Tea Party "dying on the wrong hill"?

Discussion in 'Politics' started by Ricter, Jul 30, 2011.

  1. Ricter


    An interesting perspective:

    "The U.S. Is Not Drowning In Debt

    In case you haven’t noticed, Washington is currently consumed in an acrimonious debate over whether to raise the debt ceiling. There is no agreement about whether to do so or how, but both parties appear to accept the logic that the United States is suffering from an unacceptably high level of government debt and that further debt will doom the U.S. to generations of decline. Judging by polling data, large swaths of the country agree. Nonetheless, that consensus is wrong.

    The Republicans have generally been most vocal on this score. Eric Cantor, the House Majority Leader and a major player in the negotiations, has said,

    “The government is a fiscal train wreck. It is over $14 trillion in debt and borrows nearly 40 cents of every dollar that it spends. Before us lie two divergent paths: one defined by crushing debt, slow growth and diminished opportunity; and one defined by achievement, innovation and American leadership. We stand at a crossroads. If we are to leave our children a nation that offers everyone a fair shot at earning their success, we must take the later path… House Republicans have taken an honest, responsible approach to confront the debt crisis facing our nation.”

    Yet even President Obama believes further debt is untenable and has pledged to cut spending by trillions of dollars in the coming years.

    What neither side seems to recognize — or at least acknowledge — is that what matters about the debt isn’t the dollar amount per se, but how much it costs us to service it. And by that measure, the debt isn’t nearly as big a problem as it’s being made out to be.

    Yes, the federal debt has grown by nearly $3 trillion dollars in the past three years. And yes, the dollar amount of that debt is quite large (in excess of $14 trillion and headed toward $15 trillion should the ceiling be raised). But large numbers are not the problem. The U.S. has a large economy (slightly larger than that debt number). And, crucially, we have very low interest rates.

    Because of those low rates, the amount the U.S. government pays to service its debt is, relative to the size of the economy, less than it was paying throughout the boom years of the 1980s and 1990s and for most of the last decade. The Congressional Budget Office estimates that net interest on the debt (which is what the government pays to service it) would be $225 billion for fiscal year 2011. The latest figures put that a bit higher, so let’s call it $250 billion. That’s about 1.6% of American output, which is lower than at any point since the 1970s – except for 2003 through 2005, when it was closer to 1.4%.

    Under Ronald Reagan, the first George Bush, and Bill Clinton, payments on federal debt often got above 3% of GDP. Under Bush the second, payments were about where they are now. Yet suddenly, we are in a near collective hysteria.

    If you point all this out, the response you typically get is that today’s interest rates are artificially and atypically low — and that when they skyrocket, that debt burden will become much more painful. Well, yes, but rates don’t skyrocket unless there is a collapse of market confidence. Rates may rise, and that will force hard choices in future spending or trigger the need for new sources of revenue. But only crisis triggers dramatic rate swings, and the only thing that will create that crisis is brinksmanship over the debt ceiling or levels of debt that are substantially higher than they are now.

    I’m not saying that the money we’ve borrowed recently has been well spent. One could persuasively argue that the government has done a terrible job of using debt to spur economic activity. But that has nothing to do with whether the debt is itself harming the country.

    This view of debt isn’t popular. But the numbers aren’t debatable and indicate that by historical standards there is no debt emergency except for the one we are making.

    Our diminishing competitiveness and ability to invest in the future – those are real crises, and ones that the debt ceiling debate will do nothing to solve."

  2. Lucrum


  3. Ricter


    You didn't read the article, did you?
  4. Mav88


    bold emphasis mine- Notice the jump to the huge fallacy of the excluded middle here, and the lack of mention about deficit, it's needed to put a pretty bow on this or else the entire argument falls apart.

    I don't understand why we are all still playing political games here while our home is burning. The Tea party is correct that the deficit and debt are problems, critics are correct pointing out that messing with the debt ceiling right now is not a good idea. Let's recall some history however, it took a hugely unpopular shutdown of gov't in 1995 to smack liberals in line and kick start a pretty good 5 year run in the economy.

    The empty suit named Obama just 2 years ago started something called stimulus and now pretends it is 'uncuttable' while at the same time publicly stating that the current state of gov't finances is unsustainable. It's the old Bill Clinton two step, make something you really want happen then posture against it in order to look like you sympathize with both sides of the argument. Play for the vote. The problem is that small brained ideas like hope and change are not translatable into effective and meaningful policy for all, instead you usually get the economic shit we have now. I'm sure the huge bump in medicaid was smashing for his tit sucking constituency, but for most of us it wasn't stimulus and it wasn't responsible. Fighting against that is dying on the right hill.
  5. Max E.

    Max E.

    When an article starts out with a line that assinine is it really worth reading?

    It reminds me of an article that Artful D0dger posted the other day where the author started out by listing the reasons he was not a white supremacist, is it really worth reading once you see something like that?

    Against my better judgement i read the article and realised that it was basically as stupid as the opening line. The guy is saying that the debt doesnt matter because we have low interest rates, and he then goes on to say that rates wont go up unless there is a crisis..... like the debt ceiling, or lack of confidence in the U.S. ability to pay the debt off. The author actually says "only crisiis triggers dramatic rate swings"

    Does the author even know how the fed operates? Or the fact that they raise interest rates to combat inflation, and that it really doesnt matter if there is a crisis within the government? I:f interest rates went to 20% like they were in the 80's we would be paying 3 trillion dollars just to service the 15 trillion dollar debt, which is basically the entire federal budget.
  6. 377OHMS


    I read your post completely.

    Ricter, do you think it is appropriate for the federal government to control/spend fully 25% of GDP?
  7. Ricter


  8. 377OHMS


  9. Ricter


    That statement is a giveaway that your mind is already made up. Made up by who? By what data?
  10. Ricter


    Are you griefing? Many decent nations are spending a lot more than that.
    #10     Jul 30, 2011