Slow Growth and Debt: The Coming Government Debt Crisis? | Hacker News Reader

Slow Growth and Debt: The Coming Government Debt Crisis?

ft.com

13 pointscwan24 comments

Astounding. Where was this alarmism while the Republicans were spending money in the Middle East like drunken sailors and we were in the last recession?

Oh - sorry. Military spending is always OK. My bad.

Two wrongs don't make a right here, but if there's going to be a coming crisis, it's going to be a bipartisan crisis that both parties are very much responsible for. I think you'd find that most Americans - Democrats, Independents and Republicans are unhappy with how much was spent under Bush, but by the same token, I don't think it's unreasonable to note that the deficit under the Obama administration last year alone was $1.074 trillion dollars while the Bush administrations had an average annual budget deficit of about $104 billion per year.

Let me repeat and rephrase given how stunning it is - the Obama administration's deficit last year alone was greater than all the deficits combined under the Bush Administration including all the war spending. I think it's fair to argue that last year was unusual but deficits are also projected to remain high for the forseeable future and the Obama administration has additional significant spending programs in the years beyond his current proposed modest spending freeze.

EDIT - I erred - I used an average of 104 billion under the Bush administration when it was an average of 104 billion under the 12 years of the Republican controlled budgets which extends into Clinton's last administration. However the data including, I believe, war expenditures can be found here (excel file): http://www.cbo.gov/ftpdocs/108xx/doc10871/Historicaltables20...

I don't understand your numbers in relation to what Wikipedia has to say on the issue. How does your number relate to these? If at all?

http://en.wikipedia.org/wiki/United_States_public_debt

2001 $144.5 billion 1.4%

2002 $409.5 billion 3.9%

2003 $589.0 billion 5.5%

2004 $605.0 billion 5.3%

2005 $523.0 billion 4.3%

2006 $536.5 billion 4.1%

2007 $459.5 billion 3.4%

2008 $1017.0 billion (proj.) 7.4%

I think it's a shame we let Pay As You Go expire in 2002. It seemed to be working pretty well to keep spending under control.

I made a mistake. It's an average of 12 years - where Republicans controlled the budget when they controlled the House - data from CBO here: http://www.cbo.gov/ftpdocs/108xx/doc10871/Historicaltables20...

That said, the numbers are still gargantuan in terms of the increase. If I'm not mistaken though, the CBO numbers include the war numbers.

I think a better compromise would have been to allow for a line item veto which would have also also helped to greatly keep spending under control.

For a more explicit graphic have a look here: http://instapundit.com/79840/ - a comparative of deficits under the Bush administration and what's being currently projected by the CBO/White House.

I agree on the line item veto. Deficit spending is so institutionalized at this point that we need real legislative checks & balances on spending. For the last ~30 years both parties have done it. The only point of contention is which party does it more. As long as it remains a political issue I don't see a good solution. For Pay As You Go I like the idea that you simply cannot spend this money. You can go back to your home district and tell the people you didn't vote for X, Y, Z because it was illegal to overspend. The system we have now makes spending too much of a political tool. We can't trust them to use it wisely.

Indeed,

Despite all the ideological noise, one might actually find a tremendous amount of commonality in policy between the administrations.

It's worth noting also that a good portion of the Obama debit has involved making good the implicit guarantees which the Bush administration issued on Fannie etc debt.

I'm not in favor of this but it wasn't cooked up by the democrats out of whole cloth - it merely continued the direction things were already going in.

Our current wars are actually heavily funded through emergency spending bills, which are off-budget and not included in deficit calculations.

Edit: Also, the 2009 deficit of $1.2 trillion was announced on Jan 7, 2009, two weeks before Obama took office. http://money.cnn.com/2009/01/07/news/economy/cbo_2009_budget...

> Astounding. Where was this alarmism while the Republicans were spending money in the Middle East like drunken sailors and we were in the last recession?

It is interesting to see someone use the "Bush did it, so it's okay" defense. (If it wasn't okay when Bush did it, then bring up Bush isn't an argument.)

However, even the snark is wrong because there was alarmism and criticism from the right and left. See for example http://www.youtube.com/watch?v=A9WKimKIyUQ&feature=playe... which, according to http://www.guardian.co.uk/media/2010/jan/24/super-bowl-ads-c... was produced by moveon.org for the 04 superbowl (cbs declined to run it).

What? Moveon.org isn't complaining this time?

I don't know about Moveon. But Evan Bayh, my Senator, is suddenly all about the fiscal discipline this year. I never heard from him earlier. So I am really pissed at the selectivity of the fiscal discipline mavens, because I personally would rather have functional health care for my family than be outspending the rest of the world on war.

The people need to stop believing the Democrats and Republicans are on different teams. They are on the same team -- the powerful elite.

Do not hesitate to believe that the wars are good for both parties. Only one congressman voted against the war and he is a republican.

I previously pointed out that people did object to Bush's deficits.

Now I'll show that Obama's deficits are significantly larger.

Bush's worst deficit, less than $500 B was in 08, and that includes the bailout. From 04 to 07 Bush's deficits, including the war, were decreasing.

Obama predicts a 2010 deficit of 1.6T. He claims that it will drop to 1.3T in 2011, but that relies on economic recovery that he's consistently overestimated.

Here's a report on Obama's recent predictions - http://www.reuters.com/article/idUSTRE60U1PZ20100201 .

Here's the historical data (on debt, not deficit). http://www.treasurydirect.gov/govt/reports/pd/histdebt/histd...

And here's an graph which compares Obama's plans and CBO predictions to Bush's "accomplishments". This graph is outdated and actually understates what we've learned since about the Obama deficits.

http://pajamasmedia.com/instapundit/files/2009/04/obamadebt....

The unfunded future liabilities of the US government are staggering, some $50 Trillion if you assume that Social Security etc. remain the same.

This means either SS will be reduced, or that SS taxes on earnings will be increased, or that the currency will be debased (or some combination of the 3).

Medicare, not Social Security, is the primary problem. Social Security's problems can be resolved using a similar adjustment like that done in the 80's. Push out the retirement age and there is no problem.

Medicare and healthcare costs are an enormous problem. Expect a combination of tax increases, benefit cuts, and means testing. If Congress finally acts to eliminate waste, the growth in healthcare costs can be slowed.

> If Congress finally acts to eliminate waste, the growth in healthcare costs can be slowed.

What waste is that? Medicare already pays less per procedure than anyone else.

Are you suggesting that Medicare should cut services?

Be careful when citing studies. The goal isn't to minimize the cost per death, it's to minimize the cost of lives saved. The two are different.

The overwhelming majority of us did not agree to borrow this money with compounded interest payments, therefore I see no reason to pay the money back.

Easy for you to say, until you realize that every debt is someone else's asset, and if you hold any Treasury bills/bonds, bond funds, or money market accounts/funds, it's probably your asset. Phrased as "should the American public have to pay back the $12T that the government owes?", the answer is "Of course not!" Phrased as "should the American public lose all the money they put in Treasury bonds and money market accounts because they didn't trust the stock market?", the answer is "Of course not!" But those are two sides of the same default...

You did implicitly via the social contract.

> You did implicitly via the social contract.

In every other contract, I'm not bound if the other side doesn't satisfy its obligations. Also, there's a concept of a "meeting of the minds".

The social contract isn't a contract. It's a promise to use force.

I didn't say I idealistically agreed, but that's the theory anyway. I sort of like Lysander Spooner's argument in No Treason* that social contracts are false justifications because there's no opt-out program. The practicality of such an idea, however, is another question (to which none of us know the answer because it has never existed).

* http://en.wikipedia.org/wiki/No_Treason

Also, I never agreed to the current allocation of land titles, so I see no reason to respect property rights.

You raise an interesting concept - can one generation of Americans vote or permit, via debt financing, to obligate a future generation to pay back the debt incurred? Lysander Spooner, amongst others, wrote about this.

If it was simply an issue of paying back what we owe this could work but we need more credit going forward -- lots more, so we have to keep paying out indefinitely. It's a classic debt cycle.

PBS Frontline did a very fascinating documentary on this

http://www.pbs.org/wgbh/pages/frontline/tentrillion/view/

And terrifying, too.

In the long run, not only are we all dead anyways, but I think that the government will come alive and fix this somehow ... they did in the 90s. Sort of.

Why have a "coming crisis" when you can have one right now?

I mean, I doubt the present "recovery" is going to last more than a couple of years. The problem, actually, isn't the government spending money like crazy to get us out of the crisis. The problem is that government is spending the money on ... the same perps who got us into this mess to begin with

Plus I wouldn't trust Ken Rogoff's research papers any further than I could throw them - I've followed him for a short while:

Two interviews: http://www.onpointradio.org/shows/2007/11/wheres-the-economy... http://www.businessinsider.com/henry-blodget-rogoff-the-wors...

In the first, 2007, he touts the US economy to the sky against some skeptic. In the second, he angry denounces all the people who didn't see the mess coming - which includes he himself in the first interview! I kind of agree with Rogoff(II) - the liars should be held up to some sort of standard. Why's he still around?

Reply on news.ycombinator.com