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Thu Jan 3, 2013, 03:13 PM

 

We've just added $3.6 trillion in debt.

Tim Kane: “The fiscal cliff metaphor is overrated, but the long-term fiscal crisis is not. The cost of the ATRA bill, according to the CBO, is an additional $3.6 trillion in debt over ten years. The nation sits atop a mountain of unstable debt dynamite, and every year more is added to the mountain. A trillion dollars per year, funding principally by artificially low interest rates due to monetizing by the Fed.”
“Maybe Obama thinks the Fed is his ultimate ace card. But when the crisis comes, when the bond market hesitates to buy new T bills with vigor, the President and the nation will be caught empty-handed.”

Bill McBride is more optimistic: “We still don’t know the details of the sequester, but I expect the deficit to be close to 5.5% of GDP this year. Still high, but improving. Unfortunately there are some longer term issues, especially with health care, but in the short term the deficit is moving in the right direction – and will decline further as the economy improves.”

http://wonkwire.com/2013/01/03/we-still-have-a-long-term-debt-problem/?utm_source=twitterfeed&utm_medium=twitter

51 replies, 2824 views

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Reply We've just added $3.6 trillion in debt. (Original post)
dkf Jan 2013 OP
Capt. Obvious Jan 2013 #1
el_bryanto Jan 2013 #2
frazzled Jan 2013 #3
dkf Jan 2013 #10
frazzled Jan 2013 #14
dkf Jan 2013 #26
NoOneMan Jan 2013 #32
frazzled Jan 2013 #34
samsingh Jan 2013 #4
Liberalynn Jan 2013 #5
dkf Jan 2013 #6
samsingh Jan 2013 #11
dkf Jan 2013 #27
Dreamer Tatum Jan 2013 #8
samsingh Jan 2013 #9
Dreamer Tatum Jan 2013 #13
phleshdef Jan 2013 #17
samsingh Jan 2013 #20
phleshdef Jan 2013 #22
samsingh Jan 2013 #24
Dreamer Tatum Jan 2013 #28
Viking12 Jan 2013 #35
Tempest Jan 2013 #37
phleshdef Jan 2013 #40
JaneyVee Jan 2013 #51
samsingh Jan 2013 #19
samsingh Jan 2013 #12
phleshdef Jan 2013 #15
Dreamer Tatum Jan 2013 #16
phleshdef Jan 2013 #18
samsingh Jan 2013 #21
Tempest Jan 2013 #38
taught_me_patience Jan 2013 #41
cthulu2016 Jan 2013 #7
Amonester Jan 2013 #23
phleshdef Jan 2013 #25
Amonester Jan 2013 #29
NoOneMan Jan 2013 #31
phleshdef Jan 2013 #39
NoOneMan Jan 2013 #42
dkf Jan 2013 #45
stevenleser Jan 2013 #46
dkf Jan 2013 #47
stevenleser Jan 2013 #50
phleshdef Jan 2013 #48
dkf Jan 2013 #49
bemildred Jan 2013 #30
Amonester Jan 2013 #33
bemildred Jan 2013 #36
Rex Jan 2013 #43
JoePhilly Jan 2013 #44

Response to dkf (Original post)

Thu Jan 3, 2013, 03:15 PM

1. Just throwing this out there

Let's see how many bites you get.

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Response to dkf (Original post)

Thu Jan 3, 2013, 03:18 PM

2. Does it do us any good to pretend that debt isn't a long term issue? No.

But we had a balanced budget back in the day, and a surplus. We don't anymore, thanks to republican policies. I think the way we get past our debt problems is by growing the economy not through austerity measures that will crimp our economy.

Bryant

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Response to dkf (Original post)

Thu Jan 3, 2013, 03:28 PM

3. Misleading

The $3.6 trillion figure is the amount added to the deficit compared to what would be the case if ALL the tax cuts expired, as they would have by law if we'd gone over the cliff (and not changed anything). But we knew that was never going to happen. Because of the still weak economy, taxes were not going to rise on middle-class Americans. That was the theme of this election.

In reality, the bill saves approx. $700 billion over having kept all the tax rates as they were, which was what the Republicans were advocating. (The difference between what would have been saved had the bill taxed incomes over $250K rather than $450K was adjudged to have been around $90 billion difference).

It just depends what perspective you are looking from, and what you are taking as your base line.

Also, the president has firmly stated that any future cuts to be negotiated will have to be matched on a dollar-to-dollar basis with further revenue increases. So this story is far from over.

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Response to frazzled (Reply #3)

Thu Jan 3, 2013, 03:36 PM

10. The baseline assumed the bush cuts would lapse.

 

So it's a $3.6 trillion change over previous long term assumptions.

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Response to dkf (Reply #10)

Thu Jan 3, 2013, 03:44 PM

14. But not a single person believed they would permanently lapse

That was the entire theme of this election: that taxes would remain the same for 98% of Americans and rise on the top 2%. Obama won with that mantra, repeated ten-thousand times. No one ran on the promise that all the Bush tax cuts would lapse.

So this was a mythical assumption; and therefore a mythical number for us to be discussing ... whatever our point of view on the eventual deal.

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Response to frazzled (Reply #14)

Thu Jan 3, 2013, 04:08 PM

26. And the nation elected to increase projected debts by $3.6 trillion

 

The public thinks there is no consequence to large deficits. I hope they are right because being wrong could be devastating.

The Greeks also voted to increase debts...then they found out how things are when no one wants to buy your debt.

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Response to frazzled (Reply #14)

Thu Jan 3, 2013, 04:42 PM

32. So are you saying the crisis was mythical since it was a non-possibility?

 

And therefore, this bill should be judged entirely on its own merits, independent of a mythical catastrophic alternative which was used to "sell" ot?

If so, hows it stack up on its own in your opinion?

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Response to NoOneMan (Reply #32)

Thu Jan 3, 2013, 04:54 PM

34. Not so easy an answer

The so-called "crisis" involved a number of things:

(1) taxes going up on everyone (not just the wealthy) during a period where the economy was still in a fragile state; people having less money to spend could have put the economy back into a slide.
(2) automatic sequestration that had been enacted by Congress in 2011 kicking in, which was tantamount to a severe austerity budget--another thing that would be bad for the economy in the short term.

It's really the austerity part of the budget, still to come, that is the most dangerous. All the cuts, with insufficient increased revenues, would have been hurtful not only to individuals (especially the poor) but to the recovering economy as well. As it stands now, no new spending cuts have been enacted that could affect the deficit. We just kicked that can down the road.

All I was saying above is that the interpretation of the deficit is (a) a relative one, since it is being measured against a total and permanent lapse of all the tax cuts, which neither Congress or the White House was ever going to let happen; and (b) an incomplete one, since no grand bargain was made in which spending cuts and further revenues were decided on.

The harder part of this deficit reduction thing is going to come in two months: spending cuts will be decided (whether they are the ones the WH wants, such as letting Medicare negotiate drug prices, or Republican ones, such as cutting everything that isn't nailed down and isn't defense), and additional revenues gained from closing loopholes and dealing with corporate taxes. This thing is simply only about 1/3 done at this point. So it's too early to be getting our knickers in knots about final deficit projections.

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Response to dkf (Original post)

Thu Jan 3, 2013, 03:31 PM

4. the debt problem started under Reagan, was solved under Clinton, and really skyrocketed under Bush

or should i say Cheney.

Democrats are always cleaning up the destruction left behind by the ignorant repugs

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Response to samsingh (Reply #4)

Thu Jan 3, 2013, 03:33 PM

5. Bingo

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Response to samsingh (Reply #4)

Thu Jan 3, 2013, 03:34 PM

6. I used to think so til we kept the vast majority of the Bush cuts.

 

Don't see any cleaning up planned.

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Response to dkf (Reply #6)

Thu Jan 3, 2013, 03:37 PM

11. only for those earning less than $400k.

as far as i can tell, those above this are going to pay a lot more.

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Response to samsingh (Reply #11)

Thu Jan 3, 2013, 04:10 PM

27. Not really...at least not in the scheme of things.

 

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Response to samsingh (Reply #4)

Thu Jan 3, 2013, 03:35 PM

8. That's utter bullshit




It was "solved?" How so? It was higher when Clinton left than when he started. Please stick to facts, thanks.

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Response to Dreamer Tatum (Reply #8)

Thu Jan 3, 2013, 03:36 PM

9. are we reading the same chart? the diagram shows exactly what i said

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Response to samsingh (Reply #9)

Thu Jan 3, 2013, 03:38 PM

13. If it was "solved" under Clinton, there'd be no debt.

Instead it was higher when he left than when he started. Not MUCH higher, but HIGHER. Are you just being obtuse?

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Response to Dreamer Tatum (Reply #13)

Thu Jan 3, 2013, 03:46 PM

17. Simple minded and wrong headed conclusion.

The debt had to be lowered each year, over time. Clinton setup that trajectory to get us out of debt by 2012. To think that it would've been eradicated during his time in office, to think there was even enough time to realistically make that happen is just plain ignorance and naivety about how this kind of thing works.

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Response to phleshdef (Reply #17)

Thu Jan 3, 2013, 03:50 PM

20. thank you. and the poster has the audicity to start calling me names without understanding the math

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Response to samsingh (Reply #20)

Thu Jan 3, 2013, 03:53 PM

22. He/she also has no clue how to properly interpret the data in their own posted graph.

The dollar number doesn't really matter that much. Its the percentage of GDP that matters. That shows where the debt is really heading. And that number was dramatically lower than when Clinton first took office.

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Response to phleshdef (Reply #22)

Thu Jan 3, 2013, 03:55 PM

24. thanks for the thoughtful response

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Response to phleshdef (Reply #17)

Thu Jan 3, 2013, 04:17 PM

28. That wasn't what was said, thanks.

The claim was that the debt was eradicated by Clinton, which is false.

What is true is that the growth of the debt slowed substantially in the later Clinton years due to budget surpluses, but as much as I am sure it pains you to hear, US debt was higher when Clinton left office than when he entered office.

I'm sorry you don't like it, but it is true.

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Response to Dreamer Tatum (Reply #28)

Thu Jan 3, 2013, 04:54 PM

35. Why do you misrepresent the poster?

S/he never said the debt was eradicated. S/he said the debt problem was "solved" which is an accurate statement. The CBO projected that debt would be eliminated under the path create by Clinton by 2010-2012. Had it not been for the Bush tax cuts and 2 wars, we wouldn't be having debt conversations.

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Response to Dreamer Tatum (Reply #28)

Thu Jan 3, 2013, 05:06 PM

37. Sorry, but it's not true

The word "eradicated" wasn't used until you used it.

The word used was "solved", which is an accurate description.

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Response to Dreamer Tatum (Reply #28)

Thu Jan 3, 2013, 05:30 PM

40. The poster never claimed that and the value of the debt in 2000 is IRRELEVANT.

You keep ignoring the FACT that the debt was projected by the CBO to be basically eradicated by sometime last year because of the path that Clinton set in motion. That's irrefutable.

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Response to Dreamer Tatum (Reply #28)

Sat Jan 5, 2013, 12:55 PM

51. N seriously, we were projected to have a surplus & zero debt by 2010.

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Response to Dreamer Tatum (Reply #13)

Thu Jan 3, 2013, 03:49 PM

19. i think you're obtuse for starting to name call. if you can't have a conversation, don't comment

you clearly don't understand the difference between long term debt, deficits, trajectory, and trends.

stop pretending. i don't any economist doubts that Clinton solved the debt crisis and left a surplus, while Bush took it in the opposite direction

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Response to Dreamer Tatum (Reply #8)

Thu Jan 3, 2013, 03:38 PM

12. don't you see the steepness of the curve?

Clinton also left the treasury with a surplass

please consider all the facts and give a complete picture

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Response to Dreamer Tatum (Reply #8)

Thu Jan 3, 2013, 03:44 PM

15. You are being terribly misleading and you are far from sticking to anything resembling a fact.

The initial spike during the beginning of Clinton's tenure was because of a recession and because he hadn't had TIME to do anything yet. Notice the SHARP drop starting in the mid 90s? That's all Clinton.

Furthermore, debt is a long term projection. Clinton set us on the path to having a complete surplus by 2012 and Bush screwed it up. So yes. It was solved until the Bush tax cuts and the unpaid for wars and all the other unpaid for spending occurred under Bush and Tom Delay and the rest of his Republican cronies.

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Response to phleshdef (Reply #15)

Thu Jan 3, 2013, 03:45 PM

16. We had a 5-year recession?

Yeah, whatever.

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Response to Dreamer Tatum (Reply #16)

Thu Jan 3, 2013, 03:47 PM

18. Every credible economist would back up everything I've said. You are just ignorant on this topic.

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Response to Dreamer Tatum (Reply #16)

Thu Jan 3, 2013, 03:51 PM

21. great and thoughtful response

sarcasm off

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Response to Dreamer Tatum (Reply #16)

Thu Jan 3, 2013, 05:08 PM

38. Why do you continue to be wrong and arrogant?

They never claimed there was a five year recession.

However, it took all of 5 years to recover from the one Clinton inherited.

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Response to Dreamer Tatum (Reply #8)

Thu Jan 3, 2013, 05:35 PM

41. There is no need to reduce debt to zero

Clinton brought the debt down as a percent of GDP to easily sustainable levels.

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Response to dkf (Original post)

Thu Jan 3, 2013, 03:35 PM

7. Good

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Response to dkf (Original post)

Thu Jan 3, 2013, 03:55 PM

23. If I get it correctly, that means 3.6 Trillions more in circulation...

Since debt = credit/debit

The problem is, the 'circulation' mostly always stops 'circulating' when it reaches the Swiss, Caymans, Bermudes bank accounts...

And for what?

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Response to Amonester (Reply #23)

Thu Jan 3, 2013, 04:02 PM

25. Thats why middle class tax cuts are stimulative, while tax cuts for wealthy folks aren't.

Basically, people who don't have enough money to buy everything they want or need tend to spend it whenever they get their hands on it. People who have everything they need and pretty much everything they want tend to hoard it away and it gets pulled out of the larger economy for long periods of time.

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Response to phleshdef (Reply #25)

Thu Jan 3, 2013, 04:25 PM

29. So it should be good for the economy.

Until the day it ends up 'sleeping' in these myriads of accounts.

The US Dollar is 'controlled' by the US.

While Greece doesn't 'control' the Euro, nor does Spain, Italy, et al...

I just hope the 'economy' will become a 'green' one ASAP...

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Response to Amonester (Reply #29)

Thu Jan 3, 2013, 04:39 PM

31. It probably will not do too much either way

 

Tax policy's impact on the economy is very overrated, and often a mythical effect touted by conservatives. In any case, it will defund the government quite a bit.

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Response to NoOneMan (Reply #31)

Thu Jan 3, 2013, 05:26 PM

39. Its not mythical when you are talking about tax cuts for middle and lower incomes.

You give middle class people money and poor people money, they spend it. Thats stimulative. I agree that its mythical when you get into the wealthy incomes.

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Response to phleshdef (Reply #39)

Thu Jan 3, 2013, 06:06 PM

42. Its never zero-sum

 

But its also not a dichotomy. There is also the possibility of the government spending that money in a manner that has a higher multiplier effect than that of even the middle/lower incomes.

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Response to phleshdef (Reply #25)

Fri Jan 4, 2013, 01:12 PM

45. Your hoarding equals others investing.

 

Do you have a job if no one provided any capital?

Where is labor without investment? I'd call that "unemployed".

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Response to dkf (Reply #45)

Fri Jan 4, 2013, 01:16 PM

46. Once again I am so not shocked that you would make this kind of rightwing pedantic argument. nt

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Response to stevenleser (Reply #46)

Fri Jan 4, 2013, 02:15 PM

47. I owe my job to the fact that someone invested capital.

 

Did you buy with your own funds everything you use in your employment? Is there no outside investment or even a loan enabling your livelihood?

Would you be better off if the person investing their money had used it for a party or other type of consumption?

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Response to dkf (Reply #47)

Sat Jan 5, 2013, 12:32 PM

50. Do you understand the meaning of the word 'pedantic'? You are still doing it. nt

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Response to dkf (Reply #45)

Fri Jan 4, 2013, 03:57 PM

48. Sorry, I don't believe in free market fairies trickling down job creating fairy dust.

If they actually did invest the extra capital in job creation, that would be great. But as we've seen so often, that's not the case, at least not to the extent that it should be.

Wealthy business owners don't create jobs until they have to. They'll cut any corner to avoid it if it saves them more money to hoard, in order to do so. In a perfect world, you'd be correct. But its a very imperfect world, and thus, you are not.

Now at one time, when the top tax rates were 70-90%, that was closer to the case. That's because there were incentives for domestic investment in order to avoid handing over all that profit to Uncle Sam. You have to gear the system in such a way that basically forces their hand, otherwise, they'll bury it all away in something that often does not bring great benefits to the middle class.

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Response to phleshdef (Reply #48)

Fri Jan 4, 2013, 05:02 PM

49. I'm curious what kind of job you have...

 

Was there no outside funding of equipment used? You only have tools you personally bought with savings?

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Response to dkf (Original post)

Thu Jan 3, 2013, 04:33 PM

30. Republicans hate debt but love spending. nt

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Response to bemildred (Reply #30)

Thu Jan 3, 2013, 04:45 PM

33. They only use the debt to scare their shrinking base into electing them locally.

They don't believe a word they spew.

(Actions speak louder than words.)

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Response to Amonester (Reply #33)

Thu Jan 3, 2013, 04:58 PM

36. Correct. nt

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Response to dkf (Original post)

Thu Jan 3, 2013, 06:13 PM

43. Okay.

.

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Response to dkf (Original post)

Thu Jan 3, 2013, 06:14 PM

44. Not concerned.

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