perhaps it’s because your mother had too many children. Hard to say. But they filed chapter 9 so there is no discussion as to their financial instability.
If large cities are in financial trouble and states are in financial trouble and the Federal debt is 17 trillion dollars and unemployment is still high then where is the financial stability?
Figure of speech, as indicated by the phrase you left out when you snipped my post that you quoted.
By printing money I simply meant to say spending money or allocating funds as though there is some never ending source of funding.
ETA: Something tells me if it was a “simple spending vs. revenue issue” then we wouldn’t be where we are today, right? All these asshats in congress/senate know how to balance their own checkbooks. There’s just no shit given about the taxpayer’s cash.
I think Congress has shown itself incapable of controlling a budget that links spending with revenue. Whether or not you believe we should raise taxes (revenue) to cover expenditures or cut spending, we definitely need a Constitutional amendment. As a compromise to the Keynesians I would say that spending cannot be more than 110% of revenue (the up to 10% debt approval is automatic and amends Art I, Sect 8 that leaves it up to Congress).
The recession decreased tax revenue and increased demands on the government for social services. Duh. I understand that many of the people helped vote Democratic so you don’t care, but the rest of us would rather not see new Hoovervilles. In fact, even as private industry started hiring local governments kept cutting back, and were a drag on the recovery.
Pensions are a problem. Bonds, not so much so long as the states can pay the interest. I don’t lose a lot of sleep about my mortgage. And budget shortfalls, even if they exist, have been closed, even in California, thanks to revenue growth due to the recovery. Where I live, in Silicon Valley. jobs have rebounded to pre-recession levels and are on target to hit bubble levels in a few years.
Equating government finances with personal finances is an excellent sign of not knowing anything about economics.
But you do even worse. Think about what balancing a checkbook entails. It is just knowing where your money is and your total. If you balance doubled or was halved, you can still balance your checkbook. I think the government does a pretty good job of balancing its checkbook.
Now, if you personally are making lots of money and have no big expenses, you should be saving - not starting a war like the Republicans did when they were in charge. On the other hand, borrowing to send kids to college or for a new roof doesn’t show you don’t know how to manage your money. Is it really financially prudent to not borrow to pay for a needed operation for your kid? Or would you let her suffer just so you can avoid debt. Be sure to remember that your interest rate would be very, very low.
So it doesn’t even make sense for private people, and makes far less sense for the government.
You miss my point entirely - perhaps due to my poor phrasing. I was indicating that it IS NOT as simple as that, evidenced by the situation we find ourselves in. The congresscritters know how to balance their own checkbook, and so if it were that simple, they would do it. But it’s not. In other words - we agree, so
There simply isn’t enough concern given to the actual forces (taxpayer money) supporting the government to handle them responsibly. The issue is very very obfuscated and hidden behind MOUNDS and MOUNDS of bureaucratic bullcrap and the only motivation any politician has is getting elected. Damn be the actual facts of the solvency of the nation. Just get me re-elected.
The solution is ridiculously obvious. The appropriation of revenue should be authorized when the appropriation of spending is authorized. If we have statutory obligations, then Treasury should be assumed to be able to raise funds, whether by borrowing or by, you know, taxation.
Don’t like it? Repeal the spending obligations. Can’t do that? Treasury gets to either borrow more or raise taxes without your active consent, because the obligation is already there.
I agree - even Ted Cruz probably can balance his checkbook. Now, I understand being cynical and saying it is easy for politicians to spend other peoples money.
But we have to distinguish good uses of money from bad, and that is where the politics come in. And the understanding of economics. The interstate highway system can be viewed as a gigantic pork barrel project or as one of the best investments the US government ever made.
And our nation is plenty solvent. There is still high unemployment. There are still tons of the under-employed. if we get them good jobs we wouldn’t have to have living wage discussions because the market will pay living wages for most. When we hit full employment I’m all for raising taxes and cutting spending (and a lot of that will happen automatically.) But not now, not for most of the country.
I personally hate personal debt. But the government is different from me.
You keep on using this number as if it meant anything in a vacuum. It doesn’t. The sheer amount of debt, as a number, does not matter. We’ve got about 1568781253064026 yen in debt; is that more impressive? No, because it doesn’t matter. The sheer number is meaningless. It could be 17 googol, and it would not matter in the slightest if our GDP was 20 googol. Not in the slightest. Debt only matters scaled against the nation’s GDP, because the GDP essentially tells us how big our economy is, and a lot about how much we could potentially put into reducing the debt. The sheer number “17 trillion” means nothing. Not when our economy has an output far greater; not when our deficits are dropping; not when US treasury bills are still one of the most sought-after commodities in the world. The USA has an essentially infinite credit line because people keep giving us money. Why do they do that? Because the USA t-bill is rock-solid even in the worst of times.
No, there could be other reasons why it matters. We could be in a credit crunch, and not have investors queuing up to buy our debt. We could have a terrible credit rating and be in desperate need of fixing. But can you think of any that apply to the USA? Again, as long as the T-bill is a rock solid investment and our debt:GDP ratio isn’t much worse than Japan’s (which it will be as long as the world markets consider it to be such), there is no reason to worry about the USA having “too much debt”. Oh sure, debt isn’t good, but it’s not a huge issue. It’s not something to lose sleep over. It’s certainly not something to prioritize above “getting people back to work” or “fixing the incredibly broken economy”.
Given that you’ve compared the financial situations of individual cities (cannot print their own currency, their debt is not considered the number one bedrock solid investment world-wide, etc.) to the situation of the USA, I honestly don’t feel like it’s worth taking anything you have to say on the subject of economics seriously. You have no idea what you’re talking about.
Honest question.
Since federal spending drives so much of our economy, how much of GDP is either directly or indirectly a result of government spending?
I’m sorry but that’s a bunch of rubbish. It is not rocket science to budget for unforeseen shortfalls. It requires that less money is spent then taken in on average. That’s not what’s happening. All levels of government have been spending money way beyond any level of reason and that’s why we have such large deficits.
For you to say the unwashed masses “don’t understand” economics is not a reasoned statement. By default, if we continue to increase debt then there is less money to accomplish the same basic government functions that were paid for in years past. As debt increases it requires a greater share of the tax revenue to retire it. It is very much like personal finances and we’re seeing cities in default as a result of poor management.
We’re not spending money that doesn’t exist. The federal budget for this year is around $3,803,000,000,000. The national debt is around $11,959,000,000,000. But the GDP is around $15,653,000,000,000. And the total assets in the country is around $188,000,000,000,000.
So the money exists. The question is how much of that money should the government collect in taxes, how much it should borrow, and how much it should spend.
For my ease of understanding, I removed 3 sets of 0’s from each of those numbers in your post.
That’s actually an eye opening set of numbers for me. I can’t claim to know enough to contradict you, but if those numbers are accurate, it puts a lot in perspective, for me at least.
I’m sure there are actual numbers for this somewhere, but given that government spending has been ~25% of GDP for much of the last few decades, probably a bit over half.
The comparison puzzles me because the U.S government is not like a family or business. What other individual, small business, corporation, or family has the power to print money and levy taxes? Anyone? The purpose of government is to do what families and corporations can’t do on their own, like the pavement of roads, construction of schools and bridges. Without government, how would we pool resources to provide funding for health services, national defense, intelligence, etc?
It’s not a spending problem,** Magiver**. This is the product of trillions of dollars of unpaid for tax cuts by Reagan the Great (1981, 1984, 1986) and Bush the Lesser (2001, 2003). Clinton the Magnificent (1996) deserves some blame for his tax cut but at least he was he was reducing the debt as % of GDP. It’s not just these tax cuts, it was two unnecessary wars, an expensive healthcare program, and deregulation of the financial sector. These all combine to deprive U.S government of money and destabilize our economy. Eventually, the U.S will be unable to comfortably service its debt.
Bush the Elder laid the groundwork that made it possible for Clinton to greatly reduce deficits. Remember “read my lips, no new taxes?” GW Bush changed his mind to become fiscally responsible, and was voted out of office for it.
This is from a biased source, but lays out much of the case:
