Financial News

[StrangeSox]

That would have made Keynesian economic policy unconstitutional. It would have required drastic spending cuts as GDP fell off a cliff, amplifying the cycle instead of stopping it. It would make the current struggle to get 217 House votes look like a joke. It incentivizes screwing around with the budget and not counting spending on things like $1B/day in Iraq and Afghanistan in the budgets.

 

In short, it doesn't actually force Congress to follow any reasonable fiscal policy and seriously constrains their ability to react to a crisis.

[Balta1701]

Unless you could have gotten a 60% vote in Congress, that would have required nearly $1 trillion in cuts/tax increases happen between mid-2008 and mid-2009 due to the financial collapse and expansion of unemployment.

[StrangeSox]

Unless you could have gotten a 60% vote in Congress, that would have required nearly $1 trillion in cuts/tax increases happen between mid-2008 and mid-2009 due to the financial collapse and expansion of unemployment.

 

That version didn't appear to allow for a more generic "crisis," only militaristic threats to national security.

 

[Balta1701]

That version didn't appear to allow for a more generic "crisis," only militaristic threats to national security.

And if you make it any economic crisis, then what you've got is toothless. The 2001 and 2003 tax cuts were justified because of the economic weakness following the tech bubble and 9/11, and then the wars didn't have to be paid for.

[Jenksismyhero]

That would have made Keynesian economic policy unconstitutional. It would have required drastic spending cuts as GDP fell off a cliff, amplifying the cycle instead of stopping it. It would make the current struggle to get 217 House votes look like a joke. It incentivizes screwing around with the budget and not counting spending on things like $1B/day in Iraq and Afghanistan in the budgets.

 

In short, it doesn't actually force Congress to follow any reasonable fiscal policy and seriously constrains their ability to react to a crisis.

 

Well given the fact that they won't do it on their own, what's your solution?

[StrangeSox]

Well given the fact that they won't do it on their own, what's your solution?

 

There is no solution. The system is doomed. Enjoy the ride while you can.

[StrangeSox]

And if you make it any economic crisis, then what you've got is toothless. The 2001 and 2003 tax cuts were justified because of the economic weakness following the tech bubble and 9/11, and then the wars didn't have to be paid for.

 

Right, which is why I said it's either strong enough such that it's terrible or it's weak enough such that it's meaningless. There's no good that comes out of it, especially not some of the absurd versions proposed lately that cap the budget at arbitrary percentages of GDP.

[Balta1701]

Well given the fact that they won't do it on their own, what's your solution?

Well, the first answer is: grow the **** economy. As long as we're at 9% unemployment, we'll never close the gap.

 

The second answer is...some still significant additional overhauls to the entire health care system.

 

You do those 2 things, and you've eliminated 95% of the problem.

[StrangeSox]

Well, the first answer is: grow the **** economy. As long as we're at 9% unemployment, we'll never close the gap.

 

The second answer is...some still significant additional overhauls to the entire health care system.

 

You do those 2 things, and you've eliminated 95% of the problem.

 

Also those two wars and those tax cuts that account for a huge chunk of the current deficit.

[Jenksismyhero]

Alright but you're talking about two things that politicians won't drop or change much because of their personal interest in keeping the defense/health care lobbies happy. So again, without anything to force them to do it, what will?

[StrangeSox]

Alright but you're talking about two things that politicians won't drop or change much because of their personal interest in keeping the defense/health care lobbies happy. So again, without anything to force them to do it, what will?

 

If you take off the table the actual drivers of debt, nothing, obviously. And as I said, even with a requirement, they'll simply find ways around it, like not counting spending trillions on wars.

 

It also sets up an extremely easy way to follow the "starve the beast" idea--Republicans cut taxes as much as possible when in control, thus forcing significant government expenditure cuts.

[Balta1701]

Alright but you're talking about two things that politicians won't drop or change much because of their personal interest in keeping the defense/health care lobbies happy. So again, without anything to force them to do it, what will?

The Democrats and the Republicans have both passed health care overhaul plans over the last 8 years. One of them included substantial cuts.

 

With Health Care costs growing at 7-9% of the economy, it's not long before they start overwhelming other priorities, like bombing people. That's what forces Congress to act again.

[Rex Kickass]

I will point out that before the 2001 tax cuts, the federal government was looking at a roughly 2 trillion dollar surplus today.

[southsider2k5]

And the person in the private sector benefits from the smaller government because he can come up with models saying that Housing prices never go down and convince all sorts of fools to invest trillions based on those models then walk away with a severance package worth millions while never having to worry about being investigated for financial fraud.

 

Oh, and the economy is screwed for a decade. Sorry.

 

I'm enjoying this.

 

Then again if they can't sell that loan to the now smaller government, they aren't going to make many loans of the bad variety because they know there isn't going to be anyone to bail them out...

[southsider2k5]

Here's something from the Washington Post that explains some of the potential problems and lack of any real benefits.

 

I don't have a problem with balanced budgets when we're at or near full employment in principle. You shouldn't be running substantial deficits when the economy is performing well because it'll leave you unable to respond adequately to a crisis, both fiscally and politically.

 

Which is exactly why we should be engaged in substantive cutting when the economy recovers.

[Balta1701]

Then again if they can't sell that loan to the now smaller government, they aren't going to make many loans of the bad variety because they know there isn't going to be anyone to bail them out...

That'll still happen, the people who want the smallest government are more than happy to bail out wall street when they come calling

[southsider2k5]

That'll still happen, the people who want the smallest government are more than happy to bail out wall street when they come calling

 

Not if there are no Fannie and Freddie.

[Jenksismyhero]

I will point out that before the 2001 tax cuts, the federal government was looking at a roughly 2 trillion dollar surplus today.

 

Just gonna gloss over that whole 9/11 thing huh?

[Balta1701]

Not if there are no Fannie and Freddie.

According to estimates by Passmore, Sherlund and Burgess (2005), the existence of the GSE's provides a subsidy on the order of a reduction of 42 basis points on a standard mortgage.

 

I don't know the value of your home but I assume you can easily figure out how much this would increase the cost of your mortgage. Here's where you can send it.

[southsider2k5]

According to estimates by Passmore, Sherlund and Burgess (2005), the existence of the GSE's provides a subsidy on the order of a reduction of 42 basis points on a standard mortgage.

 

I don't know the value of your home but I assume you can easily figure out how much this would increase the cost of your mortgage. Here's where you can send it.

 

Does it add in the trillions in additional costs from the lost loans?

[Balta1701]

Does it add in the trillions in additional costs from the lost loans?

Oh, I see, so when someone thinks taxes should go up if we're going to hack at the deficit and you direct them to the Pay.gov site, it's fine, but when you argue that an indirect homeowner subsidy should go away and you get directed to Pay.gov, you quibble with the outside issues and ignore the fact that you're receiving a subsidy on one hand and arguing it should be done away with on the other.

 

Fair is fair.

[southsider2k5]

Oh, I see, so when someone thinks taxes should go up if we're going to hack at the deficit and you direct them to the Pay.gov site, it's fine, but when you argue that an indirect homeowner subsidy should go away and you get directed to Pay.gov, you quibble with the outside issues and ignore the fact that you're receiving a subsidy on one hand and arguing it should be done away with on the other.

 

Fair is fair.

 

Honestly, I have no problem with the ending of housing related subsidies.

[Balta1701]

Honestly, I have no problem with the ending of housing related subsidies.

Then why have you not chipped in to the treasury? It's the same standard you use on us.

[southsider2k5]

Then why have you not chipped in to the treasury? It's the same standard you use on us.

 

I am also not the one saying people should be paying higher taxes. That would be the biggest difference. I am also not looking for massive expansions of spending.

[Balta1701]

I am also not the one saying people should be paying higher taxes. That would be the biggest difference. I am also not looking for massive expansions of spending.

Yes, you are. You just said you wanted the elimination of housing subsidies. That would raise taxes on people who own houses. The biggest housing subsidy is the mortgage tax deduction. Removing that would raise taxes.

 

At least we know how well you take your own joke line.