Obama unveils budget with record deficit

[Ali G. 37]

Deficit spending is justified at only one time, during a recession, and I'll give you one guess as to what we have now.

Deficit spending outside of a recession is bad, and we have a nice fellow from Texas to thank for that. Of course, the "fiscal conservatives" were mostly quite during his term.

This is true. The lack of spending is what prolonged the depression and plunged the economy back into one, prior to WWII.

[Dan J 277]

Exactly. Government spending doesn't create wealth, just redistributes it.

Japan is in a really deep hole - their public debt will reach 227 percent of GDP this year

and 246 percent by 2014.

It's truly scary. Japan spends 25 percent of their tax revenue on interest payments alone.

And that's with super-low interest rates - the yield on 10-year government bonds has been

around 1.30-1.40 percent. Any significant increase in interest rates would push this expense

into crippling territory. It has been manageable so far only because Japanese savers have

been willing (or coerced) into lending for almost nothing - more than 90 percent of Japan's

national debt is internally held. This would be impossible in the US where consumers are

themselves over-leveraged and can't lend much to the government.

In recession, we have the savings paradox. Consumers and investors wont break that paradox without sufficient confidence in their financial security. The government can help break that paradox.

Redistributing wealth is not a bad thing if its redistributed into circulation again.

Edited February 2, 2010 by Dan + Gemvita

[I'm Gone 60]

This is true. The lack of spending is what prolonged the depression and plunged the economy back into one, prior to WWII.

“We have tried spending money. We are spending more than we have ever spent before, and it does not work… I say after eight years of this administration, we have just as much unemployment as when we started — and an enormous debt to boot.”

- Henry Morgenthau (FDR’s Treasury Secretary)

[Ali G. 37]

Government spending doesn't create wealth, just redistributes it.

The government is not there for the select few that are wealthy. The question is, what actually is a government and what is their duty? In my opinion, a government is like a business. It generates revenue and reinvests this revenue back into their business, which is running the country. By investing in the country, in the form of improved modern infrastructure, public services, schools etc, they are able to generate even more revenue and grow the country further. I would think this is a no-brainer for conservatives here, who clearly adore business.

The contrary to this is the libertarian zero government (Matt85) way, which simply does not work. Furthermore, there is a reason why only third world countries practice such ideologies. And we can see where that got them. Countries where the majority of the populous is dirt poor, yet a handful of people are mega rich.

Come to think of it, where is Matt? I am still waiting to show him the latest article I have about Australia's property prices going up, yet again; something he assured me would never happen. I even proved myself wrong saying the prices would stay flat.

[Ali G. 37]

“We have tried spending money. We are spending more than we have ever spent before, and it does not work… I say after eight years of this administration, we have just as much unemployment as when we started — and an enormous debt to boot.”

- Henry Morgenthau (FDR’s Treasury Secretary)

Modern economist from around the world seem to think otherwise. How does cutting spending during a recession get you out of it? Considering it's this contraction of spending that gets an economy into the recession, in the first place.

How do you think Australia has managed to weather the g l o b a l financial storm? When everyone cut back, they ramped up spending in the country's infrastructure. I am not talking about simply 'repaving roads' either, but about investing big $$$ in the country's infrastructure. It's also the reason why they have not had a single recession since the 1988 stock crash. They comfortably weathered both the Asian crisis, as well as the dot com crash and are now doing quite well during this crisis. Then again, Australian businesses have diversified and are not solely focused on their own market.

Edited February 2, 2010 by Booyah

[I'm Gone 60]

The government is not there for the select few that are wealthy. The question is, what actually is a government and what is their duty? In my opinion, a government is like a business. It generates revenue and reinvests this revenue back into their business, which is running the country.

Where exactly in the constitution is this stated as a function of the federal government? The government doesn't generate revenue, it takes and which companies has the federal government created?

[scandal 951]

I thought Mort Zuckerman's comments on MTP yesterday, regarding whether we need an additional stimulus, were quite interesting.

http://www.msnbc.msn.com/id/35159331/ns/me...e_press/page/4/

MR. GREGORY: Mort, you were at the White House this week, at the president's invitation, with other business leaders. Give us some sense of that.

MR. ZUCKERMAN: Well, it's a little difficult for me to do that since it was supposed to be off the record.

MR. GREGORY: Yeah.

MR. ZUCKERMAN: But I'll give you a general sense without--I'll cross my legs for a second, OK?

MR. GREGORY: Yeah.

MR. ZUCKERMAN: Look, I think it all focused on the economy. And again, a, a good part of it focused on what I just said, in fact, I focused on that, because I do think that he's got to really concentrate his political capital and the country's attention and the Congress' attention on a whole series of programs to improve the economy and the jobs. We can't do much, as David says, about the fiscal thing at this point, but the country is really terrified. It's--the overall unemployment rate, if you take full- and part-time unemployment, is somewhere in the range of 20 percent. We've never seen that in our lifetime.

MR. FABER: But we do know, I mean, jobs lag a recovery, and certainly that will be the case here. It is always the case.

MR. ZUCKERMAN: Without question. But we're in a very different kind of economic recession now because it was induced by a financial crisis. And that is something we have not experienced in this country anywhere near to this degree. It's going to take a much longer time. We've got to have government programs. It's the only agent...

...

MR. ZUCKERMAN: Look, we are also looking at a condition where the state and local governments and local school boards are going to be cutting their expenses by $200 billion this year. It's completely countercyclical. It's going to wipe out much of what we still think is left of the stimulus program. They've got to come up with a much more serious program. I, I, I mean, there's a major industrial program, industrial policy that is possible to improve manufacturing in this country. They've got to have a whole series of these programs because we may have a double dip in this recession, and then we're going to be in real, real trouble.

[I'm Gone 60]

Modern economist from around the world seem to think otherwise. How does cutting spending during a recession get you out of it? Considering it's this contraction of spending that gets an economy into the recession, in the first place.

So you are going to take the word of economist over the word of the guy that was involved in it spending money during the depression and it didn't help end it.

[I'm Gone 60]

I, I, I mean, there's a major industrial program, industrial policy that is possible to improve manufacturing in this country. They've got to have a whole series of these programs because we may have a double dip in this recession, and then we're going to be in real, real trouble.

The Five-Year Plans for the National Economy of the USSR were a series of nation-wide centralized exercises in rapid economic development in the Soviet Union.

Each five-year plan dealt with all aspects of development: capital goods (those used to produce other goods, like coal, iron, and machinery), consumer goods (e.g. chairs, carpets, and irons), agriculture, transportation, communications, health, education, and welfare.

[Ali G. 37]

Where exactly in the constitution is this stated as a function of the federal government? The government doesn't generate revenue, it takes and which companies has the federal government created?

The rest of the developed first world does not rely on their constitution to be the decider of all. We don't make decisions based on what people said 232 years ago. For most of us abroad, while the constitution is the basis of a country, it's not something we use to decide on issues we are facing in 2010.

There seems to be a huge lack of understanding here regarding the purpose of a government. After all, this is the only place I have heard of outside a third world country that genuinely fears and lacks any faith in the government they vote in. It's why the same people who scorn socialism, cheer on the military; aka the largest example of socialism ever. It's why people scream off the top of their lungs "tell the government to keep their hands off my medicare".

[spookyturtle 9,466]

The rest of the developed first world does not rely on their constitution to be the decider of all. We don't make decisions based on what people said 232 years ago. For most of us abroad, while the constitution is the basis of a country, it's not something we use to decide on issues we are facing in 2010.

There seems to be a huge lack of understanding here regarding the purpose of a government. After all, this is the only place I have heard of outside a third world country that genuinely fears and lacks any faith in the government they vote in. It's why the same people who scorn socialism, cheer on the military; aka the largest example of socialism ever. It's why people scream off the top of their lungs "tell the government to keep their hands off my medicare".

But the US has the largest economy in the world.

[Ali G. 37]

So you are going to take the word of economist over the word of the guy that was involved in it spending money during the depression and it didn't help end it.

Yes, a good 70 years have passed since then. Our knowledge of economics and recessions has increased exponentially since then. That is also a soundbite, which I have no idea in what context it was spoken in. Once again though, good or bad, people here love to cling on to the soundbites. George Washington once said bla bla bla so we better use this for life.

You realize the year the constitution was ratified, the first stake was hammered into a bay to be called Sydney. 232 years later and a large portion of Americans could not afford to live there. So what's the point of that example you ask? Quite simple, times change. Stop looking at the past and look at the present. The past is there to be be learned from, not dwelled on.

It's honestly no wonder why so may Americans live in trailers or in Ghettos throughout this country, yet in the same breath we have people like Rush tossing off over it being the greatest land in the world.

[spookyturtle 9,466]

Yes, a good 70 years have passed since then. Our knowledge of economics and recessions has increased exponentially since then. That is also a soundbite, which I have no idea in what context it was spoken in. Once again though, good or bad, people here love to cling on to the soundbites. George Washington once said bla bla bla so we better use this for life.

You realize the year the constitution was ratified, the first stake was hammered into a bay to be called Sydney. 232 years later and a large portion of Americans could not afford to live there. So what's the point of that example you ask? Quite simple, times change. Stop looking at the past and look at the present. The past is there to be be learned from, not dwelled on.

It's honestly no wonder why so may Americans live in trailers or in Ghettos throughout this country, yet in the same breath we have people like Rush tossing off over it being the greatest land in the world.

And the majority of Americans wouldn't want to live there. What's your point?

[Ali G. 37]

But the US has the largest economy in the world.

It does, no one is disputing that but since people live eat and sleep individuality, we need to analyze their wealth rather than the entire country as a whole. The average Joe in America is not wealthy at all. You have over 60,000,000 people living in poverty. You have city after city losing money and cutting back services. never in my life, not even during the 1988 recession did I ever hear of my state or city having to cut back as we are doing now here. We have a tax system stuck in the stone ages and still used by third world countries. We have illegal aliens who are taking up jobs at a time when over 10% of the country is unemployed, with the real rate being close to 17%, yet still refuse to kick them out. we are donating money to third world countries when Detroit now has a graduation rate of less than 60%, with teachers having to pawn school equipment to get by (read it in Time).

The Us us becoming more like a second world country by the day. With a handful that are mega rich, and a non existent middle-class.

[spookyturtle 9,466]

It does, no one is disputing that but since people live eat and sleep individuality, we need to analyze their wealth rather than the entire country as a whole. The average Joe in America is not wealthy at all. You have over 60,000,000 people living in poverty. You have city after city losing money and cutting back services. never in my life, not even during the 1988 recession did I ever hear of my state or city having to cut back as we are doing now here. We have a tax system stuck in the stone ages and still used by third world countries. We have illegal aliens who are taking up jobs at a time when over 10% of the country is unemployed, with the real rate being close to 17%, yet still refuse to kick them out. we are donating money to third world countries when Detroit now has a graduation rate of less than 60%, with teachers having to pawn school equipment to get by (read it in Time).

The Us us becoming more like a second world country by the day. With a handful that are mega rich, and a non existent middle-class.

If you look hard enough, you can find something negative anywhere and in anything. So we are a second world country that the world looks to for answers, protection and doing business with.