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"It's about taking on the spending problem..."
"The president got his tax hikes on January 1st," Boehner said bluntly after the meeting with Obama. "The discussion about revenue in my view is over. It's about taking on the spending problem here in Washington."
"Obama met for less than an hour Friday morning with House Speaker John Boehner, Senate Majority Leader Harry Reid, Senate Republican leader Mitch McConnell and House Democratic leader Nancy Pelosi."
It seems that balanced ways to managing our nation's debt crisis are to increase tax revenues (done in January with the expirations occurring) and then cut spending. The Republicans did not get their way in January - taxes were increased. So, doesn't it now seems apparent that the Dems need to give in compromise and allow spending cuts to happen?
We can't solve this problem with a one-sided approach (raising taxes only).
And how come Obama is playing these blame game cards, when the tax increases, to the Republicans' chargin, have been raised? Okay so they aren't pleased by it, but it's happened. Why can Obama blame the Republicans for playing hardball, when SPENDING is the issue here? And, he refuses to want to cut spending?
Does anyone else see the disconnect here? The U.S. has a spending problem.
57% of registered voters think the only way to control the problem is through spending cuts. The survey was done via phone calls from Feb. 25-27, to 1,010 registered voters. Two separate polling companies handled the calls to registered Rs and Ds. From the Methodology document of the survey...online...
Re: "It's about taking on the spending problem..."
From the Congressional Budget Office's website...
"Federal debt held by the public now exceeds 70 percent of the nation?s annual output (gross domestic product, or GDP) and stands at a higher percentage than in any year since 1950. Under an assumption whereby current laws generally remain unchanged, federal debt will be 77 percent of GDP in 2023, CBO projects. Such a large amount of federal debt will reduce the nation?s output and income below what would occur if the debt was smaller, and it raises the risk of a fiscal crisis (in which the government would lose the ability to borrow money at affordable interest rates). Moreover, the aging of the population and rising health care costs will tend to push debt even higher in the following decades."
Also,
"Nevertheless, the unemployment rate is expected to remain above 7? percent through next year; if that happens, 2014 will be the sixth consecutive year with unemployment exceeding 7? percent of the labor force?the longest such period in the past 70 years."
And, the CBO looked at three possible budgeting "paths"...very briefly...
"CBO analyzed three budgetary paths that would alter cumulative primary deficits (that is, deficits excluding interest costs) from 2014 to 2023 relative to those under current law?an increase of $2 trillion (Path 1), a decrease of $2 trillion (Path 2), and a decrease of $4 trillion (Path 3). In each case, the budgetary changes would begin in 2014 and increase steadily over time.
The changes in primary deficits that occurred under the three paths would induce changes in debt service (the interest the government pays on its debt). They would also affect the economy, which would have further budgetary consequences (mostly through the rate of economic growth and interest rates). As a result, CBO estimates, the changes in total deficits and in federal debt held by the public from 2014 through 2023 would be as follows:
The numbers are scary high now. More spending will increase our debt relative to our GDP. With unemployment expected to remain consistent and then increase, our GDP will not grow on its own. If GDP does not grow, or remains constant, which all indicators say it will, and spending remains the same or increases, our DEBT will increase realative to GDP and will be be in far, far worse shape.
As you can see, with Paths 2 and 3, the goal needs to be to drop debt relaitive to GDP, which those two paths can accomplish.
In addition, any percentages approaching 90% of debt to GDP are dangerous. If we spending, we can get to the high 80's by 2023.
My question is....WHY? Why spend? Is risking our entire economy and its stability WORTH it?
My vote is no. I'd rather more people have jobs than not. More people be stable, than not. And the risk here is dire. We cannot keep spending ourselves in this direction.
This chart reveals the current and three paths described above. Over the years compared to GDP its the national debt. Spending, as some Dems and Obama want to do will put us on the tan-colored path. Current levels, dark blue, will still be elevated, and light blue and white will reduce our debt significantly.
Also from the CBO, "What Are the Consequences of Rising Federal Debt?
Prolonged increases in debt relative to GDP can cause significant long-term damage to both the government?s finances and the broader economy. Such increases in federal debt would have the following consequences:
None of that really answered my question, though. You said a lot about what *isn't* an acceptable level, but I asked about what *is* an acceptable level.
Is debt at 58% of GDP acceptable? 65%? 25%?
I hear conservatives talk a lot about how they don't want government spending, but unless you say you want zero government at all and you prefer to live in anarchy, there has to be SOME government spending. But I never, ever hear anyone say what they believe an acceptable level of spending is.
"How High is Too High?
A ratio below 50% is seen as being healthy, while a ratio over 90% is generally regarded as the danger zone. This is only a general guideline, however, since a country can support higher debt if its economic growth also is robust. Conversely, slow-growing countries can run into trouble at much lower debt-to-GDP ratios than faster-growing nations."
There will always be government spending and debt. To answer your question according to the brief research I did, a debt of around 50% of GDP is considered healthy.
As the above mentions, a higher debt can be supported IF the nation's economic growth is robust. As a point of reference, the last time our nation's debt percentage of GDP was this high was immediately after WWII. The war efforts boomed the U.S. economy and the debt was able to be handled safely since there were so many financial boons upon the war ending with new growth opportunities.
The past decade to fifteen years has seen the advent of economic bubbles forming, popping and continuing to pop. This isn't the success we had in the 1950 time period as a national economy. Bubbles are growth...so people can claim that they caused our economy to grow, but they are false indicators of true economic health. A bubble is NOT healthy for an economy...they look great in our retirement portfolios as they rise, but the effects of them as they pop are nasty (see housing bubble popping).
Since we have no major economic growth occurring, we have no way to sustain a higher national debt compared to GDP.
Without cuts, we are headed for an even higher percentage - we are flirting very closely with financial danger.
Spending is a necessary part of government. And we can't assume fiscal conservatives want "anarchy" as you called it. But, there needs to be a reckoning now to avoid an economic collapse.
?To promote economic growth in the longer term, and to preserve economic and financial stability, fiscal policymakers will have to put the federal budget on a sustainable long-run path that first stabilizes the ratio of federal debt to GDP and, given the current elevated level of debt, eventually places that ratio on a downward trajectory,? Bernanke said (from 2/26/2013 in testifying to the Senate Banking Committee).
If we truly are talking about cuts of 2.3%, it's ridiculous to assume that every penny of that money is needed.
Seriously, if we can't even talk cuts in the rate of increase, a mere 2.3%, are we ever going to have spending cuts in this country?
It's so much more complicated than that, though. For one thing, the money is already spent in a lot of cases. If someone told you" next month, you need to cut 5% out of your family budget" you could probably do that. But if someone came to you on the 25th and said "by the way, for this month, you need to cut your family budget by 5%" you'd probably be pissed because you already bought that new sofa.
Allowing temporary tax cuts to expire is not the same as a tax increase. The Bust Tax Cuts were never meant to be permanent.
Frankly, I think this whole thing is stupid. This is not the time for austerity, it's the time for jobs. The time for austerity was during the Bush years when he decided to give away all that tax money to the rich instead of paying down the debt, rubber stamped by many of the same Republicans who are still running around in congress. I'm sick of the fact Republicans only care about the debt when a Democrat is in charge.
The data and numbers don't lie, though. You can see for yourself at the Congressional Budget Office's website. Also, there is some data I pulled from there in PPs.
We can easily all say it's the time for ABC and not XYZ (I too have been guilty of this). When the cold, hard numerical facts depict a certain picture it's THAT picture on which decisions need to be based and not a set of wants, desires, or emotions.
So, unfortunately the truth hurts. This case is no exception. It's tough for lots and lots of people.