can we eliminate a deificit this large without destroying this country

[ksu_aviator]

So we stop spending at current levels. As the debt is paid down, the interest payments will also reduce.

Good luck with that. I don't think you've thought this through.

 

[imagep]

By the way, I'm not really defending stupid government spending. I get as mad as the next guy when I hear about $400 hammers, or my taxpayer dollars being spent on turtle bridges. I mean mad like veins start popping out of my forehead.

But I get mad out of jeolousy. I'm mad that some tool vender is making more money than I am. Or I am jeolous that we care more about turtles than we do replacing the 100 year old bridge that I have to drive under every day going to work. Then I have to pinch myself, and remind myself that those turtle bridge builders and tool sellers are also my customers, and that I sell more of what I produce because they have good paying jobs. Money never really gets wasted or used up during the long run, it just continues to recirculate, and the more gov spending, the faster it circulates, and we all get a tiny piece of the pie everytime it circulates, and the pie gets a little bigger every time it circulates.

Besides that, I don't really have anything against turtles. I mean, good luck to them crossing the road and everything, I just wish that they would stop slacking and start building their own bridges.

 

[AliHajiSheik]

Good luck with that. I don't think you've thought this through.

No, I have. Why are you over complicating it?

 

[VanceMack]

We can, and still enjoy prosperity. But not with either party or these particular candidates. Its not that hard a concept really. Eliminate government waste, turn the social spending back to the states where it belongs (not overnight...over a 10 year phased in period). Insist on a balanced budget, incentivize industry (American and Foreign) to reopen manufacturing plants in this country, and legislate across the board but sundowned tax increases that must ONLY go to paying down the debt. We dont have to pay it completely off...we have to get it back below 5 trillion or so. It doesnt have to happen overnight. If there is a bipartisan legislated and mandated plan that both parties would stick to, our debt would be paid down completely in 15-20 years, our credit rating would increase, our economy would flourish and people would still be taken care of.

In order for that to happen both parties would have to stop their inane quest to be the kings of the ****pile. Thats why it is never going to happen.

 

[ksu_aviator]

No, I have. Why are you over complicating it?

I'm not. You are over simplifying it. The US has made commitments to millions of people (that we can't pay, so we borrow) and to just end that is going to cause a lot of pain. The point of the thread was to cut spending without "destroying".

 

[imagep]

I'm not. You are over simplifying it. The US has made commitments to millions of people (that we can't pay, so we borrow) and to just end that is going to cause a lot of pain. The point of the thread was to cut spending without "destroying".

But we are paying them, always have, and since we can print money we have no reason to expect that we can't pay them in the future, exactly like we have in the past.

You are over complicating it.

 

[imagep]

We can, and still enjoy prosperity. But not with either party or these particular candidates. Its not that hard a concept really. Eliminate government waste, turn the social spending back to the states where it belongs (not overnight...over a 10 year phased in period). Insist on a balanced budget, incentivize industry (American and Foreign) to reopen manufacturing plants in this country, and legislate across the board but sundowned tax increases that must ONLY go to paying down the debt. We dont have to pay it completely off...we have to get it back below 5 trillion or so. It doesnt have to happen overnight. If there is a bipartisan legislated and mandated plan that both parties would stick to, our debt would be paid down completely in 15-20 years, our credit rating would increase, our economy would flourish and people would still be taken care of.

In order for that to happen both parties would have to stop their inane quest to be the kings of the ****pile. Thats why it is never going to happen.

Thats probably all true, but I wonder if it even matters what our credit rating is. Immediately after our credit rating dropped, there was a surge in the free market price of government securities. I don't think that anyone gives a darn about what some privately owned credit rating system says. The credibility of the rating companies was pretty much destroyed in 2008.

 

[jonny5]

Seriously. You can do all the mud slinging and name calling you want but we have a multi TRILLION dollar deficit that an X with 12 zeros after it. WHOA
I am not talking about the next 4 years either. That would be impossible. Clinton had 400 billion which is peanuts compared to this.

So, REALISTICALLY can it be done and if so how being as specific as possible. I proposed a remedy in another thread but I know it did not come close.

So please try and stick to the problem without going yes he did not he didn't OK? TRY??

Easily. Eliminate all spending that has been added since 2005. Is there anything that they added since then that the country cant do without, that would destroy it? Reciepts in 2012 are estimated at 2.5 trillion. Spending in 2005 was 2.5 trillion. Budget balanced!

 

[Fisher]

But we are paying them, always have, and since we can print money we have no reason to expect that we can't pay them in the future, exactly like we have in the past.

You are over complicating it.

If and when a loaf of bread costs $50 and Social Security checks are still $1300 a month because we tried to print our way out of it, ask yourself if maybe you over simplified it.

Thats probably all true, but I wonder if it even matters what our credit rating is. Immediately after our credit rating dropped, there was a surge in the free market price of government securities. I don't think that anyone gives a darn about what some privately owned credit rating system says. The credibility of the rating companies was pretty much destroyed in 2008.

Our credit rating does not matter as much as that of others because we are a reserve currency, a standard currency for transactions, and because every other country's economy sucks too. It may not always be that way though.

 

[VanceMack]

As I understand it (that's with limited international finance knowledge) a country isn't all that different than individuals with regard to credit. Yes...we can still get it but it costs us more. We simply need to pay things down and stop having deficit spending.

 

[jonny5]

Lets start with the biggest offender. Human Resource spending, has increased by 880bn a year since 2005. Thats:

Education, Training, Employment, and Social Services - 41bn
Health-111bn
Medicare-185bn
Income Security-233bn
Social Security-255bn
Veterans Benefits and Services-60bn

Lets drill in farther - Income Security - 233bn increase since 2005

601 General retirement and disability insurance (excluding social security) - 1.3bn
602 Federal employee retirement and disability-34bn
603 Unemployment compensation-73bn
604 Housing assistance-21bn
605 Food and nutrition assistance-62bn
609 Other income security-40bn

Ok, simple question. Is there any reason we cant reduce unemployment compensation back to 2005 levels where the govt was spending 35 billion instead 108bn as it is now?

 

[AliHajiSheik]

Lets start with the biggest offender. Human Resource spending, has increased by 880bn a year since 2005. Thats:

Education, Training, Employment, and Social Services - 41bn
Health-111bn
Medicare-185bn
Income Security-233bn
Social Security-255bn
Veterans Benefits and Services-60bn

Lets drill in farther - Income Security - 233bn increase since 2005

601 General retirement and disability insurance (excluding social security) - 1.3bn
602 Federal employee retirement and disability-34bn
603 Unemployment compensation-73bn
604 Housing assistance-21bn
605 Food and nutrition assistance-62bn
609 Other income security-40bn

Ok, simple question. Is there any reason we cant reduce unemployment compensation back to 2005 levels where the govt was spending 35 billion instead 108bn as it is now?

Yes, there is a constituency that doesn't want these things reduced under the assumption someone will get hurt.

 

[wolfman24]

I would like to give an educated answer but I don't think I can. The debt we owe concerns me greatly. I believe it is going to be like the stock market crash and the surprise and shock of 9/11. One day someone is going to want us to answer for it and pay for it and we will be as shocked as we were when other "unexpected things" happened. People say "no, it will be okay, nothing is going to happen" but I am not so sure about that. One day the wolf is going to come knocking at the door and he isn't just going to be full of hot air and everyone is going to completely and utterly shocked because no one thought it would happen. Might not be in our lifetime but it might be in the lifetime of people that we love. I would also love to know if people have real ideas. I honestly think that it would take the whole country pulling together and each person pulling his own part to fix it. And I really don't think that is going to happen in our country, but I am certainly not the one who could dream up the real answer.

Wonderful post, Thanks. I pretty much agree with all of it.

 

[wolfman24]

Anything's possible in the long-run.

Nothing is really possible in the short run.

So that's the problem - every few years a new opinion takes hold and undoes the efforts of the previous Congress - and there seems to be no desire to pick something and work *together* over *decades* on it. Because bringing down the deficit requires control

This seems to be a vicous cycle. One step forward two steps back and it doesn't seem to matter whose in office or "in charge"

I really appreciate the honest thoughts here folksl. Its giving me alot to think about and now my head hurts.

 

[wolfman24]

The biggest offender in the budget is the military. The GAO reports every year how much of their budget goes unaccounted for. If the money is spent and doing good things why is it an offender? Just because of its size? Remember there are 300+ miillion in this country and its getting older not younger. So naturally Social Services go up.

Besides SS is a pay into tax, what I pay in I get out sol that doesn't even count. Granted there are parts of SS that are used for other purposes but they are still for the most part doing good. I think the same can be said to some extent for Medicare. Vet benefits are actually too low for the amount of issues the VA and related agencies have had to deall with since Viet Nam.

I own thoughts are that as someone else said, we all need to wake up and realize the extent of the issue and be willing for alot of reasons including the common good or patriotism or whatever that we all need to bite the bullet. Raising taxes in a fair manner would be the first step. Then going after government spending with a scalpel with NO ONE being exempt. then get a real balanced budget amendment passed that has only a few words in it. "Do not spend more than you (read government) take in." That would be the whole thing. I realize all this is just a drop in the bucket.

The problem would still be this grotesque monster out there killing our future. When it was 400 billion that was doable. but 16 trillion or whatever thats just not on my radar at all.

I see alot of stuff here about printing money and securing debt but I just can't see how that is a realistic answer. Look at countries like Italy and Austria, they did this and thier money is almost useless. I am not money guy except for my own families finances, so maybe I am missing something.

Perhaps another possiblity is be willing to give up some of the luxuries we have as a society. I am not sure how that would work and my thinking on it is incomplete.

Would it help anything if we went back to the gold Standard? Just spitballing.

 

[Kushinator]

Buy something else, that are low risk assets. We could still allow bond purchases but limit them, to limit our foreign debt risk (not that there is much of one).

Even low-risk private assets are susceptible to systematic risk where as the short term U.S. T-Bill market is not. The question Cardinal posted is of the most importance. What happens to the global financial system if we allow the majority of the worlds risk-free assets to become extinct?

 

[imagep]

If and when a loaf of bread costs $50 and Social Security checks are still $1300 a month because we tried to print our way out of it, ask yourself if maybe you over simplified it.

Social security is indexed to either inflation or the GDP. Also, based on the rate of inflation for the past 100 years or so, it will take like 85 years before a loaf of bread is $50 - and by the social security will be $32,500 a month.

Our credit rating does not matter as much as that of others because we are a reserve currency, a standard currency for transactions, and because every other country's economy sucks too.

So if our currency is the worlds reserve currency, then the arbitrary credit rating given by some private company that can make up any numbers it chooses to is not important.

 

[imagep]

As I understand it (that's with limited international finance knowledge) a country isn't all that different than individuals with regard to credit. Yes...we can still get it but it costs us more. We simply need to pay things down and stop having deficit spending.

Well are we paying any more to borrow money now that we did before the credit rating was reduced?

 

[imagep]

Ok, simple question. Is there any reason we cant reduce unemployment compensation back to 2005 levels where the govt was spending 35 billion instead 108bn as it is now?

Ya, there is a reason. We have a higher unemployment rate today. Once the unemployment rate drops down to the 2005 level, then we can certainly reduce unemployment spending. I expect that to happen, sooner or later, so we are not doomed.

 

[Cardinal Fang]

Well, sure, our currency isn't backed by anything, but theoretically, we have to accept that money actually means something, so debt actually means something... in terms of actual product, doesn't it mean that our government owes more product than it provides? I can understand economics when it's a simple good, but when it's about a sovereign currency that's not backed with anything, I get confused. Can anyone explain to me the problem?

Currency is simply an IOU. We could pay you every two weeks is real goods and services such as goats or chickens instead, but that would be an unwieldy system at best. Since we don't know what basket of real goods and services you might actually want, we give you a bunch of these handy IOU's instead. Then you can go collect the debt that is owed to you for your fortnight's labor by trading your IOU's to any vendor or merchant anywhere in the economy. It's sort of like scrip or coupons that can only be used at the company store, except that the company store is everywhere.

What currency is backed by then is the entire array of real goods and services produced within the economy that issued the currency. Because the US produces such a huge volume and rich variety of real goods and services, its currency is widely desired and held. Once upon a time, Zimbabwe's currency became virtually worthless, not because its government printed extra bunches of it on the side, but because wars and emigration had reduced its GDP to nearly zero. Who wants coupons to a store that doesn't have any goods on the shelf?.

Note that no intermediary commodity is necessary at all anymore. That idea is a relic from the days when paper currency might have been valuable one day and worthless the next. But ask around these days and see if you can find the last time a ten-dollar bill was turned down in a transaction somewhere. It doesn't happen. At all. Currency is always good in exchange for anything you want. And it's easy to hide and to carry around with you when you travel, you don't have to store or insure it, and if a corner of it should get torn off somehow, it's still worth exactly ten dollars, not $9.94 or something. Paper currency rocks. It does everything you need transactional money to do, and it doesn't come with with any of these annoying side effects.

 

[jonny5]

Ya, there is a reason. We have a higher unemployment rate today. Once the unemployment rate drops down to the 2005 level, then we can certainly reduce unemployment spending. I expect that to happen, sooner or later, so we are not doomed.

What does that have to do with anything? Why is the federal govt responsible for compensating the unemployed?

 

[Cardinal Fang]

I'm not arguing against all government spending. I was arguing against the assumption that any cut to government spending would contract the private sector economy.

Who does the government give the money to when it spends? Defense contractors? Office supply companies? Retired and disabled people? All in the private sector. Don't kid yourself. Cuts to any of these and to any other outlet will directly hurt the private sector.

 

[imagep]

What does that have to do with anything? Why is the federal govt responsible for compensating the unemployed?

Mostly because it is a system that the legislators that we voted for created and voted for. Employers pay an extra tax to both the states and the federal government to fund unemployment. During good times the unemployment fund runs at a surplus, and thus creates some intergovernment debt which I believe may be included in the national debt, during bad times the unemployment fund may run at a deficit and draw from the past surpluses.

We could end the unemployment benefit, but I think it would only be fair to stop charging employers the extra tax that they have to pay into the system, thus in the long term, there might not be any net reduction in the federal debt due to eliminating unemployment.

Unemployment benefits are also sort of an automatic stimulous program in that when unemployment is low, the amount paid out is fairly low, and when unemployment is high and our economy needs some stimulous, the total amount of unemployment benefits paid out is higher, thus stimulating the economy more.

If nothing else, unemployment benefits reduce other benefit expenditures that the gov would have if we didn't have unemployment, such as foodstamps and welfare.

 

[jonny5]

Who does the government give the money to when it spends? Defense contractors? Office supply companies? Retired and disabled people? All in the private sector. Don't kid yourself. Cuts to any of these and to any other outlet will directly hurt the private sector.

Taxing and borrowing trillions hurts the private sector.

 

[jonny5]

Mostly because it is a system that the legislators that we voted for created and voted for. Employers pay an extra tax to both the states and the federal government to fund unemployment. During good times the unemployment fund runs at a surplus, and thus creates some intergovernment debt which I believe may be included in the national debt, during bad times the unemployment fund may run at a deficit and draw from the past surpluses.

We could end the unemployment benefit, but I think it would only be fair to stop charging employers the extra tax that they have to pay into the system, thus in the long term, there might not be any net reduction in the federal debt due to eliminating unemployment.

Unemployment benefits are also sort of an automatic stimulous program in that when unemployment is low, the amount paid out is fairly low, and when unemployment is high and our economy needs some stimulous, the total amount of unemployment benefits paid out is higher, thus stimulating the economy more.

If nothing else, unemployment benefits reduce other benefit expenditures that the gov would have if we didn't have unemployment, such as foodstamps and welfare.

Actually, no, employers dont pay a tax to the federal govt for UC. Only to the states. The federal govt gives the states extra money to extend UC beyond state levels, which it takes out of income tax. And UC isnt a stimulus because the money is taken out of the economy from those who work and produce and given (after bureaucratic waste) to those who dont. Who then spend it on consumption, whereas the business its taken from could have spent it on growing a business.

And thats before we even get to the fact that the constitution doesnt permit the fed to spend on UC.