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Requiring a balanced federal budget is sheer lunacy and a recipe for disaster. We must do everything in our power to stop these well-intentioned but ill-informed individuals from pushing us down this road to ruin.
Here’s a summary of why we don’t need a balanced-budget amendment:
1. The U.S. can never be forced to default on debt denominated in dollars
2.) Deficit spending alone cannot cause inflation, crowding out or capture of resources
3.) The economic expansion of the 1990s caused the budget surplus and not the other way around
4.) Unbalanced budgets serve as economic stabilizers
5.) The government’s deficit is our surplus
This is common sense. People who push for a "balanced budget" amendment tend to be the morons who believe the national debt is going to literally enslave our kids.
Five Reasons Why A National Balanced Budget Amendment Is Lunacy
Requiring a balanced federal budget is sheer lunacy and a recipe for disaster. We must do everything in our power to stop these well-intentioned but ill-informed individuals from pushing us down this road to ruin.
Here’s a summary of why we don’t need a balanced-budget amendment:
1. The U.S. can never be forced to default on debt denominated in dollars
2.) Deficit spending alone cannot cause inflation, crowding out or capture of resources
3.) The economic expansion of the 1990s caused the budget surplus and not the other way around
4.) Unbalanced budgets serve as economic stabilizers
5.) The government’s deficit is our surplus
1.) You have no idea what you're talking about when it comes to the debt. We can literally never default on our debt, first of all, this is well accepted by economists. Err, why do we have to cut spending? That's a stupid idea, especially when we're not at full employment and at a time when we're running a trade deficit with the recent recession... Who are we paying our debts to? You do understand how the debt works, right? It's a record of cumulative deficits, that have not yet been taxed away by the US government. You do know what treasury bonds are, right? His 1st point is correct and you cannot prove it false.This is common sense. People who push for a "balanced budget" amendment tend to be the morons who believe the national debt is going to literally enslave our kids.
Five Reasons Why A National Balanced Budget Amendment Is Lunacy
Requiring a balanced federal budget is sheer lunacy and a recipe for disaster. We must do everything in our power to stop these well-intentioned but ill-informed individuals from pushing us down this road to ruin.
Here’s a summary of why we don’t need a balanced-budget amendment:
1. The U.S. can never be forced to default on debt denominated in dollars
2.) Deficit spending alone cannot cause inflation, crowding out or capture of resources
3.) The economic expansion of the 1990s caused the budget surplus and not the other way around
4.) Unbalanced budgets serve as economic stabilizers
5.) The government’s deficit is our surplus
Literally nothing in this list makes any rational sense. It's complete nonsense from top to bottom.
1. A balanced budget has nothing to do with default on our debt. We will have to cut spending and pay our debts first. This is an excuse and not a reason.
2. Deficit spending does ultimately result in inflation because taxes have to be raised to pay the debt and higher taxes will eventually cause inflation.
3. What does economic expansion of the 90s have to do with balancing the budget?
4. Total horseshit.
5. An even bigger load of steaming horseshit.
Figure it out.Economic Growth => Surpluses
Economic Contraction => Deficits
#4 is also discussed in the article:This is the record:
1. 1817-21: In five years, the national debt was reduced by 29 percent, to $90 million. A depression began in 1819.
2. 1823-36: In 14 years, the debt was reduced by 99.7 percent, to $38,000. A depression began in 1837.
3. 1852-57: In six years, the debt was reduced by 59 percent, to $28.7 million. A depression began in 1857..
4. 1867-73: In seven years, the debt was reduced by 27 percent, to $2.2 billion. A depression began in 1873.
5. 1880-93: In 14 years, the debt was reduced by 57 percent, to $1 billion. A depression began in 1893.
6. 1920-30: In 11 years, the debt was reduced by 36 percent, to $16.2 billion. A depression began in 1929.
There have been no such multiyear budget surpluses and debt reductions since World War II and, significantly, no major new depression. The record suggests that reducing the debt never sustained prosperity, even when the debt was virtually wiped out by 1836. The highest deficits were those of world War II, ranging from 20 to 31 percent of Gross National Product. For a few years following the war, the debt was greater than GNP, the only such case in history. The wartime borrowing and spending actually ended the Great Depression.
Post-World War II
Both political parties pledge to balance the budget by 2002, and all budget-balancers hope ultimately to reduce the national debt. In the meantime, the nine recessions of the depression-free postwar decades have each followed reductions in the annual deficits relative to GDP.
Using data developed by Warren B. Mosler, economic analyst for a Florida investment firm, I suggest how some of the recent recessions have been politically significant:
· Deficit reductions, 1971-74, led to the recession that began at the end of 1973; a slow recovery did not help Gerald Ford in 1976.
· Deficit reductions, 1977-80, gave way to a recession in 1980 that damaged Jimmy Carter’s re-election hopes.
· Deficit reductions, 1987-89, were followed by the 1990-91 recession that harmed George Bush.
Meanwhile, the longest period without a recession was from November, 1982 to July, 1990.
The Republicans who now praise that "Reagan boom" never refer to the deficits or blame the Democratic Congress, while Democrats repeatedly attack "Reagan deficits." Neither side seems aware that a steep rise in deficits began in 1981, preceding the "boom" by almost two years.
When deficit reductions finally began in 1987, they paved the way for the next recession. Political irony is everywhere.
5.) It's a fact man, you really need to have a basic understanding of deficit's and surplus's to understand it though. Let me try to explain it to you. There's actually a real simple example in the article, which you clearly decided not to read, as expected:This is not to say that government budget balances are only effect and never cause. In fact, they play an extremely important role in stabilizing the economy during recessions. Because, as shown above, government spending automatically increases and taxes automatically fall as economic activity slows means that extra demand is injected just at the time we need it most. This has not prevented recessions altogether, but it has certainly dampened their impact.
Before World War Two, the government was very small and unable to have much of an impact on overall economic activity. But the war saw it grow massively, and while it shrank in relative terms after 1945, it has nevertheless been a force ever since in a way that was not true prior to 1941. This is why recessions have been so much shorter since the end of the war. The average economic downturn from 1854 to 1945 was around twenty months. Since then, it has been almost half that at eleven.
Those who want to mandate balanced budgets want to rob us of one of the most successful anti-recessionary tools ever invented.
But there’s even more to it than that. Basic accounting tells you that in a closed system with two people, if Person A spends more than she earns then Person B earns more than she spends. Now substitute Federal Government for Person A and Private Sector for Person B. Whenever the governments spends more than it earns, WE EARN MORE THAN WE SPEND!!! On the flip side, what does a government surplus really mean other than the fact that they taxed us more than they gave us back? That anyone is in favor of such a thing is beyond me. Want to reduce the deficit? Be prepared to reduce household income. Want to reduce government debt? Be prepared to reduce household saving.
Those who want to reduce the debt and the deficit want to reduce private sector income and assets. They don’t realize this, of course, but that doesn’t make it any better. And don’t let anyone tell you that there’s nothing to worry about since we are going to cut spending rather than raise taxes–the impact on the economy is exactly the same.
I am awaiting your reply to my first response to this post.This is common sense. People who push for a "balanced budget" amendment tend to be the morons who believe the national debt is going to literally enslave our kids.
Five Reasons Why A National Balanced Budget Amendment Is Lunacy
Requiring a balanced federal budget is sheer lunacy and a recipe for disaster. We must do everything in our power to stop these well-intentioned but ill-informed individuals from pushing us down this road to ruin.
Here’s a summary of why we don’t need a balanced-budget amendment:
1. The U.S. can never be forced to default on debt denominated in dollars
2.) Deficit spending alone cannot cause inflation, crowding out or capture of resources
3.) The economic expansion of the 1990s caused the budget surplus and not the other way around
4.) Unbalanced budgets serve as economic stabilizers
5.) The government’s deficit is our surplus
Literally nothing in this list makes any rational sense. It's complete nonsense from top to bottom.
1. A balanced budget has nothing to do with default on our debt. We will have to cut spending and pay our debts first. This is an excuse and not a reason.
2. Deficit spending does ultimately result in inflation because taxes have to be raised to pay the debt and higher taxes will eventually cause inflation.
3. What does economic expansion of the 90s have to do with balancing the budget?
4. Total horseshit.
5. An even bigger load of steaming horseshit.
I won't bother responding to something so silly.The interest paid on existing Debt is ~equal to total Military spending. If Debt gone....well?
Where did I act like the federal government was a separate entity from the people? We live in a democratic country, do we not? The currency authority in this country is the united states Government though, with the treasury and the fed reserve being the "consolidated" government. I feel like I need to explain how the us dollar works, how interest works.. I'm not going to do all of that. You have refuses to actually refute my response to your first post though, instead, you've chosen to go on a senseless rant. I'd expect nothing less from one who obsesses over the deficit.You're acting as if the federal government is some separate independent entity from the people and it's not. WE are the federal government, for all intents and purposes and the federal government's debt is OUR debt. Furthermore, you are acting as if the independent entity fed has it's own resources of unlimited money it can spend on us or anything it pleases... it doesn't and it can't. WE ultimately pay the tab for everything the government spends money on.
Now you can act like you're having to talk down to ignorant little me to explain what the national debt is but it doesn't bother me. I know that I am just as smart as you are, if not smarter. So cut the shit, it doesn't work on me. In our annual budget, the national debt interest is our biggest expenditure. That's just interest on the debt. We're not buying anything, we're not funding any program, we're not paying for essential services or taking care of the needy... we're simply paying someone to hold our debt for another year. Hundreds of billions of dollars wasted every year, year-in and year-out... simply to maintain the debt we have.
Think of all the wonderful things we could do with that money if we didn't have to pay the interest on our debt. And we can't even cut our deficits so the debt just continues to grow and next year, we'll pay even more to maintain it. We have people like you arguing that this is not a problem and we should just keep amassing more and more debt because it's a good thing. You come with this convoluted word salad to play a shell game and fool gullible people into believing there is a magic money fairy somewhere and we're idiots not to enjoy the benevolence of said money fairy.
I agree, we should be amassing more debt, since it's manageable, even more so if we manage to get full employment and raise wages.1. 1817-21: In five years, the national debt was reduced by 29 percent, to $90 million. A depression began in 1819.
2. 1823-36: In 14 years, the debt was reduced by 99.7 percent, to $38,000. A depression began in 1837.
3. 1852-57: In six years, the debt was reduced by 59 percent, to $28.7 million. A depression began in 1857..
4. 1867-73: In seven years, the debt was reduced by 27 percent, to $2.2 billion. A depression began in 1873.
5. 1880-93: In 14 years, the debt was reduced by 57 percent, to $1 billion. A depression began in 1893.
6. 1920-30: In 11 years, the debt was reduced by 36 percent, to $16.2 billion. A depression began in 1929.
There have been no such multiyear budget surpluses and debt reductions since World War II and, significantly, no major new depression. The record suggests that reducing the debt never sustained prosperity, even when the debt was virtually wiped out by 1836. The highest deficits were those of world War II, ranging from 20 to 31 percent of Gross National Product. For a few years following the war, the debt was greater than GNP, the only such case in history. The wartime borrowing and spending actually ended the Great Depression.
Post-World War II
Both political parties pledge to balance the budget by 2002, and all budget-balancers hope ultimately to reduce the national debt. In the meantime, the nine recessions of the depression-free postwar decades have each followed reductions in the annual deficits relative to GDP.
Using data developed by Warren B. Mosler, economic analyst for a Florida investment firm, I suggest how some of the recent recessions have been politically significant:
· Deficit reductions, 1971-74, led to the recession that began at the end of 1973; a slow recovery did not help Gerald Ford in 1976.
· Deficit reductions, 1977-80, gave way to a recession in 1980 that damaged Jimmy Carter’s re-election hopes.
· Deficit reductions, 1987-89, were followed by the 1990-91 recession that harmed George Bush.
Greece doesn't have control of their money like we do.. I feel sorry the the countries stuck with the euro.Mr. H,
Dovahkiin is right. All the smart leaders were saying that when Greece, Italy, Portugal, Spain, and Ireland went to shit with their stupid austerity measures after 2008.
If we did that we'd be in a recession for the next two hundred years.
I'm curious.. have you actually read post #5?You're acting as if the federal government is some separate independent entity from the people and it's not. WE are the federal government, for all intents and purposes and the federal government's debt is OUR debt. Furthermore, you are acting as if the independent entity fed has it's own resources of unlimited money it can spend on us or anything it pleases... it doesn't and it can't. WE ultimately pay the tab for everything the government spends money on.
Now you can act like you're having to talk down to ignorant little me to explain what the national debt is but it doesn't bother me. I know that I am just as smart as you are, if not smarter. So cut the shit, it doesn't work on me. In our annual budget, the national debt interest is our biggest expenditure. That's just interest on the debt. We're not buying anything, we're not funding any program, we're not paying for essential services or taking care of the needy... we're simply paying someone to hold our debt for another year. Hundreds of billions of dollars wasted every year, year-in and year-out... simply to maintain the debt we have.
Think of all the wonderful things we could do with that money if we didn't have to pay the interest on our debt. And we can't even cut our deficits so the debt just continues to grow and next year, we'll pay even more to maintain it. We have people like you arguing that this is not a problem and we should just keep amassing more and more debt because it's a good thing. You come with this convoluted word salad to play a shell game and fool gullible people into believing there is a magic money fairy somewhere and we're idiots not to enjoy the benevolence of said money fairy.
Not right now we shouldn't. Maybe when we've achieved full employment, sure. Hell, once we achieve full employment again and once wages start to rise again at a decent rate, we'll be able to lower taxes and cut spending.. People on this forum seem to think I'm in support of constant deficit spending that goes up every year.The best way to balance the budget is to close the loop holes on the rich and to get out of the ever lasting wars.
We shouldn't cut a cent from infrastructure, science, r&d, education and ssi!!
Where did I act like the federal government was a separate entity from the people?
Dude, a "balanced budget" amendment would almost certainly mean drastic cuts in the things you claim to care about, caring for the needy, etc.. If you really want to do that, help us get back full employment, my inflation thread talks about what happened in the second post to take that away from us.
We pay the tab for everything the government spends money on? See, this is the silly rhetoric that makes me wonder what the hell has happened to this country.
Mr. H,
Dovahkiin is right. All the smart leaders were saying that when Greece, Italy, Portugal, Spain, and Ireland went to shit with their stupid austerity measures after 2008.
If we did that we'd be in a recession for the next two hundred years.
Dude, a "balanced budget" amendment would almost certainly mean drastic cuts in the things you claim to care about, caring for the needy, etc.. If you really want to do that, help us get back full employment, my inflation thread talks about what happened in the second post to take that away from us.
We're going to get back to full employment whenever a Conservative gets elected and we reverse the stupid liberal War on Capitalists. But we're also going to balance the budget and start living within our means, and programs are going to be cut. Departments and agencies are going to be eliminated. Federal government is going to relinquish control of our lives and return power to the States and private sector.
