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How Your Government Works

Peacenik said:
If the government does practically anything it is because the rich want it. The rich need I-10, too.
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The rich wanted the EPA, OSHA, and social security?
 
Luce said:
The rich wanted the EPA, OSHA, and social security?
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Those were created before the rich seized outsized power over the government. The turning point was the Powell Memo, which advised the rich to spend on public opinion-shaping. 50 years later, the effects have gotten us Fox news, Heritage Foundation, Cato Institute, ALEC, CPAC, MAGA. That's all cheerleading for big business and the rich, and there's no matching effort on the left. That is why the right is stronger than the left. Big money paid for that and big money gets value back for that. The value being outsized power and idiots on the right who won't even believe facts, but are certain rumors are reliable information.
 
ttwtt78640 said:
Loads of words and numbers, but they are what they are. IMHO, the problem is what many call ‘baseline budgeting’ which keeps (past) federal spending increases (plus some annual growth) in place regardless of what the GDP is doing.

Added to that is the ever increasing national debt and the (interest) cost of servicing that debt, thus the more is added to the national debt the more total annual federal ‘mandatory’ spending becomes. We have reached the point where even if congress critters cut 100% of federal non-defense ‘discretionary’ spending (mission impossible) we would still have an annual federal “budget” deficit.
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Damn close, more like budgets are not determined by economic condition but rather political whim. If you agree that most political promises boil down to less taxation, more spending, or some terrible combination of the two then economic principles have no room at the table of discussion.

When it comes to debt the biggest concern is when excessive spending levels causes inflation, then closely followed by currency valuation against the international basket of currencies, then closely followed by sentiment of and demand for that investment vehicle. Total debt as a percentage of GDP seems to be bouncing around between 115.5% and 120.8% of GDP ever since the covid impact fiscal years. Not great, not terrible.

It is true that expense to the treasury year on year has been on the sharp incline since FY2020. $371B then and now $892B for FY2024. The question is what the strain really does but every bit of it is scheduled from bond auctions throughout the year every year. But more than just budget cuts in an attempt to deal with this, which would be GDP impacting, one of the largest reasons for all of this was tax changes as well. All should be up for discussion if we are willing to be honest about this, trajectories for deficits per year involve both sides of that accounting. Taxes in and spending out.
 
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OrphanSlug said:
Damn close, more like budgets are not determined by economic condition but rather political whim. If you agree that most political promises boil down to less taxation, more spending, or some terrible combination of the two then economic principles have no room at the table of discussion.

When it comes to debt the biggest concern is when excessive spending levels causes inflation, then closely followed by currency valuation against the international basket of currencies, then closely followed by sentiment of and demand for that investment vehicle. Total debt as a percentage of GDP seems to be bouncing around between 115.5% and 120.8% of GDP ever since the covid impact fiscal years. Not great, not terrible.

It is true that expense to the treasury year on year has been on the sharp incline since FY2020. $371B then and now $892B for FY2024. The question is what the strain really does but every bit of it is scheduled from bond auctions throughout the year every year. But more than just budget cuts in an attempt to deal with this, which would be GDP impacting, one of the largest reasons for all of this was tax changes as well. All should be up for discussion if we are willing to be honest about this, trajectories for deficits per year involve both sides of that accounting. Taxes in and spending out.
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OK, but federal tax revenue was higher in FY2024 than in FY2019, yet the annual federal “budget” deficit was larger.
 
ttwtt78640 said:
OK, but federal tax revenue was higher in FY2024 than in FY2019, yet the annual federal “budget” deficit was larger.
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Biden's inflation causing spending spree, which has been found, to be on any number of lunatic leftist social engineering programs, now appropriately defunded.
 
ttwtt78640 said:
OK, but federal tax revenue was higher in FY2024 than in FY2019, yet the annual federal “budget” deficit was larger.
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And so was spending over the same period, and even though deficits fluctuated between the timeframe that still means new debt issued.

Try to keep in mind that "servicing debt" is dealing with debt already previously issued, schedules of interest and schedules of bond maturity, but new fiscal conditions each year dictate how much new debt needs to be issued by auction.

Lastly, also keep in mind that for the majority of the Fiscal Years we are talking about the "budget passed" was more or less just continuing resolutions with some blind and flat percentage increase in spending across departments. A few exceptions but overall, not real budgets in terms the process this thread was about.

So all the treasury is doing is auction, speaking of the next one is next Thursday and Friday offering everything from 6-week bills to 7-year notes. Something like $402 billion in offerings over just that 2 day period. The schedules are usually fairly stable month to month in what is offered, the only change is the total amount of the offering depending on treasury needs.
 
Econ4every1 said:
I don't think they tell the whole story.
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I do not think PPP loans tells the whole story either.

The entire $955B program was ripe with fraud and abuse, did not really save near the jobs it was intended to protect, and ultimately added to the inflationary pressures of our already dramatic aggregate shifts in demand and supply. Twice. Once going into the covid lockdown period then again coming out, which ultimately those aggregate shifts are far more responsible for the inflation spike than any government spending along the way.

For the purposes of this thread the very large jump in government spending as a percentage of GDP from FY2019 to FY2021 was far more than the PPP loan program. Largely because tax revenues fell from both going into the covid lockdown years then coming back out. GDP year on year took a hit going in, then GDP jumped coming back out.

From an economic principles position only, the recovery played out as intended because without the government spending part the impact from the covid lockdown years would have taken longer to recover from. The demand pulling supply coming out of covid would have taken longer to play out and likely caused longer periods of unemployment. The Consumer Spending part of the GDP math would have taken longer to become realized.
 
samiam5211 said:
It actually works much better that most people give it credit for, because they have no idea what all it is doing for them.
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Most people have a very good idea of what it's doing for the wealthy. It's making them richer.
 
While Musk is in charge, the government doesn't work.
 
OrphanSlug said:
I do not think PPP loans tells the whole story either.
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Of course you are correct, but I didn't mean to suggest it did, PPP just being a recognizable part of a much larger program.
OrphanSlug said:
The entire $955B program was ripe with fraud and abuse
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Intuitively that sounds right, and I'm inclined to believe that you are right, that the most spent, almost $1 trillion dollars in the case of the Inflation Reduction Act (IRA) some waste fraud and abuse (WFA) occurred, but my spidey senses start tingling when people lean harder on intuition than evidence when making this claim. The problem is, spending money without WFA requires oversight and oversight cost money. The point here is that there's an equilibrium point where the costs of defending against WFA and the actual $ amount of WFA cross over and that is the point we should consider the zero point. In theory the zero point is ideally the zero point, but in reality, it is not.

The point is, whatever the realistic amount of WFA is considered acceptable is, it's likely in the millions of dollars and that can generate a LOT of anecdotal examples of government corruption, greed, laziness etc to post online and be used and misused by the dishonest to fuel dissension. I think WFA is a certainly a real thing, but I want to be careful going from a quantifiable amount measured against real variables to making the term a meme that is wielded like a club by people like Alex Jones or politicians who wield these memes with more self-interest and less public good in mind.

So, do we have any real numbers?
OrphanSlug said:
and ultimately added to the inflationary pressures of our already dramatic aggregate shifts in demand and supply.
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That depends on where the money ended up. The last quantifiable look at the question of inflation I saw was from the San Francisco Fed that determined that roughly 2/3rds of the inflation to that point (2022 IIRC) was driven by higher profit than by material or labor costs. So yes, WFA certainly contributes to inflation, but how much, and where? Did it drive up the price of Cap'in Crunch or real-estate and gold?
OrphanSlug said:
Once going into the covid lockdown period then again coming out, which ultimately those aggregate shifts are far more responsible for the inflation spike than any government spending along the way.
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Perhaps, but I think it important that people understand that a government with the capacity to spend can reduce inflation through targeted spending. If money used can be used to address long term supply constraints or labor shortages. When people believe spending=inflation because it's easy to understand and requires zero thought or, in the case of politicians, requiring compromise with the goal of achieving the greatest public good, the nation pays the price of willful ignorance and increasing division. And, just to be fair to the "other side", the problem works in both directions.
OrphanSlug said:
For the purposes of this thread the very large jump in government spending as a percentage of GDP from FY2019 to FY2021 was far more than the PPP loan program. Largely because tax revenues fell from both going into the covid lockdown years then coming back out. GDP year on year took a hit going in, then GDP jumped coming back out.
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Quite right, I didn't mean to suggest the PPP was responsible, rather I think it's something that most people are aware of and clearly was one of the programs that were abused. That said, the Novel Corona virus novel not just from a virus perspective, but an economic one in that, the last time we saw something like this, what, 100 years ago? The world was much different.
 
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I had to take this separate....
OrphanSlug said:
From an economic principles position only, the recovery played out as intended because without the government spending part the impact from the covid lockdown years would have taken longer to recover from. The demand pulling supply coming out of covid would have taken longer to play out and likely caused longer periods of unemployment. The Consumer Spending part of the GDP math would have taken longer to become realized.
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Should have started with this (or I should have read you answer before responding...lol), it sounds like we agree?

The costs of COVID were always going to be significant, the question was, how, as a nation were we going to pay? And, whatever we choose, will we overpay? I think the nation could have paid in several ways:

In lives, where if we did little to limit the spread by not enforcing lockdown, masks, social distancing and vaccines more people would have died. I've seen estimates between 3-15 million where the higher end includes tangential affects.

In unemployment, where we take preventive measures, but the government does very little to provide assistance and economic collapse and unemployment are the result. We spend a generation trying to put the nation and perhaps even the world back together.

Inflation. So we take steps to limit spread (saving lives) and provide economic support (preventing economic collapse), but spending during COVID is in some ways similar to spending during WWII, lots of people getting paid while simultaneously there is less output and inevitably inflation results. In the case of the US we overspent here on inflation which was exaugurated by the lack of competition in private markets.

The first two effect tend to disproportionally affect only the affected and almost certainly affect the poor and middle class the most. The last affect distributes the costs, where the government comes in and provides assistance to those that needed to most.

Back to the point, the WFA could be traced back to a lack of preparedness. In my job we'd do post incident analysis and quantify our mistakes which provide the framework for directing policy and resources on how to eliminate or reduce affects in the future. But, again, in my businesses we're always considering the costs of reducing problems, failures and other issues against the costs of the failure themselves.


What do you think?
 
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MamboDervish said:
Most people have a very good idea of what it's doing for the wealthy. It's making them richer.
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Only idiots think that billionaires are dancing on stage because of how great they are going to make things for the working man.

It's ok, you idiots are about to get exactly what you asked for.
 
aociswundumho said:
I believe the interest payments have already passed military spending, and politicians don't even talk about it.
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Congress critters enjoy re-election rates of over 90% by engaging in continuous annual federal deficit (stimulus?) spending. They now borrow/print far more annually than the cost of interest on the ever growing national debt. IMHO, this will continue until Austerity Day.
 
ttwtt78640 said:
Congress critters enjoy re-election rates of over 90% by engaging in continuous annual federal deficit (stimulus?) spending. They now borrow/print far more annually than the cost of interest on the ever growing national debt.
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Trump is a big spender too, even by DC standards.

ttwtt78640 said:
IMHO, this will continue until Austerity Day.
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It's not going to be one day of pain, it's going to be years of living with high inflation, like they do in third world shitholes.
 
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