The Budget Deal - Page 5

Originally Posted by jazzguru

Frankly, I think this stagnation and indecision is preferable to the "well the government has to do SOMETHING" mentality.

Every time the government does "something" we all end up a little worse off.

Originally Posted by MJ1970

After all it's all about getting Obama re-elected at any cost!

Originally Posted by jazzguru

Frankly, I think this stagnation and indecision is preferable to the "well the government has to do SOMETHING" mentality.

Every time the government does "something" we all end up a little worse off.

Originally Posted by jazzguru

Frankly, I think this stagnation and indecision is preferable to the "well the government has to do SOMETHING" mentality.

Every time the government does "something" we all end up a little worse off.

Originally Posted by marvfox

This is just another stall for the GOP Party to hold the Democrats hostage once again.

Originally Posted by jimmac

Talk about drive by vacuous comments.

The GOP's posturing is so transparent. They want us to go through this again closer to the election.

After all it's it's all about getting Obama out of the Whitehouse at any cost!

Oh well it's not the first time the Republicans have shot themselves in the foot and their plans have back fired. And this time they have the Teabaggers to thank for it.

Thanks for the votes.

Originally Posted by e1618978

SDW - I really believe that. I think that Japan got in the hole it is in because they spread their stimulus too thin, and got all the debt of a stimulus without the benefits.

Socialized medicine reduce costs dramatically - go look at per-capita costs for all of the other industrialized nations, ours is way higher.

Rationing is better than killing all the old people -

the costs of private insurance are growing faster than medicare, and medicare is growing faster than Canada's health plan - plus Canadians live longer than we do. A decade or two from now only millionaires will be able to afford private medical insurance.

How would "opt out" help social security? The SS debt would go exponential.

I don't think you are thinking about this as a math problem, your solutions make no sense at all if you do.

Originally Posted by MJ1970

In time for what?! First, the date keeps moving...out. Second, it's not like even if they don't get something done by that date that default is the next step. It simply means that they will not be able to borrow money and will be forced to cut spending. Default is when the US can no longer pay interest on its debt. We're a long, long way from that happening. The interest in around $200B/year. The federal government is bringing in about $2.2T/year. They can pay the interest. They will just have to cut other spending. And they will cut spending on the the least valuable things. Treasury will determine what spending is cut. Which is why Obama is scared because the fact that everything he and the Democrats have claimed is of the utmost importance will be laid bare as being not quite so important.

Originally Posted by tonton

How do you figure? Please explain this statement. How exactly does Obama stand to benefit from any of this?

Honestly, what Obama should do is to stand up, and address the American people.

Obama should tell the American people that we are being forced into an agreement, with no alternative, that will cost nearly all of us in a very real and obvious way, almost immediately. There will be serious harm done.

Then what he has to say is this...

When this deal is passed, and you find that our problems are not solved, and that your lives have become worse, and the lives of your children have become worse, when some of you can no longer afford the most basic level of nourishment, health care, and shelter, while the rich continue to get richer, you're going to need to do one thing. Get down to the polls and vote these people who pushed for this deal out. Vote them out. Get rid of the people who would have the richest Americans and the richest corporations earning record amounts while the majority of us suffer. And never make this mistake again.

To put things in perspective: this year alone the federal government spent $1.7 trillion more than it took in. According to the Congressional Budget Office, the John Boehner plan (really more of a recommendation), cuts $917 billion in spending growth over 10 years. Thats barely more than the debt ceiling hike thats been proposed and far less than we overspent this one year alone.

In opposition to this exceptionally minor disruption of irresponsible and explosive government, House Minority Leader Nancy Pelosi has this to say:


The United States government spends twice as much on its yearly budget today than it did when Bill Clintons left office. Yet, (hardly) slowing the growth by a few billion a year alters the life of all things, living and dead, on the planet?

Then theres this bright, but not too bright, bulb:


Yep, GOP rhetoric. House Republicans, you see, are displaying authoritarian impulses because they wont acquiesce to the presidents wishes. Makes sense. These fascists have the audacity to advocate for their positions and constituents. What a bunch of Mussolinis!

But speaking of dictatorships, Rep. Jim Clyburn suggests that, since all the major civil rights victories of this country were achieved via executive orders, Barack Obama should just ignore the law and do the right thing. Nah, dictatorships never start with that kind of reasoning.

While it is likely that the two parties in Congress will reach a deal before the August 2 deadline, I can’t help reflecting on how wonderful it would be if they didn’t. While Congressman Ron Paul has correctly pointed out that the government has already defaulted at least three different times in its history, and continues to default every time it prints new money, it is not quite the same as an “on-the-books” failure to make a timely payment. That is exactly what America needs.

Politicians, mainstream economists, and the media tell us that a U.S. government debt default would be catastrophic. Treasury bonds would be downgraded, interest rates would soar, and the massive government spending that has supposedly fueled the present (jobless) recovery would be severely curtailed, plunging the U.S. and possibly the world back into a deep recession.

Perhaps that is true. However, a debt default by the federal government would still be a blessing to American society for several reasons.

First, one must remember that all government spending represents a redistribution of wealth (what we regular folks call “stealing”). The government forcibly confiscates money from those who have earned it and spends it for the benefit of someone else. The most insidious way that the government does this is by borrowing. When it borrows, it is confiscating money from people in the future – some of whom are not even born yet – to hand out to their special interest supporters today. To the extent that it would prevent or decrease this, a default would result in a more just society.

However, even if one doesn’t care about justice or property rights, a default would help correct the very malinvestment that has caused the crisis in the first place. As I’ve said before, the entire U.S. economy is really one, huge bubble of misallocated resources, caused by at least a century of government intervention. Most people recognize that the government’s backing of mortgages, together with monetary inflation by the Federal Reserve, were the primary causes of the housing bubble. However, most people fail to recognize this same dynamic in almost every sector of the economy.

The government also backs student loans for people to go to college. Just like it did to the housing industry, this has inflated the price of higher education far beyond what could be supported by real demand. That in turn has led to the creation of millions of jobs in the education sector that only exist because the government redistributes wealth to back those loans. When the government funds are no longer there, the price of education will plummet, just as housing prices did. All of those people will be out of work.

Healthcare is another sector with all of the same intervention-related problems. Government subsidy creates artificial demand, inflating the price and driving the misallocation of resources to the healthcare sector. The industry is not forced to innovate in terms of delivering its services in more efficient ways because the customers are forced to buy its products (if you doubt this, just withhold the Medicare portion of your payroll taxes and see what happens). This also directs employees into the healthcare sector that would not be supported by natural market forces. When the government can no longer subsidize it, the bubble will pop, just like housing and education. Again, massive unemployment for misallocated human resources.

Banking, research, agriculture, energy, automobile manufacturing – there is not one sector that anyone can name where government is not overriding the voluntary transactions that market participants would otherwise engage in. Wherever the government is spending taxpayer money, it is overriding the choice that the taxpayer would have made if he had been allowed to keep his money and spend it as he pleased. As F.A. Hayek pointed out in The Road to Serfdom, the government has never and can never make better choices than millions of market participants acting in their own self-interest. They simply lack the information necessary to do so.

So, wherever the government is spending money to try to boost some aggregate statistic, it is making the problem bigger, not smaller. If government spending is creating jobs, they are not real jobs. A real job is a voluntary contract between a buyer of services (an employer) and a seller of services (an employee). If that job is created because of government spending, then a third party is introduced into the transaction who is not acting voluntarily. Government-created jobs force taxpayers to purchase services from employees because it is not profitable for the employers in that sector to purchase them. Forcing taxpayers to purchase them doesn’t make those jobs any more profitable. It just depletes the capital available to create profitable jobs elsewhere.

The prospect of perhaps tens of millions more people unemployed may seem frightening, but that day is coming regardless of what politicians do in Washington. Economic laws are like the laws of nature. They will assert themselves in the end. Any job that requires the government to borrow more money to subsidize it is also a job that depends upon the lenders continuing to lend. As we have seen in recent Treasury bond auctions, those days are coming to an end. Raising the statutory debt ceiling only allows more phony jobs to be created, setting up more employees for the painful correction.

However, the most important reason that a debt default will be beneficial is a philosophic one. It will force a complete paradigm shift in the way Americans think about the role of government. For at least a century, there has been no area of life that some special interest has not appealed to government to manage or subsidize. From the way we conduct commerce to the way we make personal decisions on food or healthcare to the way we coexist with our neighbors in other countries, nothing has been off limits. Complacency about our liberty has been one reason. The other has been the perception of infinite financial resources. The great wealth that the United States generated in its freest period provided a tax base and borrowing collateral that has always been perceived as unlimited. A debt default would shatter that foolish perception.

The default would be a bucket of cold water in the faces of a drowsy and compliant populace. It would wake people up to the reality that Thomas Paine was aware of over 200 years ago, when he wrote that government “is at best, a necessary evil.” People would realize that the government doesn’t “have our back,” other than to stick a gun in it to loot our liberty and wealth. We would no longer hear that horrid refrain from media pundits after some new government incursion or heist: “Well, the government had to do something.” Instead, we would hear the resigned chorus, “Well, the government couldn’t do anything.” And perhaps, in some glorious, enlightened future, “The government shouldn’t do anything.”

Originally Posted by MJ1970

In opposition to this exceptionally minor disruption of irresponsible and explosive government, House Minority Leader Nancy Pelosi has this to say:

Let’s put it in perspective. During the 111th Congress, the one that did not pass a budget, the federal government was comprised of a democrat-controlled House, a democrat-controlled Senate, and a democrat-occupied White House. There was no reason whatsoever that a budget could not have been passed, except for that tiny little reason that the democrats did not introduce one.

Originally Posted by jazzguru

People would realize that the government doesnt have our back, other than to stick a gun in it to loot our liberty and wealth. We would no longer hear that horrid refrain from media pundits after some new government incursion or heist: Well, the government had to do something. Instead, we would hear the resigned chorus, Well, the government couldnt do anything. And perhaps, in some glorious, enlightened future, The government shouldnt do anything.

Originally Posted by jazzguru

Why a Debt Default Would Be Wonderful

Originally Posted by john galt

Who cares what she said.

Originally Posted by SDW2001

It just keeps getting better! Class warfare. Scare tactics. Meanwhile, Obama gets to bankrupt the country with his policies and blame it on the people that are trying to stop it. Genius.

Originally Posted by SDW2001

You're comparing us to Canada? Surely I don't have to explain how this is a problem?

Originally Posted by tonton

Read Obama's policy positions. How many has he actually followed? Obama is bankrupting the nation with Republican policies. His complete failure to follow his published positions is another issue. But make no mistake, he has helped enact Republican policies, and this is what has killed us.

Originally Posted by e1618978

What do you mean by that? Canada is better than the US - better medical care and cheaper, lower national debt per capita, more solvent pension system, better banking regulations, longer life expectancy, more natural resources, etc.

Originally Posted by e1618978

What do you mean by that? Canada is better than the US - better medical care and cheaper, lower national debt per capita, more solvent pension system, better banking regulations, longer life expectancy, more natural resources, etc.

Originally Posted by jazzguru

They also have quasi-commodity-based currency, not fiat currency. Interesting, isn't it?

Originally Posted by MJ1970

Indeed Canada is better than the US in a number of ways. Doesn't mean it can't improve of course, but it is better in many ways. It is also, interestingly enough, 3-4 points higher (more free) on the Index of Economic Freedom. It has also been increasing over the years while the US has stagnated or declined over the years.

Originally Posted by e1618978

huh? don't know where you got that from - Canada has a fiat currency.

http://en.wikipedia.org/wiki/Bank_of_Canada

Originally Posted by e1618978

Sure - but the biggest differences between Canada and the US in terms of regulation are

- socialized medicine
- low military costs
- heavy handed banking regulation

As long as you have socialized medicine and good banking, labor laws and environmental regulations, then it is OK to let the libertarians have their hand with the rest - it works well that way. You just can't let libertarian ideas get into any laws where people can do more damage than they can repay - like murder, or banking. Imagine if we had a system where murder was a civil issue, and you had to sue the murderer...

Originally Posted by tonton

Read Obama's policy positions. How many has he actually followed? Obama is bankrupting the nation with Republican policies. His complete failure to follow his published positions is another issue. But make no mistake, he has helped enact Republican policies, and this is what has killed us.

Originally Posted by MJ1970

OK let's stop right there with the implication that libertarian political philosophy in any way, shape or form gives things like murder a pass. It makes you look foolish.

Second, your comment about doing more damage they can repay is a bit of hand wave.

Originally Posted by e1618978

You didn't understand my point at all. I wasn't saying that libertarianism gives murderers a pass, just that it does things that are similar to giving murderers a pass.

Originally Posted by e1618978

My point was that libertarianism over-uses the civil courts,

Originally Posted by e1618978

and gives people freedoms that they use to do more damage than they can repair.

Originally Posted by jazzguru

Canada's Commodity Currency: Oil And The Loonie

Originally Posted by MJ1970

Any examples?

Originally Posted by e1618978

That is a bad argument. Canada has a fiat currency - you are wrong.

You might as well say that the US has an arms and movie based non-fiat currency. The Canadian currency is not backed by oil, gold, or anything else - and they can print as much of it as they like.

Originally Posted by e1618978

The last three years.

And tell me - why is it that libertarians don't think that murder should be solved in the civil courts? What is special about murder, vs some other kind of harm? Where is the dividing line between a civil offense and a criminal one for libertarians?

Originally Posted by jazzguru

They can, but do they?

Originally Posted by tonton

Read Obama's policy positions. How many has he actually followed? Obama is bankrupting the nation with Republican policies. His complete failure to follow his published positions is another issue. But make no mistake, he has helped enact Republican policies, and this is what has killed us.

Originally Posted by e1618978

What do you mean by that? Canada is better than the US - better medical care and cheaper, lower national debt per capita, more solvent pension system, better banking regulations, longer life expectancy, more natural resources, etc.

Originally Posted by e1618978

The last three years.

Originally Posted by e1618978

And tell me - why is it that libertarians don't think that murder should be solved in the civil courts? What is special about murder, vs some other kind of harm? Where is the dividing line between a civil offense and a criminal one for libertarians?

Originally Posted by e1618978

yes, not sure what you are fishing for - just admit you are wrong and move on.

Originally Posted by jazzguru

On the same scale as the United States?

Originally Posted by e1618978

It does not matter what scale - you said that Canada does not have a fiat currency, not that it had a less-debased fiat currency. Up is down, left is right for you - and once somebody points out that up is not down, you say "but it is less down that this other up!"

Originally Posted by jazzguru

I said "quasi-commodity-based".