A prediction: $3,500,000,000,000 Annual Budget = Halve deficit in 4 years

[Beerina]

President Obama is making a testable prediction.

Budget bottom line: More than $3,500,000,000,000
President Obama unveiled a $3 trillion-plus budget plan today that he says will halve the federal deficit by the end of his first term. The plan includes substantial investments in health care reform, renewable energy and education. It also has big cuts for some programs, setting the stage for battles as political patrons fight over budget items in coming weeks.

Odd, I thought it was the Internet bubble, with all its private investment in profitable, growing, desired enterprises that fueled economic growth that outstripped Congress' ability to spend it in the '90s.

Here it was just dumping a bunch of cash into the market, independent of whether they're profitable or just pet projects with little actual economic drive, such as health care reform and renewable energy and education.


This thread is more to put out the prediction for comparison in four years, complete with Monday morning quarterbacking, than it is to start a pointless debate on the likelihood that it's an accurate prediction.

Of course, the economy is cyclic, barring too much intervention slowing that, but that's a far cry from a once a century boom. What was it, 1920's, then 1990's, both of which had new worlds of opportunity open up (cars and other manufacturing in general, and Internet).

 

[Tsukasa Buddha]

Is this another OP that is trying to say something without saying it?

 

[mr rosewater]

Is this another OP that is trying to say something without saying it?

What does this say $3,500,000,000,000? To me it says something we can't afford.

 

[geni]

What does this say $3,500,000,000,000? To me it says something we can't afford.

On what basis?

 

[rwguinn]

On what basis?

Where does that kind of money come from?
What it looks like to me is a return to rampant Inflation or high taxes--or both.

 

[geni]

Where does that kind of money come from?

Taxes are the most common form of goverment revinue raising.

 

[Beerina]

Taxes are the most common form of goverment revinue raising.

Evidence?


Seriously.


I'll bet, though I haven't run the numbers, that the government gets more money from growing the economy than it does from raising taxes.


Borrowing is a game they play. Since they get the best interest rates, literally in a class all by themselves, they just "monetize" the debt, which is to say, keep paying interest on it until inflation has turned it into an almost negligible sum.

For most of '80's through a few years ago, if we had no debt to pay interest on, we'd have had a surplus. But that doesn't lose as many votes as extra spending now buys.



A couple of months ago, I made a cynical comment that, if history judges Bush positively, it will be for increasing the level of spending by a magnitude. Think in terms of plans on the order of $1 trillion instead of a mere $40 billion.

I hate it when reality outstrips my sarcastic exaggeration!

 

[Puppycow]

Evidence?


Seriously.


I'll bet, though I haven't run the numbers, that the government gets more money from growing the economy than it does from raising taxes.


Borrowing is a game they play. Since they get the best interest rates, literally in a class all by themselves, they just "monetize" the debt, which is to say, keep paying interest on it until inflation has turned it into an almost negligible sum.

For most of '80's through a few years ago, if we had no debt to pay interest on, we'd have had a surplus. But that doesn't lose as many votes as extra spending now buys.



A couple of months ago, I made a cynical comment that, if history judges Bush positively, it will be for increasing the level of spending by a magnitude. Think in terms of plans on the order of $1 trillion instead of a mere $40 billion.

I hate it when reality outstrips my sarcastic exaggeration!

I agree.

BTW, didn't Bush's budgets also claim that the deficits would be halved or eliminated in 5 years or whatever it was?

But, we do have a recent example of a balanced budget at the end of the Clinton presidency. So it's not impossible.

And half of a 2 trillion dollar deficit would still be bigger than anything before 2008.

 

[Puppycow]

Where does that kind of money come from?
What it looks like to me is a return to rampant Inflation or high taxes--or both.

All else being equal it might, but consider the following: Homes in America have lost $5 trillion in market value since the peak of the bubble and are expected to lose another $5 trillion or so before bottoming out. All the equity markets in the world have lost about $30 trillion in value. Assuming about 1/4 of that is in the US, that's approximately $7.5 trillion that has evaporated. 5+5+7.5= $17.5 trillion, which is 10 times 1.75 trillion. So if you pump $1.75 trillion of new money into an economy that has just lost $12.5 trillion and has another $5 trillion to go, it would probably just make the deflation less severe.

 

[balrog666]

Evidence?


Seriously.


I'll bet, though I haven't run the numbers, that the government gets more money from growing the economy than it does from raising taxes.


Borrowing is a game they play. Since they get the best interest rates, literally in a class all by themselves, they just "monetize" the debt, which is to say, keep paying interest on it until inflation has turned it into an almost negligible sum.

For most of '80's through a few years ago, if we had no debt to pay interest on, we'd have had a surplus. But that doesn't lose as many votes as extra spending now buys.



A couple of months ago, I made a cynical comment that, if history judges Bush positively, it will be for increasing the level of spending by a magnitude. Think in terms of plans on the order of $1 trillion instead of a mere $40 billion.

I hate it when reality outstrips my sarcastic exaggeration!

Me too. Another beer for beerina, stat!

 

[peptoabysmal]

Where does that kind of money come from?
What it looks like to me is a return to rampant Inflation or high taxes--or both.

Where does it come from?
It might be fresh off the presses, as in printing more. Perhaps it is a good time to invest in gold?

 

[Tsukasa Buddha]

Evidence?


Seriously.


I'll bet, though I haven't run the numbers, that the government gets more money from growing the economy than it does from raising taxes.


Borrowing is a game they play. Since they get the best interest rates, literally in a class all by themselves, they just "monetize" the debt, which is to say, keep paying interest on it until inflation has turned it into an almost negligible sum.

For most of '80's through a few years ago, if we had no debt to pay interest on, we'd have had a surplus. But that doesn't lose as many votes as extra spending now buys.



A couple of months ago, I made a cynical comment that, if history judges Bush positively, it will be for increasing the level of spending by a magnitude. Think in terms of plans on the order of $1 trillion instead of a mere $40 billion.

I hate it when reality outstrips my sarcastic exaggeration!

Amazing how you can get so upset over a reality you made up without evidence.

 

[kallsop]

But, we do have a recent example of a balanced budget at the end of the Clinton presidency. So it's not impossible.

With Pelosi and Reid running rings around rookie Obama, it's impossible.

Maybe after 2010 if there is a 1994 like turnaround and the democrats get creamed at the polls. It's very pathetic that its taken an Obama spending explosion to wake up the republicans, who fed at the same trough the last 8 years and liked it plenty.

 

[rwguinn]

Where does it come from?
It might be fresh off the presses, as in printing more. Perhaps it is a good time to invest in gold?

I thought I said something about inflation?

 

[geni]

Evidence?


Seriously.


I'll bet, though I haven't run the numbers, that the government gets more money from growing the economy than it does from raising taxes.

You misunderstood. By raiseing revinue I meant bringing in money in general (the other methods of plunder and nationalised industries are less popular these days). I have no idea one way or the other with regards to your claim. Definetly one where I'd need to see some serious evidence before takeing either option.

 

[Beerina]

I agree.

BTW, didn't Bush's budgets also claim that the deficits would be halved or eliminated in 5 years or whatever it was?

But, we do have a recent example of a balanced budget at the end of the Clinton presidency. So it's not impossible.

As an amateur, and hopefully, eventually, professional, cynic, I would like to point out that Clinton, very early on was talking about balancing in 10-15 years, but that quickly evaporated and his administration officially threw up their hands and said, "Oh, well. Deficits as far as the eye can see."

He didn't predict the Internet boom. So technically, he got it wrong, too, FWIW.


But such booms only come along rarely, the most recent before that was probably the auto industry in the early 1900s. Hot air is blowing hard about such a boom for things like environmental and alternative energy stuff, but that won't happen as the markets don't support investment when oil is still so cheap and plentiful, in spite of several-year hiccups that look like a "long time" to humans who think in seconds.

Biomed, too, holds possibility, but until gene splicing and so on are much easier to do (perhaps a computer that can predict how an organism will develop) that could be years or decades off, still.


That's why this is such a wonderful thread -- just keep in mind the prediction. Not just a recovered economy, but a throbbing one ala the Internet boom of the mid '90's, as only such a thing can outstrip Congress' ability to increase spending every year.



By the way, economies are normally somewhat cyclic and naturally unstable, so one can expect the economy to recover regardless of what the government does, aside from massive tax increases on business, or massive expensive regulatory increases, which amount to the same thing. So how would one tell what part was just cyclic and what part was government helping (or even hurting, for that matter)?

I guess that's kind of like AGW, except in this case, it's GAER, Government-Accelerated Economic Recovery, to (theoretically) speed the recovery faster than it otherwise would occur. What part's natural and what part's man-made? And what fraction is incorrectly interpreted and what part is raged about with hyperbole to make consequences seem worse so you can pass still more legislation as a hero?

 

[Beerina]

Amazing how you can get so upset over a reality you made up without evidence.

Evidence?

 

[mhaze]

With Pelosi and Reid running rings around rookie Obama, it's impossible.

Maybe after 2010 if there is a 1994 like turnaround and the democrats get creamed at the polls. It's very pathetic that its taken an Obama spending explosion to wake up the republicans, who fed at the same trough the last 8 years and liked it plenty.

Better would be for rank and file Democrats to wake up and take action.

 

[Puppycow]

President Obama is making a testable prediction.

From the article:

The government's fiscal year runs from October of one year to September of the next.

Peter Orszag, director of the Office of Management and Budget, outlined four ways the administration will reach their goal of reducing the deficit in half by 2013

So, while the congress didn't actually pass the budget proposed by the president as-is (it never does), the goal that the FY2013 budget deficit would be half that of the FY2009 budget deficit was, in fact achieved:
2009: $1413 Billion Deficit
2013: $680 Billion Deficit

With the latest report from the Treasury Dept, the FY2014 deficit looks likely to be smaller yet:

WASHINGTON (MarketWatch) -- The U.S. budget deficit was $37 billion in March, the Treasury Department reported Thursday. That is a decrease of $70 billion, or 65%, from the shortfall posted in March 2013. Receipts increased 16% in the month, to $216 billion, while spending dropped 14% to $253 billion. For the first six months of the 2014 fiscal year, the deficit has fallen 31% mostly thanks to receipts, which are up 10% compared to the same period a year ago. Spending has fallen 4%.

I don't know what the deficit for the full year will be, but something less than $500 seems within reach at this rate.

Not saying Obama necessarily deserves all the credit for this. At the end of the day, congress makes the budget, not the president (although the president has to sign it). But if we're going to hold him accountable for something he has limited control over, I'd say he passed the "testable prediction" test here.

 

[Puppycow]

Where does that kind of money come from?
What it looks like to me is a return to rampant Inflation or high taxes--or both.

The "rampant Inflation" at least didn't appear. Taxes are slightly higher, but mostly for those earning over $400,000/year. They are still lower than in the 1990s.