fiscal policy

jimotis4heisman · #1 (**permalink**) 09-10-2008, 12:17 PM

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Here's a prediction: The media will report today that the federal budget deficit is big and getting bigger. What most of them won't report, alas, is that the cause of these deficits is an explosion in federal spending. The era of big government is back, bigger than ever.

growth of fed govt

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next year federal outlays could be higher as a share of the economy than at anytime since World War II. (by GDP)

military spending

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Another myth is that the war on terror has busted the budget. While operations in Iraq and Afghanistan are expensive, defense spending is $605 billion this year, or about 4.5% of GDP. That only seems large by comparison to the holiday from history of the 1990s, when defense fell to 3% of GDP. As recently as 1986, defense spending was 6.2% of GDP.

since 2006

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federal expenditures are up $429 billion -- to $3.158 trillion.

earmarks

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In 2008 there were some 11,000 at a cost of $17 billion, the second most ever,

good article for discussion. not meant to be ubber politically, by me anyway.

AKAKBUCK · #2 (**permalink**) 09-10-2008, 12:21 PM

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The real runaway train is what CBO calls a "substantial increase in spending" that is "on an unsustainable path." That's for sure. The nearby chart shows how much some federal accounts have expanded since 2001, and in inflation-adjusted dollars. This year alone, federal agencies have lifted their spending by 8.1%, with another 7% raise expected for 2009. There's certainly no recession in Washington. The CBO says that, merely in the two years that Democrats have run Congress, federal expenditures are up $429 billion -- to $3.158 trillion.

Huh?

jimotis4heisman · #3 (**permalink**) 09-10-2008, 12:44 PM

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Originally Posted by AKAKBUCK

Huh?

it says the increase is a lot, this is gonna be problems if not addressed. spending increase 15% this year (2008 fiscal year end is like now) and with next years projection (now through early next fall). since 2006 expenditures are up 15.7% since those elected in 2006 took their seats.

Tresselbeliever · #4 (**permalink**) 09-11-2008, 12:25 AM

This type of fiscal policy is definitely unsustainable. You can't just reduce domestic financing in the form of taxes and increase borrowing from foreign sources at the current level of domestic interest rate. Sooner or later, investments in US government debt will be so unattractive due to the low real interest rate that capital outflow may cause the government to offer prohibitively high interest rates to regain them. By then, you are going to have a real and prolonged economic crisis in your hand, because the fed won't be able to bail anyone out with low interest rates.

jimotis4heisman · #5 (**permalink**) 09-11-2008, 07:36 AM

pst, the article mentions that the financing side is at an all time high. i agree with some of the foreigh argument. you also have to look at the crazy spending, and crazy spending increases...

Steve19 · #6 (**permalink**) 09-13-2008, 03:51 PM

Tax and spend?

'BusNative · #7 (**permalink**) 09-15-2008, 12:50 PM

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Originally Posted by Steve19

~~Tax~~ Borrow and spend?!!

FIFY

NewYorkBuck · #8 (**permalink**) 09-15-2008, 01:36 PM

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Originally Posted by 'BusNative

FIFY

None of the above. Its going to be "print up money and spend."

Trust me, if we dont stop trying to print our way out of this, there is not one discussion topic on currently on the first page of this board that is going to matter.......

'BusNative · #9 (**permalink**) 09-15-2008, 02:16 PM

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Originally Posted by NewYorkBuck

None of the above. Its going to be "print up money and spend."

Trust me, if we dont stop trying to print our way out of this, there is not one discussion topic on currently on the first page of this board that is going to matter.......

I don't disagree at all. I just meant up to this point.

craigblitz · #10 (**permalink**) 09-16-2008, 09:30 AM

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Trust me, if we dont stop trying to print our way out of this, there is not one discussion topic on currently on the first page of this board that is going to matter.......

+1

Jake · #11 (**permalink**) 09-16-2008, 12:48 PM

Quote:

Originally Posted by NewYorkBuck

None of the above. Its going to be "print up money and spend."

Trust me, if we dont stop trying to print our way out of this, there is not one discussion topic on currently on the first page of this board that is going to matter.......

You are correct...unfortunately.

jimotis4heisman · #12 (**permalink**) 09-16-2008, 02:08 PM

Quote:

Originally Posted by NewYorkBuck

None of the above. Its going to be "print up money and spend."

Trust me, if we dont stop trying to print our way out of this, there is not one discussion topic on currently on the first page of this board that is going to matter.......

but its a topic no one will touch, here on BP or in washington. always interesting. maybe since its not a sexy issue?

'BusNative · #13 (**permalink**) 09-16-2008, 02:44 PM

Interesting move...

Bloomberg.com: Worldwide

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Fed Keeps Rate at 2%, Rebuffing Call for Reduction (Update1)

By Scott Lanman and Craig Torres
Sept. 16 (Bloomberg) -- The Federal Reserve left its main interest rate at 2 percent, rebuffing calls by some investors for a cut after Lehman Brothers Holdings Inc.'s bankruptcy shook markets worldwide.

"Downside risks to growth and the upside risk to inflation are both of significant concern," the Federal Open Market Committee said in a statement in Washington. "The committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability."

Chairman Ben S. Bernanke and his colleagues signaled they will continue to address market turmoil with emergency lending and aim monetary policy at a longer-term economic forecast that may still show the economy skirting a recession. Stocks fell after the decision, while the dollar gained and Treasuries remained higher...