National Debt Thread II: Attack of the Fiscal Responsibility

[Post-Keynesian Economics]

1. You missed the point. My point was that debt was high and yet did not hurt the economy in any measurable way. If you believe it did, I'd like to see a link.

2. In what way is capital being taken from the private sector through our national debt? When we spend more money and lower taxes, there is less capital in the public sector (hence the deficit) and more in the private sector. It's simple accounting.

3. You say "the near 0% interest rates right now will inevitably skyrocket." Interest rates skyrocketing. That's a pretty big claim. Any actual reason you think this is inevitable?

4. Don't even try to compare the US to Argentina. Argentina didn't default on its debt because of the amount of its debt. Argentina defaulted on its debt because it entered a terrible recession coming not long after a nearly two decade long depression, its government collapsed, and unemployment and riots were widespread. So there was zero confidence in their ability to pay. Call me when our government collapses.

No no no! Point two is wrong and merely an accounting trick. Plus govt beauracracies introduce terrible inefficiencies, waste fraud abuse. It would be better to have people directly invest in private enterprise and cut out the fat bloated middle man that is the federal govt.

Atlanticatia explained this well already, but to reiterate - it isn't an "accounting trick." It's basic math. Sometimes economics is simple.

If you're going to say my second point is wrong and a "trick," you better have some kind of evidence (especially empirical) backing it up.

[Atlanticatia]

Generally, if the economy is doing poorly - as it is now, as we are far from full employment or normal economic growth - the government should stimulate the economy by both spending and cutting taxes to increase private sector growth and employment.

[Farnhamia]

Generally, if the economy is doing poorly - as it is now, as we are far from full employment or normal economic growth - the government should stimulate the economy by both spending and cutting taxes to increase private sector growth and employment.

Increase government spending and cut down on government revenue at the same time? How is that a good idea? The government spends, perhaps puts people to work, and then when the private sector recovers from its swoon, maybe then taxes can be cut. It depends on how high taxes are to begin with. They aren't very high in the US, not really.

[Atlanticatia]

Generally, if the economy is doing poorly - as it is now, as we are far from full employment or normal economic growth - the government should stimulate the economy by both spending and cutting taxes to increase private sector growth and employment.

Increase government spending and cut down on government revenue at the same time? How is that a good idea? The government spends, perhaps puts people to work, and then when the private sector recovers from its swoon, maybe then taxes can be cut. It depends on how high taxes are to begin with. They aren't very high in the US, not really.

Because both actions increase aggregate demand and stimulate the economy.

For example, if we cut the lowest marginal tax rate, to say 5% during a recession or provide a tax rebate, while increasing public spending, those on low-middle incomes (who are more likely to immediately spend their money), would have more income in their pocket, and increased public spending would stimulate private sector development, which would create jobs and wealth, therefore leading to a faster economic recovery.