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Political & Elections -> Political & Elections - 2014 -> GOP Lists $2.5 Trillion in Spending Cuts
Post Info TOPIC: GOP Lists $2.5 Trillion in Spending Cuts
Cardinal Fang


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Date: Jan 21, 2011
RE: GOP Lists $2.5 Trillion in Spending Cuts
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As a general rule, businesses make hiring decisions based on long term forecasts. If long term rates come down, money is cheaper to borrow and businesses can make larger investments. For example, if the cost of borrowing comes down, the cost of construction comes down and more projects get funded.

BIG businesses are in a position to make hiring decisions based on long term forecasts. But big businesses don't need to borrow money, because they already have huge cash reserves. And the cost of construction is low right now: since the construction industry tanked, all those out of work construction workers and idle construction equipment can be hired cheaply. Plenty of supply (of construction resources) and not much demand equals low prices, as it always does. Big businesses could already be expanding, if they wanted to.

SMALL businesses can't make hiring decisions based on long term forecasts, because if they don't make money in the short term, they won't have a long term to worry about. Small businesses would be walloped by the big increase in unemployment caused by hundreds of thousands of newly out of work federal and state ex-employees.



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Cardinal Fang


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Date: Jan 21, 2011
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Obamacare doesn't decrease medical spending. It does cut some Medicare benefits, and by the tax on Cadillac health care plans it probably (almost certainly) decreases some health care spending in people with expensive insurance, but at the same time it gives more people the ability to go to the doctor when they get sick.

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BigG


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Date: Jan 21, 2011
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http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/

Ten year government debt is yielding less than inflation.

How can this go much lower?

Even GE has to pay more than Uncle Sam...

And I see no reason to be fair to amoral politicians, Democratic and Republican, who gave Wall Street a free pass at everyone else's expense. That money flowed to Europe and China. It did not help Americans.

The big winners in the bailout;
http://www.unelected.org/the-federal-reserves-3-3-trillion-dollar-bailout-of-foreign-banks-and-corporations

http://articles.cnn.com/2009-03-15/us/AIG.banks.list_1_aig-federal-bailout-money-bonuses-and-compensation?_s=PM:US

But now the Republicans are "born again" fiscal conservatives. Oh yeah. Until their alma maters and cronies get their a$$e$ in a bind again. Seems to happen every 20 years or so.

Meanwhile ordinary savers are being wiped out by low interest and inflation. How can paying them less generate real wealth?

-- Edited by BigG on Friday 21st of January 2011 08:21:55 PM

-- Edited by BigG on Friday 21st of January 2011 08:24:12 PM

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Abyss


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Date: Jan 21, 2011
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Cardinal Fang wrote:

BigG is a little unfair about his comments. The $2.5 trillion figure over ten years is unrealistic-- this year's Congress can't compel next year's Congress, let alone Congress ten years from now-- but the proposed cuts for this year are significant. And, I think, probably quite unpopular. That's not an argument about whether they should be enacted, but it is relevant to whether they will be.

The Republicans claim to be deeply concerned about jobs, but whatever the long run affect of their proposed cuts, the short run effect would be the loss of many, many jobs. I realize that Tea Partiers don't like government jobs, but I thought they weren't so fond of unemployment either, and in the short run their plan would increase it dramatically.


Both parties claim to care about jobs. However, any decrease in medical spending as a percentage of GDP will certainly require massive job loss. Yet, decreasing medical spending as a percentage of GDP was one of the major goals of healthcare legislation.

 



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Razorsharp


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Date: Jan 21, 2011
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As a general rule, businesses make hiring decisions based on long term forecasts. If long term rates come down, money is cheaper to borrow and businesses can make larger investments. For example, if the cost of borrowing comes down, the cost of construction comes down and more projects get funded.

If we reduce current spending, inflation pressure will also subside which makes it even easier for long term bond rates to drop.

Focusing on the short terms is a mistake. When President Obama spent a trillion dollars of government money it did not stimulate the economy by much. Why not? Because the increase in government spending (faux demand, in my opinion) was offset by an increase in debt. There is no wealth creation when an increase in government expenditures is offset by an increase in government debt.

Our economic policy should focus on wealth creation. Wealth for our society is not created by government spending. It is created by private sector activity. (I am not saying the government is irrelevant; I am saying it is irrelevant when the increase in government spending results from an increase in government debt; they are a wash). If we want more private sector activity, long term interest rates are the capital in capitalism. Lower rates means more wealth creation in the long run.



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Cardinal Fang


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Date: Jan 21, 2011
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So let's assume that long term interest rates are primarily determined by the predicted future quantity of bonds issued (although I think predicted inflation is more relevant), and long term rates (which are not currently high) go down. How does that create more jobs?

The problem right now is demand, across the board. How is decreasing already-low long term rates, and at the same time increasing unemployment, going to increase demand? Business are not going to start to ramp up production unless they think they can sell what they're making.

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Razorsharp


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Date: Jan 21, 2011
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I think enacting the proposed budget cuts will have the immediate effect of creating jobs. Why? Because if the bond market realizes the US may actually get control of its finances (and not need to issue so many long term bonds), long term interest rates will drop which will spur private job growth (the right kind of growth).

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Cardinal Fang


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Date: Jan 21, 2011
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BigG is a little unfair about his comments. The $2.5 trillion figure over ten years is unrealistic-- this year's Congress can't compel next year's Congress, let alone Congress ten years from now-- but the proposed cuts for this year are significant. And, I think, probably quite unpopular. That's not an argument about whether they should be enacted, but it is relevant to whether they will be.

The Republicans claim to be deeply concerned about jobs, but whatever the long run affect of their proposed cuts, the short run effect would be the loss of many, many jobs. I realize that Tea Partiers don't like government jobs, but I thought they weren't so fond of unemployment either, and in the short run their plan would increase it dramatically.

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BigG


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Date: Jan 20, 2011
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Any big "cuts" that are projected over ten years or in the future are not real. They are simple political BS-ing and "playing to the base".

Weren't we promised big savings and big cuts by the Bushy "starve the beast" proponets?

Life is what happens while you are making other plans.

What makes the Republicans confidant that they are going to enjoy the sort of "thousand year reich" that would allow that kind of continuity and discipline?

Tell me about what you have actually accomplished. Don't give me any "pie in the sky".

It is too easy for both parties to project some "in the future" utopia in which their fondest doctrinaire fantasies are realized. That plays better than actually cutting Grannies social security check right now.



-- Edited by BigG on Thursday 20th of January 2011 07:11:44 PM

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Razorsharp


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Date: Jan 20, 2011
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 Moving aggressively to make good on election promises to slash the federal budget, the House GOP today unveiled an eye-popping plan to eliminate $2.5 trillion in spending over the next 10 years. Gone would be Amtrak subsidies, fat checks to the Legal Services Corporationand National Endowment for the Arts, and some $900 million to run President Obama'shealthcare reform program.


I love it.  I am so glad the adults are back in town.  Maybe the Democrats will get on the bandwagon and throw in some military cuts.





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