. The elected legislature and governor wanted to take away collective bargaining rights for compensation and make each teacher or employee negotiate their own salary based on their performance, and make government employees pay a minuscule portion of their health and pension benefits.
And finally, you think the TEA Party wants to destroy the economy? The article you mentioned does not contain the words "TEA Party" anywhere in it. However, I did find this quote from Obama, "Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket." Don't take my word for it. Here is the video: http://www.youtube.com/watch?v=HlTxGHn4sH4 .
Hmmm. Sounds like I found more evidence that Obama wants to wreck the economy than I could find for the TEA Party.
There is no "I disagree" mod for a reason. Flamebait, Troll, and Overrated are not substitutes.
Increasing government stimulus won't do any good. Hoover tried everything, FDR tried everything, but none of it worked. It took WWII to finally get us out of that great depression.
Uhm, you mean the period in American history where we went to an all but demand economy, with the majority of our economic output going into the war effort? So basically, your argument is that Hoover and FDR tried everything politically possible, but it took a World War for the political will to be there to really spend enough to come out of the Depression? Or did you have some other mechanism in mind for how a publicly financed war effort would have ended the Depression?
...sometimes, in order to hurt someone very badly, you have to tell that person terrible lies. - PA
S&P is a ratings agency.
As a private entity, its valuations (sold to investors) are its main cash cow. You don't have to believe what they say--that's your prerogative. If you think what they say is BS, out of touch with reality, or a "$X trillion mistake," that's what the other rating agencies are for (Fitch, Moody's, etc.).
Who gave S&P the authority? Private enterprise gave them that. They happen to be very good at gauging these things, which is why people tend to trust them.
OK, so they were manipulated (or manipulating) for mortgage pass-through securities during the 2008 credit crisis. They fell asleep at the wheel, should have been paying more attention, should have been better at figuring it out. They could have been more savvy to realize that the CDS market was getting bigger and bigger all at AIG's expense. But they weren't. That also happens to NOT be their primary market. Fannie and Freddie are supposed to be responsible for securing mortgages. S&P is all about stocks, bonds, and indices.
Think of how many times does S&P get it right compared to how many times it is off base. If there is one plane crash, does everyone decide not to fly ever again?
I'm no big fan of S&P, but at the end of the day, S&P is answerable to its investors and its clients, no one else. Certainly not Robert Reich. Who gave HIM the authority?
Does Moody's have a potential increase in revenue if the US rating is lowered? Why, yes it does, if nothing else from the churn of the holdings for institutional and private investors. So with S&P "at arms length" but Moody's child, Moody's makes money, S&P remains "independent" and brokers buy more Ferraris or whatever this years bonus candy is... The tumult in the government is an excuse to lower it. Facts don't matter; and, where there is a difference between the rating agencies, there is a chance to play between them as that influences peoples investment strategies. Who wins? Why the brokers win. No matter if a investment gains or loses the guy brokering the deal makes money, from both sides. The seller pays their broker, the buyer pays his broker, and slowly through churning they make considerable amounts without a contribution to the GDP.
/. is even interested in this article...
And how the times have changed that
- Tjp
I am in wallow with my inner money grubbing capitalistic pig. ... Oink!
Anyone in for a Class-Action lawsuit against S&P? The plaintiffs will be just about all US citizens, with certain obvious exceptions like guys who work for S&P, judges, and twelve randomly-chosen people to be the jury. We'll sue them for $14 trillion, or about $40,000 for each plaintiff. I could use an extra $40,000.
No Congress can constrain a future Congress's action by mere laws -- it takes a constitutional amendment. It's probably a fact in any other such system. Each US Congress lasts two years, and they are bound by the rules they establish at the beginning of the session, and no others. Merely passing a law which says future Congresses must reduce spending by a certain amount is a joke.
Furthermore, the so-called cuts are only cuts from a laughable baseline. They are not reductions in spending, they are only projected (and "recommended", ha ha) reductions in spending increases. The promised actual spending cuts for this year are only $22B, barely 1% of the total deficit this year. Even that is probably an illusion; the last promised cuts, $38B, turned out to be programs already expired, with only $380M, 1%, being true spending cuts. At that rate, this $22B will only be $220M, so small no one will even notice. Almost all the so-called $2T in future spending cuts are mere vague promises of future actions by future Congresses, almost certain to be ignored because they have no force of law.
The yearly deficit this year is $1.6T. $2T over 10 years is just 15 months of deficit alone. It is pitiful, pathetic, and a joke without humor.
Infuriate left and right
I wouldn't mind the "cut spending" pressure coming from the Tea Party if the people pushing hardest for that didn't also seem to be entirely incapable of compromise.
Obama, Reid, Boehner. Those were the three people at the table and non of them are "tea party". Besides, how do you compromise with a leaderless abstraction? If Ron Paul or Bachman was at the table, then you might have a point. As it was, you are only an ignorant fuckface.
Patch the hole (with real market regulation
What's needed is real government regulation, like a debt ceiling that cannot be raised, no matter what. What's the use of a ceiling if it can be raised at will?
Economics theorists always have their pet theories, like Keynes had with that government spending could always save the day, but they forget that real life needs not follow their theory.
In the 1990s there was this matter of government regulations stating that people could not be denied mortgages based on where they lived because there could be hidden racial prejudice in that. The result today is that today in Detroit there are houses being sold for $7.
Try to regulate the market and people will find a way to create a speculative bubble out of that. You cannot create artificial regulations on the market, because the market is a natural thing. You cannot control the market any more than you can control nature. Nature takes revenge.
That's the big difference between market and government, the market is a natural process, government is an artificial entity.
It doesn't take a rocket scientist to see fixing the problem requires that 14.6% and 24.3% move towards each other. Both figures are lowish, so it doesn't matter which one moves. Your S&P rating dropped because your politics is so divisive it is looking like neither will. The right wing is welded to the 14.6%, the left the 24.3%. If they both stick to their guns you are well on your way to creating a banana republic.
I am sure that the people with the money would agree, but the people with the labor who have to build the yacht and mansion have a different opinion.
-rd
These guys are all cut from the same cloth, business majors for a reason.
As an alternative reason for why a war can end a depressions, what about creating demand for your industry by assisting in the bombing of the industry of every other country on the earth, leaving only your industry capable of producing goods for at least a decade? Might that not work?
The problem in the US appears to be that neither side has the power to make a decisive decisions so they engage in these stupid showdowns where they resolve to be irresolute and the situation gets worse. The US political system for all it's supposed advantages strikes me as a complete joke in a crisis that pitches one side against the other. While other governments often have their own faults at least there is usually one party / coalition in charge who can make a decision and it must be abided by.
Of course back in reality if you tap the rich for money you will get more money. Maybe some will attempt to evade paying but I expect they already do, which is why it might be a good idea to plug some of those loopholes and ensuring compliance through stricter tax audits. It's not a case of doubling anything either, simply observing that the economic wheels have come off the US economy and the money has to come from somewhere to put it back on track. And that absolutely should include the rich.
Keep in mind that some of the largest areas of spending are entitlements, and those involve issuing bazillions of medicare payments for doctor visits and surgeries, and a modest check every month to millions of people. In a sort by amount of individual checks, they'd be very low on the list compared to buying buildings or tanks, but they add up to quite a bit. Actually, I'm not sure where the military would even rank on something like this - it isn't like the government just goes into the Lockheed store and buys 10 F-22s - there are probably contracts involving regular payments and such.
In the aggregate the largest areas of spending are social security, medicare, and the military. When you talk about future obligation then the military actually drops off the picture - it is a lot easier to stop buying bombers than to tell somebody that despite paying social security taxes their entire life they're not going to collect as much as their parents did.
So, at this point in most conversations everybody starts going back and forth about which of these three is a legitimate and important function of government, and in the end since we can't agree we keep paying for them all.
In America everyone is a private interest. We're not state owned slaves yet.
Of course, you are privately owned slaves, unfortunately.
It's not personal, the Americans I know are all great people but you are slaves to the dollar and the weight of your apathy is dragging down what is left of democracy all over the world. Freedom has become an illusion and soon there will be no way back from the apolitical structural issues that no party seems to have the will to fix.
My ism, it's full of beliefs.
The tax cuts were for everyone that pays taxes- not just "the rich". You are certainly correct in that folks with trust funds don't pay tax on them - nor should they as the tax was already paid on that money(thus an income tax not a savings tax). Estate taxes are when wealth is transfered via death (and the estate tax is what generated a whole generation of "trust fund" babies since trusts don't change hands they are not subject to estate taxes). The poor (since they are already not paying anything in federal taxes) did not get a reduction from 0
The problem with your quoted Democrat policy is that the ultimate conclusion of spending and collecting more is socialism. How about we collect more (everyone who has personhood should be paying their fair share of taxes...) and spend less until we have the deficit dealt with? Is this too hard to understand?
APK likes to ask for responses to the same things over and over. Maybe he just likes the responses?
The problem with your #1 source is that the President at the time has nothing to do with the budget. The House and Senate are the ones who write the budget.
You see that spike in years 6-8 of Bush? That was a Democrat controlled Congress. The President can make recommendations, but it is up to Congress to pass them or ignore them. You will also notice that the only portion of Obama's presidency on there was a Democrat President with Democrat Congress. This says quite a bit about Democrats vs Republicans to me. Granted, they are both terrible and should be thrown out for not repealing the campaign contribution problems we are dealing with.
APK likes to ask for responses to the same things over and over. Maybe he just likes the responses?
The problem with your quoted Democrat policy is that the ultimate conclusion of spending and collecting more is socialism.
It is perfectly legitimate to believe that the US should be more socialist, just as it is legitimate to believe that it should be less so.
Is this too hard to understand?
No, it is quite easy. It is also quite easy to understand how one might want to spend even more and tax appropriately. It's also quite easy to understand how one might want to keep spending about even and raise taxes appropriately. All combinations of spending level are very easy to understand, so long as taxes are lowered or raised to match the spending level.
What is hard to understand is the opinion that taxes and spending should be offset in the long term.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
she was just a vile, hypocritical person. I don't see how people can hold her in such general high esteem.
> printing our way out of debt
That's exactly what should have been done long ago. This endless borrowing is what got us into this mess in the first place.
The belief that what comes in must come out equally is a totally failed concept. It hasn't been true for 50 years. It was probably never true -- Kings would go to war to loot other people's money. We should stop pretending it's going to change. Printing the money will finally end this nonsense. Sure, if we print too much it'll deflate the dollar, so don't be stupid about it. Either way it's better than to stupidly keep borrowing exponentially growing amounts.
Why do so many people here base their economics on the small-minded, ultra-conservative mindset of the owner of a small corner shop? In the real world, companies and countries borrow money to leverage their growth. You can't run a multinational corporation or country on the basis that you should save up money for a rainy day and never spend more than you earn in a particular day.
To have a right to do a thing is not at all the same as to be right in doing it
What amazes me is that any politician of any slant would think it's a great idea to allow the most wealthy people in society to escape from taxation at the point it is needed most.
In the US, it seems that to a lot of right wingers taxation is considered an evil in itself, and therefore higher taxes are more evil.
To have a right to do a thing is not at all the same as to be right in doing it