Is the Budget deficit almost closed?

Really?

Wasn't clear?

 

Funny, because I watch 0 cable news. I guess it is easier to call me names than to accept the fact that it is Obama policies that will lead to 4 trillion in additional debt over the next ten years. All things equal, I'd have no problem saying Mitt Romney's policy (keeping all Bush tax cuts) would lead to additional 6.9 trillion.

And what policies of his are working well? The ones that generated an anemic recovery? The ones that have put more Americans on food stamps than ever before? Maybe you are talking about the ones that have dropped the labor force particpation rate to its historical low?

If you think his policies are working well, I'd have to ask for whom?

You ever here the phrase "the buck stops here." Only the President can make a bill into the law of the land. If the fiscal cliff fix was so shitty he should have vetoed it. Instead he doubled down (for less by) enacting policies that add 4 of a potential 6.9 trillion in additional debt. These are the same policies he said were irresponsible when he was in the Senate.

Obama can continue to Blame George Bush, but he has extended his policies with only limited changes.

I think it is you who lacks a basic understanding of fact. If all tax cuts were allowed to expire we would have had current projection - 6.9 trillion in new debt. Obama's policy choices altered that to current projection - 4 trillion, all savings coming from tax increases.

So it is 100% correct to say Obama's policies are adding 4 trillion dollars to the debt. It is a fact, you can look it up.

 

I didn't read the whole article. I read the synopsis that said we were 1.2 trillion away and then looked at the numbers myself without reading his interpretation. My point is, the numbers he is using are already totally wrong. He needs to reevaluate when the new numbers come out.

This statement couldn't be any more wrong. when they say stabilizing the debt to gdp ratio, they mean exactly that. You don't have to balance the budget to stabilize debt to gdp. You just have to grow the economy at the same rate you grow depth. to be clear, this article does not claim we will balance the budget, do you dispute that? Balancing the budget means equal revenues and expeditures in a year. There is no other definition.

That's not what the article says. I agree with your premise though. If we didn't increase debt, the economy grows, our debt to gdp goes down. This article is saying that we are close to not growing our debt quicker than we grow our gdp.

those predictions he posted show an amazing ability to shrink the deficit. However, the numbers are already totally wrong.

I agree that there is a balance but we are not striking it. Your article forecasts spending cuts that have not happened. If they happen, and if we stay focused, we can get this thing under control but right now our gross debt to gdp has never been higher and it is increasing drastically as we speak.

 

what the hell does this mean? I assure you Bush's spending cuts didn't get us into this mess because Bush never made a single spending cut in his 8 years. His tax cuts were a leading factor in getting us into this mess.

it's really hard explaining this to you because you really do not have a clue about how the economy works. It's not like your dining room table with a stack of bills and a calculator, it's more complicated than that.

Our economy in 2009 was like a guy who had been drinking straight up rye whiskey every single day for the past 8 years. If you take the liquor away from the guy altogether he will die because his system has gotten so used to rye whiskey every day. There is no choice but to slowly reduce the amount of liquor intake until he is able to completely get off the bottle. Had all the Bush Tax Cuts been repealed or if we had made huge spending cuts it would be very much like taking away the whiskey bottle from our aforementioned drunk friend. It would have tanked the economy. So, while I realize you think it is cute to make these overly simplistic assessments of our economy, you have no fucking idea what you are talking about my friend.

 

Obama's policies have done nothing but stabilize a free falling economy, made roughly 1.5 trillion in spending cuts through the 2001 Budget Control Act, raised 1.9 trillion in additional revenue through the American Taxpayer Relief Act of 2012 and soon enough, through sequester or another means, we will make another 1.2 trillion in spending cuts. By my calculations that is roughly 2 bucks in spending cuts for every dollar in revenue; the formula all the major economists said we needed in order to right the economy. We have positive job growth, albeit slow, for four years and as a result of the increased number of tax payers our deficit has shrunk. Boehnor and the Republicans are not stupid, they have known all along that we would have to make a budget deal but didn't want to give the President the political victory of achieving a grand bargain. If they drag it out and do a series of smaller deals then they can further perpetuate this lie that the President's policies are to blame.

The largest problem with every economic calculation you have made is that they work from old baselines. The economy is a dynamic and changing beast, not some dead figures spelled out on a sheet of paper. As the economy has continued to grow we've finally positioned ourselves well to close our budget deficit and began reducing our national debt. Do you think that the Republicans really want any one to know that? Right before another congressional election in 2014? Hell no.

I do not lack an understanding of how this works. My career in business supports that. I do, however, grow frustrated with people like you who cannot explain the "why" portion of their argument and instead rely upon pundits and what others say to determine your position. Everything you are saying matches perfectly to the right's talking points so I have no other conclusion to logically draw other than you are simply regurgitating what you've heard. Further, your conclusions fail to account for the fact that economic baselines are an ever changing dynamic. In March when the CBO releases their baseline numbers you will notice how different they are from previous years. It is because legislation, executive orders, etc. during the course of the year alter those baseline numbers. Your figures make the assumption that we've made no progress at all and it simply isn't the truth.

I am happy to continue this dialogue but you will have to prove that you have some depth of understanding before I am willing to continue. I do not mind engaging in a reasonable and rational discussion but when you are dealing with someone who is telling you that a Coca-Cola can is really blue and you are looking right at it and know it is red, it's hard to justify wasting time on such.

 

This isn't from any single author, this is a production of the Center for Budget and Policy Priorities, a non-partisan group. What they are saying is that when the new economic baselines come out in March it will reflect that we are closer to closing the deficit. Essentially the new baseline numbers should be encouraging news.

I am not wrong about stabilizing debt to gdp ratio's and balancing budgets. A stabilized debt to gdp ration is the predecessor of a balanced budget, call it chapter one. You are correct in an aspect though: our budgets will take approximately two to three more years to balance, at least by the standards you are talking about. This is primarily because we will not be able to take Afghanistan off the books until then and we have to wind down those operations in order to balance the budget.

You are correct that there is a caveat to what they are saying: our politicians have to actually make that additional 1.2 trillion in spending cuts or none of what they said is possible. the sequester cuts equal 1.1 trillion so they would either have to replace the sequester cuts with 1.2 trillion in spending cuts elsewhere or add a 100 billion in spending cuts to the sequester cuts. And you are right to point out that this IS the biggest impediment: our politicians ability to reach agreement.

 

The CBO projection summed up that the fiscal cliff fix would result in 4 trillion in additional debt vs. outcomes in nothing would have been done. True or false? It is true.

We are nowhere near a point where we will close the deficit. We are still going to have 800 billion to 1 trillion dollar deficits. This is based on review of every CBO and CRS study out there. Our deficits are structural deficits. You are painting a picture that is completely void of reality unless we see double digit economic growth for a sustained period of time. By the time Obama leaves office we will be nowhere near the 350 billion dollar deficit he promised us when he campained in 2008. We will be somewhere between double and tripple that.

We have made so much progress that our deficits have increased from 700 billion in FY 2008 to 1.1 trillion in the previous fiscal year. The bulk of Obama's deficit reduction is from the scale down of TARP and ARRA, not from any legitimate spending cuts to permanent programs.

And again, the 1/1/13 base line projected 4 trillion dollars less debt than the projection of the fix. FACT plain and simple. The why you seek is because the baseline assumed a return to the Clinton era rates for everyone. I have explained this multiple times. You can continue to insult my intelligence, but I understand the issue perfectly. You just like to spin it in the favor of your team.

I aint on a team, so I have nothing to spin.

You can't even cop out without insulting me.

 

That's not what you said before. You said....

Of course it's a step in the right direction as you now claim. Any budget deficit less than last year is good. But your statement is above is totally wrong, I won't back off that. If our debt to gdp ratio is stabilized then we are by definition still incurring debt.

Regardless, I accept that a stabilized debt to gdp is better than an increasing debt to gdp. Do you accept that a stabilized debt to gdp means we are still running enormous deficits and adding to the debt?

there are not standards. There is a balanced budget. That is a budget in which revenues and expenditures are exactly equal. The only way to lower the national debt is to have a surplus. That money can then pay down our debt. And if you think that will happen in 2 to 3 years, you are very wrong. You do realize even the CBO projects for the next ten years say that we will never balance our budget even with their rosy assumptions.

yes but they have also created a law that will lower revenues. They did this after the last CBO numbers therefore there's even more money that has to be made up.

 

Sorry NC but I only have time to address one point. Math must not be your strong point because it is not accurateto say that if you stabilize the % (ratio) of debt to GDP you balance the budget. Sort of like a stopped clock (being correct twice a day) that is only right in one instance; if the GDP growth is 0%. Simple demonstration if the GDP is $10 now, the debt is $7.30 right. If the GDP grows to $20 then if the same 73% ratio holds then the debt grows to $14.60. That is in no way balanced.

Easy to see the effect with the numbers I used, but at any growth rate above some number (probably the 2% we have had over 4 years) with the controls in place our debt will grow as shown. At a slower than about 2% the debt to GDP ratio will get worse and we will have a harder time managing. By holding the growth of the debt to that of the GDP you guarantee an increasing debt and never balance the budget.

The 90's had remarkable growth and the debt to GDP ratio dropped. The spending vs taxing debate is important and critical but parrallel to it is to the need to generate real and significant growth in the economy. We need to grow the economy at a rate of 4-5% (as I read) for a decade or more while managing spending and developing a tax and domestic policy that encourages the growth. On a long term basis we also have to find a way to manage the obligations we have pending for social security etc. Only then will we have the strong financial position we had before.

 

I thought I was pretty clear on the stabilizing debt vs. balanced budget issue but perhaps not. I think we are saying the same thing but in a different way. If the debt is stabilized and we are no longer adding to the debt then we are drawing closer to a balanced budget. As I said before the budget cannot be balanced until we are done with Afghanistan. I won't draw this out longer than necessary over details because on this point I think we are near agreement.

There is a caveat to your second point: We make payments on our debt every month. We have been incurring debt so quickly over the past dozen years that our payments have amounted to little more than a pittance. But as the economy recovers and our debt to gdp ratio shrinks, the amount of debt will also begin to drop because our payments will be essentially worth more than they are now. It's like this: as all of the legislation that we've been discussing is enacted into law such as spending cuts and tax increases, our budget deficit shrinks. As our debt to gdp ratio goes down our deficit also shrinks. As our budget deficit shrinks and we cease to add new debt, the payments that we are currently making actually start to bring down the debt. Once we start to run surpluses the debt will shrink much faster, but as you can see it is a process and stabilizing the debt to gdp ratio is the first step in that process.

I do not believe we will be out of debt in the next 2-3 years and never said so. I believe that in the next 2-3 years our budget will be balanced and we will see our payments making greater progress. Once we are able to run a surplus we will pay them down much faster but that will never happen and it is because as soon as there is a surplus, the Republicans will start screaming for tax cuts just like they did in 2001.

On your last point, the new law does not lower revenues. We were getting 0 and now we are getting 1.9 trillion. The new CBO baseline numbers will be released in March and you will see what I am talking about then.