The Taiwanese government is running a deficit of about 10%
http://eng.dgbas.gov.tw/ct.asp?xItem=29 ... =5555&mp=2

They have public debt of over 100% of GDP (GDP is about 14Trillion Taiwanese dollars, debt in 2010 was 19Tn Taiwanese dollars)
http://www.taipeitimes.com/News/editori ... 2003464653

Surely if your prescription for the USA is to cut spending, it would be irresponsible to encourage a country in a similar position to increase it

Perhaps not all Taiwanese would actually agree, given that for many years it was a military dictatorship run by the Chinese Kuomintang, who imposed martial law for the period 1948-1991. Some citizens will have seen much of the last 60 years as being about the two sides of the mainland's civil war squaring up to each other at the cost of their own 'freedom'.

I'm not going to tell the Taiwanese how to run their economy. That makes as much sense as foreign nationals perpetually telling the US what to do.

If you are facing another existential threat, it's okay to run a large deficit and debt. To me that's the critical difference between now and WWII.

Ray Jay wrote:I'm not going to tell the Taiwanese how to run their economy. That makes as much sense as foreign nationals perpetually telling the US what to do.

And thus, I am damned for keeping quiet on this thread (by Brad) and for saying anything (by you).

If you are facing another existential threat, it's okay to run a large deficit and debt. To me that's the critical difference between now and WWII.

So the global economic situation is not potentially devastating in itself? The supporters of the GWOT and those who fear a Global Islamic Caliphate would also differ with you on existential threats.

If you are in recession or are just emerging from one, you have no choice but to run a large deficit. If that comes after a sustained period of debt building, then you will have debt no matter what you do.

However, cutting government spending too drastically (and that also includes raising taxes too quickly, or raising the wrong taxes on the wrong people) will also have an effect on the economy. It's all very well trying to save the US economy of 2020 or 2040 or whenever, but the economy right now is the real one.

In all seriousness, I don't know much about Taiwan's economy; I do know that they have the right to defend themselves. You and Ricky are welcome to kibitz on the US economy. But it is not lost on me that it is in a foreigner's interest to have us stimulate our economy because they won't be on the hook for the debt. But my lineage and I will be on the hook. And my political institutions will suffer further as did Germany's in the 20's and 30's. Similarly it would be fine for my pocket book if Europe went on a spending spree; no doubt some of that would increase US activity.

We've been down this road before. We just don't agree on what the underlying problem is.

By the way, when you use terms such as "Cutting government spending too drastically" my sense is that you are not seeing things clearly. (Others think you are being disingenuous, but I like you too much to think that.) Haven't we already gone through the exercise of noting that government spending is increasing drastically based on demographics and entitlement promises? The question on the table right now is whether we increase spending even more drastically to jump start the economy, or we just increase spending substantially (drastically?) as under the current budget.

rickyp wrote:But the timing? Unless the American economy is expanding before starting this, huge spending cuts will simply exacerbate the current economic malaise.

Is that based on the same expertise that told us the effect the Stimulus would have?

I think you're wrong in any event. If certainty is restored, the economy will take off. There is pent up money that is waiting until the smoke has settled from all the change Obama has wrought. He thinks he can get things moving through temporary measures. I see no evidence that this has worked or will work.

And a reasonable level of taxation Steve? How about the levels that existed when Saint Ron was in power? He was a reasonable man wasn't he? How about the levels that existed 10 years ago? In both periods investment was high, and the economy generally grew quickly. So taxation couldn't have been an unreasonable drag on business, personal spending or the economy in general. And that sounds reasonable.

I would invite the President to run on tax increases. That is sure to "help" him. Again, I encourage you to go to work for his campaign team. I think you can get him over the top.

One thing, you can't have a first world nation with a tax structure that resembles a third world nation.

Mmm, good insight. I mean, I am sure most third world nations raise as much in taxes per capita as we do, right? Go ahead, Ricky--rattle off the first ten that come to mind.

Infrastructure and governance cost money. A social safety net costs taxes.

Right. So does crony capitalism, which this President has practiced like none in generations.

Your right about Ryans plan and his plan to reduce entitlements. The problem is, it went over like a lead balloon didn't it?

Amazing what demagogues, like the President, can accomplish in league with a servile media, isn't it?

The truth is his plan has not had a fair airing.

People have become used to the security and comfort of those horrible socialistic mechanisms and don't want to give them up. Who can blame them?

I can. Right-thinking Americans can. Maybe a socialist can't.

Look, if the "greatest generation" had to sacrifice, so should mine. Democrats lied about the effects of Ryan's reforms. They would not impact those 55 and older. For those younger, yeah, we might have to work a few years longer and *gasp* save a bit of our own money, but so what?

What's the alternative? Letting the whole system collapse so I can get "mine?" Maybe some selfish people are willing to think that way. I think conservatives like me are more altruistic. I don't want my kids and grandkids being forced by law to pay more in taxes so that I don't "lose" anything.

Again the problem being that Americans don't really accept that you can't have your cake and eat it too.

I do--and I know I'm not alone. So, stop with the generalizations.

Which comes back again to, when growth is occurring, cutting spending simplistically and letting the experts in each area maximize with 90% of what they've been used to...

Which has nothing to do with solving the current problem. One can only conclude that your answer is "do nothing."

I think we need to look at the debt as the "existential" threat.

Ray Jay wrote:In all seriousness, I don't know much about Taiwan's economy; I do know that they have the right to defend themselves. You and Ricky are welcome to kibitz on the US economy. But it is not lost on me that it is in a foreigner's interest to have us stimulate our economy because they won't be on the hook for the debt. But my lineage and I will be on the hook.

I would argue that it is in your interests to stimulate your economy as well, as you are going to be paying for it either way (low growth will make deficit reduction harder going forward and the longer it goes on for the greater the opportunity cost of a period of stagnation)

And my political institutions will suffer further as did Germany's in the 20's and 30's.

Seriously, the German crisis of the 1920s is totally different. The main problem was that they were not only paying back the loans for fighting WWI, but they were paying massive punitive reparations on which the annual repayments were larger than national GDP at one point, the economy was stymied by occupation of key industrial areas, and then the demand came in to pay in gold rather than in marks and Germany had no means to do anything other than print ridiculous amounts of money just to keep up.

It was unprecedented, but we now understand how it happened, and why Zimbabwe had it a few years ago. The US deficit problems are not comparable, and even with the worst projections, it's not going to happen any time soon. Dredging up Germany in the 1940s is like comparing every country with debts and deficits to Greece.

You are probably in a more similar position to the USA of the mid-1930s, to be honest.

Similarly it would be fine for my pocket book if Europe went on a spending spree; no doubt some of that would increase US activity.

Which is why I would argue that the UK and European austerity measures are also wrong. I don't propose for the USA what I would oppose here, because I believe that it is in both our interests.

And I don't actually support a spending spree for either side of the Atlantic either. There are cuts that can be made, and should be.

By the way, when you use terms such as "Cutting government spending too drastically" my sense is that you are not seeing things clearly. (Others think you are being disingenuous, but I like you too much to think that.) Haven't we already gone through the exercise of noting that government spending is increasing drastically based on demographics and entitlement promises? The question on the table right now is whether we increase spending even more drastically to jump start the economy, or we just increase spending substantially (drastically?) as under the current budget.

Well, long term yes, demographics and uprating of Social Security and the increasing costs of medicine will see spending in dollar terms go up a lot in the next few years (although it's over decades that the changes become dramatic), and inflation means that dollar-term spending will always go up anyway, the current deficit is largely a result of the current economic situation in that it increases temporary entitlements and reduces tax incomes.

I am aware that in that context, a 'cut' is really a slow down in the rate of increase, but if you consider the effect after inflation and on the spending per unit, it will often be a cut in real terms as well. If it's a reduction in spending in terms of GDP, it's pretty much a cut. I suppose the question is whether you consider it to be a dirty word (I don't by the way, and I would support moderate cuts)

In some parts of the government, it will mean actual reductions in what can be provided, won't it? It would certainly put a lot of jobs at risk - not just government jobs, but those of people in the private sector. The hope is that the result will also be that somehow private sector investment will create opportunities, that banks will start to lend to them and that the economy will pick up.

bbauska wrote:I think we need to look at the debt as the "existential" threat.

perhaps. Here's an analogy:

What's worse - the fact that you have a mortgage worth 300% of your annual income, or the possibility of losing a fair proportion of your income in the next few years?

The former is three times as bad as the current US debt level. The latter is a deep recession.

As long as you can pay your mortgage interest payments, it's not a big problem. Losing income is one of the things that will threaten that (or make life very uncomfortable while you keep it up).

By the way - and this is a serious question - why not look at the whole balance sheet, not just spending and debt:

There are two components to your balances: revenue and capital. On the revenue side you have two flows - income and spending, with the difference being your surplus/deficit.

But on the capital side there are also two pots - liabilities and assets. The debt is a liability, but who is measuring the assets?

Honestly, if you want to treat the US like a family budget or a corporate budget, you should consider the whole budget, not just part of it.

ricky

Your right about Ryans plan and his plan to reduce entitlements. The problem is, it went over like a lead balloon didn't it?

steve

Amazing what demagogues, like the President, can accomplish in league with a servile media, isn't it?
The truth is his plan has not had a fair airing.

right now not a single republican candidate for president is using the Ryan proposals in his/her policy positions. Wouldn't this be a geat time to give his proposals a "fair airing". If it didn't get a fair airing it was because his plan was abandoned by his party.
And it ws abandoned because it couldn't be sold.
I beleive you when you say you'd be willing to personnally make immediate sacrifices in your standard of living and entitlements in order to help reduce the deficit. I just don't beleive thats typical. Nor do i beleive there's a politican willing to ask for that kind of immediate sacrifice. (Especially sacrifice from millionares...) Right now Obama is carrying the can for the economy. But in the next election it will be a choice between prescriptions to fix the economy.
You can debate unrealistic solutions all you want, but the options will come down to what the electorate finds palatable. Or what politicians can dress up and sell...

Here's what Sargeant wrote about the latest WSJ poll.

It’s true. The poll finds that only 37 percent approve of Obama’s handling of the economy, versus 59 percent who disapprove. It also finds that only 31 percent are “extremely confident” or “quite confident” that the President has the right goals and policies to improve the economy, versus a whopping 68 percent who are only somewhat or not at all confident.
But then the pollsters ask about the policies themselves. And here’s what they find:
— A solid majority (60 percent) supports reducing the deficit by ending the Bush tax cuts for the rich.
— A solid majority (56 percent) supports reducing the deficit through a combination of tax increases and spending cuts.
— Only 37 percent support the GOP’s solution to the deficit, i.e., reducing it only through spending cuts with no tax hikes on the rich or corporations.
— A plurality supports a federally funded roads construction bill to create jobs, 47-26, which is similar to what Obama is expected to propose in his jobs speech.
— A plurality supports continuing to extend unemployment benefits, 44-39.
— A plurality supports an extension of the payroll tax cut, 40-20.

By the way, yes the poll is adults. But the margins are so large that the 4 point difference that a poll of "voters" usually turns out isn't significant.

ray

But it is not lost on me that it is in a foreigner's interest to have us stimulate our economy because they won't be on the hook for the debt. But my lineage and I will be on the hook

.

Ray, do you remember when you started feeling this way about the accumulation of debt?
Did you feel this way through the 80's , 90's or through the first five or six years of this century?

rickyp wrote:right now not a single republican candidate for president is using the Ryan proposals in his/her policy positions. Wouldn't this be a geat time to give his proposals a "fair airing". If it didn't get a fair airing it was because his plan was abandoned by his party.
And it ws abandoned because it couldn't be sold.

Rubbish. It was passed by the GOP-controlled House. That's not abandonment.

Meanwhile, the President proposed a budget. It was defeated 97-0. Now, THAT is abandonment!

Ryan's plan will be modified and raised by GOP candidates. Why? Because anyone with a brain knows we cannot keep doing nothing about tens of trillions in unfunded liabilities.

Sadly, that lets out about 97% of Democrats. That is the party of "there is no Medicare problem" and "there is no Social Security problem." They are either stupid or dishonest. In either case, they don't do the American people any favors by continually misrepresenting the situation.

I beleive you when you say you'd be willing to personnally make immediate sacrifices in your standard of living and entitlements in order to help reduce the deficit. I just don't beleive thats typical.

You may be right. The question is what to do about it. Democrats say "Nothing" or "Raise taxes on the rich." Nothing is not an answer. Raising taxes on the rich cannot bridge the gap. To close the unfunded liabilities would demand massive tax increases on everyone. Romney cited something in excess of 40% payroll tax.

Nor do i beleive there's a politican willing to ask for that kind of immediate sacrifice.

Ryan didn't call for an "immediate" sacrifice. It seems you fall into the typical Democrat way of thinking--either unable or unwilling to be honest. Were I called upon to make a sacrifice, it would not be for more than 15 years. That is not, by any definition, "immediate."

Right now Obama is carrying the can for the economy.

Really? About 2/3 of the rhetoric from the White House is still blaming Bush.

But in the next election it will be a choice between prescriptions to fix the economy.
You can debate unrealistic solutions all you want, but the options will come down to what the electorate finds palatable. Or what politicians can dress up and sell...

Raising taxes has never been popular. When people hear how little money the "soak the rich" plans will get compared to what is needed, most (those who actually think) will realize it's not an answer.

Here's what Sargeant wrote about the latest WSJ poll.

It’s true. The poll finds that only 37 percent approve of Obama’s handling of the economy, versus 59 percent who disapprove. It also finds that only 31 percent are “extremely confident” or “quite confident” that the President has the right goals and policies to improve the economy, versus a whopping 68 percent who are only somewhat or not at all confident.
But then the pollsters ask about the policies themselves. And here’s what they find:
— A solid majority (60 percent) supports reducing the deficit by ending the Bush tax cuts for the rich.
— A solid majority (56 percent) supports reducing the deficit through a combination of tax increases and spending cuts.
— Only 37 percent support the GOP’s solution to the deficit, i.e., reducing it only through spending cuts with no tax hikes on the rich or corporations.
— A plurality supports a federally funded roads construction bill to create jobs, 47-26, which is similar to what Obama is expected to propose in his jobs speech.
— A plurality supports continuing to extend unemployment benefits, 44-39.
— A plurality supports an extension of the payroll tax cut, 40-20.

By the way, yes the poll is adults. But the margins are so large that the 4 point difference that a poll of "voters" usually turns out isn't significant.

There are several problems with that analysis. First of all, Obama has proposed no serious spending cuts--so that 56% mark isn't very helpful to him. Additionally, the GOP candidates will propose overhauling (simplifying) the tax code in a way that will net federal income.

I wonder if people would feel the same way about unemployment benefits if they knew they already last nearly two years? I wonder if they'd feel the same way about road construction if they knew it was going to be done at top-dollar union wages and include the same massive waste as the Stimulus bill did? I wonder if they would support any of these measures if they knew all they do is add to the debt? They don't stimulate anything.

Meanwhile, you've got Maxine Waters proposing a Trillion dollar jobs program. The President is going to propose local and State aid (again). There is going to be nothing new to promote growth or confidence.

Think whatever you want, but the status quo means Obama will lose. Thankfully, he only knows one tune.

Doctor Fate wrote:Buffet should put up or shut up, as Buchanan notes:

“I’m a little fed up with these people who come on, you know, their big op-eds, all these admonitions. Why doesn’t he set an example and send a check for $5 billion to the federal government? He’s got about $40 billion. You know, you had a plan up there, I talked to Howie Carr at Boston where the super-rich could contribute an extra amount. It was something like one-tenth of one percent did it. You get all this noise from these big rich folks. Let them send checks and set an example instead of writing op-eds.”

What's stopping Buffet?

I'm sorry, but this line of argument is just plain dumb. It was also essentially the WSJ editorial response as well. Come on people, you all can do better than that, can't you?

geojanes wrote:I'm sorry, but this line of argument is just plain dumb. It was also essentially the WSJ editorial response as well. Come on people, you all can do better than that, can't you?

You're right--it's dumb to expect someone with a big yap to follow through on what he wants to force others to do.

We have done better--you just haven't been reading. He is an Obama sycophant. His proposal raises little money. His argument is that raising taxes won't impact job creation. That's one theory. Another is that cutting red tape and removing onerous programs and requirements (e.g. Obamacare, Dodd-Frank) and providing certainty would do more to lift the economy than anything Mr. Buffett has said.

RUFFHAUS 8 wrote:Buffett is a blowhard hypocrite with a political agenda because he's got a long term financial stake in seeing Obama re-elected. And since you love to beat the drum of reptition, I'll say it again, he's not an expert on tax revenues, or anything remotely close to managing the governemnts spending and revenue problems. If he's so interested in helping out, then he can start writign checks, or apply his expertise investing the social security revenues in the market. Otherwise his opinion is worthless here.

Buffet is perhaps the most accomplished capitalist of the 20th Century. He's charitable acts are well known and understood. He's not a angel but as primarily an American investor, what's good for him financially is a country that prospers. Why do you think so poorly of him? What has he done, other than pointing out the very rich pay very low tax rates that makes you suspect him so?

Doctor Fate wrote:

geojanes wrote:I'm sorry, but this line of argument is just plain dumb. It was also essentially the WSJ editorial response as well. Come on people, you all can do better than that, can't you?

You're right--it's dumb to expect someone with a big yap to follow through on what he wants to force others to do.

Oh, come on. That's not how policy works. You can say, let's invade Libya, but if the country doesn't what are you going to do? Raise a private army? Policy is about moving forward in unison with common goals, benefits and sacrifice. But you know this. This line of argument is a red herring.