CDZ The projected path we're on

Discussion in 'Clean Debate Zone' started by task0778, Dec 27, 2017.

  1. task0778
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    task0778 Gold Member Gold Supporting Member Supporting Member

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    "If we want to grow a strong, stable, and prosperous society with a healthy economy then we need to start having an honest conversation about what’s happening and what kind of projected path we are on."

    Sounds like a discussion about demand-side vs supply-side economics. I'm not really interested in getting into the politics of it, who's right and who's wrong. Rather, I'd rather talk about what works and what doesn't when it comes to spurring economic growth in a stagnant economy. That is after all what you want, right? More jobs, higher wages, higher standard of living? OK, let's get to it.

    So what's happening? Looks to me like Trump is repealing a lot of regulations and lowering taxes in an effort to reduce overhead costs that can lead to lower prices and more demand and as a result greater sales, i.e., revenue. Which is basic supply-side economics. At the macro level, if a nation's economy is growing relative to their competitor nations then their businesses will generally be more successful and their citizens will enjoy a better standard of living. Why? Because they can buy more stuff with the same amount of money. Why? Because the prices are lower.

    So, we cut taxes but that means the nation's debt is projected by the CBO to be approx $1.5 trillion higher than it would have otherwise been. A lot of people, me included, don't like that cuz it means future generations will have to pay interest on that debt, aside from paying off the principle. So why do it? Cuz you want to spur long term economic growth with a short term economic boost, the idea being to get the economy going and then you're supposed to get more people working and enjoying a higher lifestyle. My personal opinion is that if and when the economy grows stronger you might even raise taxes so that inflation doesn't get out of hand and the gov't can begin to pay down that debt.

    So what kind of projected path are we on? IMHO, not a very good one cuz $20 trillion in debt is a heckuva lot of money and is expected to grow ever higher with or without the Trump tax cuts. And so is the interest rate to be paid on that debt; as the economy grows so will interest rates, and if those rates approach what is thought to be normal then we can expect to be paying maybe a trillion dollrs a year just in interest payments. And not too long into the future either.

    Some say we need to raise more revenue, but the problem as I see it is that we cannot possibly raise taxes (revenue) anywhere near enough. What we have is not a revenue problem, it's a spending problem. Used to be, politicians in both parties were leery of spending too much relative to revenue. But not any more, nobody wants to be the bad guy that says we can't afford to pay for all these great programs, be it social or defense or whatever. So, there's a collision coming and something's gotta give, either we raise revenue or we cut spending but one party doesn't want to raise taxes and the other doesn't want to cut spending.

    So how does it end? Not well, eventually the interest payments on the debt will grow so large as a budgetary item that it can't be ignored. We're just not going to be able to pay for Social Security, Medicare and Medicaid, and all the rest of our entitlements as they exist now. Seems to me the projected path we're on can only lead tothe next Great Depression similar to the 1930s. It took a World War to get us out of that one, I hope it doesn't happen again.
     
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  2. MarathonMike
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    MarathonMike Platinum Member

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    Agreed on all points. My top concerns going forward are the shrinking workforce due to automation and robotics while entitlement payouts keep growing and people continue living longer. According to interest rate and inflation projections, if the debt exceeds $24 Trillion that could be a point of no return i.e. little chance of ever paying down the debt. I believe Donald Trump understands that so he in effect rolled the dice with this tax cut bill. We need to have the big dogs in this hunt and If we don't get sustained 3%+ growth we have little chance of getting the debt under control and we doom our kids to 50%+ tax brackets.
     
  3. JGalt
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    JGalt Platinum Member

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    If we're going to talk about what works and what doesn't when it comes to spurring economic growth, it's pretty obvious that what President Trump is doing works. How could anyone possibly believe otherwise?
     
  4. william the wie
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    william the wie Gold Member

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    A slight but important difference in these tax cuts. The reinstitution of a tariff has three major effects:

    It punishes out Sourcing

    It improves returns on domestic investment

    It increases foreign investment
     
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  5. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    I recommend accepting the inevitable and enjoying the decline.

    https://www.amazon.com/Enjoy-Declin...=1514433714&sr=8-1&keywords=enjoy+the+decline
     
  6. william the wie
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    william the wie Gold Member

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    The CBO scoring system is fatally flawed but is the best predictor we've got. What is not factored in is that GDP growth above 2.4% reduces the deficit/national debt. And by the way it is the drought/dust bowl that has the strongest correlation with the beginning and end of the Great Depression.
     
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  7. JGalt
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    JGalt Platinum Member

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    Regardless of the numbers or the way they're calculated, I think we're in for a pleasant surprise. Trump seems to have unleashed a whole set of circumstances that have only begun to be realized.
     
  8. william the wie
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    william the wie Gold Member

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    there will be a crash of the Blue wall probably this year and in Canada next year is also likely so the wall of worry is in place. When everyone buys into unending prosperity that is when the panic will hit.
     
  9. task0778
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    task0778 Gold Member Gold Supporting Member Supporting Member

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    At 69 years of age I'll probably be dead by then anyway. But I do kinda feel sorry for you poor young effers that'll have to deal with the shitstorm that's coming your way.
     
  10. Votto
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    Votto Gold Member

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    Never mind all that man, we have had our GOP tax cuts now it's time to elect Dims to start a stimulus after which we can have more GOP tax cuts.

    We need another fix and quick!!

    I hate withdraw symptoms.
     

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