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In the news recently Republican Newt Gingrich’s people admited that while Newt is on vacation in Italy his failed presidential campaign is almost $5 million dollars in debt.
Just how does someone spew rhetoric about how evil debt is and how we must cut deep into social programs to cut defecit spending but then go into a huge amount of debt himself? And its not just him. Michele “Crazy Eyes” Bachmann left the race a cool million in the hole and she was the Tea Party darling.
So putting slogans aside we can see not all debt or deficit spending is bad. I get that run away spending is wasteful and harmful but responsible deficit spending usually allows for a profit. This is why a line of credit in business is so important. Free market requires going into debt to expand and make more money.
The same is true for government spending. Investment in infastructure, research and our youth will pay in dividends for the future! Estimates for just NASA’s ” return on investment range from 33% — not great, but not bad — to as high as 10 to 1.”. So lets stop this attack on government spending and look at this in a rational manner. Responsible spending, even deficit spending, can pay off in the long run.
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Gaijinass 
‘Debt’ is just a wedge word. What it is code for is to kill social spending, because right-wing voters, although they often identify as Christian, would ask, “am I my brother’s keeper?” Culling debt is a lie, not just because everything from a neocon’s mouth is a lie, but history shows the neocons create more debt than the centrists, in the US and in Canada: they just like to direct it to prisons, the military and corporate graft.
Exactly they’re throwing around “debt” to roll back programs that have tried to create social equality.
Debt is a problem, just ask the good folks of Stockton, California. Of the citizens of Bakersfield, California. Or the citizens of Spain, or Greece…
You raise an important issue (deficit spending) and point to an uncomfortable truth for Republicans: despite tough talk, Republicans are just like Democrats when it’s time to walk the walk. In fact, until Obama came along, Bush was the greatest deficit spending President in the history of the USA. This merely proves that the Republicans are more hypocritical than Democrats. It doesn’t prove that deficit spending is a good idea. People (creditors) get hurt when debtors can’t repay what they have borrowed.
An editorial in the Wall Street Journal some time ago pointed out that you could tax every last penny of every citizen and it would not pay the national debt, which has ballooned beyond repair. The solution you propose would be to “grow” our way out of it. It sounds like an attractive proposition, except that history has shown that deficit spending is permanent, through good times and bad. Which means that every year the problem gets worse. In fact, the only reason it has not imploded our system is because the government borrows money from itself (The Federal Reserve Bank “lends” money to the Treasury.)
The most immediate problem with deficit spending is the complete and utter lack of priorities and lack of any sense of urgency. If we wait long enough the balloon will pop and priorities (eating) will fall into place naturally. In the meantime, the federal government continues to spend on military intervention, maintaining a military presence around the globe at a huge cost, on hundreds of billions in farm (read: agri-corp) subsidies, and on an apparently infinite list of political pork. There is no indication from most quarters that we have any deficit spending problem at all. Except during the campaigns.
Here in California, we face a giant deficit despite many job cuts and other cuts to social services, schools, parks, etc. Surely, after such cuts, the government of California tackled the fastest growing spending item in our budget, the generous pensions of public employees. Wrong. That “discussion” has been… deferred to another day. Instead, in an act of irresponsibility that is a stick in the eye of every California taxpayer, the legislature approved a $62 billion NEW SPENDING project on high speed rail (for a zig-zaggy route between Los Angeles and San Fran that makes no sense other than if you inquire about which politicians have interests in the various zig-zags along the way). Priorities? What priorities. Oh, there is one new priority: in November Californian’s will vote on a proposed MASSIVE TAX INCREASE.
This comment is awesome.
The debt isn’t out of control and the government only spends 6% of general revenue maintaining the interest. Today the national debt held by the public stands at 67% of GDP (The IMF claims it is 102%). Japan ratio is almost 200%. True that could be going other places but it’s not unmanageable.
That’s the point though in recessions there should be massive deficit spending so that we CAN grow our way out. Then in good times the spending is parred back and the profit used to pay down the debt. California now has such a problem with its debt because tax revenue is down so much due to the sluggish economy. If the economy improves tax revenue will go up and the deficit will be closed.
As for the new high speed train you mention the $62 billion is spread out over many years and that the initial cost for California is $4.5 billion of which about half will be used to upgrade California’s aging train network which will in the future return a net return on investment.
I think you are confusing revenue and spending. 6% of SPENDING is on interest (thanks to artificially near-zero rates… which won’t last forever). If you look at REVENUE ($2.3 trillion) 9% is spent on interest payments. Overall, for fiscal 2011, the gov’t spent 156% of revenue. You call for MASSIVE deficit spending. If $1.3 trillion isn’t massive deficit spending then I don’t know what is.
An interesting feature of your chart above is that it shows that “discretionary” spending is 18 percent of the total. In other words, if every “optional” spending item were eliminated there would still be a $700 billion deficit because of entitlements (social security, medicare, etc.) In other words, you don’t have to worry about deficit spending going away anytime soon because the deficit is “structural” and cannot be solved without entitlement reform. Paul Ryan, a Tea Party favorite, has proposed a “harsh” budget plan that balances the budget in… 15 YEARS! As far as I am aware, only Ron Paul has proposed a budget that balances by 2014 but I wouldn’t hold my breath for its implementation.
You argue that deficit spending will boost the economy, but the 2008 crash came on the heels deficit spending every year since 1976. By your logic we should all be millionaires and have zero unemployment by now. The reality is that deficit spending (and debt) undermine confidence in the future and almost certainly do more harm than good.
There are also ethical and logical reasons why deficit spending is less productive than allowing people to spend their own money. For example, government spending is often directed to unproductive pet projects which results in waste. Bureaucrats are spending other peoples money and are not as concerned about getting a return on their investment. On the other hand, when you or I have to pull out our wallet and pay cash for something, we like to think we are at least getting something of equal value in return. Then there is the coercion/use of force problem with taxation, which is basically taking another’s money by force. Who has a higher claim on the fruit of your labor than you? I would argue that nobody does.
We probably won’t solve these issues today but it is an interesting discussion and it may be the story of the decade when historians look back at how Rome crashed and burned… er, Washington.
Are you referring to the $700 billion TARP payouts that have almost all been paid back?
“The Treasury Department has projected that the total bank investments by TARP will earn a profit because of additional income from dividends, interest and the sale of stock warrants the government received.”
The problem with the past deficit spending it was always ignored to par it back during the good times, barring of course Clinton’s brief budgetary surplus in the 90s.
The $700 billion structural deficit I refer to is just the mathematical difference between mandatory spending items (total spending of $3.6 trillion) – (discretionary spending approx. $600 billion) minus total receipts/revenue of $2.3 trillion = $700 billion structural deficit that cannot be eliminated by reducing appropriations. This is the deficit that would have occurred in 2011 if all federal spending on highways, schools, federal employee salaries, etc. had been eliminated. The actual deficit in 2011 was $1.3 trillion.
TARP was a perverse incentive program of the worst kind, rewarding the most reckless corporations and their shareholders and creditors at the expense of taxpayers. Whether the government actually recovers the money from TARP is one question, but the damage inflicted to the integrity of the system will be long lasting. What a black eye for America.
ugh, I hate when those people like Gingrich, Bachman and Palin who decided to pick up the mantle of running on the Tea Party ticket. They just stole a movement that they never truly supported. I’m a conservative independent and it makes me sick.
The tea party in reality had more in common with the most recent occupy movement then the occupy people would like to admit. It was just taken in two different directions. One was slightly more organized but not really. Its all about lets take this shit back then rhetoric. and those people made it about rhetoric.
the election committee should require a proof of income for these people instead of Mitt Romney paying him off if he is lucky enough to become president. Truely broken system.
What was that statement about Japans debt about? I think trying to compare Japan and the US is a waste of time. The US is in a vastly more dire situation.
I think the nature of debt is important.
Japans military spending is 2% as opposed to Americas which is now, I believe, 19%. This included intelligence spending as well.
That’s a big chunk. It’s a big unnecessary chunk. For hundreds of bases all over the world basically doing jack shit. And Japan, with that little 2%, effectively has the fifth largest military in the world and in all likelihood, nuclear capability despite it’s declarations to the contrary.
Next, Japan largely owns its debt. When Japan makes interest payments, those payments are made to Japan. Unlike the US that pays to foreign countries. That money then leaves the US and these days, is unlikely to return.
The concept of “growing” out of this recession is based on flawed economic principals. There is no such thing as “sustainable growth” on an honest timeline. It’s an oxymoron. Because, when growth reaches 100%, that’s it. the games over. Because that is 100% of what was available.
There can be sustainable CHANGE, but this is what the USG is trying so hard to avoid and hide. Nobody really wants to change, hence this desperate clinging on to of antiquated and inherently flawed economic policies.
Also what’s interesting about the Japanese military budget is that a large part of it is actually paying for the US occupation military bases on Japanese land. Although apparently the Japanese are trying to lower the amount they pay to host the Americans.