Presidential address last night

[BridgeTroll]

I see... well that certainly makes sense.  He... and you... then must agree with the people "making statements" now.

What are you talking about? Please explain.

When Senator Obama voted against raising the debt ceiling he was making a statement... which you seem to approve of.  hence you must also approve of those who are making a statement now.  You could almost call Senator Obama a prototypical Tea Partier...

[FayeforCure]

I see... well that certainly makes sense.  He... and you... then must agree with the people "making statements" now.

What are you talking about? Please explain.

When Senator Obama voted against raising the debt ceiling he was making a statement... which you seem to approve of.  hence you must also approve of those who are making a statement now.  You could almost call Senator Obama a prototypical Tea Partier...

Did you not see my last sentence?

Still, I despise such game playing and voters prefer authenticity you would think.

[BridgeTroll]

Why did Senator Obama not vote to raise the debt cieling when he had a chance to?  Does that make him a radical or a hypocrite?

I think it makes him exactly what he has said it makes him "wrong about that decision".

Perhaps... he very clearly felt pretty strongly about it.  I mean... he makes some pretty specific "Tea Party type" claims here.  I think I heard Rand Paul say the exact same thing the other day...

“The fact that we are here today to debate  raising America ’s debt limit is a sign of leadership failure. It is a sign that  the US Government can not pay its own bills. It is a sign that we now depend on  ongoing financial assistance from foreign countries to finance our Government’s  reckless fiscal policies. Increasing America ’s debt weakens us domestically and  internationally. Leadership means that ‘the buck stops here.' Instead,  Washington is shifting the burden of bad choices today onto the backs of our  children and grandchildren. America has a debt problem and a failure of  leadership. Americans deserve better.”   

-- Senator  Barack H. Obama, March 2006

[Dashing Dan]

The problem is that we vote for people who tell us what we want to hear instead of what we need to know.

Does anybody remember who Paul Tsongas was?  If you don't then I've made my point.

[BridgeTroll]

Im not sure if Im following your reasoning here, Bridge Troll.

Are you saying that causing the country intolerable harm as a result of group identity and ideology, and a lone senator voting against a bill to make a statement are the same thing?

And why in hell are you supporting deficit reduction now?

You didnt give two flying figs about it when Senator Obama voted against a three trillion dollar drain on our economy back when you were implying that anyone who disagreed with your pals was anti american or just didnt understand world politics?  Remember?  You know.. 911 and all?  That whole international terrorist thing?  In fact, you werent content with taking money out of all our pockets, didnt you also tell us that Al Quaeda was so powerful that we needed to sacrifice our constitutional liberties to be protected against big bad Osama?

That was back when you were calling Senator Obama an unelectable liberal I believe, and Charleston Dave and NotNow were 'weeping for this country' because people didnt see the connection between your three trillion dollar wars and the events of 911.

Of course Senator Obama became President Obama and he had Osama Bin Laden killed with a very small operation that acted independently of the two wars that you and your pals started.

Oh yeah, it was also in a different country----Pakistan.

Im trying to get a 'takeaway' from all this.

He was not the lone senator... and here is the punch line... if it wasnt so sad it would be hilarious...



U.S. Senate Roll Call Votes 109th Congress â€" 2nd Session

As compiled through Senate LIS by the Senate Bill Clerk under the direction of the Secretary of the Senate
Question: On the Joint Resolution (H.J.Res.47 )
Vote Number:54 Vote Date:March 16, 2006, 11:17 AM

[JeffreyS]

No doubt both parties have played politics with this.  I do not believe however these past votes have had anyone seriously considering default.  I think many of the Tea Party representatives consider default an acceptable outcome.  At the very least weather you think that is acceptable it is a radical departure from what we have believed in the past about paying our bills.  We decided to spend that money we have to pay the piper.

Balance the budget by closing tax loopholes and bringing the troops home.

[Sigma]

It would hurt you to post unbiased information wouldn't it Stephen.  Heck, why not just slap a vid of Bill Maher up there while you're drinking the kool-aid?

I doubt Mr. Hartman is forgetting the many other factors in his "analysis" that contribute to the few examples he gives, he's just another leftist disregarding those issues while demonizing Bush.  Most people understand that fault does not lie in the hands of a few in one party, but many in both parties. So will the solution.

[Sigma]

“The fact that we are here today to debate  raising America ’s debt limit is a sign of leadership failure. It is a sign that  the US Government can not pay its own bills. It is a sign that we now depend on  ongoing financial assistance from foreign countries to finance our Government’s  reckless fiscal policies. Increasing America ’s debt weakens us domestically and  internationally. Leadership means that ‘the buck stops here.' Instead,  Washington is shifting the burden of bad choices today onto the backs of our  children and grandchildren. America has a debt problem and a failure of  leadership. Americans deserve better.”   

-- Senator  Barack H. Obama, March 2006

[Sigma]

Before you get all "BUT HE'S JUST BLAMING BUSH!"

There are plenty of issues with this dubious NYT's chart, but let’s start with the notion that the “Bush tax cuts” cost the static-analysis price listed here.  Absent those tax cuts, we would not have had the recovery from 2003-7, which generated a rather hefty increase in federal revenues.

The actual revenue listed in this chart was what static analysis of the recovery would have brought into federal coffers, which is one of the main problems with static analysis.  It also conflates tax cuts with federal spending, which only makes sense if one starts from the premise that the people owe their government all of their income less any that the government arbitrarily allows them to keep.

The chart then tries to claim that Obama’s spending increases over the next 8 years (projected) will amount to just $1.44 trillion â€" less than the annual deficit these days. It doesn’t mention that the last Republican annual budget passed in Congress (FY2007) only had a $160 billion deficit, which tends to interfere with the bias that the NYTs wants to portray here.

The war costs used by the NYTs appears to contain mainly costs that would have been incurred by the Department of Defense whether or not we went to war in Afghanistan and Iraq. 

It also fails fails to include the costs of both wars under Obama for the first two years.  Similarly, the chart correctly notes the first tranche of TARP under Bush, but skips the second tranche under Obama.  Also, the category of “2008 Stimulus and Other Changes” seems pretty suspect, since the 2008 stimulus was scored at $150 billion, or less than one-fifth of the $773 billion the NYTs claims.

[Sigma]

http://youtu.be/YOtOqDyH_x8

http://reason.com/archives/2011/07/29/the-facts-about-spending-cuts

The Facts About Spending Cuts, the Debt, and the GDP
Separating economic myths from economic truths

Veronique de Rugy | July 29, 2011

Editor's Note: Reason columnist and Mercatus Center economist Veronique de Rugy appears weekly on Bloomberg TV to separate economic fact from economic myth.

Raising the debt limit might put off a downgrade disaster in August, but that still isn’t enoughâ€"as Standard & Poor’s recent warning made clear. Perhaps the most important shot not heard around the world was S&P’s other admonition: Namely, that the U.S. bond rating will be downgraded in three months, if not sooner, unless we do something about government spending. Beyond raising the debt limit, S&P laid out clear criteria for avoiding a downgrade: 1) reduce the debt by about $4 trillion; 2) agree to a credible plan within three months; and 3) guarantee that this newfound fiscal discipline will actually stick.

If S&P isn’t bluffing, then lawmakers should get serious about reducing the debt-to-GDP ratio, and they should do it quickly. But how do we achieve such a task?

Myth 1: You cannot reduce the deficit to an appropriate level without also raising taxes.

Fact 1: Spending cuts are the most effective way to reduce the debt-to-GDP ratio.


We are not the first nation to struggle with a dangerous debt-to-GDP ratio, and thankfully, the academic world has already produced great insights into what can be done to reduce this ratio without hurting the economy.

Take the work of Harvard’s Alberto Alesina and Silvia Ardagna. They examined 107 efforts to reduce the debt in 21 OECD nations between 1970â€"2007. Their findings suggest that tax cuts are more expansionary than spending increases in the cases of a fiscal stimulus. Also, they found that spending cuts are a more effective way to reduce the debt-to-GDP ratio:

    For fiscal adjustments we show that spending cuts are much more effective than tax increases in stabilizing the debt and avoiding economic downturns. In fact, we uncover several episodes in which spending cuts adopted to reduce deficits have been associated with economic expansions rather than recessions. We also investigate which components of taxes and spending affect the economy more in these large episodes and we try to uncover channels running through private consumption and/or investment.

As you can see in this chart, in cases of successful fiscal adjustmentsâ€"defined by the cumulative reduction in debt-to-GDP ratio three years after fiscal adjustment greater than 4.5 percentage pointsâ€"spending as a share of GDP fell by about 2 percentage points while revenue also fell by half a percentage point (left bars). On the other hand, unsuccessful fiscal adjustment packagesâ€"cumulative increases in debt-to-GDP ratioâ€"were made of smaller spending reductions (only 0.8 percentage-point reduction) and large revenue increases (right bars).



The IMF found similar results and reports that fiscal adjustment on the requisite scale of what we need today is actually not unprecedented:

    During the past three decades, there were 14 episodes in advanced economies and 26 in emerging economies when individual countries adjusted their structural primary balance by more than 7 percentage points of GDP. Several economies were also able to sustain large primary surpluses for five or more years afterwards, though the record is more mixed in this regard.

For those who are not ideologically inclined toward austerity measures, it is key to remember that this research is consistent with the work of former Obama Council of Economic Advisers chairman Christina Romer and her economist husband, David Romer, which shows that increasing taxes by 1 percent of GDP for deficit-reduction purposes leads to a 3 percent reduction in GDP. In fact, Alesina and Ardagna discuss the work of Romer and Romer  starting on page five of their paper.

Myth 2: Lawmakers facing economic catastrophe forget about politics and adopt measures that address genuine fiscal issues.

Fact 2: Politicians rarely put politics aside. Historically, four out of five fiscal adjustments were primarily comprised of tax increasesâ€"and were unsuccessful.




Following and building on Alesina and Ardagna’s work, a new paper by Andrew Biggs, Kevin Hassett, and Matthew Jensen of the American Enterprise Institute studies fiscal adjustments covering over 100 instances in which countries took steps to address their budget gaps. Their results are consistent with those of the Harvard economists; expenditure cuts outweigh revenue increases in successful consolidations. Moreover, their work shows that even in a time of crisis (or especially in a time of crisis), lawmakers tend to adopt policies for the sake of politics. Countries in fiscal trouble generally got there through years of catering to interest groups and pro-spending constituencies (on both sides of the political aisle), and their fiscal adjustments tend to make too many of the same mistakes.

As a result, failed fiscal consolidations are the rule rather than the exception. Indeed, 80 percent of the fiscal adjustments Biggs, Hassett, and Jensen studied were failures. The United States cannot afford to follow this pattern.

Myth 3: We have had higher debt-to-GDP ratios before so we shouldn’t worry now.

Fact 3: We should worry. The debt-to-GDP ratio actually underestimates the size of the government’s real liabilities.



As government debt and deficits have swollen, we often look to the past for guidance. From that point of view, history appears to be reassuring, since several advanced countries have had debt-to-GDP ratios much higher than the one we have now. The United States after World War II had a public debt/GDP ratio of roughly 110 percent, while Britain’s was 250 percent. In fact, the UK’s national debt has averaged almost 100 percent of GDP since its creation in 1693. France's public debt was about 280 percent of GDP at the end of World War II. And yet neither of these countries defaulted. So why should we worry?

Two main reasons: First, while our debt is big now, it’s only going to get bigger in the coming years. This year, the debt held by the public is $9.7 trillion, which is roughly 69 percent of GDP. According to the Congressional Budget Office, it will reach 200 percent in 2037--if the economy doesn’t collapse first (which it likely will). These projections aren’t surprising considering that the president’s budget doubles the debt held by the public from $9 trillion today to $18 trillion in 2021.

Second, the debt-to-GDP ratio actually underestimates the scale of our debt problem. Here is why:

1. Intragovernmental debt. This $4.6 trillion of debt is money that the federal government owes to its various trust funds. In other words, it’s a liability to the government but an asset to the trust funds, so in accounting term it’s zeroed out. However, over time the programs will redeem the IOUs as they need the money to fund benefits. As that happens, the intragovernmental debt decreases but debt held by the public increases. Eventually, this $4.6 trillion will be converted into public debt.

2. Unaccounted liabilities. There exists a broad range of liabilities that are debt, yet are not captured in the debt-to-GDP ratio. To take one example, the Financial Statement of the United States values the government’s civil-service pension liabilities (that is, the contractual claims on government accumulated to date by civil servants) at $5.7 trillion. That amount is not captured by the debt-to-GDP ratio. A share of this $5.7 trillion will be paid for by IOUs included in the intragovernmental debt, which we know will be converted into public debt. In addition, the unfunded share of this liability will have to be paid for with more debt, which isn’t accounted for in the debt/GDP metric. The Financial Statement of the United States shows another $1.5 trillion of such liabilities, including payments due to government-sponsored enterprises.

3. Unfunded liabilities. There is a balance of $39 trillion in unfunded liabilities over 75 years for programs such as Social Security and Medicare.

While we can’t add all these numbers up because it would be the equivalent of comparing oranges to apples (some of these numbers represent the net present value of beneficiaries’ future claims on the government), considering them in context still helps to illustrate why the debt-to-GDP ratio underestimates how much present and future debt has been accumulated over the years. Hopefully, this also helps illustrate why the current debt-ceiling debate shouldn’t just focus on Treasury’s ability to pay our bills today, but must focus on our overall debt problem.

Contributing Editor Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

[buckethead]

http://www.businessinsider.com/a-few-more-charts-that-should-accompany-every-discussion-about-the-debt-2011-7

A relevant chart along with an insightful essay offered by a writer employed by a left leaning publication via a site which is also leftward leaning .

A daily read for me thanks to the advice of a mutual friend (who says it's the aliens running the show... who am I to disagree?).

[buckethead]

I found that quite interesting myself. Your  quick response indicates that you did not read the article.

There's a whole lotta "Hide the military budget from any cuts" going on all around the aisles.

[Sigma]

interesting how business insider spread the military costs across the entire pie chart, dont you think?

interesting how social security is included as well.  I thought ss paid its own way?

[Sigma]

also dumb and just a recitation of political opinions.  no facts.

No wonder you have these quaint opinions.

you got facts.  and all you have is petulant remarks. 

[BridgeTroll]