procrastinate.

Increase spending and boost all economic activites, use up all the (easily available) resources and pus h the enviroment to it's limit. (or our limits of controlling it) THEN with all the extra 'dead capital', innovation, robots, human capital (ie education and knowledge, which is powerful) we can default all our loans and start from a much richer position (except the natural enviroment which will be exhausted, and we'll have to find even more innovation to support ourselves...

robots can't solve everything ;)

I'm presuming you're a fellow American, strat?

I'm disgusted, at best, at what's been going on with our country.

I was pissed enough at Bush (I'm a libertarian sort of fellow) for sticking his nose in others' business and wasting so much of our money on useful crap (and huge expanses of government bureaucracy)...and now we have Obama, who makes Bush look like a fiscal conservative!

We need to do something ASAP. Before too long (measured in years in all likelyhood) we are going to see interest rates shoot up and the loans our government is using to finance all this outrageous spending will become even more expensive for us to pay the interest on (we'll never pay off any of this, realistically...) than it already is.

If the health insurance bill hadn't passed before what's going on in Europe started it wouldn't have passed at all, I'd imagine...a shame it couldn't have been delayed longer.

I'm relatively young (24), but my parents (and now I) are in the financial field so I've always been responsible with my money (started a Roth IRA at 16 - as soon as I could - and make it out every year). It kills me to see not only people wasting my tax dollars but people actually being rewarded for being lazy fools! Bah!

@strat

Luckily Obama can! Didn't you know he's the messiah!

You are thinking of the deficit in the wrong way. Yes this is the highest it's ever been before, but that's extremely misleading because the GDP has also been increasing. A more accurate way to depict the national debt is to plot it as a percentage of GDP. Take a look at this site, and you'll see the deficit is simply not that bad. We've come back from much much worse.

http://www.usgovernmentspending.com/federal_deficit_chart.html

Yeah - we're not in a world war where we're building thousands of warships and tens of thousands of tanks, burden - try changing your graph to view the gross public debt, which is a lot more worrying.

We're still spending a massive portion of the budget on the military, stratagos. And yes, the gross public debt is more worrying, but still not insurmountable. All this hand-wringing and cringing because of the deficit is counter-productive. Now the state of the economy and job situation is what I'm worried about. The deficit is simply not the cause of economic woes, just a symptom.

The bigger issue is that pension, social security etc. liabilities are somewhere around 50-100 trillion for the US (UK has it at a few trillion, hardly much better per capita)

There's a role for government spending, and I don't mind much of the public debt at the local level. Gotta keep the roads, classrooms & libraries up, give the cops and firemen decent equipment every few years. Raising taxes should be just as much a part of the discussion here.

The US has lowered tax rates pretty far since the 1940s. Perhaps its time to pay our way on the stuff we want.

Stuff I'd cut: I'd like to see social security reformed (means tests, higher age, wider investment etc) and military spending trimmed back to 1-2% of GDP. Also, there should be an annual dollar limit on earmarks per congressman.

Also, government spending doesn't result in development, money being put into the economy. That money comes from the economy in the first place.

@Ghost - In some cases it does. If you don't maintain infrastructure and provide a basic level of security, the economy suffers. Government is a part of the economy, not a completely removed object.

The bigger issue is that we're essentially pissing away our money in the least productive way possible by outspending any other state in the world 10-1 on defense expenditures. First thing we ought to do is cut the defense budget by at least 30%, and redirect about a third of that towards transform to a post-fossil fuels economy.

Even supposing I accept those exceptions, it does not imply that the government should spend over 50% of GDP (as it did in the UK last year).

Government spending absolutely results in development and money being put in the economy. How effective would our economy be operating on dirt roads? Or without power in the deep south and southwest?

"I'd like to see social security reformed (means tests, higher age, wider investment etc)" - means tests seems stupid, (and expensive, especially if the IRS has to do a seperate test to find out how much tax you are supposed to be paying and two government agencies can't share data for privacy reasons) instead offer social welfare to everyone.

Ok, everyone who claims it, and those who are paying tax can claim it as a tax credit - but not limiting it to the unemployed, let the employed claim welfare payments and pay them back in taxes if they want. You just need to ensure everyone can only claim their credit once - fraud prevention is still a problem, but i think the savings from removing a means test would more than cover the cost of fraud prevention.

I don't know what wider investment means.

Here's an idea for social security: no max to contributions. Capping the social security tax to the first $107,000 of gross income seems to me to be extraordinarily regressive.

@ora... Right now social security can only purchase US treasuries and nothing else. Wider investment would allow the fund to purchase other financial instruments (stocks, bonds etc) and potentially earn higher returns. Greater risk, greater reward in essence. You could do this via individual accounts or allowing investment firms to manage a portion of social security receipts.

I am dead fucking set against the Social Security fund purchasing anything other than US treasuries. We're already way too bailout happy. Imagine the political free for all that would happen if Social Security monies were used to purchase shares in private organizations. The influence peddling nightmares alone make it seem to me a really bad idea.

Our?

America's. Seeing as I am an American, I can use the possessive when referring to the American economy.

To start, it would help if people - legislators particularly - would actually read the constitution. Then the issue of defense spending wouldn't be so bad -- it IS one of the few purposes of the Federal government. The notion that Federal spending on local economics is helpful is ridiculous -- Government taxes people (not businesses - people pay the taxes, business pass taxes on to people), gathers the money, decides where it should go, and then sends it back to the states, often times with ridiculous strings attached. This money that was taken by the government has now been reduced by X% in bureaucratic costs -- they effect is to devalue the work that was put in to earning that money. If I need a local road fixed, the local economy can do it much more efficiently than sending my money through a federal Government sponge. Same things with Education, welfare, etc. The government can NOT stimulate the economy by removing money from it and then giving back a smaller amount! That's just ridiculous. If I come to your house and have you give me $100.00, for which I give $15 to your neighbor to pay a bill, and keep $5 for myself, and then give the remaining $80 back to you, tell me exactly how stimulated you will feel....

*Not* that I'm in favor of deficit spending, krellin, but the government isn't taking money from the local economy and giving it back for stimulus reasons - it's pulling money out of the magic Chinese piggyback and 'stimulating' growth by spending more than the US economy would normally be able to spend.

The caveat with that, of course, is that we have to pay that back *someday*, at which point we take money from the local economies... plus interest.

The logic would appear to be that the payments plus interest are a lower price to pay than watching the economy tank - in other words, the future revenue lost (ie: the FV) is less than the Present Value that would be lost if the money would not be spent.

I don't know if I necessarily agree with that logic, but of course it wasn't (solely) done for economic reasons - it was done so politicians could appear to be Doing Something. Whether it will bite us in the ass in the long run isn't something I feel qualified to comment on, but it's evident to everyone that we *can't* keep spending at these levels forever - either we can cut back ourselves, or we'll be forced to cut back when people won't lend to us any longer

I haven't heard of a local economy building a road. When did that happen. Here in the socialist paradise of Texas, it's the state and local governments.

@Bobby G: US, no surprise really. Would it hurt to specify which country?

Krellin, your argument might have some teeth to it if marginal spending was always exactly even regardless of distribution of wealth. However, it's not, and so the critical question becomes whether the intrinsic inefficiencies of government spending are outweighed by the increased consumption that comes with redistribution.

Diplomat, I would have thought from the text it was obvious, but I was wrong. Glad we cleared the issue up.

@Bob GenghisKhan, regarding dirt roads, the roads of America were built, at great expense (factoring in GDP) by private citizens. It would not be impossible for them to be maintained privately today.

It would be completely impractical to pay people for maintaining private roads, however. That's a fairly large disincentive to keep them going. And we don't live in a society where 3/4 of the population will never be 30 miles from home anymore, as we were when roads were privately built and maintained.

The danger of the deficit is perhaps overstated. I've heard numbers like $53 trillion thrown around regarding future Medicare and Medicaid liabilities, but it's all bunk. Public debt could be drastically be reduced by reducing government spending or increasing taxes. The former is unlikely to happen in any meaningful fashion due to political climate, and the latter will most likely be the go to solution, as is the case with many governments that run into problems. We'll likely see tax increases, like Bob already suggested, uncapping or raising the cap on Social Security tax is very likely, and other increases as well. It's not an economy crushing debt that will spell the downfall of America... it will just mean that you guys will have to pay slightly higher taxes, which is not a good thing by any means, but is not Armageddon.

Hopefully Obama's healthcare reform will at the very least reduce the growth of medical costs, which is far more important than paying off the debts used to pay these costs. It's the growth that needs to be reined in.