Real Change you can believe in!

• BoatShoes

  BGFalcons82;1361540 wrote:Has anyone looked at that $800,000,000,000 stimulus spending since 2009? If anyone thought it was just a 1-time occurence, check the annual spending in 2010, 2011 and 2012. You'll find that it never went away. In other words, it's been 4 years x $800,000,000,000 or $3,200,000,000,000 since Our Dear Leader signed off on spending our heirs tax money. We still have over 20,000,000 unemployed, a virtually stagnant economy, and record numbers of people on government assistance. Hey Keynes' fans....when exactly do you give up?

  Actual deficit for FY 2012 was 1.1 trillion. With Desired Savings and Desired Imports where they are we would need about a deficit of 10% of GDP (give or take a couple $100 billion depending on the fiscal multipliers of the particular policies) or 1.6-1.8 trillion to create enough aggregate demand to close the output gap and get to full employment w/o causing demand-pull inflation.
  
  So, continuing to close the budget deficit, making it smaller year-after-year, looking to make budget deals and not extending payroll tax cuts, etc. etc. amounts to the opposite of a keynesian prescription under current conditions. This is austerity. Reducing a budget deficit, even if not to your satisfaction, that still results in an increase in public debt to gdp (as gdp predictably doesn't rise in the face of contractionary policy) is austerity. Our Budget deficits have actually gotten more in balance over the last couple of years but yet GDP has not risen as you would expect and consequently our public debt to GDP ratios continue to rise, just as you'd expect. It is the views of people who think that we should be closing our actual budget deficit that have been repudiated by experience.
  
  The whole reason we made a fiscal cliff deal is because going over the cliff would've closed our deficit too fast and caused a recession and unemployment!
• BGFalcons82

  

  Boat - Your Keynes' approach has torched over $3,000,000,000,000 in attempting to overcome our economic problems, which were caused by the Bush tax cuts of 2001-03 according to the winners of the 2012 election. Now that they've instituted these same cuts "permanently" (nothing is permanent in government-speak), won't we have all of the same problems that were originally caused? It's a loaded question and I'm digressing.
  
  I find it interesting that someone actually thinks that our deficits should be 50% higher than they are currently and thus labels THAT "shortfall" as austerity!! Your barrister skills are on full display with that gem! We're spending more money than exists and you believe these are austere measures because it should be MORE! Only in America :laugh:
• gut

  BoatShoes;1361589 wrote:This is wrong. The structural budget deficit (not the actual budget deficit sensitive to unemployment) is what matters. The structural budget deficit at full employment, when the output gap is closed, including interest payments was around 2% of GDP even before the "fiscal cliff deal."

  2% a year before we piled on Obamacare and a slew of other increases to entitlements. At 3%+ of GDP you're zooming past $500B. We hit $400B in 2007, which was the largest under Bush (ex - bailout/stimululs). Obama took that baseline and really ramped things up.
  
  And, um, you're parsing of the deficit makes no sense. Debt is debt. It's not like debt is going to be forgiven because that was money to pay unemployed. As you know, the keynesian model requires banking money in good times to pay for those bad times....which would mean you're $300B bogey is wrong again.