Adverting a Government Shutdown

[ThatRobGuy]

Do you think both parties are spending too much?

Taxation levels have to be part of the conversation.

I know the statement of "taxes are the price we pay to live in a civilization" has become something of a trope, and something the RNC uses against the DNC, but there is some truth to it.

When you look at the budget for the US

Healthcare, Social Security, and Defense are the 3 biggest line items.

Large cuts to any of those 3 could put us back on the path to a balanced budget in 10-15 years.

...but nobody is willing to dive on that political grenade.

A democrat saying we need to cut either the first two is career suicide, a republican saying we need to cut defense spending is career suicide.

Absent raising some taxes on corporations and high earners, there's not really a ready solution.
(and cutting any of those 3 would involve breaking promises to people who have already either made sacrifices or paid into those systems, I'd be one of those people...I'd be a little more than miffed if I got the news that the system I paid over $250k to "made some changes" and I wouldn't be getting a check once I come of age...much like a veteran should be rightfully miffed if they enlisted based on the promise that they'd have certain expenses covered, and the government went back on their word)

There's no pathway in which everyone can pay less in taxes, that doesn't cut into one of those 3 categories. Sure, there's some other random programs that are wasteful and don't provide huge benefits that we could cut, but they wouldn't show up as a blip on the radar in the grand scheme of things if eliminated tomorrow.

 

[Hans Blaster]

If they knew precisely when to buy low and sell high, they'd be billionaire investors, not economists. This non-economist says that a recession will come at some point, but I have no idea when, and I suspect neither do they.

The stock market is driven largely by the emotionalism of the investors on top of the fundamental economics with a tinge of the real fundamentals of the companies being traded.

 

[Hans Blaster]

Quibble: Hasn't happened. I saw this show in the 1970s and 1980s. Recessions will come despite the best schemes of economists who promise a soft landing.

On what basis do you predict a pending recession? Which fundamental economic trends or properties lead you to predict one?

 

[Tuur]

The stock market is driven largely by the emotionalism of the investors on top of the fundamental economics with a tinge of the real fundamentals of the companies being traded.

True. So is the economy. They used to call severe economic downturns "panics," and that's a very apt term. People panic and things snowball. The other side of that are periods of unwarranted optimism.

 

[Hans Blaster]

True. So is the economy. They used to call severe economic downturns "panics," and that's a very apt term. People panic and things snowball. The other side of that are periods of unwarranted optimism.

There is certainly a lot of mushy talk about the future of the economy, but if you listen to stock pickers and prognosticators you begin to wonder if you might do better at prediction with tarot cards and chicken entrails. (Or rather their "methods" are largely no better.)

 

[Laodicean60]

Taxation levels have to be part of the conversation.

I agree and I don't mind paying taxes but wasteful spending and overspending have to be reduced. When I was Republican I was in the camp for low taxes but once I learned about the seriousness of debt I changed my toon. I could bash the Left cause I know all the talking points but it;s up to the left to control their party.

A democrat saying we need to cut either the first two is career suicide, a republican saying we need to cut defense spending is career suicide.

This is the problem if they educated themselves and explained to their constituents change would be possible. I realized a year ago they are as dumb as I am and the American people. I was naive to think they knew what they were doing with fiscal policy

Absent raising some taxes on corporation

I don't like this because it's you and I that pay. Governments love inflation but it's political suicide I've heard as a hidden tax.

high earners

I can see this. Tax Trump and Gates. Maybe it will slow down Bill from buying all of America's farmland.

 

[Tuur]

On what basis do you predict a pending recession? Which fundamental economic trends or properties lead you to predict one?

Only that these things are cyclical. In the past, inflation was followed by deflation. I've seen many promises over the years of soft touchdowns (no recessions), but have yet to see it happen. Either inflation continues or we have a recession.

 

[Hans Blaster]

Only that these things are cyclical. In the past, inflation was followed by deflation. I've seen many promises over the years of soft touchdowns (no recessions), but have yet to see it happen. Either inflation continues or we have a recession.

Name a couple episodes of deflation that happened.

 

[Tuur]

There is certainly a lot of mushy talk about the future of the economy, but if you listen to stock pickers and prognosticators you begin to wonder if you might do better at prediction with tarot cards and chicken entrails. (Or rather their "methods" are largely no better.)

Or the dartboard method.

 

[Laodicean60]

tarot cards

Or the weather.

 

[Tuur]

Name a couple episodes of deflation that happened.

The easy one is the Great Depression. Another was during the Reagan Administration. That one ended double digit interest rates and high inflation. Whether that was by design or a case of a blind hog finding an acorn, I can't say, but you asked for two. I seem to recall some limited reduction during the dot.com bust and we saw a devaluation of property values after the housing market burst.

 

[Laodicean60]

on corporations

I would say this, do away with tax loopholes.

 

[Hazelelponi]

Do you think both parties are spending too much?

Everyone who votes has always thought both parties spend too much - it's why we only have very short periods of time with one party in majority.

People like government that doesn't spend, and give one party (take your pick) power and watch the checks get written. So mixed government has always been the voters preference.

As for why we hear more about government shutdowns etc lately, to be honest I'm not sure we hear about it enough to really help people understand just how bad our finances are... We are in a serious hole and we aren't talking about it enough.

So if you are hearing more, I'd say the above is why ..

 

[Laodicean60]

I seem to recall some limited reduction during the dot.com bust and we saw a devaluation of property values after the housing market burst.

If you look at the history of the Federal Reserve usually it's their monetary policy that causes recession. Raising the interest rates slows down an economy. Like this go around with inflation they raised rates and are talking about higher for longer but this is hurting banks and several have already gone under. You don't hear on the mainstream. It's like Hans said emotion and Psychology move markets but if they hold for too long something will break the economy. If you look at the chart below, every time the FED started to lower rates an event happened or we were in a recession.

Federal Funds Effective Rate | FRED | St. Louis Fed

View data of the Effective Federal Funds Rate, or the interest rate depository institutions charge each other for overnight loans of funds.

fred.stlouisfed.org

 

[Hans Blaster]

The easy one is the Great Depression. Another was during the Reagan Administration. That one ended double digit interest rates and high inflation. Whether that was by design or a case of a blind hog finding an acorn, I can't say, but you asked for two. I seem to recall some limited reduction during the dot.com bust and we saw a devaluation of property values after the housing market burst.

I thought the only period of deflation since the great depression was in the "great recession" after the housing market collapsed.

 

[Tuur]

I thought the only period of deflation since the great depression was in the "great recession" after the housing market collapsed.

I almost threw in the time the Hunt Brother tried to corner the silver market, but wasn't sure. As a rule of thumb, recessions cause some deflation. I think I saw on Forbes after my other post that there is a thing called disinflation which is a reduction in inflation but not in prices. Oh, what was I doing on Forbes? Looking for a chart of inflation / deflation. Unfortunately failed.

 

[Nithavela]

After the 2024 election ok. That's your prediction.

No, my prediction is "once the next GOP president is in the white house". Contrary to popular belief among republicans, winning an election is not guaranteed.

How's your recession going right now?

I can't say I've noticed any difference in my day to day activities or my quality of life.

 

[Tuur]

Found this chart on appropriations bills passed on time on Pew Research Center:

Congress rarely passes spending legislation on time

www.pewresearch.org

We hear more about it now because the bills are seldom passed on time now. The last time they were all passed on time was 1997.

 

[Laodicean60]

"Rising US debt is a “boiling frog” for the US economy, JPMorgan warns."

Macro Briefing: 8 January 2024 | The Capital Spectator

 

[Laodicean60]

I can't say I've noticed any difference in my day to day activities or my quality of life.

Since we are tied together in global finance usually what happens overseas happens here and vice versa. Germany is in a recession and China is not doing well either. Last year globally we hoped China would kickstart the global economy but it didn't happen.