Charting the American Debt Crisis
nytimes.com
nytimes.com
Political theory and hundreds of years of tradition holds that the legislature, not the President, is solely responsible for spending. That's why we have legislatures. That's their job -- to exert popular control over taxes and spending.
It's also a fact that the people you currently elect are responsible for the spending and policies that go on today. If new guys couldn't change policies and spending, then why have elections at all?
Please. Enough of this already. You want me to sign a letter saying your guy is awesome? Happy to do it. Just please cease and desist the posturing.
I'm not really interested in helping politicians out as they try to shift blame onto each other. They're pretty good at doing that kind of thing themselves.
Also, the president has some influence on policy debates and can veto any spending bill congress passes. I don't think it's accurate to say the legislature is solely responsible for spending.
It's clear that most of the blame is to G. W. Bush. But neglecting to mention that Obama is fighting two wars seriously irks me.
He does have a magic wand, in the form of a pen that he can use to veto new military spending. He hasn't used it.
> If the large banks, oil companies and corporations thought it would be in their interest to end the wars, the troops would be home.
No. If Obama chose not to renew the various war spending bills, the troops would be home.
> Plus what are you going to do with the sections of economy that depend on these wars?
This sentence is confusing to me. The wars cost us money, money that we don't have any more and that is causing us huge amounts of trouble right now. I'm not sure what will happen to those sections. But they didn't exist 10 years ago, they exist now for the sole purpose of killing people, and they are using money that isn't theirs. Surely we can do away with them.
Xradionut is using the broken window principle - if we break stuff and then rebuild it, we've increased GDP and therefore helped everyone. If we stop doing this, we might ruin the economy.
http://en.wikipedia.org/wiki/Parable_of_the_broken_window
In other news, the Tsunami was great news for Japan.
No. I'm a life long student of history and politics that was raised by a pair of history professors. I grew up watching news about the Vietnam War and the Nixon debacle. (Yes, I'm an old cynical fart.) Most people evaluate political news with the attention span of a day-trader or ferret instead of spending the time researching the causes and tracing the money.
Obama can't fulfill his promises nor do the morally and legally right actions to "fix" the situation. His hands are tied by his political obligations. That's why the general public is going to be fked some more. We've basically turned back a generation of progress in a generation.
> Surely we can do away with them.
What are you going to do with the military and their families? To the contractors and suppliers? And the jobs and businesses that relies on the war gravy train? You need a "real" stimulus and infrastructure program. Otherwise you are looking at an much larger number of unemployed group of people, many which are soldiers.
We have some real big problems in the United States, which will not be solved, because it's not interests of the people in control to solve them.
There's no such thing as a line-item veto. So, it's not that simple. But he's commander in chief and could just order the troops home, which I think he should do by early next year and make the Republicans howl about it in between howling about spending. Not that cognitive dissonance has stopped them so far.
Not to change the debate, but if Obama really cared about saving money he not only would have ended the wars in 2009 but also cut military spending significantly - we could keep the largest military in the world and still cut its spending by $3 or $4 hundred billion. (http://en.wikipedia.org/wiki/List_of_countries_by_military_e...)
For the same reason that Reagan's tax cuts aren't mentioned under every subsequent administration. When you chart a timeline of policy changes, it's implied that the responsibility for continuing those policies is inherited by each subsequent administration until a reversal (if any).
This is seriously mistaken.
The Congressional Budget Office's projections from January of 2008, the last ones made before it recognized the housing bubble and the implications of its collapse, showed a deficit of just $198 billion for 2009, the year President Obama took office. In other words, the deficit was absolutely not 'on track to top $1 trillion.'"[2]
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[1]: http://blogs.wsj.com/washwire/2011/07/25/obamas-address-to-t...
[2]: http://www.cepr.net/index.php/blogs/beat-the-press/president...
http://cbo.gov/ftpdocs/99xx/doc9957/01-07-Outlook.pdf
(Page 11: "CBO currently projects that the deficit this year will total $1.2 trillion, or 8.3 percent of GDP. That total, however, does not include the effects of any future legislation.")
Since the housing bubble and the collapse happened before Jan 2008, and was not _recognized_ (which is being used as an accounting term - i.e. put on paper) - using the phrase "on track" to include that subsequent recognizing seems perfectly reasonable.
Someone posted an interesting video the other day: http://www.kpcb.com/usainc/
The Heritage Foundation has a different take on it: http://blog.heritage.org/2011/07/28/the-truth-about-obamas-b...
Which shows that Obama is more to blame than Bush.
Situation is normal as each side is blaming the other side.
John Mauldin has a book called Endgame, which is worth reading through Interlibrary loan. It presents some interesting ideas.
Think we need a new super post that just allows everyone to post articles on who's responsible for the US debt underneath.
How about this as an alternative suggestion: we keep politics off of HN?
For instance, if the deficit was one trillion dollars at the end of President Smith's administration and two trillion dollars at the end of President Jones' administration eight years later, how is the blame apportioned between Smith and Jones? A large fraction of Jones' deficit is due to the fact that he's stuck paying the interest incurred under President Smith. So a fifty-fifty assignment of blame is wrong. On the other hand, we can hardly absolve President Jones for his failure to pay off the debts incurred by President Smith, either.
Of course, as DanielBMarkham has said, the whole idea of blaming presidents for deficits is rather silly, when it's really congress that writes the budgets. (Not that presidents can be absolved of blame either...)
The closest analogy to your credit limit is the interest rate for Treasury bills; as investors become more concerned that the US will either become insolvent or inflate its way out of debt, they will demand a higher interest rate for that money. T-bill rates are as low as they’ve been since the 1940s, so clearly the markets are happy to loan the government money; Congress is just arguing about how much to allow itself to borrow.
As you correctly point out, the debt ceiling is an entirely voluntary constraint that the US government imposes on itself (if, as is appropriate from an economics point of view, you take the government to be the union of executive, legislature and judicative branches).
The interest rate for short-term T-bills necessarily follows very closely the monetary policy targets set by the Fed. In fact, the Fed and Treasury cooperate all the time to control the supply and demand of T-bills, in order to make sure that the interest rate established by the market matches the target rate - that's just part of normal day-to-day operations, see e.g. http://pragcap.com/resources/understanding-modern-monetary-s...
Long-term interest rates behave slightly differently, and some people believe that useful information about the state of the economy can be extracted from them.
This is still not analogous to a credit limit, because those long-term rates can never actually constrain the US government financially. After all, Fed and Treasury can always work together to reduce the supply of long-term bonds, which will drive down the interest rate.
What extraordinary measures were taken to ensure that the budget would be closer to being balanced going forward?
It seems like there is a never ending solution of debt limit increases going back decades. I suppose things need to get broken very badly before the drastic changes that are needed can be made. Until the general public feels real consequences that are directly attributable to this spend more mentality, nothing is likely to change.
THERE IS NO DEBT CRISIS.
What we have here is a Congressional insanity crisis.
And a media fail crisis.