Polytricks

~ $14.9 TRILLION national debt

~ 99.3% debt-to-GDP ratio

~ $116 TRILLION unfunded liabilities (sorta like the balance on our national credit card)

LOL 2.0

And our beloved leaders have come up with a plan to save us:

Cut ~ $3 TRILLION over 10 years.

Even if things stayed exactly the same over the next 10 years (no GDP, no inflation, no more spending, no more production) that’s roughly 20% of our debt in a decade.

Now let’s take an extrapolated view of reality into account:

Federal spending today is ~ $3.6 TRILLION. Extrapolate to the end of the year and that’s ~ $4.3 TRILLION. Assuming annual spending stays exactly the same, we will have spent ~ $43 TRILLION after ten years.

Wait, I forgot about today’s ~ $3 TRILLION plan.

Make that ~ $40 TRILLION debt.

O_O

We’re consuming and accumulating more than ever.

- Median size of houses increased 40% b/w 1979 - 2007
- Annual spending to improve existing houses increased 167% b/w 1979 - 2006
- Higher % of people in 2006 said certain items (i.e. clothes dryer, computer, a/c) are necessary, rather than luxuries, than we did in 1996
- Consumer expenditures across all income levels increased b/w 1984 - 2006
- Highest % change in consumer expenditures b/w 1979 - 2004 were for “healthcare” and “recreation”
- Overall self-assessment of “good, very good or excellent” health increased across all age levels b/w 1982 - 2006

BUT

- Household debt also increased between 1980 - 2008

Historically, society has gauged progress by the growth
in “things obtained”— whether it be housing, health care,
education, entertainment or sundry consumer goods and services—
because people tend to purchase things that make life
more convenient, pleasurable and productive.

And virtually across the board, the middle class is
consuming more of everything, which makes the notion
of a stagnant middle class an argument that
doesn’t fit well in the garage.

But, something is wrong with the way things are going.
Any advances we make occur despite DC’s dunderheadery.

If we had separation of economy and state,
perhaps things would be even better.

—  — —

Not that I agree or disagree necessarily,
but it is pretty suspect to use data ending in 06 and 07,
at the height of the bubble, and use it to draw conclusions for 2011.

By most measures, real wages did stagnate around 1980.
We have more stuff because we’ve gone into more debt
and because stuff has gotten cheaper (thanks to free trade
and Chinese manufacturing, among other things.)

The amount of debt incurred by healthcare and education
spending is going through the roof, as these costs are
growing way faster than income or inflation. If we want to
live in a country where people like Herman Cain can look
at an unemployed person and say “the only reason you
don’t have a job is because you didn’t maximize your
opportunities” and actually be correct,
those trends have to change.

Engineers vs. Intellectuals (Engineers win, hands down).

This essay pretty convincingly lays out the difference in results between people who make decisions based on facts (scientists and engineers) and ideologies (communists and fascists.)

Pretty amazing how much better things have gotten in the past 200+ years for humanity thanks to the scientific method.

So the experiment has been run,
and the results are in.
Science and technology wins;
ideology loses.

A Neanderthal axe-maker might not
make sense of a postmodernist lecture,
but I doubt that he’d have much trouble
getting comfortable with a laboratory lathe.

Meanwhile the world’s grubby, error-prone
scientists and engineers toiled away.
And what did they produce?
The greatest increases in knowledge,
health, wealth, and happiness in all human history.

Gut $1 Trillion from the budget? Could it really be that easy?

I almost released an uncontrollable chuckle when I saw this.

No more Departments of:
-  Energy
-  Housing & Urban Development
-  Commerce
-  Interior
-  Education

Freeze spending at 2006 levels for Departments of:
-  Defense
-  Health & Human Services
-  Justice
-  Agriculture
-  Homeland Security
-  State

Privatize the:
-  FAA
-  TSA

End all wars.
End all corporate subsidies.
End all foreign aid.
End all onerous Executive Order regulations.

Audit the Federal Reserve.

Like it or hate it, this statement rings true: 

Ron Paul is the ONLY candidate
who doesn’t just talk about
balancing the budget,
but who has a full plan
to get it done.

—  — —

I’ll give him credit for actually creating a concrete plan
that identifies exactly what he would cut and by how much.
That takes some balls.

That said, his plan would put us into a depression.
Government spending is part of our GDP.
$1T is about 7% of our $14T economy.
This plan would wipe out 7% of the economy—
Much worse than the worst of the recession.

Is there a rational argument that this would be good for the U.S.?
We’ve already got 14 million people unemployed.
After the chain reaction of another 7% knocked off GDP
we could be at double that. Maybe triple.

Thousands more businesses would go under.
The blow to tax revenue would mean that this plan
wouldn’t even balance the budget.

I agree that there are lots of examples of where
government needs to get out of the way,
but we don’t need to ruin the economy to get there.

—  — —

A point to consider:

The bad economist looks only at the immediate term effects of any given policy.
The good economist looks at the long-term, as well as the short-term effects, for all groups, not just a few.

I’d say our President’s current batch of myopic meatheads fall into the former category.

Perhaps this $1T plan looks too much to the future, which this would be great for the long-term health of our country. No doubt about that.

I’m not sure how thousands of businesses would go under by cutting government spending. Sure, maybe the folks receiving subsidies or the folks supplying office materials to federal agencies that add little sustainable value to the economy will go under. But should these businesses have ever been around in the first place, had we implemented smart economic policies? Certainly not by the threat of force.

Say government increased spending by $10T next year (all for good, well-intentioned, poorly implemented reasons, of course); I could make the argument that cutting that amount that we should never have been spending in the first place, would also place us in a depression.

We increased spending by $10T this past year.
The increase is about 42% of our $24T economy.
Getting rid of that spending would put us in a depression!

This probably isn’t the plan. But I’m not convinced severely reducing our federal budget, not just reducing the increase of our federal budget, isn’t the answer. That the one organization in our lives who can employ the legal use of force, is spending money it doesn’t own wildly, is. Not. Good.

Neither for the short-term, nor for the long-term.

—  — —

Actually, there is doubt about that. The basis for Paul’s proposal is ideology and economic theory, not undisputed fact.

7% of the economy gone. This doesn’t just affect businesses and people who take money directly from the government. Thousands of business failures and millions of newly unemployed would be among the unintended consequences of this plan.

I see your point, but it’s a false equivalency. We’re pretty close to historical averages on spending and taxing as a percent of GDP 23% compared to ~20 for spending and 15% compared to ~18% for taxation. Arguing to maintain a level of spending near historical average is not the same as your example—the act of government borrowing and spending $10T at once could crash the economy on its own, nevermind what happens the year after when that money is gone.

This is the foundation of the argument—the unfounded assumption that all government spending is inefficient when compared to non-government spending, and that government spending crowds out private investment. In same cases this is true. That doesn’t make it true in all cases. 
If it’s a long-term plan, then implement it over the long term.
—  — —
Well, yeah…as time increases, there are very few undisputed facts about the economy’s future (and human behavior).

Newly unemployed, yes. And I concede I don’t know how to deal with that (not that I’m supposed to [yet]).

But how would businesses go under by decreasing government spending? I know its an established fact, but maybe you could explain via a real example? I get how businesses who depend on their spot in line at the feeding trough would go under. But outside of that, what are the unintended consequence businesses that would fail? Is there a real demand for these businesses in the first place? Can we afford to keep them in business?

Traditional levels of spending and taxing? Is there something better to go by than tradition? I mean, what if whatever we’re up against today is an accumulation of long-term effects of our adherence to different traditions?

We have an estimated $13.5T in debt…shaving off $1T long-term won’t really mean much (especially if the level of spending increases).

I don’t know.

;-(
—  — —
Additional businesses would go under beyond those receiving direct aid from the government because each of those businesses and people support a much broader network of businesses. Those facing the direct loss would then pass along the absence of wealth further down the supply chain—a ripple effect.
We don’t really need to get rid of the debt… we just need to stop increasing it. Get more people back to work and the tax revenues get back in line with spending and we won’t have nearly the deficit issue that we do now. Certainly spending is a part of that too. In my book, military spending should be priority number one. Everything should get a look. If private enterprise can do it better, farm it out. If not, reorganize the way government is doing it so that it’s done more efficiently. Every business in the country has laid people off and increased productivity, so can the government. I guess what I’m getting at is that the budgeting approach currently in place is very ideologically influenced. Each department is fighting to get a bigger slice of the pie. Instead, they should each be trying to do more with less pie. Maybe to get there they have to operate like a private business, I don’t know.
As to whether there is a real demand for them…there is obviously some demand, but whether it would survive the free market is unknowable since they have never been subjected to it. That’s part of the reason I support gradual spending reductions and reorganization of government agencies rather than topline budget cuts. 
You bring up a great question as to what the correct level of taxing and spending should be for government to take on. I don’t think there’s a right answer here. It’s whatever the people want it to be—that’s the way our system of government works. Maybe if we had more direct representation it would be easier to find the right answer.
Remember that NYT interactive that let you pick your own solution to the deficit? Why can’t our representatives send that to their constituents, aggregate the results, and use that as the basis for the solution that they propose and vote for? Why even have Congress now that the Internet allows each person the ability to vote on anything instantly? The entire city of Green Bay owns the Packers football team, and it is one of the most successful in history. Is there any reason that each person taking an equivalent ownership over management of the country couldn’t work as well?

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