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844 comments

Could Someone Help Me Out With This? (5, Interesting)

eldavojohn (898314) | more than 2 years ago | (#36945568)

As an engineer that uses math on a daily basis, the more I read about the rising debt the more confused I am. It seems that a strategy of Reagan's was to take in less money in taxes than the government spends [wikipedia.org] and this strategy has been intact for far too long. So if you're trying to balance a budget, how in the hell do you justify spending way more money than you take in? Either you have to raise taxes or cut spending. It's pretty clear that Clinton was the only president to break from this norm since then [wikipedia.org] and now we're shocked that our debt crises get worse and worse every term?

I don't spend more money than I take in. I see commercials for people like that who have credit card debt because they couldn't do some simple balancing and see that they were spending more than they made. Why on Earth are we still implementing tax cuts and deficit spending?! Have we given up any hope of ever getting out of the red as a country?

This is very basic math ... so basic that when you're taught how to balance a checkbook in high school, they don't even teach it in Math class. It's a general life skill and our country is failing at life in general.

Re:Could Someone Help Me Out With This? (4, Funny)

gmuslera (3436) | more than 2 years ago | (#36945598)

Why on Earth are we still implementing tax cuts and deficit spending?!

Because the ones that financed the campaign of the current (and past, for many years) government said so. That's the problem with using math, ab absurdum proofs always go wrong in politics.

Re:Could Someone Help Me Out With This? (1)

c0lo (1497653) | more than 2 years ago | (#36945926)

Why on Earth are we still implementing tax cuts and deficit spending?!

Because the ones that financed the campaign of the current (and past, for many years) government said so. That's the problem with using math, ab absurdum proofs always go wrong in politics.

"Ad absurdum" and "politics" is already so way-of-life that already boring... But, now... "proofs" and politics... what an oxymoron!!!

Re:Could Someone Help Me Out With This? (5, Informative)

risom (1400035) | more than 2 years ago | (#36945612)

This is very basic math ... so basic that when you're taught how to balance a checkbook in high school, they don't even teach it in Math class. It's a general life skill and our country is failing at life in general.

Yes, but when using your checkbook you take the value of the currency as a given. A state has (limited) control over the value of it's currency (by limiting or expanding the available sum of printed money), thereby it also has (again, limited) control over the value of it's own dept. Now you might say that playing with the value of the currency can have complex consequences, and that would be true. Still, macro economics work differently than micro economics.

Then Why Are We Seeing the Same Negative Effects? (5, Interesting)

eldavojohn (898314) | more than 2 years ago | (#36945682)

Yes, but when using your checkbook you take the value of the currency as a given. A state has (limited) control over the value of it's currency (by limiting or expanding the available sum of printed money), thereby it also has (again, limited) control over the value of it's own dept. Now you might say that playing with the value of the currency can have complex consequences, and that would be true. Still, macro economics work differently than micro economics.

I completely agree that the analogy is not perfect (never is). What I'm asking is why, if people like Cheney said that "Reagan proved deficits don't matter" [washingtonpost.com] then why are we seeing negative effects? Suddenly we're concerned about our AAA rating? Why should we care? Deficits don't matter, right? If you're saying that a checkbook deficit and national deficit are two completely different things then why are we seeing a threat of losing our credit rating and other money problems that are associated with drowning yourself in debt on a personal level?

Re:Then Why Are We Seeing the Same Negative Effect (0)

Anonymous Coward | more than 2 years ago | (#36945842)

Suddenly we're concerned about our AAA rating? Why should we care? Deficits don't matter, right?

Deficits don't matter as long as we keep getting loans.

If we lose our AAA rating...to be honest it wouldn't really mean diddly in the short run (10 yearsish). But following that, it's possible that the world bank might make it so the reserve is no longer in dollars. (fuck you europe and your euro. and shutup china, no one wants to rely on the yuan) This...would hurt us a great deal.

There's a great deal of background information about it, but the gist of it ends up being that, if we're no longer the de facto currency of the world, a HELL of a lot less money will be coming into us in terms of investments. And that'll screw our economy faster than a power drill through cheese.

Re:Then Why Are We Seeing the Same Negative Effect (0)

Anonymous Coward | more than 2 years ago | (#36945962)

The Yuan IS the USD at the moment, until the Chinese government says otherwise. The Euro may not work on a basic level, but at least blind people can tell the banknotes apart...

Re:Then Why Are We Seeing the Same Negative Effect (5, Interesting)

KiahZero (610862) | more than 2 years ago | (#36945950)

The potential downgrade has little to do with the amount of debt owed - rather, it is a reflection of the rating agencies' assessment of how likely we are to repay our bonds. Originally, simply raising the debt ceiling would have been sufficient to satisfy the rating agencies. However, now that Republicans have made clear that raising the debt ceiling is an opportunity to extract concessions with the nation's credit rating on the line, some of the rating agencies wanted to see that Congress was capable of reaching agreements without blowing up the world economy.

Re:Then Why Are We Seeing the Same Negative Effect (1)

baegucb (18706) | more than 2 years ago | (#36945968)

âoeCongress consistently brings the government to the edge of default before facing its responsibility. This brinksmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets, and the Federal deficit would soar.â Ronald Reagan 1987

Re:Could Someone Help Me Out With This? (1)

garaged (579941) | more than 2 years ago | (#36945762)

So you are saying that the matter is so complex that you cannot make a guess that is closer than a few trillions of the actual expenses/taxes you make in 4 years?

Not only that, the error is always against you, not in favor

Re:Could Someone Help Me Out With This? (0)

Anonymous Coward | more than 2 years ago | (#36945632)

I may be wrong, but the underlying belief if that with less taxes, the economy grows stronger, and you get more money in the long term with smaller tax on a large scale than heavier tax on a small economy.

it's also basic math, with a hint of wishfull thinking...

Re:Could Someone Help Me Out With This? (5, Insightful)

Anonymous Coward | more than 2 years ago | (#36945668)

Why on Earth are we still implementing tax cuts and deficit spending?

Well.

*cough*

Let me lay out the situation as best I understand it.

DEMOCRATS: Let's cut some spending (BUT NOT MEDICARE/MEDICAID/SOCIAL SECURITY) and raise taxes on the rich.
REPUBLICANS: Let's cut MORE spending, but leave taxes as is (OR LOWER THEM. THAT'D BE COOL TOO)
TEA PARTY: Cut spending. DON'T TOUCH TAXES UNLESS YOU'RE CUTTING THEM. YOU'RE CUTTING MY GOVERNMENT PROGRAMS THAT I BENEFIT OFF OF? WHAT THE FUCK MATE?

Sane Politician: Wait, didn't you say to cut spending?

TEA PARTY: Yes, but NOT the things we benefit off of.

Sane Politician: Uh.

As for raising the debt ceiling, we're like...the only country that has a debt ceiling that limits how much we can borrow. So that results in craziness every few years.

And yes, this time around the really hellhole was caused by the hardliner Tea Party senators. The normal Republicans wanted to get this shit done sooner, and the Dems were like, "fuckall we'll bend over backwards to get this shit through. Shit, we want to raise taxes, but FUCK taxes so we can get this through NOW." The Tea Party was, essentially, fanatically fighting for an ideology that doesn't really work in the real world.

If you want them to raise taxes, get more Dems in office. They may be just as crooked as the Republicans, but at least they come off as willing to raise taxes.

And no, shut up about the laffer curve. Assuming it works, and IF we're at the right side of the laffer curve, explain to me why the economy went up like a rocket back when tax rates were higher than the shithole of an economy we have now.

Re:Could Someone Help Me Out With This? (3, Insightful)

Darkness404 (1287218) | more than 2 years ago | (#36945742)

What we really need to do is:

A) End the many wars we are involved in (Iraq, Afghanistan, Libya, "war on drugs", etc.)

B) Close a lot of unneeded military bases in various countries, not only would this save a lot of money, we'd gain the respect of other nations.

C) Work to privatize social security, but those who've paid in need to get the money that was taken from them by force and promised to them. If the government wants to run social security, make it a voluntary program.

D) Sell a lot of the vacant, unused and generally worthless land holdings the US has. While selling it in the bottom of the market isn't ideal, it will help reduce unneeded staff, and gain the government more revenue.

Do all those and we'll end up doing better than "cutting" 1 trillion only to spend 10 trillion more down the line.

Re:Could Someone Help Me Out With This? (0)

Anonymous Coward | more than 2 years ago | (#36945884)

C) Work to privatize social security, but those who've paid in need to get the money that was taken from them by force and promised to them. If the government wants to run social security, make it a voluntary program.

This works only if politicians have the balls to tell those individuals that choose to not save for their retirement to shut up.

Re:Could Someone Help Me Out With This? (5, Informative)

zach_the_lizard (1317619) | more than 2 years ago | (#36945898)

I think giving up military bases could be a profitable adventure. I used to live in Kadena AFB in Japan (I was a military brat), and the bases take up like 10-20% of the island we were on IIRC. Lawns are unheard of off base, but yet many of us were housed in small homes with lawns. I'm willing to bet Japanese investors would go crazy over that land (so long as the US military hasn't massively polluted it; that's been known to happen).

Re:Could Someone Help Me Out With This? (4, Interesting)

visualight (468005) | more than 2 years ago | (#36945944)

C) Work to privatize social security, but those who've paid in need to get the money that was taken from them by force and promised to them. If the government wants to run social security, make it a voluntary program.

No way in hell will that happen and only a fool or a thief would want that to happen. All you'll end up with is an entire generation living "on the streets" and a handful of super-enriched bankers. It was a disaster for Brazil and it would be one for us too.

Not to mention the fact that social security is what opened the door to taxing wages on labor. It is the definition of evil to take that step and then a few generations laters say "well, we're not going to deliver on our promise of a pension but we're still going to take 30% of your check every week." Don't want Social Security? Then figure out a way to run the government without taxing wages.

Re:Could Someone Help Me Out With This? (0)

Anonymous Coward | more than 2 years ago | (#36945670)

No, you need to raise taxes AND cut spending. Look at the breakdown, if we just cut spending, we'll start cutting into the important shit (e.g. the Highway Trust Fund is going to go broke soon) and if we just raise taxes they'll be at ridiculous, Moon Landing levels without any moon landing to show for it.

Re:Could Someone Help Me Out With This? (0)

Anonymous Coward | more than 2 years ago | (#36945812)

Ironically the moon landings occured during the low point in NASA's funding.

Re:Could Someone Help Me Out With This? (0)

Anonymous Coward | more than 2 years ago | (#36945956)

Uh, no they didn't. NASA was getting ~5% of the entire nation's tax revenue at the time, now they get ~0.2%. As a result we used to be able to go to the moon and now we can't even go to LEO without hitching a ride on Soyuz.

Re:Could Someone Help Me Out With This? (2, Insightful)

Anonymous Coward | more than 2 years ago | (#36945850)

Trust fund? There are no trust funds. The US government owes more debt to the US government than any other entity including China. Those trust funds are a bunch of IOUs from the government to the government.

The reason the whole system hasn't collapsed is that pretty much every other government in the world pretends the US government's system is working so their governments don't collapse. Pretty soon someone is going to officially notice and then we'll have to do a giant do-over, probably in the form of world war 3, 4 and 5 to sort out the mess.

Re:Could Someone Help Me Out With This? (1, Informative)

pete.com (741064) | more than 2 years ago | (#36945680)

Reseach the economic state the US was in just before Reagan. Reagan did the same thing JFK did, lowered taxes which increases revenue. Reagan's policies are widely recognized as bringing about the second longest peacetime economic expansion in U.S. history, surpassed in duration only by the 1990s expansion that began under George H. W. Bush in 1991. http://en.wikipedia.org/wiki/Reaganomics [wikipedia.org]

Re:Could Someone Help Me Out With This? (5, Interesting)

RingDev (879105) | more than 2 years ago | (#36945766)

After Reagan's huge tax cut he proceeded to raise taxes almost a dozen times to make up for it and STILL ran the government at such a bloated rate of growth he blew every dime of the economy growth for generations to come. Reagan was an interesting president for sure, and there's lots we can learn from him, but really, there is a lot of revisionist history about what he did in his two terms.

-Rick

Re:Could Someone Help Me Out With This? (0)

Anonymous Coward | more than 2 years ago | (#36945806)

So if spending money without actually taking that money in first is totally fine because Reagan did it and it worked (and Reagan tripled the national debt), then why is his party freaking out about it now?

Re:Could Someone Help Me Out With This? (3, Insightful)

Anonymous Coward | more than 2 years ago | (#36945700)

Well, gov *does* take in ``taxes'' what it spends... just depends on what you consider a ``tax''. For example, by expanding the money supply, inflation can be viewed as a flat tax on everyone. It's not visible, and that's what makes it politically attractive (e.g. politicians would have a hard time saying they want to raise taxes by 10% on *everyone* and *everything*, no exceptions), and yet they do that every time more moneh is printed.

In that light, the recent government stimulus can be viewed as, ``we'll flat tax everyone using dollars and use that money to attempt to fix roads and bridges'' (I say attempt, 'cause... well... I haven't seen much improvement in the last few years).

Re:Could Someone Help Me Out With This? (1, Insightful)

zach_the_lizard (1317619) | more than 2 years ago | (#36945710)

It wasn't just Reagan's way; plenty of presidents have engaged in that behavior, and Clinton himself did in his first term from what I remember. I think what helped Clinton was the tech bubble was going on at the same time, making his years look prosperous (even though they were built on rotting driftwood towards the end).

Re:Could Someone Help Me Out With This? (2, Insightful)

NoNonAlphaCharsHere (2201864) | more than 2 years ago | (#36945712)

Regan's plan was the same that MANY American households use every day: they put whatever they desire on the credit card and make the minimum payment. This has become the Republican mantra. Recall Dick Cheney's "Regan proved deficits don't matter". The notion that increased taxes cost jobs has been proven countless times, and defies logic, yet somehow it's the cornerstone of the current deal. Most borrow and spend households eventually end up in bankruptcy court, failing the death of a rich relative. Since the US doesn't have ANY relatives, I think we all know how this is going to play out in the long run.

Re:Could Someone Help Me Out With This? (0)

Anonymous Coward | more than 2 years ago | (#36945724)

I think the basic idea is go into debt now in the hope that if you spend enough money getting things back on track then by the time all your debts need to be settled your economy has grown enough for you to afford it..... [cynic] or you've invaded enough countries and plundered their resources to cover it [/cynic].

Re:Could Someone Help Me Out With This? (1, Insightful)

Seumas (6865) | more than 2 years ago | (#36945750)

We're fucked, no matter which way it goes. Both parties want to keep spending and spend even more. The only difference is that one party wants to raise our taxes and the other doesn't. One fucks us directly and the other indirectly. Nobody really gives a shit about reducing the spending, because every dickhead in America has a special little "touch this and I'll never vote for you!" pet. God forbid you touch anything that even remotely might affect old people or people with children or anyone in education or the military or anything involving federal jobs. So we constantly go for the simple solution - raise our credit card limit.

Wouldn't we all love to have a credit card that we could spend all we wanted on and then when we spend too much, the lender just says "don't worry, here's more!" and know that we never have to be accountable for it during our lifetime?

Of course, when you suggest reducing spending, people lose their shit and ask "well what would YOU cut?" as if it's some fucking trick question.

Well, for starters, let's ditch social security. And yes, I'll kick in mine. You can keep what you've taken from me so far and don't give me anything when I'm old. Then, let's ditch the four or six military actions we have going on right now. Then, let's reduce spending in education. We spend more money on education than any nation in the entire world and yet we're not even in the top 20 for results. Stop spending more to get lower results. I'm sure those whose job it is to deal with the budget and economy could come up with plenty of other areas, since they have the entire list of expenses and I don't -- but since I came up with this in about thirty seconds, I'm sure others could manage much better.

What's not going to help is for everyone to keep bitching about spending and then never cut anything. It's just a bunch of sound-bites that are forgotten in a few months when it's time to be accountable. All people remember is "oh, that's the guy who said we should cut spending" rather than "... who then went on to support more spending, anyway".

Oh - and I'm not sure when you went to highschool, but I can tell you that in the 90s, that wasn't part of our curriculum. Taxes, checkbooks and all that stuff was not part of the education. I guess they had to focus on more important things like DARE assemblies.

Re:Could Someone Help Me Out With This? (1)

man_of_mr_e (217855) | more than 2 years ago | (#36945754)

Really? You don't spend more than you take in? You don't have a car loan, or a mortgage, or student loans?

If not, then you're probably lucky enough to be in a situation where that's possible. Jobs that pay well enough to put yourself through school are few and far between for those with no experience. Living month to month, paying rent rather than owning is money going out that you will never see again.. while owning a home gives you equity and investment.

But most people find it hard to function well in society without some kind of debt.

Re:Could Someone Help Me Out With This? (1, Troll)

Joce640k (829181) | more than 2 years ago | (#36945942)

Really? You don't spend more than you take in? You don't have a car loan, or a mortgage, or student loans?

If not, then you're probably lucky enough to be in a situation where that's possible. Jobs that pay well enough to put yourself through school are few and far between for those with no experience.

Either that or he doesn't try to live like a king. Believe it or not it is possible to survive without the latest iPhone, designer clothes and a gas guzzler.

Re:Could Someone Help Me Out With This? (3, Insightful)

Pieroxy (222434) | more than 2 years ago | (#36945966)

I used to live in the US for about 4 years. I didn't take ANY credit at all (just renting my place and bought used cars). In the end, I got some customer card refused in some shitty store because I didn't have any "credit history".

In other words, the store refused to trust me because I didn't have any debt. I tried to explain that I was paying everything cash, and that this was way better than paying with credit, but alas.

The US as a society is completely screwed in this regard. To be trusted, you need to have had many debts and you need to display your spotless track record of reimbursing this debt. The fact that you have no debt (and never had) is a mark of distrust. How more screwed up can it be?

It's not surprising (to me) that the government is thinking along the same lines.

Re:Could Someone Help Me Out With This? (2)

FriendlyLurker (50431) | more than 2 years ago | (#36945756)

Either you have to raise taxes or cut spending.

...OR you "print" more money and hand it to the MIC [wikimedia.org] so they can spend it at todays value, before the rest of the population cottons on that it must be devalued. Don't worry, all that printed cash eventually "filters downs" to weaker hands, forming bubbles here and there like in the housing market. Take a course that explains it with references: one of many [chrismartenson.com] (worth starting at chapter 1 but if your in a hurry)....

Re:Could Someone Help Me Out With This? (1)

Pieroxy (222434) | more than 2 years ago | (#36945982)

Printing money is equivalent to raising taxes. Your fellow citizens end up with less value at the end of the month.

Re:Could Someone Help Me Out With This? (0)

Anonymous Coward | more than 2 years ago | (#36945772)

People develop at different stages both physically and mentally. I'm sure you understand this, but as easy as it is to fill out a check book, it's even easier to assume that all students in high school know how to fill out a check book, let alone, balance it...

Re:Could Someone Help Me Out With This? (1)

adamchou (993073) | more than 2 years ago | (#36945786)

Why on Earth are we still implementing tax cuts and deficit spending?!

The theory is that the amount of money saved by companies from tax cuts will increase their ability to grow thereby bringing in more money to generate more taxes. Republicans believe that the increase in revenue will offset the amount lost due to decreased tax rates. There are numerous companies that are incorporated off shore and revenue goes in through those countries because they have lower tax rates. Republicans want to bring those tax revenues back to our shores.

Re:Could Someone Help Me Out With This? (1)

mochan_s (536939) | more than 2 years ago | (#36945814)

As an engineer that uses math on a daily basis, the more I read about the rising debt the more confused I am.

First mistake is to compare personal finance with budgets. Governments can easily print extra money to pay off debts and balance budgets. This would lead to inflation and problems related to it but it could be done.

The main reason given for deficit spending is that it will stimulate private sector investments and thus lead to a surplus budget in the future. If your plan of cutting spending and raising taxes are instituted during a recession, it could lead to a dangerous downward spiral where less spending reduces the private spending which in turn reduces taxes and budget and so on.

But, indefinite deficit spending is not sustainable and has to balanced by surpluses in the past or future. However, the timespans for governments and countries is generations and the expectation and burden of such a surplus might be left to a generation that is not even born yet.

Re:Could Someone Help Me Out With This? (0)

Anonymous Coward | more than 2 years ago | (#36945834)

I don't spend more money than I take in. I see commercials for people like that who have credit card debt because they couldn't do some simple balancing and see that they were spending more than they made. Why on Earth are we still implementing tax cuts and deficit spending?! Have we given up any hope of ever getting out of the red as a country?

I suppose you don't have a mortgage, car or student loan. It must be nice to save up the money to pay for those in cash!

Re:Could Someone Help Me Out With This? (1)

homer_s (799572) | more than 2 years ago | (#36945844)

"So if you're trying to balance a budget"

Who is the "you" in that sentence? The system of government in most countries rewards a politician for giving free stuff and penalizes him for taking away things given to people.

So, the issue here is not basic math, but basic economics - give it a try sometimes.

Re:Could Someone Help Me Out With This? (5, Insightful)

dkleinsc (563838) | more than 2 years ago | (#36945862)

So if you're trying to balance a budget ...

That's where you went wrong in your analysis. The Republican Party has absolutely no interest in balancing the budget. This has been shown time and time again: For instance, when George W Bush took office with a slight budget surplus if you count Social Security (which you probably shouldn't), he immediately cut taxes to put the budget in a hole.

Based solely on their actions when in power, this is what the Republican Party really believes in:
1. Cutting taxes on the wealthiest Americans. That's why, if you're somebody who makes their living off of investments, you pay a 15% capital gains tax, whereas if you make considerably less by working you pay a 25% income tax and a 12% FICA tax. Thanks to their actions, the tax rates are the lowest they've been since at least the 1940's.
2. Neutering or completely getting rid of any government agency that could serve as a check on corporate power. They would love to live in a world without the EPA, OSHA, MSHA, NLRB, or the SEC.
3. Getting rid of anything that smacks of aid to the poor and downtrodden. Social Security, Medicare, Medicaid, TANF, food stamps, housing assistance, and minimum wages all come under that category.
4. Expanding the 'national security' portion of government as much as possible, preferably with large no-bid contracts for their family, friends and business associates. They like being able to spy on anybody and everybody, starting wars that they don't need to start, and taking over Latin American countries with little or no military forces to speak of.

I'm no supporter of Democrats either, but one of the biggest myths out there is the idea that the Republicans want to balance the budget when it's abundantly clear they have no intention of doing so.

Re:Could Someone Help Me Out With This? (2)

trout007 (975317) | more than 2 years ago | (#36945866)

The history of the debt is punctuated by one major constant. War.
See http://en.wikipedia.org/wiki/File:US_Federal_Debt.png [wikipedia.org]
There are several peaks which coincide with wars followed by peacetime declines.
Revolution
War of 1812.
Civil War
WWI
WWII
Cold War (Regans Spending)
Global War on Terrorism

The Korean and Vietnam wars were overshadowed by the recovery from WWII which was massive.

A minor factor is when we had Central Banks. These helped allow deficit spending war or peace to occur.
These are the times when we didn't have a Central Bank and you can see they correspond well with declines in debt.
1811–1816: No central bank
1837–1862: Free Bank Era
1863–1913: National Banks

Re:Could Someone Help Me Out With This? (0)

Anonymous Coward | more than 2 years ago | (#36945872)

If you take in less than you spend, you can manufacture a budget crisis and are eventually forced to take on politically unpopular spending cuts such as Social Security and Medicare. Reagan put it this way: "John Anderson tells us that first we've got to reduce spending before we can reduce taxes. Well, if you've got a kid that's extravagant, you can lecture him all you want to about his extravagance. Or you can cut his allowance and achieve the same end much quicker." History has shown that instead of reducing the size of government, borrowing just increased. The national debt quadrupled under Reagan. But the thinking is that this is still the best way to reduce the size of government. This is why Bush Jr enacted a popular (but expensive) new Medicare program for prescription drugs while simultaneously cutting taxes. Of course you don't want to force the issue when your party is in power. Bush Jr lost a lot of clout when he tried to take on Social Security. That among other things cost his party the house and senate in 2006. You want to be in the situation Reagan's followers are in. You have lots of control and a lot of blame to smear on the other guys.

tl;dr: Starve the Beast is a way of destroying the country's finances for political points and smaller government.

Re:Could Someone Help Me Out With This? (1)

Joce640k (829181) | more than 2 years ago | (#36945892)

Why on Earth are we still implementing tax cuts and deficit spending?!

Because the politicians their pork today !

Re:Could Someone Help Me Out With This? (2, Informative)

Anonymous Coward | more than 2 years ago | (#36945896)

Clinton did NOT balance the budget -- he did an accounting trick to appear to balance the budget.

That trick? He took the income from Social Security payments (the ones going into the supposed "lockbox") and moved that income to the general funding of government.

http://www.craigsteiner.us/articles/16

Never once did Clinton balance any budgets. Instead, he stole from future Social Security recipients and forced those payments to be made by future taxes and spending shifts.

There's no crisis (0)

Anonymous Coward | more than 2 years ago | (#36945910)

There's only a crisis because there's a Democrat in the White House and Republicans are willing to force a default to get their demands met.

Debt service is still at a very managable level. Debt is a long-term problem. We have a short-term problem called a **** economy that's going to cost us way more in the long-run than the debt.

We *should* be spending boatloads of money right now. There's no demand. Tax cuts won't help - the rich and Fortune 500 are sitting on trillions of dollars in cash because there's no one to buy their products and they won't start hiring until there is. The only entity that can kick-start demand is the government. Unfortunately, Republicans (and too many Democrats) think that we should kill demand even more by imposing austerity. Ask the Europeans how that's working out for them: it isn't.

What happened to JOBS JOBS JOBS? The only bills Republicans have passed in the House would kill jobs and make things worse. Every person that's unemployed is one more person not paying taxes and is one more person using social services. The Republican plan is to increase their numbers.

We need bigger stimulus programs. That's what got us out of the Great Depression - the New Deal and a stimulus program of government spending called World War 2. Do you know what sent the economy into a recession two years into FDR's term? Spending cuts to appease Republicans.

And thanks to low interest rates, it actually *cheaper* to borrow now than to wait until we have cash on hand. Provided we invest it in getting people back to work, education, technology, etc instead of going to war over seas and to cut taxes, it'll pay itself back in increased revenues easily.

Re:Could Someone Help Me Out With This? (0)

Anonymous Coward | more than 2 years ago | (#36946008)

So you have no mortgage or car payment?

Get ready! (-1)

Anonymous Coward | more than 2 years ago | (#36945570)

Snowbank, get ready for an awesome pee hole!

great (5, Insightful)

Anonymous Coward | more than 2 years ago | (#36945580)

Debtor says, "I would like to borrow some money."
Creditor says, "And what do you owe now?"
Debtor: "So much I need at least 145 years to pay it back."
Creditor: "Tell me your plan."
Debtor: "I have no plan to pay it back. I will only pay the
interest."
Creditor: "You want your kids, grand kids, and great grand kids to pay it back?"
Debtor: "It will be very painful for me not to get the loan. I can print up some money if I need to."
Creditor: "You have no plan."
Debtor: "I am working on a plan to borrow a little less than usual - 10% less."
Creditor: "You have no plan to balance the budget, you plan only to keep borrowing, you print up money, you dump your debt on 3 future generations and counting, and you want us to believe you have integrity, and are worthy of credit and trust?"
Debtor: "I want what I want when I want it, and I want it right now.
Give me the loan or I will print the money!"

Ponzi Scheme (5, Interesting)

igreaterthanu (1942456) | more than 2 years ago | (#36945582)

Can someone explain to me why US Treasuries should be rated AAA in the first place?

Money is paid out to investors out of new investor's money, and the cycle continues. Last time I checked, this is also known as a Ponzi Scheme and it is inevitable that it eventually collapses.

These are the same people who rated junk mortgage bonds as a good investment, so I'm not surprised.

Re:Ponzi Scheme (2)

Dasuraga (1147871) | more than 2 years ago | (#36945660)

Except, unlike a ponzi scheme, the US government has other forms of revenue ( taxes), meaning it's possible for it to pay back the debts....

Re:Ponzi Scheme (2)

igreaterthanu (1942456) | more than 2 years ago | (#36945732)

...not after it pays it's other liabilities it doesn't.

And if it doesn't pay for those, there won't be a US for much longer.

Re:Ponzi Scheme (1, Troll)

pete.com (741064) | more than 2 years ago | (#36945692)

Social Security has been a Ponzi scheme since its inception.

Re:Ponzi Scheme (0)

NoNonAlphaCharsHere (2201864) | more than 2 years ago | (#36945778)

Thanks for the Classic Conservative Response: dismiss reality with a smug and derisive phrase. It really adds something useful to the debate.

Re:Ponzi Scheme (0)

Anonymous Coward | more than 2 years ago | (#36945996)

How is it not a Ponzi scheme? Benefits are paid out to retired persons with the money received from people currently working. The benefit paid is indexed to inflation, not the amount of interest earned by the money in the trust fund. Unlike a traditional pension fund, if every worker in the US stopped paying into the system, it would collapse rather quickly. A properly managed pension fund would pay every beneficiary until the day they died, even if no new money was introduced to the fund.

Re:Ponzi Scheme (3, Interesting)

Serpents (1831432) | more than 2 years ago | (#36945734)

The rating agencies are a kind of a self-fulfilling prophecy. They give you good rating and people throw their money at you without bothering to check if the rating is justified; they rate you poorly and everyone will panic and there's no way you can convince them to listen to your explanations.

Re:Ponzi Scheme (2, Insightful)

Anonymous Coward | more than 2 years ago | (#36945774)

Can someone explain to me why US Treasuries should be rated AAA in the first place?

Money is paid out to investors out of new investor's money, and the cycle continues. Last time I checked, this is also known as a Ponzi Scheme and it is inevitable that it eventually collapses.

These are the same people who rated junk mortgage bonds as a good investment, so I'm not surprised.

The 14th amendment guarantees that the sovereign debt of the USA will be payed back. The AAA rating comes from the fact that US Bonds are the most secure way to guarantee a specific return on your investment. They are the least risky investment in the world.

Re:Ponzi Scheme (3, Insightful)

blueg3 (192743) | more than 2 years ago | (#36945894)

In a Ponzi scheme, payments are made solely through new investor's money. The government, on the other hand, does have a fairly sizable revenue stream.

Since money is fungible, you can't say that the money to pay back bonds is necessarily paid with the income from the issuance of new bonds and not from revenues. This applies to individuals, too -- if, every month, I put $1000 on a credit card and pay it off every month, it's logically the same as having a perpetual balance on the card. The creditor certainly doesn't think so, though (in only one scenario am I charged interest, and most credit card companies will get upset if you don't pay *anything* back), because in the former scenario, I have revenue backing my credit.

Re:Ponzi Scheme (0)

Anonymous Coward | more than 2 years ago | (#36945946)

It is illegal for US gov to not make payments on bonds, AND, if push comes to shove, they can always print more money to repay the bonds. Thus, no matter what, your US gov bonds are "safe" in a sense that they'll be repaid with interest and principle in full---and that gets the AAA rating. That doesn't mean US gov bonds are a great investment, just that you'll always get back the dollar figure promised.

Re:Ponzi Scheme (3, Interesting)

JamesP (688957) | more than 2 years ago | (#36946000)

Can someone explain to me why US Treasuries should be rated AAA in the first place?

Easy

the US never defaulted, that's why

Of course, past performance doesn't correspond to future gains.

It also helps that US bonds can be used as money, and are used as such.

Yet just to clarify (and speculate) (4, Interesting)

Pollux (102520) | more than 2 years ago | (#36945606)

An agreement has been reached, but it hasn't been passed by either the house or senate yet. (It's almost certain to pass the senate, as that's where the compromise originated. The house, on the other hand...well, we'll see.)

Yet, in the back of my mind, there was a part of me wondering whether an agreement would ever be reached. The conspiracy theory in me kept saying that there were enough rich fat cats who were paying off key congressmen to sabotage the process and make sure that no agreement was ever reached. Why? Because billions of dollars had been invested in credit-default swaps [go.com] against the United States debt.

Re:Yet just to clarify (and speculate) (4, Insightful)

Seumas (6865) | more than 2 years ago | (#36945776)

Of course they'd reach a deal. This is all theater. A bunch of showboating and grandstanding to get your name out there and get people hearing your soundbites while, in the end, accomplishing nothing and buckling. Spend two months saying "we spend too much!" and then agree to some bullshit "we agree to cut our expected spending over the next decade and count it as actually cutting costs" and call it "job done".

Re:Yet just to clarify (and speculate) (1)

adamchou (993073) | more than 2 years ago | (#36945828)

4.8 billion is a drop in a pond compared to the billions or trillions that major investors stand to lose if the market crashes

Well of course it will be downgraded... (1)

Darkness404 (1287218) | more than 2 years ago | (#36945608)

Well of course government debt should be downgraded from its "perfect" rating because the idea of even -having- 14 trillion+ of debt is absurd. The US is equivalent to a family living off of their credit cards and using one card to pay another. There is no real way to gain more revenue short of raising taxes which will lead to an overall worsening of the economy because it will force companies to move overseas because there is absolutely no reason to do business in the US anymore when compared to China/India and other developing nations.

Re:Well of course it will be downgraded... (1)

TheCouchPotatoFamine (628797) | more than 2 years ago | (#36945690)

That is crazy. The order in which businesses decide to base their money is; Stability, Inflation, Regulations, Taxes. They aren't going to remove them selves from the largest stable economy in the world because they actually have to *gasp* pay some taxes. It sounds like you've drank their koolaid though. Companies aren't going to tell you to raise taxes even if it's the best damned deal they have, they aren't stupid!

Re:Well of course it will be downgraded... (1)

Darkness404 (1287218) | more than 2 years ago | (#36945816)

Lets see here, in the US you pay a factory worker about $10+ along with benefits an hour. In China you can pay a factory worker a few cents an hour. In the US there are a ton of environmental regulations which make it harder for a factory to turn a profit, there are few of those in China. In the US there are unions which make it nearly impossible to fire a lazy worker or change pay/benefits/hours. In China there are none.

If I was a business, I'd put most of my manufacturing jobs in China, it makes a lot more sense. And as for currency, I'd put it in something non-fiat, not the US dollar, not the Euro, not the Japanese Yen, but something tangible such as gold/silver/oil/etc. Because the US dollar is not stable and has rampant inflation.

Re:Well of course it will be downgraded... (1)

richieb (3277) | more than 2 years ago | (#36945954)

And where are you going to sell this cheaply produced stuff made in China for a huge profit? Not in China, as those workers cannot afford it.

Re:Well of course it will be downgraded... (1)

adamchou (993073) | more than 2 years ago | (#36945924)

The companies don't need to move overseas, they just need to take in revenue through an offshore shell [cbsnews.com]. How do you think multinational companies like GE pay negative taxes?

Re:Well of course it will be downgraded... (1)

Attila Dimedici (1036002) | more than 2 years ago | (#36945794)

There is no real way to gain more revenue short of raising taxes...

There is significant reason to doubt that raising taxes will increase government revenues by any significant amount. When Mayor Bloomberg first became mayor of New York, he raised cigarette taxes by a significant amount. A year later, he was scrambling to find money to balance the city budget because the tax did not generate anywhere near the amount of revenue he anticipated (my recollection is that revenue from the cigarette tax actually diminished, but that may be incorrect). The problem with raising taxes to increase revenue is that whatever activity you tax will decrease when you increase the tax on it. Additionally, that increased tax will increase the incentive to take the activity "off the books". It is very difficult to accurately predict the amount that the reported activity will decrease for a given tax increase because very few people know how much elasticity there is in demand for that activity. The few things that are known to have little elasticity in demand (and a high barrier to taking off the books) are politically very difficult to raise taxes on (fuel taxes are one example).

Re:Well of course it will be downgraded... (1)

blueg3 (192743) | more than 2 years ago | (#36945972)

All large numbers seem absurd in a vacuum. Better to say that the debt is at about 400% of tax receipts. It's not the same as using a credit card to pay off another, though, as the US has substantial revenue to back its debt. It's more like a family with a $45,000 / yr income having $180,000 of debt (albeit at a rate well below that of a credit card). That's still pretty high -- you'd be hard-pressed to get a mortgage with those numbers -- but the US's revenue stream is a lot more stable than individual job security.

Cuts to spending growth, not spending (2)

georgenh16 (1531259) | more than 2 years ago | (#36945614)

The government is slated to spend almost 10 trillion more over the next decade due to built-in yearly spending increases.

So if we cut 1 trillion, we're really going to be spending 9 trillion more.

If the plan was to just freeze spending, the CBO would score that as a 9.5 trillion "cut".

US Credot Agency Reduce US Credit Rating? (1)

improfane (855034) | more than 2 years ago | (#36945620)

Would a US Credit Agency really reduce the USA's credit rating? Somehow I don't see that happening and all, given the inherent corruption in the US government and financial institutions. I guess it depends which commercial banks have the most clout, the Federal Reserve, Goldman, Citi?

Didn't Jeferson try to kill the federal reserve once?

Re:US Credot Agency Reduce US Credit Rating? (4, Informative)

Darkness404 (1287218) | more than 2 years ago | (#36945678)

...There was no Federal Reserve prior to 1913 when it was created in a secret agreement by bankers and then spun to the public as a way to "regulate" and prevent abuses in the banking industry.

However Jefferson opposed the first bank of the United States which was similar to the Federal Reserve system but yet entirely different because it didn't deal in fiat currency and money creation.

Can't drink yourself sober (3, Funny)

rcb1974 (654474) | more than 2 years ago | (#36945624)

Going further in to debt is not a good strategy to becoming debt free. A person can't drink themselves sober, and economies can't borrow themselves out of debt. The US government should have minted two $1 trillion dollar platinum coins, thus creating debt free currency, deposited that into the Federal Reserve Bank, and then wrote checks against it. Instead they're going to borrow $2 trillion from the private Federal Reserve Bank. Now the US is going to have to make interest payments on that borrowed money. The US spends 500 billion dollars a year on interest payments. If they had created the money at the mint, they wouldn't have to pay interest on it. Watch the recent Still reports to learn more about this: http://www.youtube.com/user/bstill3 [youtube.com]

Re:Can't drink yourself sober (1)

msauve (701917) | more than 2 years ago | (#36945886)

"The US government should have minted two $1 trillion dollar platinum coins, thus creating debt free currency "

Don't be silly. It's thinking like that which brought us to the financial problem we're in. Creating money from nothing doesn't avoid creating debt, it just causes the debt to payed in monetary inflation. Really, instead of just minting 2 coins, why not 300,000,000 of them, and send one to everyone - we'd all be trillionaires, and then they could pay off the debt with the taxes we'd pay on that income.

Most economists think this isn't enough? (1, Insightful)

guises (2423402) | more than 2 years ago | (#36945628)

"Most economists think this isn't enough"... Try: "Most economists think that cutting spending during a recession is a recipe for disaster."

The Republicans even got their Medicare cuts. The only bright point in this is that the cuts won't take effect for another couple of years (from TFA), I guess the hope is that the recession will have eased by then. If it hasn't, we're in for a very tough time.

Re:Most economists think this isn't enough? (0)

Seumas (6865) | more than 2 years ago | (#36945796)

How is cutting your spending (especially when you don't have the money to pay for it) ever a "recipe for disaster"? How is "taxing the fuck out of citizens, instead" any less of a disaster?

Re:Most economists think this isn't enough? (1)

Aladrin (926209) | more than 2 years ago | (#36945928)

They keep claiming that the governments lack of spending will ripple down through the entire economy and depress it further.

I'm not arguing that it won't, but I do argue that it's better to get that over with now while it's relatively minor, instead of forcing it to happen later, where it'll be disastrous.

AAA (2, Insightful)

Anonymous Coward | more than 2 years ago | (#36945630)

The USA having a triple A rating says more about the rating companies than about the USA

Strange situation (2, Insightful)

teg (97890) | more than 2 years ago | (#36945640)

For someone from a country with a better grip on its economy, the whole ordeal seems rather strange:

  • An agreement was made on the budget just a couple of months ago. The debt ceiling increase is just a consequence of the budget, not a separate item. So why the fight?
  • It's rather obvious that cuts alone won't do it. The amount is just too big, there needs to be a mix.
  • Going back to see when the deficit started coming, it's rather obvious that the Bush tax cuts can't be afforded. Still, noone is talking about letting them expire. And when the budget is balanced again, always be vigilant in finding expenses to cut so tax cuts can be funded.

Re:Strange situation (2)

Seumas (6865) | more than 2 years ago | (#36945818)

The right thing is to cut spending to the point that you're spending less than you're taking in. Period. I'm sorry, but I want tax cuts and I want them to be "funded" by cuts in spending.

Economist: Republicans are at fault. (5, Insightful)

Anonymous Coward | more than 2 years ago | (#36945644)

According to Lexington at the Economist [economist.com], this whole hoopla was the Republican's fault.

the Republican House has come up with is a non-solution (since the Senate cannot buy it) to a problem entirely of the Republicans' own making. The reason for this crisis is that instead of just raising the debt ceiling in the customary way so that the government can pay the bills Congress has already run up, the Republicans decided to point a pistol at the American economy and threaten to pull the trigger if they did not get the spending cuts they wanted.

Also, I think it was horribly hypocritical of the Republicans to blame "entitlement programs" for the problems and never mentioning the wars and their action of lowering taxes during war time - that's what killed us. All the other reasons like Obama Care are just distractions - especially when you consider that it hasn't even taken effect yet. And why is SS on the table in this context? Bullshit!

Yes eventually Social Security will have to be addressed but to include it in the debt ceiling was ludicrous.

By the way, the debt ceiling allow the government to pay it's current bills and nothing more. Thinking that it allows for increasing government spending just shows how little we Americans truly understand how our government operates - myself included.

Re:Economist: Republicans are at fault. (1)

Bardwick (696376) | more than 2 years ago | (#36945880)

Sigh. I usually run a stop watch to find out how fast people blame Bush for everything, it's getting too old/predictable. The debt problem started dozens of presidents ago... The reason I am against raising the debt ceiling is that the government is incapable of reducing it's size/spending on it's own. I'm okay with "revenue" increase as long as we are sure that we really need to pay for the programs we run. The fact that you can't listen to $RADIO_STATION for an hour without running into some kind of government program that I'm paying for is frustrating. Pay for what we NEED first.

Re:Economist: Republicans are at fault. (1)

royallthefourth (1564389) | more than 2 years ago | (#36945906)

How can you blame just the Republicans when Obama's idea of compromise is doing what Republicans want?

Perhaps these two parties are not nearly as different as they portray themselves

Re:Economist: Republicans are at fault. (3, Interesting)

dbIII (701233) | more than 2 years ago | (#36946006)

They are always looking for an excuse to cut Social Security which is why it is put on the agenda even though it is not relevant.
I wonder how many years worth of Social Security the missing money in Iraq would have paid for? I'm writing about the vast quantity of undocumented funds that just vanished and not the documented payments to contractors and mercenarys.

Umm...duh? (4, Interesting)

HarrySquatter (1698416) | more than 2 years ago | (#36945646)

The deal would cut more than $2 trillion from federal spending over a decade. However, most economists think this isn't enough and does not remove the threat that the nation's AAA credit rating could be downgraded.

Of course it's not going to do anything substantial. You really thought the Republicans were fighting this fight truly to solve and end the debt woes of this country rather than politicking for 2012? Especially when the terms of last 3 Republican presidents accounted for $9.5 trillion of the $14 trillion this country carries? This in no way makes excuses Obama pushing even more debt on pile, but the Republicans hardly have a case for being "fiscally conservative" when Reagan, Bush and Bush Jr piled on 67% of the current debt.

Re:Umm...duh? (4, Insightful)

dbIII (701233) | more than 2 years ago | (#36945998)

It's hard to fix something without spending anything. The USA had a decade of almost unregulated Enron economics and the hole it fell into can't be patched for free.

THEY ARE POLITICIANS !! THEY LIE ALL THE TIME !! (-1)

Anonymous Coward | more than 2 years ago | (#36945706)

Right !! If you believe any of that shit you are one sorry ass motherfucker, motherfucker !!

The best part... (5, Insightful)

Anonymous Coward | more than 2 years ago | (#36945726)

The actual funny part is.... You all still think there is a difference between republicans and democrats.

They've kept that thru all of this. It's outstanding. Best scam ever. Wish i'd thought of it.

Keep the population arguing over D/R while we rob them all blind. It's genius!

Oh wait... i live here too.. shit.

Why does every story about US politics.... (-1, Troll)

trawg (308495) | more than 2 years ago | (#36945752)

...sound like it is a battle between common sense or good ideas, and Republicans?

Genuine question; I don't live in the US so have only a limited window to watch the circus, but I can't see how the country is so polarised when one party seems to be just hellbent on holding your country back.

Because (0)

Anonymous Coward | more than 2 years ago | (#36946004)

Because we have a media that's interested horse races and terrified of being called "liberal".

Because every story is He Said/She Said even if the He Said is complete bullshit.

Because there's no real debate, it just ends with "We're going to have to leave it there" and go to commercial.

Because you have Fox News which is a committed propaganda arm of the Republican party.

Because corporations have discovered opinion is more profitable than journalism.

Because the "center" in this country would pass for far right in any other democracy.

Doesn't Cut Existing Spending (5, Informative)

mwasham (1208930) | more than 2 years ago | (#36945790)

"No plan under serious consideration cuts spending in the way you and I think about it. Instead, the cuts being discussed are illusory and are not cuts from current amounts being spent, but cuts in prospective spending increases. This is akin to a family saving $100,000 in expenses by deciding not to buy a Lamborghini and instead getting a fully loaded Mercedes when really their budget dictates that they need to stick with their perfectly serviceable Honda." http://www.ronpaul2012.net/2011/08/01/ron-paul-on-the-debt-ceiling-debate-just-freeze-the-budget/ [ronpaul2012.net]

Congress... (1)

MachineShedFred (621896) | more than 2 years ago | (#36945864)

Yeah, but will the Congress play along? We've seen no evidence that they are following their "leadership" thus far: Boehner's bill only being passed after placating the far right wing, Reid's bill not passing 49 - 50 in his majority Senate, after objecting to his own cloture vote.

What about the biggest post of all? (3, Insightful)

miffo.swe (547642) | more than 2 years ago | (#36945882)

The US spends more money on its military than all other countries combined. Why not save a bit there, on the biggest budget post of them all? Saving some small posts here and there without even looking at the expenditures that really digs holes in the wallet seems, insane.

Seems military spending is sacred even if countless research has show excessive waste and that US military could get by on half the money without any noticable effect on the defence capabilities.

To an outsider it looks as if the US is on the exact same path as the USSR was some years ago when it overspent all its money on the military complex. Once that happens the US will have the exact same situation that Soviet has had, with states wanting to jump off the sinking ship.

2000 Trillion over only 1 century! (0)

Anonymous Coward | more than 2 years ago | (#36945920)

I love how politicians try to commit future governments.

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