# Why is the Debt/Deficit issue #1 for so many people? **URL:** \ **Category:** Great Debates\ **Created:** [June 6, 2012, 6:31pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297 "2012-06-06T18:31:30Z")\ **Posts on this page:** 20\ **Page:** 7
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 14, 2012, 5:27pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/121 "2012-06-14T17:27:46Z")
> [@CJJ](#): > > In Spain at least (and there’s a similar story in Ireland), the problem was not the level of sovereign debt, but the sudden rise of interest rates thanks to a banking crisis. The crash reduced the value of real estate held by the banks some 30-50% ; in total Spanish banks are looking at [a 300 billion euro loss](http://money.cnn.com/2012/05/25/investing/spain-banks/index.htm). > > Spain’s government organized FORB in 2009 to deal with the crisis and started implementing austerity measures around the same time. Austerity has caused high unemployment, and the recent admission by Bankia that it needed 19 billion euro in recapitalization (sure to be the tip of the iceberg) essentially caused it to be nationalized–the Spanish government took on its debt to avoid risking another crisis. The inevitable sovereign debt downgrades have [raised Spain’s borrowing costs to 7%](http://money.cnn.com/2012/05/25/investing/spain-banks/index.htm)–arguably through no fault of their own, or at least not because the government was overspending. It says right in the article you linked to the cause of the high debt cost was the result of deficit spending. This is not a short term concern. The concern is continued long term deficit spending and a continued rise in debt. By default, without argument, this takes money out of the budget. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [June 14, 2012, 5:31pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/122 "2012-06-14T17:31:22Z")
> [@Magiver](#): > > So if we increase the debt we’ll be OK. In the short run, the likelihood of being OK rises if we increase the debt, and falls if we decrease the debt. In the long run, it is the opposite. Unfortunately, to get to the long run, we must first traverse the short run, so increasing the debt is the prudent thing to do _today_. ---
**Author:** ![Hentor\_the\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/h/8edcca/32.png) [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)\ **Post date:** [June 14, 2012, 5:35pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/123 "2012-06-14T17:35:22Z")
> [@Magiver](#): > > our debt exceeds GDP. Our debt exceeds one year of our GDP. And it has done so in the past. This is of course not a trivial problem, but it is eminently manageable and secondary to our other economic problems. We should address the after we get the economy going. > [@](#): > > Our credit rating has taken a hit. And the net result was what? I’ll tell you what. It was precisely dick. We are still quite able to borrow money at very very low rates. > [@](#): > > These are not semantics. Well, in terms of the practical impact, the credit rating thing pretty much is. What neither of them is is any reason for the US to engage in austerity. We need jobs right now, not fretting about a very manageable debt situation. > [@](#): > > We are like every other country who has gone down the road Greece went down. It will eventually happen if we continue to spend more than we take in. Pure nonsense. Please elaborate on specifically how we are like Greece. Give me numbers. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 14, 2012, 5:55pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/124 "2012-06-14T17:55:54Z")
> [@Fear\_Itself](#): > > In the short run, the likelihood of being OK rises if we increase the debt, and falls if we decrease the debt. In the long run, it is the opposite. Unfortunately, to get to the long run, we must first traverse the short run, so increasing the debt is the prudent thing to do _today_. “In the long run, we’re dead”: Paul Volcker. Yes, that’s true. We have to plan for the short term in order to realize the long term. With that said our reprsentatives have flung money at an accelerated rate for 3 straight years. Unemployment is going up as are foreclosures. When people talk about fiscal conservancy it’s not just looking at a number. It’s how the money is spent. In my city we got stimulus money towards some hybrid buses that may or may not pay for themselves. They’re very expensive. It’s a gift from the Federal government. Who is paying for them? The state had a grant for a “high speed rail” system. It wasn’t a bullet train but it would cut down some of the time traveling between one end of the state and the other. Studies showed it would cost the state money even with borrowed Federal money infused into it. We returned the money. I say “returned” even though it never existed in the first place beyond a promissory note. The money was spent on the books and will be made available to another rail project somewhere else. Debt for the sake of debt is just bad. We waste a tremendous amount of money and get little in return for it. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 14, 2012, 5:58pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/125 "2012-06-14T17:58:41Z")
> [@Hentor\_the\_Barbarian](#): > > Our debt exceeds one year of our GDP. And it has done so in the past. This is of course not a trivial problem, but it is eminently manageable and secondary to our other economic problems. We should address the after we get the economy going.And the net result was what? I’ll tell you what. It was precisely dick. It’s been 3 years and unemployment is rising. I think we got dicked. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [June 14, 2012, 6:06pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/126 "2012-06-14T18:06:54Z")
> [@Magiver](#): > > “In the long run, we’re dead”: Paul Volcker. Yes, that’s true. We have to plan for the short term in order to realize the long term. > > With that said our reprsentatives have flung money at an accelerated rate for 3 straight years. Not nearly enough, thanks to misguided Republicans. The stimulus should have been three times a large to create the jobs necessary to goose the economy. And once again, Republicans are blocking the President’s jobs bill, then blaming him for not creating jobs. We in much the same place as we were in 1937. Just starting to move in the right direction, when conservatives prevailed with spending cuts over worries about the debt, and plunged us back into recession. Why do you think it will be any different now? ---
**Author:** ![Hentor\_the\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/h/8edcca/32.png) [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)\ **Post date:** [June 14, 2012, 6:07pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/127 "2012-06-14T18:07:36Z")
> [@Magiver](#): > > It’s been 3 years and unemployment is rising. I think we got dicked. 😕 Unemployment has fallen over the last three years, from around 10.2% to about 8.2%. Perhaps your understanding on this issues is clouded by your lack of knowledge on such basic facts as this. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 14, 2012, 6:40pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/128 "2012-06-14T18:40:47Z")
> [@Hentor\_the\_Barbarian](#): > > 😕 Unemployment has fallen over the last three years, from around 10.2% to about 8.2%. > > Perhaps your understanding on this issues is clouded by your lack of knowledge on such basic facts as this. It should be falling. It’s rising. And real unemployment is higher than that. [More like 12%.](http://blogs.wsj.com/marketbeat/2012/04/12/the-true-unemployment-rate-try-12/) ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 14, 2012, 6:41pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/129 "2012-06-14T18:41:55Z")
> [@Fear\_Itself](#): > > Not nearly enough, thanks to misguided Republicans. The stimulus should have been three times a large to create the jobs necessary to goose the economy. And once again, Republicans are blocking the President’s jobs bill, then blaming him for not creating jobs. > > We in much the same place as we were in 1937. Just starting to move in the right direction, when conservatives prevailed with spending cuts over worries about the debt, and plunged us back into recession. > > Why do you think it will be any different now? so all we need to do is spend 3 times more than we have. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [June 14, 2012, 6:43pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/130 "2012-06-14T18:43:45Z")
> [@Magiver](#): > > It should be falling. It’s rising. And real unemployment is higher than that. [More like 12%.](http://blogs.wsj.com/marketbeat/2012/04/12/the-true-unemployment-rate-try-12/) Oh, real unemployment? Not the unemployment we had during Republican administrations, this is a special kind of unemployment we only use for Democrats. That kind of unemployment? ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [June 14, 2012, 6:45pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/131 "2012-06-14T18:45:32Z")
> [@Magiver](#): > > so all we need to do is spend 3 times more than we have. There’s that Republican math again. But, yes; we do have to spend more than we have. We have never cut our way out of a recession, but we have spent our way out of several, by increasing the debt. ---
**Author:** ![Hentor\_the\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/h/8edcca/32.png) [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)\ **Post date:** [June 14, 2012, 6:53pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/132 "2012-06-14T18:53:11Z")
> [@Magiver](#): > > It should be falling. It’s rising. And real unemployment is higher than that. [More like 12%.](http://blogs.wsj.com/marketbeat/2012/04/12/the-true-unemployment-rate-try-12/) Hopefully you never try close up magic, because you’re really clumsy at sleight of hand. Tell me what real unemployment was three years ago. I guarantee you it has also fallen, and not risen. Unemployment is down even over last year. However, it isnt declining like it was a couple years ago, I’ll agree with that. And do you know what was in effect then that is not now? Can you say “stimulus”? I knew you could. We have right here and now a great example of stimulus spending and economic improvement. We just need to finish the job. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 14, 2012, 6:54pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/133 "2012-06-14T18:54:52Z")
> [@Fear\_Itself](#): > > There’s that Republican math again. I was quoting you: “The stimulus should have been three times a large to create the jobs necessary to goose the economy.” > [@Fear\_Itself](#): > > But, yes; we do have to spend more than we have. We have never cut our way out of a recession, but we have spent our way out of several, by increasing the debt. I guess the Democrats should have just multiplied by 3 when they passed the bill in the first place. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 14, 2012, 6:57pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/134 "2012-06-14T18:57:25Z")
> [@Hentor\_the\_Barbarian](#): > > Hopefully you never try close up magic, because you’re really clumsy at sleight of hand. Tell me what real unemployment was three years ago. I guarantee you it has also fallen, and not risen. > > Unemployment is down even over last year. > > However, it isnt declining like it was a couple years ago, I’ll agree with that. And do you know what was in effect then that is not now? Can you say “stimulus”? I knew you could. > > We have right here and now a great example of stimulus spending and economic improvement. We just need to finish the job. yes, it’s down from last year. It was suppose to go down this month and it went up. Foreclosures are on the way up. We literally spent trillions doing this. could have just written a whopping check to each person and let them spend wildly. ---
**Author:** ![Hentor\_the\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/h/8edcca/32.png) [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)\ **Post date:** [June 14, 2012, 7:09pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/135 "2012-06-14T19:09:13Z")
> [@What the fuck is wrong with these homophobic bigots?](https://boards.straightdope.com/t/what-the-fuck-is-wrong-with-these-homophobic-bigots/4948/297): > > We literally spent trillions doing this. could have just written a whopping check to each person and let them spend wildly. If by “this” you mean the ARRA stimulus package, you’re literally wrong once again. We should have spent trillions. We have spent $758.4 billion, the largest chunk of which was in tax benefits (297.8B). And all we got for doing so was the prevention of a second great depression. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 14, 2012, 7:26pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/136 "2012-06-14T19:26:57Z")
> [@Hentor\_the\_Barbarian](#): > > If by “this” you mean the ARRA stimulus package, you’re literally wrong once again. We should have spent trillions. We have spent $758.4 billion, the largest chunk of which was in tax benefits (297.8B). > > And all we got for doing so was the prevention of a second great depression. we’re averaging 1.5 trillion dollars more debt each year. given the real unemployment rate we got very little in return for all the money spent. Please note the title of the thread. If anybody understands budget deficits it’s the unemployed. I’ll quote you something that should sound familiar since it was your party that coined the phrase, “It’s the economy stupid”. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [June 14, 2012, 7:37pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/137 "2012-06-14T19:37:02Z")
> [@Magiver](#): > > I was quoting you: “The stimulus should have been three times a large to create the jobs necessary to goose the economy.” > > I guess the Democrats should have just multiplied by 3 when they passed the bill in the first place. The stimulus passed the Senate with bipartisan support. Republicans threatened to withdraw support if it was higher. ---
**Author:** ![Hentor\_the\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/h/8edcca/32.png) [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)\ **Post date:** [June 14, 2012, 7:37pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/138 "2012-06-14T19:37:21Z")
> [@Magiver](#): > > we’re averaging 1.5 trillion dollars more debt each year. > > given the real unemployment rate we got very little in return for all the money spent. Please note the title of the thread. If anybody understands budget deficits it’s the unemployed. I’ll quote you something that should sound familiar since it was your party that coined the phrase, “It’s the economy stupid”. Are you saying that all debt is due to the stimulus? Do you think all debt is the same? Do you know what the biggest drivers of our current debt are? And I completely agree that it’s the economy, stupid. That’s what I’ve been saying all along. It’s the economy first, debt second. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 14, 2012, 7:51pm UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/139 "2012-06-14T19:51:14Z")
> [@Hentor\_the\_Barbarian](#): > > And I completely agree that it’s the economy, stupid. That’s what I’ve been saying all along. It’s the economy first, debt second. People don’t perceive them as mutually exclusive. A lot of people have gone through hell and when they see large amounts of debt it resonates. ---
**Author:** ![Snag](https://avatars.discourse-cdn.com/v4/letter/s/94ad74/32.png) [@Snag](https://boards.straightdope.com/u/Snag)\ **Post date:** [June 15, 2012, 9:38am UTC](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297/140 "2012-06-15T09:38:13Z")
> [@Magiver](#): > > our debt exceeds GDP. Our credit rating has taken a hit. These are not semantics. We are like every other country who has gone down the road Greece went down. It will eventually happen if we continue to spend more than we take in. Again, as others have said unlike Greece the US the 800 gorilla of economies. As I’d mentioned earlier people routinely run up debts of a much greater percentage, 300 or 400 % owning a home and that’s a good investment. Look at the earning power of a nation. Granted, it’s more drastic if an economy fails. But while we need to turn it around in no more than a few years we’ve recovered from 120% before and paid it down in a decade. Some economists say at worst we could handle 150% or more for a while if we needed to. I don’t think that’s a good idea but I wouldn’t be surprised if we could do it. If we don’t need to then we’ll turn around much faster. It may require some investment to also help keep other economies afloat for a little while, as the way the Marshall plan rebuilt markets and built us new ones as well. But with additional governmental revenues and investment along with some spending cuts it can be beaten back. My understanding is that our government spending has been down a lot over the last two years as as percentage. Much of the real problem is the private sector which is flush with cash, lots of cash, which they won’t release for loans or jobs or at least boosting some current salaries significantly enough to give it a kick start. So that they can buy their own companies product sometimes. Money is still cheap right now. But demand is low because most people don’t take home nearly enough money every week. I’m a lot more concerned about low demand then the debt at the moment. Fix the middle class money drain and it starts solving the debt. In part, people will start recapitalizing themselves and the economy if given the chance while their spending will also increase. We need different strategies for job creation. Ones that have worked in the past but haven’t been used well for over a generation. [Previous page](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297.md?page=6) [Next page](https://boards.straightdope.com/t/why-is-the-debt-deficit-issue-1-for-so-many-people/624297.md?page=8)