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chaos0xomega wrote:

youbedead wrote:
Tell me do you actually understand that the phrase 'balancing the books' is completely and utterly meaningless to a nation. countries that ran a surplus for many years generally failed to expand economically because they were to afraid to increase spending for new economic ventures

That doesn't need to be the case.

If you are a business it doesn't need to be the case, but government isn't a business and shouldn't be treated as such. This isn't the United Corporate Holdings of America™.

chaos0xomega wrote:

youbedead wrote:
Tell me do you actually understand that the phrase 'balancing the books' is completely and utterly meaningless to a nation. countries that ran a surplus for many years generally failed to expand economically because they were to afraid to increase spending for new economic ventures

That doesn't need to be the case. It is entirely possible to expand without operating under a continuous deficit. In any case, such a large debt will eventually become a hindrance to economic expansion, in fact it will become a driving force for recession

If you try to expand without creating a deficit you only have to options. Raise taxes to cover growth, do this to much and it stifles domestic development. You can also cut programs to pay for it, obviously if you need to make cuts every time you want to grow then you never go anywhere.

Thats not to say that the current debt level is a good thing just that deficit isn't intrinsically bad

youbedead wrote:

chaos0xomega wrote:

youbedead wrote:
Tell me do you actually understand that the phrase 'balancing the books' is completely and utterly meaningless to a nation. countries that ran a surplus for many years generally failed to expand economically because they were to afraid to increase spending for new economic ventures

That doesn't need to be the case. It is entirely possible to expand without operating under a continuous deficit. In any case, such a large debt will eventually become a hindrance to economic expansion, in fact it will become a driving force for recession

If you try to expand without creating a deficit you only have to options. Raise taxes to cover growth, do this to much and it stifles domestic development. You can also cut programs to pay for it, obviously if you need to make cuts every time you want to grow then you never go anywhere.

Thats not to say that the current debt level is a good thing just that deficit isn't intrinsically bad

Right, you'll notice that my post said we can't CONTINUE running on a deficit. As in, we can't continue piling on such a massive debt, because you know what happens? Eventually we run out of people willing to give us money, and then not only are we running a deficit, we're running an even bigger deficit, and we're not growing at all anymore, instead the nation is basically rusting/decaying away, receding if you will... a depression more than anything else. And then it all spirals out of control into who knows what.

Besides that, there is no real reason why a nation can't be treated as a business in regards to growth vs. deficit. Granted, it doesn't optimize growth, but its still doable. Additionally, its perfectly reasonable to operate under a deficit one year and then run a surplus the following year, as long as it 'balances out' in the end. I would love to see how anyone plans on balancing out the current debt though.

http://www.usdebtclock.org/

Its very close to reaching the threshold of what I consider 'unfixable'

By continue running on a deficit do you mean at the current debt rate or any deficit at all. One makes complete sense the other leads to the stagnation and collapse of nations

The first one. I understand a little deficit is necessary sometimes, but when the deficit is over 1/3rd of the budget and the debt is 5x the budget, something somewhere went wrong.

chaos0xomega wrote:The first one. I understand a little deficit is necessary sometimes, but when the deficit is over 1/3rd of the budget and the debt is 5x the budget, something somewhere went wrong.

You're right that the US is an excessive case at the moment, but a state that isn't running a deficit isn't an effective state. In fact, you would be hard pressed to find a stable, or really any, state that isn't running a deficit.


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chaos0xomega wrote:
Besides that, there is no real reason why a nation can't be treated as a business in regards to growth vs. deficit.

Growth and deficit are not opposing concepts.

dogma wrote:

chaos0xomega wrote:The first one. I understand a little deficit is necessary sometimes, but when the deficit is over 1/3rd of the budget and the debt is 5x the budget, something somewhere went wrong.

You're right that the US is an excessive case at the moment, but a state that isn't running a deficit isn't an effective state. In fact, you would be hard pressed to find a stable, or really any, state that isn't running a deficit.

Nor is a state that has defaulted on its debts, which is something that looks entirely possible in the next 10 years. Besides that, a deficit is only healthy when its cyclical. You need to balance out the deficit with a surplus. You CANNOT run a permanent deficit, most economists (admittedly not all) agree on this point, and it is a central component of Keynesian economics (which I am not a fan of myself, but it seems to be the most generally accepted economic theory). What the US has is a structural deficit, which is basically the equivalent of a failed economic model. Really, the way you make it sound is that a state that isn't running a deficit all the time will fail spectacularly, which isn't the case, nor is it accepted by all schools of thought on economic theory (and it certainly isn't accepted by me).

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chaos0xomega wrote:
Besides that, there is no real reason why a nation can't be treated as a business in regards to growth vs. deficit.

Growth and deficit are not opposing concepts.

Fair enough, they are not opposing concepts, and I didn't intend to word it as such, I was trying to shorthand the relationship between the two concepts that we are presently discussing.

How do you create the surplus then

chaos0xomega wrote:Besides that, a deficit is only healthy when its cyclical. You need to balance out the deficit with a surplus. You CANNOT run a permanent deficit, most economists (admittedly not all) agree on this point, and it is a central component of Keynesian economics (which I am not a fan of myself, but it seems to be the most generally accepted economic theory).

So long as GDP growth continually offsets the deficit such that the total debt, as a percentage of GDP, never increases you can run a permanent deficit. In fact, its basically necessary for healthy growth due to the need to maintain and expand infrastructural assets owned by the public.

You're also wrong about Keynesian economics. Keynes' theory only applies to periods of particularly high deficit spending, it does not make any comment on normal deficit spending.

chaos0xomega wrote:
What the US has is a structural deficit, which is basically the equivalent of a failed economic model.

No, not really. A failed economic model entails a system that cannot possibly executed regardless of how expenditure is balanced against revenue; which would imply that any state with a free market and national, social services is impossible to sustain. Given how many of them there are, and how many of them are actually very prosperous, that really can't be the case.

Structural deficit, on the other hand, is just a failed bet on expected growth, and is the sort of deficit that states must maintain in order to keep up with continued growth. Part of the issue for the US is that taxes have not kept pace with expenditures, and no one has really tried to bring the two in line since Reagan began the anti-tax preaching. Now we're at a point where we have to cut spending, and raise taxes (or, more properly, revenue) in order get back into a sustainable state.

chaos0xomega wrote:
Really, the way you make it sound is that a state that isn't running a deficit all the time will fail spectacularly, which isn't the case, nor is it accepted by all schools of thought on economic theory (and it certainly isn't accepted by me).

Don't appeal to authority, least of all in so vague a fashion. I also wouldn't argue from belief, as that isn't a particularly strong position either.

In any case, that's exactly what I'm saying. For most states strucutral deficit is necessary to keep up with both economic and population growth. Certain nations, primarily small, prosperous states and states with shrinking populations, can get away without any form of structural deficit as they can reasonably be expected to have fixed infrastructural expenditures. In any other nation, though, the absence of a structural deficit essentially means that we're discussing a failed state.

Step 1: Get all the money I can.
Step 2: Go exchange it all for gold coins in South Carolina!
Step 3: SELL IT TO GLEN BECK!
Step 4: GREAT VICTORY!

Melissia wrote:Le gasp, you suggest raising tax rates? HOW DARE YOU!

Heh. Repugs would slit your throat if you said that to their face.

I've said before that the issue of the US deficit is a bit like a starving vegan at an all the bacon you can eat party.

The solution is obvious, if only the vegan would start thinking about ideological assumptions.


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chaos0xomega wrote:That doesn't need to be the case. It is entirely possible to expand without operating under a continuous deficit. In any case, such a large debt will eventually become a hindrance to economic expansion, in fact it will become a driving force for recession

The issue is all about sustainable debt, and what the debt is spent on.

Deficit spending that develops infrastructure can be expansionary, and if it can lead to enough growth then it can be a very god thing for the economy. Similarly, deficit spending that maintains aggregate demand can limit the long term damage from recession.

The problem is that the US has spent much of its deficit on operating matters that haven't grown the economy, and it's maintained deficits during the best economic times.


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chaos0xomega wrote:Its very close to reaching the threshold of what I consider 'unfixable'

The problem is nowhere near unfixable.

The US is the wealthiest, and most productive nation in the world. If anyone can live within its means it is the US.

The only thing stopping the problem from being solved is the steadfast resistance of so many people to actually consider the basic steps that need to be taken.