With the exception of athelas, no one in this thread who has criticized the Obama pay-as-you-go proposal has mentioned either major political party. Certainly, no one has claimed that either a Republican President or a Republican-controlled Congress would necessarily have resulted in increased fiscal responsibility. On the contrary, it is some of the supporters of Obama’s plan that are characterizing this as a partisan issue. It is no such thing; it is fundamentally a fiscal and economic issue.
How do the actions of the previous Administration in any way contribute to a possible justification/denunciation of the current Administration’s actions? You can debate whether or not prior Presidents acted in a fiscally responsible manner until the cows come home, but it has absolutely no bearing on whether or not Obama’s actions can be considered fiscally responsible.
Obama has led an attempt to substantially increase government spending over the next decade. This proposed spending includes projections of substantial budget deficits during each of these next ten years. Now, only after he has already proposed his budget is he claiming a commitment to fiscal discipline. Further, he is proposing a pay-as-you-go (PAYGO) framework that is arguably not in the spirit of statutory PAYGO. The proposal contains multiple loopholes that can be used to circumvent the PAYGO rules. It does not actually promote the drafting of balanced budgets due to the lack of restrictions on (1) discretionary spending (2) various taxes (3) Medicare. Given the questionable PAYGO proposal and his desire to expand government through long-term deficit spending, Obama’s committment to fiscal discipline in general and his motivations behind his PAYGO proposal need to be called into question.
I like the theory of politicians who support financial responsibility, but I do not trust that this is the goal here. I would not be surprised to discover the goal was to protect programs or tax hikes Obama supports by putting popular/essential “mandatory programs” on the chopping block instead.
Wasn’t the theory to spend and not tax, so that the increased money supply would encourage action in the economy? Tax and spend isn’t stimulative unless you believe that government spending is more effective for this purpose than private spending.
The problem is with the type of spending they are doing with the stimulus money. They may create work, but they are not creating jobs. The continued employment will always be dependant upon yet additional government project funding.
There is also the issue of tax complexity - our tax code is sufficiently arcane as to add about $200 billion of cost annually to individuals and companies - some 20 cents for every dollar collected by the government. And all of this effort still can’t keep a Treasury Secretary, of all people, from screwing up his tax form.
Various loopholes exist for companies to exploit to reduce their tax exposure - the problem there is using them vastly increases the compliance cost and channels business money into ventures that might not be as profitable.
These are real issues and they have a tremendous economic cost. And especially now, when businesses are struggling and revenues are falling to the government, we need to examine which of these costs are necessary and which aren’t.
My cite demonstrated that the Bush cuts didn’t affect corporate tax rates very much, so I don’t understand your criticism here.
Frankly, while most of the Bush tax cuts were needed, especially at the time, the corporate tax issue and the problem of compliance costs should have been a much higher priority than they were at the time, and they are reaching a crisis level now.
This is a gross misunderstanding. The stimulus provided jobs aren’t supposed to give people work forever. They’re supposed to give people work in the short term, so that the increased spending they pump into the economy speeds the recovery. Then the businesses that have been laying people off because they aren’t making any money will hire people until they were back at capacity.
Look you’re company X. You employ 1000 people. Suddenly sales drop 40% so you don’t need 1000 widget makers because 500 can meet demand. You lay them off. The economy rights itself and now your sales jump back to previous levels. You now have to hire 500 people to get the widget factory up to speed.
I keep seeing this misunderstanding. Stimulus jobs are there to accelerate recovery and keep people employed in the meantime. The economy will hire them when everything is back to normal.
George Bush was a bad man. The Republicans are bad people.
Therefore everything they did, and everything they propose to do, is bad.
Mr Obama is a good man.
Therefore everything Mr Obama does, or proposes to do, is good. Even if it runs counter to policies of Mr Bush that produced beneficial effects. And even if it is the exact same thing, or something that is taken to a worse extreme, that Mr Bush and the Republican party did, or propose to do, that has negative effects.
Unfortunately, that is the extent of the underlying logic of a large portion of the posts on economic and foreign-relation matters on the SDMB.
Unfortunate, but true. It took me a while to get used to it, too.
This is one of the more fatuous things I have seen posted in a long time. Care to point out where this is the case or admit it for the mischaracterization that it is?
The OP is asking about the PAYGO proposal and several responses were guffawing that isn’t it rich to hear someone who is spending money like a drunken sailor proposing fiscal responsibility (I am not commenting on whether PAYGO as proposed is a good idea here).
This comes from the conservative (and/or fiscal conservative) types. It is a talking point on most conservative chat shows and blogs. The characterization is that they are trying to stop all this fiscal irresponsibility and protect us from these ruinous policies.
Forgive me if I cannot accept these people trying to claim the ground of fiscal responsibility. When they were in power they were anything but. It is like they are Lucy from Peanuts promising that this time she will not move the football when Charlie Brown tries to kick it. Call me cynical but I am not betting on Lucy not moving the ball this time, history argues against it.
What is particularly egregious here is yelling about Obama as a big spender when the reasons for that big spending are manifest. Somehow this gets conveniently ignored. Yes it is bigger spending then ever before but most economists agree that it is necessary (of course they argue endlessly on the details). Bush & Co., conversely, held the record till this point and nicely spent us out of a budget surplus at a time when there was no economic disaster in our laps.
It is not amiss to point this out when it is now those same people proclaiming themselves as the ones who are fiscally responsible (who also went in for a massive government bailout…short memories).
So what, the Democrats who criticized Bush deficits are now fighting back with…deficits? You’re not making a whole lot of sense either, especially when you consider that the “surplus” you hold so dear evaporated all by itself - in the face of the tech bubble bursting and the economic disruptions caused by 9/11.
In case you forgot, there was a recession then. And while I certainly won’t defend everything Bush did on the economic front, least of all his spending, it amazes me that you will defend Obama spending reflexively and attack Bush for squandering a surplus.
Given that fiscal irresponsibility (along with corruption) was a huge portion of why Republican leaders were voted out (as in, I didn’t want to vote for them until enough were kicked out), methinks you have no merit. We tok the lead in criticizing them, but had no power to change anything, as they had us over the barrel on other policies at the time.
No, economists do not agree that it is neccessary. One (large but stupid) school of thought favors it. This side is wrong. It is empirically wrong, in that no one has ever manage to spend their way out of a recession, much less a despression, yet. Roosevelt accomplished nothing exceopt to mitigate it and significantly harm the American polity in the process with his naked power-grabs and bad management. SOme people have failed to learn that you ought to model your behavior, if after anything, then after sucessful strategies.
The entire argument here is that if we just blow enough money we can somehow pull through. This ignores two things entirely: the cost of paying back that money, the risk that it will be wasted, and the the fact that there may not be enough money to do it, period.
And if it so neccessary, please explain why the money is being blown in a wildly flagrant manner to shore up Democrat political support in a bad economy, and going to Democrat’s home districts? More to the point, if the economic strategy is going to wortk so well, why has it already failed horribly. Obama likes to crow about the many jobs he’s supposedly “created or saved.” Aside from being a meaningless phrase, his supposed “worst case scenario” is already much rosier than the actual picture, while his other boneheaded moves have already undermined investor confidence across the board.
And finally, please cite that most economists support a massive bailout. Oh, and your political heroes claiming they do does not count. I won’t be holding my breath.
This is not true. You have chosen to believe nonsense because it shores up your prejudices. Most economists agree that the government is the spender of last resort. And that inflation from spending is better than deflation in the long run.
You are essentially arguing for the economic version of creation theory. Simply rubbish.
As I said, inflation is better than deflation.
I shouldn’t have to explain this to you, but the economy is big. Like godzilla, it does not spin on a dime. Remember, any spending is stimulative. Period. Stimulus money for pothole repair. The city pays a contractor. The contractor pay’s his worker. The worker pays for his daughter’s Karate lesson. The Karate Sensei pays for a pair of roller blades. The Big 5 Sporting goods store pays its supplier. The supplier pays its accountant. Get it? Spending stimulates the economy, and they say that each dollar spent gives 1.79 into the economy as a whole.
Whereas the Republican tax cut method means that people get a little back. And they tend to save it. So for each dollar spent some amount less than a dollar goes into the economy. Tax cuts stimulate less than spending.
And if you can stimulate the economy and at the same time get lasting benefits, like say the potholes on main street being filled, bully for you.
I assume you mean the stimulus package, because that’s what was being discussed. Do you understand the the bailout and the stimulus are different things?
Here’s my #3: A large stimulus package that included significant tax cuts is urgently needed to get the economy moving again. That has created a larger deficit which needs to be fixed. The alternative to not doing a stimulus, in the opinions of most economists, would worsen the crisis. PAYGO is one element of bringing future deficits down to manageable levels. The deficit cannot be eliminated overnight because cutting spending or raising taxes right now to do so would be an anti-stimulus, and do further harm to the economy.
Is that a reasonable answer for you? I’m sure it isn’t.
Did you actually seek a reasonable answer? I’m not sure you did.
For all of those economic conservatives who want to re-write history to make it look like most other economic conservatives advocated doing nothing as opposed to increasing the deficit. Not true. Even guys like House Minority Whip Eric Cantor advocated hundreds of billions of dollars in unpaid for tax cuts as his solution to getting the economy moving again. The anti-stimulus crowd is entitled to their own opinions, but they aren’t allowed to rewrite history to make it look like a lot of conservatives advocated no stimulus. Not to put too fine a point on it, any stimulus would have meant bigger deficits, whether it was due to tax cuts or spending increases.
On Mr. Moto’s point about corporation tax rates, let us keep in mind that most corporations don’t pay anything in corporate taxes. See table 1.
Finally, to the substance of the OP. There had been criticism that PAYGO as proposed by Obama doesn’t include controls on discretionary spending. As far as my memory serves, PAYGO has never included controls on discretionary spending, which has separate budget enforcement mechanisms which have never lapsed, never expired.
So anybody with a reasonable reply to my assertion is welcome - I think it is self evident that corporate taxes are too high, too complex, and that the loopholes lead to unproductive and even economically undesirably corporate behavior. But if you think they aren’t, serve up some proof.
Because in the opnion of most economists, it was necessary to spend our way out of the recession. To “blindly” borrow is a misnomer. We knew that future cuts will be necessary but that current spending is more important right now. There was nothing blind about it. To put it another way, if we didnt borrow, we’d go bankrupt and wouldnt have a future to borrow from. By spending future capital, Obama at least assures things won’t be as bad now, in an attempt to fix it
But that’s what he’s doing. He’s using deficit spending and trying to prepare for the future at the same time. You may not see that, but that’s why we disagree
So if its not sudden or cataclysmic, why do you expect change like instant budget solvency to be implemented? I was not referring to PAYGO as sudden or cataclysmic, you seemed to have misunderstood that point. I was saying that to expect PAYGO to be completely loophole free with no exceptions would be sudden and cataclysmic. You seemed to agree, since you said they were implemented years ago but never adopted. So what if Obama tries to implement it now but allows exceptions? Let his version work, and when the economy gets better, he can start closing the loopholes
What is wrong with balancing spending against revenues? You seem to be arguing 2 things here: How terrible the stimulus was and how bad PAYGO is. I dont see anything wrong with the stimulus because it was necessary to spend a lot at the time when our economy was tanking. And I dont see PAYGO as fiscally irresponsible because it tries to achieve a balance between spending and borrowing. If your assertion is that the stimulus doesn’t mix with PAYGO, then that is a seperate issue entirely
It is completely possible to be fiscally loose and then, a few months later when things look better, try to fix some of it. Being loose was necessary.
You didn’t really expect the recession momentum to suddenly stop the hour the bill was passed did you?
I know Obama rocks and everything, but even he can’t completely stop the economic recession by himself. Besides, 2015 is a long way away, why don’t you stop fuming at him for what he may or may not do 6 years from now?
Of course, “provided” we acquiesce to your specific conditions, any scenario can play out. But we can’t, because Congress and the President works together on a budget. It would be impossible to take them out of trimming things out of the budget. So in my original example, I guess I’ll put you down as a “No, even I, furt, am not in favor of stopping all extraneous spending”, thus proving me right.
It isn’t for me. Every pro-Obama poster has dodged this question in every thread it is posted in. If it was stimulus, and only stimulus, and a one time thing, you would see this year’s 1.7 trillion dollar deficit and next year it would be back to 400 billion.
But it doesn’t. It is NOT stimulus. It is a massive, perpetual increase in continuous funding of government programs.
Answer these:
Is Obama predicting that we will still be in this bleak economic situation in 2019?
If not, then why is his deficit projected to be even higher that year than this year? What economic crises perpetuates the spending when by his own numbers we have returned to prosperity?
It couldn’t be good, old fashioned liberal government expansion, could it?