How will eliminating the budget deficit unleash private sector jobs?

I think it is a Republican pipe dream.

I also think it is the height of insincerity when the deficit was sent skyrocketing by a Republican President who has never been called to account for the increase.

@marinelife Obama has been POTUS for two years, 25 days and counting. Dems had control for nearly six years up until November. Please, let’s live in the present and quit blaming everything on Bush.

I think that the multiplier effect for dollars spent in the civilian sector is higher than for government dollars. I don’t know whether this is true or not. But say that the government is as inefficient as its detractors say it is. There might be lots of lazy govt workers doing nothing. Then dollars spent by the private sector will go to the lowest cost, highest quality service or good that people want. That efficiency creates a higher multiplier effect (dollars being spent and re-spent over and over, as they pass through the economy).

You make so many unwarranted assumptions and straw men in this argument that one hardly knows where to start.

In the first place, who says that cutting the budget by over a trillion dollars should or could stimulate “sudden” or “massive” growth in private sector jobs, and much less both “sudden and massive”? I don’t know that either would result. What I do know (but can’t predict with certainty “when”) is that such a budget deficit will eventually lead to more inflation. And what I know with absolute certainty is that a deficit like that will result in a string of interest payments that will dwarf the current deficit. So that’s for starters. Is balancing a budget a failure if it doesn’t lead to “sudden and massive” corrections?

You assume that the current deficit amount is paid “in salaries to federal workers, government contractors and employees of companies who sell to the government”. I know nothing of the kind; how are you privy to where this is spent? It could very well be spent on service to the previous year’s deficit, gold-plated toilet seats or surplus GM vehicles that are being stored in various parking lots around the country. It could be spent in aid to Haiti, for all I know. A lot of the money, in fact, was sent to banks and bankers, and you certainly know that. My point is that there’s no certainty that the money is being spent as specifically (and benignly) as you claim. So the claim that “government orders to business, and the paychecks, and the ability to go shopping or pay the mortgage” would be harmed is unproven. (This is akin to every public executive claiming that the first things that have to be cut in budget cutting times are police, firefighters, libraries and parks.)

What I also don’t know with certainty is that taking a trillion dollars out of government’s hands and leaving it in the hands of the people who earned it will result in “better” spending decisions. I’m not one who says that “everything” that government spends money on is inefficient, high-priced, unwanted and stupid; nor do I say that “everything” purchased by private individuals and companies IS efficient, right-priced, needed and wanted and a best buy. God knows that I’ve made some stupid decisions, and the companies I’ve worked for, too. The difference is that when I make stupid decisions and realize the error, I change my plans. Some of the companies I’ve worked for have made stupid decisions for long enough and gone out of business, if they don’t change their plans in time. The difference with government is… the plans and decisions don’t change, and the government doesn’t go out of business. The budgets (and deficits) simply increase.

One other difference between government and private enterprise is that private enterprise must modify its spending when faced with “unsustainable” deficits. Governments simply find a way to sustain the unsustainable until they collapse. I suppose that’ll do it. That will answer your final question about “how to tame the debt monster” once and for all. I don’t recommend it, but it’s the path we’ve been on for my lifetime. The Russians have tried it; let’s ask them how it’s working out for them.

@marinelife I totally agree with what you say. This chart shows what happened to the national debt curve when Ronald Reagan slashed taxes for the wealthy by ⅔rds. Till his tenure, we had been slowly, consistently reducing the national debt. He tripled it.

Be that as it may, the problem now rests on every American’s shoulders. We have no choice but to turn the debt curve back around. Eventually, debt service alone will outstrip tax revenues. At that point, creditors will move to push the nation into default and divide up its assets. Right now, the debt amounts to $45,527 per person for every man, woman and child in America or $127,675 per person who files taxes.

@bkcunningham As the chart shows, I am pretty sure that @marinelife was talking about Reagan and not Bush. But the chart also shows that Clinton had reversed the debt growth as a percent of GDP, and George W. Bush with his tax cuts and spending increases destroyed that, nearly doubling the debt in his 8 years. Reagan holds the record, though. He tripled the debt in 8 years. A Conservative? No! A Con? Absolutely!

@wundayatta There are no magical guvment dollars versus REAL dollars. A dollar spent is a dollar spent. Money is fungible and goes into general circulation so long as it gets spent. Our problem is we are spending more than there is, so we have to print more, which ends up generating inflation. We have to get the economy back to full tilt, but as soon as we do, we have to begin to attack the debt. Note from the link I posted to the debt chart, the debt is not as high as a percent of GDP as it was right after WWII, and we paid it down then. We can do this. But not by sitting in separate corners and pointing fingers at one another for the next 8 years

@WasCy You asks, “who says that cutting the budget by over a trillion dollars should or could stimulate “sudden” or “massive” growth in private sector jobs?” I did not say it would. I asked ho9w could it. But Republicans and Tea Party courting ones in particular are saying that in their own words. Here’s Governor Cristie.. Rep. Todd Young Responds to State of the Union.

You ask, “how are you privy to where this is spent?” It is a matter of public record. Granted some of the spending goes abroad in foreign aid, some of which may come back here and some not. But the vast bulk of US Government spending gets spent right here and, as fungible dollars, goes through many hands from individuals to businesses, to city, county and state governments. I assume you are being supercilious talking about gold plated toilet seats accounting for all federal spending, and the size of our debt encourages one to be supercilious. But in fact, even if our entire federal spending were directed to nothing but gold plated toilet seats, that would still come right back into the private sector to supply the gold, the seats, the plating services, the installation, the delivery. We face serious problems with this debt. They will not be solved by talking about the absurd and treating all who want to address the issue with such disdain.

“What I also don’t know with certainty is that taking a trillion dollars out of government’s hands and leaving it in the hands of the people who earned it will result in “better” spending decisions.” Dream on then. Nobody is seriously talking about cutting taxes by another trillion dollars. Get real. This problem is real. It will not be resolved by such polemics. If you cut revenues another trillion dollars to “leave that trillion in people’s pockets” that would boost the deficit from $1.645 trillion to $2.645 trillion. Not my idea of a workable solution.

@bkcunningham President Clinton made 22 million new jobs with his “liberal” agenda. Thats more than President Bush 2 (1.1, not counting the 3 million lost in the first couple months of Obama’s administration that would’ve been his fault), Bush 1 (2.6 million) and Reagan (16.1 million) Combined.

Liberal policies in 8 years created 22 million jobs. Conservative policies in 20 years mustered only 19.8 million jobs.

Obama getting our jobs to NEUTRAL was frankly nothing short of a miracle.

As far as the original post… the only way reducing the deficit would really help private business, is that it may have an effect on the popularity of government bonds, and that somewhat directly effects loan and interest rates.

@ETpro

It’s amazing that someone can (presumably) read so much and (apparently) understand so little. I’ll try to use short sentences composed of simple words. (‘Supercilious’? Do you even understand the meaning of the word you used? I don’t know what you intended to say but that’s not even in the direction of any target that I can imagine.)

Cutting the budget so that we don’t spend money we don’t have on non-essential items is important so that private individuals and other concerns can make the more rational spending decisions that they generally make on their own. It starts us on the path to a sustainable growth, and allows the economy to grow (so that the government has more actual treasure to steal from us in the present, instead of stealing from our grandchildren).

I know that the budget is public record, and we can see where “it is all spent”. Or at least in what buckets it seems to be hidden under in the typical government accounting shell game. What my post was intended to point out is that we don’t know what is considered the least essential element of spending in the budget. What is so vital that we have to borrow so much to fund it? Apparently, since funding for public arts projects is still included, as well as PBS and NPR, those programs are absolutely as essential as everything in the Defense budget. And apparently everything in the Defense budget is as important as every other thing.

I find all of that absurd. Laughable, in fact, when I try to avoid being serious about it.

We’re running a current deficit of over a trillion and a half dollars and everything in the budget is “too essential to cut or reduce”. Nonsense.

You don’t appear to have an idea of a “workable solution”.

@tedd Very cogent analysis. Thank you.

@WasCy Insults and claims your opponent simply isn’t intelligent enough to understand you form a poor substitute for sound argument. The question was not “What will put us on a road to sound finances?” It was specifically addressed instead to false and absurd claims being made by Republicans that cutting government spending will supercharge private sector growth in the short term. It will not. It will do the opposite.

Do I have a solution that will eliminate the deficit while supercharging the economy? No. If anyone does, I am all ears.

Here is a post I wrote on Sodahead looking at the possible solutions and what are not really solutions but rather political polemics designed to distract from even addressing the real problems. I will post it here as well, so we can discuss it locally.

@ETpro, @WasCy calm down, you two. @ETpro, is it possible you misread the sentence from WasCy that you quoted in your earlier post (“What I also don’t know with certainty is that taking a trillion dollars out of government’s hands and leaving it in the hands of the people who earned it will result in “better” spending decisions.”)? In your comment, I got the impression you may have missed that “don’t”.

The groundwork has been laid for a productive and informative exchange of views here. Don’t blow it by losing your tempers.

[Digression: this month’s Atlantic has an interesting article about artificial intelligence. One of the points it raises concerns computer programs that can fool humans into thinking they’re real by insulting the humans. Insults set off exchanges in which each party simply reacts to the previous comment, losing sight of any coherent discussion of a topic. It’s relatively easy to program a computer to mimic human communication patterns in such an exchange.]

@submariner What I was taking exception to is the idea that cutting government spending of money is the same thing as “leaving it in the hands of the people who earned it…” It is not. Cutting taxes leaves money in the hands of those who earned it. But it further exacerbates the debt problem. It is the direct opposite of solving the problem, and it is how the problem got here to begin with.