Did we not just have a debt debate?

The big news this summer? DEBT! It's the new political topic that no one ever really gave a crap about until .. the spring of 2011. So we are now told debt is bad (after several trillion dollars of "stimulus" and bailouts?) that we need to cut the budget (only things that directly effect average citizens) and for the most part the argument just plain old "responsibility".

And then....

September 2011 rolls around and tonight President Obama unveils a new "stimulus" proposal to "create jobs" .... $447 billion dollars.

Just over a month after agreeing to raising the debt limit, the President unveils a new stimulus. In fact, assuming his budget passes it can't be funded because we are already at the debt limit again. Once it's raised in a few weeks at the next leg, the new stimulus will eat a huge portion of the new limitation. This would then lead to the maximum debt limit after the 3 leg increase to being reached by early next Spring or into June/July.. stretching the "accounting tricks" 3 months right up to ............. the election.

Politicians (on both sides, all sides) play with our country and our livelihoods to grapple power from one group or another.. the last time they played a game with our economy they royally screwed things up, once the debt limit was reached the loss of faith sent the economy into a faster decline. I fear by late 2012 the entire economy would be destroyed just for the sake of a few political points in an election. Eerily it does coincide with a certain prophecy.... but nah.. can't be.

Obama's new $447 billion dollar "stimulus"

reply to post by Rockpuck


Yes, he is going to cut revenue (taxes) and raise spending on public works. Truly, this is an economic genius at work. Astounding!

/TOA

We have already had a catastrophe: Now for a second round of financial ruin.
We just built a 9 mile 4 lane highway in my city. It was to help traffic congestion. It was a new road perhaps not even 5 years old. Not a thing wrong with it. then our leader spends money he doesn't have. Our money, and tears up those brand new roads and replaces them with brand new roads. It is almost done. Wow! if this keeps up we will never ever have an old road! Cost? I have no idea but possibly in the tens of millions.
That money builds more roads. But most of the jobs will be those who know how to build roads, which most folks do not. they are still hungry and cold. so only those who build roads/ construction for highways will benefit. and soon that will be done to. then we must pay the piper! And his pipe is loud.
If you have 3 credit cards maxed out, and all you have to do is order a new card taking cash out to pay the interest on the first 3. that 4th card soon will max out too. At some point someone is going to call in the loan. and you will default. does anyone really have a clue what a US default would mean?
we all need to learn how to fast. "get along without food" because there is a storm coming, and when that rain falls we are all going to get soaked. This man has no clue. He just spends the blank check and without a doubt we are in very serious trouble, now more than ever
DH

reply to post by Rockpuck


I didn't watch the speech, because come on.....it's Obama. But from what I've heard of his plans, they are actually pretty legit. I heard that since the Republicans have been slowing things lately, in order to satisfy them and get the ball rolling, he is cutting taxes on businesses that hire more people, $4000 in tax cuts for every person they hire if I remember correctly. He did some other stuff, but that's all I can remember.....

So even if it won't work, at least they'll actually try to do something rather than sitting around squabbling like stubborn idiots and accomplishing nothing.

reply to post by DavidsHope


Building roads doesn't even create that many jobs, and they are temp .. that almost pisses me off more than the city tearing up every road. We moved from one side of town to the other, where we were every road was under construction .. we move away and we say "glad there isn't any construction" .. then, just as you say, they tore up perfectly good roads and now im surrounded by orange barrels and blue signs touting stimulus at work.

reply to post by TupacShakur

But from what I've heard of his plans, they are actually pretty legit.

Legit? He's going to take $447 billion dollars from Social Security and Medicare (which will have to be funded anyways, so he expands the debt a huge amount either way) to pump into rebuilding roads and schools. The last stimulus took nearly $1 million dollars to create one job .. no sir.. these plans do not work. They also defeat entirely the purpose of debt reduction.. it's a waste of money.

PS: It has no chance in hell of passing. Which I believe is actually the point... make a "compromise" that's been tried before and make it seem like the other party stalled it for political reasons.

reply to post by Rockpuck

Legit? He's going to take $447 billion dollars from Social Security and Medicare (which will have to be funded anyways, so he expands the debt a huge amount either way) to pump into rebuilding roads and schools. The last stimulus took nearly $1 million dollars to create one job .. no sir.. these plans do not work. They also defeat entirely the purpose of debt reduction.. it's a waste of money.

I'm not exactly the guy to call when it comes to defending the president, but how would rebuilding roads and schools not create jobs? People need to be hired to perform those tasks....meaning job opportunities will pop up. Now I have no clue about how many people will be needed for these jobs and how many will be created, but it's something.

I say end all of the wars and use that money, but unfortunately I'm not the president.

American Jobs Act

Everything paid for
Purpose: Put people back to work
Tex credit for hiring
Tax credit for raising wages (small businesses)
Will be able continue making these breaks
Repair and modernize 15,000 schools
Thousands of transportation projections
Cutting red tape to speed projects
Thousands of teachers in every state to go back to work
Companies get tax credits to hire vets (15% of vets unemployed vs 9% national rate)
Summer jobs for low income Americans
Companies to get $4,000 in tax credits for hiring someone how has spent more than 6 months looking for a job
Extends unemployment insurance for another year
Typical working family will get 1500 tax credit
Will NOT add to deficit

I don't think it's nearly as bad as you're making it out to be, but we all have our own opinions. What would you do differently if you were in his shoes?

Speech Summary

you know what he was saying seemed pretty legit..tax breaks for hiring...thats any small business means more people working not just in construction or schools....im amazed at how many americans watched and listened and yet half the stuff he was saying went over their heads.....its all OH MY GOD its only teachers and construction!!! did u all miss the other stuff? and secondly could you please link where he said the money was gonna come out of SS and Med? because i read the transcript since i couldnt watch and it never said it there.

reply to post by TupacShakur

I'm not exactly the guy to call when it comes to defending the president, but how would rebuilding roads and schools not create jobs?

Some firms would hire a few laborers to fill some positions, but usually for only a very short time frame. Most skilled labor firms rotate their workers on different projects, seniority usually granting full time work. (I have family and family friends who are in construction, specifically excavating and masonry.) What jobs are created are usually lower paying and temporary. Construction stimulus is more or less maintaining jobs.. and if we rebuilt every road we'd still have a long ways to go to fill the void left after the housing crash. A city might spend $100 million on road repairs, but it only takes one team to do it.. a company may hire 4 sign holders. Money well spent.

I don't think it's nearly as bad as you're making it out to be, but we all have our own opinions. What would you do differently if you were in his shoes?

It is bad. Assuming he could actually cut something from the budget to make up for half a trillion dollars .. which he can't .. it would STILL add to the deficit through unfunded liabilities He wants to steal from SS again, from Medicair again, but if the programs are still open and money is withdrawn, there's then a huge deficit on the account per funds required. It's moving money in circles but eventually we WILL pay for it, in one way or another.

reply to post by Calex1987

could you please link where he said the money was gonna come out of SS and Med?

The treasury calls it "accounting tricks" .. when the government sets limits on a certain project and bases them on expectations of income (like raising taxes on the wealthy, or ending loopholes, or any other scheme that does not guarantee the funds) and the budget falls short, the Treasury will move funds from the coffers of the second and third largest tax stores (Medicare and Social Security) since those funds are not being used "right now".

It's not an Obama thing.. it's something that every President has done since they programs were born.. Clinton was actually the worst. How do you think the Government stayed afloat this summer? They took tens of billions out each month in the form of "loans" from the Pension programs, then once the debt limit was raised they pushed it back resulting in one of the largest single day debt offerings. Assuming the bill passes (which it won't) and assuming the income markers fall short (which they will) the funding is law and must be funded ... they will steal from the pension funds. Again.

The problem with Obama's grandiose plan is that it's only as good as the paper that its written on. THis is a reelection tactic and nothing else. No substance.

Note his urgency with this legislation just like with Obamacare, Dodd Frank and his last stimulus. No debate, no committees etc etc, just another rush vote to pass it and let someone else worry about it. It would take two years just to get this plan rolling. By then Obama will NOT be president and this legislation will be overturned. Its just more lip service.

Essentially, the jobs plan is an IOU from a president and lawmakers who may not even be in office down the road when the bills come due. Today's Congress cannot bind a later one for future spending. A future Congress could simply reverse it.

Currently, roughly all federal taxes and other revenues are consumed in spending on various federal benefit programs, including Social Security, Medicare, Medicaid, veterans' benefits, food stamps, farm subsidies and other social-assistance programs and payments on the national debt. Pretty much everything else is done on credit with borrowed money.

So there is no guarantee that programs that clearly will increase annual deficits in the near term will be paid for in the long term.

OBAMA: "It will not add to the deficit."

THE FACTS: It's hard to see how the program would not raise the deficit over the next year or two because most of the envisioned spending cuts and tax increases are designed to come later rather than now, when they could jeopardize the fragile recovery. Deficits are calculated for individual years. The accumulation of years of deficit spending has produced a national debt headed toward $15 trillion. Perhaps Obama meant to say that, in the long run, his hoped-for programs would not further increase the national debt, not annual deficits.

___

OBAMA: "The American Jobs Act answers the urgent need to create jobs right away."

THE FACTS: Not all of the president's major proposals are likely to yield quick job growth if adopted. One is to set up a national infrastructure bank to raise private capital for roads, rail, bridges, airports and waterways. Even supporters of such a bank doubt it could have much impact on jobs in the next two years because it takes time to set up. The idea is likely to run into opposition from some Republicans who say such a bank would give the federal government too much power. They'd rather divide money among existing state infrastructure banks.

Don't be fooled by the wordsmith in the White House.

www.breitbart.com...

reply to post by DavidsHope

Not a thing wrong with it. then our leader spends money he doesn't have. Our money, and tears up those brand new roads and replaces them with brand new roads. It is almost done. Wow!

The same happened here in my town. A large 4 lane, 8 mile stretch of road was redone flawlessly. It came in ahead of schedule and under budget, and the residents down here on my end of it were thrilled. Then they began tearing it back up and repaving certain portions, and eventually it overran the budget a little, and now we have several bumpy areas where repairs were done? I guess, they needed to eat up the rest of that budget money.

reply to post by TupacShakur

I'm not exactly the guy to call when it comes to defending the president, but how would rebuilding roads and schools not create jobs?

It does "create jobs." Until the road is complete.

Then what?

Does the -road- create jobs? Only if it offers a substantial improvement to infrastructure so as to allow shipping for industry (provided the industry wants to put up with taxes and labor unions).

This is the key difference between what we are doing now and what FDR did back in the 30s. I cannot say I agree with FDR's policies - but much of our electrical infrastructure that is used today was first developed under those policies, as well as the telecommunications networks and many of the pan-american highway systems. Those were the key to our industrial success in the 50s through 70s. We can argue all day about whether or not it was better or worse for the government to do it - the fact is that what the government -was- doing actually contributed to the future of the American economy and industry.

Building the same road over again won't really be paving the way for the future of industry. About the most sensible thing that we could do, in this regard, is revitalizing the railroads (not for high-speed commuter services, but for freight - commuter services will follow, naturally). The "green power" initiative is all well and dandy - but it's being done in reverse - trying to subsidize the development of companies that have no market (rather than creating a future for the market - which is far more tricky in terms of government spending).

The point is - the jobs Obama is proposing have no future outside of government spending. A worker through that program is going to receive some $40,000 a year in tax dollars for the job, to pay about $8-10,000 back in total taxes while sinking most of his paycheck into mortgage payments and the service industry - which is going to generate negligible improvements in the economy. Debt payments don't stimulate market activity and the service industry is reliant upon the income of industry producers that end up purchasing their services (the service industry cannot drive the service industry).

Which translates to all of Obama's plans turn into money wasting nonsense. If we are going to spend money to "create jobs" - then we need to do stuff to promote the development of advanced industry that will be the future of the global economy. This will remain true if we leave it up to private investment and simply cut spending, taxes, and regulations. In either case - the solution to a better economy remains unchanged.

I say end all of the wars and use that money, but unfortunately I'm not the president.

Even if you were to end all Defense-related spending (that includes the FBI, CIA, NSA, etc), the U.S. is still spending about 600 billion dollars into the red each year, under Obama's budget proposals. (That is 0.6 Trillion, or about 1/4 of our net revenue). In effect - you could get rid of the military, completely, and still have no money to work with.

Balancing the budget would require deep cuts to Medicare and Medicaid, as well as "income security" programs (that's a nice name for paying people to sit around). The rate of deficit spending by this administration is, by all sensible standards, treasonous (though not grounds for treason, obviously). No other administration in history has come anywhere close to this kind of insanity.

reply to post by Aim64C

Does the -road- create jobs? Only if it offers a substantial improvement to infrastructure so as to allow shipping for industry

At least in my time of being in chamber of commerce and observing panels discussing commercial development .. I have never once heard any developer, industry or business say that they would relocate, expand or otherwise increase production because a new lane was added to a by-street. Except perhaps when wal-mart moves into an area and a new intersection is built .. but that ultimately destroys jobs.

The key difference between the USA today and back in FDR's time is that FDR sent people to dig ditches until we could ship them off to die in the war, Obama has us spending mountains of cash on projects finished in a matter of week and months.

reply to post by TupacShakur


business 101 if your already spending more than you take in you cant hire and the only way people can hire is if they are making money.

now if business small business is already sufferring a tax cut on nothing is still nothing but hey go hire someone they cant afford to pay.

meh

reply to post by Rockpuck


To quote dick cheney: "Reagan has proven deficits don't matter"

The theory is of course that rising souvereign debt causes rising interest rates. That of course would be bad for spending & growth, since people would keep their money in the bank, and neither buy nor invest.
But with global financial markets even a economy like the US doesn't make a significant dent in the interest rate.
US treasuries are still very low. (Meaning investors get very little out of them, yet they buy them)
Because what else are you going to buy? Swiss francs? (The SNB has started to massively fight against the rising SFR, because surrounded by weak Euro land, the high exchange rate starts to hurt swiss exports)

I rarely agree with cheney, and I don't think it was reagan who proved that, it was keynes, but otherwise he is spot on in this regard.

reply to post by narwahl


A Keynesian on ATS?

"Reagan has proven deficits don't matter"

Funny that deficits collapsed our greatest enemy the USSR. Economic warfare, who could spend the most the fastest.. we won. But deficits still matter. And deficits themselves have no effect at all on the Interest rates .. only demand. And the demand, if you will notice, is mostly filled by the US Federal Reserve (nearly 1 trillion dollars in the past 18 months). Then we have the guarantee buyers, a set group of banks that have to purchase a certain amount of treasuries at auction.

This devalues the Dollar, a Keynesian method of taxation, to handle the increased expense of Government the Dollar must be weakened to keep interest rates low (monetization) causing all kinds of hell, headaches and misery for the poor and the middle class.

May Keynes burn in hell eternally.

Hayek had it right nearly 70 years ago .. Fascism is Capitalism's expansion of Socialism, and that's exactly what this government is doing. Wealth is being consolidated for the elite, the people are paying for the mistakes of the few through indirect taxation. Wealth is being redistributed to the marriage of Government and Corporations.

If the deficit and the National Debt don't destroy us, the serfdom that will evolve from the massive depreciation of wealth amongst the lower and middle class will alter the very landscape of our economy and culture.

I say it's time for another new deal.

en.wikipedia.org...

We are in this situation because we stripped away all the regulations that prevented the stock market from collapsing.... for what that is worth.... I mean... we might want to fix that one of these days.

reply to post by Rockpuck


Deficit effects demand?
Interesting!
how?

regualtions do nothing

have they stopped the enrons the leiman brothers and the savings and loans and the maddoffs of this country

no they havent they havent done anything but run trillions of wealth out of this country thus destroying it.

which is the problem here the fundamental lack of capital in a so called "capitalistic soceity" where everything revolves around it.

other places have it we dont which is why the current state of the union exists.

yeah its all hookers and coke when you got the benjamins and now you aint got them this country is like a coke addict going throw withdrawl.

reply to post by narwahl


Deficit effects demand by "faith" .. easiest way to see faith is through Credit Ratings (observe Greece, very little demand and thus interest rates are high .. demand is low because of their budget deficit)

Nations that Monetize can artificially keep interest rates low by buying their own debt.
Because of the USA's deficit issues the demand for our debt is actually very low, hence Quantitative Easing, Monetization on a grand scale to keep demand high.