Topic: Tea Party Wins

[cupper]

If continued cuts to Federal spending is the path that the GOP and the extremist Tea Part elements chose to walk, the mine field will reveal itself in due course.

The cuts will result in higher unemployment as federal workers and contract employees are laid off. Cuts to state budgets due to loss of federal funds will result in contraction of the stae workforce. And so on down to the local level.

As federal state and municipal employees start cutting back on their own spending, the private sector will feel a reduction in revenues, and thus may consider contracting their own workforces.

What we have is the proverbial self-licking ice cream.

I believe todays market closings have shown that Wall Street has no confidence in any economic improvement in near or medium term.

[muskrat89]

First off, if you are going to challenge the economic theory, you should at least getthe spelling right. Keynesian Economic Theories.

You've been posting decent debate. Don't derail it by nitpicking spelling errors. By the way, what is a "getthe"? See how that works?

Army.ca Staff

[GR66]

If continued cuts to Federal spending is the path that the GOP and the extremist Tea Part elements chose to walk, the mine field will reveal itself in due course.

The cuts will result in higher unemployment as federal workers and contract employees are laid off. Cuts to state budgets due to loss of federal funds will result in contraction of the stae workforce. And so on down to the local level.

As federal state and municipal employees start cutting back on their own spending, the private sector will feel a reduction in revenues, and thus may consider contracting their own workforces.

What we have is the proverbial self-licking ice cream.

I believe todays market closings have shown that Wall Street has no confidence in any economic improvement in near or medium term.

We (the collective industrial West) have taken quite a while to dig ourselves into the economic hole we're currently in.  The Tea Party is correct that we need LESS government.  Government in very general terms should be restricted to providing the infrastructure and regulatory framework to support a healthy and growing private sector.  Public sectors in the West have grown far beyond that and do need to be reigned in.  The wages of civil servants are paid from the profits of the private sector (through taxes) and when they become too large a portion of the GDP become a major drag on the economy as a whole. 

The problem with the Tea Party is not in this general concept, but rather the idea that just hacking away at public services will solve the problem.  As Cupper pointed out simply slashing public sector jobs (and withdrawing services) will hurt the economy in the short- and even medium term.  A more reasoned and long-term approach needs to be taken to reverse the trend in recent decades toward a big-government nanny state.    We need to ask the fundamental questions of what services our various levels of government SHOULD be providing and what can be devolved (back) to the private sector.  Then we need to develop transition plans to move toward that long-term goal of a smaller, more efficient public sector.

The biggest hurdle is our political system.  It doesn't typically reward those that take the long view on issues but rather rewards those that seize the spotlight available in the moment.  The solutions really aren't rocket science and when you talk about these issues at a fundamental level ("you can't spend more than you make", etc.) it's not hard to make people understand what we are facing.  Unfortunately we're simply lacking in political leaders with the vision and charisma to take the electorate by the hand and start us down the right road.

[Redeye]

Still, it's beside the point.  California chooses its own taxation and spending within its own sphere of responsibility.

Actually, no.  It doesn't choose federal tax rates, nor federal spending.  California's state fiscal mess is largely a product of its own laws and voter initiatives that have handcuffed its ability to raise revenue substantially.  So when conservatives talk about it being a fiscal basketcase, I laugh, because Prop 13, one of the major roots of its problems (though by no means the only one), was a conservative ballot initiative.  They're reaping, in essence, what they sowed.

[Redeye]

First off, if you are going to challenge the economic theory, you should at least getthe spelling right. Keynesian Economic Theories.

Not only that, no one has ever actually practiced what Keynes really advocated - they're cool with the deficit spending concept but they don't really get around to the paying off the debt incurred and saving during good times well.  The stimulus shot was sort of the first half (and, some argue, wasn't enough to have an impact) but there hasn't been much of a plan for the second part.  In the mess that is US fiscal policy there's no easy way to do it either.

As for the 2008 financial meltdown, the system was doomed to fail, regardless of what ever economic theory you subscribe to.

The biggest cause of the meltdown was a complete lack of regulatory oversight, combined with questionable financial investments, and a wild west mentality within the investment community. The huge losses in the mortgage backed securities markets, along with the credit default swap scams pulled trillions of dollars out of the global economy. As a result, consumers lost confidence in their own futures, as homes were foreclosed, jobs eliminated, industries slowed or shut down.

Yep.  And both sides of the aisle were to blame.  Both created policies that set the conditions for the mess to happen.  Blaming one side or another is pointless.  What made it worse was basically "positive feedback loops" that made things worse and worse regardless, particularly in the housing market.  People walked away from homes they could in fact afford the mortgage payments on because non-recourse loans shielded their other assets, and there's economically speaking no rational reason to continue paying a $300,000 mortgage on a house devalued to to $200,000.  That fueled the wreck particularly in the US southwest.

The problem was so extensive that you could have thrown the equivalent of the national debt at the problem and it would have not resulted in any different outcome.

Probably not, to be honest - it was that bad.

As to your other post, I generally share the sentiment that the idea of smaller, more efficient government is good - but the problem I see with the Tea Party is that they're largely economic illiterates who do not have any particularly strong understanding of the impacts of their ideas - and not just in economic terms.  The idea of scrapping agencies like the EPA strikes me as rather ridiculous.

Among many of the pundits and so on I'm watching, it's interesting to see how they're interpreting the last few days' events.  It seems like the Tea Party is the "winner", but a lot of them are thinking it'll be a Pyrrhic victory - I suspect they've blown their political capital, and a lot of the folks who didn't bother to vote in the midterm elections will be back out in 2012.  It's interesting watching both the GOP and the Democratic Party tearing themselves apart by factions, the impacts will be quite interesting to watch.

[Thucydides]

As for the 2008 financial meltdown, the system was doomed to fail, regardless of what ever economic theory you subscribe to.

Unless you are suggesting the ancient Greek view of how the universe works is in effect, nothing is "doomed" or "ordained". The economic system was stressed by perverse incentives enacted into law and regulatory practice (some of which date as far back as the Carter Administration) and overstressed by the rapid ramping up of spending and "free money" starting in 2006.

The biggest cause of the meltdown was a complete lack of regulatory oversight, combined with questionable financial investments, and a wild west mentality within the investment community. The huge losses in the mortgage backed securities markets, along with the credit default swap scams pulled trillions of dollars out of the global economy. As a result, consumers lost confidence in their own futures, as homes were foreclosed, jobs eliminated, industries slowed or shut down.

As Rep Barney Frank put it; "I'm prepared to throw the dice" WRT not regulating Fannie Mae and Freddy Mac. Regulatory failure is indeed a huge cause of the problam, but where do these regulations come from in the first place? The croney capitalists and their partners in government set the stage, providing favours and access to taxpayer wealth. This offers perverse incentives to the markets, which respond accordingly. Really this is the same issue (on a much larger scale) that plagued Britain in the 1700's during the South Sea Bubble, with similar results. The economic meltdown in Japan and decades long stagnation since the 1990's is also illustrative. The same conditions are growing in China (See the July 25 2011 edition of Maclean's; the particular article isn't online yet but China currently has outstanding loans worth @125% of its GDP, and over $500 billion in government spending cannot be accounted for....), what China has is a "bubble" economy, and the deflating of that bubble is bound to be messy.

The problem was so extensive that you could have thrown the equivalent of the national debt at the problem and it would have not resulted in any different outcome.

The Administration's prediction was quite clear: No "Stimulus" spending and American unemployment would rise to 8%.
The result is stark as well; Stimulus spending was applied and most economic indicators fell, economic growth was 1.6%, while official unemployment grew to over 9%.

Perhaps you need to look at different economic periods and see what alternative solutions were tried and their results (the real solutions, not what popular history would have you believe). Start with the John F Kennedy tax cuts for an illustration of what is actually possible by a Democrat Administration....

[Haletown]

If continued cuts borrowing to support Federal spending is the path that the GOP Democrats and the extremist Tea Part AFL/CIO elements chose to walk, the mine field will reveal itself in due course.

The cuts will result in higher unemployment  lowered government interest payments to China as federal workers and contract employees are laid off.  and a balance budget at the State and Local Level. Cuts to state budgets due to loss of federal funds will result in contraction of the stae workforce. And so on down to the local level.

As federal state and municipal governments  [/s]employees start cutting back on their own spending,[/s]  stop borrowing and driving the economy into a hole, the private sector will feel a reduction in revenues, confident that  taxation and borrowing are under control and thus may consider contracting investing in their own workforces.

What we have is the proverbial self-licking ice cream. proof you can't borrow your way to prosperity, or as a wise man said, when you are in a very deep hole and want to get out, the first thing you have to do is stop digging the hole deeper.

I believe todays market closings have shown that Wall Street has no confidence in any economic improvement in near or medium term. in the Obama regime and their continued use of failed spread the wealth socialist economic policies.

[Redeye]

I agree with your editing of this post.

Except, of course, for all of it.

[Haletown]

I agree with your editing of this post.

Except, of course, for all of it.

As is your right.

But a question . . .  what level of borrowing to fund what level of deficit spending would make you feel worried about the policy being currently followed by the Obama administration?

OK with the current $1.65 trillion or would you go higher, lower?

[Redeye]

As is your right.

But a question . . .  what level of borrowing to fund what level of deficit spending would make you feel worried about the policy being currently followed by the Obama administration?

OK with the current $1.65 trillion or would you go higher, lower?

Ideally, I'd like to see the deficit cut - and dramatically so.  There are likely many places where efficiencies can be found.  But it's unrealistic to expect it to happen overnight.  Ending the wars in Iraq and Afghanistan will help, and probably a substantial downsizing of the US military through natural attrition and getting rid of some bases will also help, but that takes a lot of political will.  A national conversation about "entitlement programs" will probably have to happen as well, but there's also little constructive happening there.

As far as the "policy currently being followed by the Obama Administration", I don't really see anything especially different other than major insurance reform which in the long run should help save money.

The other side of the coin is the revenue side.  A large majority of Americans agree with increasing taxes on the wealthiest Americans, so getting rid of Bush's tax cuts as soon as possible is going to need to happen, and other options must be explored - ideally in the form of consumption taxes - a national sales tax being the most unpalatable but probably best way to do things.

[Thucydides]

Are these the same large majorities who swept 87 TEA Party movement candidates into the Congress in the Mid Term elections, and captured many State legislatures and Governor's mansions on the basis of election promises of spending cuts?

[Redeye]

Are these the same large majorities who swept 87 TEA Party movement candidates into the Congress in the Mid Term elections, and captured many State legislatures and Governor's mansions on the basis of election promises of spending cuts?

Possibly, disenchanted with their performance so far.  I have a feeling the Tea Party's party is about to come to a jarring halt, but I guess we'll see.

[E.R. Campbell]

Possibly, disenchanted with their performance so far.  I have a feeling the Tea Party's party is about to come to a jarring halt, but I guess we'll see.

I wouldn't be too sure. My perception is that the Tea Party won this round, and I suspect that many, many Americans agree. This is a tiny, maybe a too small step but, however hesitant, it is a step in the right direction. I think that most Americans understand the Tea Party's simple narrative: we spend too much, now, we need to spend less. Many, maybe even most Americans may be unable to agree on what 'less' means - especially re: spend less on what? - but they, mostly, I think, agree on the basics.

[cupper]

You've been posting decent debate. Don't derail it by nitpicking spelling errors. By the way, what is a "getthe"? See how that works?

  Pardon me while I switch feet. Gotta love the taste of old sweat socks.

[cupper]

Awww For F#$% SAKE! . Hit the wrong key and lost my whole post. Let's see if I can reconstruct it.

Unless you are suggesting the ancient Greek view of how the universe works is in effect, nothing is "doomed" or "ordained".

I meant "doomed" in the sense that a lot of people could see it coming a long way off, but those who had the power to do something about it just sat by and watched.

The regulators either turned a blind eye, or didn't have enough knowledge to understand how the markets were being played.

For example, hedge funds were "advising" the investment houses on which mortgage derivatives to include when creating the collateralized debt obligations (CDO's - read toxic assets), then turned around and took out credit default swaps as insurance against failure of the CDO's (which were designed to do just that). When the collapse finally occurred, not only did they collect the full value of the loss, they had the profits from the sale pf the CDO's to other investment houses, as well as the "consulting fees" for putting the CDO together in the first place.

Now, add to this wild west market the holders of the global wealth. They wanted some place to put the global pool of money, so it would grow at a desired rate of return. As the first CDO's provided astonishing returns, since they were made up of the best of the mortgage backed securities, every one wanted in on the action. As demand form more and more CDO's was generated, the investment houses wanted more and more securities to put in CDO's. And the mortgage companies were only willing to oblige. And since they were going to sell off the asset as soon as it was created, they really didn't care if it was sound or not.

It was the free market gone wild.

And it could have been averted if proper oversight of the mortgage industry was done, if the SEC and other Agencies enforced the regulations on investments, and had people who understood how the financial instrument worked. And eliminating the conflicts of interest with respect to the bond rating agencies who were paid by the investment houses to rate the securities.

So, I figured that "doomed" was an adequate description of something that was deliberately designed to fail.

[cupper]

Just for clarification, I don't disagree with some of the view that the Tea Party puts forth.

We need a smaller, more efficient government. We need to reduce wasteful spending.

Where I differ from the majority is that spending reductions need to be done in a rational manner, and need to be done with respect to what will get the most bang for the buck. In the same way that money that does get spent needs to be done so to get the most bang for the buck.

And taxes need to be raised when cuts will not be sufficient.

[Brad Sallows]

Does anyone bother to ask why so much junk got into the mortgage-backed securities in the first place, thereby necessitating new risk mitigation schemes?  The instigators of the bubble were the politicians who pressured more money into the situation in the first place.  They must have been rather disappointed that the lenders weren't simply going to suck up the risk for nothing.  It was not the first time the invisible hand outplayed the dirigistes, and it won't be the last.

[cupper]

This is the best explanation for the housing market meltdown I've heard.

http://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money

And this site has more coverage of economic issues with discussions that people with even a limited understanding of economics can understand.

http://www.npr.org/blogs/money/

[recceguy]

Ideally, I'd like to see the deficit cut - and dramatically so.  There are likely many places where efficiencies can be found.  But it's unrealistic to expect it to happen overnight.  Ending the wars in Iraq and Afghanistan will help, and probably a substantial downsizing of the US military through natural attrition and getting rid of some bases will also help, but that takes a lot of political will.   A national conversation about "entitlement programs" will probably have to happen as well, but there's also little constructive happening there.

As far as the "policy currently being followed by the Obama Administration", I don't really see anything especially different other than major insurance reform which in the long run should help save money.

The other side of the coin is the revenue side.  A large majority of Americans agree with increasing taxes on the wealthiest Americans, so getting rid of Bush's tax cuts as soon as possible is going to need to happen, and other options must be explored - ideally in the form of consumption taxes - a national sales tax being the most unpalatable but probably best way to do things.

I guess the war on terrorism and the decimination, at any cost, really mean nothing to you. You'd rather sit around and wait until they take the CN Tower down or blow up the CNE before you get your socialist *** off the couch?

And given your previous, of course, it's all Bush's fault. right.

[Gimpy]

I guess the war on terrorism and the decimination, at any cost, really mean nothing to you. You'd rather sit around and wait until they take the CN Tower down or blow up the CNE before you get your socialist *** off the couch?

The war on terrorism isn't being fought by the military on American soil. It is being fought by intelligence agencies, the TSA, and law enforcement of all levels. The military aren't the ones who have been infiltrating and successfully stopping terrorist activity within the US and Canada. At most the military is helping via the National Guard and Coast Guard providing help, but they are not the ones taking the active role in prevention of attacks on the homeland.

How much military involvement was there in the stopping of the Toronto 18? Even recently the US soldier who was planning an attack was not found out by the military, but by the police.

Cuts to the US military would not affect the abilities/means of groups like the CIA, TSA, FBI, and all levels of law enforcement. At least not when it comes to homeland security.

There were terror attempts in the US before the War on Terror began, there were terror attempts after the War on Terror began, and no doubt there will be terror attempts after the War on Terror has ended. The military has no bearing on those attempts.

[recceguy]

The war on terrorism isn't being fought by the military on American soil. It is being fought by intelligence agencies, the TSA, and law enforcement of all levels. The military aren't the ones who have been infiltrating and successfully stopping terrorist activity within the US and Canada. At most the military is helping via the National Guard and Coast Guard providing help, but they are not the ones taking the active role in prevention of attacks on the homeland.

How much military involvement was there in the stopping of the Toronto 18? Even recently the US soldier who was planning an attack was not found out by the military, but by the police.

Cuts to the US military would not affect the abilities/means of groups like the CIA, TSA, FBI, and all levels of law enforcement. At least not when it comes to homeland security.  Janet Napolitano is the biggest joke that the Obama administaration could have possibly fousted upon the US and the rest of the free world.

If you don't think the US military isn't involved in border security betwem Can\ US, you're living in a cave.

There were terror attempts in the US before the War on Terror began, there were terror attempts after the War on Terror began, and no doubt there will be terror attempts after the War on Terror has ended. The military has no bearing on those attempts.

You miss the point entirely. If 'you' don't give a frig, 'who' does. I guess you assume because the CIA, TSA, & FBI are at the helm , everything is cool.

Sorry Dude, I can't swing with your jive. Nabcy Pelpocia

[Gimpy]

You miss the point entirely. If 'you' don't give a frig, 'who' does. I guess you assume because the CIA, TSA, & FBI are at the helm , everything is cool.

Sorry Dude, I can't swing with your jive. Nabcy Pelpocia

OK then what is the point if I am missing it. Also where did I say I don't give a frig and where did I say everything is cool? You're really all over the board here and making zero sense.

Edit: Just to be clear, I'm absolutely not saying that I don't give a frig and that everything is hunky-dory. But minor cuts to areas of the military unrelated to the war on terror will not spark mass attacks across the country.

[cupper]

You miss the point entirely. If 'you' don't give a frig, 'who' does. I guess you assume because the CIA, TSA, & FBI are at the helm , everything is cool.

Sorry Dude, I can't swing with your jive. Nabcy Pelpocia

Perhaps you could have worded it a little clearer so that your point could be more easily understood.

I know my first thought was "Whoa, where the hell did this come from?"

[recceguy]

My post got scrambled and lost. Wait out,.

[Redeye]

I guess the war on terrorism and the decimination, at any cost, really mean nothing to you. You'd rather sit around and wait until they take the CN Tower down or blow up the CNE before you get your socialist *** off the couch?

 

I don't know why I'm stooping to respond to such a stupid argument, but here goes:

The War in Iraq was POINTLESS.  It was totally unnecessary, totally unjustifiable, and it cost some 4600 American soldiers' lives, plus how many other "coalition" lives, plus a wildly varied toll of Iraqi civilians variously estimated between 100,000 and 700,000, with the higher figure being more generous and including deaths that could be attributed to the complete breakdown of Iraqi society, infrastructure, etc.  While Iraq was ruled by a brutal tyrant, they had NOTHING to do with 9/11, nor did they have any active WMD.  In short, they posed zero threat to "the West".  They were well contained.  For whatever reason, the Bush Adminstration invented and inflated a casus belli, and they bet correctly that the public would be too wrapped up in the post-9/11 horror to question the hubris.  With that, at least a trillion dollars was wasted, and generally, it was borrowed from China.  The fact that they failed to have a workable plan for what to do after Saddam was gone was ample demonstration of how poorly thought out the whole thing was.

The Dems forced the war expenditure onto the books when they took Congress in 2006, and now President Obama is doing the right thing by getting out of there in as orderly a fashion as possible.

Afghanistan is a slightly different story - intervention there was justifiable.  Sadly, Iraq became a huge distraction and I am left with the impression that the US tried to do Afghanistan "on the cheap" and I suspect made things there much more complicated.  There too, there's a general sense of "war weariness" and unease about the cost that is leading a lot of people in the US to conclude that it's time to start winding up there as well.

This "You'd rather sit around and wait until they take the CN Tower down or blow up the CNE before you get your socialist *** off the couch?" is a bunch of bollocks, frankly.  It's a giant non sequitur.  Deciding as a matter of national policy to p*ss massive amounts of money against the wall (while making enemies in the process) on the basis of such a nonsensical claim is frankly silly.  Are there potential threats to our security that require vigilance?  Yes.  If I didn't believe that, I don't see why I'd wear a uniform.  Does that mean that "the long war" on terrorism is to be accepted unquestioningly?  Er, no, not by a long shot.  And frankly, when you're going to discuss matters of fiscal responsibility, those questions have to be considered.

There's loads of room to cut the US defence budget without impacting national security, but it's funny when I hear "fiscal conservatives" decry them.  Obama was attacked for concluded the New START treaty with Russia to downsize a nuclear arsenal that is massively expensive to maintain.  Hell, the US could cut 90% of its arsenal, I'd wager, and still have more than enough nukes to form an effective deterrent.  They won't, of course, and that's fine - but steps which do reduce the stockpile and the costs associated therewith are positive steps.  Reducing some foreign bases can probably be justified too, particularly in Europe since the Soviets aren't going to be rushing the Fulda Gap any time soon.

And I'm not, never have been, and never will be a socialist.

And given your previous, of course, it's all Bush's fault. right.

All?  No.  You can lump Reagan and Bush 41 in there too - they presided over adminstrations that helped make the mess.  I still fail to understand why anyone with access to so much information can still fall for the Cult of Reagan.