1st District candidates talk about federal debt

Comments

  1. Michael H Schneider says:

    No, it’s the Republicans who are stalling the economy.
     
    Republicans and democrats alike ( as well as all citizens who went along with policies )deserve blame and chastisement.
     
    Consider the harm done by the uncertainty caused by the Republicans playing chicken with the debt ceiling:
    http://economistsview.typepad.com/economistsview/2012/05/whos-really-creating-economic-uncertainty.html
     
    Consider that additional borrowing now would pay us at least as much as it costs, and probably more; that it would be a money-making investment:
    http://delong.typepad.com/sdj/2012/05/fiscal-policy-in-a-depressed-economy-late-may-presentation-spine.html
     
    Surley they know that the vast majority of tax cuts went to the middle class.
     
    No – or, at least, that’s a very very misleading thing to claim. The very rich got a far, far bigger benefit than the middle class. Rich people got a very, very big tax cut – although because there are a lot more middle class people the total cost to the treasury was a bit more balanced. It’s like saying to your 11 kids: I’ll give you a total of $20, ten of you will get $1 each and one will get $10; that’s fair because the middle class gets half the benefit, and the rich get the other half. 
    https://www.nytimes.com/2007/01/08/washington/08tax.html
     
    Ask Greece about running deficits to lift themselves out of recession. Or Ireland, or Spain, or Portugal, or Italy.
     
    Wrong again. See: http://krugman.blogs.nytimes.com/2012/04/24/rogoffs-bad-parable/
    http://krugman.blogs.nytimes.com/2012/02/25/european-crisis-realities/
     
    Better you should ask the UK how their attempt to get prosperity by cutting spending has worked out:
    http://krugman.blogs.nytimes.com/2012/05/28/britains-trap/
     
    You will reflect that I never wrote that.
     
    True. Janice Arnold-Jones said that in the original post by Heath. My apologies if I made it seem that you said it. That wasn’t my intention.
     
    The key point here is the one Delong lays out in the column I cite above:
     
    … for reasonable parameter values expansionary fiscal policy appears highly likely to be self-financing at the zero nominal lower bound in which there is a non-zero multiplier. Moreover, even for unreasonable parameter values expansionary fiscal policy appears highly likely to pass its benefit-cost test.
     
    In other words, deficits right now are a money making investment. Right now is when we should be borrowing money to fix roads, bridges, schools, and to develop alternative energy, and to improve public transit, and all the other things that will (a) employ people; and (b) give us the things that will improve productive capacity in the future. Right now we can borrow at negative interest rates. We should grab that opportunity, and make the whole country richer.
     
     
     

  2. Skeptic says:

    The conservatives lie; that’s the lesson of Sweden:
    http://krugman.blogs.nytimes.com/2012/05/16/sweden-sweden-as-conservative-icon/
    Sweden is NOT cutting government spending.
     
    I was referring to the article about Sweeden’s response to their own financial crisis in 1992.
    They did cut benefits -and- raise taxes ( on everyone ).
     
    Yes, we need to rein in health care spending, and that means Medicare and Medicaid and private health insurance. So I agree with this: Some limits on Medicare and Medicaid – we can’t have a pay for everything policy.
     
    But this is just crazy:  everyone should pay at least a little.  Homeless people should pay income tax? People living on disability, or living on only social security, or the mentally handicapped, or people in kindergarten – should they pay income tax? With what? They do pay sales tax and excise taxes and property taxes (probably indirectly) so what’s the problem?
     
    Absolutely all citizens should pay at least a token amount. (Citizens excludes children ).
    If people are truly unable to contribute, make the payment  $1, but we should be and are all in this together.
    Republicans and democrats alike ( as well as all citizens who went along with policies )deserve blame and chastisement.
    But the blame the rich rhetoric from the democrats above is divisive and just plain wrong.
    They all have education. Surley they know that the vast majority of tax cuts went to the middle class.
    They know that on average the highest earners do pay much more in absolute and relative terms.
    The biggest unfairness of the tax code is horizontal – people in all income brackets pay wildly divergent sums
    from other people in the same bracket because of deductions.
     
     
    And this one is totally bogus: Slowly raise retirement age.  Social Security isn’t the problem, the problem is health care spending.
     

    To be sure, social security input and output for an individual are close to equal but it is a problem, a big problem because of demographics –
    input is coming from relatively fewer and fewer workers going to more and more retirees. 
    When you retire from a 401K, it’s because you save up a bunch of money. NOTHING IS SAVED FOR SOCIAL SECURITY. And because of our
    aging society, that money has to come from current incomes which means young people will have to pay more to support retirement of the old.
    Roosevelt wanted social security to be a retirement plan, but government (our democracy) has proven itself incompetent to do this
    (because we/they) spent all the savings. So we have to think of it as a welfare plan for the elderly ( because that’s what it is ).
    We do have to limit social security because demographics and no assets means it is insolvent.
     
    But the award for Stupidest Idea of This or Any Other Century should go to for this idea: That means we must balance the budget now… .
     
    You will reflect that I never wrote that. In fact I don’t believe we need to balanace the budget – ever.
    But we do have to get to within one years taxable percentage of GDP 
    ( close enough that for every year we ‘grow out of last years debts by the end of this year )
    That is why we should s-l-o-w-l-y raise retirement ages ( by one month every calendar year ) so we don’t shock they system,
    but slowly become more solvent long term. I you look at the long term projections, however, spending rises to 25% of GDP.
    The long term average of tax revenues is 18% of GDP. Clearly that is not sustainable.

    We must run deficits now. That’s the way to get ourselves our of this recession and get people back to work. We need to invest in infrastructure. As the economists say, Y=C+G+I+Nx. The way to increase income is to increase spending. Then, when unemployment is back down below 6% (or thereabouts) we can start cutting government expenditures below government income because C and I (non-governmental spending) will pick up the slack and keep the economy going. But to try to balance the budget now is guaranteed to keep us poorer longer.
     
    We have run deficits of more than a trillion dollars a year for four years and will likely continue doing so!!!!
    But it hasn’t really helped. That’s because this was a FINANCIAL crisis, not just a recession. The book ‘This Time is Different’
    details the historical difference. The problem remains with overleveraged consumers. But transfering this debt to be government debt
    (which is what is happening ) has its own perils.
     
    Ask Greece about running deficits to lift themselves out of recession. Or Ireland, or Spain, or Portugal, or Italy.
     
    The truth is a governemnt debt crisis ( which is what we want to avoid ) is not a problem until its a problem, but then it’s too late.
    Right now, US bonds are still for very low interest because the world thinks we good for our debts.
    But each new bond of debt we issue is paid by future generations in inevitably a slower paced US economy.
    When doubt arises, interest rates rise very quickly, and like the insolvent Europeans, we will decline.
     
    I don’t want that to happen.
     
     
    Of course, the people who are fighting so hard to keep the tax cuts in place for themselves because they make over $250,000 a year don’t really care whether average Americans are poorer, so they’ll vote Republican. They’ll make the country as a whole poorer, so they can keep being so much richer than the rest of us.
    The average American receiving $400,000 more in Medicare benefits than they paid in is not a problem caused by the rich.
     

  3. Michael H Schneider says:

    The conservatives lie; that’s the lesson of Sweden:
    http://krugman.blogs.nytimes.com/2012/05/16/sweden-sweden-as-conservative-icon/
     
    Sweden is NOT cutting government spending.
     
    Yes, we need to rein in health care spending, and that means Medicare and Medicaid and private health insurance. So I agree with this: Some limits on Medicare and Medicaid – we can’t have a pay for everything policy.
     
    But this is just crazy:  everyone should pay at least a little.  Homeless people should pay income tax? People living on disability, or living on only social security, or the mentally handicapped, or people in kindergarten – should they pay income tax? With what? They do pay sales tax and excise taxes and property taxes (probably indirectly) so what’s the problem?
     
    And this one is totally bogus: Slowly raise retirement age.  Social Security isn’t the problem, the problem is health care spending.
     
    But the award for Stupidest Idea of This or Any Other Century should go to for this idea: That means we must balance the budget now... .
     
    We must run deficits now. That’s the way to get ourselves our of this recession and get people back to work. We need to invest in infrastructure. As the economists say, Y=C+G+I+Nx. The way to increase income is to increase spending. Then, when unemployment is back down below 6% (or thereabouts) we can start cutting government expenditures below government income because C and I (non-governmental spending) will pick up the slack and keep the economy going. But to try to balance the budget now is guaranteed to keep us poorer longer.
     
    Of course, the people who are fighting so hard to keep the tax cuts in place for themselves because they make over $250,000 a year don’t really care whether average Americans are poorer, so they’ll vote Republican. They’ll make the country as a whole poorer, so they can keep being so much richer than the rest of us.

  4. Skeptic says:

    It is troubling that this entry, perhaps the most important to our nation, has drawn no comments.

    In many ways, it may be a crisis of democracy – people will vote for self interest over group interest.
    But ultimately when the group fails the individual interest also fails.

    The lessen of Sweden may be instructive. Sweden faced the reality of unsustainable benefits,
    but agreed to reduce benefits AND pay more in taxes to put them in a better position. 
    But Sweden is a small relatively homogeneous country – the individuals identify with the group.

    America is a large and diverse country. Can we still pull together as Americans and do what is
    right for the country? Or are we selfish and destined to watch our decline?

    It’s pretty straight forward:

    1. Simplify the tax code, making it fairer horizontally.
    2. Broaden the base, everyone should pay at least a little.
    3. Slowly raise retirement age
    4. Some limits on Medicare and Medicaid – we can’t have a pay for everything policy.

    This is largely what Bowles-Simpson suggested, but strangely not a single reference above.

    History will judge, not only the candidates above, but we as citizens on how well we do the right things,
    or how we let down a great nation into decline.