Poll: Will the US cut spending?

[REWahoo]

With all the recent news coverage on the Deficit Panel recommendations, I'm curious to know what action, if any, the forum readers believe Washington will take regarding the financial future of the US.

[aaronc879]

The problem with cutting expenses at a federal government level is that you need people on both sides of the isle to agree which almost never happens. Republicans will decline pretty much anything a Democrat proposes no matter how good it is and it's not much better the other way. If I had the budget in front of me I guarantee I could have a surplus immediately. It's not that hard but it won't happen with the mindset of the politicians in office today.

[M Paquette]

The Congresscritters will bloviate, and the talking heads will rant. A proposal to ban earmarks will eventually pass, once enough key Senators attach their earmarks to it. Many committee meetings will be held. Hundreds of dinners shall be hosted by lobbyists, who did grin, and the Congresscritters did feast upon the lambs and sloths and carp and anchovies and orangutans and breakfast cereals, and fruit bats and large chu...

Meanwhile, the economy will quietly improve, and as a result, tax revenues will rise. Various programs set in motion during the recession will wrap up, and interest, dividends, and repayments will accrue, which will cause the deficit to be slightly less than static projections done with poor assumptions would forecast.

Assorted politicians will then take credit for this wonderful, magical deficit reduction, and extrapolating from one data point, will predict that the problem has been solved.

They're all too busy campaigning for the 2012 election to actually DO anything.

[Independent]

With the "stimulus bill" running out, maybe unemployment compensation going down, and maybe the war in Afghanistan slowing down, it will be hard to establish a baseline to figure out if Congress really reduced on-going spending.

I think they will do some largely symbolic things, but nothing major. They might put Social Security, Medicare, veterans benefits, much of Defense, and interest payments "off the table", and then say they cut 5% of the rest.

[Alan]

Quote:

Originally Posted by Independent I think they will do some largely symbolic things, but nothing major.

I agree. We still have 2 more years of electioneering ahead of us.

[youbet]

Quote:

Originally Posted by Alan I agree. We still have 2 more years of electioneering ahead of us.

And if we do well enough to survive those 2 yrs and continue as a country, they'll be 2 more yrs of electioneering followed by 2 more years of electioneering followed by 2 more years of electioneering...... well you see what I mean.......

[samclem]

There's going to need to be a crisis before painful steps are taken. The crisis will likely come when creditors begin to have doubts about receiving the payment they are due. Even the slightest doubts will send interest rates up, and as leveraged as we are, things will rapidly deteriorate. That's a crisis, and, unfortunately, one without a convenient tangible rallying point (no flaming, collapsing WTC, no USS Arizona settling to the bottom of Pearl Harbor, etc). It's easier with a tangible enemy, as it gets us out of the chocks quickly and with determination. This time we'll have a few years of finger pointing and indignation before getting beginning the long trudge back.

We could save a lot of heartache by beginning today, but we're just not set up to do it.

[REWahoo]

Quote:

Originally Posted by samclem We could save a lot of heartache by beginning today, but we're just not set up to do it.

So far 94% 95% 93% 92% of those responding to the poll agree with you.

[MichaelB]

I think our political leadership will get around to slowing down spending and even reduce some. It's just that, well, that requires a set of skills they don't currently have, so they first have to learn how. Seriously. I'm not sure there is a Governor or State with a record of holding down spending either - as one digs into the detail, lots of budget tricks appear.

Maybe we should send them over to UK and Germany for a lesson.

[Alan]

Quote:

Originally Posted by youbet And if we do well enough to survive those 2 yrs and continue as a country, they'll be 2 more yrs of electioneering followed by 2 more years of electioneering followed by 2 more years of electioneering...... well you see what I mean.......

Yes, one of the surprising things I found when I moved to the USA is that the term for a Congressman is a mere 2 years and there are no limits of when you can campaign. (In the UK, campaigning is only allowed in the 5 or 6 weeks prior to a General Election which is usually once every 4 or 5 years). When it comes to macro economics, what can you really achieve in 2 years (minus all the time out campaigning) ?

[REWahoo]

Quote:

Originally Posted by Alan When it comes to macro economics, what can you really achieve in 2 years (minus all the time out campaigning) ?

Alan, you can achieve a lot - of damage.

[scrabbler1]

Quote:

Originally Posted by samclem There's going to need to be a crisis before painful steps are taken. The crisis will likely come when creditors begin to have doubts about receiving the payment they are due.

This is sorta like what happened in New York City back in the mid-1970s. The banks which had been lending money to NYC all the time just shut their windows because of NYC's awful fiscal practices. This sent NYC on the brink of bankruptcy, requiring drastic remedies and a restructuring of NYC's debt (Re: Felix Rohatyn).

If our foreign lenders start doing what the NYC banks did back in the mid-1970s, that will be a crisis-causing event as you wrote.

The Feds often look to the states as "laboratories for experimentation" but they should also take heed at l"aboratory of failure" such as what happened in NYC back then.

[Alan]

Quote:

Originally Posted by REWahoo Alan, you can achieve a lot - of damage.

Very true - like a big change to try and make things happen quickly.

[samclem]

Quote:

Originally Posted by MichaelB I'm not sure there is a Governor or State with a record of holding down spending either - as one digs into the detail, lots of budget tricks appear.

Well, I'm sure there are some skeletons in the closet, but Indiana seems to be doing something right according to this article about their governor:.

Quote:

Daniels trimmed the state payrolls by 14 percent and Indiana now has fewer state employees than it did in 1982. Daniels eliminated a $200 million deficit and transformed it into a $1.3 billion surplus, boosting the state's bond rating and cash reserves after eight years of unbalanced budgets. He was able to cut property taxes by an average of 30 percent despite a Democratic-controlled lower house of the legislature, delivering the largest tax cut in Indiana history. Under Daniels, all state agencies were made to cut their budgets by 10 percent and Indiana sold two-thirds of its state-owned airplanes. Most state employees didn't get pay raises in 2009 or 2010 and the governor's pay was cut. But more than 50,000 low-income Hoosiers received health coverage through a relatively free-market reform -- the Healthy Indiana Plan -- that combined health savings accounts with catastrophic insurance (though the program's health savings accounts may now run afoul of ObamaCare's new qualified coverage standards).

Governor Daniels balanced the budget and has a 70% approval rating.

Look to Europe--mein Gott!

He's also got some experience in actually running an organization, which I think an increasing number of people now recognize to be an important skill in an elected leader.

[MichaelB]

Quote:

Originally Posted by samclem Well, I'm sure there are some skeletons in the closet, but Indiana seems to be doing something right according to this article about their governor:. Governor Daniels balanced the budget and has a 70% approval rating. Look to Europe--mine Gott! He's also got some experience in actually running an organization, which I think an increasing number of people now recognize to be an important skill in an elected leader.

Samclem, I'm not challenging your post but I would need to see real numbers. My understanding is Gov Daniels reduced proposed spending but real spending has increased, the budget is balanced by dipping into reserves, and Indiana has increased it's borrowing. I think the efforts of Govs like Daniels and Christie are notable but are baby steps compared with the task ahead.

As for Europe, I was referring not to their unbridled socialistic ways but the recent examples of UK and Germany political leadership in challenging themselves and others to greater fiscal and monetary responsibility.

[W2R]

I am braced for some sort of major budget cut that happens to affect me, to hit me in the stomach like a sucker-punch. It may not happen but I'm ready. See? ~~~>

[RonBoyd]

Quote:

Originally Posted by Alan When it comes to macro economics, what can you really achieve in 2 years (minus all the time out campaigning) ?

Just look around.

[obgyn65]

+1

Quote:

Originally Posted by Independent I think they will do some largely symbolic things, but nothing major. They might put Social Security, Medicare, veterans benefits, much of Defense, and interest payments "off the table", and then say they cut 5% of the rest.

[harley]

I couldn't vote. IMO the best we're going to get is a decrease in the rate of increase of spending. Over (a long) time as the economy recovers the increase in income will decrease the increase in spending and bring the deficit back into a reasonable range.

[DblDoc]

Quote:

Originally Posted by MichaelB I think our political leadership will get around to slowing down spending and even reduce some. It's just that, well, that requires a set of skills they don't currently have, so they first have to learn how. Seriously. I'm not sure there is a Governor or State with a record of holding down spending either - as one digs into the detail, lots of budget tricks appear. Maybe we should send them over to UK and Germany for a lesson.

Or do a gov't swap with Iceland for a year...

DD