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February 23, 2013
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The Sequester

:icontbschemer:
TBSchemer Featured By Owner Feb 23, 2013
:iconwplz:hat if I told you I could afford a mansion by taking out a loan for the down-payment, and then borrowing successively increasing amounts of money every year to pay the mortgage. Would you consider me wealthy or prosperous? No, of course not- you'd tell me that eventually, I'll have to pay it all back, and I'll then be poorer than ever before because of the interest payments.

Well, that is exactly what the Democrats are trying to make the US federal government continue doing. They spent trillions of dollars that we did not have during Barack Obama's first term to give the illusion of economic growth. They want to keep increasing the rate of this spending to sustain the illusion and avoid ever having to pay off our debts. However, as our friends in Europe should now be very familiar with, all debts must eventually be paid off, and the longer you wait, the more painful it is.

So now, in an effort to force a slight move in the direction of fiscal sustainability, the Sequester is approaching. The Sequester was originally proposed by Jack Lew and pushed by Barack Obama, as a means to force Republicans to agree to more tax hikes. Congressional Republicans agreed to it, because they felt they could use it as a means to force Obama to agree to more spending cuts. But of course, nobody can agree on anything, and so the Sequester is going to be triggered- consisting of a tiny cut in the rate of increase of federal spending over 10 years. I repeat: this is a cut in the rate of increase in federal spending, not even a real spending cut. As in, we're still digging ourselves deeper in debt every year through federal spending, but we're going to do it ever so slightly slower. You can see from the graph here [link] how tiny and insignificant this 2.7% cut really is.

Yet, Barack Obama is crying bloody murder. [link] He is saying that federal spending must always keep rising, or the entire government will just collapse, and the economy will follow. If our economy can't function without federal spending rising faster than the GDP is growing, and the federal government can't function without growing faster than inflation every year, then the President has left us with a severely broken system. You can see in the third graph here [link] that the private sector is in a real Great Depression, and that all growth in the GDP that has been registered over the last 5 years has been purely from increased deficit spending, not from real economic growth.

This means the US economy has not recovered at all. We've only papered over the cracks with borrowed money that will need to be paid back eventually, with more interest the longer we wait. [link] There is no better time to pay off our debts than right now. Unfortunately, doing so will require far larger cuts than the Sequester will bring, and will remove the illusion of growth that the Democrats have worked so hard to build. We're now at the hangover from the Keynesian binge: [link]

Contrary to left-wing belief, the solution to a hangover is not "more booze!" Detoxing from our addiction to government spending will be painful, but it is the only way to avoid Greek-style collapse and return to real, sustainable growth of prosperity.

From an International Perspective,
we can see these same issues popping up around the world. Greece is in total collapse as they try to climb out of their debt hole. Most of Europe has slid back into recession as the unsustainable Keynesian spending comes to an end. The ruling French Socialist Party has blamed Europe's problems on "austerity," even as their own tax hikes have sent France back into recession without a drop of real spending cuts.

The whole world will now see that the only countries that truly recovered from the 2008 Great Recession are those that avoided the temptation of Keynesian stimulus, opting instead for free market reforms to lift the burden of government off the backs of the entrepreneurs and innovators. Switzerland [link] can now laugh at Germany [link] and the rest of the European Union [link] from their relatively free-market mountaintop.
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Devious Comments

:iconabcat:
AbCat Featured By Owner Feb 24, 2013   Writer
You need another fiscal cliff, followed up by a fiscal parachute jump, topped off by a fiscal death-dive. If the GOP really gave a shit, they'd agree to the tax rises proposed by the Dems, instead of filibustering their country into bankruptcy.
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:icontbschemer:
TBSchemer Featured By Owner Feb 24, 2013
Tax hikes are the absolute surest way to hurt the economy while doing nothing to actually fix the deficit crisis.
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:iconabcat:
AbCat Featured By Owner Feb 24, 2013   Writer
Well, sure as hell they aren't going to cut a trillion dollars from the budget any time soon, and if it came down to it the GOP wouldn't have the balls to do that either, so either taxes are going up, or the country's going bust.
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:icontbschemer:
TBSchemer Featured By Owner Feb 24, 2013
You mean taxes are going up, AND the country's going bust. Higher taxes won't fix this. [link]

Either we privatize the health care entitlements, or the country goes bankrupt. There is no other choice.
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:iconabcat:
AbCat Featured By Owner Feb 24, 2013   Writer
Sorry, but cutting public medical spending on its own will not nullify the US deficit. And linking to a graph drawn by someone three years ago on the presumption that the debt will be just flat-out ignored does not justify your statement.

The best solution would be to double income tax.
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:icontbschemer:
TBSchemer Featured By Owner Feb 24, 2013
:iconjawdropplz: Double the income tax!? Do you have any idea how devastating that would be for the economy? We'd collect less revenue than we do now, simply because of the resulting recession and the fleeing of the rich from the country. It seems you have a lot to learn about economics before you can make any reasonable suggestions.

And the debt is being ignored. This graph [link] drawn by the CBO within the last two months, is really not much different than the one from 3 years ago that I linked to. Look at how tiny the sequester really is there.
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:iconabcat:
AbCat Featured By Owner Feb 24, 2013   Writer
It wouldn't be devastating to the economy at all. It is a necessary measure. It is utterly laughable that people on six figure salaries pay as little as 16% income tax, and your country is humming and ahhing over how it's going to deal with the deficit. Utterly laughable.

Where do you think the middle and upper classes will go? The Cayman Islands? Mexico?
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:icontbschemer:
TBSchemer Featured By Owner Feb 24, 2013
People with 6-figure salaries pay upwards of 30%. You're full of shit.

If you double their income taxes, they'll flee to countries with lower tax rates. Here's a nice list to show you how easy it would be to find such a country: [link]

If you double the tax burden in the US from 30% to 60%, then people who can afford to move will flee to South Korea, Ireland, New Zealand, Japan, Iceland, Australia, Switzerland, Canada, the UK, or any other developed nation on that list. There are plenty of developed nations (some of them even more developed than the US) that have far lower tax rates than you're suggesting, and they will all receive the wealth that you scare away with your idiotic tax proposal.
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:iconsnuffleseleven:
snuffleseleven Featured By Owner Feb 23, 2013
"Detoxing from our addiction to government spending will be painful"

Only for people with lots of debt, like recent college graduates, middle class families with home loans, lower-middle class families with credit card debt, poor people with outstanding debt that hampers their economic livelihood... oh, actually... that's everybody, basically.

...yeah, that would be painful. Very. And crippling. Crap, you think consumer demand is at an all time low right now? That happens, ain't nobody buyin' ANYTHING. They'll be lucky if they can find a nice bridge to lie under at night.
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:iconzagstrike:
ZaGstrike Featured By Owner Feb 23, 2013
"The whole world will now see that the only countries that truly recovered from the 2008 Great Recession are those that avoided the temptation of Keynesian stimulus, opting instead for free market reforms to lift the burden of government off the backs of the entrepreneurs and innovators."

:iconaustraliaplz:


Australia, welfare/heavy regulator state that recovered from the recession yonks before the rest by using government stimulus spending. Once again proving Schemer wrong.
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