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The Deficit
Mike Allen and Jim VandeHei have a sexed-up big-picture story in today's Politico on the Obama administration's plans for cutting the federal deficit. The gist is that the Obama team is going to spend 2010 focusing on slashing the deficit—so much so that the President will focus his State of the Union address in January on the subject. The problem is that most economists agree that when the economy is in recession it needs more spending, not less. So cutting the deficit could be counterproductive, especially if it further depresses the economy and further reduces tax revenues. At the same time, the deficit is an illustration of a very serious problem, as Doug Elmendorf, the director of the Congressional Budget Office, explained this week:
The country faces a fundamental disconnect between the services the people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services.
The difficulty for the Obama administration lies in the contradiction between the need for deficit spending to stimulate the economy and the unsustainability of deficit spending. The national debt is already at a historically high level as a percentage of GDP, leaving Obama with less room for countercyclical deficit spending than he would otherwise have. It's a bad time to borrow, but it's also a bad time not to borrow. The profligacy of 2001-2008 has put the Obama team in a really tough place.
"The profligacy of 2001-2008
"The profligacy of 2001-2008 has put the Obama team in a really tough place."
Huh?
The profligacy of 2001-2008 has put the country team in a really tough place, and Obama's team in a really great place.
There, fixed that for you.
The Deficit
tagged as:- result
The government ought to auction off states to the highest bidder. China can have California, Mexico can have New Mexico and Arizona, etc. until the debt is paid in full. Rome had to shrink its borders due to a heavy deficit. It looks as though the U.S. will have to do the same.
Anyone holding their breath?
It's a good concept, but it's also kind of an old, and rusty piece of political boilerplate, that's definitely been used and abused before.
To cut the deficit, that means they're going to have to cut back pretty substantially on federal spending. It also means keeping the process transparent, and cutting sort of uniformly across-the-board. Taking 10% off everything will do a nice job of balancing the books. Whether or not all the agencies and institutions native to the government will spend their money wisely, that's another story. Nonetheless, it's a fair challenge to them to do just that, cut their spending by 10%. We have NASA, so we have supercomputers, at least we used to, so....
Klaatu marachas necktie
Team Obama is indeed in a
Team Obama is indeed in a tough place right now considering the fact that many are criticizing every step Obama's making. This concept could somehow work but it's quite risky. However, I don't really see the point on why is it that there should be more spending and not less. Isn't it better to spend just enough for the benefit of the state and use the money wisely rather than spending more? If we dig deeper in our present situation citizens of this state tend to seek aids on alternative financial services just to make ends meet. Thus, this scenario is a challenge to the leaders to change these kinds of habit. Show the people that the state is doing actions that will benefit them in the future.