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Not a surprise, deficit up

By rdm follow rdm   2018 Oct 15, 11:36am 8,434 views   45 comments   watch   nsfw   quote   share    


Yep, higher interest payments, more Social Security spending for aging population and higher defense spending. Education spending down. And those robust revenues pouring into the government coffers generated by the booming economy. Yeah, they didn't happen as revenues are flat in the midst of a booming economy. Why? Well that's rather obvious, they cut taxes for corporations and the wealthy (mainly). But tax cuts pay for themselves is the mantra. Fact is no they don't and everyone knows it. The White House answer; cut spending, but of course not defense spending. What happens when the economy slows or goes to recession? What happened to the Republican deficit hawks? Republicans took control and they flew off to Vegas until the next Dem. becomes president.

https://www.marketwatch.com/story/us-budget-deficit-jumps-to-779-billion-2018-10-15

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6   Goran_K   ignore (3)   2018 Oct 15, 12:13pm     ↓ dislike (0)   quote   flag      

curious2 says
The function of TDS is to prevent people from discussing the merits of different policies. Most can't separate the policy itself from the person proposing it. Monetizing debt goes back thousands of years. It isn't a new idea, it isn't a good idea, and its merits have nothing to do with who happens to propose it at each generation. There is always someone. The policy itself creates similar problems regardless of who proposes it.



Exactly.
7   Heraclitusstudent   ignore (2)   2018 Oct 15, 12:17pm     ↓ dislike (0)   quote   flag      

curious2 says
Deficits are the one thing both major parties appear to agree on.

I think most people agree to have a larger budget deficit during recessions, and then decrease it as the economy grows.
Most people, except Trump that is: big tax cut in an end of cycle growing economy.... because? Need to prolong that cycle until after 2020.
Screw the country. Trump needs this personally.

curious2 says
The function of TDS is to prevent people from discussing the merits of different policies.


The function of ODS (Obama Derangement Syndrome) was to cause republicans to go bersek and create the tea party when Obama ran a deficit during a deep recession.
Now the same people are A-ok with big deficits in a booming economy.
8   MrMagic   ignore (10)   2018 Oct 15, 12:24pm     ↓ dislike (1)   quote   flag      

Heraclitusstudent says
The function of ODS (Obama Derangement Syndrome) was to cause republicans to go bersek and create the tea party when Obama ran a deficit during a deep recession.
Now the same people are A-ok with big deficits in a booming economy.


Did the recession last all through Obama's first term?

9   FuckCCP89   ignore (5)   2018 Oct 15, 12:31pm     ↓ dislike (0)   quote   flag      

curious2 says
People want stuff, but they don't want to build it.


You sure people don't want these (now offshored) jobs?
10   Goran_K   ignore (3)   2018 Oct 15, 12:33pm     ↓ dislike (0)   quote   flag      

DASKAA says
You sure people don't want these (now offshored) jobs?


Good point.
11   bob2356   ignore (4)   2018 Oct 15, 1:21pm     ↓ dislike (1)   quote   flag      

curious2 says
Deficits are the one thing both major parties appear to agree on. Two Presidents in a row, of ostensibly opposite parties, have each doubled the national debt. We have seen every possible combination of government (Republican Congress and White House, Democratic Congress and White House, and divisions), and the result is always more deficits.


There is just a teeny tiny little bit of difference between doubling the debt with tax cuts and war spending vs inheriting the second largest economic disaster in the history of the country.
12   curious2   ignore (0)   2018 Oct 15, 1:29pm     ↓ dislike (0)   quote   flag      

DASKAA says
curious2 says
People want stuff, but they don't want to build it.


You sure people don't want these (now offshored) jobs?


You're right, I should phrase more precisely: people want cheaply built stuff, but they don't want to build cheaply. They choose a TV based on advertising, appearance, features, specifications, and cost. That latter variable, cost, depends partly on how much the factory workers are paid. If you want the low cost, you end up buying the TV made with low wages, and if market buyers choose overwhelmingly to do the same thing, then Curtis Mathes goes BK.
13   rdm   ignore (2)   2018 Oct 15, 4:26pm     ↓ dislike (0)   quote   flag      

Forget 'starve the beast!'...I say 'Kill the motherfucker!'.

Right we should model this country on Somalia. No government better is than big government. If you be a survivalist that is probably what you are waiting for. It may well come to that anyway.
14   Heraclitusstudent   ignore (2)   2018 Oct 15, 5:06pm     ↓ dislike (0)   quote   flag      

MockingbirdKiller says
What does tax cuts have to do with trade deficits? Nothing.


Let me walk you through the math:
[US account deficit] = [trade deficit] + [capital account deficit] = [US private dissavings] + [US budget deficit]

i.e. Everything else being equal, tax cuts mean more dissaving in the US, tends to result in bigger trade deficit.

In other words: tax cuts mean people have more money to spend, and since they are not necessarily producing more just because they spend more, it means they import more, which in turn means larger budget deficit.

The government doesn't control the private saving rate, but it does control the government saving rate, and through that variable it can set the national saving rate.
15   tatupu70   ignore (0)   2018 Oct 15, 5:10pm     ↓ dislike (1)   quote   flag      

MockingbirdKiller says
First of all, Somalia has a government. Get your facts straight. Might not be no better than any other in Africa, but it exists.

Second, during the period when it didn't have any, Anarcho-Capitalist cooperative structures arose...and worked just fine. In fact social scientists and economists who specialize in Anarchism went there to study it in action, as the last time Anarchism established itself was during the Russian & Spanish Civil wars.

Third, your type always throws out the Somalia canard (which I just demolished) as this extreme example of what will happen when the Beast is Slaughtered. In reality, the Beast will just cut back on spending like 90% of what it was. And the States will take on more as a result...JUST AS IT SHOULD BE. But you don't like discussion that outcome...butt hurts your narrative.


This one isn't personal either?

Just looking for some clarification and consistency.
16   tatupu70   ignore (0)   2018 Oct 15, 5:11pm     ↓ dislike (1)   quote   flag      

MockingbirdKiller says

WHAT COMPLETE IDIOCY. Go learn some basic econ 101.

And no the government does not control the savings rate. Yet more bullshit.

This explains a lot about you.


And this one is A-OK? Nothing personal here?
17   tatupu70   ignore (0)   2018 Oct 15, 5:11pm     ↓ dislike (1)   quote   flag      

MockingbirdKiller says
What does tax cuts have to do with trade deficits? Nothing. Your chart also has nothing to do with the tax cuts or proving that they are bad for the trade deficit.

OMG! You don't know the difference between a trade vs budget deficit! Either that, or your TDS is so severe that you momentarily forgot the difference when you spied a chance to bash Trump.

Wow! But then again, I suppose I should not be surprised.


More non personal postings, right?
18   Heraclitusstudent   ignore (2)   2018 Oct 15, 5:14pm     ↓ dislike (0)   quote   flag      

MockingbirdKiller says
What planet did you dream that shit up? It's total nonsense.

What part of it don't you understand?
[US account deficit] = [trade deficit] + [capital account deficit] = [US private dissavings] + [US budget deficit]

This is basic arithmetic. What flows out is what is the overspending.
19   Heraclitusstudent   ignore (2)   2018 Oct 15, 5:14pm     ↓ dislike (0)   quote   flag      

Any moderator can delete mockingbird insults please?
20   Heraclitusstudent   ignore (2)   2018 Oct 15, 5:26pm     ↓ dislike (0)   quote   flag      

MockingbirdKiller says
So what? Two completely different things.

No, they are linked through the account deficit as I described.
If the US was a single person, the deficit for this person would be loss in trading with others + the loss in investments.
With many participants, it's just the sum of participants.
The government is the largest participant.

Stop assuming other people are idiots and think it through.
21   tatupu70   ignore (0)   2018 Oct 15, 5:29pm     ↓ dislike (1)   quote   flag      

"Go learn some basic Econ 101" seems a bit personal to me, but maybe the mods can chime in on it. Because I'm certain a lot of comments from Bob or Aphroman that were much, much less personal than that have been censored.
22   Heraclitusstudent   ignore (2)   2018 Oct 15, 5:30pm     ↓ dislike (0)   quote   flag      

MockingbirdKiller says
That is just a Keynesiantarded fictional construct anyway and


"Keynesiantarded" is what Trump is doing. This is why we reached 4% growth 2nd quarter.
23   Heraclitusstudent   ignore (2)   2018 Oct 15, 5:31pm     ↓ dislike (0)   quote   flag      

What MockingbirdKiller writes is totally moronic.
24   tatupu70   ignore (0)   2018 Oct 15, 5:31pm     ↓ dislike (1)   quote   flag      

MockingbirdKiller says


No, it isn't. Not that it is any of your business. It wasn't even directed at you.


Following the rules is everyone's business!
25   curious2   ignore (0)   2018 Oct 15, 5:38pm     ↓ dislike (0)   quote   flag      

tatupu70 says
Following the rules is everyone's business!


Comment in a thread about the rules, or the flag feature. This thread is about the deficit, not your LeonDurham/tatupu70/JoeyJoeJoeJr trolling (five comments already, none of them about the OP).

As for the debate occurring regarding the deficit, i.e. the topic that is getting buried, this would be a good time to point out Warren Buffett's parable of Thriftville vs Squanderville. Deficit spending by whatever name ("stimulus" seems popular lately) produces deficits in Squanderville (where things are consumed) and surplus in Thriftville (where things are made).

The W and Trump tax shifts (mislabeled "cuts," but they were not really cuts because that would require cutting spending) had the effect of increasing the net income of people who had already high net incomes. Prospective Corvette buyers bought Ferraris. Prospective Cadillac buyers bought Bentleys. GM went BK.
26   LastMan   ignore (1)   2018 Oct 15, 6:41pm     ↓ dislike (0)   quote   flag      

As much as Trump and his supporters want to see him as different, when it comes to fiscal responsibility, he's like every other politician. They will always put the cost of their political agenda on the national deficit credit card. In the current political environment where neither Ds nor Rs are truly fiscal conservatives, there will be token resistance from Ds and whole hearted support for continuation of reckless spending.
27   FortWayneIndiana   ignore (3)   2018 Oct 15, 8:30pm     ↓ dislike (0)   quote   flag      

HEYYOU says
http://www.usadebtclock.com/


That's why we need to lower cost of healthcare in our country. It'll drop that number by a factor of 1000.

I've been paying taxes all my life, and a lot. But man I know people who haven't worked a day in their life, been lifetime moochers, all Democrats.
28   NoCoupForYou   ignore (4)   2018 Oct 15, 11:55pm     ↓ dislike (0)   quote   flag      

MockingbirdKiller says
What does tax cuts have to do with trade deficits? Nothing. Your chart also has nothing to do with the tax cuts or proving that they are bad for the trade deficit.


If the $500B trade deficit was eliminated, that would be ~$100B in federal corporate and worker income taxes being paid, not to mention the property taxes, state income and sales taxes, etc. that would reduce the need for state block grants as well. Plus reduce the welfare rolls.

But in fairness, it's a secondary issue to overall spending. The Trade Deficit is probably 10-20% of the cause, however.

However, there is something between the declining standard of living for the 60% and Trade Deficits, the trade deficit tracks well with both deficit spending and the decline in standard of living increases for ~2/3 of Americans (and brutal for the bottom 20%)

29   NuttBoxer   ignore (2)   2018 Oct 16, 6:55am     ↓ dislike (0)   quote   flag      

This is crazy, everyone knows a bloated central government spending like there's no tomorrow is a sure sign of a healthy, stable, economy!
30   NoCoupForYou   ignore (4)   2018 Oct 16, 9:43am     ↓ dislike (0)   quote   flag      

Aphroman says
which is why the Cult45 cucks get so triggered.

There was no cult around Obama, amirite?
31   ThreeBays   ignore (3)   2018 Oct 16, 10:08am     ↓ dislike (0)   quote   flag      

curious2 says
Deficits are the one thing both major parties appear to agree on. Two Presidents in a row, of ostensibly opposite parties, have each doubled the national debt. We have seen every possible combination of government (Republican Congress and White House, Democratic Congress and White House, and divisions), and the result is always more deficits.


Reagan
Started Presidency: $965 billion
Ended Presidency: $2.74 trillion
Increased 184% or 13.9% per year

H.W. Bush
Started Presidency: $2.74 trillion
Ended Presidency: $4.23 trillion
Increased 54% or 11.5% per year

Clinton
Started Presidency: $4.23 trillion
Ended Presidency: $5.77 trillion
Increased 36% or 4.0% per year

W. Bush
Started Presidency: $5.77 trillion
Ended Presidency: $11.1 trillion
Increased 93% or 8.5% per year

Obama
Started Presidency: $11.1 trillion
Ended Presidency: $19.85 trillion
Increased 78% or 7.5% per year
32   Heraclitusstudent   ignore (2)   2018 Oct 16, 10:37am     ↓ dislike (0)   quote   flag      

ThreeBays says

Reagan
Started Presidency: $965 billion
Ended Presidency: $2.74 trillion
Increased 184% or 13.9% per year

36 yrs. debt increase 2056%. 8.7%/yrs.
Tells you something wrong with the economic strategy during that period.
33   ThreeBays   ignore (3)   2018 Oct 16, 10:50am     ↓ dislike (0)   quote   flag      

We have over $200 trillion in unfunded liabilities. Aren't you proud of your elected officials dedicating night and day to solving this problem?
34   Heraclitusstudent   ignore (2)   2018 Oct 16, 10:55am     ↓ dislike (0)   quote   flag      

ThreeBays says
We have over $200 trillion in unfunded liabilities.

$200 trillions lol...
Over how long?
What is expected cumulative GDP over that period assuming just 2% nominal growth?
35   ThreeBays   ignore (3)   2018 Oct 16, 11:05am     ↓ dislike (0)   quote   flag      

Heraclitusstudent says
ThreeBays says
We have over $200 trillion in unfunded liabilities.

$200 trillions lol...
Over how long?
What is expected cumulative GDP over that period assuming just 2% nominal growth?


This is net-present value of funds required to be invested today to achieve liquidity over the indefinite time horizon. Since the government doesn't have those funds (and instead has interest to pay) that figure will keep increasing.

https://www.mercatus.org/system/files/debt-in-perspective-analysis.pdf
36   socal2   ignore (1)   2018 Oct 16, 11:19am     ↓ dislike (0)   quote   flag      

Just like the State Municipal pension crisis - there is no tax scheme or Bull Market that can ever pay this off.

We are going to have to cut back spending.

Government workers making 6 figure pensions will have to cough something up, and we are going to have to do some long overdue reform to our entitlement and welfare systems.

Expect the Democrats to fight against this government reform every step of the way. Republicans can no longer ignore it and will have to take on this unpleasant task head on.
37   ThreeBays   ignore (3)   2018 Oct 16, 11:33am     ↓ dislike (0)   quote   flag      

Heraclitusstudent says
ThreeBays says
We have over $200 trillion in unfunded liabilities.

$200 trillions lol...
Over how long?
What is expected cumulative GDP over that period assuming just 2% nominal growth?


This is a good read: https://www.kotlikoff.net/sites/default/files/Kotlikoffbudgetcom2-25-2015.pdf

US treasuries are an IOU from the government, and we count those as the federal deficit. SS, Medicare, government and veteran benefits, and all other commitments it has made are also IOUs. However the government fails to add those liabilities to the so called "deficit".
38   Heraclitusstudent   ignore (2)   2018 Oct 16, 11:43am     ↓ dislike (0)   quote   flag      

ThreeBays says
US treasuries are an IOU from the government, and we count those as the federal deficit. SS, Medicare, government and veteran benefits, and all other commitments it has made are also IOUs. However the government fails to add those liabilities to the so called "deficit".

You seem to confuse deficit, debt, and future liabilities.
39   ThreeBays   ignore (3)   2018 Oct 16, 11:47am     ↓ dislike (0)   quote   flag      

Heraclitusstudent says
ThreeBays says
US treasuries are an IOU from the government, and we count those as the federal deficit. SS, Medicare, government and veteran benefits, and all other commitments it has made are also IOUs. However the government fails to add those liabilities to the so called "deficit".

You seem to confuse deficit, debt, and future liabilities.


No, I do not. Read the paper, it makes a good point that the distinctions between debt and future liabilities is an arbitrary accounting choice. They are all liabilities.
40   MisterLefty   ignore (0)   2018 Oct 16, 11:52am     ↓ dislike (0)   quote   flag      

rdm says
What happens when the economy slows or goes to recession?
Interest rates get lowered. But "we" disappeared the banks' bad debts, please recall.
41   rdm   ignore (2)   2018 Oct 16, 3:39pm     ↓ dislike (0)   quote   flag      

Senate Majority Leader Mitch McConnell on Tuesday called the ballooning budget deficit “very disturbing” but said large federal spending programs were to blame, dismissing criticism that last year’s GOP tax cuts are saddling the country with more debt.

https://www.washingtonpost.com/business/economy/mcconnell-calls-deficit-very-disturbing-blames-federal-spending-dismisses-criticism-of-tax-cut/2018/10/16/a5b93da0-d15c-11e8-8c22-fa2ef74bd6d6_story.html?noredirect=on&utm_term=.a36028de30b2

Putrefied turtle and Republican leader McCornhole is now "disturbed" by what everyone, except every Republican in the Senate and most of the Republican House predicted, that cutting taxes and increasing spending increased the deficit. The solution, that everyone knew would be forth coming, is to make up the difference from seniors and poors.
42   LastMan   ignore (1)   2018 Oct 16, 5:37pm     ↓ dislike (0)   quote   flag      

socal2 says
We are going to have to cut back spending.

Government workers making 6 figure pensions will have to cough something up, and we are going to have to do some long overdue reform to our entitlement and welfare systems.

Expect the Democrats to fight against this government reform every step of the way. Republicans can no longer ignore it and will have to take on this unpleasant task head on.


If the Rs go after government workers, welfare, etc. without making similar cuts to defense, farm subsidies, etc. of course the Ds will fight it. Depending what happens in the mid term elections, the Rs should be able to push through whatever cuts they want if they have the political will to do so.

I'm not inclined to believe either party will make a serious effort to cut spending. Cutting spending tends to reduce receipts, which can lead to a deflationary spiral. Not something that a politician wants on their watch. Kicking the can down the road is expedient.
43   NoCoupForYou   ignore (4)   2018 Oct 16, 7:55pm     ↓ dislike (0)   quote   flag      

MegaForce says
??? trade is not a deficit. Never is. I trade you a goat for 10 chickens, where's the deficit? In order for that trade to occur, you agreed to the deal as did I. I might not like that you only gave me 10 chickens instead of 15, but I found it acceptable enough to conclude the trade, yes?


We're not a barter economy and these transactions are financial, not swaps for goods. Ricardo's famous wool and wine example fails because the goods involved are manufactured goods, not agricultural products that have a far tighter limit of scale (you can only raise so many sheep in Portugal or England).

Eventually if you outsource your profit-generating industries overseas, you won't have any profit to import with, and no domestic industry to produce for you. There no guarantee the money that goes abroad won't come back as buyouts of IP and Profitable Companies, to further be outsourced to China.

Everyone talks about how smart China is, one thing they are not doing is Outsourcing high valued added manufacturing, nor replacing Chinese employees with imported Somalians or anybody else.

There's also no IP involved in chicken and goats - at least nowhere the same degree of high tech, high value added manufacturing which has nothing but disadvantages to outsource - especially to a strategic rival.
44   Tenpoundbass   ignore (14)   2018 Oct 17, 10:06am     ↓ dislike (0)   quote   flag      

Obama didn't build no Roads... uh-uh-uh You know? Trump did! Trump is building roads that You and I can use to create commerce and jobs.
You're Welcome!
45   tatupu70   ignore (0)   2018 Oct 20, 8:51am     ↓ dislike (0)   quote   flag      

MegaForce says
The US government has consistently been only able to retrieve about 18% - 21% of GDP from the income tax. Didn't matter when the top rates were 91% or 25%, that range has held solid. It's called Hauser's law, after the guy who discovered it.


Hauser's law is bullshit. We're in the midst of proving it this year. Revenue is down 19%.

http://egnorance.blogspot.com/2012/08/hausers-law.html

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