Is it logical to oppose the deficit while being in debt in your own finances? How can someone rationalize taking out a loan to buy a house or a car and oppose the government taking out a loan? Am I missing something other than the issue of scale? But then again when you buy a house you are conceivably going into debt for an amount several times your annual income. Makes the government debt of less than 100 percent of GDP look tame.
One difference is that personal debt has a term and payoff requirements and consequences if in default. Government appears to have no term, no payoff requirement, and no consequences. Government debt as a ratio to GDP is pretty meaningless. How about comparing the annual $450 billion debt interest payment to the total annual tax revenues? When you look at an individual's debt, their debt is not justified as a ratio of their income; it is justified based on the individual's capacity to pay the principle and interest monthly payments throughout the term of the loan. Regarding your OP...it is not a double-standard...
I am sure you know that this is not true. Government can and does role over its debt instruments which individuals do as well. As to no consequences I guess all those who were worried about default during the debate over raising the debt ceiling were just unaware of the fact that there weren't any consequences to the US defaulting.
Your post is not about debt instruments? It was about debt...when was the last time the US government paid down debt? What was the consequence for not paying down debt?
For individuals, it is sometimes advantageous to carry debt. For instance, say my investment account returns to me on the order of 12%, whereas my automobile loan was issued at 0% interest. Would it be wise to take money that is earning me 12% in order to pay down debt that costs me nothing? Of course not. In fact, it makes the final cost of my automobile go down for me to have NOT paid cash for it and carried debt instead. Same goes for my mortgage, at 3.5%. It makes no sense to take money earning 12% to pay down debt that costs me 3.5%. On the other hand, if I had credit card debt at 15%, it would absolutely make sense to pay it down from my 12% investment account.
Don't know about 'logical', but I think it's immoral to take on more debt that you know damn well your kids are going to have to pay the interest for. When an individual dies, his kids are not responsible for his debts, but that's not so with the gov't.
The use of debt instrument disproves your point though. Hence, why he sued them. Government debt is more similar to corporate debt. However, since American households are in more debt or have far worse financial issues than government, then how can you expect someone to make the point of being debt free on the government side when personally, the person is in more trouble than the FED. Again, holding debt is not a bad thing. The key is how to manage debt, not whether you have debt or not.
You don't believe there are consequences if the US defaulted on it's debt? BTW, that is an opinion, not a fact.
I think he thinks the US did default on it's debt? Which it did not do. Deficits are good thing when unemployment is above it's long term structural level. Otherwise they are bad.
Deficits are bad if the money is not well spent. If we only see a short term benefit but a long term disadvantage, then the deficit spending isn't good.
Obviously money being well spent is better than money not being well spent- but money being spent on stuff means that the people who get the money for the stuff will have more money from the stuff which they will spend and benefit the rest of the economy. Ideally you'd do infrastructure spending or something like that with lasting value- but failing that anything is better than nothing. For example WW2 was the massive spending program that got countries out of the depression. Enormous social costs but in purely non-emotional deficit spending terms it worked in that regard.
Two points: 1. We're talking about deficit spending here, money that must be borrowed and interest paid on the principal until the debt is retired. So, if the advantage gained is only temporary and the economy slides back down in terms of growth and jobs created, then I'd have to say on balance it ain't worth it. The $862 billion Stimulus back in '09 is an example of spending that helped somewhat for awhile but the benefits didn't last, and now we and future generations will have to pay interest on that debt into perpetuity. What have we got to show for it now? Nothin'. Wasn't all bad, we did avoid a more serious depression; but there's some question if whether things would've gotten that bad if there had been no Stimulus or a smaller one. My point being: if you're going to spend more than you take in, then you better be spending that money as wisely as possible. We didn't do that IMHO. 2. Some might counter than WWII didn't get anybody out of the depression, economic well-being and the standard of living didn't improve until the war was over and millions of military people went back to civilian life and THAT's what ended the depression.
Unfortunately...there is zero management of the debt! Deficit spending continues for years to come which means more and more debt...this is not management...this is out of control spending. Government debt has zero resemblance to corporate debt? Government debt has no limits and no consequences (other than debt interest) and no payback plan...corporations would relish this form of debt!
Analysis by reasonable economists doesn't lead to questioning as to whether we'd be better off without the stimulus. We better off because of stimulus- ideally it would have had no tax cuts and been much larger (this would have restored long run employment rates) There is just no debate there. Of course you want to spend money wisely. I'm not arguing that spending money stupidly is better than spending money wisely- that is an absurd proposition. But spending money is better than not spending money in that position. (Well- not if you spend it really really really badly- like if you just gave it all to large corporations that would do almost nothing [or indeed if you spent it all on another country- that would do almost nothing]) But most of the Obama stimulus did what it was supposed to, everything would be worse right now if it hadn't happened. WW2 got everyone out of the depression when analysed from a pure employment and GDP terms- standard of living didn't improve because of rationing and the resources being put towards the war. But the massive deficit spending from WW2 was what ended the depression.
The private sector wasn't sustainable on it's own until after the war ended. Gov't spending does help people get through bad times, and it may help prime the pump so to speak to encourage economic growth, but it does not end depressions and recessions. Only the private sector does that.
I think you are confusing logic with constancy. It could be logical or it could not be logical just depending on the nature of the debt.
Let's look at some numbers to get a perspective on this whole debt thing. The national debt is about $17Trillion to be paid off over the next 30 or so years Over the next 30 years the US economy will generate about $1,000Trillion if average growth is around 3%, which is the long term historical average. If the US economy does not grow one penny over the next thirty years it will still generate over $500Trillion. This makes the current national debt 1.7-3.4% of the total GDP over the time it will be paid off. Coincidentally, 3.4% of GDP is the difference between average government revenues as a percentage of GDP and average government spending from 2001 to today. From 1950 to 2001 average government spending was about 20% of GDP while average government revenues were about 19%. In other words, the national debt would be far smaller, if not zeroe if taxes had not been cut so far below their historical average in the 2000s while historical spending levels were maintained.
I think your numbers are somewhat suspect, care to provide a link? The CBO projects the deficits to begin rising after 2016, back up to trillion dollar levels and higher unless Washington does finally do something about their spending problem. That $17 trillion is only the part that is disclosed, what about the unfunded liabilities that according to some estimates exceeds $100 trillion over the near future? And you are out of your mind if you think the Bush tax cuts are responsible for the 17 trillion national debt. Have you considered what the economy might have been like if those tax cuts had not been made? I think not.
Without the Bush tax cuts, by 2010 the US would have just about paid off the public portion of the national debt and been in a sound fiscal position to begin paying back the $2Trillion it borrowed from the baby boomers excess SS contributions. That was the deal that the republicans made with Clinton in 1994. Once they got a hold of the entire government they tossed that out the window and went hog wild cutting taxes, invading countries, expanding Medicare, spending money like a teenager with dad's credit card. By 2006 while Bush was still in office and the republicans still controlled both houses of Congress and two years before the economic meltdown, the CBO projected a budget deficit of $600Billion by 2008 and over $1Trillion by 2010, which is sort of what happened and suddenly the exact same drunken spenders became concerned about deficits and the debt. The Bush tax cuts were the worst fiscal mistake the US could possibly make. In times of economic prosperity governments are supposed to pay down their debt, not increase it, raise taxes not cut them, reduce spending, not take on huge new unfunded mandates. That gives government the freedom and ability to increase spending and cut taxes to bring immediate relief and economic recovery in the inevitable economic downturn that follows without massive increases in government debt. Instead what happened was a government confronted with an economic calamity already strapped by deficits and debt due to a lack of revenue caused by massive tax cuts. OK, we can use your figures for total future liability of $100Trillion, which the pseudo economists had to figure over a 60 year time frame to get to that number. Over the next 60 years the cumulative US GDP would be somewhere around $3-8,000Trillion. That puts all those unfunded liabilities at around 3.3% of GDP in a worst case scenario. That figure, 3.3%, is almost the exact same amount of GDP that the Bush tax cuts removed from government revenues. The most interesting thing about the "unfunded future liability" panic mongers is that they assume zero government revenue increases for the next 60 years. It is as ridiculous as going into a panic because your $50,000 income this year is not enough to pay off your $300,000 thirty year mortgage.
It is painfully obvious that liberal democrats simply cannot face the consequences of spending more money than they take in. Borrow more, print more, forget about tomorrow, who cares about what'll happen down the road, we just have to feed and clothe everybody, buy 'em all a new house, cell phone, and car, pay all the medical expenses, and what the hell let's send 'em all to Disneyland once a year. Who cares about money, we can crank up the ole printing press and run off a few trillion bucks every so often, no big deal. Cuz there no consequences, we can do whatever we want and if necessary we can take all the money the rich people have. It is clear to me now that with so many people who have that kind of attitude that this country is going to experience one hell of a bad depression at some point. It'll be cheaper to wipe your rear with a ten dollar bill than use toilet paper, it won't be useful for anything else.
To the contrary, both political parties created this mess. It does seem to be the democrats who are unwilling to make the prerequisite changes to the entitlement programs that would make them fiscally sound for future generations.
We liberals are perfectly willing to make the necessary changes to entitlement programs that would make them fiscally sound for future generations. We just differ on what those changes should be.
My impression is that there are many on the left who will not support any changes at all, they only want more revenue. And there are many on the right who will not accept any new revenue at all either, and so here we are. If I'm not mistaken, current law says that if a trust fund becomes insolvent (no more gov't IOUs) and is taken in less money than it pays out, that the payouts have to be diminished enough to equate to the income stream. Congress has to act to change the status quo, and therein lies the rub. I believe the SS Disability Trust Fund becomes insolvent in 2016 or thereabouts, so this issue is not that far off. Within 20 years, Medicare and Social Security will also be insolvent, according to the trustees who are responsible for administering those trust funds. So there is a problem looming, and it appears that this will grow into another political football, followed by a last minute temporary extension. The first of many.
