Fiscal Cliff Discussion

[Y2HH]

I disagree on the spending limit but three cheers for the post nonetheless!

 

You can have a spending limit with emergency rules that kick in under certain circumstances, preventing spending of money over budgets. The problem is we don't have a budget, or a limit of any kind.

 

I bring in a certain amount of money per month...so I can only spend a certain amount per month. I don't think it's too much to ask the government be responsible and do the same under ordinary circumstances.

[Balta1701]

"Obama plans" being an interesting way to put it. Nonetheless, I think it's brilliant. If the Republicans want to hold us hostage on something they should have no say in anyway, then Obama should have an equally ridiculous yet absurdly legal trump card. If they wanted to make changes to the budget, they should have negotiated over the budget. Obama was going to give them hefty spending cuts that they're now going to have to make asses of themselves to fight for.

Just for reference, I think this is a terrible idea. It may be technically legal per the letter of the law, but doing this technique leaves the government open to a court challenge on its legality. Clearly allowing for the creation of a trillion dollar coin was not the intent of the original law, and therefore, it's entirely plausible that a judge could rule at some point after minting the coin that the process was not legal. Even if it was challenged up the chain...that single ruling could throw the entire economy into chaos, because the government would have been paying its bills illegally. Even if there's only a small chance of it happening...it's like an asteroid impact. It might be surprising, but are you really willing to risk the stability of the entire global financial system on a bet that no court will rule against it?

[mr_genius]

Just for reference, I think this is a terrible idea. It may be technically legal per the letter of the law, but doing this technique leaves the government open to a court challenge on its legality. Clearly allowing for the creation of a trillion dollar coin was not the intent of the original law, and therefore, it's entirely plausible that a judge could rule at some point after minting the coin that the process was not legal. Even if it was challenged up the chain...that single ruling could throw the entire economy into chaos, because the government would have been paying its bills illegally. Even if there's only a small chance of it happening...it's like an asteroid impact. It might be surprising, but are you really willing to risk the stability of the entire global financial system on a bet that no court will rule against it?

 

simply change the law to explicitly legalize trillion dollar coins. give every person that is in the United States unlimited trillion dollar coins and watch as housing prices recover, no one is poor, and everything is perfect.

Edited January 4, 2013 by mr_genius

[StrangeSox]

I'd be in favor of fed policy that spent $40B/month or whatever on direct checks to every American instead of on securities.

[bmags]

You can have a spending limit with emergency rules that kick in under certain circumstances, preventing spending of money over budgets. The problem is we don't have a budget, or a limit of any kind.

 

I bring in a certain amount of money per month...so I can only spend a certain amount per month. I don't think it's too much to ask the government be responsible and do the same under ordinary circumstances.

 

Had they done that in 2008-2012 it would have been devastating and undoubtedly would have led to the great depression part II. Is putting 20% of your work force out of work responsible when it could be avoided? The government is not a household. It's not an analogy that should be a part of the discussion.

[mr_genius]

I'd be in favor of fed policy that spent $40B/month or whatever on direct checks to every American instead of on securities.

 

what do you mean by securities? what spending is this?

Edited January 4, 2013 by mr_genius

[southsider2k5]

I'd be in favor of fed policy that spent $40B/month or whatever on direct checks to every American instead of on securities.

 

If we are going to send money directly to Americans, I wish we would come up with a way to actually get something to show for it, if at all possible.

 

Something like a new WPA program that paid more than simply being on welfare, unemployment etc, and use that to do infrastructure work around the country would fit the bill. There is plenty that needs to be done, there are plenty of things that need to be done, and there are plenty of people who currently have a disincentive to look for work unless it pays significantly more than what they are making.

[southsider2k5]

what do you mean by securities? what spending is this?

 

The Federal Reserve bank.

[bmags]

If we are going to send money directly to Americans, I wish we would come up with a way to actually get something to show for it, if at all possible.

 

Something like a new WPA program that paid more than simply being on welfare, unemployment etc, and use that to do infrastructure work around the country would fit the bill. There is plenty that needs to be done, there are plenty of things that need to be done, and there are plenty of people who currently have a disincentive to look for work unless it pays significantly more than what they are making.

 

And anything they'd do would be considered pork and greasy politics by among other people, yourself.

[StrangeSox]

The latest QE program has involved the Fed buying mortgage-backed securities. Instead of subsidizing bad loans from the lenders' end, just pay down the securitized mortgages directly.

[southsider2k5]

And anything they'd do would be considered pork and greasy politics by among other people, yourself.

 

It is way more appetizing than simply giving the money away, like we are currently doing.

[StrangeSox]

If we are going to send money directly to Americans, I wish we would come up with a way to actually get something to show for it, if at all possible.

 

Something like a new WPA program that paid more than simply being on welfare, unemployment etc, and use that to do infrastructure work around the country would fit the bill. There is plenty that needs to be done, there are plenty of things that need to be done, and there are plenty of people who currently have a disincentive to look for work unless it pays significantly more than what they are making.

 

A WPA/CCC program would be awesome. The original ARRA included some infrastructure spending but not nearly enough.

 

Bond rates are incredibly cheap, we've huge amounts of idle labor and production facilities and there's an awful lot of work that needs to be done anyway. We should have had massive jobs programs since late 2008, but there's political and ideological opposition to any such programs.

[StrangeSox]

It is way more appetizing than simply giving the money away, like we are currently doing.

 

I'm glad you support a new stimulus bill that is entirely spending and no tax cuts, as it should have been in 2009.

[StrangeSox]

And anything they'd do would be considered pork and greasy politics by among other people, yourself.

 

e.g. Sandy relief bill

[southsider2k5]

A WPA/CCC program would be awesome. The original ARRA included some infrastructure spending but not nearly enough.

 

Bond rates are incredibly cheap, we've huge amounts of idle labor and production facilities and there's an awful lot of work that needs to be done anyway. We should have had massive jobs programs since late 2008, but there's political and ideological opposition to any such programs.

 

I'm not talking about new spending. I am talking about redirecting current spending. That is the middle ground.

[southsider2k5]

I'm glad you support a new stimulus bill that is entirely spending and no tax cuts, as it should have been in 2009.

 

Keeping your own money isn't spending either.

[StrangeSox]

I'm not talking about new spending. I am talking about redirecting current spending. That is the middle ground.

 

No, cutting safety net programs and not expanding fiscal policy during a certain type of recession is not ~the middle ground~

[StrangeSox]

Keeping your own money isn't spending either.

read closer.

[southsider2k5]

No, cutting safety net programs and not expanding fiscal policy during a certain type of recession is not ~the middle ground~

 

It isn't cutting programs. Its making them productive.

[StrangeSox]

keeping people from starving or being homeless is productive!

 

But if you're going to build a whole bunch of infrastructure, it's going to cost a lot more to employ 10,000 unemployed people plus the additional already-employed companies to design and build said infrastructure than it would to simply mail out 10,000 unemployment checks. So that means you need to expand spending overall or cut something somewhere else. One is good policy in this type of recession, the other isn't.

[Y2HH]

Had they done that in 2008-2012 it would have been devastating and undoubtedly would have led to the great depression part II. Is putting 20% of your work force out of work responsible when it could be avoided? The government is not a household. It's not an analogy that should be a part of the discussion.

 

Again, you ignored the part where I said there are times that emergency actions kick in to avert such a crisis...I'm pretty sure 2008-2012 would have qualified.

 

And yes, the Government should be treated as a household...a massive massive household that looks out for the people that live in that household. That simply means the government should be responsible, and it should hold the citizens of that household responsible in many ways, too. It doesn't mean they should have carte-blanche to spend money they don't have...because those citizens are the ones that supply them their money in the first place.

 

In bad times, I sometimes have to borrow in order to fix something on my house -- then that's what you do. But in good times, when nothing is wrong with the house, you don't continue spending as if there is. The problem with our govenrment is they do exactly that. They borrow/spend in bad times (supposed to do that), but they continue to do the same in good times, when they're supposed to be doing the exact opposite. This is a valid analogy whether you like it or not.

Edited January 4, 2013 by Y2HH

[southsider2k5]

keeping people from starving or being homeless is productive!

 

But if you're going to build a whole bunch of infrastructure, it's going to cost a lot more to employ 10,000 unemployed people plus the additional already-employed companies to design and build said infrastructure than it would to simply mail out 10,000 unemployment checks. So that means you need to expand spending overall or cut something somewhere else. One is good policy in this type of recession, the other isn't.

 

All righty, we are getting into manipulating words again, and that's enough for me.

[StrangeSox]

Disagreeing with your framing isn't manipulating words. It's not excepting you choosing the rhetoric defining the discussion.

[NorthSideSox72]

Y2HH is right that the debt ceiling is about already-executed and/or passed programs from the legislature. If you want to rein in spending, rein in spending.

 

In the long run, spending absoutely needs to be put under better control. Regardless of how good anyone thinks any given program are, the fact is the US government can't afford what it is buying. Something has to be done.

 

But right now, during a burgeoning recovery, you need to be very careful, and only do the right kind of cutting. Things like keeping SS benefit increases to a more realistic CPI, for example, is a good idea IMO - it doesn't take any money out of the current economy (directly), and helps keep that under control going forward. In Medicareland, it gets more complicated, but that sort of long-term slowing of growth should be the mindset.

 

[Balta1701]

Things like keeping SS benefit increases to a more realistic CPI, for example, is a good idea IMO - it doesn't take any money out of the current economy (directly), and helps keep that under control going forward.

What standard to you use to say that the current CPI is inaccurate?

 

Yes there is the "Chained CPI" which reflects how purchases change for the average taxpayer when prices change, but if you really want to be accurate, then using the chained CPI for a subset of the population (Specifically the elderly) isn't a smart idea. The BLS has constructed an experimental index for the elderly, CPI-E, but has not been funded to develop and track it fully.

 

Because people over 65 tend to spend more of their income on Health Care, and health care costs are rising more rapidly than the rest of the economy, the elderly tend to see a higher inflation rate than the rest of the population. Thus, if you really wanted to accurately reflect the costs to seniors, right now, you'd be increasing benefits at a rate faster than the regular CPI, rather than slower.