Chart courtesy of Bianco Research

>

Earlier this week, the total debt in the U.S. topped $15 trillion ($14.98 trillion of which counts against the debt ceiling).  This makes the U.S. just a few ticks away — $200 billion,practically a rounding error in DC terms — away from the current ceiling.

Estimates for based on current pace of debt accumulation are that the ceiling should be reached around New Year’s Eve, plus or minus a day.

To raise this ceiling, the Super Committee must agree to $1.2 trillion in debt reduction over the next 10 years.  No one is particualrly optimistic about the prospects for this occurring.

Will early August’s default talk return once again?

See also Wall Street Journal: Deficit Stalemate Signs Rise;

Category: Credit, Fixed Income/Interest Rates, Politics

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

84 Responses to “The Next Debt Ceiling Crisis”

  1. Thor says:

    . . . and yet we’ve heard almost nothing of this from the MSM. Reminder #1001 why I’ve given them up for good!

  2. ashpelham2 says:

    Oh, god. Don’t tell Fox News or CNN. My investors will be blowing my phone up afraid of bonds again. Sometimes, I hate my life :D.

  3. DJKeegs says:

    Default talk? Yes. That’s the republican playbook. To stagger from one fiscal ‘crisis’ to the next to hamstring any recovery and reinforce their favored perception that government can do no good.

  4. Deviator says:

    If the supercommittee “fails,” doesn’t the legislation assume that the squester will take care of the necessary cuts? So wouldn’t that allow the administration to keep on raising its borrowing, as if the sequester is in effect, even while congress is trying to undo it?

  5. Frilton Miedman says:

    We must do all we can to preserve the “job creating” wealth of the Koch brothers and Rupert Murdoch or it will be the end of civilization as we know it, it’s in the Constitution – listed in article 9 & the 29th amendment,, Michelle Bachman told me so….

  6. Global Eyes says:

    Despite the rhetoric, USA debt keeps increasing because too many people benefit from a National debt that brings personal joy.

  7. Petey Wheatstraw says:

    Taken together with the previous post, in which Bill King was quoted as having said, “The main difference now is sovereign governments are in crisis for bailing out their banks and economies; and central banks are left with only one option – to go Weimar,” the so called “Debt Ceiling Crisis” would seem to serve no purpose but to divert the public’s eye away from the inevitable fate of our debt-based (and already bankrupt), central bank managed, world reserve status, fiat currency economy.

    The “Super Committee” is a sideshow. Debt carried forward and dollars issued to back that debt are not the path of least resistance, they are the ONLY path. There has never been any balancing of accounts (and there never will be), because the entire system is dependent on imbalance (and pretty much guaranteed to self-destruct — not self-correct). We are in a debt continuum.

    Will default talk return once again?

    In the card game that is the global economy, we stacked the deck in our favor long ago, and default isn’t among the cards we hold (we could just throw down our hand and fold, but why would we?).

    Downgrades are another matter. We will have downgrades. In the news, Europe will take a back seat to the US for a while.
    _____________

    I remember when we used to talk about what inning of this game we were in. Nowadays, it seems like the top of the 1st — forever. Groundhog Inning.

  8. JimRino says:

    This is Great.
    There will be a REVOLT against the Tea Party in 2012.
    We will then be able to do something about Wall Street Corruption.
    We can then start funding the SEC sufficiently to start prosecuting FRAUD.

  9. Irwin Fletcher says:

    I agree with Marcus Aurelius.

  10. dead hobo says:

    $120B x 10 years and screaming bloody murder is a farce bigger than the unfunded and incomprehensible EFSF. The US budget crisis has yet to hit. Assume Greece * 1000 in a couple of years. All due to incompetent and corrupt politicians. Fortunately, the problem will be easily solvable in real terms when competent and responsible people take over. But the theater until then will be priceless. The market swings coming from the incompetence of those easy to buy off cheap goobers and nose pickers in Washington DC will be just off the chart profitable.

  11. RW says:

    Those who like to cite Weimar as some kind of ultimate anti-expansionary totem tend to forget (or are simply unaware) of the critical fact that the German hyperinflation of the early 1920′s was not directly causal in the rise of National Socialism; the deflationary, austerity policies of the early 1930′s were proximal (ht PK).

    Joe SocGen analyst Dylan Grice sets the record straight.

    It’s easy to forget here too that the time of greatest political turmoil in the US was during the Great Depression.

    Condemning a significant percentage of the population to chronic unemployment has consequences; serious ones, always.

  12. brianinla says:

    The additional debt isn’t $120B x 10 years. It’s about $1.3T annual deficit x 10 years, and they are arguing how to only cut $1.2T out of the expected $13T of the expected increase. Yes the projected national debt will be $28T in 2022. Who still thinks the debt should be rated AAA?

  13. DeDude says:

    The committee will fail and the automatic cuts will go through. Neither Dems nor GOPs can vote to reduce the military, but the automatic cuts will do that for the Dems. Right now the blame for not reaching a deal will likely land a lot more on the GOP. The Dems put SS and medicare on the table and in return the GOP predicated any tax increases on making the extended Bush cuts permanent (i.e. we will increase taxes, but only after you decrease them a lot more first). Refusing to extend the debt limits after the automatic cuts are implemented would be a losing deal for GOP. My guess is that Obama secretly is saying “go ahead make my day”. This is the time in the election cycle where he has to start being rigid and block things rather than compromise. Its the only way he can get his base rallied and committed to go to the pools. If he is smart he will also let the extended Bush cuts run out after a my-way-or-the-highway ultimatum on the GOP. If he combined that with a fair child tax credit and “everybody gets a $1000 tax credit proposal to be shut down by the GOP he would have a huge winner.

  14. ilsm says:

    If the US spent the 1.4% of GDP on war industry, same as the Germans, that doesn’t work, the US’ FY 2012 outlay would be reduced by $430B.

    The congress is selling the US to their war profiteer bagmen.

    Supercommittee reflects the owners of congress’ objects.

  15. dead hobo says:

    brianinla Says:
    November 18th, 2011 at 1:53 pm

    The additional debt isn’t $120B x 10 years. It’s about $1.3T annual deficit x 10 years, and they are arguing how to only cut $1.2T out of the expected $13T of the expected increase. Yes the projected national debt will be $28T in 2022. Who still thinks the debt should be rated AAA?

    reply:
    ———-
    No it’s 1.2T over 10 years. The histrionics out of DC are phony.

  16. AtlasRocked says:

    Democrats own the debt. Only the 25 blue dogs voted for todays Balanced Budget Amendment. Democrats have voted it down twice now, they voted against it in 1995 too. No more whining about the Bush spending binge – the Democrats could have prevented it. Republicans voted to Balance in 1995. A party whose foundation is “we want something and we don’t want to pay for it.” Twice confirmed by vote. No protests in DC when the Bush tax rates were re-confirmed. Twice against a Balanced Budget Amendment. A party for Rangel the tax cheat.

    “Last night marked a momentous evening in my campaign for re-election,” Rangel wrote in a letter to supporters on Thursday. “At a special event in Washington, Democratic leaders including Nancy Pelosi, Steny Hoyer, James Clyburn, Sandy Levin, John Conyers, Emmanuel Cleaver, and Steve Israel stood by my side and pledged their unwavering support on my behalf. I am so humbled and grateful for their involvement.”

    ~~~

    BR: You seriously believe the GOP has clean hands in this? Don’t look to me to defend the Dems, but BUSH created a huge swath of this when he had all three branches of govt. Only a naive or an ideologue thinks this is one sides.

    “Thinking is what a great many people think they are doing when they are merely rearranging their prejudices.” ~William James

  17. Roger Bigod says:

    It’s the fault of the deadbeat subprime borrowers and the bleeding-heart liberals that encouraged them.

  18. rootless says:

    brianinla, you wrote:

    Yes the projected national debt will be $28T in 2022. Who still thinks the debt should be rated AAA?

    Why is the absolute level of the debt supposed to be the relevant criteria to make a statement about this? And not, e.g., the public debt relative to GDP and the ability to service the debt?

  19. arbitrage789 says:

    To the extent that they raise public awareness, these debt ceiling debates do provide some value.

    I just hope that the average J6P sees the national debt as a problem before the bond market does.

  20. AtlasRocked says:

    BR: The Democrats could have voted for the BBA in 1995 right? That was pre-Bush II years, bro.

    The Republicans under Newt voted for the BBA, the Dems were against. Passing the BBA then would have fixed the problem, right? The Republicans voted to tie Bush’s hands in 1995, the Democrats voted against it. Now The Dems vote against it again, the Republicans vote for it, and yesterday the Dems held a party for tax cheat Rangel.

    Proclaiming a platitude in your post does nothing. Actions speak louder than words. You should DAMN the Democrats for this. You decry over-borrowing in the private sector then try to spread the blame to a group that has tried twice to make it a concrete commitment to keeps spending in check.

    Equivocation is a waste, BR. You claim to be all about looking at the data. There’s two concrete data points: NO and NO, “we don’t want to reign in spending, we want to spend more than the tax revenue”. Accountability is needed, and you’re making excuses the party of unaccountability.

    Actions. Speak. America needs leaders, not equivocators that fail to cite failure.

  21. AtlasRocked says:

    If you can find me the Federal level Democrat that wants to raise taxes 45% to cover all the US government expenses, I’ll personally write a letter of warm adoration for them, BR, and you can post it on your website. We need two parties that want to pay for every program the gov’t funds, not just one.

    Paying for everything you buy is not a partisan thought, it’s the root of all successful economic and social systems.

    Very disappointing equivocation BR. 25 Democrats did better than you. You have just let the rest of the Democratic party and the 4 Republicans that voted against this off the hook by failing to cite them for the thieves they are.

  22. AtlasRocked says:

    Dang it, Barry, of course I hold the Republicans responsible. I quit the Republican party in 05, right? Do I need to send you my Orange Country Florida Libertarian registered voting card? Please, you know I hold them accountable. But one party can’t keep spending it check, it takes 2 parties committed, just like in a marriage: One partner can’t be the only one responsible for spending, both partners have to be committed.

  23. Frilton Miedman says:

    I get sickened at the thought of continued “Your party is the one that screwed us” routine.

    As a Libertarian, I found myself swinging to the left at the start of Obama’s admin, when the GOP immediately sought to dissolve itself of blame and pin it on O, despite the glaring and obvious fact that it was largely Bush’s nail in the coffin spending and tax cuts and deregulation (CFMA) that tipped us. (we can thank Clinton for Gramm-Leach-Bliley as well)

    We can go back as far as Carter to find fault, we can blame everyone else till the cows come home, but the facts are glaring, we need revenue’s, we also need to invoke common sense on the cuts, like Alan Simpson’s recommended means testing for medicare and Social Security, as well as an end to corporate & upper class tax welfare that Simpson states amounts to $1 trillion per year in lost revenue’s.

    We’re also absolutely f—ed if we keep listening to ridiculous notions that the “free market” will resolve trade deficits and recover lost jobs, all the while the corporations and their executives making massive profits off trade agreements are still rewarded with “job creating” tax cuts.

    That alone is profound, $1 TRILLION a year in tax giveaways to corporations and the wealthy….and the GOP is fighting tooth and nail to cut grandma’s medicaid, food stamps for single moms out of work or veterans benefits to make up for it..

  24. brianinla says:

    rootless: What do you call when in order to service increasing debt loads you have to sell even more debt? Do you even want to start another debate on what constitutes a ponzi scheme? You pigs have no shame.

    dead hobo: What was the annual deficit this year? $1.3T. What will be the deficit next year? Hint: there won’t be a balanced budget. There absolutely is no projected balanced budget over the next ten years. It will be around $1.3T again. And again the following year. You fell for the MSM ruse on what the deficit debate is about. They are debating on if they can find a way to cut about $1.2T on an expected $13T increase in debt. Write it down on paper. Do the math.

  25. AtlasRocked says:

    Frilton – Read the bill – IT DIDN’T HAVE SPENDING CAPS LIKE THE TEA PARTY WANTED. I’m a TEA PARTY fan and I was FOR THIS BILL. I posted that sentiment on TEA PARTY FORUMS. WE NEED THIS BILL NOW. Nobody gave me a hard time.

    If the party that wants benefits wants to keep the benefits, the bill would say they have to find the votes to raise the taxes for them.

    This would have STOPPED the Bush tax cuts and STOPPED TARP and the never-has-worked Keynesian spending foolishness.

    It’s a bipartisan solution MOVING FORWARD to gov’- created debt either by tax cuts or overspending – NEITHER has created revenue to pay for themselves.

    This is HERE AND NOW: The Democrats just voted en masse to not be held accountable for spending, neither with tax cuts nor overspending. They RE-PASSED the Bush tax cuts last year and they just paved the way for another round of REPUBLICAN FOOLISHNESS too.

    The Democrats own any future Republican tax cut deficit and all the over spending. Period. Done.

  26. dougc says:

    RWSAYS that the problem was not hyperinflation but austerity, so if they would of continued to print, everything would of turned out great. The austerity was the ultimate result of hyperinflation

  27. Frilton Miedman says:

    Atlas, at the inception of the Tea Party, the Santelli rant, I knew it was toast, the Tea Party was all but owned by Fox and Koch brothers, going off course from anger over the governments conflicts on interest in conjunction with special interest =bAck door deals (bribery) and becoming twisted into pro wealthy, corporate tax and deregulatory spin.

    A Libertarian stands for one thing first and foremost – PERSONAL liberty…not corporatism (fascism), not plutonomy, not aristocracy, monarchy or any other form of tyrannical concentration of power.

    While Fox Network has guided Libertarians over to the Federalist ideology, a mindset that everything is the governments fault for being too powerful….therefore we need to get “big government” out of the way of corporations, let me remind you of Milton Friedman’s actual stance on the topic -

    “The greatest threat to human freedom is the concentration of power, whether in the hands of government or anyone else”

    I don’t give a rats ass about who’s party is best or least to blame, what concerns me is that my government is acting at the behest of bribery, which is clearly defined as a “high crime” in the Constitution they so often like to boastfully talk of adhering to.

  28. Petey Wheatstraw says:

    Anakin still hates him some goddamned Democrats. It’s! All! Their! Fault!

    http://www.youtube.com/watch?v=WgkVIV_7DFU

    The economy is only a part of the US political picture, which has been painted, primarily, by the Republicans/Right wing/conservatives for the past 3 decades.

    That political picture includes war mongering, pandering DIRECTLY to special interests (the religious right, corporate interests, Grover Norquist, crony government contractors, etc.), borrowing and spending like drunken sailors as SOP (with the blatant and clearly stated denial that deficits have any bearing on the economy, whatsoever), religious freaks in positions of power and influence, denial of science (generally), the creation of the Unitary Executive theory, a Supreme Court that would have us believe that GE is a person, hypocrisy of the highest order in matters sexual, ethical, or moral (so much so that the phenomena earned the well-deserved ‘IOKIYAR’ designation), dismantling of our social safety net (which, if you think about it, was one of the very best things about America, ever), the corruption of the voting process, torture, treason (Reagan and Cheney), the overturning of habeas corpus, the politics of obstruction, the flood of illegal immigrants, disastrous deregulation of banking and industry, the greatest transfer of wealth to the fewest people in our history, and the clear intention to deny equal rights to as many American citizens as possible (and this is over unimportant shit like gay marriage — going as far as to say it will destroy our culture. Who gives a shit about that?).

    Government worked right up until we elected them to prove it didn’t.

    30 years of this shit ideology has been distilled down to the parade of knuckleheads that is their current crop of Presidential candidates.

    Your disclaiming of the (R) party, having, as you say, “quit” them on ’05, belies your implicit support of them in the rest of your rant. As the (D)s obviously don’t, as you claim, own the entire debt, why would you single them out, if not in support of the (R)s?

    In any event, if it helps, the Democrats, at least those not actually Republicans in Democrat’s clothing, are a feckless bunch of centrist nincompoops, and Obama is more of a Corporatist than Bush ever was.

  29. Frilton Miedman says:

    Petey, though I agree fully, I would point to two individuals running for presidency who are losing any shot to win by openly discussing the things you talk about – Buddy Roemer and Gary Johnson.

    Buddy flatly refuses any contribution over $100.

    My point, both are republicans, simply blaming whole parties would dismiss the merit of individuals, also fueling more of the “my daddy is bigger than yours” childishness.

  30. AtlasRocked says:

    You guys are doing the same thing the Democrats are doing – you’ll talk any dissembling you can think of to avoid linking gov’t spending to tax revenue. This has nothing to do with the Koch brothers or religion or abortion or any other crap. This was making Democrats force their constituents to reconcile their wishes with the cost of their wishes.

    The record speaks: Republicans just tried to pass an Amendment that could have forced massive tax increases to pay for all the benefits we have now. The Democrats voted against it.

    So did Paul Ryan – he’s wrong on this too.

  31. rootless says:

    @brianinla:

    What do you call when in order to service increasing debt loads you have to sell even more debt? Do you even want to start another debate on what constitutes a ponzi scheme? You pigs have no shame.

    Currently, payments on interest for government debt are fully covered by tax revenue. So, a claim that the debt service in the present was only possible by increasing the government debt load is not based on facts. But my question was one about the relevance of a criterion you mentioned. You don’t know any answer, apparently. Instead you try to insult me. Do you already feel cornered? You make the impression of an ideological hack.

  32. Frilton Miedman says:

    AtlasRocked Says:
    November 18th, 2011 at 5:34 pm
    “You guys are doing the same thing the Democrats are doing – you’ll talk any dissembling you can think of to avoid linking gov’t spending to tax revenue. This has nothing to do with the Koch brothers or religion or abortion or any other crap. This was making Democrats force their constituents to reconcile their wishes with the cost of their wishes.”

    Misdirection, Fox style, where I do not agree verbatim with your points I’m then labeled “left”…..in other words -”My daddy is bigger than yours”.

    For example, Rather than tackle the healthcare monopoly that pays the bills come election time, and kills tens of thousands of Americans every year, destroys the ability for Americans to compete for foreign wages via special interest payola, we got no oversight on pricing & cost, coupled with an individual mandate the Heritage Foundation has been drooling over for years. (forced purchasing of private sector goods…yeah, there’s a Libertarian ideal)

    While Luntz was coaching Fox’s on-air staff to refer to the “public option” as a “government takeover” we were simultaneously losing jobs to countries with healthcare that costs a fraction our rates….because Fox has viewers brainwashed with words like “socialism” any time our Democratic government attempts to act in our safety, security & posterity.

    King George III would approve, Benito Mussolini would be blushing.

  33. DeDude says:

    AtlasRocked@2:24;

    Not that reality has any influence on you but the balanced budget deal that Newt and Clinton agreed to in 1995 immediately disappeared after Bush II got into office – and after that what happened to spending and the deficit? The only time the GOP want’s to balance the budget is when the associated cuts, politically can hurt a democratic president. But don’t let the facts interfere with your narrative. Better to play dumb and declare yourself non-partisan after such a blatant partisan attack. If you want to be taken serious you need to stop being so full of distortions and lies. Are you sure you are not a lefty faking a caricature of right wing moron?

  34. DeDude says:

    AtlasRocked@4:34;

    So the Dems either do exactly what you want and how you want it, or they are forever responsible for all problems herafter? How old are you? 12.

  35. Joe Friday says:

    AtlasRocked,

    Democrats own the debt.

    Rewriting history is not your forte.

    Chimpy Bush and the Republican Congressional Majority inherited federal budget surpluses as far as the eye could see, with Greenie testifying to Congress of the “danger” of our ENTIRE FEDERAL DEBT being paid off.

    As the CBO has illustrated, our current massive federal deficits & debt, as well as our future projected medium-term massive federal deficits & debt, are OVERWHELMINGLY as a result of the MASSIVE plummet in federal income tax revenue as a result of the numerous rounds of tax cuts for the Rich & Corporate during the previous administration.

    Only the 25 blue dogs voted for todays Balanced Budget Amendment. Democrats have voted it down twice now, they voted against it in 1995 too.

    GOOD.

    The Balanced Budget Amendment is a SCAM to lock-in the failed tax cuts for the Rich & Corporate.

    Do try and be less gullible.

  36. DeDude says:

    In theory the idea of balanced budget amendments can sound fine – provided they have the right balance of tax increases and budget cuts. But there are major problems with restraining the ability of the federal government to act counter-cyclical when things get bad. The balanced budget requirements of state governments have made them extremely pro-cyclical. So when things go bad the states just pile on the problems. But to be efficient and competitive in use of capacity we want to blunt the cycles not amplify them. The federal government has served that function but has to run budget deficits to get that done. Furthermore, the buy low advantage of counter-cyclical policies would be replaced with a buy high disadvantage if we were forced to balance budgets as the states do. The only times the federal government would be able to invest in infrastructure would be when the economy was booming and government would compete with the private sector for labor and materials (driving prices up for both). I can see some advantages to forcing long-term responsibility onto the budget, but it is so easy to end up like CA and shooting yourself in the foot.

  37. dead hobo says:

    brianinla Says:
    November 18th, 2011 at 4:29 pm

    dead hobo: You fell for the MSM ruse on what the deficit debate is about. They are debating on if they can find a way to cut about $1.2T on an expected $13T increase in debt. Write it down on paper. Do the math.

    reply:
    ——–
    No I didn’t. As I said, $1.2T = 120B x 10 years, not 1.2T each year, and that is still inaccurate because a lot of the 1.2T is back loaded into the distant years. It’s a drop in the bucket and the histrionics from DC are all false concerning this being a huge amount that will cause catastrophe for us all if they take effect. We will see Greece * 10000 here in a few years, I am quite sure.

  38. AtlasRocked says:

    @Dedude, gov’t overspending via tax cuts or via spending increases has NEVER worked. NEVER. Post an example. It has ALWAYS yielding some growth but NEVER does the tax revenue increase enough later to pay off the debt created. You’re advocating the EXACT same fiscal morality as Wall Street: Creating a fiscal instrument that has ZERO intrinsic value, the federal debt. Here is the chart of delta-debt versus delta-GDP, notice it NEVER turns positive. http://market-ticker.org/akcs-www?post=190174 It’s made from Fed Z1 data.

    You’re part of a promotion of fraud scheme, the same as Bernie Madoff.

    You’re a bigger crook than Wall Street for promoting this cockamamie idea.

  39. 873450 says:

    Question: Will early August’s default talk return once again?

    “I think some of our members may have thought the default issue was a hostage you might take a chance at shooting. Most of us didn’t think that. What we did learn is this — it’s a hostage that’s worth ransoming.” – Mitch McConnell (08/02/11)

    “When you look at this final agreement that we came to with the White House, I got 98 percent of what I wanted. I’m pretty happy.” – John Boehner (08/01/11)

    Answer: Yes.

  40. AtlasRocked says:

    To all you who replied to my point about Democrats owning the debt:

    I noticed none of you spoke to the BIG FACT: Democrats, consistently vote against paying for all the benefits they ask for. Republicans try to make it unlawful for BOTH parties. It is a criminal vote.

    The Republicans have OF COURSE failed too, but they SPONSORED and VOTED FOR, an amendment to constraint debt, even while they owned congress. They did NOT limit upward spending, so it was not going to shut down any programs, it was going to force taxpayers to PAY for the programs. Trying to constrain a Democrat President? You’re post exhibits failure again: The current BBA goes in effect in 6 years future – 2 administrations future. Who could predict which party would be in power? The Democrats DOCUMENTED they do not want that constraint for EITHER party, it lets BOTH parties fail to control spending. In action, they spoke this sentence: “We are the party that does not want to force the current tax payers to pay for their benefits, we want to burden future taxpayers.”

    You guys are a bigger frauds than Wall Street for pushing debt-based benefits. NEVER has any western democracy or any G20 nation since WWII created ROI growth from debt. NEVER. If you dispute, it, post the proof. I’ll send you a $50 gift card to the restaurant of your choice, just to make it worth your effort to research it, ok?

    You’re the same as Bernie Madoff, the same as Wall Street: You’re pushing cockamamie Federal spending ideas that NEVER create ROI, they only accrue debt for our progeny and falsely lead our citizens to believe they are sustainable ideas. They most assuredly are NOT.

  41. DeDude says:

    “has NEVER worked. NEVER. Post an example”

    How about we exit the high school cafeteria and pretend we are adults? Then we might head over to the adult people library and find one of them there Econ101 books and read about things like “multipliers” and how different types of private and gobinment spending have different multipliers (some higher some lower than 1.0). Heck if we make it to chapter 2 we might even get to understand that the same spending can have different multipliers depending on the state of the economy. We may even get to the formula for GDP and see that the spending on private sector consumption and spending on public sector consumption is exactly the same as far as GDP and economic growth is concerned. We may even have one of them there light bulb moment and understand that whether “we the people” individually indulge ourselves with building an outhouse for personal use or indulge ourselves collectively by building a bridge for “community use”, makes absolutely no difference for GDP and economic growth. But maybe we shouldn’t cause our heads could explode if we got disconnected from the Fox narratives.

  42. DeDude says:

    Heck we might even look up Keynes and see how he never suggested debt based spending as a permanent tool for growth but only as a rare tool in severe downturns. We could even use the internet tubes to look for democrats that advocate deficit spending as a permanent tool for growth – and find that there are none. But maybe we shouldn’t – cause then we would have to argue against the real facts of the real world, rather than putting up straw men and shooting them down.

  43. Frilton Miedman says:

    ATLAS,

    I actually agree with much of what you say, but disagree with the focus of your debate….which at this point in a recession should not be on deficits, but on job creation (the two are not as tightly linked as Neocons claim)

    As you note above, tax cuts on their own DO NOT create jobs when not targeted to their intended purpose, giving out tax welfare to wealthy friends of Congress is NOT creating jobs, giving “job creating” tax cuts to GE or CAT while they close shop here and ship jobs to China is NOT creating jobs.

    I personally think tax cuts on the demand side (the middle class) would help induce consumption, instead of focusing on supply-side strategies that worked in the 1970′s supply crisis but now only serve to line the pockets of political bribers at the expense of the poor, elderly, disabled and unemployed. (see Friedmans “Negative Income Tax” & “Permanent Income Hypothesis” for more perspective on why that’s a bad idea)

    The problem I have, first, is your tunnel vision, specifically on spending, but ignoring the massive resources we have in the form of revenues to cut that debt.

    As I stated above, Simpson-Bowles found that we lose $1 TRILLION PER YEAR in ineffective tax loopholes and tax cuts….Alan Simpson (R) has been outspoken on the subject of revenues, of that $1 TRILLION per year in tax giveaways we could extremely easily find substantial revenues to reverse the deficit, but Oliver Norquist’s takeover of Congress won’t allow it.

    If you’re of the Michelle Bachman school of thought, that somehow it’s unconstitutional to tax, please do what she has not, read the Constitution, specifically “The Powers of Congress” section that specifically cites taxation as a duty of Congress. (Which technically means Gover Norquist has violated the Constitution by coercing officials sworn to uphold the Constitution to do the opposite)

  44. Frilton Miedman says:

    DeDude Says:
    November 19th, 2011 at 12:57 pm
    “Heck we might even look up Keynes and see how he never suggested debt based spending as a permanent tool for growth but only as a rare tool in severe downturns ”

    CORRECT.

    Keynes also stressed the importance of paying down any incurred debt once the economy turned around.

    Clinton had successfully done that, he was able to pay off a substantial portion of the debt Reagan had started, while at the same time we saw 23 million new jobs….Bush then completely obliterated any progress Clinton ha made.

  45. AtlasRocked says:

    The graph is there for you DeDude – You’re a fraud. Fed Z1 data right there in front of you.

    The increase in GDP added per unit of debt is a negative. Fed Z1 data.

    You are a Bernie Madoff, promoting a fraud.

    That’s one adult to another: Right here in print you are documenting you are promoting fraud. Stop dissembling and find some data to support your case, if you have one.

    You argue just like DC politicians – bring up how much more mature you are than I, saying the Democrats don’t advocate Keynesian spending as a central policy. Find the Econ 101 text book that proves with historical charts Keynesian deficits produce more revenue in the future and pay back the debt created.

    FRAUD. You can call me a fraud – I’m just an alleged fraud. You are a DOCUMENTED FRAUD.

  46. AtlasRocked says:

    Frilton – you’re not stating fact either. Clinton/Gingrich (the House sources ALL spending bills, so Gingrich’s House gets credit too) NEVER reduced the deficit. The rate of debt accrual slowed down. The national debt NEVER went down. It hasn’t gone down at all since the 70s I don’t believe. The TOTAL NATIONAL DEBT has only gone up.

    Debts accrual slowed under Clinton because tax receipts accelerated, not because he cut spending. Spending never went down under Clinton/Gingrich. The spending growth rate was slower than the revenue growth rate.

    Tax revenue grew fast because it was a time of high productivity gains. They were due to Oracle, PCs and apps became cheap and ubiquitous, a half million engineers were available from the defense downturn due to the reduced Russian threat, and the internet became widely available.

  47. Frilton Miedman says:

    ATLAS, you’ve made this cookie cutter argument on Keynesian spending before, any data presented is then discounted by you as “That doesn’t count because…”.

    Do tell, the “frivolous government spending” on DARPA, for example, which led to the creation of cell phones, GPS, microchips and a plethora of other advAnced technology and devices that have benefited the economy in untold volumes…what “empirical” Fed data can you procure to show what a waste of money that was?

    Seems to me, that spending is wht led to the greatest 30 year bull market in our history, 1982 through 2000…unless you feel the technology DARPA originated had nothing to do with it.

  48. rootless says:

    @AtlasRocked:

    Hey, what about you promote your case by providing some facts or data according to which strongly cutting government spending will deliver economic growth or solve the debt problem of this economic system. None of the Denninger formulas and graphics to which you linked provide any evidence that the proposals of the Tea Party crowd have to offer anything meaningful.

  49. DeDude says:

    AtlasRocked;

    Yes the graph is there and anybody can read what it presents and Denninger is even kind enough to mention things like “does not distinguish as to where the credit is created” and “nor does it distinguish as to how the GDP is created”. He even serves up the critical piece of the conclusion up with bold font “The exception is if debt is actually contracting” (ding, ding, ding), all to help the Econ101 challenged. However, he does not point out 500 moronic conclusions that people cannot use this graph to reach (because the data does not say much about them) – and I guess that was where he failed.

    Poor Berry, he spends all this time pointing out how correlation does not mean causation, and how to not get trapped in your own narrative, and logic evaluation of sources and information to build understanding — and then you do this to him!!!

  50. Joe Friday says:

    AtlasRocked,

    To all you who replied to my point about Democrats owning the debt: I noticed none of you spoke to the BIG FACT: Democrats, consistently vote against paying for all the benefits they ask for.

    Except, it was a Democratic President, with a Democratic Congressional Majority, that turned the FAILED massive Republican federal budget deficits & debt (which were growing faster than the national economy and were unsustainable) into federal budget surpluses, primarily by raising taxes on the Rich & Corporate, which the Wrong Way Rough Riders of the American RightWing adamantly predicted would be a disastrous failure:

    * “The tax increase will kill jobs and lead to a recession” said Newt Gingrich (who is now a presidential candidate), “and the recession will force people off of work and onto unemployment and will actually increase the deficit.

    * Rep. Dick Armey (R-TX), a claimed economist (and now behind the Tea Party), labeled the Clinton economic plan “a job killer

    * Another strident opponent of the Clinton administration’s economic legislation was (now Governor of Ohio) Rep. John Kasich (R-OH), who said “This plan will not work. If it was to work, then I’d have to become a Democrat…” (Still waiting on that conversion)

    * Senator Pete Domenici (R-NM), said “April Fool, America. This Clinton budget plan will not create jobs, will not grow the economy, and will not reduce the deficit

    * Stephen Moore, director of fiscal policy studies at the Cato Institute (now with the Wall Street Journal), predicted that “Clinton’s plan will torpedo the economy

    * Senator Phil Gramm (R-TX), another claimed economist, said “I want to predict here tonight, that if we adopt this bill the American economy is going to get weaker and not stronger, the deficit four years from today will be higher than it is today and not lower … When all is said and done, people will pay more taxes, the economy will create fewer jobs, the government will spend more money, and the American people will be worse off.

    EVERY Congressional Republican voted against, and of course, they were all DEAD wrong on EVERY count.

    What part of the phrase ‘FAILED RIGHTWING ECONOMIC POLICY’ are you not comprehending ?

  51. AtlasRocked says:

    Just put up one case of success guys. Unfortunately I can’t promise you any kind of comfort and warmth from cutting spending or raising taxes, OK? This is what happens when you get into a debt spiral – all roads out are painful. If you look at the simple equation for GDP, you’ll see than ANYTIME YOU STOP DEFICIT SPENDING via tax increases or spending cuts THE GDP IS MATHEMATICALLY CERTAIN TO GO DOWN IMMEDIATELY.

    There is an extensive research report from a Harvard economist that points to the least painful paths out – all the successful nations used BIG spending cuts, with smaller tax increases. This should not surprise you guys – people and businesses that fail have to do this all the time. The government does not operate under any different rules that any other entity – if you’re not created ROI, and still borrowing, you eventually fail and have to default or cut spending.

    Here is the research report, unfortunately its very technical, but this will allow you to complement your “that’s a cookie cutter (too simple) argument” with “that’s too complicated”:

    http://www.economics.harvard.edu/faculty/alesina/files/Large%2Bchanges%2Bin%2Bfiscal%2Bpolicy_October_2009.pdf

    This documents the successes of spending cuts, ok?

    As for DARPA or NASA having some success – sure they do. That doesn’t mean all gov’t investments will turn out will. The very notion that the gov’t has to do an investment is a HUGE negative guys: It means all the folks in the private sector – the ones that are dying to make a profit – think the idea that only the gov’t will fund is an outlandish investment. The chances of success are remote, and the cost of building it will increase because the gov’t runs contracts poorly – I’ve worked both sides as an engineer, anyone that post here that has done government contracts and private research will tell gov’t contracts waste tons more money that private research tasks.

    What you guys are saying is “lets let a bunch of political bureaucrats that just failed to keep the fiscal system healthy keep chasing the most outlandish investment ideas”, instead of “lets let all the savvy investors in the country make a million decisions on the best paths out of this. ” You’re rewarding failure with more responsibility. And continuing to dump the debt on our kids instead of yourselves. If you’re going to push this why not man up and mandate the gov’t put on the debt only on YOUR tax bill instead of the kids.

    At the end of the day, all of you are still advocating an idea that has FAILED in every western country in every year it’s tried since WWII: Keynesian spending. You’re still advocating a solution with a 100% failure rate.

    I offer you the gift certificate to find a solution, here’s the criteria again:

    Keynesian Beauty Contest

    $50 gift certificate for the winning example:

    Keynesian stimulus was used in the
    country _____ in the years ______,
    during a __ recession/__ depression,
    then the economy turned around within 2
    years and then produced ___ years
    of lasting growth after this. The
    increased tax revenue was enough to
    pay off all the deficit the stimulus
    had created within ______ years.

    You’re a bunch of Bernie Madoff frauds documenting you want the nation to continue to fund a gigantic, proven, fiscally corrupt scam.

  52. AtlasRocked says:

    @Joe Friday: You are defending Clinton like he had surpluses. I appreciate you documenting the fact that your telling something completely in conflict with Dem leadership. Here is what a leading Democrat had to say:

    “Both Democrats and Republicans are all running this year and next and saying surplus, surplus. Look what we have done. It is false. The actual figures show that from the beginning of the fiscal year until now we had to borrow $127,800,000,000″ – Democratic Senator Ernest Hollings, October 28, 1999.

    Clinton NEVER REDUCED THE DEBT BRO. Here’;s a graph: http://www.usgovernmentspending.com/spending_chart_1990_2001USb_13s1li011mcn_H0t

    You are documenting that you will state pro-Democrat data here that is exactly the opposite of the truth spoken by the Democratic leadership at the time. And by the way, Gingrich is at fault for this too – they all scammed the population. Thanks for documenting you will post fraudulent data, all the readers can tag your future posts. Prove one fact I’ve put here is wrong.

    I’ve been studying key failure data for liberal programs for years – the trendline is horrible. And pinning free-er market failures on the Republicans is a waste of time – MORE-FREE MARKETS FAIL SOMETIMES, guys, and KEYNESIAN SPENDING FAILS ALL THE TIME. You never have to bailout the crooks behind the free-er market failures if you REALLY have a free-er market. Failure is part of free-er markets. and don’t think I want totally free markets, that’s ridiculous. I want well regulated markets that allow failure and separate gamblers from investors, and open trading exchanges, no hiding data.

    There is no such thing as an economy that never slows down, and there is no such thing as a gov’t that spends its way out.

    What you guys are scamming the nation on is you are pushing the ALWAYS-FAILING. feel good medicine that never cures the addiction over the SOMETIMES-FAILING. painful solution that also cures the addict.

    Do I need more credentials for attacking Republicans? How’s this? Reforming welfare under Clinton? – all Gingrich did was move all the money over to gov’t medical spending. It was a scam that never resulted in a single dollar cut in overall social spending. Check the CBO tables guys, you’ll see welfare reform never resulted in a dollar of overal social spending savings, the spending continued to grow under Clinton. He got all his cuts the easy way by cutting mil-spending. Not one tough social spending cut by Clinton – that’s where 3/4 of our deficit increases come from since Bush in office. We’ve had about 3 parts social spending to 1 part defense spending increases.

    You’re advocating a massive, deceptive con game that’s just leaving debts for our kids, transferring debt to them and claiming you’re doing good. You’re exhibiting the worst kind of human behavior on the planet – a deceiver hiding behind a cloak of good. Bring on your success stories if you have a good idea for us. We can’t chase cockamamie gov’t debt based fiscal instruments any more. They NEVER pay back ROI.

    Have you noticed in my whole argument dialogue I’ve never had to defend my ideas by saying I have higher ideals than you? That’s tantamount to a religious argument, you’re just as bad as a religious bigot claiming God is on their side – give it up. I’m willing to acknowledge right now that you want whats best for the country. Let’s talk about solutions, not engage in an holier-than-thou intentions-mongering, ok?

  53. DeDude says:

    “you are still advocating an idea that has FAILED in every western country in every year it’s tried since WWII: Keynesian spending”

    You really are dense. There has NEVER been a single case of “Keynesian spending” that has not increased the GDP. It is in the definition of GDP. So you can redefine Keynes, or GDP or spending or failure/success. Reality is that Keynes nailed what spending will do and no matter what your little pea brain cannot get itself wrapped around that is the fact. Give me just one example of Keynesian spending having failed to add to the GDP.

  54. Frilton Miedman says:

    AtlasRocked Says:
    November 20th, 2011 at 2:52 pm
    “Just put up one case of success guys.”

    DARPA

  55. Frilton Miedman says:

    DeDude Says:
    November 20th, 2011 at 5:43 pm
    ” “you are still advocating an idea that has FAILED in every western country in every year it’s tried since WWII: Keynesian spending”

    You really are dense. There has NEVER been a single case of “Keynesian spending” that has not increased the GDP. It is in the definition of GDP. So you can redefine Keynes, or GDP or spending or failure/success. Reality is that Keynes nailed what spending will do and no matter what your little pea brain cannot get itself wrapped around that is the fact. Give me just one example of Keynesian spending having failed to add to the GDP. ”

    ****

    Let’s not forget, there are dozens of online forums with Atlas referencing something about a “beauty contest” that a web search will unarguably prove Keynes is a failure.

    However, in the time since learning this, I have posted in at least a hundred online forums that Keynes is the most successful economic policy of all time, thereby meaning a web search will empirically prove Keynes is better than Austrian by any measure.

  56. AtlasRocked says:

    Thanks, Frilton, I appreciate you posting here and writing in print, that if a country spends money it does not have, you are certain it will increase GDP. That is brilliant, bro. And that is the end of your defense of it. You documented your thought process is in the here and now only, and you refuse to think about the Keynesan debt that has to be repayed later. When You get asked about paying back the “loan” the government is making to the citizens, you think: It’s not on the table. Not interesting. Only the current GDP rise is interesting. Ability to pay back a loan is not important in your mind’s economy.

    You’ve provided the forum readers with far more than I could say about the mindset of those in favor of creating even more massive debts for the gov’t: I was able to get you, a debt proponent, to push aside the name calling, the holier-than-thou best-intentions-mongering, and the Clinton-reduced-the-debt lie (Democratic Senator Ernest Hollings said it was a false story) , then you, the debt-proponent, when faced with discussing the future debts of Keynesian deficits, you chose ONLY to talk about present benefits.

    Frilton, are you a guy that decries short sighted corporate profit focus, then refuses to discuss long term debt implications of Keynesian spending? All about the future in one place, but refuse to discuss the future in another? Do we have a double-stand_ _ _ here?

    You have done America a huge favor.

  57. Joe Friday says:

    AtlasRocked,

    I don’t know what planet you’re living on, but I had no idea one could access our internet off-world:

    ANYTIME YOU STOP DEFICIT SPENDING via tax increases or spending cuts THE GDP IS MATHEMATICALLY CERTAIN TO GO DOWN IMMEDIATELY

    Nope.

    * Reagan signed massive tax cuts for the Rich & Corporate and the national economy tanked into recession. After he signed the largest peacetime tax increase in American history, GDP rose.

    * Clinton signed tax increases on the Rich & Corporate and GDP rose.

    Just how many times you gonna get it wrong ?

    all the successful nations used BIG spending cuts

    Nope.

    The nations that practiced austerity (“BIG spending cuts”) saw their economies TANK.

    At the end of the day, all of you are still advocating an idea that has FAILED in every western country in every year it’s tried since WWII: Keynesian spending.

    False.

    You are defending Clinton like he had surpluses … Clinton NEVER REDUCED THE DEBT BRO

    I ain’t “defending” anyone, just statin’ the facts. From the independent non-partisan ‘Congressional Budget Office’:

    1998 – $069 billion SURPLUS
    1999 – $126 billion SURPLUS
    2000 – $236 billion SURPLUS
    2001 – $128 billion SURPLUS

    Argue with them, BRO.

    Not one tough social spending cut by Clinton – that’s where 3/4 of our deficit increases come from since Bush in office.

    The independent non-partisan Congressional Budget Office DISAGREES with you. The vast overwhelming majority of our federal budget deficits & debt resulted from the numerous rounds of tax cuts which primarily benefited the Rich & Corporate.

    Have you noticed in my whole argument dialogue I’ve never had to defend my ideas by saying I have higher ideals than you?

    Because you’re spouting unsubstantiated gibberish.

  58. rootless says:

    Atlas Rocket, you wrote:

    http://www.economics.harvard.edu/faculty/alesina/files/Large%2Bchanges%2Bin%2Bfiscal%2Bpolicy_October_2009.pdf

    This documents the successes of spending cuts, ok?

    I don’t think it does. At least not with respect to for what you were asked. To provide data and facts, which are evidence that cutting government spending, fiscal austerity in a weak or even contracting economy will lead to economic growth and solving the debt problem. The paper only shows that there were episodes with economic growth at the same time when fiscal austerity was applied, and there were episodes with economic contraction when fiscal stimulus was applied. However, please could you specify what the evidence is in the paper according to which the fiscal austerity was the cause for the economic growth or the larger economic growth in comparison to the fiscal stimulus policies? I don’t see the evidence. Correlation does not imply causality. Although the authors of the paper basically claim the same as you do it seems to me they just conclude what there preconceived views already have been. They take the correlations as confirmation for what they already have assumed to be true at the starting point.

    Interesting in the data is that the trade balance is more positive on average for the countries and time periods with fiscal austerity policies than for the countries and episodes with stimulus policies. That makes sense. If one contracts domestic demand with austerity policies, but is able to compensate the domestic demand contraction by applying a Beggar-Thy-Neighbor policy at the expense of the trade partners then there is a higher chance indeed that a domestic austerity approach can succeed. However, what if every one does the same? What if every one applies austerity policies?

  59. AtlasRocked says:

    Thanks for talking data, Bro. This is where learning happens.
    I did verify your data. Great work. Then I discovered
    something more.

    You have given me the opportunity to show you how the gov’t
    keeps 2 sets of books, an illegal practice in the private sector,
    right?

    I have a copy of the 2007 CBO Historical tables.

    Year 2007 historical tables

    Table 7.1—FEDERAL DEBT AT THE END OF YEAR

    1997 5,369,206
    1998 5,478,189
    1999 5,605,523
    2000 5,628,700
    2001 5,769,881
    2002 6,198,401
    2003 6,760,014 Note the Clinton Debt ALWAYS GOES UP.

    I see the data conflicts with yours. The total debt NEVER falls.
    I did verify that your data agrees with the 2010 edition of the tables.

    Apparently they go back and “revise”the data. In 2007 Congress documents
    the Clinton/Gingrich debt rising while Bush was in office. While Pelosi ran
    congress, the 2010 tables have been revised to make the Clinton/Gingrich
    years look better. I’ve seen this before and know how to cross check
    goverment data.

    I go to another source, since I don’t trust politicians that
    keep 2 sets of books.

    Now, what does TREASURY DIRECT, the Treasury’s portal, have to say
    about this? I went to debt-to-the-penny @

    http://www.savingsbonds.gov/NP/BPDLogin?application=np

    Debt to the penny shows

    jan 1 1998 5,481,924,290,553.50
    jan 1 2002 5,943,438,563,436.13 Debt rose $462B

    So there you have it, Joe Friday. The CBO books conflict with the treasury books. We see BOTH: four years with a CBO surplus of around $500B, yet the debt, according to the Treasury, gets $462 bigger. Congress, the ones responsible for spending, show you one set of numbers. The Treasury has another.

    Congratulations: You’ve found someone in the gov’t that has told you what you wanted to hear. I’ve found a conflicting set of data. Isn’t this comforting to know the organization that is supposed to be regulating Wall Street keeps two sets of books for the public to see?

    Now what do we do? Do we trust the rosey numbers or the skeptical numbers? Is this the group of people you want running our banks? Regulating Wall Street? Prosecuting securities fraud?

  60. AtlasRocked says:

    @rootless – austerity is when you pay off a loan, bro. Paying off a loan is not a revenue generating activity, it’s what a contract requires you to do after you borrow money.

    ABCs:
    A. The USA borrows money for 30 years straight as BOTH PARTIES believe in a debt-based economic prosperity theory that fails 100% of the time. In 2011, let’s say we figure out a 100% failing idea is failing.

    B. After recognizing it always fails, the country has to PAY IT BACK. Paying back does not require a new theory to testify it will generate economic prosperity. The contract for the Treasuries says we have to pay back the money we borrowed. It doesn’t say we get to default if we invested in a cockamamie, 100% failing idea.

    C. For the love of Pete, you just documented that you are starting to make the argument that paying back a loan is only going to be done if it guarantees economic prosperity. You’re doing what Wall Street is doing – right here on Barry’s page for the whole world to see: You’re finding an excuse to not pay what you owe someone else, using a sense of contrived righteousness. This is how your post reads:

    if your 100% failing idea fails, you don’t have to pay back the loan unless the folks loaning you the money convince you it will bring you prosperity.

  61. AtlasRocked says:

    Today I spent time talking on a forum where they where asking me to tell them how balancing the budget (austerity) will produce more economic activity. Let me get this straight: These are people that have been arguing for increasing gov’t debt in order to increase economic activity, now they are seeing Keynesian spending doesn’t producing real, sustainable growth, and they want to know how paying back the loans we just received are going to make us richer. That’s what America is working against right now. Double stump-dumb economic ideas.

  62. Frilton Miedman says:

    Not one person has made the argument for increasing debt as a means to boost economic activity, the argument has been to maintain, or increase, spending.

    Where Bush’s tax cuts for the filthy rich equate to $400+ Billion per year, and Simpson-Bowles concluded that pointless tax giveaways amount to $1 TRILLION per year, it’s not rocket science to conclude that austerity isn’t necessary, in fact, the only conclusion is that austerity is a means for wealth preservation for the 1%.

  63. rootless says:

    AtlasRocked, you wrote:

    austerity is when you pay off a loan, bro.

    Wrong.

    “In economics, austerity is a policy of deficit-cutting, lower spending, and a reduction in the amount of benefits and public services provided.[1] Austerity policies are often used by governments to reduce their deficit spending[2] while sometimes coupled with increases in taxes to pay back creditors to reduce debt.[3]
    (Reference: http://en.wikipedia.org/wiki/Austerity)

    “Paying off” a loan could be technically done from reduced expenses or increased income (e.g., increased government tax revenue). Just the “paying off” part doesn’t define “austerity”. Austerity is a set of specific policy measures, the purpose of which may be reducing the government debt burden, indeed.

    Paying off a loan is not a revenue generating activity, it’s what a contract requires you to do after you borrow money

    Red Herring.

    I see you are trying to evade the burden to provide a meaningful reply to my criticism of the conclusions by the authors of the paper and by you, which I don’t see sufficiently supported by the data, since correlation does not imply causality. Can you specifically point out now what the alleged evidence is in the paper for the causal link between austerity and successfully generating economic growth? I guess not.

    Where did you get the link to the paper from? Is this something you show each other in the conservative blogs where you reside at other times for mutual confirmation among the right-wingers how right they were?

  64. AtlasRocked says:

    @Frilton – Great idea!! Ignore all the data we provided and above and divert the thread back to the Bush tax cuts. We’ve already moved past how they failed to created ROI to repay the debt, bro.

    The interesting threads now are:

    Why does the gov’t keep 2 sets of books for the public?

    Now that we debunked with myth of the Clinton tax increases starting to pay down the national debt using Treasury Direct data, we are finally starting to talk about paying back the debt. The debt advocates actually began to criticize paying back the debt because won’t produce economic growth. Maybe you could comment on how paying back any loan could, on any planet, be considered an engine for growth?

    The GDP equation tells us GDP will fall when the deficit is closed no matter if tax increases or spending cuts occur. This is why the folks who have advocated AGAINST federal debt for 30 years were so vocal: When failure finally becomes evident to the liberal policy advocates, they are going to deny they owe anyone anything. They are going to claim ignorance and attack the loan payment advocates as being against the benefits created by the loans, instead of the debt created by the loans.

    It’s a gigantic shell game: You create debt under the fraud of Keynesian spending, then attack the anti-debt crowd as being against the poor and the downtrodden, against recovery.

    Your morality is the same as Bernie Madoff. You’re advocating a gigantic swindle and vilifying opponents that are trying to stop it with strawman deceptions.

  65. AtlasRocked says:

    @rootless – the paper does not prove causality. You can NEVER do that in economics, there are always uncontrolled variables. But you can show strong correlation.

    Barry did that with the interest rate vs housing price boom a few weeks ago, he showed wide correlation, the paper here does the same thing. Did you write Barry to complain about his graph? I doubt it – you only bring this up with data that conflict with your ideas.

    The research shows what it shows, and its from a rather liberal school, right?

    Rootless – just go ahead and Google any of my comments here before you accuse me of getting my ideas from liberal blogs. You’ll see all my words and phrases are mine. You’ll also notice I don’t to connect you to dailykos.com or any other source to make my points.

    The forum still awaits a SINGLE incidence of Keynesian spending success – while I’ve provided 4 data sets to support my positions: 1. multi-country data that citizens in all the western democracies in deep debt, none are spending their way out. 2. No evidence on the web of ANY post-WWII success for either gov’t under-taxing or gov’t overspending creating ROI to pay back the debts. 3. The Alesina paper from Harvard. 4. Treasury data shows CLinton tax increases did not result in surpluses, they only slowed down the debt accrual rate. 5. The Denninger graph that shows delta-GDP to delta-debt is almost always below zero, the integral is negative. http://market-ticker.org/akcs-www?post=190174

    You guys are using religious arguments to support your position, faith based advocacy. You are pushing a fraud on the citizens of the USA.

  66. rootless says:

    AtlasRocked wrote:

    The GDP equation tells us GDP will fall when the deficit is closed no matter if tax increases or spending cuts occur.

    You have made this assertion in this blog before together with nonsense claims like that taxes “take money out of the economy” or that government spending had nothing to do with taxes, or that spending in the GDP equation had nothing to do with demand.

    We already have had this discussion. Do you remember?

    http://www.ritholtz.com/blog/2011/09/look-out-below-post-fomc-version/

    I see now that you sent another reply back then after all, after you had announced your exit from the discussion together with some belittling remarks towards me. I haven’t seen this last comment by you anymore before now.

    You don’t seem to understand that it’s all a big circulation in the economy. Spending, whether government or private, creates demand in the economy, which has to be met by a supply of goods and services that have to be produced. Someone’s spending is always someone else’s income, whether it’s government spending or private spending. And taxes aren’t “taken out of the economy”, they are part of the economy, of the circulation of money/capital.

  67. Frilton Miedman says:

    @assrocket – Not ignoring data, for that matter, the report you posted ignores massive amounts of data, by it’s own admission it’s a rudimentary overview of debt vs growth within a relatively finite time frame (1970-2007).

    It cites only a period from 1970-2007 of OECD countries that entirely ignores the U.S. prior to 1970 – what about WW2? or the uuber high tax rates from 1940′s to 1970′s, yet we experienced massive growth over that period? – it repeatedly states it’s only a broad sweeping nondescript measure that ignores minutia, for example it states at the conclusion –

    ” American families were saving too little before the crisis. An income tax cut might have just simply been saved and might have had not a big impact on aggregate consumption”.

    This is a “no-shit-Sherlock” statement, where wages are stagnant and cost of living has skyrocketed, wages are forced to compete with countries who have socialized healthcare and college, and this report only mentions this vital detail in passing, referring to a broader crude conclusion that spending is detrimental to economic growth, while entirely ignoring details such as what spending was on, or what type of recession a given country was in at the time of stimulus.

    The report’s (and your) problem is similar to using a sniper scope at close range to draw detailed conclusions about the big picture, you’ll get some detail in very high resolution, but you’ll miss a lot more by honing only on what’s visible.

    In order to solve a problem, you have to know what the problem is first.

    The problem, wage stagnation/unemployment, wealth concentration via farcical foreign trade & tax policies that have entirely failed to create the jobs & wages they claimed.

    60 years ago, wealthy conservative banker, Fed chair through the Great Depression, Marriner Eccles foretold this event when he described the underlying cause of the Great Depression in his 1951 memoirs “beckoning Frontiers”. –

    “The United States economy is like a poker game where the chips have become concentrated in fewer and fewer hands, and where the other fellows can stay in the game only by borrowing. When their credit runs out the game will stop.”

  68. AtlasRocked says:

    You guys challenge my data with false Clinton stats and I answered them. Why don’t you guys answer questions sometime? YOu make a challenge, I answer it, then I ask you a question. It’s a conversation, not a tap dance ok?

    Do you finally agree deficit spending has NEVER lowered the debt in the US, neither Reagans’ or Bush’s tax cuts nor Clinton’s increased taxes that never equaled tax revenue levels?

    If you’re just going to stonewall treasury data and deny any truth exists about deficit increases, further posting is a waste of my time. The forum readers can see for themselves what you and I are about at this point, and decide who is credible and who is not.

  69. AtlasRocked says:

    @ rootless – you chose the path, let’s stay on this ok? no more topic dancing.

    is the dollar the govt taxed and spent from you and I the same, economically, as the dollar the gov’t spent and left as debt ? Isn’t there a little something left behind on the gov’t balance sheet by a borrowed dollar.

    Tell us where that repayed dollar comes from. Consider foreign sold treasuries. Consider domestically purchased treasuries, and use the liberal theory that money rich folks make from investments goes back into their bank accounts, they hoard it instead of spreading it around.

  70. Joe Friday says:

    AtlasRocked,

    So there you have it, Joe Friday. The CBO books conflict with the treasury books.

    Eh, there is no “conflict”.

    I’m afraid you simply have no idea what you are posting about.

    The USA borrows money for 30 years straight as BOTH PARTIES believe in a debt-based economic prosperity theory

    False.

    Now that we debunked with myth of the Clinton tax increases starting to pay down the national debt using Treasury Direct data

    False.

    The GDP equation tells us GDP will fall when the deficit is closed no matter if tax increases or spending cuts occur.

    Already disproven.

    The forum still awaits a SINGLE incidence of Keynesian spending success

    Been there, done that.

    TWICE.

    ~

    You got anything besides unsubstantiated bumper-sticker gibberish ?

  71. Frilton Miedman says:

    AtlasRocked Says:
    November 21st, 2011 at 12:49 pm
    ” You guys challenge my data with false Clinton stats and I answered them. Why don’t you guys answer questions sometime? ”

    You asked for an example of where government spending yielded an ROI, improved the economy.

    I cited DARPA.

    You’ve ignored it.

    DARPA is singly responsible for microchips, cell phones, GPS, the internet, personal computers and a plethora of others.

    I’m making a point, the spending on DARPA yielded immeasurable returns, not just economically but in terms of living standards and the advancement of civilization.

    Your report also hand selects A period from 1970-2007, completely ignoring WW2 debt and the ensuing 20 year bull market.

    It’s important to note the debt to GDP was substantially higher in 1945 than it is now.

    My entire premise is summed in a single word – “target”, what target of stimulus spending is effective, not a simplistic generic overview of a conveniently hand selected period that “proves” all spending is detrimental.

    If you insist on this generic statement, you need to explain DARPA spending and it’s economic and technologic advancements to civilization.

    Otherwise, please, shut up already..

  72. AtlasRocked says:

    You picked a bad guy to argue DARPA with, I’m a defense engineer who has worked DARPA contracts. Occasionally some interesting things come out, but very little in the way of economic impacts.

    Hopefully there is a seasoned IC engineer on the forum somewhere that will back my claim here: Defense and aerospace only used the MOST reliable components, not new unproven technology. They FOLLOW commercial industry, except maybe in some basic materials for aerospace. The DARPA contracts I worked were putting together commercial technology in novel ways for war fighter applications, not something to be resold to consumers. We were always trying to leverage more advanced commercial engineering ideas, not vice versa.

    Microchips and cellphones didn’t rely on DARPA, most of it is from radio engineering out the big radio houses like Motorola and Qualcomm. I’m actually building a cellphone receiver right now (Node B, FDD and TDD), so I’ve been studying the scrambling codes, channelization codes, diversity, finger receivers, etc. none of it has gov’t research fingerprints on it. Wiki all those keywords if you want to verify my credibility. Some fundamental research that has commercial application occasionally manifests itself, but the ROI is not there for DARPA. Most engineers will tell you DARPA is a minor contributor to commercial technology. Far below the ROI achieved by commercial companies with R&D dollars.

    While your bragging about how great DARPA AND GOV’T technical investment has been over the last 2 decades, maybe you noticed much of the car and electronics industry has moved overseas. Our gov’t investment increases have correlated with more work hi-tech going overseas, unfortunately, the opposite of the objective.

    Can you tell me the specific cellphone invention you are thinking of that DARPA provided? I’ll research it further.

  73. AtlasRocked says:

    @Frilton: You wrote:
    “So there you have it, Joe Friday. The CBO books conflict with the treasury books.”
    Eh, there is no “conflict”.
    I’m afraid you simply have no idea what you are posting about.

    —————–

    That’s it? The treasury says Clinton’s debt went up $450B while you find Congress’s books showing a surplus of similar size, and you say there is NO CONFLICT?

    The forum readers can see what you are about, Frilton. Thanks for posting that you ignorning Treasury data so you can preserve your cockamamie beliefs. And documenting the ignore – ence for us.

  74. AtlasRocked says:

    frilton, joe fri, rootless – I have to head out for the week for Thanksgiving, I’ve enjoyed the debate.

    I don’t think I’ll have time to post much more.

    Barry, thanks for hosting the scrum.

    Have a great thanksgiving, guys.

    Regards,
    JDL

  75. Frilton Miedman says:

    Still failing to explain the level of success, economic & technological benefits of DARPA all told.

    Granted you have successfully made the argument that you yourself in your participation in DARPA have proven to be wasteful.

    My point, again, dispel the “myth” that the technological offspring of DARPA was not worth the expenditures.

    You can’t, however, I applaud you for letting us know you yourself are the product of the wasteful portion of my tax money within DARPA….perhaps you’ll volunteer to return your salary retroactively, like a good Austrian trooper.

    Now, off to set my GPS, made possible by DARPA, for an appointment I have later today, or maybe I’ll use my smartphone, courtesy of DARPA, and just call my client to get directions once I’m in the area….I can’t spend all day on the internet, courtesy of DARPA, arguing about how effective DARPA spending was.

    But wait, I have to check my AMZN, ORCL, CSCO, PCLN, AAPL shares, wildly successful online retailers and tech companies, then I’ll pay some bills, check my bank account, and maybe start some Christmas shopping, all online, all made possible, yeah that’s right, by DARPA.

  76. AtlasRocked says:

    @Joe Friday: You wrote:
    “So there you have it, Joe Friday. The CBO books conflict with the treasury books.”
    Eh, there is no “conflict”.
    I’m afraid you simply have no idea what you are posting about.

    —————–

    That’s it? The treasury says Clinton’s debt went up $450B while you find Congress’s books showing a surplus of similar size, and you say there is NO CONFLICT?

    The forum readers can see what you are about, Joe. Thanks for posting that you ignorning Treasury data so you can preserve your cockamamie beliefs. And documenting the ignore – ence for us.

  77. AtlasRocked says:

    @Frilton – I was sort of ignoring the DARPA thing because it is a tiny tiny piece of the total federal spending. It is not contributing to the national debt. Yes it has shown ROI. All govt spending is not a waste OK? It also true that if DARPA money wasn’t spent, someone else would have funded these contributions.

    One of the standard tactics of the folks that don’t want to reduce the debt is to start defending areas of the gov’t that are not the main drivers on the national debt when the topic comes up. NASA and DARPA are tiny amounts of the federal budget. Defense is the next thing they attack – but social spending is now 60% of the federal spending, while defense has gone from 45 down to 20% the last 40 years, and was a constant % during the Bush war years while social spending went up 3.5X !!!! more.

    Now I’ve addressed DARPA as well as the other diversionary tactics your’ve employed, ok? How about the first diversion you mentioned, try to stay on one thread ok? You brought this up before then danced away when you realized you’re going to have to explain the stupidity of the idea you posted.

    Now back to your major failure – show us when Deficit spending has created enough new revenue to pay back the debts it has created. You’re talking all sorts of other policy issues except the gigantic failure that is dominating all the Western government right now: They aren’t addressing their problems – all the problems you mention above – because they can simply borrrow and avoid the pain of seeing their policies fail by borrowing.

    No one really knows what is working and not working because the economy is massively juiced by the steroid of deficit spending.

  78. Frilton Miedman says:

    To quote the boy in “Sixth sense” “…They only see what they want to see…they don’t know they’re dead..”

    At an annual budget of $3 billion,

    DARPA to date is responsible for -
    the Internet,
    GPS,
    electronic speech translation,
    stealth planes,
    unmanned drones,
    supercavitation, and a myriad of others, they also have many more in the works.

    Any single one of the above creations, inventions, discoveries has proven well worth the money spent.

    The internet alone has reaped immeasurable economic gain, and it’s directly attributed to government spending

    Then, we have NASA.

    Of Babies and bathwater, scalpels and meat cleavers.

    To assert blindly that any and all government spending is a failure is absolute, outright wrong., there is NO debate that there is waste and a lot of it, but the black and white approach to doing it all or none is going to crush America.

    You’re refusing to see the point, it’s all black and white, no making observations on why DARPA, NASA or other successful programs have worked, just the broad sweeping conclusion that all spending is bad.

    While China is investing in it’s citizenry like no tomorrow, Dave Koch & Rupert Murdoch have 30% of Americans brainwashed that keeping tax rates low for the wealthy is more important than competing with China.

  79. Joe Friday says:

    AtlasRocked,

    That’s it? The treasury says Clinton’s debt went up $450B while you find Congress’s books showing a surplus of similar size, and you say there is NO CONFLICT?

    Correct.

    The forum readers can see what you are about, Joe.

    I agree.

    Thanks for posting that you ignorning Treasury data…

    The only issue I want to ignore is your fatuousness.

  80. AtlasRocked says:

    @Frilton – I agreed with you, you presented a compelling case. As an engineer, I don’t want to act as a proponent for gov’t spending on engineers while decrying massive social spending ok? That would appear pretty selfish, right?

    I do agree it money that has shown some ROI.

    DARPA AND NASA aren’t causing the deficit bro. You’re diverting the discussion from key problem areas. Back on thread, ok?

    You STILL don’t have any Keynesian stimulus success stories, where the debt spending created economic growth and tax revenue greater than the debt that was created by the “growth”?

  81. Frilton Miedman says:

    Atlas, not at all diverting the topic, DARPA & NASA are examples of government programs that your report completely ignores, highly successful examples, yet the report you keep pawning excludes both, it also cites a specific time period of 1970-2007 for OECD countries overall, completely ignoring what was likely the most successful Keynesian expenditure of all time – WW2 defense spending.

    You need to delineate between tenacity and the realization that repetition alone does not add to validity.

    Though I’m sure the internet is eternally grateful that you’ve peppered dozens of discussion forums with some odd reference to beauty contests, it does not further validate your point.

    I am saying that you’re wrong for using that solitary report as empirical proof positive that absolutely no government investment, be it Keynesian or otherwise (I think it’s all Keynesian by definition), is ineffective, the report is far too rudimentary, it uses a select time frame, it excludes specifics on what monies were spent on…..while completely overlooking all the “DARPA’s” that wouldn’t fall under it’s definition of “Keynesian”.

  82. Frilton Miedman says:

    ATLAS,
    I wanted to reply to your last, that DARPA and NASA did not contribute to the recession, to that I say – no shit Sherlock.

    What did this was Bush taking Cheney’s words to Treasury Secretary Paul O’Neill that “Reagan proved deficits don’t matter” as fact when O’Neill tried to appeal to the Bush admin to stop the fiscal train wreck in 2002.

    And now, the GOP and all it’s special interest money providers, Koch brothers, Rupert Murdoch, want us to know Obama did this and the only way out to is to keep it going, but to cut spending to afford them the lower taxes.

    Obama’s Keynesian spending tally so far amounts to less than 6% of the total debt, 40% of that stimulus package was tax cuts and tax credits, estimates range at around 3 million jobs preserved by that stimulus.

    What will pull us out of recession is a combination of undoing Bush’s tax tragedy, the assumption that every spare dime on the hands of billionaires is “job creating” stuff…. also..

    Then we have to invest in America again, in infrastructure, technology, alt energies, and others….not every one of these programs or idea’s will yield the next DARPA, but if we get at least one DARPA out of it, it’s WELL worth it.

    We also have to even the slates for our workers in healthcare and education costs as we now compete with China, who offers both to citizens the way we offer grade school, not just by paying for everyone’s healthcare and college, but by getting the root costs down.

    Another illustration of my point, ask Any Indian citizen who’s here in America, or that you bump into online about what healthcare costs in India, they generally laugh when you ask what health insurance costs there, they don’t have health insurance because healthcare is affordable.

  83. Joe Friday says:

    AtlasRocked,

    You STILL don’t have any Keynesian stimulus success stories

    For the Umpteenth time:

    * As a result of FDR’s “New Deal”, the MINUS 13% GDP and 25% Unemployment Rate he inherited was reversed to +13% GDP and a 9% Unemployment Rate.

    * As a result of the stimulus enacted almost three years ago, the MINUS 8.9% GDP and 750,000 a month job losses inherited was reversed to +3.8% GDP and an average of almost 200,000 a month job gains, about a million jobs a month turnaround.

    Think twice about responding with a post that makes you look even more foolish.

  84. AtlasRocked says:

    @Joe – How much debt was left in each case, and in what year was that debt paid down to zero?