Why do people care more about the U.S. debt than about unemployment?
Asked by
Qingu (
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)
August 4th, 2011
Republicans have said that our debt is so important that, in the words of the GOP minority leader, it’s worth using the threat of default as a “hostage” in order to force us to cut spending.
Now, the markets have plunged—in large part because of the Euro crisis, but also because, according to Bank of America’s national economist, “The whole debate over the debt ceiling sent four negative messages to the markets: That we have a big debt problem, that we can’t fix it because we have a dysfunctional political system, that it’s okay to use the threat of default to achieve political ends, and that there’s no safety net if the economy goes into recession because we’re not going to have any more fiscal stimulus.”
How didn’t the markets respond? They didn’t appear to worry about our debt crisis. Panicked investors flooded into cash and treasury bonds.
We obviously have a debt problem. But what do you think is the nature of this problem? What specific harm do you think it will cause, when, and why? And is it worth spending money in the short term to fight unemployment and strengthen economic growth even if it adds to the deficit?
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28 Answers
There’s only so much that you can worry about at one time.
People care more about jobs.
“The markets” are the few, the top 2%, who are enjoying their lowest taxes in decades.
If the GOP cared about the debt and deficit, they would agree to roll back federal income taxes to pre-2003 levels.
But Republicans have very publicly stated that sinking Obama is job #1. High unemployment serves their purpose.
Hyperbole means more than reality, bread-and-circuses trumps bread on the table, and the recent show in DC has been quite effective in doing the whole “smoke and mirrors” thing to distract us from the real problems.
@jerv, it’s also made our real problems worse, by helping to spark a stock market crash.
I also wouldn’t put the blame for the show on “DC” in general.
Problem is, we simply cannot add more to the deficit. And we have already tried your way, @Qingu, with the “stimulus” in 2009.
Our debt comes from Medicare Part D, and two wars; I (as a conservative) cannot dispute this.
I would say to end Part D, reforming our government programs likes raising the retirement age (in 10–15 years), reforming the tax code, and create jobs. That is how we get out of this.
This will require tough decisions, so we are screwed.
Our debt comes from Medicare Part D, and two wars
Plus the Bush tax cuts
The securities markets are much more concerned about jobs and growing the economy than they are about debt. Their biggest fear was a default, not budget cuts or tax rates. The only ones freaked out about the debt are the Republicans.
@cletrans2col We can so maintain services and spending. The private sector has created a few million jobs in the last two years; the problem is the public sector has cut millions of teachers, fireman, and policemen across the country. Let the feds fund just teachers, firemen, and policemen to 2008 levels and unemployment would drop 1% right away. And that will grow tax revenues and stimulate the economy and eat at the deficit.
Medicare happens to be the most efficient medical plan in the country, more efficient than for profit health insurers. Social Security is well funded to 2047, and then will not be broke but run at a deficit for another 40 years after that.
Who do you refer to when you use the word “people?” The voters on the right worry about the deficit because their representatives told them to. The commands are going the wrong direction but they need that direction because they’re just dumb….and also probably working so they don’t care about jobs so much until theirs is gone.
@cletrans2col, why do you think raising the retirement age will create jobs? There are no jobs for 65 and 66 year olds now. And adding them to the labor market will make it harder for other people to get jobs.
What tax code reforms will create jobs, and why?
@woodcutter conserative=dumb Wow, that hasn’t been said before.
@Qingu I was answering the last part of your OP.
@cletrans2col Oh the conservatives thing, well it’s been implied by some tippy toers but I just come right out and say it—of course it is only a generalization. Liberals are equally as dumb. What is it they have in common? They all feed off each others rants until they’re just about positive what they are told to believe is true. gasp!
These two are actually tied together.
Think about it.
@Qingu You are late for the early show trying to pin the drop yesterday on the debt ceiling crisis as that is way old stale news. The market is merely responding to the European debt crisis and the very much expected terrible jobs report for July at 8:30 this morning. The stock market reacts to current news or anticipated news not old news like the debt ceiling debate. Even your links clearly tell why the market is going haywire…
1 “Markets plummet on global economic fears”
2 “acting on their fears about the weak global economic outlook”
If you were paying attention you might have noticed that the market stayed steady through the whole debt ceiling debate….why? Because the investment community knew that even the most stubborn of political hacks would not stand in front of a fast moving train like a default.
Yesterdays move is all about the bad news coming in 2 hours. You can read up on this here
“All three major averages tumbled into negative territory for the year as investors were rattled over an intensifying global economic slowdown and ahead of the widely-followed monthly unemployment report.”
@Cruiser, the market was not reacting to the jobs report this morning. The market crashed yesterday afternoon. And the jobs report was not “terrible,” it was “barely adequate” and actually appears to have temporarily buoyed the markets.
And I quoted the chief economist at Bank of America who is presumably paid to understand such things. And the debt ceiling debacle was not old news. I would agree that fears about Europe and about our stagnant economy were probably the main reasons, but the fact that the debate dragged on as it did and very nearly led to default certainly did not help matters.
Did the markets “know” that politicians wouldn’t actually risk default? I think for a long time they did think this. I thought it. I assumed that the Republicans’ wall street masters would never let them actually default. But the most frightening thing about the entire debt ceiling debate was that a huge chunk of Republicans, including several presidential candidates, actually expressed willingness to default. The reason the debt ceiling debate was so scary was because these people were both ignorant and intractable in their convictions. It rattled all of the politicians involved, including establishment Repubs like Boehner; I don’t see how it wouldn’t also rattle the markets.
At the very least, it was certainly irresponsible to have this stupid debate right now at a moment of weakness and I wish Obama invoked obscure constitutional powers to bypass Republican obstructionism (whether by simply declaring that our debt will not be questioned or by printing $2 trillion in platinum coins) instead of allowing the miserable spectacle to happen.
@john65pennington, I’m thinking about it. Please explain how cutting spending to reduce our debt will help unemployment. Because it hasn’t, at all, anywhere it’s been tried.
I wonder if maybe we just don’t have a good perspective. If I’m reading the DJIA chart correctly, we’re at a solid order of magnitude higher than we were 24 years ago.
@Qingu At the very least, it was certainly irresponsible to have this stupid debate right now at a moment of weakness
Here’s a quote that summarizes how I feel about the debate:
“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure…...Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership . Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.”
It didn’t come from evil hatemongers like Jim DeMint or Bachmann. It came from Barack Obama.
Not sure what your point is. I also opposed the buildup of debt during the Bush administration because the programs that added to the debt were irresponsible (Medicare Part D and the tax cuts) or morally indefensible (the invasion and occupation of Iraq).
However, there are cases where deficit-spending is necessary to fight a greater problem, such as a tailspinning financial system or an economy with unemployment. Do you think fighting unemployment is greater or lesser priority right now than paying down our debt?
@Qingu Nothing irresponsible about giving Americans more of their money back except when cuts and reforms are not included.
I feel that both are important and solving one usually leads to the other. We’ve tried the way that you and @zenvelo support. Barack Hussein Obama promised 3.4 million jobs would be created, then 2 million jobs, then 1.5 million jobs saved and created. The stimulus failed. Instead of spending money we do not have in the name of “stimulus” find other ways to get long-term unemployed off the rolls, like increasing incentives to get businesses to hire these people.
@cletrans2col, businesses have the lowest taxes they’ve ever had. Are you seriously suggesting there are “incentives” out there that can create millions of jobs needed to fill the hole left by the recession?
Do you understand that the reason businesses are not hiring is almost entirely because there is no consumer demand for their products? (Because consumers in a recession tend to be poor or unemployed)
And weren’t you just whining about the deficit in another thread? Because the Bush tax cuts are the single biggest contributor to our deficit. Hence the word “irresponsible.” Considering they mostly affected the wealthiest Americans who need no help whatsoever, I’d also call them immoral.
@Qingu Such are the flaws of supply-side economics. And what do Conservatives want? To take the policies that put us in the position we are in, give them steroids, and cut assistance to the poor/unemployed because we are holding back the economy and taking money from the people who already have 90% of the money.
Of course, they will never admit that, though I have yet to figure out whether it’s because their rhetoric trumps math skills, because they lack common sense, or merely because they are too egotistical to admit that they could ever possibly be wrong. But the most likely reason in my mind is simply that it pisses the Democrats off, and they are willing to let our country burn s they can spite the Dems.
@Qingu the only whining done in other threads was done by someone that was so angry the TP wouldn’t raise taxes or support some stupid stimulus they asked if TP congressmembers should be charged with treason.
@cletrans2col don’t dodge my point. Weren’t you upset about the deficit? Then why are you sitting there supporting the Bush tax cuts, the greatest addition to our deficit by far? Explain your inconsistency.
@Qingu Because they were not the greatest reason for the deficit. Medicare Part D, two wars, were the main culprits. As a liberal, I understand you enjoy bashing the tax cuts, but that is not the reason for the deficit.
Your question is answered in Economics 101
@Qingu So it sounds like you want to raise taxes just because, and for no other reason than to “stick it” to someone.
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