The Federal deficit continues to shrink rapidly.

[MTAtech]

Yes, but that doesn't mean the money is out of the economy as you posted.
Taxes are a transfer of money from the private sector to the public sector.

And what does the government do with that money, burn it? No, they spend it on items purchased from the private sector; government employees -- who then spend it on items purchased from the private sector; or through transfer payments, like Social Security.

 

[Lord of Planar]

The US budget deficit continues to shrink rapidly | AEIdeas

One of the most underappreciated econ stories right now is the fast-falling US budget deficit — thanks to higher taxes — which was over $1 trillion from 2009 through 2012. In February, the CBO was looking for a 2014 deficit of $514 billion. In April, CBO cut its forecast to $492 billion. But that number is still too high, according to Deutsche Bank. The bank is looking for a 2014 federal budget gap of $465 billion

A deficit is a deficit.

let us know when we start actually paying off the debt.

 

[MTAtech]

Never a worry... deficits will begin rising again soon enough - and of course we are only a "crisis" away from huge spikes.

Interest rates are at near 0%, and that is really the only rate we can afford to pay... once more baby boomers hit the dole, Obamacare kicks in, we fire up another war or two, the next housing bubble bursts, etc... the mess will come to a head.

Eventually, there won't be any buyers for U.S. Treasuries. Once that happens, the only "buyer" will be the FedRes itself; and, out of options, the only thing they'll be able to do at that point will be to print with no buyers, and not backing. It WILL be ugly.

Can't tell you how many decades I have been hearing that song.

Howard Ruff made those same predictions in 1979 and we're still waiting for them to come true. Not only didn't they, we prospered.

The current U.S. debt is quite sustainable and the U.S. has no trouble selling its bonds at record low interest rates.

 

[Slyhunter]

I'll explain to my landlord that I'm now only spending 150% of what I make instead of 200% of what I make.

 

[MTAtech]

A deficit is a deficit.

let us know when we start actually paying off the debt.

Why do we have to pay off the debt? The WWII debt was far larger then, as a comparison to the economy and we never paid it off. We just grew the economy and that debt of 120% of GDP (~$200 billion) became irrelevant.

 

[wist43]

Can't tell you how many decades I have been hearing that song.

Howard Ruff made those same predictions in 1979 and we're still waiting for them to come true. Not only didn't they, we prospered.

The current U.S. debt is quite sustainable and the U.S. has no trouble selling its bonds at record low interest rates.

We're at over 100% debt/GDP, the ratings agencies have for the first time in history lowered the U.S. credit rating, or lowered their outlook - only after pressure from the Obama administration did they reset them.

No, the math is pretty straight forward... no matter how you slice it, deficits are going to continue to pile on, and only get worse as more boomers retire, and Obamacare kicks in - and given that America has been steadily at war for the past 100 years, it is foolish to think we won't be firing up another major donnybrook somewhere around the globe.

From the standpoint of the Establishment, the debt is intentional and perfectly logical - just as it is perfectly logical to collapse the system. They collapsed it in 1929, and used the ensuing chaos to buy up companies for pennies on the dollar, and to foist upon the American people layer upon layer of bureacracy that was designed to enslave them. With the population largely sedated and dumb, it is time to pull the trigger on collapsing the old system entirely and replace it with a top-down authoritarian system in which they cannot be challenged at all.

As the old saying goes... "like a sheep before its sheerer".

 

[Greenbeard]

WOW! Revenue went up so much that we will only add about half a trillion to the national debt this year. That rosy forecast leaves out PPACA, the latest massive entitlement program, which kicks in (partially) starting in 2015.

Of course it takes into the account the ACA.

For instance, Medicare spending is now shrinking (!) on a per beneficiary basis:

By our estimate, removing these cuts and the Part D spending increase leaves an underlying year-over-year growth rate through April 2014 of about 3.1 percent, still extremely low by historical contexts. That is still lower than the 3.9 percent nominal economic growth that CBO projects for FY 2014 and the 3.8 percent projected growth in Medicare beneficiaries. Therefore, on a per-beneficiary basis, the underlying trend growth of Medicare is below zero so far this fiscal year (historically, Medicare spending grows significantly faster than the economy).

Meanwhile, lower-than-expected private sector premiums have driven down the cost of the ACA and reduced the deficit, even as the law continues to raise new revenues.

The projected cumulative deficit from 2015 through 2024 is $286 billion less than it was in February: Though projected revenues are slightly below the amounts that were previously reported, projected outlays have dropped by more, largely because of lower subsidies for health insurance under the Affordable Care Act (ACA).

The ACA was supposed to reduce the deficit by slowing Medicare spending growth and raising more revenues than the new outlays it generated. Medicare cost growth is now well below what was anticipated and new spending is even further below new revenues than was expected. So the ACA is a big factor in shrinking the deficit.

 

[vasuderatorrent]

If that were the casw we would be growing our economy by leaps and bounds instead of suffering through endless stagnantion.

It's a balancing act. If you stimulate the economy too much, you will have massive inflation which is way worse than a bad economy. You have to walk the tight rope and keep it exactly perfect. Not too much growth. Not too much shrinkage. It has to be just right. It's not that easy to do.

 

[vasuderatorrent]

...That would only be true if that extra $10, 000 was stuffed in a mattrress.

Typically, it's not.

It could be in the bank but in order for it to circulate there has to be someone willing to borrow it. With your personal funds, that is probably what happens. I understand. I was just telling you the theory behind it.

 

[vasuderatorrent]

Some of the states opted to let their poor buy into medicaid - a greater expense then they had before.

I don't follow your logic. The government was going to pay for the medical expenses of these people anyways. Enrolling them in Medicaid just keeps them from getting a bill in the mail. It's really the same thing.

You just put the government expense under a different name. Besides, almost all red states opted out of the Medicaid expansion option.

 

[vasuderatorrent]

"gut" the military. Republicans had nothing to do with it.

A great way to solve our budget problems. I don't know why Republicans are so gung ho to protect wasteful spending when they are against wasteful spending.

It was a good decision to "gut" the military and increase taxes. It was a great thing to do. I will just give the credit to the magic mushroom that grows on the east side of the mountain. Either way. I'm just glad it happened.

 

[vasuderatorrent]

I'll explain to my landlord that I'm now only spending 150% of what I make instead of 200% of what I make.

Your landlord doesn't care as long as you pay your rent.

 

[Slyhunter]

Your landlord doesn't care as long as you pay your rent.

That's the point, I'm not.

 

[vasuderatorrent]

That's the point, I'm not.

The federal government is paying it's rent. The federal government has never defaulted in 237 years.

 

[Slyhunter]

The federal government is paying it's rent. The federal government has never defaulted in 237 years.

I need to get ahold of their creditor cuz mine won't loan me anymore money

Can you believe my creditors actually expects me to pay them back. I definitely got the wrong creditors.

 

[vasuderatorrent]

I need to get ahold of their creditor cuz mine won't loan me anymore money

I take it that you don't have your own currency.

 

[vasuderatorrent]

Can you believe my creditors actually expects me to pay them back. I definitely got the wrong creditors.

The federal government does pay their creditors on time every time. Some people (myself included) thinks that we need to default so that people will stop lending us money. That will cure the spending problem really fast.

 

[Lord of Planar]

Why do we have to pay off the debt? The WWII debt was far larger then, as a comparison to the economy and we never paid it off. We just grew the economy and that debt of 120% of GDP (~$200 billion) became irrelevant.

Actually, the debt was paid down for two consecutive years after WWII. Then we had Korea, Social engineering, Vietnam, etc.

 

[CalGun]

There is a substantial difference. Before the services were provided by government run facilities. Now services will be done thru more expensive private facilities and if there is any shortage we all still pay that too.

I don't follow your logic. The government was going to pay for the medical expenses of these people anyways. Enrolling them in Medicaid just keeps them from getting a bill in the mail. It's really the same thing.

You just put the government expense under a different name. Besides, almost all red states opted out of the Medicaid expansion option.

 

[vasuderatorrent]

There is a substantial difference. Before the services were provided by government run facilities. Now services will be done thru more expensive private facilities and if there is any shortage we all still pay that too.

You are right. This will probably increase the deficit quite a bit. I didn't think of it that way.

 

[JohnfrmClevelan]

Huh ?

Thats nonsense.

Recessions and near finacial collapses have distinct causes that have nothing to do with surplus's or debt.

You're equating Govt spending to positive economic growth.

If that were the casw we would be growing our economy by leaps and bounds instead of suffering through endless stagnantion.

Yet this is our history - pull dollars out of the economy by running surpluses, and recessions follow. Why should that be nonsense? Those surpluses come from out pockets, and much of that money would have been spent. Surpluses lower aggregate demand. That much is clear.

Government spending (on goods and services, not bailing out banks) adds directly to aggregate demand. You get growth if aggregate demand grows and your economy grows to meet it - govt. spending is only part of that equation. Dollars leave the active economy through savings/hoarding - that includes our trade deficit with China, profits that corporations are sitting on and not reinvesting or distributing, and regular old dollar-saving by individuals. You need deficit spending to replace those dollars, or else you risk contraction.

 

[JohnfrmClevelan]

Never a worry... deficits will begin rising again soon enough - and of course we are only a "crisis" away from huge spikes.

Interest rates are at near 0%, and that is really the only rate we can afford to pay... once more baby boomers hit the dole, Obamacare kicks in, we fire up another war or two, the next housing bubble bursts, etc... the mess will come to a head.

Why do you think the interest rates the U.S. pays on its bonds are so low? Since when does the debtor get to name the interest rate they pay?

Eventually, there won't be any buyers for U.S. Treasuries. Once that happens, the only "buyer" will be the FedRes itself; and, out of options, the only thing they'll be able to do at that point will be to print with no buyers, and not backing. It WILL be ugly.

Why do you consider bonds bought by outsiders to be "backing" for dollars, but bonds bought by the Fed to be somehow different?

 

[votemout]

The US budget deficit continues to shrink rapidly | AEIdeas

One of the most underappreciated econ stories right now is the fast-falling US budget deficit — thanks to higher taxes — which was over $1 trillion from 2009 through 2012. In February, the CBO was looking for a 2014 deficit of $514 billion. In April, CBO cut its forecast to $492 billion. But that number is still too high, according to Deutsche Bank. The bank is looking for a 2014 federal budget gap of $465 billion

ahahahhahahahahahahahah

U.S. National Debt Clock : Real Time


Great but ummmm check out our unfunded liabilities..... its over 200 trillion higher then the entire global GDP.

those unfunded liabilities are mostly yup yup you guessed social programs enjoys

 

[JohnfrmClevelan]

It's a balancing act. If you stimulate the economy too much, you will have massive inflation which is way worse than a bad economy. You have to walk the tight rope and keep it exactly perfect. Not too much growth. Not too much shrinkage. It has to be just right. It's not that easy to do.

In order to get any serious inflation, you would have to increase demand so much that our economy would not be able to meet that demand. I think we are a long, long way from that point. Prices don't go up just because there is more economic activity.

 

[JohnfrmClevelan]

The federal government does pay their creditors on time every time. Some people (myself included) thinks that we need to default so that people will stop lending us money. That will cure the spending problem really fast.

Aaaaargh! Why did you say that? You have been on the right track for so many posts before this one - why do you think defaulting would be a good thing?