Debt and Taxes: This is No Time to Cut Federal Spending

[DarrinS]

Erk. That is really a difficult one for me.

I have always been an advocate of a fairly balanced budget, simply because I do worry that we will get to the point of having a bit too much debt, whatever "too much" means. That was why the Bush-era tax cuts without any reduction in spending drove me up the wall.

The thing that concerns me is that US Gov't borrowing might "crowd out" private borrowers who must compete for available capital. This is another one of those things that no one really seems to have a grasp on in terms of scope/effect.

The big thing that worries me is the coming effects of higher energy prices. I think that the assumption that economic growth will "take care of" ANY debt we take on is quite possibly flawed.

As energy prices eat into "available" income for individuals/corporations, this will have the effect of reducing capital available for new investments (as defined by the macro-economic model).

This has the same effect as a tax, but since so much of our oil is imported, unlike goverment spending where it might re-circulate in the domestic economy, this new "energy tax" will go straight out the window, and increase our current account deficits, kind of a double whammy.

Given this, were you to thrust such a decision into MY unwilling hands, I would say that we should have done a bit more, as we can sustain a large deficit for a year or two, especially given the desperate need to invest in infrastructure, but would have to "dial it back" in fairly short order.

There is a school of thought that really says we should ignore any deficits, as we can always inflate our way out of them. I will try to post some of their arguments at some point.

RG -- Big hat. No cattle.

[RandomGuy]

RG -- Big hat. No cattle.

http://www.urbandictionary.com/defin...%20no%20cattle

If saying this makes you feel less butthurt about my showing that you don't really know anything about basic economics, more power to you.

[Winehole23]

Just ignore him; he's a poorly-executed troll.

Highskool Security was funny once upon a time, and the poster responsible is someone I wish still posted here in the semblance of his erstwhile personality. , I'd settle for the revivified zombie form.

[DarrinS]

http://www.urbandictionary.com/defin...%20no%20cattle

If saying this makes you feel less butthurt about my showing that you don't really know anything about basic economics, more power to you.

LMAO at you looking up what "big hat - no cattle" meant.

[RandomGuy]

LMAO at you looking up what "big hat - no cattle" meant.

Heh, I'm glad you got the joke, it was intentional, and well meant.

[admiralsnackbar]

RG -- Big hat. No cattle.

You say this as though you're actually offering a substantive rebuttal in these threads.

[Winehole23]

"All hat, no cattle" is his substantive rebuttal.

[DarrinS]

You say this as though you're actually offering a substantive rebuttal in these threads.

Does it pass the common sense sniff test to you?

[Winehole23]

Having missed RG's fairly obvious hint, I suppose it should come as no surprise that DarrinS was also oblivious to RG's point, which he politely spelled out for DS later in thread.

I had the impression DS thought RG was lording it over him over an irrelevancy or something. Did anyone else?

[Winehole23]

DarrinS finds even very oblique and abstract ways to kick his own ass, at times.

[Winehole23]

I'm beginning to think that's his real contribution to this forum. In the category of self-pwnage, DarrinS is a freeking artist.

[Winehole23]

Look at him now, sniffing for "common-sense" approval.

[Winehole23]

Lazy!

[Winehole23]

Common sense is your substantive rebuttal?

[ChumpDumper]

DarrinS: no hat, no cattle -- only YouTubes.

[Winehole23]

Turn on the bilge pump!

[DarrinS]

DarrinS: no hat, no cattle -- only YouTubes.

That's actually pretty funny.

[Winehole23]

I say all that of course, as one jackass in frank and honest appreciation of another. At its best, this forum can be sort of a convention of friendly (but occasionally unruly) jackasses.

[admiralsnackbar]

Does it pass the common sense sniff test to you?

What specifically are you referring to?

I'll pre-emptively say that the reason we create theories is because common sense is eventually overwhelmed by variables. It may be common sense to you to cut taxes across the board or immediately busy ourselves with the diminution of the debt to the exclusion of all other things, but the reality is that there are countless things we need to spend money on to ensure the future creation of wealth.

RandomGuy, among others, recognizes this complexity and is trying to make sense of it using the tools he has, whereas you just seem to be reacting to his points on the basis of their not seeming transparent enough to you. That's not really a counter-argument as much as a tacit failure to follow the discussion.

[DarrinS]

I say all that of course, as one jackass in frank and honest appreciation of another. At its best, this forum can be sort of a convention of friendly (but occasionally unruly) jackasses.

No problem.


Do you subscribe to the theory that massive govt spending is "just what the doctor ordered" during a deep recession?

[DarrinS]

What specifically are you referring to?

I'll pre-emptively say that the reason we create theories is because common sense is eventually overwhelmed by variables. It may be common sense to you to cut taxes across the board or immediately busy ourselves with the diminution of the debt to the exclusion of all other things, but the reality is that there are countless things we need to spend money on to ensure the future creation of wealth.

RandomGuy, among others, recognizes this complexity and is trying to make sense of it using the tools he has, whereas you just seem to be reacting to his points on the basis of their not seeming transparent enough to you. That's not really a counter-argument as much as a tacit failure to follow the discussion.

Dude grabbed a simple GDP equation from wikipedia. I hope the people in Washington who are "holding the purse strings" have better tools.

[admiralsnackbar]

Dude grabbed a simple GDP equation from wikipedia. I hope the people in Washington who are "holding the purse strings" have better tools.

Right. And your tools are... youtube.

[Winehole23]

No problem.


Do you subscribe to the theory that massive govt spending is "just what the doctor ordered" during a deep recession?

Not really. I thought we needed to have a more chaotic unwind, so values could reset in better approximation to reality.

I think all the emergency spending and massive QE may have temporarily averted a debt-deflation spiral, more for political than economic reasons IMO. So it was good for that...

...allegedly.

[ChumpDumper]

No problem.


Do you subscribe to the theory that massive govt spending is "just what the doctor ordered" during a deep recession?

Sure, the trick would have been avoiding massive government spending during the economic expansion of the 2000s.

[DarrinS]

Not really. I thought we needed to have a more chaotic unwind, so values could reset in better approximation to reality.

I think the spending did probably avert a debt-deflation spiral, more for political than economic reasons IMO. So it was good for that...

...allegedly.

TARP was probably necessary. The "stimulus" package? Not so much.