Why Are Politicians Not Increasing Spending?

[Charles_Main]

Tell you what. You pay the $134,469 YOU owe first, then tell us how the debt is manageable. You wouldn't just pass this on to our children, would you? Better hurry up. The feds collect $6 billion per day but spend $10 billion. Your share is increasing rapidly.

I'm having an "amen" moment with your post.

It's sheer insanity that anyone thinks you have to spend more to work your way out of debt.

It's not, actually. You know how the United States got out of the Great Depression? Massive government expenditures for World War II. The debt to GDP ratio was the highest it has ever been. However, that ratio came down when the economy grew and the government collected taxes.

One very key difference, The Massive government spending in WWII that did finally get us out of the Depression, was mostly spent directly on Buying goods and services from Private US businesses. Tanks, Plans, Bullets, Ships, Planes, Uniforms, Rations, you name it.

Unlike Obama's Spending which is Mostly on Government Programs, and expanding Government. The only real Direct spending Stimulus he wants to do is Targeted at only Benefiting the Construction industry, and then only Unionized Workers. The Type of Spending FDR did before the war, that never actually got us out of the Depression. It was only when we started spending massively on Private sector goods, that we saw what is needed to end any Depression or Recession. Private Sector Growth.

 

[BakshisMouse]

I'm having an "amen" moment with your post.

It's sheer insanity that anyone thinks you have to spend more to work your way out of debt.

It's not, actually. You know how the United States got out of the Great Depression? Massive government expenditures for World War II. The debt to GDP ratio was the highest it has ever been. However, that ratio came down when the economy grew and the government collected taxes.

One very key difference, The Massive government spending in WWII that did finally get us out of the Depression, was mostly spent directly on Buying goods and services from Private US businesses. Tanks, Plans, Bullets, Ships, Planes, Uniforms, Rations, you name it.

Unlike Obama's Spending which is Mostly on Government Programs, and expanding Government. The only real Direct spending Stimulus he wants to do is Targeted at only Benefiting the Construction industry, and then only Unionized Workers. The Type of Spending FDR did before the war, that never actually got us out of the Depression. It was only when we started spending massively on Private sector goods, that we saw what is needed to end any Depression or Recession. Private Sector Growth.

I think we might agree there. What the government spends on matters in terms of economic growth. Even left wing economists like Joseph Stiglitz saw that the original stimulus's problem was that it was poorly designed.

 

[eflatminor]

You know how the United States got out of the Great Depression? Massive government expenditures for World War II. The debt to GDP ratio was the highest it has ever been. However, that ratio came down when the economy grew and the government collected taxes.

Incorrect yet again. First, the debt to GDP ratio is higher today than is was following WWII. Secondly, the great depression did not end because of war spending. It ended after the war when government stopped spending and removed price controls and regulatory restrictions on the economy. Furthermore, the economy didn't really take off until JKFs tax cuts took hold in the 60s.

If history is to be a lesson, the only way we can get out of this debt is to spend within our means, stop the central planning, widen the tax base, and lower the rates to competitive levels.

You really need to study someone other than Keynes or the Keynesian socialists you obviously have a love for.

 

[edthecynic]

You know how the United States got out of the Great Depression? Massive government expenditures for World War II. The debt to GDP ratio was the highest it has ever been. However, that ratio came down when the economy grew and the government collected taxes.

Incorrect yet again. First, the debt to GDP ratio is higher today than is was following WWII. Secondly, the great depression did not end because of war spending. It ended after the war when government stopped spending and removed price controls and regulatory restrictions on the economy. Furthermore, the economy didn't really take off until JKFs tax cuts took hold in the 60s.

If history is to be a lesson, the only way we can get out of this debt is to spend within our means, stop the central planning, widen the tax base, and lower the rates to competitive levels.

You really need to study someone other than Keynes or the Keynesian socialists you obviously have a love for.

Revisionist history is never a lesson! The economy took off in the 1960s because of LBJ's increased spending on the Vietnam War. Keynes wins again.

 

[eflatminor]

You know how the United States got out of the Great Depression? Massive government expenditures for World War II. The debt to GDP ratio was the highest it has ever been. However, that ratio came down when the economy grew and the government collected taxes.

Incorrect yet again. First, the debt to GDP ratio is higher today than is was following WWII. Secondly, the great depression did not end because of war spending. It ended after the war when government stopped spending and removed price controls and regulatory restrictions on the economy. Furthermore, the economy didn't really take off until JKFs tax cuts took hold in the 60s.

If history is to be a lesson, the only way we can get out of this debt is to spend within our means, stop the central planning, widen the tax base, and lower the rates to competitive levels.

You really need to study someone other than Keynes or the Keynesian socialists you obviously have a love for.

Revisionist history is never a lesson! The economy took off in the 1960s because of LBJ's increased spending on the Vietnam War. Keynes wins again.

Complete and utter bullshit. If government spending spurs the economy, why is the economy not ROCKING today, following the biggest spending spree in the history of the world? Facts are a tricky thing, I understand.

 

[BillyV]

You know how the United States got out of the Great Depression? Massive government expenditures for World War II. The debt to GDP ratio was the highest it has ever been. However, that ratio came down when the economy grew and the government collected taxes.

Incorrect yet again. First, the debt to GDP ratio is higher today than is was following WWII. Secondly, the great depression did not end because of war spending. It ended after the war when government stopped spending and removed price controls and regulatory restrictions on the economy. Furthermore, the economy didn't really take off until JKFs tax cuts took hold in the 60s.

If history is to be a lesson, the only way we can get out of this debt is to spend within our means, stop the central planning, widen the tax base, and lower the rates to competitive levels.

You really need to study someone other than Keynes or the Keynesian socialists you obviously have a love for.

I tend to agree with Eflatminor; many economists believe that WWII constrained the economy more than it made it expand. Here is an article that sums it up pretty well:

The Ultimate Stimulus? | The Weekly Standard

This postwar [WWII] boom has always posed a problem for Keynesians like Krugman. As government spending plummeted with the coming of peace— military spending alone collapsed from 37.5 percent of GDP in 1945 to just 5.5 percent in 1947—many predicted that, without this prop and with the new burden of millions of returning veterans looking for work, the economy would sink once more into the abyss. Paul Samuelson, later the dean of American Keynesian economists, wrote that unless the government did something drastic, “there would be ushered in the greatest period of unemployment and industrial dislocation which any economy has ever faced.”Instead, after a brief hiccup in 1946, the economy rebounded, growing from $231 billion GDP in 1947—roughly what it was in 1945—to $258 billion in 1948, and from there to $285 billion in 1950. Unemployment, despite the dire predictions, increased only to 3.9 percent between 1945 and 1947, in spite of the fact that some 10 million new workers came into the civilian labor market.

…the biggest trigger to growth turns out to have been a sharp rise in private capital investment, which the New Deal had slowed—one reason the Great Depression lingered as long as it did, Higgs argues—and the war had all but halted. That investment jumped from $10.6 billion in 1945 to $46 billion in 1948, as plants expanded and retooled for the production of civilian goods. Even though the overall personal savings rate fell, the private investment rate soared from 5 percent to almost 18 percent, with the biggest leap coming in 1946—a leap that would be reflected in GNP numbers only two years later

Samuelson wrote the textbook for an economics class I took in college (in the 70's).

 

[Sundial]

Well if the morons think another stimulus is the answer after one that was too small and mismanaged, he's my suggestion. IF another stimulus is to take place, divide whatever amount it is equally among those who pay income taxes and send them each a check for whatever amount that works out to be.

Some folks will spend all of it. Others will spend some of it. That amount they don't spend will be used to pay down debt or saved and/or invested. The result will be a huge amount of money spread out through various segments of our overall economy, but this time it will be the people who paid the money to the government in the first place making the decisions as to where and how this stimulus gets spent (or, invested in Washington-speak).

Why income taxes?

Why not property taxes? Sales taxes? Payroll taxes?

 

[Sundial]

It's not, actually. You know how the United States got out of the Great Depression? Massive government expenditures for World War II. The debt to GDP ratio was the highest it has ever been. However, that ratio came down when the economy grew and the government collected taxes.

One very key difference, The Massive government spending in WWII that did finally get us out of the Depression, was mostly spent directly on Buying goods and services from Private US businesses. Tanks, Plans, Bullets, Ships, Planes, Uniforms, Rations, you name it.

Unlike Obama's Spending which is Mostly on Government Programs, and expanding Government. The only real Direct spending Stimulus he wants to do is Targeted at only Benefiting the Construction industry, and then only Unionized Workers. The Type of Spending FDR did before the war, that never actually got us out of the Depression. It was only when we started spending massively on Private sector goods, that we saw what is needed to end any Depression or Recession. Private Sector Growth.

I think we might agree there. What the government spends on matters in terms of economic growth. Even left wing economists like Joseph Stiglitz saw that the original stimulus's problem was that it was poorly designed.

So we should spend it on bombs?

Maybe a big giant bomb, blow it up, and fix the giant hole in the ground?

 

[ladyliberal]

I think the simple answer is: politicians don't increase spending because they can't agree what to spend money on. If you look at a chart of the deficit (The Truth About Who's Responsible For Our Massive Budget Deficit - Business Insider) it tends to rise (ie, high spending) when government is divided (EDIT: I mean, "not divided") and fall when government is divided (as it is now). Democrats tend to like spending on health care, education, social programs, and progressive tax cuts. Republicans prefer spending on the military, law and immigration enforcement, corporate subsidies, and regressive tax cuts. When they can't agree, they tend to just spend less.



Also, I can't resist correcting a frequent mischaracterization of Keynesian economics (http://en.wikipedia.org/wiki/Keynesian_economics): Keynes didn't argue exclusively for government spending programs to counteract recessions. Under Keynesian economics, a tax cut without a corresponding decrease in government spending would also stimulate the economy. So from the perspective of stimulating the economy, people generally put tax cuts and increased spending in the same category.

 

[Sundial]

You know how the United States got out of the Great Depression? Massive government expenditures for World War II. The debt to GDP ratio was the highest it has ever been. However, that ratio came down when the economy grew and the government collected taxes.

Incorrect yet again. First, the debt to GDP ratio is higher today than is was following WWII. Secondly, the great depression did not end because of war spending. It ended after the war when government stopped spending and removed price controls and regulatory restrictions on the economy. Furthermore, the economy didn't really take off until JKFs tax cuts took hold in the 60s.

If history is to be a lesson, the only way we can get out of this debt is to spend within our means, stop the central planning, widen the tax base, and lower the rates to competitive levels.

You really need to study someone other than Keynes or the Keynesian socialists you obviously have a love for.

Wrong. The GDP ratio is not higher than during WWII, it's lower. More importantly, the amount added during WWII was higher - 3x higher. It was the money spent during WWII that paved the way for the economic growth after the war. The bombs and uniforms got blown up and thrown away. The money stayed.

 

[auditor0007]

Read these two stories:

Wonkbook: On debt, the conventional wisdom vs. the markets - The Washington Post

America Is Not Exceptional - NYTimes.com

As much as the politicians in Washington are telling us that doom is imminent if spending is not gutted, the risk of holding US bonds is very low:

A country that is about to default would have extremely high interest rates, and yields for its bonds would be through the roof.

Our national debt, the hawks like to point out, is $15.1 trillion. Believe it or not, that is actually manageable, especially considered as a percentage of GDP. Could it be that some politicians and pundits are exploiting this number just to advance their political goals. Make the electorate think that the reason that unemployment is 9% is those nasty welfare recipients.

Why shouldn't we try to spend our way out of this? Yes, the stimulus package passed a few years ago was ineffective, but could it be because the original one was too small and poorly designed?

To those of you who say this is totally off base: what do you think that our real interest rate is telling us about our economy?

The reason politicians are so scared is very simple. Everyone realizes that entitlement spending is going to begin increasing at dramatic rates, increasing the deficit very quickly in a very short period of time if we do not do something about it. So spending more doesn't sound like a great idea. The biggest problem is that our elected representatives don't want to actually address the entitlement problem, which would mean cutting spending. The biggest problem is how to do it without actually gutting both SS and Medicare. Of course there is a simple answer, but selling voters on the idea is another story, and that is to raise the retirement age to 70 or higher.

 

[Sundial]

Read these two stories:

Wonkbook: On debt, the conventional wisdom vs. the markets - The Washington Post

America Is Not Exceptional - NYTimes.com

As much as the politicians in Washington are telling us that doom is imminent if spending is not gutted, the risk of holding US bonds is very low:

A country that is about to default would have extremely high interest rates, and yields for its bonds would be through the roof.

Our national debt, the hawks like to point out, is $15.1 trillion. Believe it or not, that is actually manageable, especially considered as a percentage of GDP. Could it be that some politicians and pundits are exploiting this number just to advance their political goals. Make the electorate think that the reason that unemployment is 9% is those nasty welfare recipients.

Why shouldn't we try to spend our way out of this? Yes, the stimulus package passed a few years ago was ineffective, but could it be because the original one was too small and poorly designed?

To those of you who say this is totally off base: what do you think that our real interest rate is telling us about our economy?

The stimulus wasn't ineffective or poorly designed. It was too small, in the sense that had there been more government deficit spending the recovery would have been stronger. What the low interest rates are telling us is that the people who say the US is running out of money or is going broke are flat-out wrong. If they were right interest rates would be high and rising; not at historic lows.

From CNBC:

The past few years have taught us a lot about the effects and operations of monetary policy in the United States.

The Federal government responded to the economic downturn by spending enormous amounts and Federal Reserve responded to the financial crisis with an enormous expansion of its balance sheet — what the proles call "printing money" — and both occurred without any attendant inflation or giant soaring of interest rates.

The so-called "bond vigilantes" turned out to be mythological creatures, at least as far as U.S. federal debt is concerned. Even the crisis over the debt ceiling and the downgrade of the U.S.'s credit rating only lead to lower interest rates.

The school of economics that best explains this phenomenon is called "Modern Monetary Theory" or MMT. The MMT school is made up of scholars, businessmen and online advocates who have a deep understanding of the operations of the actual operational aspects of our monetary system.

They argue, quite persuasively, that our monetary system is built in such a way that our government is never revenue constrained, which is to say it can spend as much as it likes, because the government creates our money. The real constraint on government spending is price inflation, which occurs when government and private spending outpace economic output.

 

[editec]

Spending that puts people to work at productive task works to stimulate an economy.

Spending (or cutting taxes) that give people who already have more than enough money doesn't stimulate anything... except BUBBLES in the world of investments.

 

[eflatminor]

It was the money spent during WWII that paved the way for the economic growth after the war. The bombs and uniforms got blown up and thrown away. The money stayed.

War creates prosperity, eh? Think about what you've suggested here. Think hard about it. We've been at war for over ten years now in Afghanistan. We've got undeclared wars going across the North Africa and the Middle East. We've got over 900 permanent bases around the world. With all that spending, no wonder the economy is in such wonderful shape.

You know, the reason the USSR was so successful was due to their war expenditures. It's true!

 

[bitterlyclingin]

1.2 trillion increase in the debt ceiling request expected soon, on top of the fiftteen trillion we have already borrowed. If that's not an increase in spending, what is?
The story of the United States can be summarized by the state of Maine's demographics. Maine has 453,000 welface recipients but only 445,000 taxpayers. If Barry can repeat that feat in 25 more of these United States, he'll be made president for life, like his friend Hugo.
Instead of "Give me your tired, your poor, your huddled masses yearning to breath free" the United States is just a huddled mass yearning for a benevolent master.

"This is the first time I have ever been proud of my country" Michelle Obama

"We're going to take what you have away from you and put it where it will do some good!" Hillary Clinton, responding to a reporters question on what her fiscal policy would be were she running for president, San Francisco, summer, 2004.

"Redistributing the country's wealth would be a good thing" Barack Obama replying to Joe The Plumber, summer 2008.

 

[uscitizen]

Bonds get paid first no matter what. Our debt is one of the safest investments on the face of the earth.

SS gets repaid first. That is for the US citizens that made those contributions.

 

[M14 Shooter]

Why shouldn't we try to spend our way out of this?

Simple: We don't have the money.

 

[M14 Shooter]

Bonds get paid first no matter what. Our debt is one of the safest investments on the face of the earth.

SS gets repaid first. That is for the US citizens that made those contributions.

Probably not. SS benefits are not guaranteed.

 

[freedombecki]

Your thread is listed as "Why are politicians not increasing spending?"

Then you answer the question by saying hawks point out a 15 trillion national debt which you claim is manageable.

What does being a "hawk" have to do with resolving the national debt issue?

Your stated panacea is that original stimulus packages was too small and badly designed, and that we should try to spend our way out of this.

So, with no other answer that the one you want to hear, I think you may see the American people panicking at the polls and going for a debt payoff.

Spending ourselves into oblivion is what got us paying out interest-only payments to creditors with nothing left over except borrowing more money.

That is not acceptable to me.

The anti-deficit crowd were called "Deficit Hawks."

"deficit hawks" - Google Search

Hawks are predators. Using misnomers to describe caring Americans is not to be taken lightly. The predators are the ones running up the bills with runaway spending instead of living within means.

 

[edthecynic]

Incorrect yet again. First, the debt to GDP ratio is higher today than is was following WWII. Secondly, the great depression did not end because of war spending. It ended after the war when government stopped spending and removed price controls and regulatory restrictions on the economy. Furthermore, the economy didn't really take off until JKFs tax cuts took hold in the 60s.

If history is to be a lesson, the only way we can get out of this debt is to spend within our means, stop the central planning, widen the tax base, and lower the rates to competitive levels.

You really need to study someone other than Keynes or the Keynesian socialists you obviously have a love for.

Revisionist history is never a lesson! The economy took off in the 1960s because of LBJ's increased spending on the Vietnam War. Keynes wins again.

Complete and utter bullshit. If government spending spurs the economy, why is the economy not ROCKING today, following the biggest spending spree in the history of the world? Facts are a tricky thing, I understand.

Probably the same reason the economy is not ROCKING today following the Bush tax cutting spree. Not the right tax cuts and not the right spending.