Who says that is the case today? The CBO PROJECTS debt to GDP of 77% in its long term debt projections.
https://www.cbo.gov/publication/45653
The U.S. Economy: Stand by for more worse news
- Thread starter Brian Foley
- Start date
https://www.cbo.gov/publication/45653
Seattle
Valued Senior Member
I agree that he is a nut in terms of his judgement but I'm sure he is a knowledgeable guy. How do you come up with the statement about not taking a single economics course?
He has a M.A. in Int'l Economics and we don't know what his undergrad is in from what was posted in this thread.
In general however economics as practiced on Wall Street isn't a "science". Paul Krugman is a respected economist but so is Milton Friedman.
True, I think. but what does that have to do with question I asked, which was:
"When (what year) were promised future benefits 12 times annual GDP with debt growing nearly one trillion per year? "
You give the current debt to GDP ratio. not the unfunded obligation to GDP ratio (12 to 1 times) my article and my question was concerned.
I am glad the INCREASE in debt is declining wrt to GDP but 0.77xGDP = more debt still.
BTW I have many posts noting that primary schools in poor neighborhoods are the root of many of the US's problems - local funding of schools mandates they will provide low quality eduction and "graduates" unqualified for jobs, as now machines for digging ditches or washing cars and dishes are cheaper than human labor. Thus we have 1 in 6 Americans not able to support themselves - most getting food credits or eating in jails, etc. Just noticed this graphic, that is a US world leading position that is national shame:
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Because those "promised future benefits" are included in the CBO projections and the CBO doesn't anticipate total US debt (including those promised benefits) to exceed even one times GDP, much less 12 times.
I don't understand. The ratio of debt to GDP is for a fiscal year, and changes. How can all unfunded future benefits for say next 30 years be compared to some year's GDP? You say: "promised future benefits" are included in the CBO projections" What is their "projection" - tell what they do project more specifically so I can understand your statement.
Because they run projections BillyT. Things change over time. So not only do they projections of expenses, they also run projections of GDP.
I previously provided those projections in post #941.
http://www.sciforums.com/threads/th...r-more-worse-news.105212/page-48#post-3260081
Yes I know they change. That is why you confused me by giving a fixed 77% as the deficit to GDP ratio.
As I have already noted, that is not what my linked article was even speaking of. It said the current ratio of UNFNDED OBLIGATIONS was 12 times greater than the GDP - not a word about your debt to GDP ratio. Your replies are completely unresponsive to the issue of the article
I did go back to you post #941 and to the link given there. The first paragraph of the link was:
"The federal budget deficit has fallen sharply during the past few years, and it is on a path to decline further this year and next year. However, later in the coming decade, if current laws governing federal taxes and spending generally remained unchanged, revenues would grow only slightly faster than the economy and spending would increase more rapidly, according to CBO's projections. Consequently, relative to the size of the economy, deficits would grow and federal debt would climb."
And in fact that (deficit to GDP ratio) is what you link is concerned with - NOT ONE WORD ABOUT THE UNFUNDED OPBLIGATION * in your entire link about what the article I quoted from was focused on.
* The unfunded obligations are just that, not part of the current budget or deficit or CBO projects of future annual debt to GDP ratio, any more than the are included in this year's debt to GDP ratio. The tacit assumption you, and unfortunately the government, seems to be we can forget about unfunded future obligations - no worry about them regardless of how large they become. I. e we only need to worry if the current deficit to GDP ratio gets too high.
That is what McGobby (spelling?) of Zimbabwe thought too - he kept the debt to GDP ratio low by paying the debt off as it grew with newly created money, just as the US is now doing. Technically called "monetizing the debt" or "inflating it away." - Why the Fed is scared of deflation, lower prices for the people.
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Seriously BillyT…? The highest debt to GDP projection by the Congressional Budget Office was 77%. That was very clear and its a far cry from you 12 times GDP cited by your article.
Two, if expenses are unfunded, they become debt.
I don’t really care about your link. It is irrelevant because the numbers it throws out are not credible and inconsistent with those of the nonpartisan Congressional Budget Office (CBO). The CBO does a 10 year forecast and it includes ALL expected government expenses and revenues – that means future obligations. It’s difficult to know where the authors of your article got there data or if they just made it up, but they didn’t get it from the Congressional Budget Office. When you get some real and credible numbers, I will start taking you seriously.
The CBO doesn’t do forecasts for longer periods because the results become less accurate. It’s the same reason meteorologists don’t give detailed forecasts for periods longer than 7 days. My point is, your numbers are screwy and inconsistent with known data and projections of credible analysts.
Not until the Treasury issues bonds is it part of the US debt. Until then, as the name states, they are "unfunded obligations." It would be impossible to include them in the CBO's projections as they can be changed by congress and in the case of the largest, Social Security for yet to retire Baby Boomers, certainly will be reduced.
Already the SS tax collection plus the interest earned on the trust fund's bonds can not cover the SS's current pay out, so the difference it being paid with newly printed money* - part of the growing M2 seen below.
I expected you to object to my statement that US was monetizing the debt as Zimbabwe did. I.e. paying it with newly "printed" money so copied this chart that just happen to appear today:
* The actual mechanism is that SS redeems some of the bonds in the trust funds (Treaury gives SS "electronic money" that SS then pays out - increasing M2) Then the trust fund earns less interest on the smaller value of the remaining bonds, so SS's deficit problem is growing worse - self accelerating.
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Actually, they become part of the deficit and then become part of the debt. Government cannot spend money it doesn’t have. And what you don’t understand is that the previously cited CBO numbers do include “unfunded obligations” in the previously referenced debt to GDP projections.
Well you need to tell that to the Social Security and Medicare Trustees, because they disagree with your claims. The trustees, the guys responsible for these funds, claim in their most recent report, Social Security is fully funded through 2033.
“After 2019, Treasury will redeem trust fund asset reserves to the extent that program cost exceeds tax revenue and interest earnings until depletion of combined trust fund reserves in 2033, the same year projected in last year’s Trustees Report. Thereafter, tax income would be sufficient to pay about three-quarters of scheduled benefits through the end of the projection period in 2088.”
http://www.ssa.gov/oact/trsum/
The other thing you are ignoring is the ability of government to tax. Taxes are at historic lows, so there is ample room to increase taxes. The reason Social Security and Medicare have surpluses is because the taxes used to fund these programs were used to finance tax cuts for America’s wealthiest citizens and wage earners were given a promise that in exchange for their increased payroll taxes Medicare and Social Security would be solvent. It is time to raise taxes back to more historical norms and guess who doesn’t want to give back the tax cuts they have enjoyed for the last 30+ years? Increased taxation doesn’t require the printing of more money.
Actually, you are wrong again BillyT. When trust fund bonds are redeemed, money is transferred from the Treasury general fund and placed into those of the Social Security Trust Fund. Your notions of money creation are simplistic and naive at best. As I have explained to you numerous times over the years, the Federal Reserve manages the money supply, not the US Treasury. Money supply is much more complicated than you envision it to be and you don’t seem to be able to wrap your mind around it.
During the period you referenced in your Federal Reserve chart, you should also note, inflation was very moderate. So if that is your justification for saying the US is on a Zimbabwean path to Hell, well it is woefully lacking any argument of merit. US inflation has been running at less than 2% for years now. And there are good reasons for expanding the money supply. A growing economy needs a growing monetary base.
Gallup Poll: American Entrepreneurship: Dead or Alive?
by Jim Clifton (Gallup CEO & Chairman)
The U.S. now ranks not first, not second, not third, but 12th among developed nations in terms of business startup activity. Countries such as Hungary, Denmark, Finland, New Zealand, Sweden, Israel and Italy all have higher startup rates than America does.
We are behind in starting new firms per capita, and this is our single most serious economic problem. Yet it seems like a secret. You never see it mentioned in the media, nor hear from a politician that, for the first time in 35 years, American business deaths now outnumber business births.
The U.S. Census Bureau reports that the total number of new business startups and business closures per year -- the birth and death rates of American companies -- have crossed for the first time since the measurement began. I am referring to employer businesses, those with one or more employees, the real engines of economic growth. Four hundred thousand new businesses are being born annually nationwide, while 470,000 per year are dying.
(read the rest through link above)
--
Given the millions of regulations required to protect us from one another (for the Good of Society) to open a business in the USSA, is it little wonder no one wants to open a business. According the Department of Educations own statistics 1 in 5 Government schooled graduates can't read with a comprehension level required to understand said regulatory paperwork (the average American has a literacy level of between 7 - 8th grade). Not to mention, everyone knows a 19 year old who is able to somehow get a start-up running should, while pouring ALL of her assets into this gamble/venture (and while simultaneously fighting tooth and nail against the near monopolies that have used rent-seeking, licencing scams and regulatory capture to secure the lion's share of the hyper-regulated markets) she should provide value for money to stingy-arsed Amooricans AND ALSO provide a "liveable wage" to raise not just her family, but also pay enough to raise every else's family who's labor she purchases (I mean, that's only fair - else she be a capitalistic pig) AND ALSO provide full health insurance and benefits while being soaked by the State for as much tax as it can wring out of her (for the Good of Society - someone has to pay for the Police State and the NSA) and one wonders why entrepreneurs say f*ck it. Just go onto the dole and rent out a room in one of your Baby Generations / grandparents slum properties.
Done and Done.
Enjoy the Centrally Planed economy, it isn't going anywhere.
To quote the CEO of Gallup: "The Economy Is Not Coming Back"
by Jim Clifton (Gallup CEO & Chairman)
The U.S. now ranks not first, not second, not third, but 12th among developed nations in terms of business startup activity. Countries such as Hungary, Denmark, Finland, New Zealand, Sweden, Israel and Italy all have higher startup rates than America does.
We are behind in starting new firms per capita, and this is our single most serious economic problem. Yet it seems like a secret. You never see it mentioned in the media, nor hear from a politician that, for the first time in 35 years, American business deaths now outnumber business births.
The U.S. Census Bureau reports that the total number of new business startups and business closures per year -- the birth and death rates of American companies -- have crossed for the first time since the measurement began. I am referring to employer businesses, those with one or more employees, the real engines of economic growth. Four hundred thousand new businesses are being born annually nationwide, while 470,000 per year are dying.
(read the rest through link above)
--
Given the millions of regulations required to protect us from one another (for the Good of Society) to open a business in the USSA, is it little wonder no one wants to open a business. According the Department of Educations own statistics 1 in 5 Government schooled graduates can't read with a comprehension level required to understand said regulatory paperwork (the average American has a literacy level of between 7 - 8th grade). Not to mention, everyone knows a 19 year old who is able to somehow get a start-up running should, while pouring ALL of her assets into this gamble/venture (and while simultaneously fighting tooth and nail against the near monopolies that have used rent-seeking, licencing scams and regulatory capture to secure the lion's share of the hyper-regulated markets) she should provide value for money to stingy-arsed Amooricans AND ALSO provide a "liveable wage" to raise not just her family, but also pay enough to raise every else's family who's labor she purchases (I mean, that's only fair - else she be a capitalistic pig) AND ALSO provide full health insurance and benefits while being soaked by the State for as much tax as it can wring out of her (for the Good of Society - someone has to pay for the Police State and the NSA) and one wonders why entrepreneurs say f*ck it. Just go onto the dole and rent out a room in one of your Baby Generations / grandparents slum properties.
Done and Done.
Enjoy the Centrally Planed economy, it isn't going anywhere.
To quote the CEO of Gallup: "The Economy Is Not Coming Back"
Here is some likely "bad news" for the banks, other corporations, and the very wealthy (but good news for many Joe Americans):
Obama knows plan will not make it thru Republican controlled Congress, but even if they send it to committee "for study," that will hurt them in next election.
The bad news, for all, is they will retaliate - block some measures or confirmations (especially an ambassador to Cuba) etc. so expect only finger pointing of blame from government - not anything good for USA, unless it helps with their re-elections. I. e. "business as usual".
More details here: http://www.bloomberg.com/news/2015-...-cuts-on-rich-again-offset-by-new-breaks.htmla Teaser from Financial Times I did not pay to read all of said:
Obama knows plan will not make it thru Republican controlled Congress, but even if they send it to committee "for study," that will hurt them in next election.
The bad news, for all, is they will retaliate - block some measures or confirmations (especially an ambassador to Cuba) etc. so expect only finger pointing of blame from government - not anything good for USA, unless it helps with their re-elections. I. e. "business as usual".
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Unfortunately a snowball has a better odds of survival in Hell than these proposals have in a Republican controlled congress. Obama's proposals are dead on arrival in our Republican controlled congress.
good job way to defend crazy and ignorant. joe may or may not be right in his view point but i can damn well assure micheal here doesn't know what the hell he is talking about. which is why most of his posts relating to history and economics could be refuted by a middle schooler and he says such assinine things as the US has a centrally planned economy.
It's not like Republicans haven't been obstructing, they have done nothing but since Obama was sworn in to office. Republicans have done everything within their power to oppose this president - even if it meant opposing positions they previously held. What makes you think Republicans would suddenly reverse course?
Mama Cass has nothing to do with this, she has been dead for a very long time now. It has everything to do with fact and reality.
How's the Central Bankers/Planners Wreckovery fairing the USSA?
From June 2013 up to February 2015: Federal Reserve Bank of New York (FRBNY) survey of consumer expectations reports a total collapse in consumer spending growth expectations. This is the part where President Oh-blama craps out some sound bite regarding his "middle-class economic" strategy.
Note, the graph is for the $50-100k income cohort. ALL income levels are dropping, this one happens to be like a rock.
From June 2013 up to February 2015: Federal Reserve Bank of New York (FRBNY) survey of consumer expectations reports a total collapse in consumer spending growth expectations. This is the part where President Oh-blama craps out some sound bite regarding his "middle-class economic" strategy.
Note, the graph is for the $50-100k income cohort. ALL income levels are dropping, this one happens to be like a rock.
How's the Central Bankers/Planners Wreckovery fairing the USSA?
From June 2013 up to February 2015: Federal Reserve Bank of New York (FRBNY) survey of consumer expectations reports a total collapse in consumer spending growth expectations. This is the part where President Oh-blama craps out some sound bite regarding his "middle-class economic" strategy.
Note, the graph is for the $50-100k income cohort. ALL income levels are dropping, this one happens to be like a rock.
LOL, how about surprising me once and using a credible source. Below is a link to the Federal Reserve site and it shows the real survey results.
http://www.newyorkfed.org/microeconomics/sce/#main
http://www.newyorkfed.org/microeconomics/sce/#main