Succintly Put

[Embar Angylwrath]

http://www.theatlantic.com/business/arc ... ebt/60345/

From the Atlantic... how the deficit we've run up today is much much different from the deficits we've run up in the past. A very short and very informative read. Essentially... deficits of the past were run up because of of outside forces (wars mostly), but our current spending deficit is largely due to entitlement programs. Social Security (which is doubly hit since we keep borrowing from the fund) and other social programs.

Both the left and the right have enough share of the blame. The entitlement programs must be modified or they will crater the US economy.

[Lurker]

You seem to have misunderstood the article. Not your fault; it was poorly written.

Todays deficit is almost entirely the result of "outside factors" like recession, tax cuts, and wars.



The article says, "deficits of the next few decades are scheduled to balloon because of budget decisions -- Medicare and Social Security and tax levels -- that are decades in the making". And that's true, more from Medicare than Social Security.



We have a serious long term problem that needs to be addressed. There's only one party that's taking it seriously. They passed the ACA which lowers the deficit, they have re-instituted pay-go for non-emergency spending, and they support the deficit commission. As Obama said, "next year when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step up, because I’m calling their bluff. And we’ll see how much of that -- how much of the political arguments they're making right now are real, and how much of it was just politics."

But lets not pretend that our current deficit is because of entitlements because it is not.

[Embar Angylwrath]

The whole pay-go thing is troubling for me... not in concept... but in the ever-expanding definition of what is "emergency spending". Do you disagree?

[Lurker]

I haven't seen it abused in this Congress. Can you cite an example?

[Kulaf]

Where is that 2nd graph from Lurker? I'd like to see a larger version.

[Lurker]

It was from the 2009 CBO Long-Term Budget Outlook (pdf). Don't bother with that one though, there's a newer one.

Here's the CBO Long-Term Budget Outlook from June 2010 (pdf).

[Fallakin Kuvari]

Unemployment extension would be a great example, considering they're borrowing more money to pay for that.

[Lurker]

Here's what Embar said...

The whole pay-go thing is troubling for me... not in concept... but in the ever-expanding definition of what is "emergency spending". Do you disagree?

Unemployment extension is not a great example; it's the worst example possible. Unemployment is over 9%, underemployment is over 17%, the recovery is slowing, and millions of Americans are suffering and unable to find work. If that's not an emergency then nothing is.

[Embar Angylwrath]

Here's what Embar said...

The whole pay-go thing is troubling for me... not in concept... but in the ever-expanding definition of what is "emergency spending". Do you disagree?

Unemployment extension is not a great example; it's the worst example possible. Unemployment is over 9%, underemployment is over 17%, the recovery is slowing, and millions of Americans are suffering and unable to find work. If that's not an emergency then nothing is.

Actually, its a prime example of the abuse of Pay-Go. Arguments of the necessity of the spending aside, a strong case that this is NOT emergency type spending can be made.

First, a little history on Pay-Go. It was approved in 2007 by Pelosi, with no emergency spending provision. Two years later and trillions more in debt, the 111th Congress added the emergency spending exclusion to the PayGo rules. But Congress didn't define what an emergency was. So we turn to the OMB which earlier, in 1991, developed a 5 part test to define what is and isn't an emergency for the purposes of emergency spending. From here, I'll let the editorial take over. It does a much better job of explaining this than I could.

Congress was poised today to expand U.S. debt by $34 billion more to extend jobless benefits under “emergency spending.” Since it’s now obvious Congress will not balance the books to pay for that spending, it at least owes taxpayers a clear explanation of what “emergency” means.

In January 2007, House speaker Nancy Pelosi approved pay-as-you-go (“Paygo”) budget rules requiring that discretionary spending be paid for, either through revenue or savings. “We are committed to Paygo,” Pelosi said. Two years and trillions of debt later, the rule was modified by the 111th Congress to exclude certain spending in cases of emergency.

The problem is that Congress has failed to define an emergency. Simply saying “it’s important” is inadequate because any spending may conveniently be labeled “important.” In that case deficit spending by Congress is forever justified, and Paygo and the emergency exemption are meaningless.

The Office of Management and Budget created a five-part test in 1991 to define emergency spending. To qualify as an emergency, a provision was required to be: 1, necessary; 2, sudden: 3, urgent; 4, unforeseen; and 5, not permanent. While the Gulf oil spill would meet all five criteria, extending unemployment again or Medicaid state aid would not. The jobless situation has hardly been sudden, growing for three years. States saw the risks their chronically mismanaged budgets created, and it’s unlikely that either situation will change anytime soon. The prospect of creating near-permanent “emergencies” is likely unless Congress sets some standard — Four workers per job opening? Three workers per job opening? — to define when this “emergency” is over.

Michigan citizens are hurting. We’ve long felt the state needs assistance from the economic hurricane that’s battered us for a decade. But we also believe demands on other taxpayers must either meet a standard or be paid for. Congress could save $30 billion over 10 years simply by freezing the federal pay raises it recently allowed. With a $13.2 trillion debt, and adding $4.8 billion a day, Congress should not accelerate deficit spending without showing Americans that congressmen are not in fact just breaking their own rules as they go along.

http://www.lenconnect.com/opinions/x699 ... ly-20-2010

[Lurker]

Actually, its a prime example of the abuse of Pay-Go. Arguments of the necessity of the spending aside, a strong case that this is NOT emergency type spending can be made.

We're facing an employment crisis and the recovery is in danger of collapsing. Extending unemployment benefits provides the best bang for the buck stimulus and directly aids millions of unemployed people who can't find work. You say a strong case can be made that this is not emergency spending but you neglected to make any case. I wonder why.

[Embar Angylwrath]

You're confusing the issues Lurker. As I said, whether or not you agree or disagree with the validity of the spending, and what it will do for the economy, its not "emergency" spending, based on OMB's own criteria.

The Administration doesn't see the dire straits in the economy as you do. I watched Geitner on Meet the Press this morning who said the recession is over, things are improving, the worst is behind it and there will be no double dip. So the people driving the bus don't see the imminent economic collapse you do.

Also, when the Admin extended UI benefits the first time, Obama made a big deal about how the benefits were paid for, touting Paygo and no money added to the deficit. Why then and not now?

[Lurker]

Also, when the Admin extended UI benefits the first time, Obama made a big deal about how the benefits were paid for, touting Paygo and no money added to the deficit. Why then and not now?

The extension of unemployment benefits was a minor part of the bill from November 2009, about 2.4 billion out of 40 billion. I think it's more accurate to say Obama "made a big deal" about the non-emergency portions of the bill, such as aid to home buyers and tax breaks for small businesses, being paid for.

[Embar Angylwrath]

When someone refers to 2.4 billion dollars as "minor", you get a sense that the person uttering such a statement has a detached sense of reality when it comes to fiscal responsibility.

Here's Obama's quote... a lot of hoopla was made about the UI benefits in the bill by Pelosi and other Democrats, so no, I don't think he was touting the other provisions.

Now, it’s important to note that the bill I signed will not add to our deficit. It is fully paid for, and so it is fiscally responsible

But lets say Obama was talking about the bill as a whole, not just the UI benefits. Spending $40 billion 9 months and paying for it was fiscally responsible then, but spending another $34 billion now but not paying for is still fiscally responsible? I think not. In the past, when Congress extended UI benefits, efforts were made to try to pay for or off-set the cost, at least partially. No attempt was made this time, none at all, they didn't even try. All of a sudden its an emergency now when it wasn't 9 months ago. The whole emergency spending just doesn't fly when the administratio new unemployment rates were going to be high and had time to plan for it.

The oil spill is an emergency... unforseen, immediate, unplanned. A predictable economic situation long forseen by the administration isn't. The spending may be necessary, but just because its necessary doesn't mean its an emergency. The extenstion of UI benefits based on that argument is a violation of the Paygo rules, done because it was easy just to slap on another $34 billion to the debt without even bothering to explore legitimate ways to pay for it.

Edit: I'll also note that in 2009 the fully paid for bill had broad republican suppport. 403-12 in the House and 98-0 in the Senate. And the Republicans said they'd vote for this bill too as long as it was paid for.

[Lurker]

Here's Obama's quote... a lot of hoopla was made about the UI benefits in the bill by Pelosi and other Democrats, so no, I don't think he was touting the other provisions.

That's the problem with snatching one sentence out of a speech. I know you aren't responsible and you're just passing on what you read elsewhere.

Here's what he said. He was talking about the bill as a whole.

Now, I would also like to announce that I just signed into law a bill that will help grow our economy, save and create new jobs and provide relief to struggling families and businesses. The need for such a measure was made clear by the jobs report that we received this morning. Although we lost fewer jobs than we did last month, our unemployment rate climbed to over 10 percent -- a sobering number that underscores the economic challenges that lie ahead.

When we first came into office our immediate goal was to stop the freefall that caused our economy to shrink at an alarming rate. We have succeeded in achieving that goal, as our economy grew last quarter for the first time in a year. But history tells us that job growth always lags behind economic growth, which is why we have to continue to pursue measures that will create new jobs. And I can promise you that I won't let up until the Americans who want to find work can find work and until all Americans can earn enough to raise their families and keep their businesses open.

The bill I signed today will help folks do that while continuing to grow our economy. It's a bill that extends unemployment benefits for up to 20 additional weeks, with the longest extension for the hardest-hit states. Already these benefits have helped 16 million unemployed Americans, and now that I've signed this bill, an additional 700,000 Americans who are still searching for work will be able to sign up for an extension of those benefits immediately.

Although the extension will help over 1 million Americans, it won't just put money into the people's pockets who are receiving the benefits. Economists tell us that when these benefits are spent on food or clothing or rent, it actually strengthens our economy and creates new jobs.

Now, this bill will also cut taxes for struggling businesses, with even larger cuts for small businesses, which means that thousands of entrepreneurs will get the cash they need to avoid laying off workers or closing their doors, and will extend the tax credit for all home buyers through April of next year while strengthening it with stronger anti-fraud measures.

The rebound in the housing market was one of the big factors that contributed to the growth of the economy last quarter, and brought hundreds of thousands of families into the housing market. We want to give even more families the chance to own their own home.

Now, it's important to note that the bill I signed will not add to our deficit. It is fully paid for, and so it is fiscally responsible. It builds on a Recovery Act that's already saved or created over 100 -- over 1 million jobs, and it will lead to even more in the weeks and months ahead.

Now, while I do think unemployment extension fits the definition of emergency spending, I don't disagree with your larger point and I'm not opposed to finding ways to pay for it. There were deficit neutral ways to pay for this without sacrificing the economic stimulus aspect of the aid. For example, corporate tax incentives provide almost no economic stimulus. Ditto tax breaks for the top 2% of wage earners. Or we could add a public option to the exchanges. If they had taken that path I don't think it would have gotten a single Republican vote. Republicans don't care at all about the deficit. At least the Democrats are making an effort.

[Embar Angylwrath]

You think a benefit that Congress knew exactly when it was going to expire, and knew well in advance what the unemployment rate was going to be at that time.. essentially a situation they knew was coming and could plan for, is an emergency? Really. If you have time to plan for something, that really negates the notion of emergency, don't you think? By that logic Lurker, any foreseeable, albeit difficult, budget decision becomes an "emergency"

When these benefits expire (not so coincidentally after the elections...), is it going to be another emergency then too? Are we going to continue to declare a string of "emergencies" until unemployment drops? If thats the case, why not just say unemployment over x% is an emergency, and fund it until it drops below that percentage?

I'll answer that for you... because if the Democrats did that, they'd have to fund UI well into 2012, at a cost of 100s of billions of dollars, and of course they couldn't be honest about that and lay out the true cost of this type of so-called emergency response to the unemployment situation.

And as to your snipe at the republicans, they suggested paying for it by taking the funds from the already allocated "emergency" stimulus package. Your argument has always been that UI benefits have a stimulative nature on the economy, so why not use the funds allocated for stimulus programs for this? That would have been the prudent and fiscally responsible thing to do. But the Dems would have none of that... and it was an easy and elegant solution to the issue

[Embar Angylwrath]

I'll also add that the Republican suggestion to help offset the cost of the benefits using part of the stimulus package was something that 57 Dems in the Senate previously supported just weeks before.

And hell Voinovich just wanted half of the "emergency" UI benefits paid for via the stimulus funds, not even the whole amount. He split the dfference in a bi-partisan suggestions, but again, the Dems refused, and used the issue to demagogue the Republicans.

Lets be honest here... UI benefits were slammed through with no intent by the Dems to compromise soley to buy votes in the November election, soon after which the UI benefits run out. No attempt to pay for it, and no attempt to really address the issue that is going to come again when the benefits expire. That was the real reason. The Dems just slapped over $30 billion on the backs of future Americans to try and buy the election.

[Lurker]

I don't think the recovery is as firmly established as you are making out in this thread. I think we need more stimulus spending, not less, and for that reason trading stimulus money for the benefit extension would have been a non-starter unless it was the only possible way to pass the legislation.

Question for you. Do you think the short term deficit should be our overriding concern right now?

[Embar Angylwrath]

Its not me making the statement of recovery... its the administration.

And I'll answer your question directly, and hope that you can answer mine. I don't beleive short term goals should drive spending decisions, in fact I think trying to plan/budget/spend in 6 month intervals is not planning at all, but reactionary spending, and its also exactly what the Dems are doing now. I point to the fact that they rely on emergency spending and have ignored standing law by not even trying to bring a budget up for discussion, thus abrogating one of the fundamental duties of Congress, and moreso ignoring the rule of law... do you deny this?

Now please answer my questions directly.
1. Is a financial and labor dynamic anticipated months in advance an emergency?
2. If your answer to that is yes, are we still in an emergency when these new UI benefits expire if no real progress has been made in the unemployment figures, (given that no appreciable progress in unemployment is predicted in this timeframe by this administration)?
3. If your answer to that is yes, then if planned and anticipated events in the future are captured by you as an emergency, what isn't captured by your definition as an emergency (for spending purposes outside PayGo rules)
4. Finally, if you consider high unemployment as an emergency, what logic do you see in targetting UI benefits to a timeline instead of a unemployment percentage benchmark?

I've answered your questions directly, you have dodged mine in the last few posts. I would appreciate an honest response from you, as that has been your complaint against me.

[Fallakin Kuvari]

Personally I don't think any amount of money is going to keep us from going into an economic winter.

http://en.wikipedia.org/wiki/Kondratiev_wave

[Embar Angylwrath]

Kondratieff's philosophy on economics is irrelevant today, because the global economic dynamic is light years ahead of what he postulated. Just to name a few... currency trading, debt selling by countries, changes in export/import ratios, the speed of communication, automatic trade orders... you just can't take his formulas and apply them today. Sorry Fall, but you're misguided on this point.