The View From 1776

Reducing the Deficit?

President Obama claims that his budget will reduce the Federal deficit.  In Terry Jeffrey’s analysis, that asserrtion is a charade.

Posted by .(JavaScript must be enabled to view this email address) on 02/26 at 10:25 PM
  1. Yes, the stimulus bill will spend a lot of money. But most economists are saying that it may not be enough to shock the economy back to life.

    So, if there were no spending at all, as the Republicans apparently propose (a sudden epiphany from the last 8 years of Republican spending like a drunken sailor), what would happen?

    A miraculous economic recovery? Hardly. It seems pretty clear that following the Republican line is what got us into this mess in the first place.
    Posted by .(JavaScript must be enabled to view this email address)  on  02/27  at  12:50 AM
  2. The stimulus will mean that when it is cut, the nation has another recession. That has been the case each time the nation has tried to restore the budget. You can't hire millions of people with government spending and then turn off the spending and not have another downturn.

    We started borrowing $1 for each $1 of GDP growth in 1968. By the time of Bush it was up to $5 for each $1 and under Bush we never had a single year of positive GDP using real CPI data to adjust nominal GDP even though he spent like crazy. Each decade it got worse and Bush proved it was failing by trying to keep the say Keynesian policies going. Instead of money flowing into the economy in a sound manner, it flowed into debt to build houses.

    42% of the jobs were created by credit expansion into housing. Thus, when the credit bubble burst, housing collapsed and the 42% of the jobs created that were tied to housing disappeared and more with them.

    The Stimulus package is attempting to do the same thing. Create growth with debt. It can delay the collapse if successful but can't avoid it.

    The Republicans are just as bad as the Democrats. They would stimulate too, only on their own projects or even more defense spending than the increase in defense spending the President is proposing.

    Neither party is telling the people that a depression is the only solution. Either we have it now, or delay it and have a worse one later. There is no other option. Congress was told before this crisis even started you can't grow or tax out of the mess the last several decades have created. Only massive reform and cuts in spending will work and that will cause a depression before things can get better.

    That is the main problem. Both parties get their economic advisers and monetary advisers from the same international organizations the banks created in the 1900's and they have only one theory that they base their policies on, Keynesian when it comes time for recoveries from recessions, and more debt.

    We have debt based capitalism and it won't work. You have to have "savings" based capitalism and that slows growth but, is more stable if, and it is a big if, you have stable monetary and economic policy. They are all interrelated.

    The solution is massive government reform but, reform will cause a depression first.

    I don't believe there is any other choice this President can make. Congress would crucify him and the people would crucify him. He can only attempt to delay this until it implodes upon itself and then try to rebuild the nation out of the collapse. I believe he may even know this. I certainly don't envy what he faces because the people are going to be very angry when that collapse comes.

    At least those who know the collapse is coming, do have some time to prepare for it. I just received an email from a person who is 66 and retired and is making plans to leave the nation once the collapse starts to unravel so he can provide a higher standard of living for his family while things are so bad here. He doesn't want to leave but feels he won't have much choice once food prices skyrocket and there are riots and martial law in places, etc.

    Whether he is right or not, the point is he is in a growing rank of people who have lost all confidence in both parties and our government. Millionaires with $30 million are buying homes in other nations to go to when this implodes. People are growing in number who are moving to retirement communities in other nations or making plans to do so.

    The Republicans didn't have Congress for the 40 years most of this decline took place in. However, once they were elected during the Clinton Presidency, they proved they were just as bad. Remember the Democrats were in power in 1933 when they ended the gold standard and devalued the dollar 60-70%. The Democrats had
    Congress when Nixon a Republican went off the Bretton Woods after the dollar started to collapse under Johnson, a Democrat. Neither party knows what they are doing.

    Wilson, of course is one the main problems as he signed into law the Federal Reserve Act and began this long road that led to this point with "credit based capitalism." Much of this was done with good intentions. It was believe that the use of debt would end poverty, hunger, injustices, etc. We would become such a prosperous nation we could afford to meet the needs of all the people from all walks of life.

    Yet, now we know that instead of making things better, each decade the gradually got worse as shown by the the debt to growth in GDP ratio. We can see it by the 22 times they had to raise taxes just to keep social security going. We see it in the decay of our infrastructure decade after decade as funds for maintenance had to be diverted to interest on city, state, and federal debt and other spending needs of a higher priority.

    This has taken place in Republican controlled cities and states as well as Democrat controlled cities and states. Some better than others but still, debt has been slowing making things worse, not better.
    Posted by JanPBurr  on  02/27  at  11:14 AM
  3. On the deficit. Let's look at the President's budget that will grow each year in at least three of these four departments that consume 2.7 trillion and most of which are mandatory or in the case of defense, will probably never drop more than 25-30%.

    First is the proposed 2009 budget then adjustments using current government data and then this Presidents proposed budget numbers.

    Department of Defense--Military $ 588,290,000,000 Increase over FY 2008 -12.3 %
    (Gov. $654.7 billion)
    President Osama
    Posted by JanPBurr  on  02/27  at  11:39 AM
  4. Mr Obama never ceases to amaze. A particularly brazen liar. Transparency, earmarks, pragmatism...An almost pure fraud.
    Posted by .(JavaScript must be enabled to view this email address)  on  03/06  at  02:06 PM
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