How grave is the situation

[snafu]

If the proposed, Republican draconian cuts were imposed, what would the impact be on consumer spending? 18% of American personal income [2010] came from government payouts like social security, medicare, food stamps, unemployment benefits and an array of programs like FEMA.

How much of this current financial mess lays at the feet of eight years of Republican Administration.

[DRILLINDK]

I don't know if draconian is an appropriate word for doing the responsible thing to reduce our bloated government spending. We live in a twisted society where people think its appropriate and their right to steal money/distribute wealth from hard working Americans and give it to others.

It's pretty well known that the upper 15% of Americans make up 60% of consumer spending.

[snafu]

I may not have worded it well but what do you think the results would be on the consumer based economy if the government stopped social security, unemployment benefits,food stamps, FEMA assistance, medicare and the plethora of other programs?

Drillindk: You've just described Communist China where it's ok for people to be hungry, veterans with missing limbs crawl on the street begging for food, the unemployed and their families live under bridges and their one child is totally responsible for the sustenance of elderly parents who no longer work and no longer have benefits. If people can't pay for medical care up front, they do without. The saving grace is that doctors are paid like civil servants. You prepay 5 thousand RMB [USD350] for hospital admittance. The Chinese are thrifty and value savings, it's part of their very old culture.

Still, the PRC government is terrified of the idea of hundreds of thousands of people rioting for food.

[krantcents]

It doesn't matter what you call the cuts! I am in favor of balancing the budget and reducing debt, but the cuts are politically motivated! Why don't they cut defense? Ground troops are not effective when fighting terrorists! The Republicans want to cut entitlements which materially affect poor people. When is Congress going to really look at problems objectively? Probably never!

[maat55]

Originally Posted by snafu

If the proposed, Republican draconian cuts were imposed, what would the impact be on consumer spending? 18% of American personal income [2010] came from government payouts like social security, medicare, food stamps, unemployment benefits and an array of programs like FEMA.

How much of this current financial mess lays at the feet of eight years of Republican Administration.

I'd say half. Both parties are just as guilty for our current situation. This has been a build up over time of too much government and not enough personal responsibility.

The current crisis was caused by Fannie & Freddie, after years of CRA and liberal policies towards home ownership. These liberal policies are not based only in democratic party policies, republicans are just as reponsible.

Bush spent only 1 trillion on the wars over eight years. This mess started with Carter, built up under Clinton and was exasberated under Bush.

The fundamentals of free market have been distorted for many many years.

[maat55]

Originally Posted by krantcents

It doesn't matter what you call the cuts! I am in favor of balancing the budget and reducing debt, but the cuts are politically motivated! Why don't they cut defense? Ground troops are not effective when fighting terrorists! The Republicans want to cut entitlements which materially affect poor people. When is Congress going to really look at problems objectively? Probably never!

Our current budgets are heavy in SS/medicare and defense. You have to cut all of them to balance the budget.

[Angio333]

Originally Posted by snafu

If the proposed, Republican draconian cuts were imposed, what would the impact be on consumer spending? 18% of American personal income [2010] came from government payouts like social security, medicare, food stamps, unemployment benefits and an array of programs like FEMA.

How much of this current financial mess lays at the feet of eight years of Republican Administration.

We had a Republican president, but the House AND Senate were Democrat controlled for 4 of those years. So, many of those polices were the result of a Democrat House and Senate with a Republican president. Why put the blame only on the Republicans when the Democrats were involved as well?

[dczech09]

Why do we put so much emphasis on who was at fault? Republican or Democrat? It doesn't matter. Obviously the government is dysfunctional; there are people running it. Do people really think those elected officials are the most intelligent people in our society? No, they are some of the best salespeople and that is it.

When push comes to shove, the economic problem is overall a sympton of a much bigger problem. Our national debt is a symptom of a larger problem. The government spends more than it takes in, and we keep allowing it to happen. The government also does the most insane things with money; they keep spending on the same stuff even though the past showed that this spending does not work.

Bottom line is it does not matter if the people are Repub or Demo. Those titles really do not mean anything anymore. A party government is so pointless cuz all these people do is further the best interest of their part. We need to eliminate this system, elect honest people, and stop depending on the government.

I am in favor of eliminating entitlements all together. If we cut these entitlements, it will force people to either A)get out and work or B) find a way to make money themselves. We live in the most free country ever and we rely on the government to take care of us. FOR SHAME! People need to rely on one person: numero uno!

[DRILLINDK]

Originally Posted by dczech09

I am in favor of eliminating entitlements all together. If we cut these entitlements, it will force people to either A)get out and work or B) find a way to make money themselves. We live in the most free country ever and we rely on the government to take care of us. FOR SHAME! People need to rely on one person: numero uno!

Couldn't agree with you more! Entitlements breed dependance and promote waste.

Again, I ask...who gave them the right to take MY hard earned money and give it to someone else. If I feel like giving to charity I will do so on my own accord. This system is bloated and the freebies must end.

[maat55]

Our biggest problem is the idiolism that people will die in the streets without federal government programs.It is a fallacy and a huge detriment to personal responsibility and free will charity.

I stand by this truth, if we as a nation will send an 18 year old to die for freedom, then you have no entitlement to anything after that age. I would rather live in a free country where I am responsible for myself and family, as to live in one where people believe I am obligated to those I do not know.

Plain and simple, the federal government has crossed its Constitutional limits and is destroying the fabric of freedom and prosperity.

[snafu]

Employment growth has halted; the middle class is on the chopping block. Digitalized documents are read by software, a radiologist in India can read an x-ray as well as one in Indiana. If you're not an active learner you may be next. Fastest job growth is for communication analysts, bio medical engineers, athletic trainers, financial examiners, medical scientists, @ home nursing aids and physician's assistants.

On their way out: postal workers, operators in textiles, shoes, extruders, semi conductor processors

[LivingAlmostLarge]

You can't blame anything. And if you believe that cutting entitlements will make you richer, i doubt it. Everything will skyrocket in cost and you'll be paying more for goods period.

Both parties are completely irresponsible when it comes to balancing a budget. Why? Because a truthful politician who says to get this mess in order we need to raise taxes (increase income) while cutting expenses would never be elected. Which I find odd because so many people I've heard both Republican and Democratic complain about the budget, yet aren't willing to do either.

Democrats may not mind taxes but won't cut expenditures. Republicans don't want taxes but will cut expenditures. But the truth? You have to do both to get out of the mess, kinda like normal people getting out of debt. Either way overspending means you need more income and less expenses, like dieting.

Yet from neither party could an honest person say I need more taxes and less expenses and get elected.

[Frugal]

Obviously, i think consumer spending would continue its downward spiral...many, many people are living off of food stamps and gov't payments, and doing whatever they can to cut their spending...

All you have to do is drive around even a newer neighborhood, yes, even a BRAND new one, and see all the garage sales, more than I have ever seen before in one season in my entire life. People are hurting, and doing whatever they can to CUT their spending and make an extra few bucks to tide them by for basics like bills.

I think the policies of many administrations for the past sixty years or so since World War Two and actually perhaps earlier back to the Great Depression bear at least some blame for the current fiscal crisis our country finds itself in. I no longer consider myself to have a political affiliation other than independent, but I think that all the parties are to blame.

[Snodog]

Both parties are equally inept. The republicans want to cut spending and the democrats want to raise taxes. Both are deflationary. If the republicans get their way and govt spending is reduced 25% I am pulling my money out of the stock market. 1937 Redux.

[maat55]

Originally Posted by Snodog

Both parties are equally inept. The republicans want to cut spending and the democrats want to raise taxes. Both are deflationary. If the republicans get their way and govt spending is reduced 25% I am pulling my money out of the stock market. 1937 Redux.

So, you have no problem with living beyond your means, giving yourself raises you cannot afford and counterfeiting? At some point, an unsustainable status quo has to be recognized and dealt with like an adult.

Do you think it is your grandchildrens responsibility to maintain your selfish status quo?

[Snodog]

Originally Posted by maat55

So, you have no problem with living beyond your means, giving yourself raises you cannot afford and counterfeiting? At some point, an unsustainable status quo has to be recognized and dealt with like an adult.

Do you think it is your grandchildrens responsibility to maintain your selfish status quo?

First I want to say that I'm no economist and never even took an economics course and for all I know everything I say could be 100% wrong and I'm a madman. However I do find this stuff interesting and have spent many hours reading and learning the last year or so and this is just my opinion. I've studied the Monetarists, Austrians, Keynesians ect... but the school of thought that made the most sense were the Modern Monetary Theorists. I've also learned that economics is a little like religion. No one can prove anything and everyone thinks something different, and everyone is certain they are right!

Now to address your point of selfishness and grandchildren. The only thing that would be selfish would be to leave our grandchildren an aging, crippled infrastructure and subpar education when we had the resources to do otherwise.

Right now we have plenty of people who are sitting at home who want to work. They are our resources. Think about it- for example(I'm not saying you should run your household like this by the way!)- If you and your wife have chores around the house that you want done you can give your kids coupons for completing various jobs. The coupons can be used to pay rent or food costs. One of your kids one day is bored and could use extra coupons(maybe he eats a lot and wants to buy more food) and offers to mow the yard to earn more coupons. And it just so happens that you are lazy and don't feel like mowing the yard even though its been 2 weeks and really needs mowed. Do you tell him no because Daddy is broke and is out of coupons? No you make more coupons and the job gets done and both parties are happy.

As for living beyond our means I'll assume you mean our "high" govt debt. Govt debt sounds bad and could just as well be called private sector surplus. Its an accounting term and never needs to be "paid back", and can go as high as infinity so long as inflation remains under control. Did high govt debt from WW2 cripple that generations children and grandchildrens future? Heck no! The baby boomers where the most prosperous generation in US history. How is it possible that EVERY government has debt and none have a surplus? How can the world as a whole live beyond its means? The answer is of course that every country needs an ample amount of govt debt to have a healthy economy. You won't hear that anywhere in the media or by your favorite politician. They just tell you what you want to hear.

It's govt supluses that are actually bad for the economy. The last 3 times we ran a surplus were followed by recessions and depressions. Surpluses suck the money out of an economy. Money is the lifeblood of an economy, not a sugar high. The Clinton surpluses drained all the money out of the economy and we are still paying the price. Allthough I disagreed with many of Reagans policies, at least he knew how to grow the economy. He ran up the deficit by lowering taxes and increasing spending and the economy took off-with minimal inflation I might add. Before the great depression they ran surpluses for 4-5 years in a row and sucked all the money out. Did you know that Federal deficit growth precedes GDP growth by 1-2 years?

You may have heard people say we are the next Greece. We are not the next Greece. Greece is tied to the Euro and has to balance their budget. They are more like a US state. US can't go broke, and will always have enough money to pay its bills. Thats the beauty of a country in control of its own fiat currency.

The US govt doesn't need tax money to pay its bills. In fact they could pay their bills just fine collecting $0 tax dollars. (not saying they should do that!) Taxes function to heat and cool the economy rather than raise revenue.

The problems we have today with our economy are pseudo problems that can be easily solved with the correct policies. The real problems come when an economy doesn't have enough workforce to create the products and services it requires. Today we have the opposite problem- the people don't have enough money to buy all the products and services we make. The solution is simple- give them more money.

Anyway everyones got an opinion and I'm no different. In my mind it seems pretty clear cut but the fact that our leaders, media, most economists ect.. could all be wrong and I(and a few economists) be right does give me plenty reason for doubt. As humans we would all do better with a little less certitude, especially me.

[DRILLINDK]

Originally Posted by Snodog

First I want to say that I'm no economist and never even took an economics course and for all I know everything I say could be 100% wrong and I'm a madman. However I do find this stuff interesting and have spent many hours reading and learning the last year or so and this is just my opinion. I've studied the Monetarists, Austrians, Keynesians ect... but the school of thought that made the most sense were the Modern Monetary Theorists. I've also learned that economics is a little like religion. No one can prove anything and everyone thinks something different, and everyone is certain they are right!

Now to address your point of selfishness and grandchildren. The only thing that would be selfish would be to leave our grandchildren an aging, crippled infrastructure and subpar education when we had the resources to do otherwise.

Right now we have plenty of people who are sitting at home who want to work. They are our resources. Think about it- for example(I'm not saying you should run your household like this by the way!)- If you and your wife have chores around the house that you want done you can give your kids coupons for completing various jobs. The coupons can be used to pay rent or food costs. One of your kids one day is bored and could use extra coupons(maybe he eats a lot and wants to buy more food) and offers to mow the yard to earn more coupons. And it just so happens that you are lazy and don't feel like mowing the yard even though its been 2 weeks and really needs mowed. Do you tell him no because Daddy is broke and is out of coupons? No you make more coupons and the job gets done and both parties are happy.

As for living beyond our means I'll assume you mean our "high" govt debt. Govt debt sounds bad and could just as well be called private sector surplus. Its an accounting term and never needs to be "paid back", and can go as high as infinity so long as inflation remains under control. Did high govt debt from WW2 cripple that generations children and grandchildrens future? Heck no! The baby boomers where the most prosperous generation in US history. How is it possible that EVERY government has debt and none have a surplus? How can the world as a whole live beyond its means? The answer is of course that every country needs an ample amount of govt debt to have a healthy economy. You won't hear that anywhere in the media or by your favorite politician. They just tell you what you want to hear.

It's govt supluses that are actually bad for the economy. The last 3 times we ran a surplus were followed by recessions and depressions. Surpluses suck the money out of an economy. Money is the lifeblood of an economy, not a sugar high. The Clinton surpluses drained all the money out of the economy and we are still paying the price. Allthough I disagreed with many of Reagans policies, at least he knew how to grow the economy. He ran up the deficit by lowering taxes and increasing spending and the economy took off-with minimal inflation I might add. Before the great depression they ran surpluses for 4-5 years in a row and sucked all the money out. Did you know that Federal deficit growth precedes GDP growth by 1-2 years?

You may have heard people say we are the next Greece. We are not the next Greece. Greece is tied to the Euro and has to balance their budget. They are more like a US state. US can't go broke, and will always have enough money to pay its bills. Thats the beauty of a country in control of its own fiat currency.

The US govt doesn't need tax money to pay its bills. In fact they could pay their bills just fine collecting $0 tax dollars. (not saying they should do that!) Taxes function to heat and cool the economy rather than raise revenue.

The problems we have today with our economy are pseudo problems that can be easily solved with the correct policies. The real problems come when an economy doesn't have enough workforce to create the products and services it requires. Today we have the opposite problem- the people don't have enough money to buy all the products and services we make. The solution is simple- give them more money.

Anyway everyones got an opinion and I'm no different. In my mind it seems pretty clear cut but the fact that our leaders, media, most economists ect.. could all be wrong and I(and a few economists) be right does give me plenty reason for doubt. As humans we would all do better with a little less certitude, especially me.

Debt isn't a good thing, but having debt isn't necessary a bad thing either. We can live with debt. However, we cannot continue to run the printing presses 24/7 to pay for all the government luxuries. In turn, our Dollar becomes worthless and consumer staples become more expensive. CPI rose +2.5% just this last quarter. I don't know about you, but I don't enjoy paying $3.50 for a gallon of milk and $4.50 for gasoline. The talking heads our right, we must reduce the amount of debt we have incurred.

[Snodog]

Originally Posted by DRILLINDK

Debt isn't a good thing, but having debt isn't necessary a bad thing either. We can live with debt. However, we cannot continue to run the printing presses 24/7 to pay for all the government luxuries. In turn, our Dollar becomes worthless and consumer staples become more expensive. CPI rose +2.5% just this last quarter. I don't know about you, but I don't enjoy paying $3.50 for a gallon of milk and $4.50 for gasoline. The talking heads our right, we must reduce the amount of debt we have incurred.

You mean the same talking heads who have been telling us hyperinflation is just around the corner for the last 3 years? Inflation is up slightly because the price of oil went up from mideast unrest. Would you sooner live in a high debt country or a low debt country? World debt comparison: The global debt clock | The Economist

[maat55]

[quote]

Originally Posted by Snodog

Now to address your point of selfishness and grandchildren. The only thing that would be selfish would be to leave our grandchildren an aging, crippled infrastructure and subpar education when we had the resources to do otherwise.

It is one thing to maintain and invest prudently into infrastructure. It is another thing to squander future wealth on todays luxuries.

We do not need to build unneeded highways or schools in the name of putting people to work. This makes as much sense as diggin holes and filling them up. Since the DOE was established, test scores have steadily fell. We do not need more federal government education.

Do you tell him no because Daddy is broke and is out of coupons? No you make more coupons and the job gets done and both parties are happy.

Coupons and IOU's are worthless. It is also immoral for daddy to use his grandchilds future labor to pay his son for a lawn job he is too lazy to do himself.

As for living beyond our means I'll assume you mean our "high" govt debt. Govt debt sounds bad and could just as well be called private sector surplus. Its an accounting term and never needs to be "paid back", and can go as high as infinity so long as inflation remains under control.

So, me buying a new car and having my granchildren pay for it in devalued money and on going interest is considered a surplus to who? I do not know about you,but I adhere to principles. Spending more than I earn and passing the debt to future generations is not a moral thing to do, even on an interest only loan.

Did high govt debt from WW2 cripple that generations children and grandchildrens future?

We are talking about two different time frames. We were the last man standing and major producer of the world after WWII. This is nowhere near the case today. We do not have the ability to recover from this debt and the interest is huge and only has up to go.

Heck no! The baby boomers where the most prosperous generation in US history. How is it possible that EVERY government has debt and none have a surplus? How can the world as a whole live beyond its means? The answer is of course that every country needs an ample amount of govt debt to have a healthy economy. You won't hear that anywhere in the media or by your favorite politician. They just tell you what you want to hear.

If this were the case, why don't we just give every american a million dollars, would this not end the recession? The fact is that the government does not create wealth with debt. It is no different than me paying employees to over clean the shop.

It's govt supluses that are actually bad for the economy. The last 3 times we ran a surplus were followed by recessions and depressions. Surpluses suck the money out of an economy.

Surplusses are no different than spending future taxes. Both suck money out of the economy, one today, one tommorrow.

You may have heard people say we are the next Greece. We are not the next Greece. Greece is tied to the Euro and has to balance their budget. They are more like a US state. US can't go broke, and will always have enough money to pay its bills. Thats the beauty of a country in control of its own fiat currency.

No one is exempt from collapsing their currency.

The US govt doesn't need tax money to pay its bills. In fact they could pay their bills just fine collecting $0 tax dollars. (not saying they should do that!) Taxes function to heat and cool the economy rather than raise revenue.

This has to be the most absurd thing I've ever heard. The government cannot create wealth, it can only redistribute it. The more money if counterfeits, the less purchasing power we have.

The problems we have today with our economy are pseudo problems that can be easily solved with the correct policies. The real problems come when an economy doesn't have enough workforce to create the products and services it requires. Today we have the opposite problem- the people don't have enough money to buy all the products and services we make. The solution is simple- give them more money.

We have too many people consuming and not enough producing. Government policies are promoting this through a failed ponzi-scheme(SS), unemployment benefits(employer provided welfare), welfare and minimum wage laws. To finance this, we are going deeper in debt and passing the problem to future americans, which is immoral.

[Frugal]

I would say some of the blame lies there, but both Republicans and Democrats helped to get us in the mess we are in economically with the massive budget deficit.