Five Reasons Why A National Balanced Budget Amendment Is Lunacy

[Dovahkiin]

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

 

[Mr. H.]

There is good debt, and there is bad debt.

Believe me, we are submerged in bad debt.

Budgets are not budgets when spending outpaces revenue. Year after year after year....

**** off.

 

[Grandma]

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.

 

[Boss]

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.

 

[Dovahkiin]

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.

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.
But our debt is 100% in dollars, our very own currency, and for that reason we can always make the payments. This isn’t an opinion, it’s a fact.
We are not like countries using the euro.
2.) I'm tired of silly claims about inflation. What Actually Causes Inflation (and who gains from it)
LOL. You're doing it again, you're assuming we have to raise taxes to "pay off the debt." I have already explained to you what the debt is, I can go more in depth if you want, although it's hard to explain to someone who believes the national debt is anything like personal debt. Higher taxes will cause inflation? According to who? I should mention that ronald reagan ran a deficit along with the boom, which was good, I applaud him for that, although it wasn't intentional, it definitely helped provide more evidence that deficits are good for the economy.
3.) If you were actually interested in the history of "balancing the budget" and what not, you would know. But you decide to jump into my thread with completely out of touch statements that I'm now wasting my time to discuss. I hope I can teach you something, but I doubt it.

Economic Growth => Surpluses

Economic Contraction => Deficits

Figure it out.
4.) How is this horseshit? You have not demonstrated how this is horse shit at all. If anything, history shows us this is correct. Look at this, I find it very interesting and it's helped me change my outlook on things, especially the deficit:
Think big deficits cause recessions

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.

#4 is also discussed in the article:

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.

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:

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.

Anything else?

 

[Dovahkiin]

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 am awaiting your reply to my first response to this post.

 

[leftwinger]

The interest paid on existing Debt is ~equal to total Military spending. If Debt gone....well?

 

[Boss]

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.

 

[Dovahkiin]

The interest paid on existing Debt is ~equal to total Military spending. If Debt gone....well?

I won't bother responding to something so silly.

 

[Dovahkiin]

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.

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.
The federal governments debt is our debt? Look into treasury bonds/security accounts in regards to the fed reserve please, then get back to me.
The US national debt isn't really a "debt" as you and others try to see it as, which is why I find these debates silly.
IT'S a record of cumulative deficits, or should we say, all of the dollars issued by the government that have not yet been taxed away by the govt.
The fed is not as independent as you seem to think it is...
Err, we do have the ability to print money, we've been doing this for some time now and we're doing fine. I never suggest we allow unlimited printing, that's absurdity, and MMT proponents agree. 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. Please, elaborate on how a government running a deficit to boost employment is going to hurt you in the long run? Taxes may be raised, but that's about it. The government is not going to come and take 30,000 or whatever it is from each citizen, that's not how the debt works. I hear this all the time though.
I am talking down to you because you're wrong. I'm sorry.
Of course it's our biggest expenditure, and it's at very manageable levels, and if it ever begins to get unmanageable, we have the option to temporarily reduce spending/raise taxes to cover the interest. This is common sense. The debt does not prevent us from doing more spending though.
Who is this "someone?" Wasted? Yeah, "wasted." Definitely.. Keep thinking that way.
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. Increasing wages/productivity will generally help the government bring in more revenues when needed, and it's important to keep money circulating as long as possible before it gets trapped in what I like to call a "vacuum" at the top, where it either sits doing nothing or gets put into speculative things, never to go to the majority of consumers who fuel our economy. You might notice I tend to ramble about a lot of things..
Why should we cut deficits right now? Did you decide to ignore this?
Think big deficits cause recessions

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.

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.
Here's how I see it: A deficit is a reflection of how much the government is benefiting us, the people. A surplus is essentially the government HOARDING our tax dollars and not doing anything with it. What do you want?

(I always love to point this out though..)
The Republicans who praise the "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.
Now that's funny!

 

[Dovahkiin]

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.

Greece doesn't have control of their money like we do.. I feel sorry the the countries stuck with the euro.

 

[Dovahkiin]

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'm curious.. have you actually read post #5?

 

[ScienceRocks]

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!!

 

[Dovahkiin]

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!!

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.

 

[ScienceRocks]

I agree with you that we should spend more on infrastructure, science, r&d and education...We need more, NOT LESS.

 

[Boss]

Where did I act like the federal government was a separate entity from the people?

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!

WE are Person A and Person B.

 

[Boss]

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.

 

[Boss]

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.

Well yes... who the hell else do you think pays it? The Magic Money Fairy???

The government doesn't produce a damn thing to earn revenue or profit. Every penny they have comes from the taxpayers. There is no Magic Money Fairy.

It's not rhetoric, it's just a ******* fact of life.

 

[bripat9643]

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.

Only a true moron believes that "austerity" is the cause of the economic problems of "Greece, Italy, Portugal, Spain, and Ireland." In the first place, none of them ever implemented "austerity." In the second, "austerity" is not what caused their massive debts.

 

[bripat9643]

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.

When pigs fly. Nice dream, but it will never happen. The government will keep spending until this nation has to declare bankruptcy and renig on all the impossible promises it has made.