Obama to Raise Debt Ceiling by About Two TRILLION.

[Serafina]

Do you really think it is reasonable to call any year during the cold war a "peacetime year"?
After all, the whole thing was pretty much one big arms race.

[Sea Skimmer]

Do you really think it is reasonable to call any year during the cold war a "peacetime year"?
After all, the whole thing was pretty much one big arms race.

An arms race you say, you mean just like the rest of the 20th century and all of history? You’ve got to be retarded if you think a typical Cold War year had anything like the demands of fighting a real war. Here’s a hint, in WW2 the US spent 37% of its wealth on warfare, and Japan reached about 70%. Germany was spending around 35% in like 1936 and kept going higher. These are levels of utter national ruin. Not to mention that the cold war is a significant chunk of the entire US history, and two thirds of our history as a superpower so it’d be absurd to ignore it anyway.

[Serafina]

I do not want to claim that it was anything near a wartime-footing, for the simple reason that wartime-footings are pretty ruinous for a economy.

Still, i think that the incentive for spending during the cold war was higher than what can reasonably be called "peace time".
But perhaps thats simply some kind of misunderstanding/language barrier, so i am not going to argue on that point.

(Note: with "language barrier", i do not really mean a barrier between, say, german and english, but more likely between several professional languages.)

Regards
Fina

[J]

Sea Skimmer is just upset because the US military didn't receive $23 trillion in handouts and guarantees to fund a military force fit for total world domination.

[Surlethe]

The interest payments on the debt are a non-trivial amount of dollars each year. The Debt remains an issue until we can start running surpluses to pay it down.

It becomes less and less of an issue the larger the economy and money supply become.

Well the problem now is we have neither real growth, nominal growth, nor inflation unless we use Enron accounting standards. That's a bit of a problem, non?

Yeah, but it's not a situation that's going to last. The shocks will work their way through the system and we'll start growing again. Recessions are generally irrelevant when you look at growth over decades.

[J]

Well the problem now is we have neither real growth, nominal growth, nor inflation unless we use Enron accounting standards. That's a bit of a problem, non?

Yeah, but it's not a situation that's going to last. The shocks will work their way through the system and we'll start growing again. Recessions are generally irrelevant when you look at growth over decades.

Depressions, on the other hand, are relevant on that timescale. Besides, we still have this slight issue of peak oil and resource scarcity when we finally complete the current deleveraging deflation part of the cycle and return to growth. I can see a way out of it if we take the right path (nuclear power for everyone!) yet somehow, I have a feeling most countries will choose a deadend path and run into a brick wall. Repeatedly.

[Darth Wong]

Raise taxes. Military cost savings are not really feasible because George W. Bush committed the country to vast expenditures on military operations which can't be easily curtailed, and even downsizing the military (which is not possible anyway due to the various messes GWB got the country into) would reap only limited financial gains because it takes so long to clean up and close down operations and you still have to pay contractual benefits to existing and former service personnel, not to mention contractors. You could shut down a hugely expensive weapons program boondoggle and you would still end up paying huge amounts of money.

Military spending shouldn’t be a problem, regardless of the US’s ability to cut it. FY2010 US military budget including war supplemental bills is still only going to be about 5% of the GDP which is the highest it’s been since 1992…. But before then the US spent as much as twice that in some peacetime years in the Cold War. Most years it was around 6-7%. It isn’t the military budget that’s gone out of control, its everything else. Hell it used to be fifty years ago that military spending was half of all government spending period. Now it’s more like 20%. People just always look at the military, which includes healthcare and housing for millions of Americans among its budget items, because they don’t want to face reality that everything costs duckets.

Fair enough; the USA could still pay for its huge military if its taxes were at 1960s levels. But they aren't, which is the real problem. Nobody in America is willing to admit that taxes, rather than being some sort of intrinsically unAmerican evil, are the only way citizens can support the nation in any objective sense. Instead, they wave their stupid little souvenir-store flags and put "support the troops" bumper stickers on their cars, while demanding tax cuts. The day will come when Ronald Reagan and all those who subscribed to his economic thinking are recognized as the villains they are, but today is apparently not that day.

I do love BTW all the people who are absurdly opposed to universal healthcare, but basically worship military service… the most socialist thing the US government does. The reality disconnect is near insurmountable. But as long as China holds trillions in US debt, they have a vested interest in selling us more for as long as they possibly can. Anything else would be a disaster for everyone, more so them even since they depend so much on exports. So I don’t think we will see any serious change in US debt policy, not in this administration anyway.

I have to agree there. Change follows suffering, and there isn't quite enough suffering. Yet. It's just infuriating because you know that the people most responsible for this mess will be dead by the time people are finally forced to come to terms with it, so in a sense, they win.

[Surlethe]

Yeah, but it's not a situation that's going to last. The shocks will work their way through the system and we'll start growing again. Recessions are generally irrelevant when you look at growth over decades.

Depressions, on the other hand, are relevant on that timescale. Besides, we still have this slight issue of peak oil and resource scarcity when we finally complete the current deleveraging deflation part of the cycle and return to growth. I can see a way out of it if we take the right path (nuclear power for everyone!) yet somehow, I have a feeling most countries will choose a deadend path and run into a brick wall. Repeatedly.

No they're not. Look at the Great Depression; data here. It took only six years for GDP to get back up to its 1929 levels. If you look at the two decades following the Depression, average annual growth was 3%.

Edit: As for the peak oilish scare, sure, that will depress long run growth significantly, but I'm not convinced that it will cease entirely.

[J]

No they're not. Look at the Great Depression; data here. It took only six years for GDP to get back up to its 1929 levels. If you look at the two decades following the Depression, average annual growth was 3%.

Ummm...that's real GDP, debts are serviced in nominal dollars. And it's seven years, Mr. Math Genius. 1936 minus 1929 is umm...6! Good work Surly-pooh!

To inflate a debt away the nominal GDP and inflation have to go up while real GDP can be whatever it wants to be. The dollars being used to pay back the debt have to be worth less than the dollars used to incur the debt, this does not happen in deflation. Using 1929 as the baseline, inflation doesn't go positive until 1943 and nominal GDP doesn't do so until 1941. And of course WWII was one heck of a stimulus program.

[Surlethe]

In the long run, inflation proceeds at about 3%, too, so if you're just concerned about inflating away the nominal debt your criticism doesn't hold. In any case, although I was making a point about real growth, the dragged-on oil crisis is probably not going to be a deflationary situation.

[J]

Maybe, maybe not. If we look at the GDP deflator for Japan (using your linked site) it's been flat for 20 years and counting, inflating our way out of debt isn't by any means guaranteed. Based on the data I'm seeing, Japan is still deflating away and the current recession is going to tack another 5-10 years of near zero to negative inflation onto them, by the time it's over they could have 25-30 years of flat inflation. On a 100 year timespan it's not too bad, but on a 50 year, it's not that great.

[Serafine666]

Fair enough; the USA could still pay for its huge military if its taxes were at 1960s levels. But they aren't, which is the real problem. Nobody in America is willing to admit that taxes, rather than being some sort of intrinsically unAmerican evil, are the only way citizens can support the nation in any objective sense. Instead, they wave their stupid little souvenir-store flags and put "support the troops" bumper stickers on their cars, while demanding tax cuts. The day will come when Ronald Reagan and all those who subscribed to his economic thinking are recognized as the villains they are, but today is apparently not that day.

However, the day will never come because the day when billions are not leaking wholesale out of government programs due to fraud, unnecessary levels of bureaucracy, paying for the newest shiniest weapon because Senator Sparrow has the General Electric corporate HQ in his state, and eating up most of a typical bill with bribe money (which in political parlance is called "earmarks" or "pork-barrel spending") for "principled" politicians is never going to come either. So long as a politician can correctly point to billions if not trillions of dollars disappearing into thin air due to incompetence or self-interest, the argument that taxes should be cut in an attempt to cut the monetary blood supply to waste will always be legitimate. Moreover, the argument that programs should be reformed to cut overall costs is very much in force; much of the rhetoric from the supporters of the current attempt to create healthcare reform in the United States is couched in terms of "we'll make the program better by making it cost less"; unless the argument is that the government should hike taxes even after it no longer needs to do so, cutting the amount of money the government needs is naturally followed by cutting the amount of money the government obligates the citizenry to pay.

[bobalot]

However, the day will never come because the day when billions are not leaking wholesale out of government programs due to fraud

Where is your proof for this? Fraud is a serious allegation.

unnecessary levels of bureaucracy

What levels are these? How much does it cost? Why are they unnecessary? Are they they greater the massive levels of military spending?

...eating up most of a typical bill with bribe money (which in political parlance is called "earmarks" or "pork-barrel spending")...

Earmarks typically make up about 1% of the American federal budget. The spending bill that was being debated in March had a whopping 2%. While it desirable to eliminate such pork barreling, "most" of a typical bill is not made up of earmarks. Keeping in tradition with your posting history, it's another factoid that you pulled out of your arse.

So long as a politician can correctly point to billions if not trillions of dollars disappearing into thin air due to incompetence or self-interest, the argument that taxes should be cut in an attempt to cut the monetary blood supply to waste will always be legitimate.

You make one major implicit assumption.

The vast majority (since you mentioned trillions) of the money raised through taxation is either wasted or lost to earmarks and pork barreling (I can only assume on your vague claim of "self interest"). You not provided any proof for any of this. In fact the point about earmarks (that we can only assume that you are building upon) is a load of bullshit.

Moreover, the argument that programs should be reformed to cut overall costs is very much in force; much of the rhetoric from the supporters of the current attempt to create healthcare reform in the United States is couched in terms of "we'll make the program better by making it cost less"; unless the argument is that the government should hike taxes even after it no longer needs to do so, cutting the amount of money the government needs is naturally followed by cutting the amount of money the government obligates the citizenry to pay.

Since when did anybody here advocate "the government should hike taxes even after it no longer needs" or even imply it? or even imply that government programs shouldn't be made more efficient?

Also Darth Wong was deriding Ronald Reagon's approach, which was to simultaneously cut taxes while massively increasing military spending. The modern era of massive deficits began with the sainted Reagan. Americans want massive levels of military spending and support enormous foreign adventures without the corresponding level of taxation.

[Big Orange]

Debts from America's infamous Military-Industrial Complex are bad enough, China and Japan own a vast amount of America's debt from commercial imports alone (which is why they put their oars in about the raising of America's debt).

I heard Social Security in America is decried by conservatives as a huge ponzi scheme, a drain of funds and in need of privatization, despite Social Security supposedly being a practically insignificant 3.5% of the annual Federal/national budget.

[Sea Skimmer]

Debts from America's infamous Military-Industrial Complex are bad enough, China and Japan own a vast amount of America's debt from commercial imports alone (which is why they put their oars in about the raising of America's debt).

I heard Social Security in America is decried by conservatives as a huge ponzi scheme, a drain of funds and in need of privatization, despite Social Security supposedly being a practically insignificant 3.5% of the annual Federal/national budget.

What a load of bullshit. In 2008 the budget for Social Security was 608 billion dollars which is 21% of the federal budget. If you add Social Security, Medicare and Medicaid spending together the total was 1.203 TRILLION dollars which is MORE money then the entire discretionary budget (which includes the military, transportation, energy, research funding ect..) and 41% of the budget in total.

[Big Orange]

I read somewhere that it was Social Security's administrative budget, rather than the SS itself and the healthcare on top of that. And it's roughly another trillion for the US Military.

[Sea Skimmer]

I read somewhere that it was Social Security's administrative budget, rather than the SS itself and the healthcare on top of that.

Nice backpedal, that’s not what you fucking said.

And it's roughly another trillion for the US Military.

You mean that thing the constitution explicitly provides for? This is relevant to your original statement how? Not at fucking all, its just a quick attempt at a diversion? Maybe you should just do fucking basic research before making declarations like this, especially on a subject on which an overwhelming mountain of detailed information is available on with the flimsiest of searches.

[bobalot]

While social security makes up a large part of the budget. It is set to rise from less than 5% of GDP to about 6% and stabilise at that level at about 2035. (Source). Its proportion of government spending is set to rise, but not out of control, it should stabilise. The American government could bring down costs by means testing benefits (like we do in Australia).

The real growing cost for the American government is is healthcare. But America is too retarded to implement anything approaching universal healthcare to bring down costs.

Getting back to the point about military spending, the accumulated cost of the war in Afghanistan and Iraq hit a whopping $752 billion in February 2008. (Source). If most people in America was for these wars (at the onset), why weren't they will to pay more tax to finance these wars?

[Sea Skimmer]

Getting back to the point about military spending, the accumulated cost of the war in Afghanistan and Iraq hit a whopping $752 billion in February 2008.

That isn't very much for seven years of war, seriously. Like I’ve pointed out before the US spent a larger portion of its economy on the military in peacetime during much of the cold war then it does now to support its military and fight two wars at once (or really three since the rest of the GWOT and the Homeland Security budget eat a fait bit of money too).

(Source). If most people in America was for these wars (at the onset), why weren't they will to pay more tax to finance these wars?

Congress never asked and never wanted to ask, and the fact is the US has funded every war it’s fought through debt since 1898 and it hasn’t killed us yet, so why would the modern government change this policy? (yeah I know other things have changed, but congress is bad at planning ahead to say the least) Like I said above, we could be spending this much to not fight anyone. Meanwhile military spending as a percent of total government spending has been steadily dropping since the Kennedy administration kicked off the whole scale involvement in federal government in welfare spending programs, and as more and more people actually retired and joined into the social secuitry-medicare system.

In the end it is all because people just do not understand and do not want to understand that the higher standards of living they enjoy now and the higher level of services they expect actually cost money. Not enough exists to sustain both, so debt is the answer. It wouldn’t be possible if foreign countries had become so happy to buy it. China for one would almost certainly be much less economically developed if it hadn’t given the US license to print 2 trillion in debt and then use every penny of it to buy cheap Chinese made poison crap.

[Big Orange]

Nice backpedal, that’s not what you fucking said.

I fucked up, it's called posting at 01:00 AM in the morning. I should've directly quoted what Joe Bageant said about the administrative costs of Social Security in Deer Hunting With Jesus, make of it what you will:

Page 87
A good example is using the old saw of “less government” to associate presumed government inefficiency to associate presumed inefficiency with Social Security. Rather than abolish Social Security - which the Right knows cannot be done because it remains the most popular government program ever created - the neoconservative recommend privatizing it to make it more efficient and increase returns on retirees’ investments. Or as Tom says, “Let the pros on Wall Street handle it. Everybody knows how wasteful and inefficient governmental bureaucracies are.” The truth is something that conservatives will never admit: The administrative costs of Social Security are far lower than the administrative costs of any private sector company, only 3.5 percent of its annual budget, according to the Government Accounting Office.

I could even scan that paragraph directly in, but it's getting late again and I'll look up the board rules on copyright.

You mean that thing the constitution explicitly provides for? This is relevant to your original statement how? Not at fucking all, its just a quick attempt at a diversion? Maybe you should just do fucking basic research before making declarations like this, especially on a subject on which an overwhelming mountain of detailed information is available on with the flimsiest of searches.

Here's a pie chart (Wikipedia) for the recent Federal budget total from 2008, and you're right, the SS/Medicare spending exceeds Defence spending, although I guess law enforcement and the prisons come under Discretionary. Here's an easily digestible essay on future Federal spending, Federal Budget Challenges.

[ZOmegaZ]

I'm looking at the U.S. budget for this past year, and I'm curious, and hoping more learned board members could answer this, but where would the country even begin to lower its debt?

From my blog:
http://www.collings2010.com/sections/bl ... ficit.html

There are only three ways out of this budgetary mess we're in: cut entitlement spending, cut military spending, or raise taxes. This is not debatable; there's no way around it, and anyone who tells you there's another option is lying to you. This problem must be addressed. We have to choose, and we have to choose now. Nobody else is going to tell you this, because they're afraid to. But someone has to, so I am.

Are we going to have federal programs to take care of the elderly and poor? Are we going to have a strong military? Are we going to have the low taxes we have now? Because we can not have all three. We can't have things without paying for them some day, and soon we won't be able to delay that day any further.