rickyp wrote:steve

What do you know about how Dodd-Frank is being implemented? Given that regulations are being promulgated now, how much do you know?

Quite a lot actually. And I get views from other people than American Enterprise Institute hacks like Wallison...

Of course, your ad hominem argument does not tell us anything of your knowledge of Dodd-Frank. You presume it is good, well-crafted regulation. Why? Also, why is it okay for the executive branch to have so much power (as indicated by the article)?

Attack whomever you want, but please understand that is not a defense of sweeping legislation.

Cite all the creative "there was no regulation during the Bush years" arguments you want, but understand that is not an affirmation of Dodd-Frank.

Another view on the necesssity of Dodd Frank... Without rigourous regulation, the dangers of investing will be so uncertain that the economy will falter.

Ah, so Dodd-Frank is a cause of the booming recovery we're seeing? Is that your affirmative argument?

The Dodd-Frank Act responds to this need for change by establishing a regulatory structure better equipped to address evolution of product design, business models, transaction mechanisms, and one that can more effectively assess the financial system as a whole, not simply its component parts. The Financial Stability Oversight Council, or FSOC, in which the Secretary of the Treasury participates as Chairperson, is intended to be a dynamic, forward-looking regulatory body that enhances interagency coordination and improves interagency dialogue on identifying risks to the financial stability of the United States. Attention to the impact of technology on financial stability is an important component of Treasury’s efforts as Chair of the Council.
One manner in which we engage emerging technology issues and their effect on financial stability is by working with the Office of Financial Research, or the OFR. Dodd-Frank tasks the OFR with monitoring changes in risk throughout the financial system and with supporting the Council and its member agencies on matters of data, analytics, and research

Really? Your argument in favor is to cite a bit of propaganda? "We?" Honestly? Note well: that quote explains nothing of the "how." In other words, citing the alleged purpose doesn't tell us what the Law actually does.

Do you understand the difference? If so, then why did you post such utterly unhelpful bilge?

As Ray says, that's "gobbledy goop." (sic)

Thats his opinon. Appreciate that you are quoting "opinion as if it were fact". The one fact he doesn't deal with is that a fundamental cause of the crash, was excessive deregulation. Not excessive regulation.

It's analysis based on how it's actually being implemented.

On the other hand, you cite something the Obama Administration could have written.

OH WAIT!!!!

They did! http://www.treasury.gov/about/organizat ... Mokri.aspx

Cyrus Amir-Mokri serves as the U.S. Department of the Treasury's Assistant Secretary for Financial Institutions.

You call my source a "hack," then cite the Administration.

Feeble . . . as usual.

rickyp wrote:Interesting that you bring this up, since you always seem so reluctant to look at the actual economic history of the US.
The tax rates of post war years were enormous. And yet, as you seem to remember hte US became an economic power house.

Right, because the effective rate was never anywhere near the legal rate.

And, who cares? If jacking up taxes to 80% or more is the solution, why doesn't the President propose it?

Why must you live in the socialist nirvana of the 1950's (as you see it)? Why can't you deal with today? What is YOUR man doing to lower his annual trillion-plus deficits? When is he going to stop blaming Bush for what he never tried to correct? When he had unquestioned ability to pass whatever he wanted through Congress, did he raise taxes?

As for the "bloating". Have any idea about the ratio of government employees to public over the years? Its actually gone down since the 80s.

Do tell. What happens if you remove the military reductions? How many new agencies since the 80's?

If its Federal spending as a percentage of GDP.... pretty low too historically.

So, greater than 24% is low? I don't think most Americans would agree.

The deficit since 2008 is more a revenue problem than a spending problem by 2 to 1.

First, that's tough to say, since the Senate under Democrat Harry Reid has not passed a budget in three years.

Second, if your premise is true, then you should be able to demonstrate revenues have declined twice as much as spending has increased. I think that's going to be a tall order, but feel free. Fill in the blanks:

Budget of USA 2008:

Budget of USA 2011:

Revenue of USA 2008:

Revenue of USA 2011:

I'll expect to see revenue decrease more than spending increases by a 2:1 margin.,

I'll wait.

Professor Ricky wrote:

One more note: if demand is the problem, as Ricky claims, then how does one explain the up and down job market?

go back and reread Steve. And try to retain.
Private job growth was undercut by states laying off people...

Well, that's clear: when States lay off people, those are private jobs. Great insight and well explained!

Or, you could be using more Keynesian logic: government has to be the major driver of the economy. When States have to make difficult choices based on the needs of the citizenry, demand suffers. Is that your argument? If we'd just raise taxes and increase borrowing, all would be well? Is that what we see in States that tried this? California? Illinois?

I hearby terminate your tenure.

If the states had kept those people, then growth would have been greater and the ratcheting of the economy perhaps begun.
Austerity of this kind is like bleeding or applying leaches to an anemic patient...

And, the States would be bankrupt. You don't seem to understand the Federal system. The problem is that States have been too irresponsible for far too long. California is a case in point. If you want to debate this, you need to be familiar with the difference between the Federal government and the State government. Wyoming has no responsibility to pay for California's largess, for example.

Steve,

I understand you want to cut spending but I don't understand how that is going to generate a better economy. The government's borrowing of trillions of dollars has not created high interest or high rates of inflation, so borrowing all that money is not detrimental to the economy right now (though it is a concern long-term). The economy is weak for other reasons. I think it is completely speculative to say that companies are worried about Obama regulating them or taxing them--Obama has shown no sign of doing amything extreme and I'm sure U.S. corporation are aware that Republicans would stop any such legislation.The reason there is a lack of investment and lack of lending by banks is there is weak demand out there. The point of government spending during a recession (or weak recovery) is to prop up demand until the economy can recover. The only thing austerity measures will do is drive the economy into a recession. We know that the way we got out of the depression was because we were forced to run massive deficits because the country's survival was at stake (prior to that existential crisis there was not hte politifcal will to do do so). The recovery of the economy in WWII shows that Keynesian economics works.

This is what Nobel Price winning economist Paul Krugman argues--the government needs to spend the money necessary to get us out of this finanicial mess and I would argue that largely due to Republican intransigence we have not spent the necessary money. What is the necessary money?Whatever it takes to stimulate a strong recovery. After the economy recovers then we can start talking about reining in the deficit.

In any case, I don't see that you have made a persuasive argument that cutting government spending during this weak recovery would somehow create a stronger economy. You have to come with some argument as to how demand is restored--cutting spending weakens demand still further and cutting taxes does not spur investment because there is no out there to buy additional products. If you're going to complain about government borrowing then make an argument as to how you are going to restore demand.

It's not hard to see how cutting public spending has a knock on effect on the private sector.

If the cuts mean losing government jobs, that means people who were getting paid a salary no longer getting it. At the very least that's the disposable income they had as a result not going into the private economy.

if the cuts mean reducing purchasing, where is the government buying from? Suppliers in the private economy in the main, with a supply chain.

The problem is that these effects take place quicker than things like confidence-based investment from less 'red tape'.

There are two related issues. One is government finance. The other, and the one that has a greater impact on more people is the economy as a whole.

Anyway, debt is not always bad. Anyone who buys a house using a mortgage does so with a far greater level of debt-income than the government usually does.

freeman2 wrote:Steve,

I understand you want to cut spending but I don't understand how that is going to generate a better economy.

I understand you want to increase spending, but I don't understand how that's going to generate a better economy. In 3 1/2 years, the US has spent $5T more than it has taken in--is the economy doing anything more than sputter? And, in the long-term racking up more debt is a disaster.

The government's borrowing of trillions of dollars has not created high interest or high rates of inflation, so borrowing all that money is not detrimental to the economy right now (though it is a concern long-term).

Bolshoi ballet.

Interest rates have been artificially held down by the Fed. We have inflation, BUT the government has removed energy and food from the calculations so the "inflation rate" is meaningless.

The rest of your post is filled with your typical Left drivel.

Now, please:

1. You made a claim that spending vs. GDP is at a low point. I pointed out it's 24%. Do you admit you're wrong?

2. If raising taxes is the solution, why did the President prevent that last year? Also, why isn't he proposing the kind of massive tax increase needed to really grow the economy (since you believe this to be the answer)?

3. You claimed that revenues have declined twice as much as spending has increased. Can you prove it?

4. You claim government has to be the main driver. I point out raising taxes has not worked in several States, including California and Illinois. Your response is to say it will work on a Federal level and you appeal to authority (Krugman). Where has this worked? Where has an entity already at 100% Debt/GDP borrowed massively and then prospered?

Can you answer simple questions and stop bloviating?

Ah, I thought this was Ricky. I suppose it's all the same since you both come at it from the same perspective. Nevertheless, I do apologize.

I do wish you guys would pick an avatar.

danivon wrote:Anyway, debt is not always bad. Anyone who buys a house using a mortgage does so with a far greater level of debt-income than the government usually does.

Careful. Do you really want to compare a household with the government?

If you do, you're in for a rough ride.

steve

3. You claimed that revenues have declined twice as much as spending has increased. Can you prove it?

No I didn't I claimed that the source of recent deficits was 2 to 1 lower revenue over higher spending.

The Pew Center reported in April 2011 the cause of a $12.7 trillion shift in the debt situation, from a 2001 CBO forecast of a cumulative $2.3 trillion surplus by 2011 versus the estimated $10.4 trillion public debt we actually face in 2011. The major drivers were:
Revenue declines due to the recession, separate from the Bush tax cuts of 2001 and 2003: 28%
Defense spending increases: 15%
Bush tax cuts of 2001 and 2003: 13%
Increases in net interest: 11%
Other non-defense spending: 10%
Other tax cuts: 8%
Obama Stimulus: 6%
Medicare Part D: 2%
Other reasons: 7%[39]

So Pew puts 49% as either tax cuts or lower revenue due to the economy. Only 31% was direct spending, and only 6%of that was the Stimulus.(and its not clear where the tax cuts of the stimulus are in their analysis.)
The 11% increase because of interest would also have been lower if the taxes wouldn't have been cut... So 2 to 1 was a little high. But lower revenues are still a larger problem then spending...

You know, one of the things you do in this debate is start bringing Obama's policies into the debate. I don't think anyone is overtly defending Obama's policies when debating whether or not its wise to instigate a policy of government austerity Partly because what your government does is a product of Congress and the executive, and its pretty obvious that the lack of function, means that there hasn't been truly coordinated activity.
I realize that Obama has failed to do an awful lot, but then, he's not got the support in congress. Making repeated reference to the lack of a budget isn't on Obama. Its on your dysfuntional system of governance.

steve

. You claim government has to be the main driver. I point out raising taxes has not worked in several States, including California and Illinois. Your response is to say it will work on a Federal level and you appeal to authority (Krugman). Where has this worked? Where has an entity already at 100% Debt/GDP borrowed massively and then prospered?

No. I claim government expenditures are part of the economy. Period. That when government spends it creates economic activity. When it spends less - there's less economic activity.
I also told you I agreed with you that there is a limit to the percentage of the economy the government represents.
But I've disagreed that cutting government right now would have a positive effect. Period.
Managing the economy is about timing.... If you can demonstrate how cutting governemnt spending today will mean more jobs today, then you'd have an arguement. (difficult since the spending cuts directly cause employment cuts) Rather you divert than address that qustion.
As for the question of whether borrowing can be continued after 100% of annual GDP has been achieved... And the economy recovers - I remind you again of the history of the US which in 1945 had an accumulated debt of 145% of GDP.... Somehow the economy for the next three decades wasn't affected.

First, one quick note re: the above Pew Study. That's it? Really? Based on a CBO projection 10 years into the future? Btw, look at that interest number and try to project what it will be when interest rates go up.

rickyp wrote:You know, one of the things you do in this debate is start bringing Obama's policies into the debate. I don't think anyone is overtly defending Obama's policies when debating whether or not its wise to instigate a policy of government austerity

Again, you use the word "austerity." Do you have any idea what it means?

Has Obama increased or decreased spending on "investments," for example? Has he been austere with regard to green projects? Where exactly is the "austerity?" He promised to cut the deficit in half. Did he?

Partly because what your government does is a product of Congress and the executive, and its pretty obvious that the lack of function, means that there hasn't been truly coordinated activity.
I realize that Obama has failed to do an awful lot, but then, he's not got the support in congress.

For two years, he had overwhelming majorities in Congress, what did he do?

And, leaders lead. They cajole, convince and outmaneuver the opposition. President Obama has whined.

Making repeated reference to the lack of a budget isn't on Obama. Its on your dysfuntional system of governance.

No. I claim government expenditures are part of the economy. Period.

Wow. That's really bold. Not.

That when government spends it creates economic activity. When it spends less - there's less economic activity.

It's not spending less!

But I've disagreed that cutting government right now would have a positive effect. Period.

So, we should keep wasting money at the current pace?

Managing the economy is about timing.... If you can demonstrate how cutting governemnt spending today will mean more jobs today, then you'd have an arguement. (difficult since the spending cuts directly cause employment cuts) Rather you divert than address that qustion.

Still waiting for you to admit you're wrong re: GDP.

Hypocrite.

I'll answer your idiotic question. On Day One will government cuts increase jobs?

Probably not. It will take 3 to 6 months. Obama has had 3 1/2 years and has barely got the economic behemoth of the Earth to move. It's not as bad as it was is his motto.

As for the question of whether borrowing can be continued after 100% of annual GDP has been achieved... And the economy recovers - I remind you again of the history of the US which in 1945 had an accumulated debt of 145% of GDP.... Somehow the economy for the next three decades wasn't affected.

Yeah, it's a great comparison--defeating Germany, Japan, and Italy is the equivalent of funding Green Energy, Medicare, and Social Security. The two situations are in no way analogous. We had manufacturing plants all over the place that simply switched to other goods. We had a housing boom because of soldiers coming home. You are, as usual, no student of history.

rickyp wrote:steve

3. You claimed that revenues have declined twice as much as spending has increased. Can you prove it?

No I didn't I claimed that the source of recent deficits was 2 to 1 lower revenue over higher spending.

The Pew Center reported in April 2011 the cause of a $12.7 trillion shift in the debt situation, from a 2001 CBO forecast of a cumulative $2.3 trillion surplus by 2011 versus the estimated $10.4 trillion public debt we actually face in 2011. The major drivers were:
Revenue declines due to the recession, separate from the Bush tax cuts of 2001 and 2003: 28%
Defense spending increases: 15%
Bush tax cuts of 2001 and 2003: 13%
Increases in net interest: 11%
Other non-defense spending: 10%
Other tax cuts: 8%
Obama Stimulus: 6%
Medicare Part D: 2%
Other reasons: 7%[39]

So Pew puts 49% as either tax cuts or lower revenue due to the economy. Only 31% was direct spending, and only 6%of that was the Stimulus.(and its not clear where the tax cuts of the stimulus are in their analysis.)
The 11% increase because of interest would also have been lower if the taxes wouldn't have been cut... So 2 to 1 was a little high. But lower revenues are still a larger problem then spending...

looks like 1 to 1 to me. You may be as high as 51% from spending.
This analysis seems like driving by looking in the rear view mirror. What matters today is how the spending looks going forward. (Haven't you been arguing that it is the deficit and not the debt that matters?) Medicare and medicaid continue to increase by large amounts. Interest expense is an uncontrollable wild card. I don't think that either candidate has a prescription to deal with this. Tax rates are scheduled to increase on Jan 1st. -- to 42% for dividend income from 15% today -- and that's still not enough to deal with the deficit.

Doctor Fate wrote:

danivon wrote:Anyway, debt is not always bad. Anyone who buys a house using a mortgage does so with a far greater level of debt-income than the government usually does.

Careful. Do you really want to compare a household with the government?

If you do, you're in for a rough ride.

unlike the simple-minded, I know the diffierences between the two. It's just interesting that a lot of people who do equate the two themselves put their household into debt of about 3x income with no ill effect at all.

By the way, it's not just the Fed that are giving you low interest rates. The bond markets are as well. You know how they work, dontcha?

ray

What matters today is how the spending looks going forward. (Haven't you been arguing that it is the deficit and not the debt that matters?)

Not just spending, but first: the economy. And only then, the fiscal situation. Which is made up of both spending and revenue. The economy in the US has grown into positive territory, albeit slower than if a greater stimulus had been provided initially. And spending hasn't been abated,. And for that reason the US is in better shape than much of Europe which moved too quickly to rein in spending before the economy had properly rebounded,
Once the economy is growing, revenues grow, and combined with careful trimming the fiscal situation can be addressed. Ignoring the negative effects of taking money out of the economy, depending on some nebulous effect like "confidence" that some how is suppossed to grow despite shrinking demand (which would occur, and has occured at the State level, with cutbacks) is magical thinking. Businesses have confidence when they see market demand increase.... Creating less demand doesn't create confidence. (And industry doesn't look at the size of the US debt or deficit when making decisons about inventory or production....They look at the saleswithin their market sector and within their business.)

ray

Medicare and medicaid continue to increase by large amounts. Interest expense is an uncontrollable wild card. I don't think that either candidate has a prescription to deal with this

Agreed.
As long as medical costs increase at the rate they do, the US economy and the comeptitiveness of US industry is undermined. Agreed. Obama care is at best incremental improvement, if that . The alternatives offered are equally unpalatable to a society that has, by law, refused hospitals the right to turn away indigent patients for 30 years. (The only way to create a true market in medicine is to shrink demand by excluding those who can't afford care...)
Coming to terms with a more rationale proven approach to universal health care is some ways to come. Apparently.I doubt that less than universal care is really acceptable... (With the Reagan law on accessibility to emergent care, you do have a form of universal care)

steve

The two situations are in no way analogous.

No? The debt to GDP level was at 145% of GDP. Fact. (Do you disagree with the fact?)
The rest of your arguement doesn't matter to the problem. Indebtedness, accumulated debt and the path out are clearly shown from the history of 1946 thru 1980. None of that had to do with austerity, low taxation, or a shrinking government. The debt to GDP decreased despite: high taxation an expanding government role and spending. Viet Nam War? Mostly because the economy kept expanding. And part of that expansion was due to government involvement in industrial strategey....

Besides, your supposed "differences" when examined, fall apart... Today there is unused production capacity in the US that can be turned on quickly if the businesses in those sectors see demand. Just as there was a conversion to consumer products in 46.
Today, much of the accumulated debt is due to military spending. (Iraq war). Apparently there were important reasons to fight wars in the last decade too.
Housing boom due to soldiers returning home? Actually the housing boom was because of increased demand from increasing population. Both the birth rate and immigration. The birth rate has decreased in the US, but until the economy burst in 08 the real immigration rate in the US (legal and illegal) was high. And you were enjoying a housing boom..... Until the deregulation within the financial industry helped create the balloon bust scenario... If you think the housing situation can't be fixed without significant changes to financial regulations in that area, and the use of MBS in investment, then I wonder what it is about the word "confidence" that confuses you when applied to business.

The circumstance that the US faced in 46 is not that disimilar. The US today actually has a larger portion of the world economy than in 46, faces no existential threat like Communism. The major difference is that in 46 people were willing to accept taxation rates that insured they could work towards paying that debt down.
Today, Grover Norquist and his ilk insure that a sane taxation policy can't be followed. And "magical thinking" that imbues the markets with rationality and wisdom that will always work to the benfit of the USA ... even when it obviously hasn't , seems to have taken hold of a segment of the populace...\ You included. Evidence?

Steve

Probably not. It will take 3 to 6 months

Why 3 to 6 months Steve? What evidence do you have of huge govenrment spending cuts every turning an economy around in 3 to 6 months?

At the end of WWII we didn't have huge government promises outstanding to retirees; we didn't have over 50 million people (i in 6) over 65. History rhymes, but it doesn't repeat itself.

Ray, social security made a surplus of $95bn this past year. While it may be a cause for concern in the future, it is most definitely not contributing to current deficits.

In fact, accumulated social security surpluses come to about $2.5Tn, which is quite a lot more than public debt.

I understand your fear that in a generation or so it will be 'bust', but we have rather more immediate problems, and long term problems can be dealt with using long term solutions. For social security that could be higher retirement ages (in line with improved life expectancy), increased contributions, lower benefits, or caps.

But don't confuse a future problem with a current position. It is not helping.