Last month I heard both Rep. Kristi Noem and Sen. John Thune read from the same script about out-of-control government spending. Their shaky worldview/campaign strategy depends on keeping everyone scared of ever-expanding (socialist!) government.
But did you know that for the last two years under President Barack Obama, government has shrunk 1.4% a year?
Did you know that the Bureau of Economic Analysis, in a report released this week, says otherwise decent gains in GDP are being offset by "negative contributions from federal government spending and state and local government spending"? (That's econo-speak for "less government".)
Did you know that the post-recession Reagan Recovery and Bush II Boomlet both enjoyed support from higher real government consumption and investment spending, while President Obama has been working to pull the economy back to full health without such government assistance?
Tie that all to my discussion last night of Robert Reich's argument for greater government investment and distribution of production gains. Government spending does not inherently trample on liberty and apple pie. Government spending can shake up shake up economically stifling concentration of wealth, boost the purchasing power of the middle class, and make life better for all of us.
Unfortunately life is not as simple as you want it to be: our federal government is borrowing a great deal of money to meet its obligations. At some point interest rates will rise to combat inflation and then the government will be spending a huge chunk of change to pay the interest on the national debt.
There is no such thing as a free lunch.
Cory, you bring up an interesting idea. Maybe spending and saving at the super-macro level (large nations or the entire world) don't follow the same paradigm as they do at the individual, business, and local government levels.
I've often wondered, if the whole world is in debt, who owns the loan? The Vulcans? The Klingons? Black Holes? Dark Matter?
Maybe it's our fear of the debt, and not the debt itself, that constitutes the real danger.
The trouble is, if we let the debt keep growing as it is, whether it's a make-believe boogeyperson (as some pundits say) or not, sooner or later we'll hit a collective panic button, won't we? So how do we stop this fear? And what would happen if we simply went on spending, without end, without limit, and without fear? What would happen? Would the Chinese come poop on our patios or something?
Food (or something else) for thought. I'm not trying to be snarky here, and I'm not trying to promote any theory. I just wonder.
Stan, here's a pie chart of the National Debt. As of mid-May of last year, 68% of it was money we owe "ourselves."
http://www.optimist123.com/optimist/2011/08/pie-chart-of-who-owns-the-national-debt-mid-2011.html
...also note the "China" portion of the national debt is 8% followed by Japan at 7%. I'm guessing the Klingons and the Vulcans are probably lumped in with "other countries."
My question to you, Stan, is, what does it mean when you borrow money from yourself at roughly 0% interest? Doesn't that seem a little "Black Holey" or "Dark Matterish" to you?
Stan, bingo! Macro and micro are different! The federal budget is not like a simple game of Monopoly with Booker and the girls.
Bill: of minor interest, I see that the chart you provide says 31% of our federal debt is owned by foreign countries. In Rapid City Feb. 4, Rep. Kristi Noem claimed that 47% of our debt is owned by foreign countries (see 7:00 in this video of Kristi's coached slideshow).
Cory, you can't just print money. That is what we are trying to do now. Are you not a student of history as well as of current events?
If we would've faced the music years ago, we would not have over $15 trillion in debt.
Inflation is not the teacher's friend. Your salary will not erode faster when it kicks in.
Yes, she makes it sound like most of the of the "foreign debt" is owed to China. I wonder if she knows she's lying, or just repeating what someone told her to say?
Here are the Wikipedia numbers:
As of May 2011 the largest single holder of U.S. government debt was China, with 26 percent of all foreign-held U.S. Treasury securities (8% of total US public debt). China's holdings of government debt, as a percentage of all foreign-held government debt, have decreased a bit between 2010 and 2011, but are up significantly since 2000 (when China held just 6 percent of all foreign-held U.S. Treasury securities).
There is sufficient data there for you to do the numbers and check her math, Cory... as well as the math on the chart I linked to.
http://en.wikipedia.org/wiki/United_States_public_debt
Cory, don't have time to look it up but I seem to recall both are right, depending on timing and how you define debt.
I THINK based on my recollection that it fluctuates between 45-50% if you do not include government guaranteed debt and the lower number if it is Treasury obligations and GICs and the like. Or the other way around.
The fluctuations are affected by currency valuations, balance of trade, etc. No matter which you use the real point is the trend is such we are close to losing sovereignty ala Greece. Our per capita public debt already exceeds Greece and in two years our Debt to GDP will exceed Greece.
But to your larger point, to reference the miniscule decline over two years without considering the huge increase before hand is disingenuous.
Troy, the huge increase in 2009 was the effort to counteract the dramatic retraction in the private sector. Did you prefer a deeper recession? The decrease now puts the lie to claims that President Obama is egregiously expanding government.
And the chart in the Krugman post goes back to 2009 Q2, showing that real government consumption and investment have stayed steady or slightly declined compared to clear expansions under Reagan and Bush II in response to their recessions.
Two related stories:
http://voices.washingtonpost.com/ezra-klein/2011/02/the_submerged_state_in_one_gra.html
http://copssaylegalize.blogspot.com/2012/02/us-law-enforcement-officials-call-on.html
Troy, sorry but that sounds like a guy running a "find the pea" shell game.
Maybe when you have more time, you can lay it out cleaner?
For example, can you verify that the charts and the data I linked to are in error as you seem to be implying?
When we are shown the "National Debt" by the GOP, it's always the largest possible number (currently around $15 trillion). Why then would one use a smaller number when illustrating what percentage of that big number was owed to foreign nations?
And why imply a larger proportunate share of that debt is owed to China than is really the case?
I have some theories, but I'd like to hear your first.
Researchers in chemical toilet develop hydrogen generator: NSF.
Bill asks, "My question to you, Stan, is, what does it mean when you borrow money from yourself at roughly 0% interest? Doesn’t that seem a little 'Black Holey' or 'Dark Matterish' to you?"
+ I say the word "recursive" comes to mind, but I'm not sure that's exactly right. However, is the interest really 0%? I guess it is if we can come to an agreement among ourselves about it ...
Cory says, "Stan, bingo! Macro and micro are different! The federal budget is not like a simple game of Monopoly with Booker and the girls."
+ I say: We hope.