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Debt ceiling

While I am not particularly in love with our present choices in the US, wishing for multiple parties is not necessarily the solution. Take a look at Italy and their multitude of political parties.

The political process might look dysfunctional, but it is pretty profound that the deficit has become such a moving force that a Democrat Senate and Democrat President are looking at making some real cuts. The Tea Party might be "fringe", but they are really forcing the Republicans to fight hard for deeper cuts. If the Tea Party wasn't around the debt ceiling would of been increased and some token cuts would have been made. Might make everyone happy, but would not do anything to help our ever growing deficit.
 
By what measure? By much of the developed world's standards, we have very little debt:

http://en.wikipedia.org/wiki/File:Public_debt_percent_gdp_world_map.PNG

By what definition of 'developed'? My take of that chart is a little more negatively biased.

Further, one is at liberty to pick their poison:

Debt - external:
$13.98 trillion (30 June 2010)
country comparison to the world: 1
$13.75 trillion (31 December 2008)
note: approximately 4/5ths of US external debt is denominated in US dollars; foreign lenders have been willing to hold US dollar denominated debt instruments because they view the dollar as the world's reserve currency

Public debt:
58.9% of GDP (2010 est.)
country comparison to the world: 37
53.5% of GDP (2009 est.)
note: data cover only what the United States Treasury denotes as "Debt Held by the Public," which includes all debt instruments issued by the Treasury that are owned by non-US Government entities; the data include Treasury debt held by foreign entities; the data exclude debt issued by individual US states, as well as intra-governmental debt; intra-governmental debt consists of Treasury borrowings from surpluses in the trusts for Federal Social Security, Federal Employees, Hospital Insurance (Medicare and Medicaid), Disability and Unemployment, and several other smaller trusts; if data for intra-government debt were added, "Gross Debt" would increase by about 30% of GDP

GDP - real growth rate:
2.8% (2010 est.)
country comparison to the world: 129
-2.6% (2009 est.)
0% (2008 est.)

Unemployment rate: (lowest to highest)
9.7% (2010 est.)
country comparison to the world: 106
9.3% (2009 est.)

source: https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
 
The political process might look dysfunctional, but it is pretty profound that the deficit has become such a moving force that a Democrat Senate and Democrat President are looking at making some real cuts. The Tea Party might be "fringe", but they are really forcing the Republicans to fight hard for deeper cuts. If the Tea Party wasn't around the debt ceiling would of been increased and some token cuts would have been made. Might make everyone happy, but would not do anything to help our ever growing deficit.

It's not the much maligned Repubs who are fighting for cuts. Neither Boehner nor Cantor asked for cuts in SS or Medicare. It came solely from Obama. There are several sources indicating this, for instance John Conyers (D-Mich):

"The Republicans, Speaker Boehner or Majority Leader Cantor did not call for Social Security cuts in the budget deal. The President of the United States called for that," Conyers, who has served in the House since 1965, said.

Blaming it on the Repubs is White House disinformation: Obama wants to portray the repubs as asking for savage cuts, with whom he is "compromising."

During the last four years or so, the debt has gone from roughly $9 trillion to $14 trillion. The extra $5 trillion is not because of SS and Medicare. It's the ideological program of Obama and his backers to gut these programs. I agree with Hossein-Zadeh's analysis:

It is obvious, then, that the budget negotiators, posturing and shouting over the debt ceiling, are shamelessly lying to the American people when they blame the entitlements and non-military public spending as sources of the federal debt and deficit. An honest approach to the problems of debt and deficit would, instead, look into the real causes of these problems: Wall Street bailouts, war and military expenditures, tax giveaways to the wealthy, and out-of-control costs of health care.
It is obvious from this brief analysis that Washington's political dogs howling at the non-military public spending as the source of the escalating national debt and deficit are barking up the wrong tree. As long as the out-of-control spending on war and militarism is not contained, the multi-trillion dollar corporate welfare handouts (in the form of tax giveaways and costly rescue/bailout packages) are not curtailed, and the skyrocketing costs of health care are not restrained, the national debt and deficit are bound to continue their upward trend.
 
While I agree that the deficit has increased in part because of military spending, social security and medicare/caid are on an unsustainable path. Not saying they need to be cut, but at least reorganized/structured.

Other than AIG and GM/Chrysler, the Wall Street Bailouts have been a break even or gain for the government. Fannie and Freddie are the black holes and I consider them to be more government than wall street.

In bad times we borrow and in good times we borrow even more. If we would only pay down the deficit when the economy booms and borrow within reason when times are bad things wouldn't be as bad as they are now.

Yes, Obama was the one talking about cutting SSI/Medicare/caid, but I really think it was more of a talking point. Kind of like the Italian invasion of France in WWII. It was never really going to happen and Obama can now say how he was trying to cut the sacred cows.

End of the day I simply want a budget reduction and a smaller government. I think it is fair to say that the government is no where near using the money it receives from its citizens in an efficient way. If the government simply worked to become more efficient it could do the same with less money.
 

Abdel

Economist
Too bad US citizens left down capitalism with all those social programs for the last few decades.

One can only imagine how wealthy the US would of been if it followed its constitution; i.e. unparalleled wealth.
 
Well I am a supporter of basic social programs. You cannot have a wealthy nation without some safety nets. Problem is I really think we have gone overboard or at least ignored the true cost of these programs. On top of that we never made an effort to pay down the debt in good times. Think of the past economic boom and how much we could of chipped away at the debt had we focused on paying it down.
 

Abdel

Economist
Well I am a supporter of basic social programs. You cannot have a wealthy nation without some safety nets. Problem is I really think we have gone overboard or at least ignored the true cost of these programs. On top of that we never made an effort to pay down the debt in good times. Think of the past economic boom and how much we could of chipped away at the debt had we focused on paying it down.

If you have a wealthy nation, you don't need safety nets. People will give to charities more than they give now (since they are wealthier and there is low taxes).

On top of that, it would of been easy to find a job since there would have been real economic growth.

It just sucks that the only time in human history we tried freedom and small governement for 100 years, it created the wealthiest nation in human's history and they blew it by introducing socialist programs.

There is no other places to escape to. The US was the last stand on earth for free market ans capitalism and they turned it to corporatism.

RIP US constitution, one of the if not the greatest document in human kind.
 

Abdel

Economist
1) LOL!

2) I'm calling you out. There were dozens of attempts at "freedom and small government" in the early nineties - they are called former Soviet states. Seriously, if you like "small government" and "low taxes" so much - move to Russia already. Or at least go live there for a year or two... maybe it'll change your views. I know in your mind it sounds like a sexy system ... but in practice it is much different than in the idealistic view in the back of your head... I moved out for a reason. And believe me "lack of opportunity" wasn't it. It is significantly easier to get rich in Russia then in America right now.

Ok,

1) For your 'LOL'; if you had a valid counter argument you would of said it, but you didn't = no arguments.

Let me expand a little on the so called ''safety'' nets. How do you think 'poor' americans lived before all those social programs? You think they were out starving in the streets? Of course not, they relied on charities.

And you're missing the real issue here. The problem with these programs is a moral & economic one.

Moral problem because you're forcing people to pay for what YOU think is moral. You'll create a dangerous precedent in society. This means that, if someone in 30-40 years from now get elected and says '' I think it's moral to double the income tax on all the people who's name is Alexei'', will you accept it? Obviously not, but the point is, he's using the same argument as you do. So how is your argument more valid than his? Clearly, it is inconsistant.

See it this way. Let's say I see a homeless in the street, can I put a gun to your head to take your money and give it to him? Of course not, it's a crime.

BUT, if I go see the governement and tell him to put a gun to your head to get your money for that homeless, all of a sudden, it becomes acceptable? Inconsistant again.

If it hurts you to see poor people (as it hurts me), take YOUR OWN money and give it to them. Organize yourself with likely minded people and give your money to the cause that you think is moral.

The economic problem is, in order to support these social programs, you need high taxes = it won't help the poor to get out of povrety.
Simple example, imagine 2 scenarios:

a) I run a business and I have $1. The government comes in, take my $1 and give it to a poor individual. The poor person goes out and buys a sandwich with that dollar, eat it, and is still poor.

b) Now, I still run a business and still have a dollar. But this time, the governement DOESN'T comes in, so I invest that $ in my business = I create a job = poor individual comes out of pauvrety.

So, if you want to keep that person in povrety, keep taxing me. And think about it for a second. If you had a low income tax, you would have more money = you can give more to charities = that money goes almost in totality and directly to the poor. But if you give it to the governement, he'll probably give 10 cents out of every dollar to the poor.

2) What you're missing here is that those countries had no real judicial system = property rights were/are not respected.

Property rights are KEY to economic success. Actually capitalism is based on that, i.e. volontary exchange & a strong judicial system that protect property rights.
 

Abdel

Economist
I replied with a "LOL!" because what you are suggesting seems quite absurd to say the least.

Once again, ''seems quite absurd'' = NOT an argument.

Like I said before, it sounds sexy in theory, but in the creation of your theory you are completely ignoring the one single thing that makes capitalism work! (hint: Greed is good) It's phenomenal, really. And obviously in practice the world just does not behave anything like the world you portray because the world you portray is highly flawed and unrealistic.

On one hand, you're completely ignoring what made the US the wealthiest nation on earth (hint: The things I'm rooting for) and on the other, you fail to understand that ''voluntary exchange'' (as I mentioned in my previous post) includes pursuit of profits.

Like Anthony said in a different thread - he'd rather invest the money in something that generates him returns. And before you try to vilify him, he has a very standard opinion that you will find throughout most of anyone with money. The wealthy don't become wealthy by cutting checks and feeding the homeless.

1st of all, wealthy people donate alot of money to charities.
2nd, if you're in the top 2% earners and you live in let's say, connecticut, almost 50% of your income goes to the governement (35% federal, +7% state, + social security tax etc.). Obviously, you would give more if the governement was not all over your income (with of course a desastreus result, i.e. povrety's raising)

... also charities are safety nets...

Obviously, but the point is, money that goes in there has to be on a voluntary base.

As for the rest of your post, you aren't forcing other people to pay for what you think is moral, that's the root of the failure of libertarianism. Society is forcing each individual to contribute a certain amount that the majority of it feel is moral to contribute. Big difference.

When I say 'making me pay for what you think is moral', the ''you'' is not only for you, but for the society as well. Thought it was obvious -_-

If I have a gun to my head, I'd give up my wallet in a heartbeat.
Again, NOT an argument.

as for 2. Property rights are most certainly not ignored in Russia, and there is a well defined judicial system. I don't know where you heard that but that's just completely wrong (although at this point I'm no longer surprised). Moscow has the largest number of millionaires (measured in $) of any city in the world. Probably billionaires too. You know you want the freedom, low taxes and capitalism. You know you do. It is as close to your ideal society as you can get. Go give it a shot! Translators are cheap ;)

Judicial system in russia, lol....What about our friend Mikhail Khodorkosvky,the oil tycoon that got thrown out in jail. Did HIS PRIVATELY OWNED company nominated a new boss? Nop, the RUSSIAN GOVERENMENT tooked over the company.

''even the government-owned press criticised the "absurd" method of Khodorkovsky's arrest''

''Khodorkosvky appealed his convictions to the European Court of Human Rights. On May 31, 2011 the court ruled that Khodorkosvky failed to prove that his prosecution was politically motivated. The court ruled, however, that Russia committed serious violations of Khodorkovsky's rights during his arrest and pretrial detention.[9]''

Let me say it again, SERIOUS VIOLATIONS. lol.....so no thank you, I'm not going to russia. Sure, plenty of billionaires = mobs who sold your country to the highest bidders.

How do I know that they sold (and are still selling) your country? My source is a friend of mine who is an ex-highly ranked russian military official.

I also don't know where you heard that capitalism is based on a strong judicial system (an element of society necessary for and encouraged by primarily socialism!). The political system that goes hand in hand with capitalism is Plutocracy. There is no judicial system in ideal plutocracy at all... it's the rule of money. You have more money? You are correct. Have less money? Clearly inferior.

Where I heard that capitalism needs a strong legal system? lol...well, maybe because you need it to enforce contracts when voluntary exchanges occurs? lol

The bottom line is, in my previous post I laid out ARGUMENTS that explained why it was morally and economicly wrong to have those social programs and you failed to develop solid counter-arguments.
 
Let me expand a little on the so called ''safety'' nets. How do you think 'poor' americans lived before all those social programs? You think they were out starving in the streets? Of course not, they relied on charities.

Yes, often they were starving. Not just the jobless but even the families of workers paid too little. This is, for example, what precipitated the Pullman strike of 1894. It seems you don't know American history at all and you have is an "Ayn Rand" rose-tinted conception of what the USA used to be like. For starters, try Michael Harrington's The Other America, which, when it came out in 1960, shocked the country into how American poor were actually living and was a propelling force behind Johnson's "Great Society" program launched in the the mid-60s.

Same in Britain, where both workers and unemployed often went hungry, or lacked enough for a proper diet, had high incidences of tuberculosis, high rates of child mortality (poor hygiene, poor nutrition, squalid living conditions). Same in Germany once upon a time. But in late 19th century Germany -- earlier than in Britain -- statesmen like Bismarck and enightened industrialists like Krupp put together social welfare provisions (if only to stave off the threat of revolution).
 
On one hand, you're completely ignoring what made the US the wealthiest nation on earth (hint: The things I'm rooting for) and on the other, you fail to understand that ''voluntary exchange'' (as I mentioned in my previous post) includes pursuit of profits.

What made it the wealthiest country? Expropriating the land of the native Americans? Winning world wars? Military expansionism? All of this required a strong central state. That strong central state remains. This is the foundation of American "capitalism." American capital cannot function without a strong and very expensive central state. But it becomes "too expensive" only when social welfare is involved -- not where government contracts, subsidies, and military expenditures are involved. Interesting.

1st of all, wealthy people donate alot of money to charities.

Really?

2nd, if you're in the top 2% earners and you live in let's say, connecticut, almost 50% of your income goes to the governement (35% federal, +7% state, + social security tax etc.). Obviously, you would give more if the governement was not all over your income (with of course a desastreus result, i.e. povrety's raising)

Why "obviously?" If I were rich, I would not. I would buy another Masserati or boat. It's like the beggars I meet every day: I usually give nothing, or a pittance. But if they hold a gun to my head, I would part with everything in my wallet.

Where I heard that capitalism needs a strong legal system? lol...well, maybe because you need it to enforce contracts when voluntary exchanges occurs? lol

Then why are one-third of the world's lawyers just in the USA? Why is it such a litigious place? This idea of "voluntary exchanges" is another part of Ayn Randism. In commerce, I frequently sell on credit: I need a legal system to recover my receivables. I need a legal system to enforce property rights, patents, licences. A legal system to ensure I don't get something substandard.

The bottom line is, in my previous post I laid out ARGUMENTS that explained why it was morally and economicly wrong to have those social programs and you failed to develop solid counter-arguments.

Not really, they are just assertions with little or no empirical foundation.
 
Khodorkovsky was a criminal. He broke laws. He was sent to jail. The valid complaint in his case isn't that he is in jail - it's that a lot of other people aren't, and thus justice is applied not across the board but in a spotty fashion.

Name a single one of Russia's big "capitalists" who is not a criminal, not involved in massive bribery, not involved in swindling and corruption, and who does not have friends among the Russian mafia (if he does not belong himself). This is real capitalism, with no holds barred.
 

Abdel

Economist
Yes, often they were starving. Not just the jobless but even the families of workers paid too little.

Question you should ask yourself is, compared to what? Poor people in the US back then were FAR BETTER OFF then the poor in the rest of the world! For centuries, humans lived in misery and povrety. All of a sudden, we tried small governement, no income tax and low consumption taxes, and what happened? It lifted out of povrety millions of people while the rest of the world was still starving.

This is, for example, what precipitated the Pullman strike of 1894. It seems you don't know American history at all and you have is an "Ayn Rand" rose-tinted conception of what the USA used to be like. For starters, try Michael Harrington's The Other America, which, when it came out in 1960, shocked the country into how American poor were actually living and was a propelling force behind Johnson's "Great Society" program launched in the the mid-60s.

What precipitated the Pullman strike of 1894 is that ''the Pullman Palace Car Company cut wages as demands for their train cars plummeted and the company's revenue dropped''. And it was during the panic of 1893 wich was ''marked by the collapse of railroad overbuilding and shaky railroad financing which set off a series of bank failures''.

If demand for your product goes down, it's either you shut down your business or you lower salaries. I don't SEE what it has to do with povrety.

Same in Britain, where both workers and unemployed often went hungry, or lacked enough for a proper diet, had high incidences of tuberculosis, high rates of child mortality (poor hygiene, poor nutrition, squalid living conditions). Same in Germany once upon a time. But in late 19th century Germany -- earlier than in Britain -- statesmen like Bismarck and enightened industrialists like Krupp put together social welfare provisions (if only to stave off the threat of revolution).

Both of these examples (Britain and Germany) had a huge governement, so I'm not surprised.
 

Abdel

Economist
What made it the wealthiest country? Expropriating the land of the native Americans? Winning world wars? Military expansionism? All of this required a strong central state. That strong central state remains. This is the foundation of American "capitalism." American capital cannot function without a strong and very expensive central state. But it becomes "too expensive" only when social welfare is involved -- not where government contracts, subsidies, and military expenditures are involved. Interesting.

Other countries expropriated lands, won wars, expanded their military etc etc...and yet, they NEVER came close to acheive what the US did. At one time, the US governement spending was 5% of the GDP, there was no income tax (actually there was one, a very small one for the top 1% earners or so), low consumption tax etc.

Why "obviously?" If I were rich, I would not. I would buy another Masserati or boat. It's like the beggars I meet every day: I usually give nothing, or a pittance. But if they hold a gun to my head, I would part with everything in my wallet.

I refer you to my post about the moral issue. If you think that, a majority of people can decide what to do with your money, then if that same majority decides to triple your income tax (for you only), you shall obey and pay. It just shows how that argument is non sense when you push it to the extreme; it's not valid.

Not really, they are just assertions with little or no empirical foundation.

Well, ''assertations'' based on facts.

History is on my side, why do you think, during centuries & centuries, all the other countries never came close to what the US acheived?

Don't you know that your constitution was written to RESTRAIN the governement? For what reason in your opinion? Because the founders understood the dangers of a big government!
 

Abdel

Economist
Khodorkovsky was a criminal. He broke laws. He was sent to jail. The valid complaint in his case isn't that he is in jail - it's that a lot of other people aren't, and thus justice is applied not across the board but in a spotty fashion.

He wasn't read his miranda rights. Boo hoo.

You don't need a justice system in capitalism. Want execution of your contracts? Hire a guard.

I'll just copy past what I wrote earlier:

'Khodorkosvky appealed his convictions to the European Court of Human Rights. On May 31, 2011 the court ruled that Khodorkosvky failed to prove that his prosecution was politically motivated. The court ruled, however, that Russia committed serious violations of Khodorkovsky's rights during his arrest and pretrial detention.[9]'

The European Court of Human Rights said that Russia COMMITTED SERIOUS VIOLATIONS of Khodorkovsky's rights. Who's the criminal again?
 

Abdel

Economist
Name a single one of Russia's big "capitalists" who is not a criminal, not involved in massive bribery, not involved in swindling and corruption, and who does not have friends among the Russian mafia (if he does not belong himself). This is real capitalism, with no holds barred.

Come on, this is non sense.

As I said, if you don't have a solid legal system, it won't work. If you tomorrow, file a lawsuit against a big firm, YOU CAN WIN. In russia, you'll get murdered before you even think about suing them.

That is THE difference.
 

Abdel

Economist
And just in case my posts don't reflect it, I respect both of you guys alot. So please, do not feel offended by my posts if you find that the tone I used was not appropriate.
 
I don't know, I think basic government aid for this disabled or sickly is not a lot to ask. I consider it an investment in infrastructure. If the US wanted to incentivize people to donate more it could increase the amount of charitable deductions it allows on the taxes. The reason why the government likes to roll out expanded aid and programs is because it garners votes. Charity, on the other hand, cannot be channeled or controlled for election purposes.

The US military has operated as basically a global police force, without global contributions. Yes, we benefit from it, but so do other nations. Europe never needed a massive military force because the US was going to do the fighting. When you don't need a substantial military you can invest that money elsewhere.

All I want is to see the size of the Federal government shrink. We have so many agencies, so many federal employees, so much waste and overlap. Think of it like this. Every dollar you pay in taxes is a dollar that cannot be spent on goods, services or investments. If you think the government spends money more efficiently and more effectively than you do, you would support a large government with increasing taxes. I feel that the government wastes money and ineffectually uses what it is given.

I look at tax revenue as sacred money. If you were almost homeless and the community rallied around you, raised money and gave it to you, you would accept that money with a reverence. To me, this is how tax funds should be. I work hard for my money and have no issues giving the government its cut because I live in a relatively safe, clean, free and wonderful nation. What I don't like is when I work hard, send what the government asks and find out they have been partying with the money. It is insulting and disrespectful.
 
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