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 Post subject: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 8:01 am 

Joined: Fri May 04, 2007 8:14 pm
Posts: 1952
Decided to start a new thread on this particular subject because it's threatening to go way off topic in the "And the Big New in Science This Weekend Was..." thread.

So continuing on...

Kombat, you're pretty good at rhetoric and self-righteous indignation but you have a pretty tenuous grasp on history, fact and context. So that we're all looking at the same thing, I'll link to graph that I'd linked to in another thread, just to ensure that we're looking at the same thing:
Image

kombat wrote:
VinTek wrote:
And what did we get for that? Oh, just stuff like the Interstate Highway System, the Internet, the end of polio, the space program (which paved the way for other stuff like satellite communications), small stuff like that. The list goes on and on.


I never denied they built that stuff. I just said they built it with money they borrowed from their children (i.e., debt).

Actually, the debt was going down when most of that stuff was being built. We peaked in debt as a percentage of GDP in WW2 (and I think even you would agree that it was a good thing that we won that) and except for the Reagan/Bush1 and Bush 2/Obama years, had been going down ever since. So with the exception of those years, the Boomers seem to have been keeping debt in check, all while creating new things upon which modern society is based.

kombat wrote:
Yes, you have highways. And $14 trillion in debt. We're supposed to say "Thanks" for the highways, and ignore the debt that comes with them?

See the statement and chart above. Debt was going down during the years in which the majority of those highways were being built. Debt really started climbing during the years in which...wait for it...the Gen X folks became eligible to vote. As for the figure of $14T, let's just say that most of it also came during a time when Gen X had the power to vote.

kombat wrote:
VinTek wrote:
As for the stock market, there have always been booms and busts


It's my understanding that the current decade of flat returns is unprecedented. As was the 2-3 decades of steady average 12% returns that the Boomers enjoyed from the 70's - 2000.

Well let's see now.

On January 2, 1900, the DJIA was at 68.13. On December 31, 1914, it was at 54.58. So it declined 20% over a 15-year period.

On January 2, 1920, it was 307.01. On December 31, 1953, it was 280.90. So over a 34-year period, it had a net decline of 9%.

On January 2, 1973, it was 1031.68. On December 31, 1982, it was 1046.54. So it was basically treading water for 10 years.

Since that time, the DJIA hit 11722.98 on January 14, 2000. After the whole dot-com bust and 9/11, it dragged itself back up to 12011.73 on October 19, 2006. Peaked on October 9, 2007 at 14164.53. And yesterday it closed at 13008.68. It's your understanding that the current decade of decline is unprecedented? How exactly did you come to your understanding?

kombat wrote:
VinTek wrote:
So build your own infrastructure and let the old stuff crumble. OR DO WITHOUT IT. Again, you use stuff another generation built, and now you resent having to pay for it's maintenance. Okaaay....


I never said I resented paying for the maintenance. I said I resented having to pay for the original system, AND the maintenance.

Sure, the Boomers built it. But if their kids have to pay for it, AND the maintenance (and any necessary replacements), then what exactly did the Boomers do, other than pay themselves with their own kids' money?

I hate to break the news to you, but you're still using the original system. What would it have cost your generation to build all new roads? You use the system not just when you drive over roads and bridges, but also every time you buy something that was delivered on a truck. Or delivered by air (did you think the air traffic control system just sprung up out of the ground?). You use the system every time you use your cell phone. Why shouldn't you pay for some it? The prior generations may have left some debt to succeeding generations but they also left the benefits to them. You sound like a little kid. "Gimme the car for free, dad; I only wanna pay for the maintenance. What? I have to pay for the car? It's not fair!"

kombat wrote:
VinTek wrote:
The point is, things are what they are today. What do we do about it, besides whine?


How about, "nothing?" Why can't we just do the same thing every generation before us did, and do nothing? Just keep doing what we're doing? Why, after 1,000's of years, is it suddenly incumbant on Generation X to be the first generation to make meaningful sacrifice, in the name of preventing some nebulous, far-off catastrophe that a) might never actually happen, or b) might have happened anyway, as a natural part of Earth's climate cycle?

Gen X is the first generation to make a meaningful sacrifice after thousands of years? Are serious? Have you any idea how how you sound? Ever hear of WW2? I know, that wasn't the Boomer generation. My point is that you are so out of touch with history and context, you make up stuff to support your points.

kombat wrote:
VinTek wrote:
As I said above, try living without what the Boomers created. Join the Amish if you resent what they've done.


I'm glad they built what they built. I just wish they'd paid for it instead of building it with money borrowed/stolen from their children.

But you're using it today. Whaddaya say we charge Gen X a usage fee, use those fees to pay down the debt and for ongoing maintenance, and call it a day.

kombat wrote:
VinTek wrote:
My point is that you've profited handsomely in many ways from the Boomers' achievements.


And MY point is that the Boomers profited handsomely from borrowing money from their children, which stimulated the economy and produced that decades-long run of 12% market returns that we'll never see again in our lifetimes. So they gave themselves jobs building all this stuff, which created a frothy economy which boosted their investments and made them rich. Sure, we're inheriting the highways, but they also stuck us with the tab.

Market returns are predicated on greed and fear. Again you lack historical context, which I gave you above. Bubbles occur when things are purchased above their true value. GDP is actually a better measure of the economy. And aren't you guys part of the problem? You're telling me that none of the Gen Xers bought houses at too high a price? None of them are downside up on their mortgages? None of them were invested in the market when it peaked in 2007?

Also, you haven't profited as well? Give up your cell phones, computers, Internet, etc. You've profited too. Society as a whole has profited.

Gimme a break. If you want to reply, come back with some real figures to support your position.


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 Post subject: Re: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 8:57 am 
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So, my conclusion from the chart is that Republicans spend recklessly to increase the debt. Democrats lower the debt, unless they have a Republican-initiated war to pay for.

Now, I am neither R or D, but that's the conclusion I would draw from the data since WWII. But, that could be considered off-topic.

I actually think kombat has a point, in spite of the data. One thing that does not come out in the data is that tax rates were much higher back then so that the major projects could be largely paid for over a relatively short term. I've read that although Eisenhower really spent a lot on the interstate highway system, it was mostly paid off by the end of his second term. But I can't find any facts to verify that. But back then we seemed to have the mindset that anything we spent had to be repaid fairly quickly. These days even the most conservative folks think in terms of 10-50 year payback periods. Personally I think that is stupid because there will always be another war or program that is absolutely necessary in that time. When thinking in the short term (3-5 years) or in a pay-as-you-go program, if something comes up, it's not that hard to delay or "suck it up" for a year or two.

The other thing that really bothers me is that no one seems to understand the scope of teh problem. It is routinely way overestimated. The Social Security gap could be filled completely with a 2-3% increase in SS taxes, and probably a similar bump for medicare. No one wants to pay that, or even vote for it. But there is so much national effort spent on studying and debating it that I really believe that if we had some leadership to just say - we are in a bind...here's how we get out...and do it. But I'm not naive enough to expect that.


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 Post subject: Re: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 8:58 am 

Joined: Mon Feb 07, 2011 6:33 pm
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Location: Illinois
*Begins watching thread with interest.


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 Post subject: Re: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 9:03 am 

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bpgui wrote:
*Begins watching thread with interest.

Pass the popcorn, please.


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 Post subject: Re: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 9:05 am 

Joined: Mon Feb 07, 2011 6:33 pm
Posts: 1148
Location: Illinois
DoingHomework wrote:
So, my conclusion from the chart is that Republicans spend recklessly to increase the debt. Democrats lower the debt, unless they have a Republican-initiated war to pay for.

Now, I am neither R or D, but that's the conclusion I would draw from the data since WWII. But, that could be considered off-topic.

I'm curious if there is a similar chart showing which side controlled congress and the senate at the time, as I think they have much more influence on the debt than the Pres. I'm also curious about a chart showing total government revenues, but that may be too much off topic.

Though any such chart couldn't be entirely conclusive, as actions taken by one Congress may not be paid for until the other group is in power (wars, social programs, etc.)


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 Post subject: Re: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 9:37 am 

Joined: Fri May 04, 2007 8:14 pm
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bpgui wrote:
I'm curious if there is a similar chart showing which side controlled congress and the senate at the time, as I think they have much more influence on the debt than the Pres. I'm also curious about a chart showing total government revenues, but that may be too much off topic.

Though any such chart couldn't be entirely conclusive, as actions taken by one Congress may not be paid for until the other group is in power (wars, social programs, etc.)

It's harder to determine, since sometimes Congress is split, as it is now.

Interestingly enough, the Republicans don't deny the accuracy of the chart and the debt run up by Reagan/Bush 1 and Bush 2. They just say that Democratic Congress did it. But for 12 of the 20 years the Congress was not Democratic. Also, presidents can veto, and when it was Democratic, Congress passed smaller budgets on average than the Republican Presidents asked for. Presidents propose the budget, and they have the most influence. http://zfacts.com/p/57.html illustrates that.


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 Post subject: Re: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 9:48 am 

Joined: Fri May 04, 2007 8:14 pm
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DoingHomework wrote:
So, my conclusion from the chart is that Republicans spend recklessly to increase the debt. Democrats lower the debt, unless they have a Republican-initiated war to pay for.

I don't think that's the case. Debt reduction occurred under the Republican Eisenhower and Nixon administrations. Also, we were able to accomplish debt reduction throughout the Korean and Vietnam conflicts. I'm more inclined to conclude that tax reductions played a larger role in reversing the debt reduction trends. Not that I'm for taxes; I just think that if you're going to cut taxes, you need to enact spending cuts simultaneously. Otherwise you're just digging a deeper hole.


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 Post subject: Re: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 9:51 am 

Joined: Mon Feb 07, 2011 6:33 pm
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Location: Illinois
So based on that link, the pres's budget pretty much gets passed as is (very minor deviations compared to the whole)?

it still doesn't really tell us much, because so little of the budget is discretionary, as is often pointed out in discussions on decreasing spending. The chart doesn't take into account which side passed those programs.

For the record, I think both sides spend way too much.


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 Post subject: Re: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 10:03 am 

Joined: Tue Mar 11, 2008 12:19 pm
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Location: Ottawa, Canada
VinTek wrote:
We peaked in debt as a percentage of GDP in WW2


Why do you keep insisting on discussing the debt "as a percentage of GDP?" You're comparing 2 variable values and trying to draw meaningful conclusions from it.

I'm simply referring to the absolute debt itself, in nominal dollar terms.

VinTek wrote:
I hate to break the news to you, but you're still using the original system.


Yes, and it's falling apart. The Gardner Expressway in Toronto is literally crumbling onto cars below it. It's been shut down twice in the past 2 months because it's literally falling apart. Overpasses in Quebec are disintegrating, in some cases actually even killing people driving under them!

VinTek wrote:
Gen X is the first generation to make a meaningful sacrifice after thousands of years? Are serious? Have you any idea how how you sound? Ever hear of WW2?


Oh come on, VinTek, surely you realize I was referring to sacrifice in the context of climate change in that passage.


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 Post subject: Re: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 10:27 am 
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bpgui wrote:
DoingHomework wrote:
So, my conclusion from the chart is that Republicans spend recklessly to increase the debt. Democrats lower the debt, unless they have a Republican-initiated war to pay for.

Now, I am neither R or D, but that's the conclusion I would draw from the data since WWII. But, that could be considered off-topic.

I'm curious if there is a similar chart showing which side controlled congress and the senate at the time, as I think they have much more influence on the debt than the Pres. I'm also curious about a chart showing total government revenues, but that may be too much off topic.

Though any such chart couldn't be entirely conclusive, as actions taken by one Congress may not be paid for until the other group is in power (wars, social programs, etc.)


I agree. Hopefully it was obvious I was being a little facetious. But it seems fairly clear from the chart that administration changes have created inflection points in the chart while the new Congress every two years is just not obvious.

It's also troubling that we have now institutionalized spending in a way that did not happen in the past. WWII was bought and paid for then we started paying it back. It's the same with the interstate system, and even the New Deal programs to get us out of the recession. They were repaid quickly. But no one seems to be saying we should try to pay back this war we are (hopefully) winding down, and the bailout (whether necessary or not) in anything but a multi-decade time frame. That's a huge shift. And even though I don't think that was specifically what kombat was referring to, I think it is consistent with his point that future generations are paying for the irresponsibility of the previous.


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 Post subject: Re: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 10:35 am 

Joined: Tue Oct 23, 2007 7:07 am
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kombat wrote:
VinTek wrote:
We peaked in debt as a percentage of GDP in WW2


Why do you keep insisting on discussing the debt "as a percentage of GDP?" You're comparing 2 variable values and trying to draw meaningful conclusions from it.

I'm simply referring to the absolute debt itself, in nominal dollar terms.



Vintek can correct me if I'm wrong but I think he's trying to have an economic discussion, and to take one without of the context of the other doesn't really provide much meaning. Who cares if the debt is increasing as long as the GDP is increasing at a greater rate?


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 Post subject: Re: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 10:47 am 

Joined: Fri May 04, 2007 8:14 pm
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kombat wrote:
VinTek wrote:
We peaked in debt as a percentage of GDP in WW2


Why do you keep insisting on discussing the debt "as a percentage of GDP?" You're comparing 2 variable values and trying to draw meaningful conclusions from it.

I'm simply referring to the absolute debt itself, in nominal dollar terms.

Yes, because it's a meaningful measure. After all, a certain amount of investment is a good and worthy thing. We haven't had a reduction in the national debt in real dollars since 1957. Also, you have to remember that each year, you're swimming against the current because debt accrues interest. If we'd had balanced budgets every year since WW2, we'd still have a bigger deficit in actual dollars since that time because of interest accrued. You have to account for such factors. Absolute debt without a scale to measure against is meaningless. Hence the need for a comparison to GDP -- it makes the number meaningful. You really need to take a quickie course in economics.

And I'll also point out that the bulk of the nation debt that you're so worried about, in terms of absolute dollars, which you seem to fixate on, was incurred in the years during which Gen X was of voting age. Assuming that Gen X ended in the year 1981, that pretty much says that they had at least partial responsibility for any debt incurred from 1999 to the present day. At the end of the 1999 fiscal year, the national debt stood at $5.7T. So you're blaming the Boomers because...?

kombat wrote:
VinTek wrote:
I hate to break the news to you, but you're still using the original system.


Yes, and it's falling apart. The Gardner Expressway in Toronto is literally crumbling onto cars below it. It's been shut down twice in the past 2 months because it's literally falling apart. Overpasses in Quebec are disintegrating, in some cases actually even killing people driving under them!

I agree that it's a bad situation. But that's a Canadian asset. I can't speak to that. I daresay that it doesn't really apply to the US debt though.

VinTek wrote:
Gen X is the first generation to make a meaningful sacrifice after thousands of years? Are serious? Have you any idea how how you sound? Ever hear of WW2?


Oh come on, VinTek, surely you realize I was referring to sacrifice in the context of climate change in that passage.[/quote]
Yes, We did rationing (gas, rubber, metal) of all kinds in WW2 for the war effort. We did gas rationing in the 70s during the energy crisis. It seems that the Gen Xers are the ones who don't want to make a sacrifice and cut down any kind of usage for any kind of reason.


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 Post subject: Re: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 11:33 am 

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The problem with the debt, as DH has alluded to, is that no one seems to want to pay it down during the good times, but we use bad times as an excuse to run it up some more.

During the boom years of the 1990s it was all we could do to balance the budget, no one even seriously considered paying down the actual debt. Which is fine, because if you dont add more to it via deficit spending, it will eventually wind down over time.

However, since 9/11/2001, we have been on a psychotic frenzied spending bonanza, at least in terms of the budget deficit. Out spending levels are totally unsustainable. 10 more years of deficit levels like this and interest payments will become unmanageable.

The debt isnt a huge problem now, but it will certainly become a huge problem if a long term strategic spending plan is not formulated by our government.

Anyone think that plan is coming anytime soon?


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 Post subject: Re: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 11:49 am 

Joined: Tue Mar 11, 2008 12:19 pm
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Location: Ottawa, Canada
VinTek wrote:
Hence the need for a comparison to GDP -- it makes the number meaningful. You really need to take a quickie course in economics.


All right, fair enough, I never claimed to be an economic expert, nor an expert in the history of national debts in our respective countries. All I know is that as a taxpayer, the debt has been steadily increasing faster than inflation, and when rates start to rise, we're in serious trouble. In Canada, $0.25 of every federal income tax dollar collected is spent just paying the interest on our national debt. That's crazy! Who would run their own household budget that way? Where 25% of your income is sucked up just paying the interest on your outstanding debt?

VinTek wrote:
And I'll also point out that the bulk of the nation debt that you're so worried about, in terms of absolute dollars, which you seem to fixate on, was incurred in the years during which Gen X was of voting age.


Right. And who were we voting for? Boomers. How many Gen-X-er's were on the ballot? Close to none. No matter which way we voted (Democrat, Republican, Liberal, Conservative, whatever), they were all Boomers.

VinTek wrote:
kombat wrote:
VinTek wrote:
Gen X is the first generation to make a meaningful sacrifice after thousands of years? Are serious? Have you any idea how how you sound? Ever hear of WW2?


Oh come on, VinTek, surely you realize I was referring to sacrifice in the context of climate change in that passage.

Yes, We did rationing (gas, rubber, metal) of all kinds in WW2 for the war effort. We did gas rationing in the 70s during the energy crisis. It seems that the Gen Xers are the ones who don't want to make a sacrifice and cut down any kind of usage for any kind of reason.


That's actually a great point, and made me consider why this makes me mad. When you put it that way, I realized that I don't actually mind making sacrifices if it helps society. I just don't want to be the ONLY one making sacrifices.

I can live with raising the retirement age to 67. I understand that money's tight and we've all gotta make sacrifices. What makes me mad is that the people responsible for messing up the budget so badly as to necessitate such a modification are still going to take their money at 65. It's only us poor saps who had nothing to do with running up this debt that are the ones who are going to have to suffer for 2 more years.

I don't mind raising income taxes a little to help fix this mess, so long as a) the taxes are raised evenly, across the board, for EVERYBODY, including that 50% who currently don't pay any net federal income tax at all, and b) the extra money collected is actually used to FIX the problems and pay down debt, and not siphoned off and spent on needless new vote-buying partisan make-work projects.


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 Post subject: Re: The National Debt - How Bad Is It and Who's Fault Is It?
PostPosted: Wed Aug 01, 2012 12:08 pm 
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Savarel wrote:
The problem with the debt, as DH has alluded to, is that no one seems to want to pay it down during the good times, but we use bad times as an excuse to run it up some more.

During the boom years of the 1990s it was all we could do to balance the budget, no one even seriously considered paying down the actual debt. Which is fine, because if you dont add more to it via deficit spending, it will eventually wind down over time.

However, since 9/11/2001, we have been on a psychotic frenzied spending bonanza, at least in terms of the budget deficit. Out spending levels are totally unsustainable. 10 more years of deficit levels like this and interest payments will become unmanageable.

The debt isnt a huge problem now, but it will certainly become a huge problem if a long term strategic spending plan is not formulated by our government.

Anyone think that plan is coming anytime soon?


Haven't you heard? They'll work on that in 6 months - AFTER the election. Don't you think we should be asking both sides why they have once again failed to lead the country?

This kicking the can down the road is truly pathetic.


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