Originally Posted by BeAChooser
I'll buy his assertion that Ryan's solution is indeed far too "non-radical". (Although it's worth noting that Obama called it radical.)
First of all, as you might guess, I don't agree with everything Stockman says, but I also don't see any evidence that he wants something "more radical" than the Ryan plan.
I didn't suggest that Stockman wants a more radical plan. I merely noted that while Ryan's plan is anything but radical, Obama called it radical. Which I think once again proves how dishonest Obama has been in this debate.
He also notes that even though the Ryan plan makes extremely deep cuts to social programs, its insistence on not raising any revenues undermines its ability to actually balance the budget in any reasonable amount of time.
That's not true. Ryan's plan assumes that revenues as a percent of GDP will increase to the 18-19% range that they have historically averaged for the last 65 years. The problem is he takes too long to do this and then doesn't really contrain the growth in government spending enough, allowing too much time for leftists to undo the fix as they would certainly try to do.
Ultimately, if you want to reduce the debt as a percent of GDP (which is the objective, right?), you not only have to control spending (in real, absolute terms so that spending as a percent of GDP falls back to realistic and sustainable levels), but you have to make sure revenues as a percent of GDP are well above spending.
And you can't do that if you basically spend every dime you take in … which is the Obama extended baseline scenario. You can't do that if you keep spending at or above a percent of GDP that history shows revenues as a percent of GDP can actually average … which the Obama extended baseline scenario assumes.
In other words, government outlays have to be cut
below the 18-19% of GDP that history shows you can reasonably expect in terms of revenues. Currently, they are running at 24.1% (
http://www.cato-at-liberty.org/cbo-report-reveals-spending-disaster/ ). And they are projected to climb to almost 34% by 2035 if the spending programs democrats advocated remain in place without modification. It's simply madness. And it will lead to total collapse. Deep cuts … deeper than even Ryan has proposed ... are needed. And very soon, if we are to keep this boat from sinking. We probably can't even wait till the next election.
Now the Obama suggested approach to fixing the problem (the extended baseline scenario) is to reduce spending somewhat to about 21% of GDP) at the same time revenues are increased through taxation to about 21% of GDP. And then to rely on being able to steadily increase tax revenue as a percentage of GDP from about 21% in 2015 to 24% by 2035. But as I've noted, revenue levels above 21% of GDP have NEVER been seen. For that reason, the Obama/democrat plan is PURE FANTASY. You might as well believe in fairies if you believe they can do that to stabilize this situation, Bri. Much less shrink the national debt back to more sustainable levels compared to GDP ... which they aren't even suggesting in the extended baseline scenario.
And I've already shown that increasing taxes hurts GDP growth, which would lower the downstream revenues so that either even greater taxes as a percent of GNP would be required to maintain the government programs democrats insist are necessary or greater spending cuts (in absolute terms) will be required to keep the boat from sinking even further in the water. It's a vicious circle that will undoubtedly end in disaster (and even the CBO using Whitehouse economic assumptions has acknowledged this likelihood).
The ONLY alternative is to do what I've suggested. Do what history shows has worked over and over to increase GDP growth. First, roll back government spending as a percentage of GDP to the level it was prior to Obama taking office (the 18%), and then over time roll it back even farther … by cutting unnecessary programs (and there are lots of them). We need to get the government out of people's lives as much as possible so that spending as a percent of GDP falls to a more reasonable 16% or so. And at the same time, we need to cut taxes to get the economy growing again. And the two effects combined will have tax revenues as percent of GDP back up in the 18-19% range very rapidly, and that will allow us to shrink the national debt back to levels that are sustainable. To stop stealing from our children and their children and their children.
I see no evidence that Obama is a "Fabian" though.
Other than the fact that what he has advocated economically is pretty much what Fabians have wanted to happen all along? Obama and his crew have idolized and tried to mimic FDR's Keynesian approach to economics and social justice? Do you know that the term "The New Deal" was coined by a Fabian Socialist named Chase who worked for FDR? Do you know that Obama's biggest financial backer, George Soros, is a Fabian socialist who was educated at the London School of Economics which was founded by and is supported by the Fabian Society? Do you know that Obama's Chief of Staff, Pete Rouse, is a graduate of the London School of Economics and a Fabian socialist? The very foundations of the Progressive Movement of which Obama is a part was the Fabian Society. Do you think that the Cloward Piven Strategy that so many of Obama's supporters espoused at one time is anything other than Fabian thinking? So don't be so sure that Obama is not a Fabian Socialist ... at least in thinking and objectives.
Yes, I believe that cuts are needed (but not necessarily right away in the current economy).
That's ALWAYS the problem with liberals. You never can cut (except maybe the military). There's always an excuse.
It's always *we'll worry about it tomorrow* with liberals. It was exactly that sort of thinking that led to Fannie and Freddie collapsing despite all the warnings that were sounded by conservatives years earlier. That thinking led to the current economic crisis … one which Obama and leftists then took advantage of to push through even more unwise social spending.
Yeah, Bri, I've heard this defense before … *how can you talk about cuts
in a recession?* Well it's just another example of liberals being unable to learn from history and not understanding basic economics. Because history shows over and over that recessions are exactly when you need to cut to get out of recessions/depressions. And what do you think is the purpose of recession in a free market anyway? It is to force improvement in efficiency … by cutting back things that aren't working out … be it operations or employees. Eliminate products that are not selling. Shed investments that are not earning. The purpose is to make the system more efficient so that in the long run everyone benefits. To allocate resources in a different and more productive manner so that in the long run everyone benefits. There are sound economic reason for periodic recessions. But liberals can't seem to see them.
The problem with liberals and, sadly, even many modern republicans nowadays, is that they think government can operate outside sound economic principles. You've heard it during this recession time and time again … democrat leaders promising to protect government jobs by instituting policies to make government employees immune from the effects of this recession. Sure … Obama sold the Stimulus with the claim that most of the jobs saved and created would be in the private sector … with shovel ready jobs. But that was a lie. That were never enough shovel ready jobs. That was never the plan. The reality is that almost of the jobs (what few there were) that were saved ended up being in the government sector as democrat politicians voiced the mantra that *a recession is the the wrong time to cut … people need jobs*. They did this to keep government employees (a large part of their voter base) from experiencing the recession like those in the private sector (mostly conservatives) did. Because liberals simply don't understand economics … but they do understand the way the political system works and how to manipulate it to garner power.
But that was the wrong thing to do, as history proves over and over.
Look at the downturn (depression) of 1837. It was so serious that 4 million people lost their jobs (that was a LOT back then compared to the size of the working population). It was the worst downturn the US had experienced. About 40% of the banks outright collapsed. Property values that had been in a speculative bubble (much like ours) collapsed. It looked a lot like what Obama warned us
would happen if we didn't intervene with a massive stimulus in the current recession. But intervene was not what President Van Buren (a democrat who today would be called a Tea Party republican) did. No, he was philosophically opposed to government intervention … so he did
nothing. The economy recovered … partially recovering by 1839 (i.e., by now, in the current downturn), then suffering a brief relapse as a result of events overseas, then taking another 4 years to turn around (although some historians say that real GNP actually grew about 16% over those 4 years). It's worth noting that Federal debt as a percent of GDP was close to zero at the time. By the logic liberals use today, Van Buren could have spent and spent and spent and spent. But he didn't. And things worked out fine
Then we have the depression of 1893. Again, the worst in US history to that point in time. Unemployment went from 4% to over 12%. GDP dropped 10%. But again, we were blessed with a President, Grover Cleveland, who, like Van Buren, was opposed to government intervention.
Who, in fact, cut taxes and reduced government spending in response. Who was supported by many in Congress, such as Senator James Berry who declared "It is not the purpose of this government to give work to individuals throughout the United States by appropriating money which belongs to other people and does not belong to the Senate." And guess what? The economy recovered. That downturn was over within 6 years, with unemployment back to 5% and the economy booming. Do you think that's what's predicted now? No, unemployment is predicted to remain high … a new "norm" … with GDP growth relatively stagnant and predicted to remain low … a new "norm". All despite (or I think, BECAUSE OF) massive and inefficient interventions by the government.
Or how about the example of 1921, when President Harding inherited (like Obama claims he inherited) one of the sharpest recessions in US history. Unemployment rose over 700% in just one year. Production fell 23%. The stock market lost 18%. Yet within within two years (by now), it was over. Unemployment had returned to what was considered full employment and the economy was booming. And what happened to make this possible?
President Harding cut government spending by 40%, instead of massively increasing it. He
lowered taxes and
reduced regulation, all of which helped America's entrepreneurs and capitalists create new jobs and push the economy to recover rapidly. Harding's free market policies (and then Calvin Coolidge's, who followed him) led to the Roaring Twenties, known for technological advances, women's rights, the explosion of the middle class, and some of the most rapid economic growth in American history. All of this without a government stimulus robbing peter (a privately employed taxpayer) to pay paul (a government worker). All of this because Harding had a wisdom sadly lacking in all democrats and many top republicans nowadays. The wisdom to know that recessions are ALSO a time when government needs to make itself more efficient … by CUTTING programs and people that are not needed or meeting their goals.
Learn from history, Bri, or you will suffer the mistakes of the past.
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He now apparently thinks we can tax more than we spend, and thus tax our way into a surplus that will significantly lower national debt as a percentage of GDP.
You seem to keep returning to this straw man … snip … . I see no evidence that Stockman thinks we can tax more than we currently spend.
Stockman has certainly been calling for large increases in taxes. That much is clearly the case:
http://www.washingtonpost.com/busin...-to-fight-debt/2011/05/23/AFX1x09G_video.html
[Stockman] - "We have to raise revenue, there is no doubt about that. We have to allow the Bush Tax Cuts to expire for everybody, not just the rich … snip …
[Carol Massar] - David, let's talk specifics … snip … You were on with Tom Keene recently, and you talked about specifically broadening the tax base, and you put out a bunch of things. I think you talked about a VAT, a value added tax. You talked about taxes for Wall Street. … snip …
[Stockman] - … snip … If [those in Washington] were realistic, they would be discussing what are the new revenue sources that we can possibly tap in order to fill this gigantic $1.5 trillion hole in the budget. … snip … The should be talking about new sources of revenue and possibly increasing some of the existing taxes we have in place today.
And since he's smart enough to know that raising taxes will hurt economic growth (he's said that in the past, by the way), I'm not sure how he arrives at the notion that raising taxes will "lower debt", unless he was, as I said, calling for revenues to exceed spending over an extended period into the foreseeable future. Can you explain that, Bri?
By the way, David Stockman recently said:
http://www.thefiscaltimes.com/Artic...US-Is-in-Race-to-the-Fiscal-Bottom.aspx#page1
[DS] - The only solution is a long period of debt deflation, downsizing and economic rehabilitation, including a sustained downshift in consumption and corresponding rise in national savings.
And a key element of the latter is a drastic reduction in government dis-savings through spending cuts and tax increases — and these measures need to start right now. Keynesian policymakers who say wait for the midterms to address the deficit are like battleship admirals: They are fighting the last war with the same failed strategy that gave rise to our current predicament.
What do you think of that, Admiral?
And by the way, I hear that today's debt deal would put most of any possible changes on the backs of a bipartisan debt commission to figure out (ignore the fact that Obama already created one of those and then promptly ignored all their recommendations). What do you think Stockman thinks of that solution? Again from the above link:
DS: The deficit commission is a complete waste of time. The nation has become fiscally ungovernable because the fiscal policy of both parties is based on what is essentially the Big Lie. The earnest remonstrations of the commission’s report will be lost in the deafening partisan rancor which is certain to swell after the coming election.
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Relying on government to spend less than it takes in as revenue is a pipedream. It rarely has and rarely will … anywhere in the world.
Huh? Isn't that what having a balanced budget means? Spending less than it takes in as revenue is the goal of the whole exercise.
Sure, that's a nice goal. But what goals has the US government ever really met? I listed a whole bunch of goals that the US government failed to meet earlier. All I heard from you folks was {crickets}. And I think history shows this goal will also fail. If tit was easy to balance the budget, it already would have happened many times. But history shows that the US government almost ALWAYS ends up spending more than it takes in. Again, let me point you to the historical chart that proves that without any doubt:
http://static8.businessinsider.com/...345/us-government-spending-versus-revenue.jpg
Do you see the red line? That's spending. Do you see the blue line? That's revenues. And which line is above the other over almost the entire 50 year span? "Huh?"
Balancing the budget is a wonderful goal, but it's FANTASY to think democrats will EVER go along with an Amendment that would actually force that to occur. The last time one was offered by a similarly responsible group of fiscal conservatives (under Gingrich), democrats shot it down (
http://articles.latimes.com/1995-03-03/news/mn-38285_1_balanced-budget-amendment ). And they did so again in 1997. I expect no less now, if a balanced budget Amendment actually comes to a vote.
Balancing the budget through "law" is an equally futile exercise. Remember the Balanced Budget Act of 1997? That was supposed to balance the budget by 2002. Did it do it? Did it even sustain the balance through the end of Clinton's term? No. And no.
And even a balanced budget Amendment doesn't prevent nonsense like Obama's Alternative Baseline Scenario, where he claims revenues will match spending … but assumes ludicrous revenue as a percent of GDP to make that happen. And when those revenues don't materialize, what do you think you will get? A deficit. Probably bigger than any you've had before because you've so damaged the economy.
And there is one more fundamental problem with your thinking that all we have to do is balance the budget and everything will be fixed. Technically, you could balance the budget every year yet tax away every penny that everyone makes every year. In which case, the government would simply be the ultimate nanny/socialist state and we would all work for the government and receive what every standard of living the government deems we deserve. That is in essence where the Extended Baseline Scenario that you linked earlier and that Obama/democrats are pushing, is headed. As the CBO chart you linked showed, they start taking (
and spending) 21% of GDP about 2015. By 2035, the CBO projects they we be taking nearly 24% of GDP
and spending nearly 24%. With the percentages rising ever faster at the end of that period. At all times between those two dates, the budget is balanced. But has it fixed anything? No Is the debt lower? No. Is the economy stronger? No. You will end up with a failed socialist state. And history proves that over and over.
No, Bri, I'm afraid I just don't believe we can solve this problem by just balancing the budget. That is a smokescreen to hide the real problem ... low growth ... and let democrats continue to spend, spend, spend. Sooner or later we need to cut spending and grow the economy. And if what's happening now is any guide, that's NOT going to happen as long as Obama and democrats are in a position block what needs to be done.
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That's why I say that the ONLY way to fix the current economic mess is to cap spending so that government can't keep borrowing and thus increase the debt without bound, and grow our way out of this by encouraging economic growth.
If you're talking about an immediate cap on spending, and if you think that wouldn't immediately tank our economy, you're crazy.
Our economy is already tanked. Wake up, Bri. And what democrats are trying to convince people is the "new norm" for unemployment and GDP growth is what used to be called a "tanked" economy. The already high unemployment figures (over 9%
and climbing again) is a lie since many people have given up even trying to find work and therefore aren't included in that number. The real unemployment rate is closer to 17% right now and probably even higher since some sources of unemployment aren't even included in that measure. And the already low GDP growth is going down. We are in what honest economists once called a depression … a sustained economic downturn. Wake up.
http://economics.about.com/cs/businesscycles/a/depressions.htm
There is an old joke among economists that states:
A recession is when your neighbor loses his job.
A depression is when you lose your job.
Up till now most of those losing jobs have been in the private sector. Maybe it's time for a few Congressmen and some government employees to lose their jobs so they wake up to the reality of what this nation is now facing. It's time to untie the anchor that is now holding the economy back … high government spending, unnecessary government regulation and high taxes. If a spending cap is what it takes to do that, so be it. Sometimes you have to feel a little pain to set a broken bone. Otherwise it won't ever heal.
The problem right now doesn't seem to be that taxes are too high or that companies don't have enough cash. The problem seems to be a lack of demand and, yes, economic uncertainty.
You simply don't understand how most of us feel. Here's a poll from last year from a liberal source … Gallup (
http://economix.blogs.nytimes.com/2010/04/14/are-your-taxes-too-high/ ) . What that poll shows is a nation where half think taxes are too high and half think they are about right. Hardly ANYONE thinks they are too low. And note that the half that thinks them too high are mostly people who actually pay taxes. With 47% of Americans not paying any Federal taxes, it's no surprise that about half think they are about right. If I was living off someone else's dime, I'd think they were about right, too.
And note something else. The last time that taxes were at the levels democrats are again pushing us towards, close to two-thirds of those polled said taxes were too high. So where do you exactly get your belief that taxes are too low, Bri?
And as for the problem being demand, you don't create demand with government programs. Haven't you learned ANYTHING from the failure of the last trillion dollar stimulus?
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And as I proved above, increasing taxes does not grow GDP. Only reducing taxes does that, long term.
No, history doesn't really show that.
Well it certainly did in the period from 1995 to 2001, when we last grew the GDP significantly. And I've already point out other historical cases where lowering taxes stimulated growth.
As an extreme example, I would surmise that having zero taxes would not spur economic growth in the least.
You mean extreme
strawman. No one here is advocating zero taxes.
So let me ask you, under what conditions would you recommend raising taxes?
I'll take a stab at that, not that I won't revise it depending on what I may overlook in this quick response:
If there were an identified need (that most of us could agree on) that could be met within the Constitutionally agreed limits of government's role in our lives …
And if we could be somewhat confident that government could efficiently meet that need and not fail like it has so many other times (as I've noted earlier) …
And if current tax revenues were well below historical averages that suggest what people are willing to give …
THEN I might be willing to raise taxes.
Now you certainly haven't met the first two requirements. And the last requirement is only questionably met.
Furthermore, there are plenty of noted economists who say you don't raise taxes in the middle of a recession. And whether it is official or not, we are still in a serious downturn. And history proves over and over that lowering taxes during a downturn (or at least not raising them) is the best way to end that downturn. History proves (in 1929 and now, for instance) that raising taxes makes matter worse … deepens and prolongs the downturn. Why can't you liberals ever learn from history?
Part of the reason we're in the mess we're in is because of the Bush tax breaks at a time when the economy didn't grow as rapidly as was predicted
Wrong. Look at this chart, which shows recent historical GDP growth rates:
http://www.econedlink.org/lessons/images_lessons/811_em811_figure11.jpg
The US went into recession in 2000 and then suffered 9/11 on top of that. When that happened, GDP growth plummetted. To bring us out of that downturn, Bush enacted two different tax cuts.
First, there was a tax cut enacted in June of 2001 (
http://articles.cnn.com/2001-06-07/...dit-trillion-tax-tax-relief?_s=PM:ALLPOLITICS ). You can see from the chart that the first tax cut was enacted at a time when GDP growth was over -1 percent (i.e., NEGATIVE) and it was only 1 percent in the quarter before that. After it was enacted, GDP growth immediately climbed to nearly 2% and then stayed above 2% for the next 3 quarters.
Then the economy went back into another slump, falling to near zero percent growth and then only 1 percent in the first quarter of 2003. But that slump wasn't because of the tax rates.
So Bush cut taxes again. The second tax cut was enacted in May of 2003. And as you can see, immediately GDP growth rate rose to over 3%. Then in the next quarter climbed to over 7%. And then it averaged about 3.5% until mid 2006 … the next 11 quarters. Clearly, the tax cut had a very beneficial effect.
And then what happened? The power of democrats grew. They won control of Congress at the end of 2006. And looked what happened then? GDP growth rates began to head south. While two quarters of 2007 continued the 3.5% average level of the earlier quarters, for two other quarters it was only 0.5%. Then came the crash and GDP really headed south … followed by Obama who made the collapse even worse and has prolonged it.
No, Bri, the tax cuts were not the source of today's problems. You are just plain wrong about that. But then modern democrats always are when it comes to matters of economy. Because they don't actually look at history before reaching their *conclusions*.
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If we reduce the deficit and slow the growth of the national debt (by capping and then cutting spending somewhat), and encourage the economy to grow by cutting taxes and reducing needless government regulation of our lives, then over time, rather rapidly, we will see the size of the debt as a percentage of GDP shrink.
Except that history doesn't really show that.
Yes, it does. As I proved with actual sources earlier. But I can't stop you from putting your head in the sand. That's what liberals tend to do anytime they are faced with actual facts.
Reducing regulation contributed to the economic problems we have now.
Sure. If you cherry pick the data, you can find some instances where reducing regulations contributed to the current problem. But by and large, it was democrats adding regulations and democrats ignoring regulations that created this mess. Democrats were the ones who added teeth (regulations) to the CRA which forced banks to allow people who couldn't afford homes to buy them. And it's certainly true that the resistance that democrats showed to monitoring and regulating Fannie and Freddie, when republicans warned there was a serious impending crisis, that brought us to where we are now.
And overall, over-regulation of core businesses (not the financial businesses that move money from place to place, but instead companies that actually make a product that generates that money in the first place) is a large part of the problem. Just ask businessmen. They will tell you that government regulation is significantly impeding their growth. Here:
http://smallbusiness.chron.com/five-areas-government-regulation-business-701.html
http://smallbiztrends.com/2011/01/small-business’s-problem-with-government-regulation.html
http://smallbusiness.foxbusiness.co...their-stories-on-government-regulation-taxes/
http://www.uschambersmallbusinessnation.com/take-action/overregulation
Taxes are the lowest they've been since the 1950's
I'm beginning to think that you are deliberately misrepresenting the facts, Bri. Or at least you need to learn that just because a USA Today headline tells you something, it isn't necessarily so. Be a skeptic.
It's true that the amount of personal income that government has seized has fallen dramatically since 2007 and is now at the lowest levels since the 50s. But that's because we are in a deep recession. That's because we have a progressive tax structure. And when the economy falters, people make less, and they end up in lower tax brackets which drives down the average amount they pay.
As USA Today said (
http://www.usatoday.com/money/perfi/taxes/2010-05-10-taxes_N.htm ), since 2007, the "tax rate paid by all Americans -- rich and poor combined -- has fallen 26%." And what follows in their article as the reason for that shows that they didn't mean tax "rate" but the tax "revenue". The tax schedules themselves didn't changed. And the moment the economy recovers … if it recovers … the tax collected will spring back to 2007 levels. And if Congress allows the Bush cuts to expire, then we'll see the largest tax increase in history. And you know what that will do to the economy? History tells us. Learn from it.
Sadly, we'll never know if Obama's approach of following the recommendation of nearly all economists will work
"nearly all economists"? Prove that.
And even if you can (but you still have to prove it
), what gives the recommendations of *economists*,
who got us into this mess in the first place, any great weight?
Afterall, most economists are liberals. They vote democrat. They are not politically unbiased. Afterall, they are the product of liberal educations from predominantly liberal schools.
And the economists that supported the stimulus, which I imagine includes most of the economists you might name, promised us that it would keep unemployment under 8%. FAIL. That it would get the economy moving again. FAIL. So if we are going to do the battling economist bit, then start naming some of your economists so we can see how good their track record has been. Before we trust them any further with the future of this country. Because most economists will tell that an economy can only handle between 30 and 40 percent of debt as a percentage of GDP. And where do you think we are at now, thanks to Obama and *his* economists, and the foolishness that proceeded them? Hmmmm?
, because the Republicans will make sure he's blocked at every turn regardless of the consequences if they control either house of Congress.
Spoken like a toe-tag democrat. What you won't admit is that it's democrats who are blocking the needed reforms. And they'll keep on doing it until they are thrown out of office.
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