Federal Deficit Is A Triumph Of Fiscal Policy: Stan Collender

Capital Gains and Games:

Despite the headlines and the page-one, right-hand column, above-the-fold stories in the New York Times and Washington Post on Saturday, I'm not at all upset about the 2009 federal budget deficit.

You shouldn't be either...

Read the whole story: Capital Gains and Games

Comments

[Jannsmoor]

The lesson here is clear. If a country 1) elects Presidents who don't believe in government, they 2) appoint economists who don't believe in regulating the financial system, resulting in 3) a financial system eaten through with secrecy and fraud which 4) crashes the world's economy forcing 5) the taxpayers to bail out the financial system and 6) adding to an already high federal deficit.

If you don't like deficits, stop electing government officials that don't believe in government.

[stargazer13]

when you translate this in to dollars owed by every American citizen because after all it,s money owed with interest

how much is the individual share !!

I wrote Mr Hatch of Utah

and asked him these question,s ??? why in a time of war is my government giving tax breaks out like candy !! ??

why are we borrowing money from china to pay for our so called wars in the middle east .???

why is it that congress seems to think selling my children and grandchildren in to debit,s they will never be able to pay if you add on the interest is a good thing ???

we as a nation are on the hook for this it is our debt created by our elected men and women in congress

how Mr Hatch do you propose we pay with interest all this money back !!

I am still waiting for answer !!

[stargazer13]

I mean 1.4 trillion is just this years add all proceeding years together !

it,s quick sand and it is sucking the life from this nation

[Jannsmoor]

Where were you when Bush Jr. let America into a $3 trillion illegal war in Iraq? Why weren't you talking about deficits then?

[Mach8]

The national debt was 10 trillion dollars before Obama set foot in office (that's the NATIONAL DEBT, not the budget deficit, since most right-wingers don't know the difference).

As the author wrote, the deficit was projected to be 1.2 trillion WITHOUT the stimulus. Even the sham Republican budgets had deficits well exceeding a trillion dollars (more new tax cuts that could have added as much as THREE TRILLION dollars to the deficit).

Complaining about our government's debt is a moot argument. That ship has sailed. The US has been in hock since Reagan. The last time we had a balanced budget, a DEMOCRATIC president was in office, Mr. William Jefferson Clinton.

[Rog49Thomas]

Two more fundamental questions are

Why are we at war, why do we have a string of imperial bases around the world?

Why on earth on we giving out tax breaks?

[Rog49Thomas]

I would disagree.

We should be mightily exercised about the deficit

(1) as it shows conclusively except to the ideologically blind the dire results of the cult of voodoo economics preached by St. Ronnie and implemented so well by Former President Pan.

(2) as our precious national treasure has to be spent cleaning up the mess created by this crackpot economic theory instead of being spent on rebuilding infrastructure, improving education, providing health care. Imagine how we could have improved our way of life and our national security with this money!.

[Jannsmoor]

Fanned.

[myub40]

only way to pay this deficit is to get rid of NAFTA

[austinro]

The budget was 22% less than originally stated? You have to be kidding me with this kind of rhetoric, its hard to disguise being in the tank for Obama. Deficits are bad, and Republicans have been just as bad. Would you recommend an individual family massively increase deficit spending? " Honey times are tough this year and im not sure if we can even pay the debts we owe but Stan said to go ahead and max out the credit cards and take out a second loan on the house because our debt isnt that important and if you say it is then you are just a naysayer."

[Jannsmoor]

The Democrats have absolutely not been as bad. Look at the deficits under Reagan, Bush 1 and Bush 2. Compare them to the deficits under Clinton. Clinton actually balanced the budget for 4 of his 8 years.

[Mach8]

Please develop an understanding of economics before posting. One of the cornerstones of modern economic theory is the carrying of deficits during times of severe recession or depression. In those times, only the government is able to fulfill the "demand" side of the supply-demand equation.

Start your education by reading Keynes.

[lonbwoy]

Ok so where the Deficit Balloons even further in the next 2-3 yrs(which it will) will Liberals still be blaming Bush and the Republican­s?????????­???

[Jannsmoor]

I will still be blaming them. You can't just immediatly stop spending. To do so would create a huge unemployment jump and crash the economy. You need to gradually reduce spending.

I will however, continue to blame Democrats for failing to rein in bloated Defense spending. It is unconscionable and criminal.

[Mach8]

Indeed on both counts.

[ThomH]

"...previo­us years’ deficits increased federal interest payments in 2009 by billions beyond what they otherwise would have been."

So why exactly do we pay interest on borrowed money? In recent years, servicing the national debt has cost about $500 billion per year, about the same as the deficits we were incurring (before this year). Without the debt service, deficits would have been near zero.

Why not have the government create the large sums of money needed to stimulate the economy this year and spend it into being without borrowing it? Why cover deficits, when they are necessary, as they are this year, with borrowed money, rather than with government-created money?

Inflationary? Yes, but no more so than borrowing. And anyway, inflation is needed this year to offset deflation. So why not use government-issued money, rather than borrowed money, and avoid a ton of future interest obligations?

[Jannsmoor]

You are largely right. We missed a golden opportunity to pay down the debt with Fed money during this deflationary period.

[DannyGee]

Who is this guy? What a fool. This type of thinking is straight from the mouth of Dick Cheney, and is dangerous and staggeringly ignorant.

[Jannsmoor]

Where were you when Bush Jr. let America into a $3 trillion illegal war in Iraq? Why weren't you talking about deficits then?

[Raster]

Why worry when the whole US monetary system's value will collapse.

[swift goat pet for truth]

While I agree with the article, it does a disservice because it does not mention the flip side, which is the National Debt. Over $half-a-Trill goes to servicing the INTEREST ONLY of the National Debt.

As for the deficit, we need it to pull us out of the current economic problems.
There is no other way to do this, except diving into depression.

[Mach8]

Right-wingers don't understand economics.

[DannyGee]

i think Obama is a left winger

[bioluminescence]

When someone like this tells you not to worry about government deficits, he's either been asleep for 40 years or he thinks you have. Deficits contribute to total debt which in America is more than $10 trillion dollars. Pay that off at the rate of $1 second and will take you 342,000 years. China holds about 23 per cent of that debt. But it's getting worried about the stability of the U. S. dollar. It's starting to talk about needing security to back up further U. S. debt.

In our lifetimes the U. S. has gone from the largest creditor nation to the largest debtor nation. And you get there the same way we do: by spending more than you bring in. And like the person who pays off one credit card by borrowing from another, the situation just gets worse until you have no more credit to run the printing presses that churn out the currency.

When Roosevelt took America off the gold standard 80 years ago, a dollar ceased to be what the constitution said it was, 371.25 grams of silver (as in a silver dollar). It became a debt obligation of the Federal Reserve. He said at the time that America would not go down the road of creating what he called "printing press money." We wonder what he would have thought about the state of America today.

[swift goat pet for truth]

blah blah blah.

The real question is how to get out of it.

[DannyGee]

ignorant response to an articulate post

[plaidsportcoat]

Unfortunately, there are human beings involved

[ThomH]

True, national debt is about $10 trillion. And, coincidentally, the money supply is about $10 trillion, 97% of it "credit money" created by banks under fractional reserve banking.

How to pay down the national debt in a few years, with no inflation, and never again pay interest on borrowed money?

Have the government print $10 trillion of government-issued Greenbacks. That's right, "printing press" money. Use it to pay down the national debt as US bonds and T-notes mature, rather than rolling them over with new debt. After a few years, no more debt.

Inflationary? Yes, doubling the money supply this way would halve the value of the dollar. But that inflation can be avoided altogether by simultaneously eliminating the "credit money" created by banks. How? By increasing the reserve requirement to 100%. That will have a deflationary effect, exactly equal and opposite. Result: no inflation. No deflation. No debt. No interest payments. And future deficits, if any are needed - they may not be - can be similarly funded, interest-free, with no inflation, as long as they are below the rate of growth of the economy.

No need for gold-backed currency. See "The Lost Science of Money", by Stephen Zarlenga, or "The Web of Debt ", by Ellen Brown.

[Mach8]

Awesome post. Fiat money has been excellent for economic growth. Tying money to commodities was impractical. It's the focus of using money to make money rather than spending it on capital that has created the problems.

[Jannsmoor]

Where were you when Bush Jr. let America into a $3 trillion illegal war in Iraq? Why weren't you talking about deficits then?

[DavidDial]

Finally, someone who is willing to address the deficit from a non-ideological perspective.

[vinny]

hope that is sarcasm...

[FerrellGummitt]

Federal Deficit is a Triumph of Policy?!!!??

So, by that standard we should all applaud and celebrate with a beer bust having $23,000 in credit card debt.

So, it will be a great day when China, says "Here US, we have stopped buying your debt and the other bit of good news, we want all our money now!!!"

We could declare it a national holiday, yes! Call it "Bankruptcy Day".

Looking forward to it.

[swift goat pet for truth]

The government is not a person.
National Finances are not personal finances.

This is really an important distinction, but I really do not expect you to understand the implications.

[DannyGee]

you have proven beyond a shadow of a doubt by your last couple of posts that you don't have a clue what you are talking about.

[chocolatecity]

We were facing a severe deflationary spiral. When that is happening the last thing folks need to worry about are deficits. Once we fully stabalize taxes will have to be raised just to get revenue in the Treasury. The Fed has wisely kept interest rates low during this difficult time. So when inflation kicks in they can raise them to a normal level to fight it. I'm not saying that the deficit is not an issue, but it is a problem that can be solved.

[jsgaetano]

Conservatives never worry about the deficit when they are in power. Instead, they deficit spend like there's no tomorrow. Don't believe it? Just look at spending under every president for the last 40 years- all the big spenders were conservative presidents­... yet each Democratic President paid down the deficit.

This back and forth game has to end... and sadly the only way to do it is to ignore the deficit. When Democrats are fiscally responsible, it just sets the stage for another world-record spending spree the next time the "fiscal conservatives" manage to get into office.

So we need to fix the nation... but NOT pay down the deficit. In the meantime, it's of the utmost importance ALL "fiscal conservatives" be purged from government, and their movement utterly disgrace. Only be holding them accountable for their abysmal track record can America stop making the same poor decisions over and over again.