OBAMA'S MOUNTAIN OF DEBT (PICTORIAL LOOK)

[Texas Contrarian]

Originally Posted by Fast Gunn

Do either of you dummies remember, Hoover?

He thought that balancing the budget was what the nation needed after the Great Crash of 1929.

Those types of idiotic notions were what lead to the Great Depression. Bush got the country into this mess and President Obama is leading us out of the hole.

Do you dummies want another Republican to lead us right back into the quagmire?

. . . God help us all!

Fast Gunn, just a question please:

Do you have any idea how Hoover attempted to bring the budget back into balance, or near balance, and why that was a problem?

The reason I ask is that most people have absolutely no understanding of the history of the Great Depression. Amazingly, a lot of people seem to think that Hoover was some sort of laissez-faire, free market conservative who did little to prevent the depression from worsening. But the opposite was the case. He greatly expanded the federal bureaucracy and increased government spending by almost 50% between 1929 and 1933. And he tried to pay for it by taking the top income tax bracket all the way from 25% to 63%.

(Although the current proposals are less extreme, doesn't that sound like someone else we know?)

Here's another thing a lot of people don't know: During the 1932 presidential campaign, FDR blasted Hoover for "reckless and extravagant" spending, and his running mate (John Nance Garner) charged that Hoover was "leading the country down the path of socialism." Yes, they actually said that! Although the statements sound staggeringly hypocritical today, they point up the fact that Hoover had much more in common with Obama that with any conservative or libertarian.

It's astonishing that anyone believes Obama is "leading us out of the hole." It should be clear to any sentient individual that we're digging a far deeper hole. We recently discussed all this in another thread, but some simply choose to ignore the obvious.

Yes, that must be some kick ass Kool-Aid!

[Fast Gunn]

Yes, I am a voracious reader and I do know how Hoover tried to balance the budget.

However, the mechanics of the operation are not as important as the operation itself. The operation was the problem. Everything else is just details.

Hoover was badly misinformed and totally misguided on what was needed to get the economy back on track, but he did hold many bullshit meeting to give the illusion that he was doing something.

He believed that tightening credit and balancing the budget was what needed. Just about every damn thing that administration did only served to further strangle the already convulsing economy. They raised tariffs so that other countries suffered more and the Great Depression become a Global Depression.

The Great Depression did not have to be so deep or so prolonged if the leaders of this country had loosened credit and worked to boost the economy instead of trying to balanced the damn budget at the worst possible time.

The Great Recession that was a bitter legacy of Bush could easily have become another Great Depression if this country had not taken drastic steps to revive the economy and bail out Detroit.

. . . Furthermore you should note that you can raise the level of your debate if you can stop making tired and worn-out references to kool-aid. That is just thread-bare joke that has outlived its humor long ago and used as a throw-down argument when people have nothing of real substance to say.

[I B Hankering]

Originally Posted by Fast Gunn

Yes, I am a voracious reader and I do know how Hoover tried to balance the budget.

An FYI correction, Fast Gunn. The PBS documentary (4 hrs) on Clinton aired again today, and I let it play in the background. There was a three to five minute segment I missed first time through. The documentary gives great credit to Clinton for the 1993 and 1994 budgets. The Gingrich budget battles with Clinton came after the '94 election. My bad, and I admit it.

[Fast Gunn]

Well, there's hope for you yet.

. . . Okay, not much, but there's some!

[Texas Contrarian]

Originally Posted by Fast Gunn

Yes, I am a voracious reader and I do know how Hoover tried to balance the budget.

However, the mechanics of the operation are not as important as the operation itself. The operation was the problem. Everything else is just details.

Hoover was badly misinformed and totally misguided on what was needed to get the economy back on track, but he did hold many bullshit meeting to give the illusion that he was doing something.

He believed that tightening credit and balancing the budget was what needed. Just about every damn thing that administration did only served to further strangle the already convulsing economy. They raised tariffs so that other countries suffered more and the Great Depression become a Global Depression.

The Great Depression did not have to be so deep or so prolonged if the leaders of this country had loosened credit and worked to boost the economy instead of trying to balanced the damn budget at the worst possible time.

The Great Recession that was a bitter legacy of Bush could easily have become another Great Depression if this country had not taken drastic steps to revive the economy and bail out Detroit.

. . . Furthermore you should note that you can raise the level of your debate if you can stop making tired and worn-out references to kool-aid. That is just thread-bare joke that has outlived its humor long ago and used as a throw-down argument when people have nothing of real substance to say.

First of all, let me just suggest that if you're going to lambaste a couple of people for the invocation of Kool-Aid metaphors, insinuating that they lower the quality of the debate, you might try refraining from calling those who disagree with you "dummies" (post #5), and suggesting that someone has "puny pig eyesight" (post #12). That way, you might be able to ensure that you avoid hackneyed pot and kettle metaphors!

Now to some substance:

Your statement (regarding deficit reduction) that the "mechanics of the operation" were not important, and that deficit reduction per se was the problem, is completely wrong. Mechanics (or methods) are, in fact, of the utmost importance always and everywhere. In this case, Hoover failed the test miserably, calling for big increases in taxes to pay for all the new spending. You correctly noted that there were other factors, such as a Smoot-Hawley-inspired trade war and contractionary monetary policy. (Monetary aggregates declined by about one -third in the early 1930s.) But bad fiscal policy (taxes and spending) exacerbated the problem.

By contrast take a quick look at the recovery from the 1920-21 severe deflationary recession. It was similar to the "Great Recession" of recent years inasmuch as it followed the Fed's money pumping during the World War I period, when bubbles in assets such as farmland were created and then deflated. Thus it was in large measure a "balance sheet" recession, not a simple cyclical downturn. But instead of big-government interventions and "stimulus packages", Warren Harding responded by cutting both taxes and spending, and quite dramatically:

http://www.washingtonpost.com/opinio...sEQ_story.html

(Note: Although I'm not sure austerity "cured" the depression, it's clear that spending cuts did not impede recovery, thoroughly discrediting the view that an economy cannot recover from a severe recession without fiscal stimulus. If Paul Krugman had been around then, his head would surely have exploded!)

Just look at what's been going on in recent years. As we noted in another thread, the $825 billion "stimulus package" of 2009 was squandered on political payoffs and did little to boost prospects for growth. It should come as a surprise to no one that the current "recovery" is anemic compared with every other post-recession bounceback.

Big, entrenched increases in government spending retard prospects for economic growth; they do not stimulate them. History is quite clear on that.

A quick note regarding I. B.'s last post:

It was at the time (and still is) my belief that Bill Clinton had in essence fiscally conservative beliefs. I recall hearing back in 1993 (from some people who were in a position to know!) that Rubin, not Reich, was the guy he was listening to. Bob Reich is a clueless, old-time Keynesian who wanted to push through all sorts of government spending programs in an effort to kick-start the economy, which was still struggling to recover from the mild 1990-91 recession. But Bob Rubin, who clearly understood the issue better, would have none of it and steered the president toward deficit reduction -- advising that if a fiscally irresponsible course were chosen, "bond vigilantes" would eventually exact their revenge. It is my view that all of this was unfolding as early as midyear 1993. Of course, the aggressive 104th Congress offerred quite an assist beginning in early 1995. Policy went in the right direction for several years, and during the period, government spending as a percentage of GDP fell by about three percentage points. It is no accident that we then enjoyed one of the best periods of prosperity in our nation's history.

I think it's also worth mentioning that Clinton also sought to run a strong-dollar Treasury, and certainly succeeded in this effort given that gold prices in the late '90s were in the $250/oz. range, and oil prices were considerably less than one-fifth what they are today.

Generally speaking, Nixon, Carter, G. W. Bush, and Obama were all weak dollar presidents, while Reagan and Clinton were relatively strong-dollar presidents.

The results speak for themselves.

[fortylove]

Like Ron White say's "You can't fix stupid" good luck to you stupid...

[fortylove]

Thank you cute old guy, you are not stupid. As for fast gunn let me give you a word of advise, The best way to get yourself out of a hole is to stop digging...

[BigLouie]

If you start that chart with George Washington you would see that it has been an upward climb since day one. It followed the same curve for both Bush and Obama. For the next president it will follow the same curve. If you think that electing any of those clowns currently running for the Republican position would change that graph you are in for a big surprise.

[Texas Contrarian]

Originally Posted by BigLouie

If you start that chart with George Washington you would see that it has been an upward climb since day one. It followed the same curve for both Bush and Obama. For the next president it will follow the same curve. If you think that electing any of those clowns currently running for the Republican position would change that graph you are in for a big surprise.

No, it has not been an "upward climb since day one." In fact, there was a time when we actually paid off the national debt! (But it was way back in Andrew Jackson's day.) Please note also that there have been a number of times during which the debt/GDP ratio (the only thing that really matters) has fallen. The most notable recent example of that was the late 1990s, our last period of sustained prosperity.

And it's also clearly not the case that it "followed the same curve for both Bush and Obama." If you look at that curve, you will see that it's steepened sharply over approximately the last nine years, and if the current trajectory is maintained we're headed for a horrific fiscal bust -- the aftermath of which will not be a pretty sight. The practice of relying on central banks to monetize staggering amounts of debt is fraught with risks, to say the least. It has never worked well at any time in history, and eventually it will not matter that the dollar has long enjoyed status as the world's primary reserve currency. You will note that the Chinese and a number of others are already working fervently to knock it off that perch.

Although Obama has clearly shown that he has no intention of making any tough decisions, I agree with you that the current Republican candidates demonstrate no intention of doing any such thing, either. They are busy pandering to voters living in a fantasy world where more tax cuts for everyone are always good, no matter how high the levels of spending that everyone knows it's politically impossible to cut appreciably.

The problem is that both parties have become "free lunch" parties, vying with each other to claim that they can give away more tax cuts and benefits than the folks on the other side of the aisle.

See why there are so many independent voters today? A growing number of people don't want to have anything to do with all the dishonest, disingenuous political hacks in either of the two major parties.

As a nation, we've become a little like an alcoholic who has to "hit bottom" before seeking treatment.

When that "treatment" is finally forced upon us by the world's credit markets, it isn't going to be a pretty sight.

That's why I think it's now so imperative to begin taking steps toward establishing a glideslope to fiscal sanity.

[Fast Gunn]

You have to admit the trend does not look so rosy, but there are many other measures of a nation's health beside the Federal debt.

Is the nation at war?

Do the people have enough to eat?

How is the employment rate trending?

Is there rebellion on the streets?

How strong is the country militarily?

. . . There is no doubt that this country has been through the toughest period since the Great Depression, but I believe that we are climbing out of the deep hole we were in before President Obama took office.

[BigLouie]

Cm you are correct, I did not state it clearly. Government spending has always increased but through taxes it has been kept under control and at times wiped out. Starting with Reagan the trend has been to cut taxes which of course caused the debt to explode. The main issue is that there is no way to cut a lot of spending because you either not get elected or not get re-elected. There are powerful forces because the spending and they don't want the money to stop coming so in truth there is little that can be done.

[Little Stevie]

The trickle down Tax Con based on CBO figures in 2008 dollars.

Typical Teapublican deflection achieved by linking the debt ceiling to Tax Cuts for the rich that caused the inability to pay for the wars. The Iraq War was COMPLETELY avoidable and unnecessary!

[jjchmiel78]

This may be the wrong place for the democratic party to find supporters as a general rule. After all if we are here, it means most likely we have disposable income. The majority of us probably doesn't plan which bill to pay with which check. We have enough to just pay the bill when it comes in. The majority of us probably did not get laid off, had a pay cut, or loss benefits at our jobs. Five years ago I was working two jobs with a roommate and no cable paying off credit card debt. Yes it was my fault from overspending in my early 20's. My point is I had medical insurance at a reasonable rate through my main job. I had a 401K plan I was contributing to. I cut expenses like cable, eating out and something the republicans do not want to do, generate additional revenues. 2008 hit and not only did I get a pay cut at my main job, but my second one as well. My main job cut 401k contributions and healthcare. I was a lucky one that didn't get laid off. I couldn't just go and get a different job since half the competitors went out of business over the next two years. I couldn't afford student loans to learn a new field so I had to suck it up and work through it. I am a very lucky one with all debt eliminated by last year so I could afford to invest in a house and get a mortgage. I knew what it was like being in the lower 50% of wage earners and how close I came to having it worse. I still work two jobs to pay off this house early and build a nest egg. I work hard and want someone that will look out for me. Healthcare costs are high for me as an individual paying for it on my own. Republicans just want to let the insurance companies run wild and self regulate. We saw how well that worked for the banking industry. What about my nieces and nephews? Republicans want to take away funding from education, yep that is going to make the youth better. Republicans want to give more to the oil companies to keep prices lower. Free market does not exist with oil companies evident that all stations have the exact same price and the subsidies they already get doesn't prevent gas prices by a dime or more a week. My boss sure as shit not going to look out for me. Since I am paying taxes, I at least want those taxes going to something beneficial to me and the rest of us majority. I agree with one thing, lets cut spending, let us cut military (cable) as well. Cutting it half and we as a nation would still be spending more than any other nation. But I strongly think we need to increase revenue by raising the Bush tax cut back to the level when this country was most prosperous. Republicans want to lay claim it was their budget plan in the first place, fine, claim it, own it, make it work. How can Democrats refuse a plan that was in place during Clinton's term?

[CuteOldGuy]

Originally Posted by Fast Gunn

You have to admit the trend does not look so rosy, but there are many other measures of a nation's health beside the Federal debt.

Is the nation at war?

Do the people have enough to eat?

How is the employment rate trending?

Is there rebellion on the streets?

How strong is the country militarily?

. . . There is no doubt that this country has been through the toughest period since the Great Depression, but I believe that we are climbing out of the deep hole we were in before President Obama took office.

FastGoon, you make it worthwhile to show up here. Your home in Obamalala Land must be nice.

Oh, btw, when the debt reaches critical mass, which it may do before the election, and we have an economic collapse of biblical proportions, the rest of your indicators of a country's health will be meaningless.

But keep bringing us those reports from Obamalala Land. What's the weather like there?

[Texas Contrarian]

Originally Posted by Little Stevie

Typical Teapublican deflection achieved by linking the debt ceiling to Tax Cuts for the rich that caused the inability to pay for the wars.

Stevie, are you seriously going to try to tell us that "tax cuts for the rich" were what caused us to be unable to pay for the wars without running large deficits? Do you realize that restoring tax rates to 1970s levels for affluent taxpayers would land short of covering even a nickel of every deficit dollar? And do you think tax code or tax rate changes have much at all to do with the rising levels of income and wealth disparity depicted in the chart you posted? (They clearly do not.) And for that matter, do you not realize that the bulk of the tax cuts enacted during the last decade (greater than 80% in total dollars) went to the "99%ers", not to the "rich?"

The problem with some of you guys is that you support taking steps toward becoming more like a European-style social democracy, but will not say how you propose to pay the bills. Anyone who thinks raising taxes only on the affluent will pay for more than a small fraction of all the largesse suffers from a severe case of ignorance or innumeracy.

Originally Posted by Fast Gunn

. . . There is no doubt that this country has been through the toughest period since the Great Depression, but I believe that we are climbing out of the deep hole we were in before President Obama took office.

Exactly how you think continuing to add staggering levels of new debt, while ignoring bipartisan plans such as Simpson-Bowles, constitutes "climbing out of a deep hole" must remain a mystery to everyone reading this thread! Even staunch Obama supporter Warren Buffett called his outright rejection of the proposals a "travesty." If Obama didn't like any of the proffered ideas, he should at least have used them as a starting point for the debate and come up with a plan of his own.

He obviously feels that by pressing a purely political agenda and kicking the can down the road instead of making any tough decisions, he can maximize his chances of winning re-election. That may be true, and I think he'll probably succeed, but then he (and his legacy) will face a far tougher opponent than Mitt Romney: The bond market.

Check this:

http://www.forbes.com/sites/greatspe...et-is-tougher/

Originally Posted by CuteOldGuy

..Oh, btw, when the debt reaches critical mass, which it may do before the election, and we have an economic collapse of biblical proportions, the rest of your indicators of a country's health will be meaningless...

It's always very hard to predict when such happenings may occur. I know a few observers who think we will be able to rock on for years, and that we might eventually "muddle through" and slowly get back on the right course without going through any more severe recessions or financial panics. That will require a certain amount of luck, of course. At the very least, our shaky fiscal position renders the economy extraordinarily vulnerable to exogenous shocks.

The problem is that fiscal crises are not kind enough to announce their arrival a year or two in advance so that you can begin putting your house in order. It may seem for an extended period of time that things are more or less OK, until you wake up one day and suddenly find that they are not.