So we hit the debt limit...

[Admiral Yi]

On a certain level, everyone on both sides of the aisle favored some sort of "health care reform".

But anyway:

http://online.wsj.com/article/SB124865363472782519.html

http://www.huffingtonpost.com/2009/06/08/blue-dogs-backsliding-on_n_212730.html

http://articles.cnn.com/2009-07-10/politics/house.health.care_1_blue-dogs-public-option-medicare-rates?_s=PM:POLITICS

Only managed to slug my way through your first link, but the concerns mentioned in that article appear to have been accomodated.  No public option.  Revenue neutral (sort of).  Too onerous for small business (don't really know about this one).

[grumbler]

Which would you say was more important in turning the deficit into a surplus:  The Budget Act of 1993 or the dot-com bubble?

The budget act; the dot-com bubble is over-rated as a revenue enhancer, IMO, though it certainly had an effect (amplified by the increased taxes on top earners).

The whole economy was growing in this period, not just the dot-coms.  I'd say welfare reform (which came after the Democrats lost both houses of Congress, but still supported by many Democrats) was also more important than the dot-com bubble in allowing for budget surpluses. 

This isn't to argue that we can "trust the Democrats" today, since the character of the Democratic Party appears to have shifted to the left since then (at least amongst elected Federal representatives).  It is just to argue that the argument that Democrats always want to increase spending faster than the economy is growing doesn't seem to be true. 

[grumbler]

Fine-- so the Dems showed that they can raise taxes and benefit from the tech bubble to balance the budget.  How about we revert to Clinton-era tax rates *and* spending levels?

I would certainly support that.  There is no question in my mind that spending is a problem today; the question is whether or not spending cuts should be the only solution attempted (and whether or not unemployment is a bigger problem than spending).  I don't believe so on the former, and am undecided on the latter.

[dps]

Do the Democrats treat the Blue Dogs especially well vis-a-vis committees?  And would they want Obama showing up to glad-hand them in their districts?

I know Pelosi threw Blue Dogs under the bus wholesale, but I think things are handled differently in the Senate.  For example the chairman of the Senate committee (Budget? Health and Human Services?) that handled Obamacare is a Blue Dog.  So maybe you're right, that's not a useful whip.

IIRC, in the Senate, senoirity is still pretty important when it comes to chairmanships and committee assignments.  In the House, not so much.

[Razgovory]

Fine-- so the Dems showed that they can raise taxes and benefit from the tech bubble to balance the budget.  How about we revert to Clinton-era tax rates *and* spending levels?

I would certainly support that.  There is no question in my mind that spending is a problem today; the question is whether or not spending cuts should be the only solution attempted (and whether or not unemployment is a bigger problem than spending).  I don't believe so on the former, and am undecided on the latter.

It seems like a reasonable option, but all but politically impossible.  Nobody is that keen on tax increases, the Dems have made it a point not to raise taxes on the middle class.  Republicans are anathema to the idea of any tax increase.

[derspiess]

It seems like a reasonable option, but all but politically impossible.  Nobody is that keen on tax increases, the Dems have made it a point not to raise taxes on the middle class.  Republicans are anathema to the idea of any tax increase.

Taxes aren't what makes it impossible-- cutting spending from 3.8 trillion (projected for 2011) to 1.8 trillion (2000 budget) is what would be politically impossible

But hell, if we simply froze (in real terms) federal spending at the 2011 amount without doing anything about revenue, we'd have the budget balanced by 2015 or 2016.

[KRonn]

It seems like a reasonable option, but all but politically impossible.  Nobody is that keen on tax increases, the Dems have made it a point not to raise taxes on the middle class.  Republicans are anathema to the idea of any tax increase.

Taxes aren't what makes it impossible-- cutting spending from 3.8 trillion (projected for 2011) to 1.8 trillion (2000 budget) is what would be politically impossible

But hell, if we simply froze (in real terms) federal spending at the 2011 amount without doing anything about revenue, we'd have the budget balanced by 2015 or 2016.

Heh, they're debating about getting the budget balanced in 5 to 10 years! Then there will be the need to start  paying off a by then 15-20 trillion dollar deficit! Staggering sums of money.   

The US is a staggeringly wealthy nation, to be able to rack up such massive debt!   

[MadImmortalMan]

But hell, if we simply froze (in real terms) federal spending at the 2011 amount without doing anything about revenue, we'd have the budget balanced by 2015 or 2016.

I actually have no problem with doing that. I don't see why it must go up 7% a year as a baseline at all. Inflation isn't anywhere near that.

[Razgovory]

It seems like a reasonable option, but all but politically impossible.  Nobody is that keen on tax increases, the Dems have made it a point not to raise taxes on the middle class.  Republicans are anathema to the idea of any tax increase.

Taxes aren't what makes it impossible-- cutting spending from 3.8 trillion (projected for 2011) to 1.8 trillion (2000 budget) is what would be politically impossible

But hell, if we simply froze (in real terms) federal spending at the 2011 amount without doing anything about revenue, we'd have the budget balanced by 2015 or 2016.

I am skeptical. 

Note that Democrats did agree to spending cuts.  Where are the Republicans agreeing to tax increases?

[DGuller]

It seems like a reasonable option, but all but politically impossible.  Nobody is that keen on tax increases, the Dems have made it a point not to raise taxes on the middle class.  Republicans are anathema to the idea of any tax increase.

Taxes aren't what makes it impossible-- cutting spending from 3.8 trillion (projected for 2011) to 1.8 trillion (2000 budget) is what would be politically impossible

But hell, if we simply froze (in real terms) federal spending at the 2011 amount without doing anything about revenue, we'd have the budget balanced by 2015 or 2016.

We're going to have to freeze population growth too. 

[The Minsky Moment]

Allowing all the temporary tax cuts to expire, and cutting spending deeply in both domestic and defense will, I think, be the fastest road to recovery.  I think people don't trust sweet-tasting medicine, and I think that, in this case, they are right not to.

Even the modest plan adopted by Congress anticipates cutting defense + discretionary domestic spending to under 5.5% of GDP within a decade.  You would have to go back a long time to get to that low a spending figure.  I don't think it is feasible, even if the international security situation improves over the next 10 years (and IMO the opposite is more likely).

Willie Sutton said he robbed banks because that is where the money is.  In the federal budget, the money is the "mandatory" spending categories, and entitlements in particular.

[grumbler]

Taxes aren't what makes it impossible-- cutting spending from 3.8 trillion (projected for 2011) to 1.8 trillion (2000 budget) is what would be politically impossible

If we simply spent FY2000 dollars (to which you make the comparison) today, we'd reduce the deficit by almost a trillion dollars.  If we spent 1985 dollars, we'd have the same government expenditure as 2000 without cutting a thing.

I think it is politically possible to cut spending from 25% of GDP to the 2000 level of 18% of GDP.  What is probably much more difficult is getting federal revenues from 14% of GDP to 18%, since the wackos have sworn to not allow this, and I don't think the Republicans can pass any laws with the six Congressman who didn't take the oath. 

But hell, if we simply froze (in real terms) federal spending at the 2011 amount without doing anything about revenue, we'd have the budget balanced by 2015 or 2016.

I very much doubt that.  The economy would have to grow much, much faster than inflation for that to happen, and no such growth is forecast.

[grumbler]

Heh, they're debating about getting the budget balanced in 5 to 10 years! Then there will be the need to start  paying off a by then 15-20 trillion dollar deficit! Staggering sums of money.   

The US is a staggeringly wealthy nation, to be able to rack up such massive debt!   

Of course, inflation will be causing a sizable chunk of that debt, but you are correct to note that the total debt will come within striking range of the greatest level of total debt the US faced (WW2).  The country paid down that debt, but I don't think there will be the same will to pay down this one.  That is what staggers me.

[grumbler]

Willie Sutton said he robbed banks because that is where the money is.  In the federal budget, the money is the "mandatory" spending categories, and entitlements in particular.

Agreed.  Talking about ending the deficits without addressing the entitlement programs is a waste of breath.  Rolling back the retirement age and rethinking medical provisions for the dying will almost certainly be needed, IMO, along with some less drastic measures.

[MadImmortalMan]

US borrowing tops 100% of GDP: Treasury


US debt shot up $238 billion to reach 100 percent of gross domestic project after the government's debt ceiling was lifted, Treasury figures showed Wednesday.

Treasury borrowing jumped Tuesday, the data showed, immediately after President Barack Obama signed into law an increase in the debt ceiling as the country's spending commitments reached a breaking point and it threatened to default on its debt.

The new borrowing took total public debt to $14.58 trillion, over end-2010 GDP of $14.53 trillion, and putting it in a league with highly indebted countries like Italy and Belgium.

Public debt subject to the official debt limit -- a slightly tighter definition -- was $14.53 trillion as of the end of Tuesday, rising from the previous official cap of $14.29 trillion a day earlier.

Treasury had used extraordinary measures to hold under the $14.29 trillion cap since reaching it on May 16, while politicians battled over it and over addressing the country's bloating deficit.

The official limit was hiked $400 billion on Tuesday and will be increased in stages over the next 18 months.

The last time US debt topped the size of its annual economy was in 1947 just after World War II. By 1981 it had fallen to 32.5 percent.

Ratings agencies have warned the country to reduce its debt-to-GDP ratio quickly or facing losing its coveted AAA debt rating.

Moody's said Tuesday that the government needed to stabilize the ratio at 73 percent by 2015 "to ensure that the long-run fiscal trajectory remains compatible with a AAA rating."

They had to recapitalize all the government worker pension funds they drained to run current accounts between May 18th and now.