Republicans no longer a viable party?

[Greg Bernhardt]

This article sums up Obama's spending...

http://www.thedailybeast.com/articl...ng-exclusive-estimate-of-the-true-number.html

Obama has slashed one tax dollar for every dollar he’s spent on government programs.

Doesn't that mean he is raising less money and still spending more? How does that help!?

 

[SixNein]

Doesn't that mean he is raising less money and still spending more? How does that help!?

http://www.npr.org/2010/12/07/131879993/obama-s-tax-cut-deal-so-much-for-deficit-reduction

At the end of the day, the economy did need stimulus spending, and it may still need some more. The economy is very fragile right now. And people for some reason or another seem to be over looking this fact.

But again, its not fair to say that obama is spending trillions. Most of the spending comes from mandatory programs.

On a side note, the tax cuts largely backfired politically...
http://www.nytimes.com/2010/10/19/us/politics/19taxes.html

 

[WhoWee]

http://www.npr.org/2010/12/07/131879993/obama-s-tax-cut-deal-so-much-for-deficit-reduction

At the end of the day, the economy did need stimulus spending, and it may still need some more. The economy is very fragile right now. And people for some reason or another seem to be over looking this fact.

But again, its not fair to say that obama is spending trillions. Most of the spending comes from mandatory programs.

On a side note, the tax cuts largely backfired politically...
http://www.nytimes.com/2010/10/19/us/politics/19taxes.html

Please support your statement: "At the end of the day, the economy did need stimulus spending, and it may still need some more." Was stimulus spending the only option? Maybe the economy just needed Government to stop meddling and restore certainty? Maybe the economy needs global stability - not a speaking tour to the Mideast that apologizes for America and (possibly) encouraged young people to protest? Maybe we need a clear energy policy? Maybe the President shouldn't hire the CEO of GE (they didn't pay any taxes last year and sent thousands of jobs offshore) to work on his jobs project? Maybe the President should not interfere with the Federal Bankruptcy courts to protect his union supporters and at the same time create uncertainty in the bond markets?

Again - http://geekpolitics.com/obama-on-raising-the-debt-ceiling/
President Obama has exceeded the doom and gloom number he spoke about to criticize Bush - by $2Trillion (with a "T") - of course it's fair to blame him (and not Bush).

Last, the "tax cut for 95%" was political theater at best - what have you done with your extra money? btw - I didn't know it cost over $100Billion - what a waste!

 

[CAC1001]

Fiscal stimulus hasn't been considered a viable form of economic policy for over thirty years now. The only people who still adhere to it are politicians because they don't like to have to admit that there is really nothing they can do to "fix" the economy and ideologues who never really got over the fact that socialism doesn't work.

And not raising the debt ceiling will not create a default. The U.S. government doesn't take on additional debt to service the existing debt. One of the key things looked at when measuring the country's creditworthiness is what percentage of the federal revenues go towards servicing the debt. What would cause major damage if the debt ceiling is not raised is the $1.6 trillion worth of government spending that suddenly would have to stop, which would shut down whole industries as their government agencies would stop functioning. Social Security and so forth would stop getting paid. And such.

As for the thread's premise, that all this is on the Republicans, I find rather silly. President Obama himself said he will not sign a deal for a short-term debt limit. So in other words, if the House and Senate approve a bill that increases the debt limit again for the short-term, then he will refuse to sign it. In other words, he is either playing politics or willing to sink the country for his own political purposes. The only reason he doesn't want a short-term debt limit increase is because he doesn't want this as an issue he has to deal with going into the 2012 election. He wants people to forget about the issues of debt and deficit. The Republicans want it to remain (and rightfully so) an issue going into the 2012 election.

People like Bachmann however, who says that not raising the debt limit wouldn't be a problem, that is nonsense. Not raising it would be catostrophic, so it needs to be raised.

 

[mheslep]

This article sums up Obama's spending...

No it does not.

 

[mheslep]

And not raising the debt ceiling will not create a default.

It will force nearly 40% of current spending to either cease or be paid for from additional revenue such as selling off assets. The President may or may not choose to pay interest on the US debt, causing a 'technical' default for a short time. That's far preferable to a forced default, such as in Greece, where all current revenues combined are insufficient to pay the debt interest alone.

 

[Ivan Seeking]

It will force nearly 40% of current spending to either cease or be paid for from additional revenue such as selling off assets. The President may or may not choose to pay interest on the US debt, causing a 'technical' default for a short time. That's far preferable to a forced default, such as in Greece, where all current revenues combined are insufficient to pay the debt interest alone.

However, as we have seen in the last two days with threats to downgrade the US credit rating [S&P, Moody's], it will still be viewed as a default as the good faith and credit of the country will be marginalized. We still won't pay all the bills. Now I realize that popular tea position is that we can pay the Chinese their interest instead of Americans what they need to live, but even not paying Americans is a failure to pay. And not paying any principle on our debt is also seen as a failure to pay. IF our credit rating is downgraded, it will cost more to sustain the debt that we already have, and we gain nothing. So the default or failure to pay the poor plans are great plans if you want to pay more interest to China and get nothing in return.

The REAL irony is that if this happens, some of the people that will be screaming the loudest will be the tea partiers. Recall for example the heated town halls regarding health care reform. In one random sample taken by a Congressman under pressure, at least half of those in the audience protesting the reforms were dependent on government money and apparently didn't even know it.

 

[Ivan Seeking]

Fiscal stimulus hasn't been considered a viable form of economic policy for over thirty years now.

So you just make things up as you go? From that liberal rag, the WSJ.

Jan. 2009: Economists in the monthly Wall Street Journal forecasting survey generally agree with the size of President-elect Barack Obama's stimulus package but remain divided on where the money should be spent.

Congress released on Thursday details of the $825 billion package, including tax cuts and increase government spending. Like the political debate over the plan, economists differed on how best to trigger long-term growth—more "bang for the buck"—versus the need for more immediate relief. (See related article.)...

http://online.wsj.com/article/SB123195389790581947.html

 

[CAC1001]

So you just make things up as you go? From that liberal rag, the WSJ.

http://faculty.chicagobooth.edu/john.cochrane/research/papers/stimulus_rip.html (I doubt Cochrane is being disingenuous).

Plus there is no example of stimulus working in history. There are too many problems with it:

1) In order to inject money into the economy, the government must first take it out of the economy in another form, debt (in this sense, demand-side tax cuts will not work either if they mean the government must operate on debt)

2) What exactly is the multiplier effect? No one knows, and it may even be negative. If no one knows the actual multiplier (if there even is one), then no one knows how much to spend. How does one measure how much demand has dropped? All of it is using estimates and guesstimates essentially.

3) It takes too much time to get the money out in order to try to stimulate the economy

4) As the money is spent, there can be a lack of accountability in the spending of it

5) People and businesses can respond very negatively to a massive deficit, and thus hold back on their spending and/or hiring, thus the stimulus ends up reducing demand more than increasing it

6) If the government does succeed in creating demand, it can essentially keep the private economy depressed permanantly and prevent it from recovering. The traditional Keynesian idea was that the private economy could not recover without fiscal stimulus from the government. We know that is not true however. If left alone, the private economy will recover on its own and private demand will come back. But if the government steps in long enough and manages to make up for a large amount of that demand, the private-sector may remain permanently depressed, as the government replacing a lot of the lost demand can prevent the private demand from coming back.

This is what some believe happened with Japan. They spent half their GDP in fiscal stimulus, but the net result is that it likely made much of Japanese business dependent on Tokyo

7) The government trying to spend money to stimulate can crowd out private-sector investment, thus hamstringing the economy

8) One of the experiences some European nations have had with attempts at stimulus is inflation. If inflation occurs and drives up the prices of basic goods and services, this can cause consumers to cut back on their spending, thus reducing demand and undermining the very purpose of the stimulus

And so forth.

 

[Greg Bernhardt]

However, as we have seen in the last two days with threats to downgrade the US credit rating [S&P, Moody's]

Here is a good interview with Jim Rogers

https://www.youtube.com/watch?v=hLzP86UZwwM

 

[talk2glenn]

The reason the deficit has grown so much over the last 2 years is because of the recession. Government revenues are much lower while unemployment has put pressure on safety nets. As a result, the government is taking in less money and spending more money. This has happened even in state governments: http://www.census.gov/newsroom/relea...s/cb11-03.html

A great majority of government spending is mandated spending from previous administrations.

Absolute nonsense. The recession certainly hasn't helped, but the problem is spending, not revenues. The Democrats in Congress have authorized over a trillion dollars in new federal spending, created a massive new entitlement, expanded the regulatory role of government, and increased dramatically the size and pay of the federal work force. These are all new expenditures instituted since 2006. Healthcare reform alone is estimated by the CBO to cost the federal government an average of $300+ billion per year over its first 10 years.

[PLAIN]http://www.federalbudget.com/chart.gif

See there for the change in outlays since 2006, by department.

So you just make things up as you go? From that liberal rag, the WSJ.

You really want to bring the stimulus into this? Whatever articles the Journal ran in the run up to its passage, every academic study of the stimulus' effects since passage (that I am aware of) suggests the stimulus was a complete failure - at best not helpful, at worst harmful.

If you look at the chart below, it’s quite easy to see a clear trend, that after WWII every "Blue President" has lowered the debt and 4 "Red Presidents" has increased the debt.

As you have been told several times now, presidents - regardless of color - do not increase or decrease the debt. I believe others have already directly quoted the relevant text from Wikipedia, the Constitution, and federal law. You'd have to be extremely confused about the relative habits of the two parties to ever conceive of a world in which Republicans outspend Democrats; it just doesn't make sense on its face. And the data supports the common sense conclusion. Spending by party in control of the Congress:

[URL]http://i3.photobucket.com/albums/y94/nmleon/US_Federal_Debt_as_Percent_of_GDP_Color_Coded_Congress_Control_and_Presidents_Highlighted.jpg[/URL]

 

[SixNein]

http://faculty.chicagobooth.edu/john.cochrane/research/papers/stimulus_rip.html (I doubt Cochrane is being disingenuous).

Plus there is no example of stimulus working in history. There are too many problems with it:

1) In order to inject money into the economy, the government must first take it out of the economy in another form, debt (in this sense, demand-side tax cuts will not work either if they mean the government must operate on debt)

2) What exactly is the multiplier effect? No one knows, and it may even be negative. If no one knows the actual multiplier (if there even is one), then no one knows how much to spend. How does one measure how much demand has dropped? All of it is using estimates and guesstimates essentially.

3) It takes too much time to get the money out in order to try to stimulate the economy

4) As the money is spent, there can be a lack of accountability in the spending of it

5) People and businesses can respond very negatively to a massive deficit, and thus hold back on their spending and/or hiring, thus the stimulus ends up reducing demand more than increasing it

6) If the government does succeed in creating demand, it can essentially keep the private economy depressed permanantly and prevent it from recovering. The traditional Keynesian idea was that the private economy could not recover without fiscal stimulus from the government. We know that is not true however. If left alone, the private economy will recover on its own and private demand will come back. But if the government steps in long enough and manages to make up for a large amount of that demand, the private-sector may remain permanently depressed, as the government replacing a lot of the lost demand can prevent the private demand from coming back.

This is what some believe happened with Japan. They spent half their GDP in fiscal stimulus, but the net result is that it likely made much of Japanese business dependent on Tokyo

7) The government trying to spend money to stimulate can crowd out private-sector investment, thus hamstringing the economy

8) One of the experiences some European nations have had with attempts at stimulus is inflation. If inflation occurs and drives up the prices of basic goods and services, this can cause consumers to cut back on their spending, thus reducing demand and undermining the very purpose of the stimulus

And so forth.

First and foremost, you make the assumption that the government must take from the private sector at the same time it offers stimulus spending; however, credit allows the government to take from the private market at a future date. In addition, most of the actual spending was on infrastructure and saving the automotive industry. The largest part of stimulus was in the form of tax cuts. You go on to affirm the consequent with talk of how businesses can respond to debt, wasteful spending, and so forth; however, investors have been willing to gobble up US debt.

 

[CAC1001]

First and foremost, you make the assumption that the government must take from the private sector at the same time it offers stimulus spending; however, credit allows the government to take from the private market at a future date.

Yes, it takes from the private economy in one form to inject money into it in another form, though I get your argument, but that is one of the problems with attempts at stimulus.

In addition, most of the actual spending was on infrastructure and saving the automotive industry.

Only a small portion of the stimulus was on infrastructure.

The largest part of stimulus was in the form of tax cuts

Around $260 billion over two years of it was tax cuts, but temporary tax cuts that aren't structural are not necessarilly stimulative.

You go on to affirm the consequent with talk of how businesses can respond to debt, wasteful spending, and so forth; however, investors have been willing to gobble up US debt.

Investors are gobbling up U.S. debt because as bad as things are for the U.S., the U.S. is still the safest haven. The U.S. can service its debt even if the debt ceiling wasn't raised, and if worse came to worse, the U.S. could implement something like a VAT tax which it does not yet have, so U.S. bonds are a pretty safe investment. What I was talking about was that a lot of businesses and consumers could be spooked by the rising deficit and decide to hold off on hiring and spending, which is going to hamstring the economy. If the government runs a huge deficit and no one cares, behavior would be different, but if people care to an excesive amount, it can undercut the stimulus.

 

[SixNein]

Investors are gobbling up U.S. debt because as bad as things are for the U.S., the U.S. is still the safest haven. The U.S. can service its debt even if the debt ceiling wasn't raised, and if worse came to worse, the U.S. could implement something like a VAT tax which it does not yet have, so U.S. bonds are a pretty safe investment. What I was talking about was that a lot of businesses and consumers could be spooked by the rising deficit and decide to hold off on hiring and spending, which is going to hamstring the economy. If the government runs a huge deficit and no one cares, behavior would be different, but if people care to an excesive amount, it can undercut the stimulus.

The largest reason the US is the safe haven is because its relatively stable politically. If the government defaults for just one second, it is not going to be viewed as politically stable because it is a self inflected economic crisis. I think you are confusing the budget stand-off with the debt limit stand-off. They are very different situations. Right now, investors are betting that the debt limit will be raised because the consequences of not raising the debt limit are so high that it's unthinkable for the government not to do it.

http://online.wsj.com/article/SB10001424052702304203304576446234221437942.html

 

[WhoWee]

First and foremost, you make the assumption that the government must take from the private sector at the same time it offers stimulus spending; however, credit allows the government to take from the private market at a future date. In addition, most of the actual spending was on infrastructure and saving the automotive industry. The largest part of stimulus was in the form of tax cuts. You go on to affirm the consequent with talk of how businesses can respond to debt, wasteful spending, and so forth; however, investors have been willing to gobble up US debt.

Please support your post.

Is credit not a limited supply - if the Government uses it today - it takes away from someone else using it - correct?

Your comment about "most of the actual spending was on infrastructure and saving the automotive industry" needs to be supported with actual numbers - how much was spent propping up the states - or are you calling that "infrastructure"?

And my favorite "largest part of stimulus was in the form of tax cuts" please expand - a post yesterday claimed about $116Billion (if I recall?) was allocated to the 95% of working families tax cut - there seems to be a conflict in your information. Now, is most (infrastructure and union bailout) more than the largest (tax cuts) - please clarify?

Then you state "however, investors have been willing to gobble up US debt" - please explain - who is "gobbling" - or do you mean printing?

 

[mheslep]

Spending by party in control of the Congress:

The case is even more lopsided if one looks only at which party controls the House in particular, as that's where the appropriation bills originate. The Democrats and Speakers O'neil/Wright controlled the House during all of the split control period in the 80's, during which O'neil began the giant 'omnibus', take-or-leave-it budgets, prompting Reagan's campaign for the line item veto.

 

[SixNein]

Please support your post.

Is credit not a limited supply - if the Government uses it today - it takes away from someone else using it - correct?

Your comment about "most of the actual spending was on infrastructure and saving the automotive industry" needs to be supported with actual numbers - how much was spent propping up the states - or are you calling that "infrastructure"?

And my favorite "largest part of stimulus was in the form of tax cuts" please expand - a post yesterday claimed about $116Billion (if I recall?) was allocated to the 95% of working families tax cut - there seems to be a conflict in your information. Now, is most (infrastructure and union bailout) more than the largest (tax cuts) - please clarify?

Then you state "however, investors have been willing to gobble up US debt" - please explain - who is "gobbling" - or do you mean printing?

On credit, no because we have a fiat money system. If we were on a money system like gold, you would be correct.

Yes, I would call states infrastructure.

The tax cuts passed in 2009 were worth 282 billion over two years:
http://online.wsj.com/article/SB123436825805373367.html
The tax cuts passed in 2010 were worth 858 billion over two years:
http://www.bloomberg.com/news/2010-12-17/house-votes-to-debate-obama-s-858-billion-tax-cut-deal-with-republicans.html

Total amount in tax cuts: 1140 billion dollars.

Treasury has had no problem in selling debt to investors. You yourself called America the great safe Haven for investors.

 

[SixNein]

Absolute nonsense. The recession certainly hasn't helped, but the problem is spending, not revenues. The Democrats in Congress have authorized over a trillion dollars in new federal spending, created a massive new entitlement, expanded the regulatory role of government, and increased dramatically the size and pay of the federal work force. These are all new expenditures instituted since 2006. Healthcare reform alone is estimated by the CBO to cost the federal government an average of $300+ billion per year over its first 10 years.

What spending programs created by Obama are in effect right now exactly? See,
http://krugman.blogs.nytimes.com/2011/04/25/john-taylor-and-the-zombies/

Also, care needs to be taken when comparing federal budgets. Obama included things in his budget that the bush administration kept off the budget.

http://articles.latimes.com/2009/feb/24/nation/na-obama-budget24A side note, spending also increases when a recession takes places because of safety net programs.

 

[mheslep]

What spending programs created by Obama are in effect right now exactly? See,
http://krugman.blogs.nytimes.com/2011/04/25/john-taylor-and-the-zombies/
...

Krugman is wrong. ...

http://johnbtaylorsblog.blogspot.com/2011/04/paul-krugman-versus-budget-facts.html

 

[SixNein]

http://johnbtaylorsblog.blogspot.com/2011/04/paul-krugman-versus-budget-facts.html

Taylor is misleading and the following shows why:

For years, the White House and Congress have engaged in a kind of Kabuki theater around the federal deficit. The president would release a budget in February that would show declining deficits into the future. But that budget would exclude most war costs and use several unrealistic assumptions, including over-optimistic predictions of economic growth and rising federal revenue.

"There were significant costs that were excluded from the budget because the Bush administration pretended that certain policies that everyone knew would continue wouldn't continue," said Jim Horney, a budget expert with the nonpartisan Center on Budget and Policy Priorities.

One practice was including revenues from the alternative minimum tax in the projections. Congress passed the AMT four decades ago to prevent millionaires from escaping taxes. But because lawmakers neglected to index the income levels for inflation, the higher tax rate would now hit a large swath of middle-income taxpayers unless lawmakers pass AMT relief -- which they do every year.

But for budget reasons, the Bush administration continued to assume that the AMT would take effect in future years, raising tax revenue assumptions by nearly $1 trillion over 10 years.

Similarly, every year the Bush administration would issue an initial deficit projection that was much higher than other economists' projections. That way, when the final deficit count was released, the administration could claim it had brought the deficit down.

Deficits accumulated each year that President Bush was in office, from $158 billion in fiscal 2002 to $455 billion last year, totaling roughly $2.5 trillion altogether.

http://articles.latimes.com/2009/feb/24/nation/na-obama-budget24

Where as Taylor says this:

For all of 2007, spending was 19.6 percent of GDP. For all of 2021—after the impacts of the recession and the final year of the budget window—the budget submitted in February proposed spending equal to 24.2 percent of GDP.

 

[talk2glenn]

Also, care needs to be taken when comparing federal budgets. Obama included things in his budget that the bush administration kept off the budget.

This flat out false. The only thing the Obama administration requests as discretionary spending in its budgets that the Bush administration did not is some portion of the operating costs in Iraq and Afghanistan. Indeed, the president has actually shifted significant portions of classically discretionary spending into the "mandatory" categories in its budgetary requests, in order to conceal the true cost of new policies. And, cleverly, the President only moved some of the costs of the operations in Afghanistan and Iraq onto the regular budgets, then proposes reducing that "book" cost over the course of the year, producing a "discretionary savings reduction". See the gimmickery there?

Specifically, the president proposed and congress agreed to move spending on student loans and the stimulus and bailouts from discretionary to mandatory spending in 2009. This enables guys like Krugman to come along and claim the president is "reducing" discretionary spending, when all they've done is move expenses from one column to another. This produced a phantom savings of approximately $70B per year.

Even allowing for the presidents budgetary absurdities, by my estimate discretionary spending has increased by 20% since the President took office, versus a 4% increase in mandatory expenditures and a roughly 2% growth in GDP. The presidents 2010 budget proposal - rejected by congress - proposed a further increase to 23% of the FY2008 level, after moving the items listed above off the discretionary budget.

 

[SixNein]

This flat out false. The only thing the Obama administration requests as discretionary spending in its budgets that the Bush administration did not is some portion of the operating costs in Iraq and Afghanistan. Indeed, the president has actually shifted significant portions of classically discretionary spending into the "mandatory" categories in its budgetary requests, in order to conceal the true cost of new policies. And, cleverly, the President only moved some of the costs of the operations in Afghanistan and Iraq onto the regular budgets, then proposes reducing that "book" cost over the course of the year, producing a "discretionary savings reduction". See the gimmickery there?

Specifically, the president proposed and congress agreed to move spending on student loans and the stimulus and bailouts from discretionary to mandatory spending in 2009. This enables guys like Krugman to come along and claim the president is "reducing" discretionary spending, when all they've done is move expenses from one column to another. This produced a phantom savings of approximately $70B per year.

Even allowing for the presidents budgetary absurdities, by my estimate discretionary spending has increased by 20% since the President took office, versus a 4% increase in mandatory expenditures and a roughly 2% growth in GDP. The presidents 2010 budget proposal - rejected by congress - proposed a further increase to 23% of the FY2008 level, after moving the items listed above off the discretionary budget.

Moving an item from discretionary to mandatory does not change the overall figure for the budget; however, adding an item to the budget that was done in appropriations off the budget does increase the size of the budget.

But at the end of the day, your making my point for me. The comparison of the budget from 2007 to 2011 is meaningless. And even more meaningless is a comparison between projections.

 

[talk2glenn]

Moving an item from discretionary to mandatory does not change the overall figure for the budget; however, adding an item to the budget that was done in appropriations off the budget does increase the size of the budget.

Your point, and Krugmans in the linked article, was that discretionary spending was falling and mandatory spending rising. My point, in pointing out the budgetary gimmicks employed by Obama and the Democrats, was to show that to the extent that discretionary spending has "fallen" and mandatory spending "risen", it has not been due to any real reductions in expenditures or due to countercyclical government policies, but the shifting of traditionally discretionary spending items (like student loan payments and stimulus funds) into the mandatory column.

Further, the 20% increase is over FY2007 levels in FY2010 - discretionary only, from 1.1T to 1.34T. This is real spending, authorized by the Democratic congress and signed into law by the president. The only reason the FY2011 budget, which would have further increased discretionary spending to $1.386T, didn't pass was the 2010 election cycle, which decimated the progressive majority.

The comparison of the budget from 2007 to 2011 is meaningless.

What is that supposed to mean, exactly?

 

[SixNein]

Your point, and Krugmans in the linked article, was that discretionary spending was falling and mandatory spending rising. My point, in pointing out the budgetary gimmicks employed by Obama and the Democrats, was to show that to the extent that discretionary spending has "fallen" and mandatory spending "risen", it has not been due to any real reductions in expenditures or due to countercyclical government policies, but the shifting of traditionally discretionary spending items (like student loan payments and stimulus funds) into the mandatory column.

Further, the 20% increase is over FY2007 levels in FY2010 - discretionary only, from 1.1T to 1.34T. This is real spending, authorized by the Democratic congress and signed into law by the president. The only reason the FY2011 budget, which would have further increased discretionary spending to $1.386T, didn't pass was the 2010 election cycle, which decimated the progressive majority.

What is that supposed to mean, exactly?

Discretionary spending on budget for the department of defence was 430 billion in 2007 and 663 billion in 2010. That's 233 billion right there.

 

[mheslep]

The following has nothing to do with gimmicks for predictions, but is now documented, historical fact totaling up *all* government spending, on wars or otherwise:

For all of 2007, spending was 19.6 percent of GDP.

Krugman also concedes the figure "is true".

For all of 2021—after the impacts of the recession and the final year of the budget window—the budget submitted in February proposed spending equal to 24.2 percent of GDP.

This is the figure from the Obama budget.

 

[WhoWee]

On credit, no because we have a fiat money system. If we were on a money system like gold, you would be correct.

Yes, I would call states infrastructure.

The tax cuts passed in 2009 were worth 282 billion over two years:
http://online.wsj.com/article/SB123436825805373367.html
The tax cuts passed in 2010 were worth 858 billion over two years:
http://www.bloomberg.com/news/2010-12-17/house-votes-to-debate-obama-s-858-billion-tax-cut-deal-with-republicans.html

Total amount in tax cuts: 1140 billion dollars.

Treasury has had no problem in selling debt to investors. You yourself called America the great safe Haven for investors.

I disagree with regards to the supply of credit - it is limited as someone must be willing to extend terms.

 

[SixNein]

The following has nothing to do with gimmicks for predictions, but is now documented, historical fact totaling up *all* government spending, on wars or otherwise: Krugman also concedes the figure "is true".
This is the figure from the Obama budget.

He was looking at projections of the obama budget.

My dispute is the method of argumentation used here. If the bush budget was projected to run to 2021 under the same assumptions, would the figure be higher or lower than Obama budget projections?

 

[WhoWee]

Treasury has had no problem in selling debt to investors.

Are you certain about this?

 

[SixNein]

Are you certain about this?

http://online.wsj.com/article/SB10001424052702304223804576446493806299046.html?mod=googlenews_wsj

 

[mheslep]

... If the bush budget was projected to run to 2021 under the same assumptions, would the figure be higher or lower than Obama budget projections?

Did you see the spending 2009-2011 increases via federalbudget.com shown graphically in post #221 by T2Glenn?
https://www.physicsforums.com/showpost.php?p=3404244&postcount=221

 

[turbo]

http://online.wsj.com/article/SB10001424052702304223804576446493806299046.html?mod=googlenews_wsj

Please don't talk sense. It enrages the trolls.

 

[ParticleGrl]

Are you certain about this?

The real rate for 5 year treasuries is NEGATIVE. Think about that- its CHEAPER to borrow money than to pay cash upfront. My question is- why aren't we exploiting this to rebuild some of our crumbling infrastructure?

 

[mheslep]

Because there is no free lunch. There is only so much money to borrow, and that which the government borrows, even if cheaply done, can not be borrowed to fund the private sector, that is, the government is crowding out the private sector.

 

[ParticleGrl]

Because there is no free lunch. There is only so much money to borrow, and that which the government borrows, even if cheaply done, can not be borrowed to fund the private sector, that is, the government is crowding out the private sector.

We don't have a dearth of available cash-on-hand. Companies are sitting on billions in cash right now that they aren't investing in anything. How exactly is this crowding out supposed to be happening? The normal story with crowding out involves higher interest rates- which is an important part of the story. Right now, any investment with a positive real rate is BETTER than a 5 year treasury. What is getting crowded out?

Again, the demand for treasuries is so high that the real interest rates on five years are actually negative- this is not exactly a sweet deal for the lender. Also, rebuilding crumbling infrastructure can't help but be an obvious boon to the economy- putting idle construction resources to work, while lowering the cost of doing business for private firms.

And finally, much of the purchase of treasuries are foreign governments (in particular China, which has been using treasuries to control the renminbi)- IF China doubled its holdings of US treasuries, how does US competitiveness suffer?

EDIT: Bear in mind, crowding out is generally important in economies at or near full capacity. The US has above 9% unemployment.

 

[mheslep]

We don't have a dearth of available cash-on-hand. Companies are sitting on billions in cash right now that they aren't investing in anything. How exactly is this crowding out supposed to be happening? The normal story with crowding out involves higher interest rates- which is an important part of the story. Right now, any investment with a positive real rate is BETTER than a 5 year treasury. What is getting crowded out? ...

Right, Microsoft, GM, etc are not being crowded out, the smaller businesses and private investors are. They are not sitting on large sums of cash and can't get it from the banks, who have it invested largely in T Bills.

“Approximately a third of the decline in capital investment as a share of cash flow is directly attributable to the crowding out by the U.S. Treasury,” borrowing the savings of Americans ahead of all other borrowers, Greenspan told CNBC in an interview.

“Those numbers are significant,” Greenspan said. The same is happening in the United Kingdom, but “so far, it’s most dominant in the United States.”...

http://www.moneynews.com/StreetTalk/Greenspan-Treasury-Crowding-Out/2010/12/03/id/378841?s=al&promo_code=B3B7-1

Edit: more ...

...Greenspan noted that major corporations like Microsoft and I.B.M. are not affected by crowding out in a deficit of this size—the deficit would have to increase two-fold to affect such major entities. The ‘who is being affected’ then, said Greenspan, “are ones which are known to be B-rated corporations. Where the shortfall is in investment is very largely in small businesses and in construction.”

I can attest the commercial construction business in the US has completely crashed in many places.