Is there even any hope in this debt mess?

[teejayevans]

It seems like Congress is unable to act because it is structurally designed to operate in a strict two party system. Now with the "Tea Party" impact we essentially have a third party that is preventing the House from arriving at a compromise.

Actually we have 4:
Tea Party, Mod Reps , Mod Dems, Progressive Dems

But congress is unable to act because they are politicians, who only care about getting reelected and getting money from the special interest groups.
I hope if we do have to stop writing checks, the first ones we stop writing is the paychecks for congress/president
TJ

 

[sheehs1]

A balanced budget amendment is one of the worst ideas bouncing around today.

When a recession hits, the absolute worst thing for the government to do is to try to balance the budget by raising taxes/cutting spending.

Think about this recession. How much worse would it have been without unemployment insurance, the stimulus (which prevented mass layoffs at the state government level, and provided large tax cuts for business), and with the large tax increases that would have been required to fund the government as revenues plummetted?

Any sensible balanced budget amendment would require so many loopholes that it would be almost useless.

Don't know Hamlet. Probably true regarding jobs.etc.....but ...from where I sit...this "recession" is likely to last 10 years or longer...so at what point do you cap and balance? Balance budget amendment doesn't mean....we can't do all the things you mentioned...to some degree during a recession. Heck...we're doing it all now anyway.

Of course the alternative is we become like other countries with inflation at 21%. As if THAT isn't going to nail us all.
It's just so doggone confusing....and sounds so hopeless.

 

[teejayevans]

When a recession hits, the absolute worst thing for the government to do is to try to balance the budget by raising taxes/cutting spending.

Think about this recession. How much worse would it have been without unemployment insurance, the stimulus (which prevented mass layoffs at the state government level, and provided large tax cuts for business), and with the large tax increases that would have been required to fund the government as revenues plummetted?

The stimulas did nothing but delay the state employee layoffs, most of it misdirected, hence the unemployment of 10% instead of the predicted high of 8%.
Those tax breaks were used by GE to not pay taxes, GE did not hired any new employees (in US anyway)...waste of money
Housing tax credits...housing still falling
Waste of money....accomplished nothing. Arguably we are still in a recession or heading back in...
TJ

 

[Hamlet]

I think that any escape clauses would pretty much neuter a balanced budget amendment.

I would think that those escape clauses would probably include recession and war.

We are now in a state of more or less permanent war, so that clause alone would make any balanced budget amendment useless

A balanced budget amendment, with some escape clause for special circumstances, seems like a good idea. But in the short-term, it will required either a dramatic shrinking of government, or a dramatic increase in taxes, or some combination of the two. Did I mention "disruptive"? There'll be a lot of pain, something we don't seem good at any more.

Now a glide path, of say 10-20 years, would be somewhat less painful, but there are too many election cycles in that long of a period...

 

[sheehs1]

A friend just sent me this so thought I'd share.....

www.usdebt.kleptocracy.us/

 

[Hamlet]

The actual recession has passed. We have a huge unemployment problem, but the system is not on the verge of total collapse like it was. We can start trying to trim back the size of government slowly now. It will still be painful, but not like it would have been doing it all at once at the nadir of the recession.

People seem to have forgotten that we were losing 700k+ jobs a month in early 2009. That was not the time for massive cuts in government spending.

Don't know Hamlet. Probably true regarding jobs.etc.....but ...from where I sit...this "recession" is likely to last 10 years or longer...so at what point do you cap and balance? Balance budget amendment doesn't mean....we can't do all the things you mentioned...to some degree during a recession. Heck...we're doing it all now anyway.

Of course the alternative is we become like other countries with inflation at 21%. As if THAT isn't going to nail us all.
It's just so doggone confusing....and sounds so hopeless.

 

[sheehs1]

The actual recession has passed. We have a huge unemployment problem, but the system is not on the verge of total collapse like it was. We can start trying to trim back the size of government slowly now. It will still be painful, but not like it would have been doing it all at once at the nadir of the recession.

People seem to have forgotten that we were losing 700k+ jobs a month in early 2009. That was not the time for massive cuts in government spending.

I'm not so sure. I don't care what the government measures it by....we are still loosing jobs, we may have a credit crisis, housing will be in toilet for 10plus years.......just don't think we are anywhere near out of the woods ...or in a "growth cycle".

 

[HFWR]

The stimulas did nothing but delay the state employee layoffs, most of it misdirected, hence the unemployment of 10% instead of the predicted high of 8%.
Those tax breaks were used by GE to not pay taxes, GE did not hired any new employees (in US anyway)...waste of money
Housing tax credits...housing still falling
Waste of money....accomplished nothing. Arguably we are still in a recession or heading back in...
TJ

Arguably, as you say, the implied intent of both stimulus and QE1-2 was to allow the economy to "normalize". Once mark-to-market reflected some semblance of actual value, rather than "fire sale", things could normalize with less disruption. I'd argue it has worked, to some extent, but Washington being Washington, it may not have been as effective as it could have been, and maybe there was a "better" way... Hopefully, we won't have to do it over anytime soon...

 

[Hamlet]

The simple delay of layoffs was worth the total cost of the stimulus, IMO.

If we had tacked on large government layoffs to the 700k+/month job losses we were taking, I don't think the system would have survived.

Now that the economy is stabilized, we are in the process of slowly cutting government jobs. It's having a negative effect, but not a disasterous one.

When the economy is in sharp decline, it is really bad to have the government cut spending dramatically.

A balanced budget amendment forces disasterous fiscal policy.

The stimulas did nothing but delay the state employee layoffs, most of it misdirected, hence the unemployment of 10% instead of the predicted high of 8%.
Those tax breaks were used by GE to not pay taxes, GE did not hired any new employees (in US anyway)...waste of money
Housing tax credits...housing still falling
Waste of money....accomplished nothing. Arguably we are still in a recession or heading back in...
TJ

 

[Hamlet]

The economy is not good by any means, but we are making small gains in jobs instead of losing 700k+/month. I'd much rather deal with cuts now than 2 years ago.

I'm amazed that people have already forgotten how bad it was at that time compared to now.

I'm not so sure. I don't care what the government measures it by....we are still loosing jobs, we may have a credit crisis, housing will be in toilet for 10plus years.......just don't think we are anywhere near out of the woods ...or in a "growth cycle".

 

[travelover]

IMO this is all just theater. Congress runs on campaign contributions and the major donors that pretty much control congress (of both parties) will not allow them to do anything stupid that costs these major donors serious money. It is a generated "crisis" to be used for political ends, whether to defund government agencies like the EPA, break down unions or grab other political advantage.

Watch and see who ends up benefiting in the end from this 'crisis".

 

[samclem]

I wonder if we should lock congress inside until they reach an agreement. Toss the president in there too. They could send up different colored smoke each day to let us know if they have compromised.

Throw in a few cases of knives and clubs to speed up the process.

The Capitol Dome becomes Thunderdome! Ticket sales and pay-per-view proceeds might help us pay off some of the debt.

 

[LightningDawg]

Our politicians baffle me. On the one hand, the Dems and President say they want the debt ceiling raised. The House delivers. Granted ...it's not all of what the President wants so it gets rejected quickly by the Senate with the President saying all the while , "get it done", "compromise"...etc...etc..
Oh...I know....the Dems don't want to have to address the debt ceiling again before the 2012 elections. The GOP wants to use it as a "sticking point" in the 2012 elections. All politics. Nothing more.
At the end of the day....How can anyone....in any party..NOT agree with a balanced budget amendment. Secondly.. what does that say about their motivations and intentions? Without this amendment, Washington will just keep spending dollars it does not have. If we don't cut spending, cap the deficit...now....then when? This isn't going to get any less painful.
Depressing....

Agree. A recent poll said that 75% were in favor of the balance budget portion. The other 25% percent, IMO, are the problem.

 

[BigNick]

housing will be in toilet for 10plus years.....

You say "in the toilet", I say "becoming more affordable for ordinary people".

 

[pimpmyretirement]

IMO this is all just theater. Congress runs on campaign contributions and the major donors that pretty much control congress (of both parties) will not allow them to do anything stupid that costs these major donors serious money. It is a generated "crisis" to be used for political ends, whether to defund government agencies like the EPA, break down unions or grab other political advantage.

Watch and see who ends up benefiting in the end from this 'crisis".

IMO this is spot on. Anyone who caves early is failing to do the job they were hired for.

 

[snodog]

Balanced budget ammendment is purely a political ploy because they know it's popular with the masses. Has no chance of passing as it would be disasterous. There's a reason why every other country runs a deficit.

 

[redduck]

Don't know Hamlet. Probably true regarding jobs.etc.....but ...from where I sit...this "recession" is likely to last 10 years or longer...
.

Could, you know, maybe sit someplace else?

 

[SandsofTime]

Part of the problem does in fact lie with our two party system, as well as our "split goverment" system. In a parliamentary system as in UK, the ruling party can essentially do what it pleases. If what it wants to do is highly unpopular, then may lose power in a "no confidence" motion, and then have to do elections again. Even in the absence of a no confidence motion, the party in power will get a thrashing even it fails to govern properly. Examples for this are easy to see in Canada, UK etc. One thing that the govt in England cannot really do is point the finger at the other party. Of course, the problem in those systems arises when you have a minority government and a small party or parties can hold the entire govt hostage. Regardless, the "ruling party" or "ruling coalition" will be held to account at the next election. In the USA, almost always, we have a split govt, and therefore, its just always the same old point the finger at the other party.

I would not be surprised if the Tea Party, upon being highly unsatisfied with the Republicans, in a few years simply becomes a third party. That will make things very interesting in the USA. Time will tell.