Is the Budget deficit almost closed?

But so you know, I only thought it was funny.

In all the the shit Bush did, we still needed that old sack of skin.

Obama would be smart to rename them Obama tax cuts tho. Since they are for the better now!

 

NC, this is what Winston said.....

This is fact using word definitions and math. If you think this is wrong then it will be hard to have a discussion with you about this topic.

 

You are correct that it is difficult to have a conversation about this because his logic is inherently flawed. I will not go into in detail again because I responded specifically to his claim and you can read for yourself.

 

Honestly, I read it and it was nonsensical. I don't understand how you don't agree with a simple ratio. I know you said the gdp wouldn't double but the point he was making is that if you hold the ratio the same and the gdp goes up, debt has to go up. going back to his example of gdp of $10 and debt of $7.30. If you're satisfied with a steady ratio of debt to gdp and the gdp goes up 3%, gdp is now $10.30. The ratio remains at 73% therefore debt went up to $7.52. That is not a balanced budget. I don't know what else to say.

 

A ratio is little more than a snap shot percentage of how our debt relates to our gdp AT THAT MOMENT IN TIME. It is a means of measuring where we are in that immediate moment, not a long term means of measuring. If we make budgetary cuts and raise additional revenues and end our wars and balance the budget and the deficits are erased (all of which we have done or are in the process of doing), our debt to gdp ratio will start to fall. When the economy begins to grow at a more robust rate that ratio will fall ever more quickly.

For the sake of our argument let's just say that our current rate of gdp growth is 2 percent and our debt is 16 trillion. If gdp growth rises to 4 percent, the debt does not double to 32 trillion, in fact the debt would begin to go down because the economic growth that 4 percent growth in gdp would bring about would also mean lower unemployment, more tax payers, lower deficits and as a result......a lowering national debt.

On the other hand if you want to put it in terms of raw GDP figures, let's do this:

For the sake of our argument let's just say that our raw GDP number for any year is 20 trillion and our debt is 15 trillion. If our GDP doubled the following year, which by the way is impossible, to 40 trillion it does not automatically doom the debt to doubling, in fact it would be just like the example I provided above where debt would start to recede.

 

NC you made a flat statement without qualification that holding the debt to gdp ratio stable will balance the budget. My example was to show that your premise (as you stated it) is not and never will be balancing the budget. I grant in other statements that followed you include spending control and added revenues as well as growth as necessary elements. When you do that then the deficit and/or debt to gdp ratio CHANGES and goes down thereby bringing things towards balance. If as you claim the added 1.2 trillion of savings/revenue only holds the ratio stable then we add to debt. That you subsequently qualified it with out retracting your premise is not a defense IMO.

As you and many on both sides have noted it will take a troika of things to happen. 1) Control spending, 2) rationalize revenues & 3) economic growth greater than the anemic 2% of the last 4 years + (Bush's pre bust growth wasn't very good either).

Only once in the modern era (post 1970) has that happened. That was when Newt and the R's forced Clinton to control spending after 1994-6. Billy gets credit for a) being the president and b) realizing the Rs were right but needed brakeing so they didn't go overboard on cuts BUT there is no doubt he would have NEVER controlled spending without Newt & the Rs forcing his hand.

Since then the Rs have forgotten discipline and spend (for their own cause) as drunkenly as the Ds who have never gone beyond weak lip service on spending control.

 

Winston, I looked back at the entirety of this thread and specifically the posts that you and I exchanged. After reviewing them, I am certain that I pointed out that the additional 1.2 trillion in spending cuts would be necessary and in my post to Mobius, which is the one that you actually commented on, I was explicit that the 1.5 trillion in spending cuts and the additional 1.9 trillion in revenue would be factors in this equation. So, your argument that I some how changed what I was saying or that I revised my opinion is unmerited. If you take a look back at this thread as I have you will see that I was very clear about the necessity of the three measures you mentioned above. In light of this, it seems to me that you are trying to make something out of this that simply isn't there.

As I am writing this to you we do not have a balanced budget but we should expect our deficits to fall considerably over the next 2-3 years as these latest pieces of legislation take effect and if/when we get another 1.2 trillion in spending cuts. It is my hope that the stabilization of our debt will also inspire more confidence from the business community so they will take their money off the sidelines. To me, that confidence is as important, if not more so, to the legislative measures that have been taken. I was also clear in this thread that I don't think we will see a truly balanced budget on paper until the final year of Obama's term simply because of the time frame required for us to wind down Afghanistan.

The balance that was created by the tug of war between Newt and Slick Willy created, at least to me, is how our founding fathers envisioned our government functioning. Out of the heart of debate should emerge the best of our ideas, regardless of party. In spite of all the bitterness that they exhibited for one another on a personal level, they somehow managed to get a lot of important things done; and I do agree that they should equally share the glory for those times, not just the Slickster. In retrospect, you had two great minds, two great intellectuals.

 

NC maybe we are both making a mountain out of a molehill here. My first and only point was that as I read and still read, your comment to be- that holding the debt to gdp ratio steady was in effect balancing the budget. That is why I used the simple math to emphasize that it is not. Only by changing the ratio can the budget be balanced and debt reduced. I am also not as optimistic that we are as close as you hope. I don't believe either side is invested in truly changing their spendthrift ways.

I realize you were saying that stabilization is a necessary first step as it is. but I thought and still think. I note your statements about what had to be done and agree that some additional measure of spending control and revenue enhancement is required along with restoration of economic growth to change the debt to GDP ratio. We may dissagree on specific details but both could easily find effective compromise.

I also agree that newtster and the slickman are not appreciated for their genius.

 

I think that balance or tug of war is what has been missing from our politics. The Republican party has been in such disarray for the past 4-5 years that they have a hard time rallying around what many consider to be Republican stomping ground. I have some hope that the R's are coming to their senses. This announcement to raise the debt ceiling for three months to stave off economic woe is smart. It keeps the markets from going hay wire and does not use the full faith & credit of the US as leverage. I think they are eye-balling the sequester cuts as an opportunity to force the President's hand on spending cuts and IMO they are smart to do it that way. If they proposed to shut down the government to get those spending cuts over the sequester I would actually support their efforts, just not over the debt ceiling.....too many negative consequences for everyone to do it that way. The final piece of this puzzle we have been talking about are those spending cuts so I am actually pulling for the Republicans to act like Republicans and hold their ground.

My outlook might be a rosy one, and if so it wouldn't be the first time. That said, for the first time in a long time I can see some light at the end of the tunnel. It might take a few years longer than I predicted but the prospect of growth excites me.

 

So tHis Cbo analysis says NC Tiger is hella wrong about the future of the debt.

http://news.yahoo.com/deficit-shrink-slightly-growth-slow-cbo-200329209--business.html