We Have a "Paying For It Problem"

[MachZer0]

I always find the fact that the spending problem is the fault of the current President, who has been in office for 4 years hilarious. Seriously? Clinton was the last president to balance the books. Remind me what happened after that? I mean, who was in power after him and failed to continue to balance the books?

Clinton balanced "the books", but ran a deficit every year he was in office

 

[conamer]

Correct. I mean taking everything from the rich would fund what - 6 months of government? And of course, they know that - which means it's not about the "rich" at all, except to use them as an excuse to give their minions another object on which to focus their envy, greed, and hate - which, if you think about it, is all the Democrat message is.

And ironically, the Democrat party proper could care less about their minions, really. They just use them as a vehicle to obtaining more power, which is the real story in Washington - he who controls the strings of the purse has the most power. More money into the federal coffers means more power. That's the bottom line.

8.5 days, if you took everything from the rich-a one time deal when they have nothing left.

 

[conamer]

Since when? I have yet to see a republican administration vote for less spending.

True, but we have never seen this much spending in four years by far we are now at 16.5 trill and climbing.

 

[EdwinWillers]

Since when? I have yet to see a republican administration vote for less spending.

I said "tend to." There's no denying Republicans have their own struggles with spending. But let's be honest, for the Democrats it's no struggle whatsoever. Indeed, it's their platform! It always has been. Now, as far as hypocrisy may go, that's the one thing positive that can be said of Democrats. They make no bones at all about being big spenders. Republicans though *say* they're for cutting spending, cutting taxes, smaller government, etc. - and there's no denying that. Doing it I agree is more difficult - but as I also said, it's a powerful, powerful drug - money - to which there's little ability to resist - particularly given the massive size of our federal government. It's highly addictive (or more appropriately, corrupting). But you gotta give Democrats credit - they have zero problem being corrupted by such power. It's who they are and who they want to be.

 

[conamer]

I said "tend to." There's no denying Republicans have their own struggles with spending. But let's be honest, for the Democrats it's no struggle whatsoever. Indeed, it's their platform! It always has been. Now, as far as hypocrisy may go, that's the one thing positive that can be said of Democrats. They make no bones at all about being big spenders. Republicans though *say* they're for cutting spending, cutting taxes, smaller government, etc. - and there's no denying that. Doing it I agree is more difficult - but as I also said, it's a powerful, powerful drug - money - to which there's little ability to resist - particularly given the massive size of our federal government. It's highly addictive (or more appropriately, corrupting). But you gotta give Democrats credit - they have zero problem being corrupted by such power. It's who they are and who they want to be.

I'm sure Belk was just complaining that Repubs just don't spend enough.

 

[conamer]

Unless your Obama who said Bush spending was "irresposible an un american" at less than half of Obama spending at Bush's one highest year of spending. Bush 400+ bill in 2007 "evil" oBam 1.2-3 trill "good" not including ObamaCare that few have any ideas what is coming.

 

[Belk]

I said "tend to." There's no denying Republicans have their own struggles with spending. But let's be honest, for the Democrats it's no struggle whatsoever. Indeed, it's their platform! It always has been. Now, as far as hypocrisy may go, that's the one thing positive that can be said of Democrats. They make no bones at all about being big spenders. Republicans though *say* they're for cutting spending, cutting taxes, smaller government, etc. - and there's no denying that. Doing it I agree is more difficult - but as I also said, it's a powerful, powerful drug - money - to which there's little ability to resist - particularly given the massive size of our federal government. It's highly addictive (or more appropriately, corrupting). But you gotta give Democrats credit - they have zero problem being corrupted by such power. It's who they are and who they want to be.

Spending does not bother me so much. BORROWING is the thing I have an issue with. We need to get our borrowing under control. As far as I have seen both sides of the house are doing this. Unfortunately the tea party was less interested in dealing with borrowing and more interested in lowering taxes. If they would have been willing to make common sense compromises I would have been fully behind them.

 

[variant]

Spending does not bother me so much. BORROWING is the thing I have an issue with. We need to get our borrowing under control. As far as I have seen both sides of the house are doing this. Unfortunately the tea party was less interested in dealing with borrowing and more interested in lowering taxes. If they would have been willing to make common sense compromises I would have been fully behind them.

Borrowing is cheap though, why shouldn't we use it?

 

[conamer]

Borrowing is cheap though, why shouldn't we use it?

Because you are betting interest rates will not go up and revenues will increase. It's like relying on O.T to pay what you can't pay for with cash if it will not go away. Saving is the opposite of borrowing. Storing up is aways better than hoping you can pay for it down the road.

 

[Jeffwhosoever]

 

[variant]

Because you are betting interest rates will not go up and revenues will increase. It's like relying on O.T to pay what you can't pay for with cash if it will not go away. Saving is the opposite of borrowing. Storing up is aways better than hoping you can pay for it down the road.

You borrow at current interest rates. That's how it works.

The government doesn't take out a 30 year ARM on our debt it issues bonds at current interest rates at auction.

Current interest rates are lower than inflation on government bonds. It's incredibly cheap to borrow money right now for them.

 

[EdwinWillers]

You borrow at current interest rates. That's how it works.

The government doesn't take out a 30 year ARM on our debt it issues bonds at current interest rates at auction.

Current interest rates are lower than inflation on government bonds. It's incredibly cheap to borrow money right now for them.

The only "cheap" in our current fiscal crisis that might have any relevancy would be someone taking pity on this nation and charitably giving us the $60T - $120T we'd need to become solvent once again.

Only there are two problems with that. 1) No such benefactor exists; and 2) even if one did exist, all our government would do is spend it - making matters doubly worse.

 

[variant]

The only "cheap" in our current fiscal crisis that might have any relevancy would be someone taking pity on this nation and charitably giving us the $60T - $120T we'd need to become solvent once again.

Only there are two problems with that. 1) No such benefactor exists; and 2) even if one did exist, all our government would do is spend it - making matters doubly worse.

THE PEOPLE WHO BUY OUR BONDS LOAN US MONEY AT 2.53%

Yes this is what we call cheap. Inflation last year averaged at 2.1% Effective APR of.43%

The conservative thing to do is of course toss up our hands and enforce austerity to crush the economy because borrowing money at 0.43% interest will kill us.

 

[DaisyDay]

It's called a representative republic. In our case, Democrats tend to vote for all manner of entitlements and hand-outs and the attendant exorbitant taxes to pay for them (which they only use to spend on more entitlements and handouts) while Republicans tend to vote for less government spending and taxation. Sad thing is, once the Democrats spend all the money they can then turn around and whine "but we voted for it" and "but we spent it" and "...so we need to be 'responsible' folk and now pay for it" as if the problem were solely Republicans' fault.

Was it the Democrats who voted in the Medicare prescription package, which is enormously expensive, without adding funding for it?

 

[Belk]

Borrowing is cheap though, why shouldn't we use it?

The amount of money we spend on the interest of our 16 trillion dollar debt is not cheap. I do not deny that in a down economy we should borrow and then replenish in an up economy. The problem is that instead of paying off our debt we get tax cuts (because it's your money ) and unfunded wars. We need to address our debt at some point. Simply because people are willing to lend us money in order to make a profit off of us does not mean it is a good deal for us.

 

[contango]

Borrowing is cheap though, why shouldn't we use it?

Even if borrowing is cheap you need a credible plan to pay it back(*). Endlessly rolling forward loans (repaying bonds by issuing new bonds) is the kind of thing that works just fine until it doesn't. Like when lenders decide they aren't interested in lending for 10 years at less than the current rate of inflation and demand more.

There's also a big difference in borrowing to pay for specific projects that yield a specific benefit, and borrowing to pay for a general lack of fiscal discipline. In household terms it's a bit like the difference between me taking a loan so I can buy a car so I can get to work and borrowing every single year because I rather like the idea of a 5-star holiday in the Seychelles despite the fact my salary doesn't stretch that far, and borrowing for another holiday this year even though I haven't repaid anything towards the loan I took for last year's holiday.

(*) ETA - a credible plan to repay borrowings means cutting the deficit to the point of creating a situation where a budget surplus is the norm. As I understand the US budget that means cuts of something like $1,500,000,000,000 to clear the deficit, and then further cuts to start repaying the debt. When Congress appears to struggle to cut as little as $50,000,000,000 from the budget (approximately 3% of what is needed to address the deficit) it's hard to see how the debt will ever be repaid.

From my side of the water it seems the biggest elements of spending are welfare and the military, and the Democrats refuse to cut one and the Republicans refuse to cut the other. So basically the US is doomed, financially speaking at least. It's just a question of time before lenders stop lending and the only solution is massive inflation, sky high interest rates, or both.

 

[OldWiseGuy]

One problem is that we're trying to make a finite amount of money do an infinite amount of work. This might work but the chokepoints, the lending agencies, cause a 'caterpiller' effect in the economy, much like traffic delays on the interstate. Money also flows to where it will return a profit, in these times that's overseas. We need to find a way to backfill this loss without adding new debt.

 

[Belk]

Even if borrowing is cheap you need a credible plan to pay it back(*). Endlessly rolling forward loans (repaying bonds by issuing new bonds) is the kind of thing that works just fine until it doesn't. Like when lenders decide they aren't interested in lending for 10 years at less than the current rate of inflation and demand more.

There's also a big difference in borrowing to pay for specific projects that yield a specific benefit, and borrowing to pay for a general lack of fiscal discipline. In household terms it's a bit like the difference between me taking a loan so I can buy a car so I can get to work and borrowing every single year because I rather like the idea of a 5-star holiday in the Seychelles despite the fact my salary doesn't stretch that far, and borrowing for another holiday this year even though I haven't repaid anything towards the loan I took for last year's holiday.

(*) ETA - a credible plan to repay borrowings means cutting the deficit to the point of creating a situation where a budget surplus is the norm. As I understand the US budget that means cuts of something like $1,500,000,000,000 to clear the deficit, and then further cuts to start repaying the debt. When Congress appears to struggle to cut as little as $50,000,000,000 from the budget (approximately 3% of what is needed to address the deficit) it's hard to see how the debt will ever be repaid.

From my side of the water it seems the biggest elements of spending are welfare and the military, and the Democrats refuse to cut one and the Republicans refuse to cut the other. So basically the US is doomed, financially speaking at least. It's just a question of time before lenders stop lending and the only solution is massive inflation, sky high interest rates, or both.

Are you talking welfare the specific program or are using welfare as a blanket term for social programs? Welfare the program is a very small part of the budget. The monsters are social security and medicare from what I recall.

The rest of your post I agree with. Our interest payments alone are taking bigger and bigger chunks of spending that we could put to better use in other areas.

 

[EdwinWillers]

THE PEOPLE WHO BUY OUR BONDS LOAN US MONEY AT 2.53%

Yes this is what we call cheap. Inflation last year averaged at 2.1% Effective APR of.43%

The conservative thing to do is of course toss up our hands and enforce austerity to crush the economy because borrowing money at 0.43% interest will kill us.

I DON'T CARE HOW "CHEAP" INTEREST RATES ARE Variant. Yes, they ARE "cheap" - cheaper perhaps than they've ever been.

That's NOT the point.

The point is we are spending, and have spent WAY BEYOND OUR MEANS. It's irrelevant how cheaply we can borrow more money to take ourselves even into deeper debt. The point is the more we spend and the more we borrow to sustain a level of spending that is far beyond our means to EVER repay is not only foolish, it's downright wicked.

Borrowing money, going into temporary debt, has a place in an economy, personal or public. No one disputes that.

But when an individual or a government HABITUALLY and CHRONICALLY spends beyond their means and borrows money to sustain and even grow their level of spending further, that's just plain wrong - REGARDLESS how one rationalizes their reasons for borrowing and spending.

Those most enamored with this type of spending and borrowing invariably justify it on the basis of "need" - and invariably do they point to the poor, the needy, the indigent, the homeless, the struggling single mother, etc. etc. etc. etc. etc. But that's just an excuse. The real "need" for this spending is for the real power it represents for those who control to whom it's given.

Forget the needy and the homeless for a moment. If spending and borrowing the way we do - especially the way we do, and for the ostensible reasons we do could actually fix their plight, we would've fixed it a long time ago. Heck, we've actually made their plight WORSE, if you look at the growth of those now dependent on the government for their basic welfare.

So you and I both know that's NOT the issue here. And it's time we all wizened up to what's really going on.

 

[Jeffwhosoever]

The amount of money we spend on the interest of our 16 trillion dollar debt is not cheap. I do not deny that in a down economy we should borrow and then replenish in an up economy. The problem is that instead of paying off our debt we get tax cuts (because it's your money ) and unfunded wars. We need to address our debt at some point. Simply because people are willing to lend us money in order to make a profit off of us does not mean it is a good deal for us.

I agree with you!