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Thread: Democrats bringing back balanced budgets

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    tWebber Starlight's Avatar
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    Democrats bringing back balanced budgets

    The new Democratic-majority congress' first act will be to pass a set of new rules for the House this week, and one of those that is most interesting to me is the requirement that the federal budget be balanced, known as PAYGO. This comes after the Republicans ran massive budget deficits in 2017 and 2018.

    Nancy Pelosi Is Pushing a Pay-Go Provision Despite Objections from Progressives:

    Nancy Pelosi is fighting for the 116th Congress rules to include pay-as-you-go provision, despite progressives urging her not to. Pay-as-you-go or pay-go was initially a conservative strategy used to hold the government captive by requiring that all new spending must be offset by budget cuts or tax increases.

    PAYGO was allowed to lapse in 2002 under the Bush administration. But it was reintroduced by the Obama administration in 2007, though overruled multiple times for emergency bills to address the Great Recession, and PAYGO was finally signed into law by Obama in 2010.

    However, what one House passes another can repeal or vote to ignore, and the Republican House under Trump voted to suspend the application of PAYGO for their budgets that had big deficits which ballooned the federal debt. Democrats are now poised to reinstate it as a House rule that any new spending must be paid for.

    Republicans on this forum that say you care about the deficit and debt should be pleased that Democratic politicians actually do what Republican politicians claim they value.

    I, however, do not like this rule one bit. I do think governments should, on the whole, run fairly balanced budgets, perhaps even a surplus. In my personal life I save most of my money and avoid excessive spending and loans like the plague. So why do I object to enforcing balanced budgets on the government?

    Because the government needs freedom to respond to the economic situation of the country.

    A useful metaphor for the government driving the economy is like you driving a car: When the car is going uphill it naturally slows down and needs you to press on the accelerator to make it go faster, and when it is going downhill you need to press on the brake to make it go slower or it will crash off the road. You need to do the opposite of what the car is doing: Slow it if it is going too fast, and speed it up if it is going to slow.

    Governments, being the single biggest spender in the economy, spending from 20%-50% of all money per year within the national economy, have the power to control the speed of that economy by controlling their spending. When the economy is stagnating and businesses are struggling to sell their products because no one is buying them and people are struggling to find employment, then the government needs to up their spending to make the economy improve by giving people jobs and buying products, and when the economy is overheating then the government needs to put on the brakes by lowering their spending to guide the economy gently back toward a normal speed and not let it form a huge bubble then have a huge crash as it tends to naturally do. To do this, governments should run a budget surplus in years the economy is doing well, and a budget deficit in years the economy is doing badly - over the course of a decade or two their surpluses and deficits should approximately even out and be balanced.

    But to say that every year their budgets should be balanced is like a the car driver who doesn't change how much his foot is on the accelerator regardless of whether he's going uphill or down and says to himself he'll just hold the pedal in the same place regardless of how fast or slow the car is going. That is obviously a recipe for disaster. Yet, somehow people seem to think it's a good idea for that government to do that to the economy.

    Having a rule that the budget ought to balance in each individual year, is just stupid, and strips the politicians of their power to actually affect the economy by changing government expenditure. This has all been well-known since Kaynes pointed it out in 1936. Unfortunately the people in power seem to be willfully ignoring this, and currently the EU is struggling massively because they are imposing balanced budgets on EU members which is causing their economies to fail.

    However, Progressives within the Democratic party actually seem to be mainly objecting to the PAYGO requirement for another reason: They see it as a preemptive strike by Pelosi and other centrists against the Progressive agenda of Medicare-for-All, Free public college, addressing climate change, etc. By preemptively requiring that any new Progressive programs be financed by new taxes as opposed to put on the credit card like most other spending has been lately, the centrists force the progressives to jump through additional hoops that previously haven't been required (e.g. for the Republicans' gratuitous wars and tax cuts). And since raising taxes of any kind in any way is almost always unpopular, it dumps cold water on Progressive priorities because as popular as they might be in and of themselves, trying to sell them connected to tax hikes is inherently not going to be as popular.

    While I personally think that the US needs to raise taxes in general (not necessarily on you the US reader of this, but on some sort of companies or goods or services somewhere in the US economy - e.g. the estates of rich people after they die, or 1 cent on every Wall St trade performed, or on multinationals who move jobs overseas and hide their wealth in tax havens) because the total US government tax income is below that of other developed as a percentage of your economy, and the US has plenty of obvious things the government could be spending those taxes on (e.g. new infrastructure, healthcare, paying off federal debt), and while I think it is usually better to pay for large new expenditures out of new taxes and not put them on the credit card like Republicans have been doing under Bush and Trump, I do think it's important to have the option of political control over the levels of surplus/deficit, and that new and worthwhile programs to give people healthcare or education or improve infrastructure shouldn't necessarily be tied to specific tax-plans that weigh them down like a ball and chain around their legs when it comes to trying to sell them to the public.

  2. #2
    Evolution is God's ID rogue06's Avatar
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    Your hero Alexandria Ocasio-Cortez is slamming the proposal and declaring that it "isnít only bad economics" but "a dark political maneuver."

    I'm always still in trouble again

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    tWebber Starlight's Avatar
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    Quote Originally Posted by rogue06 View Post
    Your hero Alexandria Ocasio-Cortez is slamming the proposal and declaring that it "isnít only bad economics" but "a dark political maneuver."
    As usual, she is being intelligent, insightful, and accurate.

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    tWebber Mountain Man's Avatar
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    Quote Originally Posted by Dimbulb View Post
    As usual, she is being intelligent, insightful, and accurate.
    It's impossible to tell if you're being sarcastic or sincere. Either way, this statement is hilarious.
    Some may call me foolish, and some may call me odd
    But I'd rather be a fool in the eyes of man
    Than a fool in the eyes of God


    From "Fools Gold" by Petra

  5. Amen Faber amen'd this post.
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    Troll Magnet Sparko's Avatar
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    I am all for a balanced budget. We can cut all sorts of useless social programs out. Good for the democrats!

    Except they will probably want to keep all the pork and cut all the needed stuff.

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    See, the Thing is... Cow Poke's Avatar
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    Quote Originally Posted by rogue06 View Post
    Your hero Alexandria Ocasio-Cortez is slamming the proposal and declaring that it "isnít only bad economics" but "a dark political maneuver."
    She's proving us right --- a real source of amusement!

    1 Tim 2:5 For there is one God, and one mediator between God and men, the man Christ Jesus.

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    See, the Thing is... Cow Poke's Avatar
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    Unfortunately, politicians always see the "balancing of the budget" as a need to raise taxes, not cut spending.

    And when the "cut spending", usually they're only cutting the rate of increase, but still spending more actual dollars than the previous year.

    When your outgo exceeds your income, your upkeep becomes your downfall. Politicians address this by trying to increase the "income", not decreasing the outgo.

    1 Tim 2:5 For there is one God, and one mediator between God and men, the man Christ Jesus.

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    tWebber Mountain Man's Avatar
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    Quote Originally Posted by Cow Poke View Post
    Unfortunately, politicians always see the "balancing of the budget" as a need to raise taxes, not cut spending.
    And one of Pelosi's new rules allows the House of Representatives to raise taxes based on a simple majority vote rather than the 2/3rds vote that was previously required.
    Some may call me foolish, and some may call me odd
    But I'd rather be a fool in the eyes of man
    Than a fool in the eyes of God


    From "Fools Gold" by Petra

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    tWebber Roy's Avatar
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    Quote Originally Posted by Mountain Man View Post
    It's impossible ...
    Others lack your limitations.
    Jorge: Functional Complex Information is INFORMATION that is complex and functional.

  11. Amen Starlight amen'd this post.
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    tWebber
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    Quote Originally Posted by Starlight View Post
    The new Democratic-majority congress' first act will be to pass a set of new rules for the House this week, and one of those that is most interesting to me is the requirement that the federal budget be balanced, known as PAYGO. This comes after the Republicans ran massive budget deficits in 2017 and 2018.

    Nancy Pelosi Is Pushing a Pay-Go Provision Despite Objections from Progressives:

    Nancy Pelosi is fighting for the 116th Congress rules to include pay-as-you-go provision, despite progressives urging her not to. Pay-as-you-go or pay-go was initially a conservative strategy used to hold the government captive by requiring that all new spending must be offset by budget cuts or tax increases.

    PAYGO was allowed to lapse in 2002 under the Bush administration. But it was reintroduced by the Obama administration in 2007, though overruled multiple times for emergency bills to address the Great Recession, and PAYGO was finally signed into law by Obama in 2010.

    However, what one House passes another can repeal or vote to ignore, and the Republican House under Trump voted to suspend the application of PAYGO for their budgets that had big deficits which ballooned the federal debt. Democrats are now poised to reinstate it as a House rule that any new spending must be paid for.

    Republicans on this forum that say you care about the deficit and debt should be pleased that Democratic politicians actually do what Republican politicians claim they value.

    I, however, do not like this rule one bit. I do think governments should, on the whole, run fairly balanced budgets, perhaps even a surplus. In my personal life I save most of my money and avoid excessive spending and loans like the plague. So why do I object to enforcing balanced budgets on the government?

    Because the government needs freedom to respond to the economic situation of the country.

    A useful metaphor for the government driving the economy is like you driving a car: When the car is going uphill it naturally slows down and needs you to press on the accelerator to make it go faster, and when it is going downhill you need to press on the brake to make it go slower or it will crash off the road. You need to do the opposite of what the car is doing: Slow it if it is going too fast, and speed it up if it is going to slow.

    Governments, being the single biggest spender in the economy, spending from 20%-50% of all money per year within the national economy, have the power to control the speed of that economy by controlling their spending. When the economy is stagnating and businesses are struggling to sell their products because no one is buying them and people are struggling to find employment, then the government needs to up their spending to make the economy improve by giving people jobs and buying products, and when the economy is overheating then the government needs to put on the brakes by lowering their spending to guide the economy gently back toward a normal speed and not let it form a huge bubble then have a huge crash as it tends to naturally do. To do this, governments should run a budget surplus in years the economy is doing well, and a budget deficit in years the economy is doing badly - over the course of a decade or two their surpluses and deficits should approximately even out and be balanced.

    But to say that every year their budgets should be balanced is like a the car driver who doesn't change how much his foot is on the accelerator regardless of whether he's going uphill or down and says to himself he'll just hold the pedal in the same place regardless of how fast or slow the car is going. That is obviously a recipe for disaster. Yet, somehow people seem to think it's a good idea for that government to do that to the economy.

    Having a rule that the budget ought to balance in each individual year, is just stupid, and strips the politicians of their power to actually affect the economy by changing government expenditure. This has all been well-known since Kaynes pointed it out in 1936. Unfortunately the people in power seem to be willfully ignoring this, and currently the EU is struggling massively because they are imposing balanced budgets on EU members which is causing their economies to fail.

    However, Progressives within the Democratic party actually seem to be mainly objecting to the PAYGO requirement for another reason: They see it as a preemptive strike by Pelosi and other centrists against the Progressive agenda of Medicare-for-All, Free public college, addressing climate change, etc. By preemptively requiring that any new Progressive programs be financed by new taxes as opposed to put on the credit card like most other spending has been lately, the centrists force the progressives to jump through additional hoops that previously haven't been required (e.g. for the Republicans' gratuitous wars and tax cuts). And since raising taxes of any kind in any way is almost always unpopular, it dumps cold water on Progressive priorities because as popular as they might be in and of themselves, trying to sell them connected to tax hikes is inherently not going to be as popular.

    While I personally think that the US needs to raise taxes in general (not necessarily on you the US reader of this, but on some sort of companies or goods or services somewhere in the US economy - e.g. the estates of rich people after they die, or 1 cent on every Wall St trade performed, or on multinationals who move jobs overseas and hide their wealth in tax havens) because the total US government tax income is below that of other developed as a percentage of your economy, and the US has plenty of obvious things the government could be spending those taxes on (e.g. new infrastructure, healthcare, paying off federal debt), and while I think it is usually better to pay for large new expenditures out of new taxes and not put them on the credit card like Republicans have been doing under Bush and Trump, I do think it's important to have the option of political control over the levels of surplus/deficit, and that new and worthwhile programs to give people healthcare or education or improve infrastructure shouldn't necessarily be tied to specific tax-plans that weigh them down like a ball and chain around their legs when it comes to trying to sell them to the public.
    I don't know, Nancy Pelosi is quite progressive, but she is also very smart. Pay as you go doesn't necessarily mean that progressive priorities will be impeded, or that in order to enact them other progressive programs will necessarily take a hit. It's all dependent upon what is cut in the budget, or who or what is taxed in order to pay for new spending. It's all about progressive priorities while controlling the skyrocketing Republican/Trump driven debt which was up 17% in 2018. I know there are some newly elected progressive in the House who oppose pay as you go, and I haven't really heard Pelosis take on it, so, knowing Pelosi as I do, this is just my own take on what she's up to. I'll wait until I know more before I respond further, but I for one trust Pelosi, bigly!

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