I know few of you are interested in my thoughts on economics or the budget--and it is especially a shame to speak of such things in the middle of Holy Week--but I am sitting here watching Hannity interview Sarah Palin and thought I would jot down my thoughts.
1. The S & P announcement, whatever the politics behind it, confirms to me that Obama's budget proposal is not enough. We should be looking at something more extensive like the bipartisan budget commission's recommendations this past Fall.
2. The debt ceiling has to be raised. I think almost everyone recognizes this, and it is really too serious of an issue to use for political bargaining. Anyone who votes against it is a danger to the US, almost on the level of impeachment. We should immediately eliminate from our minds any candidate who suggests we should not do so--these are very, very dangerous, loony people.
3. Ryan's proposal to privatize Medicare and push Medicaid down to the states is a non-starter. Not only does it have no chance of passing--I get so annoyed with people who can't handle reality and prefer to beat their heads against the wall until they knock themselves out--it seems to deconstruct the very purpose of these programs, which was to provide medical care for the most vulnerable in our society--the elderly and those unable to take care of themselves. Instead, it likely lops off these in favor of those partially able to take care of themselves. Cut it we must, finance it some other way we must. But Ryan's idea is DOA, period.
4. We should increase revenues at the same time we make deep cuts. Perhaps we could compromise by only returning to pre-Bush rates for those who earn over 500,000. Or perhaps we could institute a flat tax on these individuals without any exemptions. I am as unconvinced as ever that tax breaks at this level for this group return more economically than the taxes do, and there is no moral argument to be made here that stands up against even the smallest scrutiny.
My thoughts in troubling times... It's compromise, compromise, compromise. The fear that Congress and the President will not be able to compromise, more than anything else, stands behind the S&P statement.
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Speaking of beating heads against walls... why in the world were you watching one loon interview another? ;) Well, it's not Sunday yet, so perhaps that goes with the theme of darkness & confusion for now.
It was part of a Lenten vow... ;-)
No one is taking The S&P thing seriously. Think about it: they are saying that there is a real chance that the US will fail to pay off its bonds. Even the markets yawned by pushing Treasury Bond rates LOWER.
While the Ryan plan was produced by (and I quote) a loon and the Obama plan is only a step in the right direction, we ain't Greece!
Once again Ken your knowledge of economics seems naive. When will you realize and understand that this nation is broke and printing money to pay for overpromised entitlements and government services is unsastainable? Does the Schenck family household practice Keynesian economics and rack up huge credit card bills and buy stuff for your kids even though you cant afford them? Calling someone loony because they want to restore some financial sanity is foolish. How much lower does the dollar have to go or higher does gold and silver have to rise before you understand that we are in serious trouble in the US and inflation is going to cause worse pain? Yes, raise taxes on the rich to solve the problem, typical answer. How about take all their money and see if that will solve the problem. It will not. This problem will not be solved until those in Washington stop the wreckless spending. The politicians have overpromised entitlements to people and now the Nanny State is broke. Printing more money to pay for the govt goodies will only make the probable economic collapse worse.
Craig, you are presenting the fallacy of false alternative. But just to be clear, I did not call Ryan's plan lunacy. I said that anyone who votes against raising the debt ceiling is loony. Even if we Ryan's plan was passed--or something much, much more radical--we would still need to raise the debt ceiling to keep from defaulting on our current loans. We would absolutely lose our AAA credit rating with S&P in that case.
When obama was senator he didn't want to raise the debt ceiling the last time this came up. Now he does. it fun to see him change his mind, what little of one he has,
Ken there are consequences to poor economic policy and when you overspend and do take not serious measures to stop doing it then sooner of later it comes time to pay up. What in the world makes you think that continuing to run up the national budget and printing more money will save us? Is that the way you run your own finances? Do the Schencks think they can spend their way to propserity or will they become bankrupt if they do? When you borrow almost 50 cents for every dollar you spend, you are pumping up the debt bubble and sooner or later it is going to burst. Maybe we can inflate our way out of this mess, but then our dollars will buy less. I do not think you understand the serious consequences of these economic policies. Being the scholar you are, tell me where running up large debts for mostly public entitlements and printing money to pay for it while at the same time being a consummer economy that manufactures less made a country properous. You need to quit reading Keynes and Paul Krugman. It will not work, you will see unfortunately. Better take some of that fiat cash from your tax return and buy some gold or silver!
NGF and Craig,
Neither of you have heard me for what I am saying. We must plan out a budget that immediately begins to take in more than it gives out. I completely agree with you both. And I agree that it should be a more substantial debt reduction that Obama is proposing.
The debt ceiling is a completely different issue. The debate is how much reduction how quickly.
That we have a lot of debt is obvious. For a little historical perspective, note that our payments on federal debt as a % of GDP hasn't really been this low (this decade) since before I was born!
Also good to keep in the forefront that economic forces (of themselves, not the irrational people behind them), like chemistry and physics, worry only about the facts, not ideology. We can pass a resolution in congress that X economic system sucks or that global warming simply doesn't exist... and all you'll have is a resolution.
http://www.fool.com/investing/general/2011/04/14/will-the-us-default-on-its-debt.aspx
Just to be clear, I called Hannity & Palin loons... I would hate for anyone to blame our sound QT analyst for this. With respect to them both, I think the only reasonable conclusion is that they are not interested in truth - but rather, power of some sort or another. As, of course, are people from all ideological camps. Of course they get some things right - you can't be talking that much and not say something truthful :)
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