The crux of the spending problem

[_beastie]

I watched Bill Maher last night, and he shared a clip from Alexandra Pelosi interviewing conservatives and tea-partiers in regards to government spending. I tried to find it online with no success. They all affirmed that government needs to cut spending, but when pressed on where these cuts should take place, only two places were offered: foreign aid and salaries for congressmen. Anyone with a brain, working digits, and access to the internet knows that neither of these cuts would make any difference overall.

So the crux of the problem is that people have been told that government spending is out of control, and needs to be dramatically cut, so they are now believers. Government must be cut. We are all in serious danger due to government spending. That is what has caused our economic problems. Yet, at the same time, they want all that government provides and don't want any of it cut. They are living in some world of magical thinking where wishes are fishes and we get to eat forever.

Government representatives know this. They may (or some may not, given the apparent lack of intelligence in some) realize that voters actually want and value government services and don't really want cuts. So they're playing a game, just shouting "cuts cuts cuts" while not seriously addressing any issue. But then there's another group that has never supported the social welfare net this country constructed in the New Deal, and has the intent of dismantling it. They are crying cuts cuts cuts because they want to dismantle these programs as much as possible. These same people don't mind deficits when it comes to issues they support, like war or cutting taxes.

I don't think we'll ever have a serious discussion on this issue, because of this inherent duplicity and self-delusion at the base of it all. Politicians will never be courageous enough to act unless and until absolutely pushed by the electorate, and the electorate is too ill-informed to push in a way that makes any sense at all.

I don't think we're doomed, by the way. It's not unhealthy for countries to allow a certain amount of debt, particularly for a country like the US who funds their own debt. We "owe" China money because of our trade deficit.

I do agree we need to make some realistic changes in social security and medicare, but that's due to the aging populace. That's our real problem, not foreign aid and government salaries. Not medicaid and food stamps. And social security and medicare are untouchable, due to the fact that older people tend to vote more. So we won't change that until forced to. Personally, I think it's realistic to raise the age of retirement a bit because we're living longer (I'm not saying that is a great solution because people who work in manual labor have real problems working that long, so I'm not sure if that's entirely fair, either), means-testing, and raising the FICA cap. But those ideas are very unpopular among the most powerful voting bloc, so chances are against it happening.

So it will be groundhog day forever. Our deficit will be high enough that people will be genuinely concerned, and other people will use that in a manipulative fashion to try and eliminate or dramatically change programs they really oppose on an ideological basis that has nothing to do with deficits. And if they ever succeed, the same people that supported their goal to cut government spending will be furious because they have lost the very government spending that they want and value.

[_ajax18]

Well I wouldn't want my children going into the current white house anyway. At least some cuts are being made. As bad as my back hurt today putting in the hours, there's a lot more things that I as a taxpayer would like to cut!

[_cinepro]

I agree with most of your points, but I'm not clear what you mean by this:

I don't think we're doomed, by the way. It's not unhealthy for countries to allow a certain amount of debt, particularly for a country like the US who funds their own debt. We "owe" China money because of our trade deficit.

Our trade deficit is manifested in cash (the deficit leaves China with a bunch of dollars and the US with a bunch of Chinese stuff). If China just kept the cash, then that would be it. But we "owe" China money because they use the cash to buy US Treasury Certificates (which pays them interest). US Treasury Certificates are a form of debt; they are an obligation that must be paid in the future. I'm not quite as worried about China holding that much US debt as some other people are, but I do think it is a concern.

As far as the trade deficit goes, as long as China is determined to keep the value of their currency low compared to the dollar, we don't have many options. We can either compete to devalue our currency against theirs (thus making American products cheaper overseas), or hope China allows their currency to rise. As someone who has savings and investments in dollars, I'm not too thrilled about the former option. And I'm not sure how likely the latter option is. So China may continue to end up with many dollars in surplus in the coming years.

Ultimately I think Thomas Jefferson had it right:

I place economy among the first and most important virtues, and public debt as the greatest of dangers to be feared.... To preserve our independence, we must not let our rulers load us with perpetual debt.... We must make our choice between economy and liberty or profusion and servitude.... If we run into such debts, we must be taxed in our meat and drink, in our necessities and our comforts, in our labors and in our amusements.... If we can prevent the Government from wasting the labors of the people, under the pretense of caring for them, they will be happy.

- THOMAS JEFFERSON, letter to William Plumer, July 21, 1816.The Writings of Thomas Jefferson, ed. Andrew A. Lipscomb, vol. 15, p. 47

[_Ceeboo]

Hey beastie!

I watched Bill Maher last night

Why?



Peace,
Ceeboo