Wednesday, July 7, 2010

Republican budget hawks boost Obama’s bipartisan deficit panel

These idiots are going to totally kill the American economy.

Rep. Paul Ryan (Wis.) and Sen. Judd Gregg (N.H.), the senior Republicans on the House and Senate Budget committees have praised a proposal by the fiscal panel’s Democratic co-chairman, Erskine Bowles, to limit government spending and revenue to 21 percent of gross domestic product.

“Get spending down and revenues up. … That would be very close to a stable situation,” Gregg told The Hill.


Cutting spending in this economy will be like dropping a bomb on it. You might as well just do that.

And their idea for "getting revenues up" is tax hikes. Another bomb.

Nowhere is anyone saying anything about growing your way to a lower deficit, like we did after WWII (when the deficit WAS THE LARGEST IN HISTORY!!!). Taxes were cut, but the spending boosted economic output and the deficit came down as a percent of GDP.

Judd Gregg is a total moron. And Erskine Boles is, too!


googleheim said...

culberson is trying to save NASA in houston ... while also trying to push austerity

what a bunch of morons

Matt Franko said...


Corrupt morons, yes.

It wont work. The household and corporate sectors (ie non-govt) are saving Net Financial Assets... period. They cannot/will not be denied. This process dictates the deficit at this point.

With private credit flat, a $40B/mo. trade deficit, and a non-govt sector hell bent to save, then what Gregg and Ryan posit, that we can balance revenues with expenditures is an accounting simply cannot happen.

If they raise taxes and thus try to remove NFA from the non-govt sector, then the non-govt sector will just cut back further on spending so they can still save. This will cause a decrease in demand which will force more layoffs (tax collections tank) and the non-discretionary automatic stabilizers (unemplyment/medicaid/student aid) kick in to increase expenditures anyway. Deficit increases despite the morons best efforts.

A cut in expenditures works in a similar fashion. The cuts themselsves result in a drop in demand as non-govt sector savings desires stay constant, more layoffs kill tax collections and non-discretionary stailizers kick in driving up the deficit...morons are wrong again.

This shows that citizens (non-govt sector) are really in control here (as it should be). They desire to save and they will not be denied. The problem is that morons in govt cannot understand or correctly read the desires of the citizens they are supposed to be supporting and in fact Ryan and Gregg here are actually working against the citizens desires in this way. They REFUSE to provide the financial assets the citizens desire at this time.

Give the people what they want! this should be easy for politicians you would think.

This said I dont see anything put in concrete yet (just talk mostly leading up to Nov elections so far) Mike's service is tracking the major spending lines marginally (1.2% gdp) above last years and of course tax deposits are in the toilet so the current year deficit is tracking almost 9% of GDP.

Sectoral Balances:
Govt deficit: 9% GDP
Trade Deficit: 3.5% GDP
Private Sector Deficit: 0 (flat)

Should result in a 5.5% gdp growth in NFA provided to domestic non-govt sector, S&Ps can probably work with that type of a number thru cost cuts and productivity growth.

We have to start thinking about next year though and that will be politically driven so stay tuned.

You know if they just did nothing it probably wouldnt get any worse at least....but their rhetoric here indicates that they will cause us to go down again.

googleheim said...

rich school PTO board says the Title-1 schools get all the tax money

but the parents of the rich schools are the largest benefactors of government spending there is period since they work for energy companies, hospitals, law firms, and so forth - all of which derive big time money from insurance claims or direct gov subsidization which are paid out by banks which leads all the way back to central banks who make credits and establish the general market playing field upon which all types of securities are made.

again, creative destruction seeks to confuse people into a free fall.

Matt Franko said...

Yes Goog,

Many (if not all) wealthy people, although they would hate to admit it, can trace the source of that wealth back to the govt. in some way.

in FY 2009 and now in 2010, Govt deficits are providing ALL of the wealth to the non-govt sectors as bank credit is actually DOWN over this time. Anyone who has done well (increased their NFA) over this time has done so becasue of the govt. on net.

Has any oil reached Galveston Houston area yet?

googleheim said...

no oil due to location
of mississippi current w.r.t. the bp platform location

my predilection for prediction is that the russians did it, bp is a bunch of buffoons, ... etc

however i am wondering what the oil does to the "dead zone" out there where the gulf is severely hypoxic due to the fertilizer runoff from farmlands as far north as iowa.

the estuaries there on the coast are over dredged from years of work.

BP probably is re-oxygenating the Gulf by scrubbing out the fertilizer waste, making a case for reflecting light back into outer space thereby cooling surface temperatures ( hence the west shifted hurricane to mexico ), and perhaps giving more attention to the estuaries that needed to be rebuilt 10 years ago.

BP problem is actually either a distraction, blessing in disguise as a wolf, and / or miniscule to the aforementioned.

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