5 ms·

He's a bit of a partisan, but in this case I think Krugman's analysis is basically correct, that real questions of debt sustainability aren't +/- $4trillion in

by hugh3 15y ago

He's a bit of a partisan, but in this case I think Krugman's analysis is basically correct, that real questions of debt sustainability aren't +/- $4trillion in the next 10 years, but longer-term insufficiently funded liabilities in healthcare and pensions: Krugman is a Democrat partisan, but complaining about unfunded liabilities in healthcare and pensions is exactly what the Republicans are doing too. If Krugman and the Republicans agree that it's a big problem then... damn, it must be a big problem.

shareme 15y ago
but they are again refusing to face facts in front of them..its not unfunded health care liabilities..its UNFUNDED LIABILITIES in FED Budget that means anytime a law is passed without the means to pay for it..for example going to war in Iraq, etc without raising taxes to pay for it.. Another example taking over the Ed Loans from the private sector and than not raising some type of tax to pay for it. It should be that in order to pass a bill in Congress that a pair of bills one to enact the law and one to pay for it. That is the budget reform that we need.
- hugh3 15y ago
  My preferred solution is this: 1. Every year, the US Government figures out how much money it wants to spend. 2. Then, it figures out what the (flat) tax rate would need to be in order to rustle up that much money. 3. Then, it sets the tax rate and sends everyone a bill. You could do this a year in advance just to make sure everybody knew how much they'd be getting taxed. But the important thing is that everybody in the country needs to see the immediate hip-pocket consequences when the government spends more money. Still doesn't help with things like SS and Medicare, though, which cost a little bit of money in the year they're passed and vast sums of money several decades into the future.
  - mkr-hn 15y ago
    Then a financial crisis hits and the government finds itself unable to react to the needs of a paralyzed market. It's a nice idea in principle. But any time something like this or a balanced budget law/rule comes up in congress, it never has a provision for reacting to emergencies.
    - CamperBob 15y ago
      The problem with that is, as we've seen (and are seeing), it's trivial to manufacture an 'emergency' or a 'crisis' on demand, whenever it's convenient.
      - mkr-hn 15y ago
        A government that can react to real crises while being vulnerable to fake ones is the best option I've seen so far. People are very creative when it comes to working around problems. Some people see data processing efficiency as a problem to solve. Others see finding ways to manipulate government for profit as one.
  - wtn 15y ago
    This is a really stupid idea.
  - rhizome 15y ago
    That kind of tight-budgeting might work when introducing a 7-year old to the concept of an allowance, but national economics is slighly more involved. "Vast sums," LOL. Very telling you don't mention the drain on the economy by the military or by the financial industry itself.
  - heelhook 15y ago
    You have to give him credit for the less-is-more approach to this answer, you summed up centuries of macroeconomics and people who dedicated their lives to finding the most optimal solutions in a very easy to follow <ol>, well done!
- encoderer 15y ago
  Your student loan bill is a bad example. In this case the Gov't was already subsidizing these loans and being charged enough by the banks servicing them for those banks to also turn a profit on that line of business. By bringing it in-house, the governement doesn't increase their liabilities, and now they don't have to pad the profit margins of loan servicers. But anyways, generally, what you're talking about is call "paygo" rules. They've been instituted before as house rules (and commonly ignored), you're advocating for them being codified into law. Not a bad idea I don't think, but i haven't given it a lot of thought.
- jonknee 15y ago
  > Another example taking over the Ed Loans from the private sector and than not raising some type of tax to pay for it. Don't take talking points at face value... Student loans in the "private sector" were a misnomer--they were backed by the Fed Gov't. The private lender had no risk, just guaranteed profit. We saved money by ending subsidizing the private market and making the loans directly. The "takeover" was simply ending the government backing of private loans. Not much of a takeover if you ask me. The private sector can still make loans all they want, they just have to be on the hook for it.
bubbleRefuge 15y ago
Modern Monetary Theory reveals the entire premise of this issue to be false. The private sector does not fund the public sector in the way that most people believe. Non-convertible floating FX currency regimes (ie fiat money) such as the US,UK, and Japan can meet any and all financial obligations by issuing currency. Thus: 1) Taxes do not fund government. ( they 'back' the currency) 2) Treasury securities do not fund government. ( they are a tool to control interest rates) 3) Social security is solvent and we are not creating a financial burden for our grandchildren. (we are creating a burden by not upgrading and investing in infrastructure such as roads,highways,mass transit,etc) 4) Medicare is solvent ( though we have to clean up the fraud) 5) Private sector savings do not fund investment. ( banks create loans out of thin air) The public is being lied to by politicians( on both sides of the aisle) who are selling a false need for government austerity when in fact what we need is the government to invest more. Much more. People stop believing the bullshit from mainstream media bought and paid for by the plutocrats. Spend a bit of time to educate yourself on Modern Monetary Theory. It will change your political outlook. Its an earth is round vs earth is flat type of revelation. You can Google the following list of founders and well known MMT advocates in academia and the blogosphere. Warren Mosler - www.moslereconomics.com Dr Randal Wray - UMKC neweconomicperspectives.blogspot.com Dr Stephanie Kelton - UMKC neweconomicperspectives.blogspot.com Dr Scott Fullwiler Wartburg College neweconomicperspectives Dr Bill Mitchel - U of Newcastle, Australia. http://bilbo.economicoutlook.net/blog/ http://bilbo.economicoutlook.net/blog/ Marshall Auerback http://www.newdeal20.org/ http://www.newdeal20.org/ Dr James K Galbreath UT - Austin Mike Norman Fox Business Analyst www.mikenormaneconomics.org ( Mike takes a beating on Fox -bless him)
- CWuestefeld 15y ago
  Sure, if you choose to look at it that way. But if you're going to make "Non-convertible floating FX currency regimes (ie fiat money) ... can meet any and all financial obligations by issuing currency", then you've got to consider that entire reference frame. Issuing currency is identically equal to inflation, which is itself nothing more than a tax levied against those holding assets denominated in that currency. Using this option makes continued borrowing increasingly expensive, because those holding the debt wind up not getting repaid in actual value, only in nominal currency. So when you look at the world from your perspective, the result is still that, long term, continually increasing deficit and debt is unsustainable.

by hugh3 15y ago

shareme 15y ago

but they are again refusing to face facts in front of them..its not unfunded health care liabilities..its UNFUNDED LIABILITIES in FED Budget that means anytime a law is passed without the means to pay for it..for example going to war in Iraq, etc without raising taxes to pay for it.. Another example taking over the Ed Loans from the private sector and than not raising some type of tax to pay for it. It should be that in order to pass a bill in Congress that a pair of bills one to enact the law and one to pay for it. That is the budget reform that we need.

hugh3 15y ago
My preferred solution is this: 1. Every year, the US Government figures out how much money it wants to spend. 2. Then, it figures out what the (flat) tax rate would need to be in order to rustle up that much money. 3. Then, it sets the tax rate and sends everyone a bill. You could do this a year in advance just to make sure everybody knew how much they'd be getting taxed. But the important thing is that everybody in the country needs to see the immediate hip-pocket consequences when the government spends more money. Still doesn't help with things like SS and Medicare, though, which cost a little bit of money in the year they're passed and vast sums of money several decades into the future.
- mkr-hn 15y ago
  Then a financial crisis hits and the government finds itself unable to react to the needs of a paralyzed market. It's a nice idea in principle. But any time something like this or a balanced budget law/rule comes up in congress, it never has a provision for reacting to emergencies.
  - CamperBob 15y ago
    The problem with that is, as we've seen (and are seeing), it's trivial to manufacture an 'emergency' or a 'crisis' on demand, whenever it's convenient.
    - mkr-hn 15y ago
      A government that can react to real crises while being vulnerable to fake ones is the best option I've seen so far. People are very creative when it comes to working around problems. Some people see data processing efficiency as a problem to solve. Others see finding ways to manipulate government for profit as one.
- wtn 15y ago
  This is a really stupid idea.
- rhizome 15y ago
  That kind of tight-budgeting might work when introducing a 7-year old to the concept of an allowance, but national economics is slighly more involved. "Vast sums," LOL. Very telling you don't mention the drain on the economy by the military or by the financial industry itself.
- heelhook 15y ago
  You have to give him credit for the less-is-more approach to this answer, you summed up centuries of macroeconomics and people who dedicated their lives to finding the most optimal solutions in a very easy to follow <ol>, well done!
encoderer 15y ago
Your student loan bill is a bad example. In this case the Gov't was already subsidizing these loans and being charged enough by the banks servicing them for those banks to also turn a profit on that line of business. By bringing it in-house, the governement doesn't increase their liabilities, and now they don't have to pad the profit margins of loan servicers. But anyways, generally, what you're talking about is call "paygo" rules. They've been instituted before as house rules (and commonly ignored), you're advocating for them being codified into law. Not a bad idea I don't think, but i haven't given it a lot of thought.
jonknee 15y ago
> Another example taking over the Ed Loans from the private sector and than not raising some type of tax to pay for it. Don't take talking points at face value... Student loans in the "private sector" were a misnomer--they were backed by the Fed Gov't. The private lender had no risk, just guaranteed profit. We saved money by ending subsidizing the private market and making the loans directly. The "takeover" was simply ending the government backing of private loans. Not much of a takeover if you ask me. The private sector can still make loans all they want, they just have to be on the hook for it.

bubbleRefuge 15y ago

Modern Monetary Theory reveals the entire premise of this issue to be false. The private sector does not fund the public sector in the way that most people believe. Non-convertible floating FX currency regimes (ie fiat money) such as the US,UK, and Japan can meet any and all financial obligations by issuing currency. Thus: 1) Taxes do not fund government. ( they 'back' the currency) 2) Treasury securities do not fund government. ( they are a tool to control interest rates) 3) Social security is solvent and we are not creating a financial burden for our grandchildren. (we are creating a burden by not upgrading and investing in infrastructure such as roads,highways,mass transit,etc) 4) Medicare is solvent ( though we have to clean up the fraud) 5) Private sector savings do not fund investment. ( banks create loans out of thin air) The public is being lied to by politicians( on both sides of the aisle) who are selling a false need for government austerity when in fact what we need is the government to invest more. Much more. People stop believing the bullshit from mainstream media bought and paid for by the plutocrats. Spend a bit of time to educate yourself on Modern Monetary Theory. It will change your political outlook. Its an earth is round vs earth is flat type of revelation. You can Google the following list of founders and well known MMT advocates in academia and the blogosphere. Warren Mosler - www.moslereconomics.com Dr Randal Wray - UMKC neweconomicperspectives.blogspot.com Dr Stephanie Kelton - UMKC neweconomicperspectives.blogspot.com Dr Scott Fullwiler Wartburg College neweconomicperspectives Dr Bill Mitchel - U of Newcastle, Australia. http://bilbo.economicoutlook.net/blog/ http://bilbo.economicoutlook.net/blog/ Marshall Auerback http://www.newdeal20.org/ http://www.newdeal20.org/ Dr James K Galbreath UT - Austin Mike Norman Fox Business Analyst www.mikenormaneconomics.org ( Mike takes a beating on Fox -bless him)

CWuestefeld 15y ago
Sure, if you choose to look at it that way. But if you're going to make "Non-convertible floating FX currency regimes (ie fiat money) ... can meet any and all financial obligations by issuing currency", then you've got to consider that entire reference frame. Issuing currency is identically equal to inflation, which is itself nothing more than a tax levied against those holding assets denominated in that currency. Using this option makes continued borrowing increasingly expensive, because those holding the debt wind up not getting repaid in actual value, only in nominal currency. So when you look at the world from your perspective, the result is still that, long term, continually increasing deficit and debt is unsustainable.