Obama: Trillion dollar deficits will be a reality for years to come.

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<blockquote>Just today, the Congressional Budget Office announced that the deficit we are inheriting for this budget year will be $1.2 trillion. And we know that our Recovery and Reinvestment plan will necessarily add more. My own economic and budget team projects that, unless we take decisive action, even after our economy pulls out of its slide, trillion dollar deficits will be a reality for years to come.</blockquote>


After watching his speech today, it seems clear that Obama is going to throw money at the problem until it goes away. If we take him at his word, our national debt will stand at ~$16 Trillion dollars when he stands for re-election... and he hasn't even been sworn in yet.



Anyone here think this is a good plan?
 
[quote author="Oscar" date=1231484936]<a href="http://change.gov/newsroom/blog/">Source</a>

<blockquote>Just today, the Congressional Budget Office announced that the deficit we are inheriting for this budget year will be $1.2 trillion. And we know that our Recovery and Reinvestment plan will necessarily add more. My own economic and budget team projects that, unless we take decisive action, even after our economy pulls out of its slide, trillion dollar deficits will be a reality for years to come.</blockquote>


After watching his speech today, it seems clear that Obama is going to throw money at the problem until it goes away. If we take him at his word, our national debt will stand at ~$16 Trillion dollars when he stands for re-election... and he hasn't even been sworn in yet.



Anyone here think this is a good plan?</blockquote>




Bush did three things to skyrocket the debt from $5.7 trillion to $10 trillion in his

2 terms.



1. He lowered taxes on the rich (by far the biggest item).

2. He invaded Iraq instead of winning in Afghan-Pakistan (another $600 B).

3. He deregulated Wall Street speculators. That bailout has now "invested" $1T



So maybe we should just let the system Fail and Blame it on Bush ? Cool !



NO. Better to blame all this on Obama. Thats the conservative ticket.
 
[quote author="bltserv" date=1231486203]Bush did three things to skyrocket the debt from $5.7 trillion to $10 trillion in his

2 terms.



1. He lowered taxes on the rich (by far the biggest item).

2. He invaded Iraq instead of winning in Afghan-Pakistan (another $600 B).

3. He deregulated Wall Street speculators. That bailout has now "invested" $1T



So maybe we should just let the system Fail and Blame it on Bush ? Cool !



NO. Better to blame all this on Obama. Thats the conservative ticket.</blockquote>
So basically, your position is: Bush was bad, so that excuses anything Obama wants to do or does in the future? Well, that makes no sense at all.



For the record, I am not trying to blame Obama for anything. I don't know where you got that impression.
 
[quote author="Oscar" date=1231487310][quote author="bltserv" date=1231486203]Bush did three things to skyrocket the debt from $5.7 trillion to $10 trillion in his

2 terms.



1. He lowered taxes on the rich (by far the biggest item).

2. He invaded Iraq instead of winning in Afghan-Pakistan (another $600 B).

3. He deregulated Wall Street speculators. That bailout has now "invested" $1T



So maybe we should just let the system Fail and Blame it on Bush ? Cool !



NO. Better to blame all this on Obama. Thats the conservative ticket.</blockquote>
So basically, your position is: Bush was bad, so that excuses anything Obama wants to do or does in the future? Well, that makes no sense at all.



For the record, I am not trying to blame Obama for anything. I don't know where you got that impression.</blockquote>


So what do you suggest we do ? Whats your plan besides shaking your finger ?

Lower taxes ? Stop the Bail-Outs ? Outlaw Welfare and end Medi-Care ? Invest the Social Security Trust fund in the Stock Market. That sounds like a real winner !!!!!!

Too bad for Bush he couldnt make that one happen in his 2 terms.



Just seems like your tuned in with Rush Limbaugh and the Anti Obama Mantra to me.
 
Actually, in regards to deficits, the CBO numbers do not include Obama's stimulus. The first year deficit from Obama would be in excess of $2 trillion dollars. It is almost certain that Obama will run for re-election having increased the debt by more in 3 1/2 years than Bush did for 8.



If I am not mistaken, while the rate that High earners are taxed at decreased, the total dollars paid in taxes by that same high earner segment increased during the Bush years, so I am not sure that you can claim that as the reason for the increase in deficits.



The war in in Irag and Afganistan has accounted for 4% of federal spending over the time frame of those conflicts (source: wikipedia). The assertion that the war in Afganistan could have been won and over if we had not gone into Iraq seems a little hollow to me. Afganistan has not had a middle class since 1979, and a durable peace will not be possible there until they have a middle class. This is a 15 to 40 year deal, with intermittent high intensity conflict, interspersed with "relative" (for the region) calm. Defense spending - including the supplementals - has run about 5 to 5 1/2 % percent of GDP during the Bush 43 years. By contrast, during the eighties, defense spending was around 6 - 8 % GDP, and this during a decade with no hot wars.



The biggest challenge has been demographic shifts in relationship to entitlements. This chart by the GAO shows how entitlements are growing as a percentage of the buget:http://en.wikipedia.org/wiki/File:GAO_Slide.png.
 
Finally, in regards to deregulation, it was the Clinton adminsitration that repealed Glass-Steagal. Furthermore, most economists do not believe that the regulatory changes led to the meltdown (in fact, they may have helped alleviate the situation by allowing mergers between financial firms that would not have been allowed prior.) The real problem was one of communication and expectation. Investors (especially foreign treasuries) belived that the "implicit" guarantee on Fanny and Freddie MBS's was actually explicit. Essentially, they treated them as T-Bills, except with better yields. They didn't manage risk, because they believed their was none.



Fannie and Freddie (and their Democratic allies in Congress) knew that they increased risk in their lending profiles, but believed that could be passed on to the "fat cats" in the open market, and that the investors would be willing/able to soak up any losses - in other words, that if there were losses, the investors should know better. As a result, they leveraged to more than 200-1, so they had no capital reserves. They also compensated executives based on total size of portfolio, not qualitiy of portfolio.



The 200-1 leverage, coupled with the lack of quality "purchases" on the part of Fannie (which Bush tried to change in 2001 legislation, and again in 2005), and the implicit gaurantee that caused investors to regard MBS as the same quality as T-Bills caused unprecedented demand, which led to the bubble. Who stood in the way of reform of Fannie and Freddie? According to Bill Clinton, it was the Democrats in Congress.



What no one anticipated was foreign treasuries holding trillions of dollars in dollar denominated securities calling Paulsen and demanding the US make good on the gaurantee. If the US failed to, they would run the securities. They had all the leverage, and we had to act.
 
[quote author="bltserv" date=1231488280]So what do you suggest we do ? Whats your plan besides shaking your finger ?

Lower taxes ? Stop the Bail-Outs ? Outlaw Welfare and end Medi-Care ? Invest the Social Security Trust fund in the Stock Market. That sounds like a real winner !!!!!!

Too bad for Bush he couldnt make that one happen in his 2 terms.



Just seems like your tuned in with Rush Limbaugh and the Anti Obama Mantra to me.</blockquote>
I suggest we question spending a trillion dollars more than we collect in taxes, per year, when we have more than 10 trillion dollars in debt already.

My plan would not include totally abandoning any pretense at fiscal responsibility.

Obama already wants to lower taxes, which I think might be a mistake in most cases.

Of course we should stop the bailouts, because there isn't any proof it will turn bad businesses/banks into good ones.

As for welfare, Medicare, and Social Security... Obama has mentioned several times in the last few days that entitlement spending needs to be addressed before it strangles us. Your stock market crack only seems witty until you realize that 401(k) and IRAs resulted in investing retirement funds in the stock market. In any case, all you have done is list things you hate about Bush as a defense, while ignoring the topic.



Even blowhards like Rush can be right from time to time, but since you admittedly listen to him maybe you can relate the finer points of his "mantra" for those of us who don't. And for the record, I voted for Obama.
 
[quote author="Oscar" date=1231498410]

I suggest we question spending a trillion dollars more than we collect in taxes, per year, when we have more than 10 trillion dollars in debt already.

My plan would not include totally abandoning any pretense at fiscal responsibility.

Obama already wants to lower taxes, which I think might be a mistake in most cases.

Of course we should stop the bailouts, because there isn't any proof it will turn bad businesses/banks into good ones.

As for welfare, Medicare, and Social Security... Obama has mentioned several times in the last few days that entitlement spending needs to be addressed before it strangles us. Your stock market crack only seems witty until you realize that 401(k) and IRAs resulted in investing retirement funds in the stock market. In any case, all you have done is list things you hate about Bush as a defense, while ignoring the topic.



Even blowhards like Rush can be right from time to time, but since you admittedly listen to him maybe you can relate the finer points of his "mantra" for those of us who don't. And for the record, I voted for Obama.</blockquote>


Okay, but what is your plan. You keep saying what you would NOT do, but you haven't said what you would do. No fair saying one plan is bad if you don't offer a better one.
 
[quote author="T!m" date=1231500328]Okay, but what is your plan. You keep saying what you would NOT do, but you haven't said what you would do. No fair saying one plan is bad if you don't offer a better one.</blockquote>


I don't know about "better", but I'm inclined to wait until the dust settles before spending trillions, if needed. I think investors call it "keeping your powder dry". Rather than propping up bad banks with make-believe balance sheets, I'd backstop new banks with clean balance sheets and tight regulations and allow the current banks to either fail or survive on their own merits. Rather than give any money to failing businesses, I would push the Fed to accept hard assets at current valuations as collateral for the Fed equivalent of commercial paper. I would go ahead with the infrastructure spending he has mentioned, but demand that ethanol production switch from corn to sugar cane or cellulose to increase the gallon per acre ratio while preventing the price of corn from artificially rising as a consequence of fuel production; maybe the southern farm states might grow profitable crops again. I wouldn't cut any taxes, but I wouldn't raise them either.



What I wouldn't do is try to reinflate a credit bubble in the misguided attempt to kickstart a consumer economy that is based on debt rather than savings. I think that model has proven itself to be unsustainable if, and I stress IF, we are unwilling to accept that business cycles, both boom and bust, must be embraced equally. It appears that our politicians are determined to avoid any negative economic consequences whatsoever. It sucks to endure the hard times of a downturn, but it cannot be put off indefinitely and the longer you try the worse the effects will eventually be.
 
<img src="http://dirtyharrysplace.com/wp-content/uploads/2008/07/obamamessiah.gif" alt="" />



<em>Muad'Dib is wise in the ways of the desert. Muad'Dib creates his own water. Muad'Dib hides from the sun and travels in the cool night. Muad'Dib is fruitful and multiplies over the land. Muad'Dib we call 'instructor-of-boys.' That is a powerful base on which to build your life, Paul-Muad'Dib, who is Usul among us.</em>



Seriously, folks, Obama is not a Messiah with supernatural powers. He's a man, just like us, who will try to do his best to do good.
 
[quote author="momopi" date=1231573979]Seriously, folks, Obama is not a Messiah with supernatural powers. He's a man, just like us, who will try to do his best to do good.</blockquote> Hey he manufactured that image, he cultivated it and used it to win an election. You can't blame the people who voted for him for expecting him to live up to the hype. Live by the sword and all that.
 
Okay, but what is your plan. You keep saying what you would NOT do, but you haven't said what you would do. No fair saying one plan is bad if you don't offer a better one.</blockquote>


It's not fair to criticize a plan if you don't a solution of your own? Tim!! Of course it's fair. If someone wanted to execute all the jobless people in the country to eliminate joblessness are you saying you wouldn't criticize that plan if you didn't have a more effective solution sketched out?!?!? Just because you don't have a better idea on hand, doesn't mean the criticism isn't "fair".



Timmy!! You wound me with these silly statements, lol,...I expect more from you :-)
 
[quote author="Oscar" date=1231507244]

I don't know about "better", but I'm inclined to....</blockquote>


Alright, I can get behind that. Thanks!
 
[quote author="4walls4me" date=1231580458]

It's not fair to criticize a plan if you don't a solution of your own? Tim!! Of course it's fair. If someone wanted to execute all the jobless people in the country to eliminate joblessness are you saying you wouldn't criticize that plan if you didn't have a more effective solution sketched out?!?!? Just because you don't have a better idea on hand, doesn't mean the criticism isn't "fair".



Timmy!! You wound me with these silly statements, lol,...I expect more from you :-)</blockquote>


You and my mom - I'm always disappointing! I would find it trivially easy to suggest a better plan than murder. I would hope you could, too. I expect more from you! ;-P



It is too easy to just poo poo a plan someone else puts forth. No plan on anything is perfect, so people who don't have any clue on anything (and I am NOT saying Oscar is such a person) can criticize every single plan ever mentioned. I prefer people to be constructive. If you can't come up with a better idea, then don't knock someone else for trying.



I use this method when in a group deciding where to eat. If someone suggests a place, you don't get to say you don't want to go there unless you offer an alternative. Otherwise, I have found some people in certain moods will just say no to everything.
 
According to the graph being issued by Obama we are going to spend a trillion (or 800 billion+, depending on sources) dollars to reduce unemployment by a projected... one percentage point.



With all due respect to T!m, sometimes saying "this is a stupid use of funds" is the best plan. What worries me is that we, as a country will not say this because we are inclined to give him the benefit of the doubt as the new President, but that the people we are asking to fund this (Treasury buyers) *will* say this by not participating. The unintended consequences will be skyrocketing yield curves as our debt auctions go unsold.



Either way, it seems I am in the minority on this.



Swiped from CR:

<img src="http://3.bp.blogspot.com/_pMscxxELHEg/SWkYU7DYqsI/AAAAAAAAELI/YsWzxIoGRpw/s320/JobImpact+copy.jpg" alt="" />
 
$800,000,000,000 / ($50,233 x 3 years) = 5,308,595



That's the math.



That's eight hundred billion dollars divided by the median <b>household</b> income for the next three years.



It's enough to provide cash for 5.3 million people.



There are currently only 11.1 Million unemployed people.



We have 154 Million people in the civilian work force.



If we are making only a 1% dent, then wages will only account for 20% of the expenditures.



We could extend $24,000/yr of unemployment benefits in the form of education credits, food stamps, etc to ALL eleven million unemployed for the next three years for that amount. It wouldn't be spending it very well, but it should put it into perspective.



I'm too jaded, I see big government creating big government programs that will not go away.
 
I'll followup with one additional thought since I'm watching "Meet the Press" this morning.



They are talking about the plan and the need to get people to invest (in business).



Is that really the problem? I don't think so. I don't think we are like the 1930s where business was waiting for the capital investment to be cheaper and the lack of consumption.



I think it is very different. Business is shedding bubblicious jobs and the economy is shrinking to sustainable levels based on real income and not bubble-equity.



Is the plan just to get us to a softer landing at the sustainable level or are they attempting to do something that will not work which is maintain us at a level above sustainability.
 
[quote author="No_Such_Reality" date=1231719218]I'll followup with one additional thought since I'm watching "Meet the Press" this morning.



They are talking about the plan and the need to get people to invest (in business).



Is that really the problem? I don't think so. I don't think we are like the 1930s where business was waiting for the capital investment to be cheaper and the lack of consumption.



I think it is very different. Business is shedding bubblicious jobs and the economy is shrinking to sustainable levels based on real income and not bubble-equity.



Is the plan just to get us to a softer landing at the sustainable level or are they attempting to do something that will not work which is maintain us at a level above sustainability.</blockquote>
I think Bernanke/Paulson were aiming for a softer landing. I think Obama has a larger goal in mind based on his own comments of creating 3 million jobs, new tech, etc. I also happen to agree with you; this was a normal process to wring out the excess. It's just that this time the excess was so large (after decades of trying to minimize recessions) that the effect is causing panic in politicians, and that never end well for the people.
 
<blockquote>Bush did three things to skyrocket the debt from $5.7 trillion to $10 trillion in his

2 terms.



1. He lowered taxes on the rich (by far the biggest item).

2. He invaded Iraq instead of winning in Afghan-Pakistan (another $600 B).

3. He deregulated Wall Street speculators. That bailout has now ?invested? $1T



So maybe we should just let the system Fail and Blame it on Bush ? Cool !



NO. Better to blame all this on Obama. Thats the conservative ticket.</blockquote>


Did we all forget 9/11?? That attack had a devastating effect on the economy and the administration.



That always seems to be overlooked by the "liberal" ticket. Blame it all on Bush and leave 911 and it's effects out of any conversation.
 
[quote author="trrenter" date=1231809476]<blockquote>Bush did three things to skyrocket the debt from $5.7 trillion to $10 trillion in his

2 terms.



1. He lowered taxes on the rich (by far the biggest item).

2. He invaded Iraq instead of winning in Afghan-Pakistan (another $600 B).

3. He deregulated Wall Street speculators. That bailout has now ?invested? $1T



So maybe we should just let the system Fail and Blame it on Bush ? Cool !



NO. Better to blame all this on Obama. Thats the conservative ticket.</blockquote>


Did we all forget 9/11?? That attack had a devastating effect on the economy and the administration.



That always seems to be overlooked by the "liberal" ticket. Blame it all on Bush and leave 911 and it's effects out of any conversation.</blockquote>


And how many Terrorists from Iraq were on those planes on 9/11 ?

Where are those darn weapons of Mass Destruction we went to war for ?



So nice to just sweep those facts aside after spending 100`s of Billions and getting 4200 US troops killed and 30,000 wounded to make us safer by invading Iraq. Thank You GW. You the man.
 
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