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Why We Should Stop Obsessing About The Federal Budget Deficit
http://robertreich.org/ ^ | November 18 2012 | Robert Reich

Posted on 11/18/2012 9:29:56 PM PST by Beowulf9

wish President Obama and the Democrats would explain to the nation that the federal budget deficit isn’t the nation’s major economic problem and deficit reduction shouldn’t be our major goal. Our problem is lack of good jobs and sufficient growth, and our goal must be to revive both.

Deficit reduction leads us in the opposite direction — away from jobs and growth. The reason the “fiscal cliff” is dangerous (and, yes, I know – it’s not really a “cliff” but more like a hill) is because it’s too much deficit reduction, too quickly. It would suck too much demand out of the economy.

(Excerpt) Read more at robertreich.org ...


TOPICS: Miscellaneous; News/Current Events
KEYWORDS: budget; deficit; federal; robertreich
But more jobs and growth will help reduce the deficit. With more jobs and faster growth, the deficit will shrink as a proportion of the overall economy. Recall the 1990s when the Clinton administration balanced the budget ahead of the schedule it had set with Congress because of faster job growth than anyone expected — bringing in more tax revenues than anyone had forecast. Europe offers the same lesson in reverse: Their deficits are ballooning because their austerity policies have caused their economies to sink.

The best way to generate jobs and growth is for the government to spend more, not less. And for taxes to stay low – or become even lower – on the middle class.

1 posted on 11/18/2012 9:30:05 PM PST by Beowulf9
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To: Beowulf9

From Clinton’s economist. Tax less, spend more. Oh boy, is THIS going to be a long 4 years.

These guys are so brilliant. /sarc


2 posted on 11/18/2012 9:35:13 PM PST by Beowulf9
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To: Beowulf9

Can’t say I’ve been following Europe closely, but is it a fair comparison? Their economies have been so dependent on government for so long, most of their countries don’t have a strong private sector left. There isn’t much left for government to get out of the way of.

Different here. Obama has just been getting started on crippling the private sector. If the private sector here got a clear signal that the government would be getting out of the way, like with a repeal of Obamacare or a big reduction in the deficit, easing fear of tax hikes in the future, then the private sector would be unleashed at full strength.


3 posted on 11/18/2012 9:38:52 PM PST by JediJones (Newt Gingrich warned us that the "King of Bain" was unelectable. Did you listen?)
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To: Beowulf9

Sounds like an alcoholic. He is starting to feel sick. Time for another drink.


4 posted on 11/18/2012 9:39:16 PM PST by hopespringseternal
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To: Beowulf9

The liberals have been saying ‘jobs and growth’ are the problem while the debt skyrockets. The problem? Jobs and growth aren’t coming while it skyrockets.


5 posted on 11/18/2012 9:41:27 PM PST by Monty22002
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To: Beowulf9

“Their deficits are ballooning because their austerity policies have caused their economies to sink.”

Is this your sentence? If so, you have zero credibility.


6 posted on 11/18/2012 9:48:07 PM PST by Flightdeck (My four children have been robbed)
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To: Beowulf9

Redistribution Communism File.


7 posted on 11/18/2012 9:48:47 PM PST by Graewoulf ((Traitor John Roberts' Obama"care" violates Sherman Anti-Trust Law, AND the U.S. Constitution.))
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To: Flightdeck

“Their deficits are ballooning because their austerity policies have caused their economies to sink.”

Is this your sentence? If so, you have zero credibility.

No, that’s all Reich’s.


8 posted on 11/18/2012 9:50:38 PM PST by Beowulf9
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To: Monty22002

” - - - The liberals have been saying ‘jobs and growth’ are - - - “ code names for “more taxes” and “more spending,” respectively.


9 posted on 11/18/2012 9:53:38 PM PST by Graewoulf ((Traitor John Roberts' Obama"care" violates Sherman Anti-Trust Law, AND the U.S. Constitution.))
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To: Beowulf9

Robert Reisssssch?


10 posted on 11/18/2012 10:04:38 PM PST by mylife (The Roar Of The Masses Could Be Farts)
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To: Beowulf9

It’s impossible - IMPOSSIBLE - for the government to create growth. The government doesn’t PRODUCE anything.

I’m not being hyperbolic. This is the defining distinction between business and government. Business CREATES. Government REGULATES.


11 posted on 11/18/2012 10:05:04 PM PST by PressurePoint
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To: Beowulf9

Missing barf alert. Then again, the source ought to be enough warning . . .


12 posted on 11/18/2012 10:06:23 PM PST by Olog-hai
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To: Beowulf9

Government spending doesn’t help the economy grow because it’s usually just wasted. Just like Obama’s programs to patch roads that didn’t need patching. It didn’t work for FDR. It won’t work now.

Government spending increases the deficit, which creates inflation as the government struggles to paper over its interest payments on its debts. Runaway inflation will create fiscal uncertainty and we’ll see prime rates back at 18%. Jimmy Carter anyone?

With the states’ and Obama’s taxing and regulatory attacks on business, the 1990’s can’t be repeated. Too many barriers.

What needs to happen is to get rid of the taxes and regulations on businesses all the way back to Clinton’s presidency. Can’t happen with Obama in office.


13 posted on 11/18/2012 10:16:05 PM PST by <1/1,000,000th%
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To: FReepers; Patriots




Tell THIS to your Congress "folks", who are supposedly "looking out for you"!


Support Free Republic.

14 posted on 11/18/2012 10:27:11 PM PST by onyx (FREE REPUBLIC IS HERE TO STAY! DONATE MONTHLY! IF YOU WANT ON SARAH PALIN''S PING LIST, LET ME KNOW)
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To: Beowulf9
(Higher taxes on the rich won’t slow the economy because the rich will keep spending anyway. After all, being rich means spending whatever you want to spend. By the same token, higher taxes won’t reduce their incentive to save and invest because they’re already doing as much saving and investing as they want. Remember: they’re taking home a near record share of the nation’s total income and have a record share of total wealth.)

Wrong.

15 posted on 11/18/2012 10:31:32 PM PST by TruthWillWin (The problem with socialism is that you eventually run out of other peoples money.)
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To: Beowulf9

So he wants to increase the deficit so that he can reduce the deficit. Probably makes perfect sense to a progresso.


16 posted on 11/18/2012 10:46:15 PM PST by justa-hairyape
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To: Beowulf9
Higher taxes on the rich won’t slow the economy because the rich will keep spending anyway. After all, being rich means spending whatever you want to spend.

completely wrong and idiotic as shown by the luxury tax fiasco of the early 1990's

17 posted on 11/18/2012 10:50:22 PM PST by BookmanTheJanitor
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To: PressurePoint
It's not a matter of definition. For me the exemplar of government entrepeneurship is the snack bar at Island Beach State Park in New Jersey, lately in the news, which I patronized back in the seveties or eighties. It was a real snack bar, with government employees and management, so it seems clear its existence was not prohibited by definition. The problem is in the disconnection between the concerns of the management and employees and the functioning of the business, which is almost complete. My memory of it is a hundred or so patrons standing around placidly, if sullenly, while the snack bar attendants processed their snack orders with a preternatural slowness. I recall the scene vividly to this day, as one that should have been buzzing with activity, but was instead a virtual tableau, in which the patrons were indeed virtual prisoners, having paid money to enter the Island at one end, then drive several miles and park their cars, and thus make themselves captives for the day. Of course, I was one of those.

They situation will be no different when we have been coralled by other means and are standing around waiting for government arranged doctor appointments.

18 posted on 11/18/2012 10:55:28 PM PST by dr_lew
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To: Beowulf9

Robert “Third” Reich....the scorched earth econodwarf of the Clinton Administration.


19 posted on 11/18/2012 10:59:57 PM PST by OrangeHoof (Our economy won't heal until one particular black man is unemployed.)
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To: dr_lew
The situation will be no different when we have been coralled by other means and are standing around waiting for government arranged doctor appointments.

DMV healthcare.

20 posted on 11/18/2012 11:01:55 PM PST by St_Thomas_Aquinas (Viva Christo Rey!)
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To: dr_lew

bump, great point


21 posted on 11/18/2012 11:04:49 PM PST by GeronL (http://asspos.blogspot.com)
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To: Beowulf9

That is he most idiotic thing I have ever read


22 posted on 11/18/2012 11:11:08 PM PST by GeronL (http://asspos.blogspot.com)
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To: Beowulf9

We are $16 trillion in debt, officially, this country must be a Garden of Eden!!


23 posted on 11/18/2012 11:11:52 PM PST by GeronL (http://asspos.blogspot.com)
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To: Graewoulf

The new math, apparently.

Can’t take much more of it.


24 posted on 11/18/2012 11:16:01 PM PST by sf4dubya (I rebelled against my parents by becoming a conservative.)
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To: Beowulf9

Reich is a total moron. There’s no help for him.


25 posted on 11/18/2012 11:35:42 PM PST by GoodDay
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To: Beowulf9
This is for the old timers who remember the Rush Limbaugh TV show:

For you young'uns who don't get it, here's a clip from his TV show: https://www.youtube.com/watch?v=t1iSjl3ukro

26 posted on 11/19/2012 3:08:11 AM PST by Yo-Yo (Is the /sarc tag really necessary?)
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To: Beowulf9
Someone tell the marxist midget that obama’s plan to tax us individuals and businesses out of an additional %1.6 TRILLION of our income is SURE to create demand, growth and jobs. It just takes a little bit more of our “extra money”
out of our hands- and the economy is in recovery now anyway!

So what can go wrong?

sarc

27 posted on 11/19/2012 3:17:35 AM PST by silverleaf (Age Takes a Toll: Please Have Exact Change)
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To: Beowulf9

The best way to generate jobs is to reign in the trial lawyers, fire most of the regulators, and stop importing most of our consumer goods.


28 posted on 11/19/2012 3:47:31 AM PST by freedomfiter2 (Brutal acts of commission and yawning acts of omission both strengthen the hand of the devil.)
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To: Beowulf9

Next: Why Households Should Stop Obsessing About Their Budget Deficits. (Why Spending More Than You Can Afford is Good).


29 posted on 11/19/2012 3:57:21 AM PST by windsorknot
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To: Beowulf9
The best way the economy to grow is for Gov't to spend far, far less and let the people keep their own money.

In reality, there is no government deficit, since the bills are paid, the only question is HOW does the Gov't pay for it.

All gov't spending is a drain on the economy,not a plus.

30 posted on 11/19/2012 4:13:51 AM PST by fortheDeclaration (Pr 14:34 Righteousness exalteth a nation:but sin is a reproach to any people)
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To: Beowulf9

Yes, the Government has done a bang-up job of creating jobs through tax-and-spend over the past four years, hasn’t it?

Are you serious, or are you trolling?


31 posted on 11/19/2012 4:29:11 AM PST by dinodino
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To: Beowulf9

Oh, sorry, I thought *you* were saying that idiotic stuff. Maybe you should have put it in quotes.


32 posted on 11/19/2012 4:30:06 AM PST by dinodino
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To: Beowulf9

$16 Trillion just isn’t enough. If only we owed $20 Trillion this country would be paradise on earth.


33 posted on 11/19/2012 4:56:56 AM PST by csmusaret (I will give Obama credit for one thing- he is living proof that familiarity breeds contempt.)
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To: Beowulf9
Stop Obsessing? Really?
Would the liberals stop obsessing about it if a Republican was president?

34 posted on 11/19/2012 5:29:51 AM PST by BitWielder1 (Corporate Profits are better than Government Waste)
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To: Beowulf9

“It would suck too much demand out of the economy.”

Suck the $ from socialists - big birds and little turds like Reich. The economy thrives. DEFUND socialist collectives, foreign and domestic.

Socialism Is Legal Plunder - Bastiat

Socialism put us in this hole...

http://www.usdebtclock.org/

Stop the clock. DEFUND. Prepare. Persevere.

live - free - republic


35 posted on 11/19/2012 5:38:38 AM PST by PGalt
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To: Beowulf9
Ah yes, the old "if we just keep taking water from one end of the pool and dumping it in the other end..." school of economic thought.

Utter lunacy. We cannot "grow" our way out of this much debt. Not by keeping taxes/regulations high that prevent market expansion and wipe out profits via arbitrary mandates.

Reduce the size and scope of the FedGov by 80%... The economy will explode like nothing we've ever seen to date.

36 posted on 11/19/2012 5:48:28 AM PST by Dead Corpse (I will not comply.)
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To: fortheDeclaration

“All gov’t spending is a drain on the economy,not a plus.”

Only private sector workers actually raises money for the govt. Govt workers do not. Here is the analogy I use to explain this to my lib aquaintances. Your family needs more income so you hire your son to mow your lawn for $500 dollars a week. In return he will give you $200 a week as “a family tax”. Are you making any money on this deal? Obviously not. Reich would say that this has created a job and is increasing the family’s income by $200 a week. In reality, to get that $200 a week you have to pay $500/week. This is essentially what happens with all govt employees. You cant tax them enough to make a profit.


37 posted on 11/19/2012 5:55:28 AM PST by Brooklyn Attitude (Obama being re-elected is the political equivalent of OJ being found not guilty.)
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To: Beowulf9
Recall the 1990s when the Clinton administration balanced the budget ahead of the schedule it had set with Congress because of faster job growth than anyone expected — bringing in more tax revenues than anyone had forecast.
Arrrrrrgh!!!. I can't take these STOO-PID democrat morons and their "Clinton Growth" meme any longer! Every single one of these JERKS seems to be forgetting about a certain thing that happened during the 90s that created that 'growth' and tax revenue.
The Internet, Personal Computers and Software!
That was it in a nutshell. THAT is where that "Clinton Growth" came from, nowhere else. And every industry and company that started using all that new fangled stuff created the Wealth and Tax Money that filled Fedzilla's coffers during said "Tech Boom" (scores of Millionaires were created overnight).

So all this 'let's return to the Clinton Tax Rates because they worked' is utter bullsh__. Unless there's some new Bill Gates, Steve Jobs or Michael Dell hiding in some weeds somewhere just waiting to create a whole new industry -- and a new way of living -- a growth like we all saw when Billy-Jeff was POTUS will never happen again. Period, end.

an aside: But Billy-Jeff, being the vindictive pr**k he is, couldn't leave any of that success for Dubya to also capitalize on, hell no. So what'd he do? ... sic the DOJ on Microsoft. Then the 'Tech Boom' went 'Bust', NASDAQ crashed, and Dubya took office with the start of a recession on his hands!

38 posted on 11/19/2012 6:27:21 AM PST by Condor51 (Si vis pacem, para bellum.)
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To: Beowulf9; PieterCasparzen; All

Benghazi-Coward Obama: ” - - - “I don’t think anybody is under any illusion that - - - “
..My Oval Empty Chair is empty again.
...I always run away whenever there is a major problem that Americans expect me to work on.
....My invention of the smoke and mirrors ‘Fiscal Cliff’ was just a gimmick to extract a Bipartisan Cave-In from the RINOs, so that I can keep on spending beyond the means of their ability to generate Federal Income.
.....I really, Really, REALLY enjoy riding around in my private Corporate Jet.
......Running away from problems is the ONLY way that I am able to keep from laughing out loud in public at how much fun I’m having destroying America!
.......This is so EASY!
........Americans are the most gullible people that the World has ever known!
.........Although all folks are not equal today, my Obamanation Communism policies in the next four years will exceed the wildest dreams of me or my Father, whoever he really was.
..........At last! America will FINALLY become a Third World Country!

_________

LONG LIVE THE TRUE EQUALITY THAT ONLY COMES FROM OBAMANATION COMMUNISM!


39 posted on 11/19/2012 7:39:35 AM PST by Graewoulf ((Traitor John Roberts' Obama"care" violates Sherman Anti-Trust Law, AND the U.S. Constitution.))
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To: Condor51

Exactly right.

This little story is for anyone not familiar with the software industry.

I was working with this software during the 90’s.

www.peoplesoft.com

They had competitors: SAP, Oracle enterprise software, to a lesser extent JD Edwards.

In the 1980’s, corporate backoffice software ran on mainframes or mid-range computers.

Unix servers were starting to be thought of as an alternative in the late 80’s, but one needed to run a SQL database to store data in, since they did not have a built-in indexed, or even record-oriented file system (files are like PC files, simply a stream of bytes).

Also, PCs were becoming commonplace and had software users preferred - PC’s now had color screens and M$ operating systems were slowly getting to the point of enablingi users to run multiple programs at once. By the early 90’s, the mouse had been invented and PCs were graphical.

A new paradigm was envisioned in the late 80’s, client-server, where the presentation code of software would run on a PC and the data storage was run on a server; application logic could run on either. In mainframe and mid-range, the user was using a terminal, or PC terminal emulator software, which gave them only a login session on the big computer: every user’s entire session, presentation, application logic and data storage, was running on the big computer.

Internal IT departments and software companies were hesitent to take on the job of porting (rewriting for a new platform) their old software so it’s data would be stored in SQL databases instead of the “legacy” mainframe and mid-range file systems. It would involve risk, since the logic had to be separated into 2 or 3 layers (presentation, application, storage) thus it was not a straightforward rewrite.

In steps the entrepreneur. PeopleSoft wrote their own toolset that was client-server in the early 90’s, then wrote software applictions using their toolset. They advertised that their software used date fields with 4 digits for the year and their code was designed to work with that format, so the changeover from 1999 to 2000 would not be a problem. SAP, Oracle, JDE and other smaller firms jumped into the fray. Tons of old software used only the last 2 digits of the year (MMDDYY instead of MMDDYYYY), making it set up to fail any time it compared two dates in different centuries (it would always think dates 2000 and beyond CAME BEFORE dates prior to 2000).

All these new software applications stored their data in SQL databases.

So buying new applications fixed ALL problems. Even then, IT shops were afraid to take on the risk of all these new technologies.

The entrepreneurs mostly had a great plan for this: instead of sending out their own staff to install and configure the software applications, they would start a “gold rush” by HANDING that work to just about anyone who started a consulting firm. They realized a) they could not hire these “implementation” guys fast enough and it would restrain their ability to grow sales of their software, but more importantly - b) the outside consulting firms would be hired by companies to help them decide which company’s software to buy. They designed their software implementation process to be a big project that would take 6 months to even several years for large multi-phase projects. This represented a lot of potential consulting sales - so consultants would HELP THEM SELL as well, often steering clients to the packages most costly to implement.

By the mid-90’s, basically every company discovered that it was going to have a Y2K problem.

Basically, every company in the world was in a race against time to get their essential software replaced with these new packages - and since hitting Y2K unprepared would destroy their record-keeping and ability to do business, this was an emergency which justified just about any expense to fix.

Every company in the world was buying new software, hiring consultants, trainers (all users needed training). All the server part of software would have to run a a new server - and not just one - but typically at least three, one for development, one for testing, one for production. Large projects would buy dozens of new servers for this new software.

Not to mention - every company in the 1990s was figuring out that that they needed a website. Again, it was a new subject they knew nothing about - all this work went to consultants, and ran on -— all new server machines.

IT labor was in such short supply that wages rose so fast that it was typical that a IT employee’s earnings would double or triple in a few years as they changed jobs. People working in non-computer fields rushed into the IT job market, quickly learning a skill and getting hired in an IT job. And still the labor supply was incredibly tight for IT and IT salaries remained high.

The economy was boosted even more by all the other effects this technology boom; the networking industry (H/W and consulting) needed for the internet, IPOs, the stock market, travel & entertainment for consultants on the company dime, real estate market and every other thing consumers buy for newly high-income people, etc., etc.

It was an upward spiral that the government, the Fed and most of Wall Street did not understand and still don’t.

I remember talking with another consultant in the fall of 1999, laughing, agreeing, one needed to be “all cash” in about February 2000.

Software implementation contracts started ending in droves; it took several years for a new normal to be established that had much lower software and consulting sales.

None of this was orchestrated by Washington DC. In fact, in the slow times after 2000, software companies targeted governments and made versions of their software tailored to the government, who bought it to get in on the coolness of the new technology. Higher Ed is more fertile ground where the sell new implementations these days. (The initial implementation is the big sale, after that, the consultants and software companies don’t make as much off the client).

FANNIE and FREDDIE had big hip, cool software implementations going on while they were collapsing. Completely bogus.


40 posted on 11/19/2012 8:50:35 AM PST by PieterCasparzen (We have to fix things ourselves.)
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To: Brooklyn Attitude

Very true. All government workers are paying their taxes with the money of those who produce who paid taxes and hence, their salary.


41 posted on 11/21/2012 3:16:08 AM PST by fortheDeclaration (Pr 14:34 Righteousness exalteth a nation:but sin is a reproach to any people)
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