How would you fix the United States' budget problem?

[Divair]

Not sure if approval or mockery.

I thought you knew my politics by now Divair! Wholesale approval.

You can never know on NSG. People shift radically overnight in this place

[Keronians]

1) I see. A much better figure, then.

I would add to this that by letting the Bush tax cuts expire, we would actually see a massive amount of revenue that could offset some of my near-term spending plans. The longer-term plans are expensive, sure, but manageably so: they are about making structural changes to the way welfare and pension expenses will work in a few decades time.

Their expiry would add $3 trillion to the budget over a decade, IIRC. Indeed, you're making (necessary) structural changes to the way welfare will work, but that needs cash.

Is the above amount enough to cover most of the expenditure?

2) I realise this, but conditions are much different today than they were at the end of WWII. There are investment opportunities other than the US.

Not very good ones...Europe looks a bit dodgy, South America and Russia/Central Asia will steal your stuff, Africa is still a basket case for everyone but mobile phone companies, Japan's returns are negative and will stay there (plus there's a budget crisis rolling towards them) and China won't let you put your money in and out as you want to. Australia's too small, and people seem convinced there's too much risk there.

So yeah, depressing though it may be, the US is probably the best bet at this stage. Maybe South-East Asia too, if they can manage inflation and capital flows.

There are places in Europe one can invest. For example, Germany and Scandinavia.

What do you mean by Russia and South America stealing your stuff? I still think the BRICS are attractive investment opportunities, even though India has been losing some of its potential over the past few months.

What about Canada?

On China, many institutions still put money in there, due to the growth opportunities, despite the restrictions placed by the Chinese government.

Not that the US isn't a major opportunity; I'm just saying that there are others around.

3) Yeah, the real return is negative. But this, IMO, is temporary. Not that the US shouldn't take advantage of the situation (in my own plan, I did actually recommend the US fund some of the measures I proposed in the short-term, via issuance of bonds), but it shouldn't expect for the situation to last more than a year tops. It's a direct result of the equity markets being in the toilet, and the uncertainty arising from the Eurozone crisis.

Basing any sort of plan on expecting the real interest rate to be negative is faulty at best.

Even if it is temporary - right now there is the opportunity to issue plenty of debt. And once it's issued, for your normal variety of instruments that rate is set for life. No matter what rates will do eight years from now, your ten-year coupon payments stay at less than 2%, and hence nicely below what one might call a reasonable estimate of inflation. Really, if I was the US Treasury I'd want to front-load as much debt issuance as people will let me get away with. I suspect that'd be politically unwise though.

Politically unwise, yes.

And whilst the yield is a fixed amount, it will likely involve various issuances over a period of several years. Yields will increase over that period of time. This is a short-term situation, which won't last into the mid-term, let alone the long-term.

Interestingly, what is your inflation estimate?

[Keronians]

Reducing expenses doesnt result into reducing debt.

Greece is the best example.

Austerity leads to economic decline and the raise of extremists. Nazi germany would have never happened without the economic crisis.

The time tested alternatives to such a disastrous course are:

(a) Inflation. For example, the Hyperinflation of 1923 reduced germanys state debt to the price of a bread. But even in lesser degree, inflation can work wonders for state debt. UK right now, for example, has about 5% inflation, but only grants 2% interest on their government bonds. Effectively, the state debt is getting reduced by 3% per year without anything done at all by the government.

(b) Tax the rich. Thats actually pretty hard. The rich own the press, and any politician demanding taxes for the rich can be guaranteed to no longer get any good press. This shows what an awesome politician FDR was in his time. He also had help, though, because other people demanded even more radical ideas, such as a limit to the wealth of the individual. Compared to that, FDR still looked tame.

And yet, the current deficit is unsustainable.

For point a), that has the massive problem of harming the average person, and weakening economic activity.

Point b) can't really cope with all of the spending unless you hike taxes to levels like 75%, which is insane.

[Keronians]

Well, for starters, stop buying all that cheap garbage from China and start manufacturing our own shit.

Also, higher tax for the rich.

And increase prices several fold?

[New England and The Maritimes]

Well, for starters, stop buying all that cheap garbage from China and start manufacturing our own shit.

Also, higher tax for the rich.

And increase prices several fold?

The way to cut out China is to be a better investment. America is certainly capable of that.

[Keronians]

And increase prices several fold?

The way to cut out China is to be a better investment. America is certainly capable of that.

Why would anyone want to cut out China in the first place?

[New England and The Maritimes]

The way to cut out China is to be a better investment. America is certainly capable of that.

Why would anyone want to cut out China in the first place?

If they're a worse investment, it'd be wasting our capital to encourage investment over there. Why is it better to keep China in the loop if it's very easy to get investors to prefer American manufacturing without heavy handed subsidies or tariffs?

[Keronians]

Why would anyone want to cut out China in the first place?

If they're a worse investment, it'd be wasting our capital to encourage investment over there. Why is it better to keep China in the loop if it's very easy to get investors to prefer American manufacturing without heavy handed subsidies or tariffs?

The US government is encouraging investment in China? I thought it was actively discouraging it.

Anyway, it's pretty hard for America to present higher potential than China. How on Earth would this happen? America carries lower risk, but lower potential. China carries higher risk, but higher potential.

[Warriors United]

To start...get rid of Obama, then all the corrupt and wasteful government agencies (EPA and DOE for a couple of examples), and get the government out of the market.

[New England and The Maritimes]

If they're a worse investment, it'd be wasting our capital to encourage investment over there. Why is it better to keep China in the loop if it's very easy to get investors to prefer American manufacturing without heavy handed subsidies or tariffs?

The US government is encouraging investment in China? I thought it was actively discouraging it.

Anyway, it's pretty hard for America to present higher potential than China. How on Earth would this happen? America carries lower risk, but lower potential. China carries higher risk, but higher potential.

I'm not saying they are right now, but if America becomes a better investment for certain manufacturing initiatives, there is literally no reason to involve China whatsoever.

Factories are already coming back to America due to a few reasons. Our society is still producing better-able workers, IE more productive workers who are less likely to have to call in sick due to crippling asthma or to die at 45 of heart failure, their output has negligible transport costs compared to shipping from China through the Pacific, and our wages are depressed thanks to our economic climate.

There's that and the fact that Chinese industry is heavily subsidized on every level and won't be able to function if the Chinese ever stop their cronyism or the artificially cheap money stops flowing to export industries.

Bringing a lot of manufacturing back to the US is probably something that can be done very easily as a result of policies we would wind up wanting to pursue regardless of China. We won't get our shoe factories back, obviously, but assembly lines for appliances and a lot of the high tech things China's been trying to play catch up on lately(solar panels, communications tech, etc.) will probably be coming home over the next decade or so.

[Bob10101010]

cut Medicare
cut Social Security
cut Medicaid
Institute a national sales tax
raise taxes on cigarettes driving on roads

Lower personal income taxes and property taxes
lower the death tax
lower the capital gains tax

this will cause booming business and we can take the revenue we get from this increase in business from companies actually coming back and payoff the national debt.
still get to keep strong military and maintained a vibrant business areas we have.

[Hippostania]

- Eliminate the Departments of Agriculture, Labor, Health and Human Services, Housing and Urban Development, Transportation, Education, Veterans Affairs and Energy.

- Abolish medicare, medicaid and all goverment welfare programs.

- Repeal Obamacare.

- Privatize things that the government shouldn't be involved in the first place, like Amtrak and USPS

- Give tax cuts to corporations who keep their jobs in the United States

- Keep the Defense budget the same or increase it a bit. Same for Homeland Security.

- Get rid of the excess bureaucracy by repealing all useless regulations.

- Keep the Bush-era tax cuts for the job creators.

- Cut all support for green energy. Face it, solar, wind and hydroelectric power are never going to meet the demands of America. Instead, heavily invest in nuclear power and more traditional power sources like oil and coal. These forms of power will provide Americans with cheap energy.

[Bob10101010]

- Eliminate the Departments of Agriculture, Labor, Health and Human Services, Housing and Urban Development, Transportation, Education, Veterans Affairs and Energy.

- Abolish medicare, medicaid and all goverment welfare programs.

- Repeal Obamacare.

- Privatize things that the government shouldn't be involved in the first place, like Amtrak and USPS

- Give tax cuts to corporations who keep their jobs in the United States

- Keep the Defense budget the same or increase it a bit. Same for Homeland Security.

- Get rid of the excess bureaucracy by repealing all useless regulations.

- Keep the Bush-era tax cuts for the job creators.

- Cut all support for green energy. Face it, solar, wind and hydroelectric power are never going to meet the demands of America. Instead, heavily invest in nuclear power and more traditional power sources like oil and coal. These forms of power will provide Americans with cheap energy.

- Keep the defense budget the same or increase it a bit

I fully support your idea and I might have to steal some of them for my next post

[Keronians]

The US government is encouraging investment in China? I thought it was actively discouraging it.

Anyway, it's pretty hard for America to present higher potential than China. How on Earth would this happen? America carries lower risk, but lower potential. China carries higher risk, but higher potential.

I'm not saying they are right now, but if America becomes a better investment for certain manufacturing initiatives, there is literally no reason to involve China whatsoever.

Factories are already coming back to America due to a few reasons. Our society is still producing better-able workers, IE more productive workers who are less likely to have to call in sick due to crippling asthma or to die at 45 of heart failure, their output has negligible transport costs compared to shipping from China through the Pacific, and our wages are depressed thanks to our economic climate.

There's that and the fact that Chinese industry is heavily subsidized on every level and won't be able to function if the Chinese ever stop their cronyism or the artificially cheap money stops flowing to export industries.

Bringing a lot of manufacturing back to the US is probably something that can be done very easily as a result of policies we would wind up wanting to pursue regardless of China. We won't get our shoe factories back, obviously, but assembly lines for appliances and a lot of the high tech things China's been trying to play catch up on lately(solar panels, communications tech, etc.) will probably be coming home over the next decade or so.

Labour is usually the highest direct cost for businesses. I know that shipping costs have been rising in recent years, but I'd be surprised if they offset the cash saved on labour.

I'd question the judgment of any CEO deciding to transfer operations to America on the basis of depressed wages as a result of economic uncertainty. That will not last.

As for productivity, again, productivity is not the be-all, end-all of the decision. Assuming that we're talking about labour productivity, it's likely that American workers do turn out more products. Maybe even for fewer employees.

However, this all factors into your efficiency. Is the lower cost worth lower productivity? In many cases, it could mean higher overall efficiency.

There's also another problem: flexibility. Chinese workers are much more flexible than American workers. And I doubt that this will ever be fixed. I remember Obama asking Steve Jobs once if there's any way Apple would return operations to America. He said no.

Further, wouldn't the hi-tech factories have shipping costs as well? Many of the raw materials needed for manufacture come from Asia.

[New England and The Maritimes]

I'm not saying they are right now, but if America becomes a better investment for certain manufacturing initiatives, there is literally no reason to involve China whatsoever.

Factories are already coming back to America due to a few reasons. Our society is still producing better-able workers, IE more productive workers who are less likely to have to call in sick due to crippling asthma or to die at 45 of heart failure, their output has negligible transport costs compared to shipping from China through the Pacific, and our wages are depressed thanks to our economic climate.

There's that and the fact that Chinese industry is heavily subsidized on every level and won't be able to function if the Chinese ever stop their cronyism or the artificially cheap money stops flowing to export industries.

Bringing a lot of manufacturing back to the US is probably something that can be done very easily as a result of policies we would wind up wanting to pursue regardless of China. We won't get our shoe factories back, obviously, but assembly lines for appliances and a lot of the high tech things China's been trying to play catch up on lately(solar panels, communications tech, etc.) will probably be coming home over the next decade or so.

Labour is usually the highest direct cost for businesses. I know that shipping costs have been rising in recent years, but I'd be surprised if they offset the cash saved on labour.

I'd question the judgment of any CEO deciding to transfer operations to America on the basis of depressed wages as a result of economic uncertainty. That will not last.

As for productivity, again, productivity is not the be-all, end-all of the decision. Assuming that we're talking about labour productivity, it's likely that American workers do turn out more products. Maybe even for fewer employees.

However, this all factors into your efficiency. Is the lower cost worth lower productivity? In many cases, it could mean higher overall efficiency.

There's also another problem: flexibility. Chinese workers are much more flexible than American workers. And I doubt that this will ever be fixed. I remember Obama asking Steve Jobs once if there's any way Apple would return operations to America. He said no.

Further, wouldn't the hi-tech factories have shipping costs as well? Many of the raw materials needed for manufacture come from Asia.

GE seems fairly content to expand American operations, as an example. I can't say I know all of their thought process, but American workers seem to usually have more skills due to the fact that America, for all its problems, has a much much better educated populace(for all of China's test scores, most of them don't go on to any post-secondary education and if I recall correctly they were at each other's throats for a seat in Ronald MacDonald Academy Beijing,) and be more able to do the work, probably in part because they aren't forced to work 16 hour days or subjected to lock-ins.

Chinese wages seem to be rising in a significant way thanks to the expansion of their middle class and a more conscious population's demanding of better lives. At the same time, a lot of lower American wages and expectations are, like unemployment changes to an extent, probably structural, and may not simply pass on, thanks to how handily we bungled our recovery effort in 2008-2010 and the amount of people put out of work and out of home for extended periods.

[Keronians]

Labour is usually the highest direct cost for businesses. I know that shipping costs have been rising in recent years, but I'd be surprised if they offset the cash saved on labour.

I'd question the judgment of any CEO deciding to transfer operations to America on the basis of depressed wages as a result of economic uncertainty. That will not last.

As for productivity, again, productivity is not the be-all, end-all of the decision. Assuming that we're talking about labour productivity, it's likely that American workers do turn out more products. Maybe even for fewer employees.

However, this all factors into your efficiency. Is the lower cost worth lower productivity? In many cases, it could mean higher overall efficiency.

There's also another problem: flexibility. Chinese workers are much more flexible than American workers. And I doubt that this will ever be fixed. I remember Obama asking Steve Jobs once if there's any way Apple would return operations to America. He said no.

Further, wouldn't the hi-tech factories have shipping costs as well? Many of the raw materials needed for manufacture come from Asia.

GE seems fairly content to expand American operations, as an example. I can't say I know all of their thought process, but American workers seem to usually have more skills due to the fact that America, for all its problems, has a much much better educated populace(for all of China's test scores, most of them don't go on to any post-secondary education and if I recall correctly they were at each other's throats for a seat in Ronald MacDonald Academy Beijing,) and be more able to do the work, probably in part because they aren't forced to work 16 hour days or subjected to lock-ins.

Chinese wages seem to be rising in a significant way thanks to the expansion of their middle class and a more conscious population's demanding of better lives. At the same time, a lot of lower American wages and expectations are, like unemployment changes to an extent, probably structural, and may not simply pass on, thanks to how handily we bungled our recovery effort in 2008-2010 and the amount of people put out of work and out of home for extended periods.

Indeed they do. But then, unskilled labour doesn't generally require lots of skill. American workers outcompete, mainly, on skilled jobs.

The approach factories take to workers is up to them. If you're the kind of executive that forces employees to work 16 hours a day, chances are, you won't be very happy with American workers.

If you're the kind of executive that prioritises training and motivation, in order to increase overall output, chances are you'd still prefer Chinese workers because:

a) They are still cheaper

b) Your strategy will be more effective than in America, where many other corporations adopt such approaches as well, whereas in China, the ruthless businessman is still present

c) You'll be getting the best of the unskilled labourers since the supply for your jobs will increase

Chinese wages are rising. So many are now either staying in China because it's still cheaper, and has a lot of capital invested into it, which most feel will have a payoff in the future; better to stay and reap the benefits before leaving, or are moving to south-east Asia.

[Hittanryan]

- Eliminate the Departments of Agriculture, Labor, Health and Human Services, Housing and Urban Development, Transportation, Education, Veterans Affairs and Energy.

- Abolish medicare, medicaid and all goverment welfare programs.

- Repeal Obamacare.

- Privatize things that the government shouldn't be involved in the first place, like Amtrak and USPS

- Give tax cuts to corporations who keep their jobs in the United States

- Keep the Defense budget the same or increase it a bit. Same for Homeland Security.

- Get rid of the excess bureaucracy by repealing all useless regulations.

- Keep the Bush-era tax cuts for the job creators.

Why do you love deficits, economic depression, and perpetual war so much? Oh right, you're a Romney supporter. Must suck to be over in Finland.

- Cut all support for green energy. Face it, solar, wind and hydroelectric power are never going to meet the demands of America. Instead, heavily invest in nuclear power and more traditional power sources like oil and coal. These forms of power will provide Americans with cheap energy.

Oil and coal, you mean the shit with ever-increasing costs that we're just going to flat-out run the fuck out of one day? Right.

[Mike the Progressive]

I don't know, but I'm sure us, NSG, can figure it out.

[The Republic of Alaska]

Next, I would abolish the shit that says Mexicans can have free health care, not to mention, crack down on all those illegals and give them the boot, creating jobs.

[Exalted Draconia]

Make me Emperor. I'll fix it all.

[Laerod]

Next, I would abolish the shit that says Mexicans can have free health care, not to mention, crack down on all those illegals and give them the boot, creating jobs.

When Alabama and Georgia tried the latter, it ended up costing jobs because all it really did was vacate jobs nobody else was willing to do. Really fucked their economy in the process.

[Nazis in Space]

Next, I would abolish the shit that says Mexicans can have free health care, not to mention, crack down on all those illegals and give them the boot, creating jobs.

When Alabama and Georgia tried the latter, it ended up costing jobs because all it really did was vacate jobs nobody else was willing to do. Really fucked their economy in the process.

However, it pleased the white mob electorate.

Mission accomplished.

[Bonface]

- Cut military spending in half immediately. Set a timetable for further cuts.
- Begin cutting social programs across the board, while working to end dependency.
- End the war on drugs.
- Begin withdrawing soldiers from overseas and pursue a non-interventionist foreign policy.
- Cut taxes on the poor and middle classes. Keep the Bush tax cuts in place but begin to close tax loopholes. I hope the US will one day move to a system with minimal taxes (non-existant taxes and no state, when I think ideologically) for everyone, but for now there's a deficit to pay down.
- Simplify the tax code.
- Begin selling off state assets.
- Lower corporation tax.
- Less regulation of business, particularly healthcare, to allow greater competition and dramatically reduced costs.

[Laerod]

- Less regulation of business, particularly healthcare, to allow greater competition and dramatically reduced costs.

Also life expectancies.

[Auzkhia]

Stop producing the Penny, and replace the $1 and $2 bills with $1 and $2 coins