Politics

Featured Diary: Traditional Debt Management Issues Should Be Important Public Policy Concern

Steve Urkel.

Posted to Politics on Tue Jan 26, 2010 at 11:22:00 AM EST (promoted from Diaries by port1080). RSS.

Rogoff and Reinhart examine the effect of public debt on economic growth: "Across both advanced countries and emerging markets, high debt/GDP levels (90 percent and above) are associated with notably lower growth outcomes. In addition, for emerging markets, there appears to be a more stringent threshold for total external debt/GDP (60 percent), that is also associated with adverse outcomes for growth. Seldom do countries simply "grow" their way out of deep debt burdens."

Gross government debt in the U.S was at 85% of GDP in 2009 and is projected to reach 108% of GDP by 2014.

"Over the past two centuries, debt in excess of 90 percent has typically been associated with mean growth of 1.7 percent versus 3.7 percent when debt is low (under 30 percent of GDP), and compared with growth rates of over 3 percent for the two middle categories (debt between 30 and 90 percent of GDP)."

"Of course, there are other vulnerabilities associated with debt buildups that depend on the
composition of the debt itself. As Reinhart and Rogoff (2009b, ch. 4) emphasize and numerous
models suggest, countries that choose to rely excessively on short term borrowing to fund
growing debt levels are particularly vulnerable to crises in confidence that can provoke very
sudden and "unexpected" financial crises. Similar statements could be made about foreign
versus domestic debt, as discussed."

Tags: edited by Port1080, written by Steve Urkel, budget deficit, public spending, entitlements (all tags)

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4

Re: Traditional debt management issues should be a

DEMachina.

Mon Jan 25, 2010 at 05:26:35 PM EST

5.00 (libertarian)

I agree with the general premise...now if only we had a political party that were willing to do something about it.

Q: What do you think of western civilization? Gandhi: I think it would be a good idea.

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Re: Traditional debt management issues should be a

shane.

Mon Jan 25, 2010 at 05:39:30 PM EST

none

How about we call them the half-way party.  The only way to be non-partison in the cuts would be to cut everything by an equal percent... the government has a 50% off sale, all services cut by 50%. Simple lose-lose-lose for everyone.

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Re: Traditional debt management issues should be a

pO157.

Mon Jan 25, 2010 at 08:18:26 PM EST

none

How come we can't have some guy figure out what the Order of Battle would be for a US Military that would decimate any other force on the face of the earth, twice? Then reduce to that amount. Then again, that may already be what is going on (although not to that extreme). The other day during my bimonthly blood donation I sat next to some random 1LT AMEDD recruiter that said he was having all his quotas cut for physicians, dentists and allied health professionals who are traditionally the hardest to get into the service. And now he's turning them away. Crazy world.

I mostly smiled and nodded. Since I don't drink coffee I also gave him my free coupon for a pound of Dunkin Donuts. Red cross has to get better incentives (not that I do it for that, but whatever).

Never compromise.

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Re: Traditional debt management issues should be a

shane.

Mon Jan 25, 2010 at 09:28:17 PM EST

none

I certainly support cutting the military budget and not social programs... however in this instance I think across the board cuts would have broad bipartisan support :)

Or at least everyone would hate it equally.  

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Re: Traditional debt management issues should be a

gerrymander.

Mon Jan 25, 2010 at 09:55:17 PM EST

none

How come we can't have some guy figure out what the Order of Battle would be for a US Military that would decimate any other force on the face of the earth, twice? Then reduce to that amount.

Technically, we did this back in 2001. We had to build up a bit to get there after the 90s.

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Re: Traditional debt management issues should be a

DEMachina.

Mon Jan 25, 2010 at 08:34:04 PM EST

none

Shit, cut military spending to a sane level and we'd be most of the way there without dicking over the poor.  Then put some work into making gov't more efficient, and there we go.  Plus once we can pay back some debt we'll blow less money on interest, which we can then spend on things that actually matter.

Q: What do you think of western civilization? Gandhi: I think it would be a good idea.

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Re: Traditional debt management issues should be a

HidingFromGoro.

Mon Jan 25, 2010 at 08:55:37 PM EST

none

Shit, cut military spending to a sane level and we'd be most of the way there without dicking over the poor.

Or we could just do what Obama wants and cut everything except the military, aka basically what McCain wanted to do.

I got more styles than prison got bricks- ain't that some shit?

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Re: Traditional debt management issues should be a

DEMachina.

Mon Jan 25, 2010 at 11:22:30 PM EST

none

Depending on how it works out, that proposal doesn't look too bad (although I think some cuts to the military would still be a good idea).  It's a question of what's politically expedient, I suspect.  Democrats don't seem to care, and this way Republicans can't hammer him for being anti-troop.

Q: What do you think of western civilization? Gandhi: I think it would be a good idea.

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Re: Traditional debt management issues should be a

zyxwvutsr.

Mon Jan 25, 2010 at 09:09:36 PM EST

none

If we cut military spending completely we'd still have a deficit of three-quarters of a trillion dollars. That's how fucked we are.

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Re: Traditional debt management issues should be a

shane.

Mon Jan 25, 2010 at 09:35:50 PM EST

none

You're more in a bigger mess than we are. But in either case I think some nice across the board cuts would solve the problem.  In Canada we need to slash spending by about $1600 per person and in the states deep cuts of $4000 per person would stop the bleeding.  If we all just cancel our 2-3 week vacation for one year and send the savings to the government, that would pretty much do it.  

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Re: Traditional debt management issues should be a

zyxwvutsr.

Mon Jan 25, 2010 at 09:51:19 PM EST

none

I expect to see some Republican attempts to begin to fix things by proposing that the unspent "stimulus" spending be cancelled as well as some other domestic spending that has been allocated but not yet spent. if it gains any traction in the press I expect the Democrat's response to be along the lines of "those heartless Republicans are stealing food from starving babies!"

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Re: Traditional debt management issues should be a

gerrymander.

Tue Jan 26, 2010 at 11:58:11 AM EST

none

if it gains any traction in the press I expect the Democrat's response to be along the lines of "those heartless Republicans are stealing food from starving babies!"

Maybe. Then again, that may not do much good unless "stealing food from starving babies" starts rating higher on the public importance list. Right now, starving babies is Job #9.

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Re: Traditional debt management issues should be a

gerrymander.

Mon Jan 25, 2010 at 09:49:43 PM EST

none

now if only we had a political party that were willing to do something about it.

Give it another 10 months or so...

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Re: Traditional debt management issues should be a

shane.

Mon Jan 25, 2010 at 10:19:33 PM EST

none

That sounds like another opportunity for broken promises.

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Re: Traditional debt management issues should be a

DEMachina.

Mon Jan 25, 2010 at 11:20:29 PM EST

none

Uh huh.  When was the last time a Republican actually lowered the deficit?

Q: What do you think of western civilization? Gandhi: I think it would be a good idea.

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Re: Traditional debt management issues should be a

zyxwvutsr.

Tue Jan 26, 2010 at 08:35:45 AM EST

none

1996.

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Re: Traditional debt management issues should be a

ThePlague.

Tue Jan 26, 2010 at 01:03:28 PM EST

5.00 (astute)

It was SS sleight of hand then:  count SS as revenues, not future liabilities, and the US still only had 2-3 years of nominal "surplus" during peak baby boomer SS contribution years, the beginning of a housing bubble, and the dotcom bubble.  However, it was certainly better than the current situation.  I would maintain that it wasn't the republican congress or the democratic white house that should get credit, rather the adversarial nature between the two.  That's what worries me about one party rule, or bipartisanship:  the more government can get done without opposition, the worst off we are.

2

Re: Traditional debt management issues should be a

zyxwvutsr.

Mon Jan 25, 2010 at 04:17:09 PM EST

4.00 (colloquial, sarcastic)

Oh well, whaddaya gonna do? This country needs stimulus - it's important for the Democrats to get reelected.

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Re: Traditional debt management issues should be a

Steve Urkel.

Mon Jan 25, 2010 at 04:00:18 PM EST

none

See also "The Global Debt Bomb".

3

Re: Traditional debt management issues should be a

joshv.

Mon Jan 25, 2010 at 04:24:31 PM EST

none

Oh man, you mean you can't have an economy that exists solely by taxing government employees in order to pay other government employees?  Bummer.

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^ 3

It's already an economic model.

pO157.

Mon Jan 25, 2010 at 08:15:14 PM EST

4.00 (funny)

We like to call that "The New Yorker."

Never compromise.

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