Originally Posted by 11Series
We definitely agree that government stability is key for economic stability.
If we properly fund the gov't, we don't have to go into any deeper debt than the 17-18 Trillion (inflation adjusted) as we went into debt under Reagan. Unless you are trying to say that our current economic situation is simply the long-term impact of the Reagan debt, you would have to agree that in the long-term after Clinton raised taxes, that the economy recovered quite well from the 1980's Stagflation. All while taxes were higher than now.
I'm sure there are some gov't programs that could use some fixing. I've got my pet programs, you have yours. But cutting them doesn't create a single job. Not one. Cutting the programs I want cut won't create jobs, just like cutting the programs you want cut won't create jobs. In fact, cuts in general will ELIMINATE jobs. The latest agreement will cost a third of a million jobs directly, and up to 1.6 million jobs indirectly. We can't cut our way to more jobs. Any wasteful programs we agree to eliminate should be replaced with job-creating programs.
Lower taxes isn't going to change anything. GE already pays ZERO in taxes on billions of profits, but you don't see them moving production back to the US. We have the lowest EFFECTIVE tax rates in modern US history for the wealthy and corporations, and they are still off-shoring like crazy. Tax cuts do NOT get passed on to consumers. Prices of goods are based upon what the market will bear, not a sum of expenses. Take the recent FAA airline taxes for example. Calls to lower taxes for corporations and the wealthy will just increase the amount of gold and cash corporations and the wealthy have piled up.
This idea of tax cuts to spur a supply-side economic recovery might have made sense in the 1980's where it often cost well into the double digits to borrow money due to Stagflation, but not now. Back when it cost way too darn much to take out a loan to expand, and companies didn't have enough cash on hand because it had been inflated away, tax cuts to spur expansion had a certain logic. But now with companies like Microsoft borrowing money just because it's so cheap, and companies like Apple sitting on record cash, tax cuts WILL NOT fund expansion. They already aren't spending the money they have, giving them more will just provide them with more money NOT to spend.
Yes, it is a lose-lose situation. This is one of those adult things everyone has to come to terms with. There will be no painless solutions. And quite frankly, we're getting pretty sick and tired of folks on the right who think there should be a solution that doesn't require everyone to share the pain.
Can't disagree with you on any of this, you've make your point quite well. I'm certainly not advocating more tax cuts, by the way.
The fact of the matter is, neither you nor I know what level of debt is sustainable or 'unsustainable'. And neither do any of the members of Congress, as we've seen in the last few months.
I would support short-term stimulus efforts (none of that Pork-barrel crap, but solid efforts at rebuilding and rejuvenating our crumbling infrastructure and education systems) if they were paired with SUBSTANTIAL reforms to entitlement programs, and if the Treasury could illustrate that we will not be at jeopardy of losing our bond rating or going into default.
And as I stated before, we need to look into strategies as to how to encourage private sector investment in America. We have these American corporations with hordes of cash, but none of them want to invest IN America. We need to foster this in a positive manner; I think SEZs should be strongly looked into. Public-private partnerships, like in other developing countries, might be another way to tackle the issue.