Quote:
Originally Posted by Seahawk
How would you have started to fix the debt, Ted?
First, what percentage of the Federal Budget is not already law, and indexed to boot?
So your options are really few, as you no doubt already knew.
So, Ted, you would have:
1) Picked a fight on Medicare, ending the indexed increase every year
2) Picked a fight on welfare/social spending, rolling back spending and eliminating the indexed growth
3) Wear your Dragon Azz Jean to the Phoebe Buffet
The demand side of the Prez Bud wasn't going to change, Ted, not in the first term since he inherited O's budget the first year. That is how it works.
So, you either grow your way out of debt or reduce spending.
In the short term, he has rolled back draconian regulations, gave small businesses a break in taxes, encouraged growth, cut taxes and is getting America back to work.
We will see increase in debt in the short term, a small increase in interest rates and inflation...take the long view. Trump, for all his bluster and crudeness changed the course of our debt service....stop being so sad about the trajectory of the US.
BTW, hold your elected representatives responsible for the debt. Spending is the issue, not revenue.
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WOW..lots of complex issues are brought up in this missive..sorta like a hand grenade with fragments flying in every direction. To answer the questions adequately and comprehensively requires a rather lengthy discourse. Many of the questions have been answered in previous missives that I have written over time on this matter.
However let us dive in and try to answer the questions in an albeit rudimentary manner.
1. How to fix the debt...There is no fixing the debt if there is NO WILL TO FIX IT... Politicians will not touch SS or Medicare reform as to do so puts their tenure in office at risk. The American peoples mindset is at the heart of the problem...as example even BO often proclaimed the "America is a rich nation" ostensibly one that can have their cake and eat it to without consequences. Further Simpson Bolles couldn't get any traction on Budget reform. All the budget hawks have either shut up (the 2011 US credit downgrade by Standard and Poors did it) or have gone home (Paul Ryan among them).
That was how many Trillions of USD's ago? It is difficult to ascertain the point of no return on the debt? I believe we have crossed that rubicon as any debt cure is going to be no worse than just letting the debt train to rumble on. Every fix has an unintended bad consequence. No one even brings up the subject anymore, it is a continuing roll over of ever higher debt limits. The train rolls on. That said what can be done to ameliorate damage and hopefully provide survivability? The answer is create firewalls, Glass Steagall was such a firewall. An interesting phenomena is taking place in which Brexit, T's tariff wars and increasing nationalism are examples of firewalls being created. The fragmentation of the Global economy is in of itself a survival mechanism from a systemic collapse as each nation seeks to protect it's own interests. Even the very election of T himself being an outsider or revolutionary reformer of the system is part of the script, an expected development on the trajectory that the Global economy is on.*
Also the massive increase of global sovereign debt is only a symptom of the larger causation and that is that the Global economy in of itself is not sustainable. That is on two counts. First the fatted calf US consumer has run out of cash, assets and credit now relying on government deficit spending to pick up the slack to juice economies. Second is environmental degradation (including running out of resources) that is inevitable with economic development of scale. A third issue might be over population, but one thinks that is a subset or consequence of economic development (people live longer due to technology and better food production).
2.To ameliorate the economic malaise that the US has been mired in T and the Republican Congress passed Tax Reform. Which as stated before is repackaged Trickle Down economics, and is a gamble. Give corporations a tax break while increasing the deficit due to revenue decrease in the hope that it spurs economic growth which will eventually increase govt revenues. Give the MC short term tax breaks to spur consumer spending. This in essence is a govt stimulus package put on the credit card. The other side of the legislative equation that has not been addressed is SS and Medicare reform..which is the other book end to tax reform. The jury is still out as to the sustainability of the ensuing US economic bump??? Here we also have to remember that Europe is still juicing the system with QEing (at least till 12/18) and China has loosened lending from state owned banks (the Chinese version of QEing)??? (All of this QE action in the world is to maintain systemic monetary and thus economic equilibrium).
The other facet is that with increased economic activity inflation is becoming a real concern which is causing the FED to increase interest rates which then increases the cost of debt service. Which then slows the economy. A veritable Catch 22. The other nasty Catch 22 is in entitlement reform, if SS and Medicare is cut the old folks dependent on those payments will become a burden on their family financially, which then decreases consumer demand and slows the economy. That is one of the reasons why SS and medicare is the third rail of American politics the other reason is the betrayal by reneging on the promise, after American workers paid into SS and Medicare for decades. Here Americans have already ate their hamburger by living better than otherwise by using the SS Payroll taxes to fund govt spending which juiced the American economy for decades.
One of the FED's goals has been to have 2% inflation which over time makes debt cheaper as it is paid off in less valuable USD's. That has been one of the means to make US debt levels sustainable. However with the amount of newly printed USD's sloshing around inflation can get out of hand where interest rates spike. Also there is a limit to the appetite for buying new debt and to entice buyers higher interest rates have to be offered. Either way be careful of what you wish for when it comes to inflation.
3) Wear your Dragon Azz Jean to the Phoebe Buffet... Your dismissiveness of my foppish nabob demeanor wounds me grievously. For you mistake image for being substance. That lack of discernment makes you a loser, because you are susceptible to being easily led astray. Where bad decisions can be made, especially on the field of battle. Remember the old Sun Tzu axiom about knowing yourself and your enemy... well you failed with one of the two and it also indicates that you ain't so knowledgeable about the other as well...
Well Ma I tried to bring this hand grenade of a missive together in some kind of cohesive and coherent manner, barring the possibility that it couldn't be done I don't think that I did that well.
*Remember I have written that Power abhors a vacuum and that fragmentation and chaos set in as powers vye to fill that vacuum and the subset is when an established order can not fix a societies problems that they lose credibility then they lose power being replaced with someone who promises to fix it (in this case T)...When that fails despair sets in.