One of the biggest things that tends to get ignored is that government spending IS the economy (even spent on "defense").
GDP = Consumption + Investment + Government Spending + (Exports - Imports)
If you slash government spending, the immediate effect is that GDP goes down and unemployment goes up (because that money doesn't go into a hole in the ground, it goes to pay for people to work in the public sector or military). Then you get second order effects - you're no longer collecting taxes from those newly unemployed people and a chunk of them are picking up social security. So your costs have gone back up and your revenue down.
Of course the alternative is that you continue spending money that you don't have. Which is also a Bad Thing(tm). Unless consumer confidence and investment picks up in a hurry, whatever you do you're kinda screwed - either you cut spending, which slows growth and drives up unemployment (which your opposition party will have a field day with) or you watch the deficit pile up (which also your opposition party will have a field day with, at least recently).
So wouldn't an alternative be to instead spend that money on other things to benefit the country like infrastructure and mass transit improvement? Things that are useful to the population, create / maintain jobs, and in many cases are necessary for people to live and work in certain areas?
I assume that taking bridges out of commission due to structural issues is probably bad for commuting and hauling cargo over them, thus causing detours making those trips take longer and cost more.
... which if I'm not mistaken is essentially what at least part of the Stimulus package was supposed to do, which was then shit upon federally by Republicans and on a state level (err, mostly by Republicans?) with people refusing the money/projects?
Am I incorrect in this assessment?
Forar on
First they came for the Muslims, and we said NOT TODAY, MOTHERFUCKER!
So wouldn't an alternative be to instead spend that money on other things to benefit the country like infrastructure and mass transit improvement? Things that are useful to the population, create / maintain jobs, and in many cases are necessary for people to live and work in certain areas?
I assume that taking bridges out of commission due to structural issues is probably bad for commuting and hauling cargo over them, thus causing detours making those trips take longer and cost more.
... which if I'm not mistaken is essentially what at least part of the Stimulus package was supposed to do, which was then shit upon federally by Republicans and on a state level (err, mostly by Republicans?) with people refusing the money/projects?
Am I incorrect in this assessment?
Yes. It's no-brainer economics. Buy into our (honestly failing) infrastructure, raise taxes on the top 10% and close corporate loopholes and you no longer have a problem.
Good luck with our corrupt and incompetent government though.
So wouldn't an alternative be to instead spend that money on other things to benefit the country like infrastructure and mass transit improvement? Things that are useful to the population, create / maintain jobs, and in many cases are necessary for people to live and work in certain areas?
This is starting to veer off towards the [Economy] thread, rather than being specific to the Debt Ceiling, but it's hard to quantify which "things are (most) useful" that government spending should be spent on. Virtually all spending creates/maintains jobs - either directly (through employing someone in the public sector) or indirectly (purchasing goods and services from the private sector, which requires people to be able to supply those goods and services).
Right-leaning commentators tend to start eyeing "cultural" programs to slash, but these improve the quality and reputation of education in general, which allows the country to attract/generate a higher standard of employees in the workforce. Left-leaning commentators often ask that "defense" be brought on the table, but defense employs a huge number of contractors who supply the uniforms, vehicles and firearms. Many of the plants for these are also used to produce items for the general population and the economies of scale allow clothing manufacturers, for instance, to remain competitive with overseas suppliers. That's not including that recruitment in the armed forces recruits tends to have higher proportions of low socio-economic families, improving their income and future job prospects, making it a social program by default.
There are rarely any non-useful programs to cut once started and they tend to be heavily politicized, which always makes it more difficult to dial it back in times of recession.
Unless you're a wolf. In which case you're on your own.
ETA - "stimulus" spending has a less predictable effect because the vast majority of economic activity is based on expectations - banks loan money with the expectation there is going to be a continuous flow of income, businesses invest in new production with the expectation that demand will continue to grow etc. Since stimulus spending tends to be short-term, a lot of that long-term activity doesn't occur because there's a high level of uncertainty about what's going to occur a couple of years down the track or how fast the stimulus money is going to be coming through the economy. This is why the majority of economists tend to look at monetary policy, as crude a tool as interest rates are, before they look at fiscal policy for kick-starting slowed economies.
Right-leaning commentators tend to start eyeing "cultural" programs to slash, but these improve the quality and reputation of education in general, which allows the country to attract/generate a higher standard of employees in the workforce. Left-leaning commentators often ask that "defense" be brought on the table, but defense employs a huge number of contractors who supply the uniforms, vehicles and firearms. Many of the plants for these are also used to produce items for the general population and the economies of scale allow clothing manufacturers, for instance, to remain competitive with overseas suppliers. That's not including that recruitment in the armed forces recruits tends to have higher proportions of low socio-economic families, improving their income and future job prospects, making it a social program by default.
The problem with defense spending is that the procurement process is incredibly fucked up. The politics involved require spreading plants out over various Congressional districts to make sure you have lots of Congressmen with an interest in keeping procurement unchanged.
There's also the problem with the US military's philosophy on weapons systems. That is, never pick the cheaper system over the more expensive one. And certainly never buy an existing system off the shelf, but rather develop every system from the ground up.
And let's not mention how working in DoD procurements is a pipeline to a fat job with a defense contractor once you leave the military. Procurement officers go from the Pentagon across the street to the big defense contractors in Crystal City and double or triple their salaries. The conflict of interest that creates in the procurement process is pretty clear.
Modern Man on
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Yeah the biggest problem with the military is we really need to reform the way our government deals with contractors. make them accountable for projects that go over budgets and never deliver. force them to lower costs
Heh... true. There's rarely anything at the state or national level that doesn't also incur some diseconomies of scale - bureaucracy tends to do that.
I'm just pointing out that "if we just cut out those danged wars" also has repercussions even if you remove national security from the equation. Granted, I'd be more than happy to see Halliburton and Blackwater get a kick in the nuts (in the case of Blackwater *another* kick in the nuts), but there's still plenty of good reasons why the scalpel should be used judiciously.
That is what the SS fund is. The government created a legal obligation to pay itself a bunch of money in the future. So yeah, legally the money exists. Yay, whatever. But the government still has to pay that money to itself.
I'm glad we're in agreement on the bolded, although "itself" is kind of a curious definition. The government owes money to retirees and uses the social security fund to pay that, is that money owed to retirees or to the government? If the government creates a new account, say "military funding" account, and puts all the money due to outside contractors in there, is money owed to Xe now "money it owes to itself?"
Where is going to get the money to pay this back? Well, with tax revenue. From... somewhere. We don't fucking know.
How is this different than any other debt currently carried by the government?
I haven't seen you making any posts about how nobody should buy bonds from the government because "THOSE ARE JUST IOU's!"
So why is one bond, one IOU, one debt, valid and one imaginary?
Honestly, I am pretty down on bonds in general, specifically because I live in California, where we have bond-issued our way into fiscal insolvency. What we like to do here in Cali is say "We want a high-speed rail system!" and then issue $10B in bonds and then... well, we just kind of forget about the "we need to pay this back someday" part, and now something like 15% of our state expenditures are to pay back money we effectively borrowed decades ago.
I assume that you have limits to how wild you are about bonds, right? Like, if the fed issued $10T in bonds tomorrow so they could, I dunno, build infrastructure of some sort, you would agree this is stupid, yes? If so, why? Because they're bonds, it's how money works, all money is imaginary, therefore let's make all the bonds we want, right?
The money we owe ourselves with regards to SS is money that we have to pay, at the end of the day. We did not fund SS in the sense that we said, "Okay, we will have this specific money coming in, and that will be enough to cover all these expenditures." It's credit card debt. The government went out and bought a bad-ass LED TV and now it has to make payments on it. And it needs to hope that its revenue is enough to do so, or else it needs to get another credit card and transfer the balance. But someday, the government will have to stop juggling its credit cards and actually pay on this shit, or else the interest is going to explode and the nation will turn into California.
ElJeffe on
I submitted an entry to Lego Ideas, and if 10,000 people support me, it'll be turned into an actual Lego set!If you'd like to see and support my submission, follow this link.
Let me mention that most companies would die for the federal government's administrative overhead (~5%-7% for those of you that moan about the inefficiency of the federal government). It was very surprising to find that administration costs so little of the federal budget, but it was a welcome surprise.
Also, while I agree procurement is a bit out of control, DoD costs are highly distorted, because the government massively over-inflates the cost of all weapons programs, so they can launder and hide money used for clandestine activities all over the world, for *mostly* legitimate national security reasons. So to me it's hard to argue that procurement alone produces ridiculous prices for hammers and toilet seats, because it really doesn't. I will guarantee that each multi-billion dollar F-22 doesn't cost anywhere near the advertised price tag, but that's how the CIA and others get the money to do counter-terrorism.
I was just looking at some government data and it also showed that the main cause of increasing deficits this year and next is actually a massive reduction in Social Security tax collection. SSI collections are projected to drop by hundreds of billions of dollars, both this year and next and that is easily the biggest change in government spending/revenues for this and next year. Pretty much all other tax collections and expenditures are sitting flat, or nearly so, compared to the previous 5 years, but the SSI tax collections drop is going to take our deficit, for 2011 and 2012, into the trillions both years.
That little problem is not only glossed over by all the media coverage I've seen (as in there is no coverage of that fact), but also nothing proposed by either party would fix the situation by directly addressing the decrease in revenue from SSI tax, just paper over that shortfall by making absurdly huge cuts elsewhere or creating a corresponding rise in other tax collection categories. Personally I'd like to see half of the lost revenue made up by ending all corporate welfare forever, and other half should be cut from defense spending.
Also, I was surprised to find that education, defense, and health care spending are almost all the same percentage of the federal budget - 18% for health care, 16% defense, and 14% on education. Not what I expected based on the info I've been hearing in media coverage.
This would be wonderful, and it's totally works with both sides.
Conservatives would support it because it's a gross interference with the free market and nothing more then wasteful spending.
Liberals would support it because it just props up fatcat corporations.
The flip side is that conservatives would oppose it because they're in the pockets of corporations and liberals would oppose it because they're in the other pockets of those corporations.
Modern Man on
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adventfallsWhy would you wish to know?Registered Userregular
Republicans would be against ending it since they get a fuckton of money from corporations. Some Dems too, for the same reasons.
EDIT: NINJA'D!
Isn't it that the Dems are owned by Big Banking and Big Content (RIAA/MPAA/etc) and the Republicans are owned by Big Oil (BP/Exxon/etc) and Big Box Stores (Walmart) or am I leaving out a few gross generalizations?
Fortunately there is not a combined shotguns, canned food and survival equipment lobby that owns both parties or we'd surely be screwed when the debt ceiling came up for a vote. Because about every other company on earth has it in its best interests for any kind of global economic anarchy NOT happening.
If the best you can come up with against someone who's patently ignorant is to yell back at him, "Yeah? Well there's BOOKS, and they say you're WRONG!"
Then honestly you're not coming out of this looking great either.
Don't forget farm subsidies, too. THe minute anyone suggests ending those, ADM and Monsanto pull the strings and a dozen rural politicians start squawking about 'oh no! the poor family farms!'
(family farms making a small portion of the recipients of farm subsidies in the US)
Don't forget farm subsidies, too. THe minute anyone suggests ending those, ADM and Monsanto pull the strings and a dozen rural politicians start squawking about 'oh no! the poor family farms!'
(family farms making a small portion of the recipients of farm subsidies in the US)
Family farmers support this rent seeking as well so lets not ignore their role in this and act like this is all big corporations doing the lobbying. The various farmers' unions and associated groups will scream bloody murder if you suggest agricultural subsidy rollbacks.
Don't forget farm subsidies, too. THe minute anyone suggests ending those, ADM and Monsanto pull the strings and a dozen rural politicians start squawking about 'oh no! the poor family farms!'
(family farms making a small portion of the recipients of farm subsidies in the US)
Family farmers support this rent seeking as well so lets not ignore their role in this and act like this is all big corporations doing the lobbying. The various farmers' unions and associated groups will scream bloody murder if you suggest agricultural subsidy rollbacks.
Do you think those screams amount to anything next to Monsanto's complaints?
Republicans would be against ending it since they get a fuckton of money from corporations. Some Dems too, for the same reasons.
EDIT: NINJA'D!
Isn't it that the Dems are owned by Big Banking and Big Content (RIAA/MPAA/etc) and the Republicans are owned by Big Oil (BP/Exxon/etc) and Big Box Stores (Walmart) or am I leaving out a few gross generalizations?
Fortunately there is not a combined shotguns, canned food and survival equipment lobby that owns both parties or we'd surely be screwed when the debt ceiling came up for a vote. Because about every other company on earth has it in its best interests for any kind of global economic anarchy NOT happening.
Both parties are owned by banks, and then there are various other sub-owners, which you identify correctly, while leaving out a few. Agriculture, notably.
enlightenedbum on
Self-righteousness is incompatible with coalition building.
Don't forget farm subsidies, too. THe minute anyone suggests ending those, ADM and Monsanto pull the strings and a dozen rural politicians start squawking about 'oh no! the poor family farms!'
(family farms making a small portion of the recipients of farm subsidies in the US)
Family farmers support this rent seeking as well so lets not ignore their role in this and act like this is all big corporations doing the lobbying. The various farmers' unions and associated groups will scream bloody murder if you suggest agricultural subsidy rollbacks.
Don't forget farm subsidies, too. THe minute anyone suggests ending those, ADM and Monsanto pull the strings and a dozen rural politicians start squawking about 'oh no! the poor family farms!'
(family farms making a small portion of the recipients of farm subsidies in the US)
Family farmers support this rent seeking as well so lets not ignore their role in this and act like this is all big corporations doing the lobbying. The various farmers' unions and associated groups will scream bloody murder if you suggest agricultural subsidy rollbacks.
Family farms are basically a myth at this point.
Where is the citation for this? In California it isn't true, 'corporate farms' (of which most aren't run by international corps anyhow) own 7.1% of the raw number of farms. On average they are larger than non-corporate farms, but even by acerage they aren't a majority.
Where is the citation for this? In California it isn't true, 'corporate farms' (of which most aren't run by international corps anyhow) own 7.1% of the raw number of farms. On average they are larger than non-corporate farms, but even by acerage they aren't a majority.
"Raw number of farms" is a pretty useless metric.
It's like pointing out that the wealthiest 400 people in America own 0.0000001% of the raw number of houses.
Where is the citation for this? In California it isn't true, 'corporate farms' (of which most aren't run by international corps anyhow) own 7.1% of the raw number of farms. On average they are larger than non-corporate farms, but even by acerage they aren't a majority.
"Raw number of farms" is a pretty useless metric.
It's like pointing out that the wealthiest 400 people in America own 0.0000001% of the raw number of houses.
On average they are larger than non-corporate farms, but even by acerage they aren't a majority.
They also aren't a majority by sales. So by what metric are family farms a myth then?
As I recall, the myth is the idea of Mom and Pop's tiny farm that they work on themselves, versus a "family farm" that is just a non chain farm. It would be like calling my local hardware store a "Family hardware store" instead of just a local hardware store.
The USDA breaks them down into small family farms, large scale family farms, and non family farms. Number of farms wise, small is ~90%. Total production wise, large family farms are ~60%. But I'd bet you most of us would be hard pressed to tell the difference between a corporate owned farm and a large scale family farm, side from the giant logo on the side of the building. At a certain scale, it's a corporation in everything but name.
I assume that you have limits to how wild you are about bonds, right?
Actually I think this is a pretty complicated issue and depends significantly on what the money is used for. If you issue, say, $1T in bonds but use that to drastically reform education and ensure that the American workforce is absolutely dominant in the coming generations, that's probably a pretty good exchange, even if $1T is a huge amount of money. A bond for $1T to, say, build a bunch of nuclear submarines that shoot magic death rays is probably worse.
Bonds aren't magical, they're like just about any other debt or investment, their value depends on what the money is used for, the total amount paid out, etc. Is $10,000 in student debt good or bad? $20,000? $50,000? Without additional context, those numbers are meaningless.
Like, if the fed issued $10T in bonds tomorrow so they could, I dunno, build infrastructure of some sort, you would agree this is stupid, yes? If so, why? Because they're bonds, it's how money works, all money is imaginary, therefore let's make all the bonds we want, right?
I'm not arguing that money is "not real". Just the opposite. I believe the bond debt is just as real as the social security debt which is just as real as any other debt.
Some people say "the social security debt is just money the government owes itself!" as if that was relevant, or made the debt less valid, or if that was somehow a way to ignore it. The money owed to the social security fund is real in the same sense that all other debts are real, and should be addressed as such.
The money we owe ourselves with regards to SS is money that we have to pay, at the end of the day. We did not fund SS in the sense that we said, "Okay, we will have this specific money coming in, and that will be enough to cover all these expenditures." It's credit card debt. The government went out and bought a bad-ass LED TV and now it has to make payments on it. And it needs to hope that its revenue is enough to do so, or else it needs to get another credit card and transfer the balance. But someday, the government will have to stop juggling its credit cards and actually pay on this shit, or else the interest is going to explode and the nation will turn into California.
California can't maintain debts and can't print currency, there's really no useful comparison between the two, or between an individual and a government.
The government is never required to "stop juggling its credit cards." If bond holders want to buy bonds, the government can always issue them. Old bond holders get paid, new ones decide "Hey, bonds sound really stable and smart and I want to invest some money into bonds!" and then they do that.
Do you find the concept of banks baffling? "They said they have my money but they loaned it out to some guy THAT'S MY MONEY?!?!" Banks maintain constant streams of revenue and debt and, so long as all parties believe their money will be safe, its not an issue.
The government is free to operate in the same way. The government never, ever, ever needs to "pay off its cards," and even if it did it could just go out and max them again. The government needs to maintain enough economic stability that investors continue to think the U.S. is a good investment.
To make this really brief:
- Debt is neither good nor bad, the merits of debt depend on what the debt is funding.
- Debts owed to social security as as "real" as debts owed to bondholders.
- Comparing the federal government with California or your own personal bank account is not useful, unless you are a remarkably skilled forger (at which point its more useful but still inaccurate).
This would be wonderful, and it's totally works with both sides.
Conservatives would support it because it's a gross interference with the free market and nothing more then wasteful spending.
Liberals would support it because it just props up fatcat corporations.
"Corporate welfare" is kind of a nebulous term. Democrats claim they're "ending corporate welfare" by attacking the oil industry over tax breaks that every industry gets.
FPA20111 on
The paranoid man believes that everyone is out to get him. The intelligent man knows that everyone is out to get him.
This would be wonderful, and it's totally works with both sides.
Conservatives would support it because it's a gross interference with the free market and nothing more then wasteful spending.
Liberals would support it because it just props up fatcat corporations.
The flip side is that conservatives would oppose it because they're in the pockets of corporations and liberals would oppose it because they're in the other pockets of those corporations.
Its a failure of motivation in government, essentially.
Let's say you work for CORPORATION X that only exists because some corrupt politician gives your business a gigantic tax break.
If some ethical, law-abiding politician comes along and says "Fuck CORPORATION X this is dumb we shouldn't subsidize underwater basket weaving!" that ethical, law-abiding politician is trying to put you out of a job.
On the other hand, what group is that politician helping? Nobody. They're helping everyone a little, tiny bit by making the government more efficient, but is any partisan going to flip their vote and support ethical, law-abiding politician because "they reduced government waste by .0002%" or are they going to be swayed by the millions of dollars of ads CORPORATION X runs to get that ethical, law-abiding politician fired?
There are plenty of interest groups who want their candy and, while we all know they don't deserve, there are no equally strong and focused interest groups dedicated to taking that candy away. So the candy stays.
This would be wonderful, and it's totally works with both sides.
Conservatives would support it because it's a gross interference with the free market and nothing more then wasteful spending.
Liberals would support it because it just props up fatcat corporations.
"Corporate welfare" is kind of a nebulous term. Democrats claim they're "ending corporate welfare" by attacking the oil industry over tax breaks that every industry gets.
Industries that make billions and billions of dollars in (net) profit every year clearly do not need taxpayer money. Perhaps there are other offenders, but Exxon and the rest are in no danger of going out of business if we stop handing them enormous checks.
As I recall, the myth is the idea of Mom and Pop's tiny farm that they work on themselves, versus a "family farm" that is just a non chain farm. It would be like calling my local hardware store a "Family hardware store" instead of just a local hardware store.
The USDA breaks them down into small family farms, large scale family farms, and non family farms. Number of farms wise, small is ~90%. Total production wise, large family farms are ~60%. But I'd bet you most of us would be hard pressed to tell the difference between a corporate owned farm and a large scale family farm, side from the giant logo on the side of the building. At a certain scale, it's a corporation in everything but name.
This is also complicated by the fact that a large majority of these family farms are merely subcontractors for large corporations. Most farmers are "under contract" to big multinationals for the majority of their crop. Essentially, they are employees of the company, they just happen to own the land and equipment they use for their job.
Phillishere on
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JuliusCaptain of Serenityon my shipRegistered Userregular
This would be wonderful, and it's totally works with both sides.
Conservatives would support it because it's a gross interference with the free market and nothing more then wasteful spending.
Liberals would support it because it just props up fatcat corporations.
"Corporate welfare" is kind of a nebulous term. Democrats claim they're "ending corporate welfare" by attacking the oil industry over tax breaks that every industry gets.
Industries that make billions and billions of dollars in (net) profit every year clearly do not need taxpayer money. Perhaps there are other offenders, but Exxon and the rest are in no danger of going out of business if we stop handing them enormous checks.
It's almost like "but all the other industries are receiving tax-breaks!!!" is something that we might expect from small children but not multi-billion dollar industries.
I assume that you have limits to how wild you are about bonds, right?
Actually I think this is a pretty complicated issue and depends significantly on what the money is used for. If you issue, say, $1T in bonds but use that to drastically reform education and ensure that the American workforce is absolutely dominant in the coming generations, that's probably a pretty good exchange, even if $1T is a huge amount of money. A bond for $1T to, say, build a bunch of nuclear submarines that shoot magic death rays is probably worse.
Bonds aren't magical, they're like just about any other debt or investment, their value depends on what the money is used for, the total amount paid out, etc. Is $10,000 in student debt good or bad? $20,000? $50,000? Without additional context, those numbers are meaningless.
Yeah, if the question is "at what point does it stop making sense to borrow a billion dollars to save two billion dollars," the answer is "when borrowing a billion dollars costs you more than two billion dollars."
I assume that you have limits to how wild you are about bonds, right?
Actually I think this is a pretty complicated issue and depends significantly on what the money is used for. If you issue, say, $1T in bonds but use that to drastically reform education and ensure that the American workforce is absolutely dominant in the coming generations, that's probably a pretty good exchange, even if $1T is a huge amount of money. A bond for $1T to, say, build a bunch of nuclear submarines that shoot magic death rays is probably worse.
Bonds aren't magical, they're like just about any other debt or investment, their value depends on what the money is used for, the total amount paid out, etc. Is $10,000 in student debt good or bad? $20,000? $50,000? Without additional context, those numbers are meaningless.
Yeah, if the question is "at what point does it stop making sense to borrow a billion dollars to save two billion dollars," the answer is "when borrowing a billion dollars costs you more than two billion dollars."
I'll let you know when we get there.
Individuals often have a difficult time wrapping their head around "borrow to save" or "borrow to profit," mostly because individual borrowers usually borrow money to purchase a car or house, in which case debt is taken in exchange for a good the borrower wants but doesn't produce any revenue.
Perhaps the most illustrative (but not necessarily best) example is a student loan: You take on debt in order to increase future earning capacity. Very few "responsible" deficit hawks will turn around and say that nobody should go to college.
The real scenario is more complicated, but in general "debt = bad" is a good concept for an individual to apply when paying off credit card bills and a TERRIBLE concept to apply for a business or government or even an individual when taken to extremes.
The "I need to pay off my credit card debt so the government should too" logic is dangerously simple, the kind of unfortunate "common sense" that sounds accurate and is completely false.
This would be wonderful, and it's totally works with both sides.
Conservatives would support it because it's a gross interference with the free market and nothing more then wasteful spending.
Liberals would support it because it just props up fatcat corporations.
"Corporate welfare" is kind of a nebulous term. Democrats claim they're "ending corporate welfare" by attacking the oil industry over tax breaks that every industry gets.
Industries that make billions and billions of dollars in (net) profit every year clearly do not need taxpayer money. Perhaps there are other offenders, but Exxon and the rest are in no danger of going out of business if we stop handing them enormous checks.
There are tons of other billion+dollar profit companies//industries. Quit with this "OMFG OIL COMPANIES" bullshit. End all the tax incentives or none of them.
"They won't go out of business if we X" is a sucky warrant. Seizing half their profits wouldn't put them out of business either, neither would quadrupling the tax on oil in general, I guess we should do all those things.
FPA20111 on
The paranoid man believes that everyone is out to get him. The intelligent man knows that everyone is out to get him.
This would be wonderful, and it's totally works with both sides.
Conservatives would support it because it's a gross interference with the free market and nothing more then wasteful spending.
Liberals would support it because it just props up fatcat corporations.
"Corporate welfare" is kind of a nebulous term. Democrats claim they're "ending corporate welfare" by attacking the oil industry over tax breaks that every industry gets.
Industries that make billions and billions of dollars in (net) profit every year clearly do not need taxpayer money. Perhaps there are other offenders, but Exxon and the rest are in no danger of going out of business if we stop handing them enormous checks.
Expecting fair treatment is something that we might expect from small children but not multi-billion dollar industries who should by now expect Democrats to politick at the expense of investors and retirees.
FPA20111 on
The paranoid man believes that everyone is out to get him. The intelligent man knows that everyone is out to get him.
This would be wonderful, and it's totally works with both sides.
Conservatives would support it because it's a gross interference with the free market and nothing more then wasteful spending.
Liberals would support it because it just props up fatcat corporations.
"Corporate welfare" is kind of a nebulous term. Democrats claim they're "ending corporate welfare" by attacking the oil industry over tax breaks that every industry gets.
Industries that make billions and billions of dollars in (net) profit every year clearly do not need taxpayer money. Perhaps there are other offenders, but Exxon and the rest are in no danger of going out of business if we stop handing them enormous checks.
There are tons of other billion+dollar profit companies//industries. Quit with this "OMFG OIL COMPANIES" bullshit. End all the tax incentives or none of them.
I'd be fine with removing handouts to companies that don't need them, but doing that all at once is not exactly feasible.
"They won't go out of business if we X" is a sucky warrant. Seizing half their profits wouldn't put them out of business either, neither would quadrupling the tax on oil in general, I guess we should do all those things.
This discussion will be a lot more productive if we limit the strawmen.
This would be wonderful, and it's totally works with both sides.
Conservatives would support it because it's a gross interference with the free market and nothing more then wasteful spending.
Liberals would support it because it just props up fatcat corporations.
"Corporate welfare" is kind of a nebulous term. Democrats claim they're "ending corporate welfare" by attacking the oil industry over tax breaks that every industry gets.
Industries that make billions and billions of dollars in (net) profit every year clearly do not need taxpayer money. Perhaps there are other offenders, but Exxon and the rest are in no danger of going out of business if we stop handing them enormous checks.
There are tons of other billion+dollar profit companies//industries. Quit with this "OMFG OIL COMPANIES" bullshit. End all the tax incentives or none of them.
I'd be fine with removing handouts to companies that don't need them, but doing that all at once is not exactly feasible.
"They won't go out of business if we X" is a sucky warrant. Seizing half their profits wouldn't put them out of business either, neither would quadrupling the tax on oil in general, I guess we should do all those things.
This discussion will be a lot more productive if we limit the strawmen.
I just don't feel like this "subsidy" talk is anything but red meat for the Democratic base. Do you disagree? (really?)
I merely intended to point out the silliness of your warrant regarding the oil company tax incentives. "They won't go out of business" is a poor one. There are lots of things we could do that would not put them out of business, but are still horrible ideas for lots of reasons.
FPA20111 on
The paranoid man believes that everyone is out to get him. The intelligent man knows that everyone is out to get him.
So why do you oppose ceasing the practice of giving money to the very profitable oil companies? I seriously don't understand this.
We're not "giving" them money. They're allowed to keep more of the money they make in accordance with tax incentives similar to practically every other major U.S. industry. Writing off losses in taxes =/= dumping money on a bad idea (ethanol).
FPA20111 on
The paranoid man believes that everyone is out to get him. The intelligent man knows that everyone is out to get him.
So why do you oppose ceasing the practice of giving money to the very profitable oil companies? I seriously don't understand this.
We're not "giving" them money. They're allowed to keep more of the money they make in accordance with tax incentives similar to practically every other major U.S. industry. Writing off losses in taxes =/= dumping money on a bad idea (ethanol).
Posts
GDP = Consumption + Investment + Government Spending + (Exports - Imports)
If you slash government spending, the immediate effect is that GDP goes down and unemployment goes up (because that money doesn't go into a hole in the ground, it goes to pay for people to work in the public sector or military). Then you get second order effects - you're no longer collecting taxes from those newly unemployed people and a chunk of them are picking up social security. So your costs have gone back up and your revenue down.
Of course the alternative is that you continue spending money that you don't have. Which is also a Bad Thing(tm). Unless consumer confidence and investment picks up in a hurry, whatever you do you're kinda screwed - either you cut spending, which slows growth and drives up unemployment (which your opposition party will have a field day with) or you watch the deficit pile up (which also your opposition party will have a field day with, at least recently).
I assume that taking bridges out of commission due to structural issues is probably bad for commuting and hauling cargo over them, thus causing detours making those trips take longer and cost more.
... which if I'm not mistaken is essentially what at least part of the Stimulus package was supposed to do, which was then shit upon federally by Republicans and on a state level (err, mostly by Republicans?) with people refusing the money/projects?
Am I incorrect in this assessment?
Yes. It's no-brainer economics. Buy into our (honestly failing) infrastructure, raise taxes on the top 10% and close corporate loopholes and you no longer have a problem.
Good luck with our corrupt and incompetent government though.
This is starting to veer off towards the [Economy] thread, rather than being specific to the Debt Ceiling, but it's hard to quantify which "things are (most) useful" that government spending should be spent on. Virtually all spending creates/maintains jobs - either directly (through employing someone in the public sector) or indirectly (purchasing goods and services from the private sector, which requires people to be able to supply those goods and services).
Right-leaning commentators tend to start eyeing "cultural" programs to slash, but these improve the quality and reputation of education in general, which allows the country to attract/generate a higher standard of employees in the workforce. Left-leaning commentators often ask that "defense" be brought on the table, but defense employs a huge number of contractors who supply the uniforms, vehicles and firearms. Many of the plants for these are also used to produce items for the general population and the economies of scale allow clothing manufacturers, for instance, to remain competitive with overseas suppliers. That's not including that recruitment in the armed forces recruits tends to have higher proportions of low socio-economic families, improving their income and future job prospects, making it a social program by default.
There are rarely any non-useful programs to cut once started and they tend to be heavily politicized, which always makes it more difficult to dial it back in times of recession.
Unless you're a wolf. In which case you're on your own.
ETA - "stimulus" spending has a less predictable effect because the vast majority of economic activity is based on expectations - banks loan money with the expectation there is going to be a continuous flow of income, businesses invest in new production with the expectation that demand will continue to grow etc. Since stimulus spending tends to be short-term, a lot of that long-term activity doesn't occur because there's a high level of uncertainty about what's going to occur a couple of years down the track or how fast the stimulus money is going to be coming through the economy. This is why the majority of economists tend to look at monetary policy, as crude a tool as interest rates are, before they look at fiscal policy for kick-starting slowed economies.
There's also the problem with the US military's philosophy on weapons systems. That is, never pick the cheaper system over the more expensive one. And certainly never buy an existing system off the shelf, but rather develop every system from the ground up.
And let's not mention how working in DoD procurements is a pipeline to a fat job with a defense contractor once you leave the military. Procurement officers go from the Pentagon across the street to the big defense contractors in Crystal City and double or triple their salaries. The conflict of interest that creates in the procurement process is pretty clear.
Rigorous Scholarship
I'm just pointing out that "if we just cut out those danged wars" also has repercussions even if you remove national security from the equation. Granted, I'd be more than happy to see Halliburton and Blackwater get a kick in the nuts (in the case of Blackwater *another* kick in the nuts), but there's still plenty of good reasons why the scalpel should be used judiciously.
Honestly, I am pretty down on bonds in general, specifically because I live in California, where we have bond-issued our way into fiscal insolvency. What we like to do here in Cali is say "We want a high-speed rail system!" and then issue $10B in bonds and then... well, we just kind of forget about the "we need to pay this back someday" part, and now something like 15% of our state expenditures are to pay back money we effectively borrowed decades ago.
I assume that you have limits to how wild you are about bonds, right? Like, if the fed issued $10T in bonds tomorrow so they could, I dunno, build infrastructure of some sort, you would agree this is stupid, yes? If so, why? Because they're bonds, it's how money works, all money is imaginary, therefore let's make all the bonds we want, right?
The money we owe ourselves with regards to SS is money that we have to pay, at the end of the day. We did not fund SS in the sense that we said, "Okay, we will have this specific money coming in, and that will be enough to cover all these expenditures." It's credit card debt. The government went out and bought a bad-ass LED TV and now it has to make payments on it. And it needs to hope that its revenue is enough to do so, or else it needs to get another credit card and transfer the balance. But someday, the government will have to stop juggling its credit cards and actually pay on this shit, or else the interest is going to explode and the nation will turn into California.
Also, while I agree procurement is a bit out of control, DoD costs are highly distorted, because the government massively over-inflates the cost of all weapons programs, so they can launder and hide money used for clandestine activities all over the world, for *mostly* legitimate national security reasons. So to me it's hard to argue that procurement alone produces ridiculous prices for hammers and toilet seats, because it really doesn't. I will guarantee that each multi-billion dollar F-22 doesn't cost anywhere near the advertised price tag, but that's how the CIA and others get the money to do counter-terrorism.
I was just looking at some government data and it also showed that the main cause of increasing deficits this year and next is actually a massive reduction in Social Security tax collection. SSI collections are projected to drop by hundreds of billions of dollars, both this year and next and that is easily the biggest change in government spending/revenues for this and next year. Pretty much all other tax collections and expenditures are sitting flat, or nearly so, compared to the previous 5 years, but the SSI tax collections drop is going to take our deficit, for 2011 and 2012, into the trillions both years.
That little problem is not only glossed over by all the media coverage I've seen (as in there is no coverage of that fact), but also nothing proposed by either party would fix the situation by directly addressing the decrease in revenue from SSI tax, just paper over that shortfall by making absurdly huge cuts elsewhere or creating a corresponding rise in other tax collection categories. Personally I'd like to see half of the lost revenue made up by ending all corporate welfare forever, and other half should be cut from defense spending.
Also, I was surprised to find that education, defense, and health care spending are almost all the same percentage of the federal budget - 18% for health care, 16% defense, and 14% on education. Not what I expected based on the info I've been hearing in media coverage.
Holy crap yes.
This would be wonderful, and it's totally works with both sides.
Conservatives would support it because it's a gross interference with the free market and nothing more then wasteful spending.
Liberals would support it because it just props up fatcat corporations.
Rigorous Scholarship
Oh, if only that would actually happen.
Republicans would be against ending it since they get a fuckton of money from corporations. Some Dems too, for the same reasons.
EDIT: NINJA'D!
Isn't it that the Dems are owned by Big Banking and Big Content (RIAA/MPAA/etc) and the Republicans are owned by Big Oil (BP/Exxon/etc) and Big Box Stores (Walmart) or am I leaving out a few gross generalizations?
Fortunately there is not a combined shotguns, canned food and survival equipment lobby that owns both parties or we'd surely be screwed when the debt ceiling came up for a vote. Because about every other company on earth has it in its best interests for any kind of global economic anarchy NOT happening.
(family farms making a small portion of the recipients of farm subsidies in the US)
Sarcasm? I can't tell.
Related news:What time is the come to jesus meating with the oil men today?
Family farmers support this rent seeking as well so lets not ignore their role in this and act like this is all big corporations doing the lobbying. The various farmers' unions and associated groups will scream bloody murder if you suggest agricultural subsidy rollbacks.
Do you think those screams amount to anything next to Monsanto's complaints?
Both parties are owned by banks, and then there are various other sub-owners, which you identify correctly, while leaving out a few. Agriculture, notably.
Note: I am not arguing that said family farm has any influence on Washington.
Where is the citation for this? In California it isn't true, 'corporate farms' (of which most aren't run by international corps anyhow) own 7.1% of the raw number of farms. On average they are larger than non-corporate farms, but even by acerage they aren't a majority.
"Raw number of farms" is a pretty useless metric.
It's like pointing out that the wealthiest 400 people in America own 0.0000001% of the raw number of houses.
They also aren't a majority by sales. So by what metric are family farms a myth then?
The USDA breaks them down into small family farms, large scale family farms, and non family farms. Number of farms wise, small is ~90%. Total production wise, large family farms are ~60%. But I'd bet you most of us would be hard pressed to tell the difference between a corporate owned farm and a large scale family farm, side from the giant logo on the side of the building. At a certain scale, it's a corporation in everything but name.
Actually I think this is a pretty complicated issue and depends significantly on what the money is used for. If you issue, say, $1T in bonds but use that to drastically reform education and ensure that the American workforce is absolutely dominant in the coming generations, that's probably a pretty good exchange, even if $1T is a huge amount of money. A bond for $1T to, say, build a bunch of nuclear submarines that shoot magic death rays is probably worse.
Bonds aren't magical, they're like just about any other debt or investment, their value depends on what the money is used for, the total amount paid out, etc. Is $10,000 in student debt good or bad? $20,000? $50,000? Without additional context, those numbers are meaningless.
I'm not arguing that money is "not real". Just the opposite. I believe the bond debt is just as real as the social security debt which is just as real as any other debt.
Some people say "the social security debt is just money the government owes itself!" as if that was relevant, or made the debt less valid, or if that was somehow a way to ignore it. The money owed to the social security fund is real in the same sense that all other debts are real, and should be addressed as such.
California can't maintain debts and can't print currency, there's really no useful comparison between the two, or between an individual and a government.
The government is never required to "stop juggling its credit cards." If bond holders want to buy bonds, the government can always issue them. Old bond holders get paid, new ones decide "Hey, bonds sound really stable and smart and I want to invest some money into bonds!" and then they do that.
Do you find the concept of banks baffling? "They said they have my money but they loaned it out to some guy THAT'S MY MONEY?!?!" Banks maintain constant streams of revenue and debt and, so long as all parties believe their money will be safe, its not an issue.
The government is free to operate in the same way. The government never, ever, ever needs to "pay off its cards," and even if it did it could just go out and max them again. The government needs to maintain enough economic stability that investors continue to think the U.S. is a good investment.
To make this really brief:
- Debt is neither good nor bad, the merits of debt depend on what the debt is funding.
- Debts owed to social security as as "real" as debts owed to bondholders.
- Comparing the federal government with California or your own personal bank account is not useful, unless you are a remarkably skilled forger (at which point its more useful but still inaccurate).
"Corporate welfare" is kind of a nebulous term. Democrats claim they're "ending corporate welfare" by attacking the oil industry over tax breaks that every industry gets.
Its a failure of motivation in government, essentially.
Let's say you work for CORPORATION X that only exists because some corrupt politician gives your business a gigantic tax break.
If some ethical, law-abiding politician comes along and says "Fuck CORPORATION X this is dumb we shouldn't subsidize underwater basket weaving!" that ethical, law-abiding politician is trying to put you out of a job.
On the other hand, what group is that politician helping? Nobody. They're helping everyone a little, tiny bit by making the government more efficient, but is any partisan going to flip their vote and support ethical, law-abiding politician because "they reduced government waste by .0002%" or are they going to be swayed by the millions of dollars of ads CORPORATION X runs to get that ethical, law-abiding politician fired?
There are plenty of interest groups who want their candy and, while we all know they don't deserve, there are no equally strong and focused interest groups dedicated to taking that candy away. So the candy stays.
Industries that make billions and billions of dollars in (net) profit every year clearly do not need taxpayer money. Perhaps there are other offenders, but Exxon and the rest are in no danger of going out of business if we stop handing them enormous checks.
This is also complicated by the fact that a large majority of these family farms are merely subcontractors for large corporations. Most farmers are "under contract" to big multinationals for the majority of their crop. Essentially, they are employees of the company, they just happen to own the land and equipment they use for their job.
It's almost like "but all the other industries are receiving tax-breaks!!!" is something that we might expect from small children but not multi-billion dollar industries.
I'll let you know when we get there.
Individuals often have a difficult time wrapping their head around "borrow to save" or "borrow to profit," mostly because individual borrowers usually borrow money to purchase a car or house, in which case debt is taken in exchange for a good the borrower wants but doesn't produce any revenue.
Perhaps the most illustrative (but not necessarily best) example is a student loan: You take on debt in order to increase future earning capacity. Very few "responsible" deficit hawks will turn around and say that nobody should go to college.
The real scenario is more complicated, but in general "debt = bad" is a good concept for an individual to apply when paying off credit card bills and a TERRIBLE concept to apply for a business or government or even an individual when taken to extremes.
The "I need to pay off my credit card debt so the government should too" logic is dangerously simple, the kind of unfortunate "common sense" that sounds accurate and is completely false.
There are tons of other billion+dollar profit companies//industries. Quit with this "OMFG OIL COMPANIES" bullshit. End all the tax incentives or none of them.
"They won't go out of business if we X" is a sucky warrant. Seizing half their profits wouldn't put them out of business either, neither would quadrupling the tax on oil in general, I guess we should do all those things.
This discussion will be a lot more productive if we limit the strawmen.
I just don't feel like this "subsidy" talk is anything but red meat for the Democratic base. Do you disagree? (really?)
I merely intended to point out the silliness of your warrant regarding the oil company tax incentives. "They won't go out of business" is a poor one. There are lots of things we could do that would not put them out of business, but are still horrible ideas for lots of reasons.
We're not "giving" them money. They're allowed to keep more of the money they make in accordance with tax incentives similar to practically every other major U.S. industry. Writing off losses in taxes =/= dumping money on a bad idea (ethanol).
Are you aware that money is fungible?