Social Question

Tenpinmaster's avatar

How do you feel about the massive government spending that is borrowing against the very future of our children and grandchildren.

Asked by Tenpinmaster (2920points) November 2nd, 2009

What do you guys think about the massive borrowing from foreign nations like China, and leveraging our childrens future to push these massive legislations by our government. Is massive government spending the way out of our current economic downturn?

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36 Answers

Saturated_Brain's avatar

Massive government spending?! The USA’s national debt is $11.8 trillion! And it increases at an average of $3.75 billion daily. Anything this big is gonna come back to bite any government in the ass.

The economy is getting better. Don’t rush it. You don’t know how your fiscal and monetary policy is gonna affect things.

JLeslie's avatar

I hate all of the spending. I hate the idea of borrowing from countries like China, so if we are going to spend I would rather have a 3 year assessment on taxes and pay an extra $3K a year and get it paid off. I disagree with helping the financial institutions as we did, I am not against all of the spending related to this, but A LOT was unnecessary, my husband works for a bank, I know. And, I am not for bailing out people who took on stupid ridiculous mortgages. The only thing that gives me hope is Reagan had us in a large deficit and Clinton was able to get us out. I am not saying Obama will get us out, just saying it can turn around.

LKidKyle1985's avatar

I think its Ironic that mostly republicans are the most outspoken about the government spending (referring to those tea partiers) , yet it was a republican who shattered the national deficit (remember clinton balanced it) and actually expanded government. I don’t really like it either but there was a consensus among experts that Something had to be done to help people out. So something was done. Bush got to bail out wall street, and Obama bailed out main street. The irony is bitter yet again. If we did nothing I think you would have seen a much slower recovery than you are, everyone wants to pretend like if we did nothing everyone would be okay, but that’s not true.

IchtheosaurusRex's avatar

It’s hideous. It has gone from less than $1 Trillion in 1980 to $9 Trillion at the end of 2007, mostly due to irresponsible tax cutting by Republicans, notably Reagan and Bush 43.

It’s a damn shame that Democrats, who like to adhere to a philosophy of “pay as you go,” have been forced by this malfeasance to extend the deficit in 2009, in order to keep the country from falling into another Great Depression. But I’m glad they did. The alternative would have been much worse.

JLeslie's avatar

@LKidKyle1985 I think the tea parties were organized by the Libertarians, but your point is valid that a lot of Republicans joined the movement regarding taxation. I just thought you might want to know.

IchtheosaurusRex's avatar

@LKidKyle1985 , the average Teabagger has an IQ of 70 and the short-term memory of a fruit fly. They can’t read all of the big words in the newspapers, but they’ll go where the voice on the phone tells them.

dpworkin's avatar

How do you feel about the repugnant right wing that has controlled the redistribution of wealth since the 1980s, reversing a long history of transferring wealth from the upper classes to the middle and working classes, and instituting a policy of unfairly enriching industrialists at the expense of the middle class and the working poor?

LKidKyle1985's avatar

@JLeslie true but I feel like a lot of other conservative republicans jumped on the bandwagon

Tenpinmaster's avatar

Yes it was a republican who was a catalyst to what we see now but there are democratic forces at work which is pushing these debts into dangerous territories. The massive public option bill (which no one wants to read), and the stimulus package (which is not getting to the people who need the most help). I am not sure whether doing nothing would of been the best option when the economy started to collapse last year but the choices our current administration are making and people like Pelosi who are trying to cram all of these democratic pet projects down everybody’s throat is not the way to spark confidence in the United States system of government. This reminds me of the age old adage. “The road to hell is paved with good intentions” I sure hope the president knows what he’s doing. Or else one day we will be paying 100$ for a loaf of bread like the germans were doing after their economy collapsed

filmfann's avatar

The money was necessary to repair the economy, but I was shocked to see how much of it was wasted on projects that obviously weren’t examined.

Tenpinmaster's avatar

I’m gonna be honest.. I don’t think the government has any idea what the economy needs in terms of stimulation. Money is defiantly needed to get things rolling but as you all remember in the 1990’s during the technological boom the economy was thriving. Taxes were relatively low and everyone had a job. We need a sustainable way to create the type of industry and business we saw in the mid to late 90’s.

IchtheosaurusRex's avatar

@Tenpinmaster , the last quarter’s results show that the stimulus worked. There’s no debate about that; the concern is over sustainability.

They may not be getting everything right, but they do have an idea of what the economy needs.

Tenpinmaster's avatar

IchtheosaurusRex, Yes we did see a rise in GDP by a modest amount from programs like cash for clunkers and tax credits for first time home buyers and you are completely correct.. the answer lies in sustainability. We need programs which will be self sustaining and not a spend and burn operation. I don’t knock the democratic party for trying, I just don’t think they have the talent and mind state needed to really recover our “sinking ship” of an economy.

JLeslie's avatar

I think Americans never want to feel any pain. They think you can spend, overspend, and never have a bad consequences. Not everyone. Something like 40% of Americans pay off their credit cards in full every month, and around 30% of people own their homes outright. But there is a feeling among the majority of our citizenry and many politicians that debt is no problem, actually it has been sold as a good thing at various times. Clinton was pay as you go, can’t afford it you don’t get any money.

I think it will continue to be tough times for many people, because there is no such thing as magic.

Tenpinmaster's avatar

JLeslie, I think that you are totally correct. We want to live in a fantasy world where we can spend without consequence. I used to call our credit binge, “Debt as you go” Man, I was scared that the entire economy was gonna go belly up last year after the banks started to fail and credit was literally seized up. Has anyone had their credit reduced from banks either canceling credit accounts or putting sizable spending limits on your credit cards?

JLeslie's avatar

I haven’t. I can get all the credit I would want, but I never spent money I didn’t have. I just got a new credit card, they informed my on the letter enclosed with the new cards that they gave me $17,000 credit limit off the bat, which is crazy, ridiuclous, absurdly high.

Tenpinmaster's avatar

JLeslie. I am glad that you have fantastic credit! Mine’s is a wreck.. one amount many things on my things to fix.

JLeslie's avatar

@Tenpinmaster You can fix it. Stick with it.

wundayatta's avatar

I don’t have trouble with borrowing. That’s how we buy cars and homes and finance businesses and many other things. There’s a ratio of borrowed money to net worth. I wouldn’t be comfortable if borrowing got above 20% of National net worth. I don’t know where we are now.

tinyfaery's avatar

No. You think the country hasn’t always done this. It’s the way we operate.

JLeslie's avatar

@tinyfaery What about Clinton, he balanced the budget?

Michael's avatar

I think this has been a good conversation, and I want to add a few data points for everyone.

First, in January of this year, before President Obama took office, the Congressional Budget Office projected that the deficit this year would be $1.2 trillion. The actual deficit this year was $1.4 trillion (the 2009 fiscal year ended on Oct. 1). So for those people saying that President Obama “exploded the deficit” that’s just incorrect. Actions taken since January, the Recovery Act primarily, account for only about 15% of this year’s deficit.

Second, a large portion of this year’s deficit comes from policies pursued under the last administration. See here and here and here for three different, independent reports on the sources of this year’s large deficit.

Third, the concerns about China are a bit overstated. Only about 11% of our publicly held debt is in Chinese hands.

Fourth, a brief note for @Tenpinmaster regarding the Clinton era. You wrote, ” all remember in the 1990’s during the technological boom the economy was thriving. Taxes were relatively low and everyone had a job.” You’re mostly right, except for the part about taxes. Tax rates were higher in the 1990’s then they are now across the board. In fact, raising taxes, starting in 1990 under the first President Bush and continuing under Clinton was a major reason why the federal budget went from red to black.

Finally, I’m going to editorialize for a minute: this year’s deficit number is eye-catching, certainly, but its not actually dangerous, by any means. Some people worry that deficits of that size will lead to inflation, and in the long-run – if you continuously run deficits of that size – they are right to worry. One or two years of big deficits, however, aren’t going to spark inflation. Indeed, this year’s prices have been completely flat (and so, unfortunately, have been wages).

The real problem, then, is not this year or next year. The real problem is long-term deficits caused, in the main, by rising health care costs and by the aging of the population. Those two trends, which have been building for decades, will need to be addressed if the we are going to get the federal budget onto a more sustainable path.

tinyfaery's avatar

Who do you think is benefiting from the money I pay to social security? Who is paying for the mistakes our parents’ and their parents’ made? Us.

Tenpinmaster's avatar

Thank you @Michael for your inside regarding the deficit. I completely agree with you regarding future trends that need to be addressed. Perhaps you should help them out down there in D.C. :) lol! Can you just imagine if the government was called about their debts from bill collectors like we are. “Mr. Ob-ama” You currently owe 11.5 trillion dollars.. did u want to make monthly payments so we don’t report this to your local agency for collection. =D

Tenpinmaster's avatar

@Tinyfaery Well. people who are currently on social security are the lucky ones. i guarantee it that I will be screwed by time I need to retire. I don’t know how old you are but I think they said that the program was supposed to go broke in like 10–15 years. Absolutely ridiculous that we will be forced to fend for ourselves based on an unstable market where NO 401k is safe, and no assistance from a government that we are paying into our entire lives.

JLeslie's avatar

A friend of mine called Social Security a Ponzi scheme the other day. He has a point if you think about it. But, I am a big believer in Social Security. From what I understand they rob from the fund for other government spending, that really pisses me off.

IchtheosaurusRex's avatar

@JLeslie , Clinton had the advantage of the tech bubble and the peace dividend. That, combined with sensible fiscal policy, helped him to balance the budget and even run surpluses. Those surpluses offended Bush 43, who promptly slashed taxes, mostly for rich people, and got us into an unnecessary and very expensive war in Iraq.

When the tech bubble burst at the end of 2000, we went into a recession, and I suspect a Gore administration would yet have had to run a deficit to mediate it. However, it would have been much less painful in the long run. The false recovery that we saw in 2001–2002 didn’t generate any jobs, and was fueled by the reckless monetary policies that resulted in the big crunch of 2008.

JLeslie's avatar

@IchtheosaurusRex I agree Clinton had some luck/timing with balancing the budget. But, when many asked him to give back the money to the people, he said no. He wanted to keep it in the kitty so to speak. Not to spend it wildly on more government programs, but to have it there in case. I like this way of thinking. If the surplus had gone up and up, I would be in favor of returning to the people also, but I think there is nothing wrong with saving some money for a rainy day. Seems to me republicans prefer to run with a deficit and pay lower taxes. They like the idea of more money in their own pockets. But, you can’t keep money in your own pocket and mortgage your life, it doesn’t work in the long run. There has to be a rational balance.

IchtheosaurusRex's avatar

@Michael , Lurve for the link to the CBO report on Fiscal 2009. There are a few teabaggers I want to beat over the head with it (if they were smart enough to read the big words).

@JLeslie , the Republicans tried soooooo hard to bring Clinton down with Whitewater and Lewinskygate for a reason. The man was smart, slick, and tough. Obama is smart. I hope he’s as tough.

JLeslie's avatar

@IchtheosaurusRex I think Obama is spending too much also. I give him credit for putting some regulations on the money that has been spent by the government to keep our economy from crashing, but there is still a bunch of bullshit going on. And some of the regs seem not thought through. Some of the restrictions on salary I believe will backfire. Kind of like Cash for Clunkers, I think that was horrible. My husband works for a bank. He does Comp and Ben, and has been the one to prepare all of the documents the government is now requiring. Tons of extra work. But that is all besides the point when you realize that his bank never needed the money. They took the money from the first bail out under Bush because you had to. If you didn’t your balance sheet and income statement looked much worse than the banks that were taking, and if you looked so-so you were going to be taken over, and the government would give money to the bank taking you over. His bank hung onto the money for the same reasons, to still look good on paper, but they don’t have to have the money, they were doing ok all along. This just drives me crazy.

IchtheosaurusRex's avatar

@JLeslie , Cash for Clunkers may or may not have been a good program. Any time there is a boost of some kind in one sector of the economy – and it did help new auto sales – there are ripple effects that are hard to quantify but still show up in broad measures like the GDP. It may have helped GM and Chrysler a little bit, although it helped out makers like Ford, who weren’t hurting, more. I do have a friend who traded in his rusting ‘96 Explorer on a new Honda Pilot and was very happy to get the clunker credit.

I concur that the TARP money was sort of shoved down our throats. It has not had the effect it was intended to, i.e., to get new loans underwritten, but at least there is some prospect for taxpayers to recover the money. What we blew on tax cuts and the Iraq war – that’s just gone.

JLeslie's avatar

@IchtheosaurusRex I agree we have a chance to recover most of the money given to the banks, that is the positive side. Last I spoke with my husband about the subject he was saying it looked like the government was going to limit bonuses to the top people, but you could raise salaries. (I am not sure if this is actualy what is going to be or has been madated?) This is just dumb to me. Once you establish a salary it is difficult to reduce it. Bonuses and/or commissions paid out when things are in the black make sense, because then the total compensation package fluctuates with the profitability of the business. Maybe one could argue the bonuses need to be regulated somehow, and for sure people should not be getting bonuses if the business is in the red! But it is favorable to a company to have lower payroll expenses when revenue is down, and can afford higher payroll when business is up.

Cash for clunkers may have helped the guy who had an old car sitting in his driveway, but it is a false dollar amount, it interferes with the free market too much for me.

I realize it is very complicated. Every time I think of something that I believe might help I have a bunch of other ideas about why it is bad. Like I am in favor of shovel ready projects, because I would rather pay people to build roads than to collect unemployment, at least one is productive, but I don’t want to give money to projects just because the money is there. I don’t want people out of work to lose everything, but if we extend unemployment people will be less motivated to find a job. I could go on, but I’ll spare you.

IchtheosaurusRex's avatar

@JLeslie , the original intent of CfC was to get gas-guzzling hulks off the road. It became part of an economic stimulus only after the economy went in the toilet. Similar programs in Europe were implemented before the U.S.‘s, and have worked pretty well. But it didn’t really get to the core of the problem, which is, why do Americans drive so much, and why do we like such awful cars? We should have a tax credit for people who dump their cars altogether and take the bus.

I’d like to see more money spent on infrastructure, too. Highways over capacity, bridges falling apart, rail lines rusting – Warren Buffet just went all-in on Burlington Northern. Private investment, best thing there is. We don’t have that option with roadways, though. And government money is always problematic. First, the earmarkers skim it. Then, whole cottage industries spring up around diverting it to things it wasn’t intended for, like education subsidies going to diploma mills. Critics say, “so let’s just stop paying out the money! No more entitlements!” as if cutting off your nose to spite your face is going to solve any problems.

Same thing with health care. Medicare fraud is endemic, but even honest providers have learned how to milk the system by scheduling dubious tests and needless office visits. I’m 4 years away from Medicare. It scares the hell out of me.

Just no easy answers here.

JLeslie's avatar

@IchtheosaurusRex You said it, no easy answer. I like your thoughts.

ItsAHabit's avatar

We are acting immorally by living so far beyond our means as a country and we’re doing so at the expense of future generations who will reap the problems that we are causing by our selfishness.

GracieT's avatar

@IchtheosaurusRex, I would SO love to be able to ditch my car and walk/take the bus. But I live in a part of my area that has no bus service and it is just too far away to be able to walk anywhere. In the US we are not a culture that is geared toward the bus. As a country we are just too big and everyone is spread out to far to make the bus practical. Because of the size of our country we are accustomed to spreading out and also being able to take up space.

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