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Old 02-14-2013, 07:14 AM  
Direckshun Direckshun is offline
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The austerity policies of the past two years is threatening a double-dip recession.

It's time for some of those among us to come to two uncomfortable truths on this forum.

1. The Obama administration has overseen the sharpest decline in deficit spending just about every single one of us have seen in our lives, thanks in part to austerity demanded by Tea Party Republicans.

2. This radical reduction in the deficit is risking to stop our recovery growth dead in its tracks.

I've made this point over and over and over and over on this forum: deficit reduction retards growth.

So when you slash into the deficit as severely as we have, you will slow growth with the same severity. And what do you know? We ended up with negative growth in 2012's fourth quarter. Two quarters in a row, of course, is the legal definition of a recession (assuming the original assessment of 2012's 4th quarter holds where it is).

We've learned nothing from Europe, which has seen huge unemployment numbers, languishing recoveries, and double- and triple-dip recessions because they embraced austerity during a financial crisis while we embraced (albeit limited) stimulus.

In comes the Tea Party, and by the conclusion of the past Congressional cycle of radical austerity policy, we're now on the verge of a double-dip recession.

This is not random, folks. This is happening for that specific reason.

http://news.investors.com/blogs-capi...icit-hawks.htm

The Deficit Chart That Should Embarrass Budget Hawks
By Jed Graham
Posted 02/12/2013 08:05 AM ET



Here's a pretty important fact that virtually everyone in Washington seems oblivious to: The federal deficit has never fallen as fast as it's falling now without a coincident recession.

To be specific, CBO expects the deficit to shrink from 8.7% of GDP in fiscal 2011 to 5.3% in fiscal 2013 if the sequester takes effect and to 5.5% if it doesn't. Either way, the two-year deficit reduction — equal to 3.4% of the economy if automatic budget cuts are triggered and 3.2% if not — would stand far above any other fiscal tightening since World War II.

Until the aftermath of the Great Recession, there were only three such periods in which the deficit shrank by a cumulative 2% of GDP or more. The 1960-61 and 1969-70 episodes both helped bring about a recession.

Far steeper deficit cuts during the demobilization from World War II and in 1937-38 both precipitated economic reversals.

Now the deficit is shrinking about 50% faster than it did during the booming late 1990s, when the jobless rate was falling south of 5% and tax revenues were soaring — without tax hikes.

That's not to say that a recession is in the cards now, as the Federal Reserve applies its might to keep housing on a recovery path and helps propel the stock market higher. But growth is likely to be disappointingly weak yet again.

The Congressional Budget Office projects just 100,000 jobs will be added per month this year, the jobless rate will remain stuck around 8% and the economy will grow 1.4% if the sequester takes effect, but that may be too optimistic.

There was certainly no good economic reason for policymakers to risk the hit to growth that came with the roughly $200 billion fiscal cliff tax hike. Now they risk compounding the fiscal drag with poorly targeted budget cuts.

History suggests that there's little good to be gotten from cutting the deficit much faster than 1% of GDP per year. That's especially true at the moment, given the nature of our related demographic and budget challenges.

Both of those challenges suggest that growth should be our paramount concern, far ahead of near-term deficit reduction, even as we work to improve the intermediate-term budget outlook.

As far as the budget goes, it makes no sense that Congress remains focused on cutting discretionary spending. The danger clearly comes from entitlement programs, particularly health care, and the prospect that interest on the debt will spiral if we don't better align spending promises with revenues. These are programs that need to be reformed gradually and with great care, but there's no good reason to delay.

As for demographics, this was supposed to be the decade in which the leading edge of the Baby Boom generation began to ease out of the workforce and pass the baton to the next generations. Instead, there are not enough jobs to go around to allow for a seamless transition and Baby Boomers are hanging on longer as they try to recover from the financial damage inflicted by the housing bust.

There has been plenty of economic pain to go around, but younger workers have borne the brunt of three crises — jobs, housing and student loans. Since January 2000, the number of full-time jobs is up 10.5 million among workers 55 and up but down close to 8 million among the under-55 population.

In the speeches of Washington politicians, deficit reduction is all about being fair to the young and not leaving the next generation with ungainly debts. That might be true if deficit reduction came through smart changes to entitlement programs, but that's not the case.

In effect, the overly rapid fiscal retrenchment is giving younger workers a deal that none of them should want: We'll slash the deficit now, so that you will have a harder time getting good jobs and paying back your personal debts. We'll cut critical government spending on education, infrastructure and science so that new college graduates for whom job prospects remain discouraging can put their futures on hold for a little longer.
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Old 02-14-2013, 06:14 PM   #46
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Originally Posted by BigRedChief View Post
Sorry about the dates my bad. That being said economist's maintain that the stimulus and the Obama financial policies ended the recession. Again we are debating the official end of the recession. I don't know of anyone personally that thinks we recovered in 2009.
See now you're using a different term again. Recovering from a recession is different than when it ended. The recession officially ended in the summer of 2009, most economists say June. The Obama recovery has been historically dismal. You even started a thread about when the economy would recover and it died an ugly, deserved death. That isn't your fault, we can instead blame an administration that squandered $800 billion dollars, much on their donors, and putting their own political beliefs ahead of sound economic principles.

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Huh????? You still haven't answered my question. Because this is important. I respect your opinion and wonder how you think England's path was better than our path.

Do you feel we should have used austerity and went through a double dip recession and almost a third recession and still can't see a guaranteed recovery? That was a better path?
I admit I went along with coddling the public with their tax breaks early on after the recession. Hindsight it was probably wrong but whatever. The recovery has been so dismal I'm not sure how much it really would have mattered economically. Politically all it gained was a reelected president with, like I said, a dismal record when it comes to the economy.

But once it was evident the debt was going to explode I've been on record as saying something should be done about it. I was for raising taxes on everyone, including myself. I'm not sure how more non-partisan I could get on that. It's evident to me at least that kicking our debt problem down the road will create a bigger problem than facing the one we'd have by cutting spending now.

Obama has not negotiated iin good faith, he's gotten most of what he wants, and we're still heading for the cliff. He keeps painting himself into a corner without facing reality. No chart Direckshun can post changes that.

Does that answer your question?
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Old 02-14-2013, 06:18 PM   #47
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Originally Posted by blaise View Post
We don't need any more stimulus. Once we start making the rich pay their fair share all our problems will be solved.
Yeah that's the funny thing. The libs here are now arguing that cutting spending will kill the supposed recovery. They never mention on how raising taxes will do the same. They are good little soldiers.
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Old 02-14-2013, 06:21 PM   #48
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No matter how you slice it or represent it, if you are out of the bubble and I know you yourself have independent thoughts, the stimulus was a rousing success. The facts are undeniable.
I'd say Obama's donors think it was a rousing success.

The rest of us would point to the Trillion dollar deficits Obama racks up every year as proof it wasn't a success at all.
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Old 02-14-2013, 06:23 PM   #49
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Originally Posted by mlyonsd View Post
Yeah that's the funny thing. The libs here are now arguing that cutting spending will kill the supposed recovery. They never mention on how raising taxes will do the same. They are good little soldiers.
If you are going to engage in deficit reduction of any kind, raising taxes on the wealthy is one of the most harmless ways to do it.

Raising taxes on the wealthy barely touches GDP growth.
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Old 02-14-2013, 06:23 PM   #50
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Originally Posted by mlyonsd View Post
I'd say Obama's donors think it was a rousing success.

The rest of us would point to the Trillion dollar deficits Obama racks up every year as proof it wasn't a success at all.
Check the OP.

Obama inherited a $1.3T deficit, and he's been on a historic tear bringing it down.

The longer you ignore this, the longer you remain uninformed.
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Old 02-14-2013, 06:26 PM   #51
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Originally Posted by Direckshun View Post
If you are going to engage in deficit reduction of any kind, raising taxes on the wealthy is one of the most harmless ways to do it.

Raising taxes on the wealthy barely touches GDP growth.
As I've tried to school you before on this....raising taxes on the rich doesn't cut the debt. It doesn't even pay its interest.
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Old 02-14-2013, 06:28 PM   #52
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Originally Posted by mlyonsd View Post
As I've tried to school you before on this....raising taxes on the rich doesn't cut the debt. It doesn't even pay its interest.
You're changing the subject.

Your argument was, "if liberals care about deficit reduction slowing growth, then why are they okay with raising taxes on the wealthy?"

That was my answer. Liberals are alright with raising taxes on the wealthy because it barely slows growth at all, if it even does so.
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Old 02-14-2013, 06:33 PM   #53
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Originally Posted by mlyonsd View Post
As I've tried to school you before on this....raising taxes on the rich doesn't cut the debt. It doesn't even pay its interest.
But it does pay the Sandy relief bill, which gobbled up all the projected income from the tax hike. Dems want to raise taxes to spend on buying votes , not cut deficits. That's why tax hikes are unwarranted.
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Old 02-14-2013, 06:36 PM   #54
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Originally Posted by Direckshun View Post
Check the OP.

Obama inherited a $1.3T deficit, and he's been on a historic tear bringing it down.

The longer you ignore this, the longer you remain uninformed.
That fact you keep bringing up is not only pointless, it's dishonest.

The debt Obama keeps adding up is long term, not some short term fix. And even in your silly numbers the debt keeps rising. No one, repeat, no one can claim Obama will reduce the debt 1 cent during his 8 years. In fact, by not reducing spending he's adding to it at a record pace never seen before by any American president.

There is not ONE Obama policy you can point to that doesn't avoid a disaster in 10 years.
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Old 02-14-2013, 06:40 PM   #55
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Originally Posted by mlyonsd View Post
That fact you keep bringing up is not only pointless, it's dishonest.

The debt Obama keeps adding up is long term, not some short term fix. And even in your silly numbers the debt keeps rising. No one, repeat, no one can claim Obama will reduce the debt 1 cent during his 8 years. In fact, by not reducing spending he's adding to it at a record pace never seen before by any American president.

There is not ONE Obama policy you can point to that doesn't avoid a disaster in 10 years.
That's the whole point of this thread. It's pretty clear you didn't bother reading the OP.

In order for Obama to reduce the debt on his watch, he would have to eliminate the $1.3 annual deficit he inherited over the course of his Presidency.

In the wake of a recession, that's asking for a Second Great Depression.

That means Obama would have had to have signed into law at least a $13 trillion deficit reduciton plan for the next ten years.

That... is insanity. And another Great Depression in the making.

The GOP and Obama were working on a $3 trillion deficit reduction package in 2011.

You are advocating over four times that.

Do you understand what that would do to the economy?
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Old 02-14-2013, 06:42 PM   #56
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Originally Posted by Direckshun View Post
You're changing the subject.

Your argument was, "if liberals care about deficit reduction slowing growth, then why are they okay with raising taxes on the wealthy?"

That was my answer. Liberals are alright with raising taxes on the wealthy because it barely slows growth at all, if it even does so.
I'm not changing the subject. Our problem is our debt. You point to reducing our deficit like it is some big accomplishment. When you're $16T in debt and rising just cutting the deficit is comparable to everyone on the Titanic using buckets to keep it afloat.

Obama failed on his promise to cut the deficit. You can't argue that, only make excuses.
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Old 02-14-2013, 06:44 PM   #57
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Originally Posted by mlyonsd View Post
I'm not changing the subject. Our problem is our debt. You point to reducing our deficit like it is some big accomplishment. When you're $16T in debt and rising just cutting the deficit is comparable to everyone on the Titanic using buckets to keep it afloat.

Obama failed on his promise to cut the deficit. You can't argue that, only make excuses.
This is absolutely unconnected to reality. He's cut the deficit at speeds unseen in our lifetimes.
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Old 02-14-2013, 07:02 PM   #58
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Originally Posted by Direckshun View Post
This is absolutely unconnected to reality. He's cut the deficit at speeds unseen in our lifetimes.
He didn't cut it even close to what he'd claim he would. You're the one unconnected to reality.
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Old 02-14-2013, 07:02 PM   #59
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Originally Posted by mlyonsd View Post
I'd say Obama's donors think it was a rousing success.

The rest of us would point to the Trillion dollar deficits Obama racks up every year as proof it wasn't a success at all.
Trillions? Last I checked Obama or the CBO was projecting a $800 BILLION deficit. Thats deficit reduction in 4 years faster than any President in history. Fact check pending
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Old 02-14-2013, 07:05 PM   #60
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So here we have one liberal saying deficits don't matter ad that we should spend our way out. While the other is lauding Obamas deficit reduction successes. You can't make this stuff up.
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