Government spending

  • Posted by a hidden member.
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    Mar 15, 2009 12:38 PM GMT
    Maybe it is me. I am sure if it is RJer's will tell me.

    Huge government spending under Bush was bad. Huge government spending under Obama is good. Obama's huge government spending will STIMULATE the economy, but Bush's huge government spending not only hurt us, it was bad. If Bush spent HUGE government money, why did that not stimulate the economy?

    Another question: We spent xxx dollars on the War in Iraq. I assume some of that was for soldiers. Were they not drawing a paycheck each week anyway? Were we not paying most of these soldiers a paycheck anyway? Maybe more for being in a danger zone, but how much more? If they sat on US bases, wouldn't they still be drawing a paycheck? So, how much more did we pay for them being in Iraq as opposed to Fort Ord? When we say the Iraq War cost xxx dollars, should we not minus what we would have paid anyway? And equipment. How much of the so called cost of the Iraq War goes towards equipment? How much would we have paid anyway, war or no war? And, when we talk about the cost of the war, how much of that money went to companies employing American citizens to build the equipment, guns, bullets, tents, tanks, aircraft, communication systems, ect. that went into the War? Is that a waste? No. Someone had a job because they worked for companies receiving government funds to build all of the equipment that was, is, used in the Iraq War.

    So, when I hear the Iraq War cost xxx dollars, I always wonder. I also wonder that if spending government money will get us out of this recession, how come all the Bush spending did not get us out of the recession? Most of the Bush spending was domestic and should have stimulated the economy, like Roosevelt in WWII, if you believe in that theory. But apparently, gov't spending does little to stimulate an economy.

    Experts will correct me, I am sure.

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    Mar 15, 2009 2:20 PM GMT
    The USA was not in a recession for much of Mr. Bush's tenure (if any for that matter). Barack Obama's spending will not get the USA out of recession, it will help a bad recession turn into a very bad recession or even a depression. Without the banking system being revived Mr. Obama's stimulus plan will not turn things around.

    What you describe in terms of spending on the Iraq War ending up back in the economy is true to a certain extent. However, it is hard to pinpoint how much of the American soldiers pay ended up stimulating the economy through consuming or tax revenue. The extra costs of the Iraq war include the replacement of destroyed equipment, the ongoing cost of disabled military personnel, as well as the cost of repairing Iraq.

    Regardless of what one thinks of the Iraq War, the fact is by cutting taxes and fighting a war, Mr. Bush greatly increased the risk of running a budget deficit when the economy was growing. As a result the US was not in particularly good fiscal shape when the present economic tsunami hit. I have yet to come across an economist or a business commentator who thought that Mr. Bush should get high marks for his handling of the economy. Ironic considering he was a Republican president.
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    Mar 15, 2009 2:23 PM GMT
    Members of the US military do in fact "cost" more in a combat zone. Those with dependent family are given a family separation allowance (FSA), and everyone is given combat duty pay (technically called imminent danger pay). Additionally, Federal withholding tax can also be exempted while in certain designated combat areas, although not social security or Medicare taxes.

    Combat injuries also raise the per capita cost of maintaining troops in the field. And former military continue to consume tax dollars if they enter the Veterans Administration medical care system, as many Iraq & Afghanistan vets have. Some of these are not initially re-employable in the civilian sector, or even become permanently unemployable and dependent upon free government support for the rest of their lives. This constitutes a hidden and long-term cost of sending troops into combat.

    Money spent on military equipment & munitions does not have an equally beneficial effect on the US economy as do expenditures on the infrastructure and social services. When a military bomb explodes it's gone. Although a US plant worker built the bomb, the device itself is expended. Similarly, combat vehicles and other equipment have relatively short service lives in combat conditions.

    Whereas government money spent on US domestic infrastructure not only puts people to work, but the product of their labor generally endures and can continue providing benefits to the economy. A bridge, for instance, facilitates traffic & commerce for decades after it's built. And money spent on education stimulates the economy by producing better workers and technological advances of all kinds.

    But a bomb has no lingering value, unless it's to destroy the real & present danger of an enemy, whose aggression would threaten our lives & property. Massive defense spending during World War II was a beneficial exception, because US factories were still not at capacity due to the Great Depression, and employment was high. Defense dollars were a stimulus package of sorts, that jump-started the economy. Plus 14 million Americans got paying jobs in the military almost overnight.

    After the war the wartime economy converted to peacetime production, and helped bring about the boom of the 1950s. But in the case of today's Iraq War, the economy was already healthier than during the Depression, and unemployment was low. Waging a war under those conditions is a drain on the economy, not a stimulus. It also causes deficit spending which adds the cost of debt to the government budget. And debt maintenance, like a bomb, produces nothing tangible for the tax dollars spent on it.
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    Mar 15, 2009 2:39 PM GMT
    So, basically, if America employed millions of people right now to build ships and tanks and armaments, and floated them out to the middle of the Pacific and sank them, that would be a stimulus to the economy. Long term. Obviously in short term people would be employed. So, that would be a good plan to stimulate the economy. Cause that is what we did in WWII.
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    Mar 15, 2009 3:12 PM GMT
    The huge deficit being created by Obama will cause inflation and devaluation of the US dollar in the long term. Hopefully his spending will stimulate the economy in the short time. People will go back to work and the additional tax dollars could be used to decrease the deficit. His spending will be different than the previous administration. He hopes to stabilize the financial markets which is the cause of all the problems. AIG, Wachovia, WAMU and the money center banks in NY. There is the talk of forming a "Bad Bank" that will buy the toxic mortgages causing the problem. There will be job creations and public work projects. Like Red_Vespa, said money spent at home rather than on bombs will stimulate the economy more. Hopefully the money being wasted in Iraq could be diverted to use at home. Unlike WW 2, the Vietnam War caused rampant inflation, budget deficits and recessions in the 70's. The Iraq War is similar to the Vietnam War. I hope the money is spent well. Some politicians will spent the money on graft and pork barrel projects. Oversight of the spending is going to have to be vigilant.
  • HndsmKansan

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    Mar 15, 2009 3:26 PM GMT
    Lots of spending when we don't have the money isn't good, regardless of the politics. Spending by Bush (hey he's conservative) was outragious.. and the cutting of taxes helped bankrupt us. The current spending isn't the best idea either, but the whining by the Republicans about the spending is not only ridiculous, but certainly calling the kettle "black".
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    Mar 15, 2009 3:54 PM GMT
    Take politics out of this...Government at all levels and all parties (federal, state or local) notoriously looks at the short term benefits of their decisions instead of long term affects. Their decisions are based on self-survival not on the good of the people. Since elections occur every 2, 4 or 6 years depending on position, short term benefits get them votes period.
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    Mar 15, 2009 3:55 PM GMT
    Triggerman saidSo, basically, if America employed millions of people right now to build ships and tanks and armaments, and floated them out to the middle of the Pacific and sank them, that would be a stimulus to the economy. Long term. Obviously in short term people would be employed. So, that would be a good plan to stimulate the economy. Cause that is what we did in WWII.

    That is the opposite of what I said. I said domestic infrastructure was the better investment for a stimulus package. I noted that World War II during Roosevelt was an exception to the rule, that does not apply to Iraq.
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    Mar 15, 2009 4:58 PM GMT
    wadawg saidTake politics out of this...Government at all levels and all parties (federal, state or local) notoriously looks at the short term benefits of their decisions instead of long term affects. Their decisions are based on self-survival not on the good of the people. Since elections occur every 2, 4 or 6 years depending on position, short term benefits get them votes period.



    I agree with you completely. Politicians, and the last time I looked Obama was one, look at short term fixes in his years. All I ask is how is that good for the US? Or is it good for Obaba? Can anyone say?
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    Mar 15, 2009 5:00 PM GMT
    Red_Vespa said
    Triggerman saidSo, basically, if America employed millions of people right now to build ships and tanks and armaments, and floated them out to the middle of the Pacific and sank them, that would be a stimulus to the economy. Long term. Obviously in short term people would be employed. So, that would be a good plan to stimulate the economy. Cause that is what we did in WWII.

    That is the opposite of what I said. I said domestic infrastructure was the better investment for a stimulus package. I noted that World War II during Roosevelt was an exception to the rule, that does not apply to Iraq.



    So define domestic infrastructure and how that will help the economy, if I miss understood you?
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    Mar 15, 2009 5:21 PM GMT
    I'm afraid that the vast majority of the money is just going to be absorbed by the bureaucracy with no visible output. They'll make a big show out of a few little projects... like painting the police station or changing some light bulbs at the middle school. The self-congratulatory press conferences and fancy signs will redouble the cost of those already-hyperinflated projects.

    But most of the money that comes to my state will get filtered into the public employee pension system. Since there don't seem to be a lot of immediately profitable investments for the pension funds, I imagine there will be a wave of early-as-possible retirements and cashing-out.
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    Mar 15, 2009 5:48 PM GMT
    Well over here in California the budget seems to be heading towards increases in the prison system funding, and decreases in the school system funding. This breaks my heart.
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    Mar 15, 2009 5:51 PM GMT
    I'm a conservative Republican and disliked all the spending under Bush and also hated it under Clinton and now Obama. Of course, there has to be some spending, but to throw the amt of money we are on pork projects is the epicenter of the country's problem. We just spend too much that is ultimately destroying our economy and will be our downfall. This Obama plan seems tailored to drive us deeper into debt with taxing small companies which are what we depend on to create jobs. A very strange philosophy he seems to have. We don't have to worry about the energy situation at this time and yet he has initiatives for Green technology which is not that important right now. That stuff can wait.

    The American way seems to be "credit is fine" but it just isn't. Too many people have gotten into a mindset of "gotta have it" even though they cannot afford it..trying to keep up with the Jones'es so to speak. The credit card is one of the biggest problems in this country and I think it is time for the govt to take action against these banks and credit card companies charging these outrageous interest rates that should be illegal. They should be capped at whatever prime rate is...like 6-8% tops. Then they should have strict limits as to how much people can have as far as a "credit limit" that is a total of every credit they have..ie mortgage, credit card, reg bills to come up with realistic "credit card limits". Since people seem to be terrible at self limiting themselves for whatever failings they have, someone has to limit them.

    I see people with 5 credit cards, maxed out and they will never get out of the debt they have gotten themselves into. To be perfectly honest, the credit cards companies and even banks that give loans are illegally lending money because only the treasury can "create money" yet the banks and credit card companies loan it like it is theirs when in reality they do not have the cash. If someone called them on it, they would go down.

    If you have any credit card debt, I implore you to not spend anything else on credit until you get your credit card paid off. I have no credit card debt and just a home mortgage that I can afford. I pay for things as I go and have a nice savings too in case something happens to me so I can afford a crunch if something were to happen like a sudden job loss. All Americans need to wake up and live within your means...don't add to the economic crisis by overspending yourself.
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    Mar 15, 2009 6:17 PM GMT
    Triggerman saidSo, basically, if America employed millions of people right now to build ships and tanks and armaments, and floated them out to the middle of the Pacific and sank them, that would be a stimulus to the economy. Long term. Obviously in short term people would be employed. So, that would be a good plan to stimulate the economy. Cause that is what we did in WWII.


    In the short term it would stimulate certain parts of the US economy, and at the same time tax rates would have to skyrocket to pay for it. During and after WWII the marginal tax rate on the highest income earners was over 90% I believe (if your income was $1 million per annum, the last dollar earned would bring in 10 cents in net income).

    You will often hear the argument that WWII effectively ended the Great Depression in the USA. You don't hear what the downsides were though. Rationing, inability to buy many consumer goods (e.g. automobiles), and high taxes. Not to mention the loss of many future productive members of society.
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    Mar 15, 2009 7:17 PM GMT
    Now you also have countries like Australia, who come and back you guys, when you pick a fight with another country, and anything we cost you, you also bill us.

    When we had Mr Howard in. Australia was not in a recession, and he was the head of the right wing party Liberal, and when he lost his job for being to friendly with America, Australia had a deficit.

    Now we have a left wing government in, Labour, we have a recession knocking at our door, and the government is throwing all our savings away, to every tom dick and harriot, so they can go out and spend our savings. Thus giving us another recession, or making us surcome to the recession America has given us.

    But yous are right. For most if not all of Mr Bushes term in offices. America was not in a recession. You also can't blame Bush for corporate greed.

    Nor do I feel Mr Obama, will be able to turn it around.
  • freydubai

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    Mar 15, 2009 7:24 PM GMT
    its not gov't money my friend it is our money. yours and mine. well i don't live in the country any more so its mostly yours. lol
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    Mar 15, 2009 7:31 PM GMT
    Triggerman saidSo define domestic infrastructure and how that will help the economy, if I miss understood you?

    I already did, 2 posts above. Building bridges versus bombs, etc.
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    Mar 15, 2009 11:09 PM GMT
    Most of the war money went to government contractors.
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    Mar 15, 2009 11:12 PM GMT
    xrichx saidMost of the war money went to government contractors.

    Yeah, we haven't even gotten into the vast waste & corruption specifically associated with the Iraq War, where US taxpayers got absolutely nothing for their money, just dollars down a Black Hole.
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    Mar 15, 2009 11:30 PM GMT
    Lately I've been hearing that the Army is using contractors for base security. These are the guys that stand guard at the entrance and patrol the perimeters. Bases here in the US! Something about that ain't right.
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    Mar 15, 2009 11:50 PM GMT
    xrichx saidLately I've been hearing that the Army is using contractors for base security. These are the guys that stand guard at the entrance and patrol the perimeters. Bases here in the US! Something about that ain't right.

    I can address that authoritatively, having been a US Army Military Police Colonel. The transition to civilian contract gate security began years ago, well before Iraq. The issue represented a great debate within the Army, about the basic role of the MPs, and whether we even still had a viable mission at all in the modern Army, and perhaps should be disbanded.

    The MPs traditionally had 2 roles: Discipline, Law & Order (DLO), which was the post mission (never "base," that's the Air Force), and Combat Support, which included convoy security, processing & confinement of Enemy Prisoners of War (EPW, never "POW," which is what our own American prisoners are called), Civilian Internees (CI), and various other combat missions.

    To save the Military Police Corps from extinction, its leadership sold the senior Army leaders on the concept of totally combat MPs, at the expense of the non-combat DLO mission. It also made sense in terms of cost, contract police ("rent-a-cops" as we called them) actually being less expensive overall than soldiers.

    I personally would have preferred that the DLO mission be retained, but I can assure you it's been widely in force since the early 90s. Just from my own personal observations, BTW, the USAF still tends to use its own internal Security Police (SP) for much of its base security, especially at sites that contain nuclear weapons.
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    Mar 16, 2009 12:36 AM GMT
    jprichva said
    HndsmKansan saidLots of spending when we don't have the money isn't good, regardless of the politics. Spending by Bush (hey he's conservative) was outragious.. and the cutting of taxes helped bankrupt us. The current spending isn't the best idea either, but the whining by the Republicans about the spending is not only ridiculous, but certainly calling the kettle "black".


    Actually, this is wrong.

    This is not rocket science. The current reces/depression is really two interlocking problems: first, a freezing of credit, since trust in these institutions has vanished, and they neither lend money nor does anyone wish to invest in them.

    Second, this is a failure of demand. People and companies have reined in their spending. The more they do so, the less anyone needs to produce, the more companies fail or cut back hugely, the more they downsize their workforce--and this creates even more people without the money to purchase things (even if they wanted to). Prices fall (as they have been), and the result is a downward cycle of deflation, which is harder to cure than inflation---this is what perpetuated the Great Depression, and to some extent also the Japanese Lost Decade.

    The foolishness of the Republican party, and those who think it is worrying to spend so much government money---is this:

    If private industry will not spend, and private citizens cannot or will not spend, exactly who is ever going to create the demand that will allow for economic growth to re-start?

    In fact, the stimulus bill was probably $2 TRILLION short of what is needed to get the economy re-started, according to Krugman and many, many other economists.


    This line of thinking is what got us in trouble in the first place. The problem now isn't that demand has fallen to abnormal levels, it's that the demand was way to high to begin with. Every administration since Bush Sr. has fostered an artificially booming economy. Forcibly lowering interest rates, injecting unbacked currency into the system, and subsidies which encouraged higher prices and wasted production all made the economy seem stronger than it was. People were encouraged by the government to keep spending beyond their means in order to keep the boom going and were encouraged to buy houses they couldn't afford because of the misguided policy of the administrations, especially Clinton, to get every family into a house.

    That was all well and good while it lasted, but eventually the artificiality of the economy would become apparent and the economy would crash, not because the market system is flawed, but because it's the natural process of the economy correcting itself. Prices need to fall until they hit their bottom before they can rebound. Jobs need to be cut from all unprofitable industries so that capital can be redirected into profitable endeavors. When the government meddles too much in the economy to try and create prosperity, this is what happens.

    Instead, Obama will prop up prices and failing companies and prevent prices from finding their bottom and preventing efficient market redistribution of capital. This will continue economic inefficiency and waste tax money.

    As for war, it can be best explained by the "Parable of the Broken Window." http://en.wikipedia.org/wiki/Parable_of_the_broken_window War can help the economy, but it is a very wasteful and inefficient way to do it.
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    Mar 16, 2009 12:41 AM GMT
    In addendum, the corporations were equally to blame. However, they were not in the wrong for wanting to make a profit, but they were wrong for using their money to buy political favors from both the democrats and republicans to get legislations passed that would help out their business or industry. Special interests who use their money to influence politicians end up creating imbalance in the competitive market system favoring one business over another not because of price or quality competitiveness, but because of government intervention in the form of subsidies or regulation preventing new competition.
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    Mar 18, 2009 5:09 AM GMT
    BSU, I think you got it right. Perfectly. The market works in capitalism until outside forces start messing with it. Which we have. Way too much. Rebublicans and Democrats.

    Now, we see the bailouts failing. Let companies fail. That is one of the tenents of a true free market. Let AIG go into receivership, GM, all of these companies that made mistakes. Let them fail. Other companies will fill the void. They always have. Studebaker does not make cars anymore. So what? The world changes. Companies come and go. No company is TOO big to fail. That is BS. Others will fill the gap. When the government bails out a company, the steal available capital that should be there for competitive companies. We can't borrow forever. Obama is spitting into the wind, hoping that these big stupid bailouts will change things. Bernanke has been wrong on almost everything he has said if you take the time to research his past statements over the last few years.

    JW
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    Mar 18, 2009 5:19 AM GMT
    Watch I.O.U.S.A