Ten Trillion

i always enjoy your blog posts ty

Seems like you're really oversimplifying things here. Sure, it makes sense for an individual to use a pay-as-you-go system, but you can't just scale that up to governments. Corporations rarely use pay-as-you-go, and it's not a problem as long as they keep their debt reasonable. With governments, it's even more complicated since government spending can increase GDP, which then increases government tax revenue in the future.

Not saying I like the government budget policy during the W years, but, I do think that limiting the government spending to a strict pay-as-you-go plan is pretty silly.

sounds like george bush senior had some problems w/ disciplining his kids

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On March 26 2009 18:18 luddite wrote: Seems like you're really oversimplifying things here. Sure, it makes sense for an individual to use a pay-as-you-go system, but you can't just scale that up to governments. Corporations rarely use pay-as-you-go, and it's not a problem as long as they keep their debt reasonable. With governments, it's even more complicated since government spending can increase GDP, which then increases government tax revenue in the future. Not saying I like the government budget policy during the W years, but, I do think that limiting the government spending to a strict pay-as-you-go plan is pretty silly.

Consider that paygo does not mean that there is no deficit. When I mentioned that there was a surplus in fiscal year 2000, that does not mean that the government was debt free. The national debt was still in the trillions. However it does mean that for that fiscal year, the government spent less than it took in. Credit is an extremely critical element of any economy and that applies to the government as well. I am in no way advocating that the government not accumulate any debt. There are many instances where it is appropriate to take on debt. However, it is not appropriate to run up huge deficits year after year. You say it is not a problem as long as they keep their debt reasonable and that is precisely my point. Running huge deficits every single year is not reasonable and that is exactly what has happened in the US since paygo lapsed.

That is in large part due to the fact that governments are run differently than corporations. The board of directors and shareholders of corporations generally do not authorize such outrageous spending that they would not be able to repay and would jeopordize the financial health of the corporation. However, politics is such that spending on entitlements and programs are hugely popular and so are tax cuts. The failure of HW Bush to get re-elected and the successful re-election of W Bush goes to show that the general public rewards those politicians that mortgage the future for current gains.

Its very naive to think that George W Bush is acting on its own and not in the interests of the same group that ruled before, actually that is quite an understatement... it is naive to believe GWB wasnt a puppet of his father and friends and all this was done in their own interest.

IMO if obama wants a quick fix, he needs to give neilly 10K and 24 hours

On March 26 2009 19:39 Baal wrote: Its very naive to think that George W Bush is acting on its own and not in the interests of the same group that ruled before, actually that is quite an understatement... it is naive to believe GWB wasnt a puppet of his father and friends and all this was done in their own interest.

I'm curious baal, what scholarly books/documentaries/publications are you basing your opinion that W Bush was his father's puppet? If you have any, I'd be very interested to read/view them. In the meanwhile, have you seen the videos that I linked?

Let's look beyond these videos and look at their actions. If you look at many of their actions during their presidencies, HW Bush and W Bush have been polar opposites in thier policies. In fact, many republican lawmakers and voters were very upset with HW Bush and the fact that he lost the support of many core republicans due to his decision to increase taxes was the main reason that he lost the presidency as an incumbent president.

Since 1960, the US has run budget deficits every year except 1998-2001. Those four years of surplus were due largely to the 'contract with America' that brought control of congress to the GOP in 1994, and that fiscal discipline was tossed out the window after 9/11 and the 'war on terror'. Deficit spending year after year is not the great evil it is portrayed as by the minority party (whichever party is in the minority at the time), but the debt to GDP ratio is much more important. The current spending being pushed by the new administration is scary in that the numbers are enormous, and GDP is in decline. I liken it to buying a ten million dollar house when you work at McDonalds. History is often forgotten, or revised, and then repeated when it comes to American politics.

In 1992 a Democratic president was swept in with big majorities in congress and the ability to do whatever they wanted, and as was predictable they then set out to spend as much as they could. The result was Congress being handed over to the GOP. This was Clinton's greatest accomplishment, and it forced him to shift away from the left, and the combination of congress and Clinton worked well because the two powers balanced each other. It's deja vu all over again in 2009, and I would watch for the repercussions in the midterm elections next year. I would, in fact, watch for Newt Gingrich to come back into play, hopefully giving the GOP something positive to say and do, and bring some sanity back to the budgeting.
And it will likely save Obama's presidency and get him re-elected, as it did Bill.