Debt

Even in Impeachment-Crazed D.C., It's Always a Good Time To Borrow and Spend!

Donald Trump, Democrats, and Republicans agree on trillion-dollar deficits for as far as the eye can see.

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Even in the midst of a divisive and angry impeachment proceeding, Republicans and Democrats somehow find a way to make common cause when it comes to spending and borrowing more and more money. The Washington Post reports that "top congressional negotiators said Thursday they had reached a deal in principle to approve $1.3 trillion in federal spending for 2020, likely averting a government shutdown next week." This is the bipartisanship that so many high-minded politicos and journalists call for, and it's killing our economic future (more on that in a moment).

The House of Representatives, controlled by the Democrats, just passed a "progressive" defense spending bill that totals $738 billion, or "$120 billion more than what President Obama left us with," in the words of Rep. Ro Khanna (D–Calif.). Is America under $120 billion more military threats since January 2017? Of course not, but why live in reality when make-believe is so much more fun? The bill is considered progressive only because it includes "paid parental leave for federal workers," a long-sought goal of liberal Democrats and, not unimportantly, President Trump, who is urging "don't delay this anymore! I will sign this historic defense legislation immediately!" Next week, the Republican-controlled Senate is expected to pass similar legislation that includes the family leave plan along with money to establish Trump's new Space Force and "the largest pay increase for uniformed service members in 10 years."

So, despite impeachment proceedings and other disagreements, Congress and the president are pulling in the same direction and digging deep into the pockets and couch cushions of current and future taxpayers. Such bipartisanship doesn't come cheap, of course. The deficit for fiscal 2019, which ended in September, was $984 billion. Total outlays clocked in at $4.447 trillion, with revenues reaching $3.462 trillion, both record amounts. For the first two months of fiscal 2020, deficits came in at $342 billion, a 12 percent increase over the same period in a previous year despite revenues climbing by 3 percent. Like GM before it was bailed out, America is losing money despite bringing in more cash than ever before.

The Congressional Budget Office (CBO) is now projecting annual deficits in excess of $1 trillion in each of the next 10 years:

Just a few years ago, such a scenario seemed unimaginable, at least rhetorically. Even while Democrats were often identified as the party of out-of-control deficit spending (fact check: both parties are terrible on this score), they at least paid lip service to the need to rein in the national debt. During its 2008 national convention, for instance, virtually every major figure in the party inveighed against "dangerous fiscal irresponsibility" (to quote Sen. Evan Bayh of Indiana). The party's official platform promised:

We will maintain fiscal responsibility, so that we do not mortgage our children's future on a mountain of debt.

Barack Obama even openly campaigned on a "net spending cut":

"What I've done throughout this campaign is to propose a net spending cut," Obama said in his final pre-election debate with McCain [in 2008]. "I have been a strong proponent of pay as you go. Every dollar [in spending] that I've proposed, I've proposed an additional cut so that it matches."

Of course, once Obama and the Democrats took power, they stopped talking about fiscal responsibility and all that. The Republicans took up the slack and constantly criticized deficit spending, right up until the moment they regained control of the purse strings.

For most of the 21st century, one of the two major parties could be counted on to mount at least a half-hearted attack on profligate spending. The critics of deficit spending would also explain why constantly spending more than you take in is a bad idea. The short version is that persistent high levels of government debt reduce long-term economic growth. Consider:

In a 2012 paper, economists Carmen Reinhart and Kenneth Rogoff define a "debt overhang" as a situation in which the debt-to-GDP ratio exceeds 90 percent for five or more consecutive years. After looking at 26 debt overhangs in 22 advanced economies since 1800, they conclude that "on average, debt levels above 90 percent are associated with growth that is 1.2 percent lower than in other periods (2.3 percent versus 3.5 percent)." These overhangs last a long time—in their sample, the average lasted 23 years—creating a cumulative loss in economic growth that's "nearly a quarter below that predicted by the trend in lower-debt periods."

That work has been validated by left-wing economists associated with the University of Massachusetts, who were critiquing an earlier version of Rinehart and Rogoff's work that had mistakenly found that debt overhangs reduced growth below zero. The critics conclude that "the average real GDP growth rate for countries carrying a public-debt-to-GDP ratio of over 90 percent is actually 2.2 percent."

We crossed that Rubicon back in 2010, folks. The only difference is that these days, nobody seems to care anymore. You don't have to believe there's something magical about a 90 percent threshold to grok the idea that unpayable government debt has a negative effect on growth. The people who comprise markets recognize that a day of reckoning will eventually come and government will do some combination of raising taxes, reducing services, or inflating currency. None of those outcomes, and especially the unpredictability they promise, is good for economic growth. Which helps explain why the CBO predicts that average annual growth between 2019 and 2029 will be 1.9 percent. That figure compares to 3.2 percent average annual growth between 1950 and 2018.

But weak growth isn't everything, right? Before we enter a decade of sluggish economic activity, let's at least feel good for a few days that Republicans and Democrats can pull together to spend money we don't have on programs that we don't need.

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  1. You get all worked up about it as if any of those numbers actually mean anything.

  2. I’ve heard there’s little worse than a government shutdown.

    1. I have: Government not shutting down.

      1. There isn’t one word in the linked article saying shutdowns are bad.

        1. Sub headline dumbass. Shutdown and then poll numbers sink. She is saying shutting down the government is bad.

          What is with you and Jeff both fucking unable to read.

          1. She’s saying it would be bad for Trump’s polling numbers. Worse than not being able to read is not being able to think.

            1. Fuck off jeff.

            2. “Mike Laursen
              December.12.2019 at 8:16 pm
              There isn’t one word in the linked article saying shutdowns are bad.”

              Ok

              “Mike Laursen
              December.12.2019 at 10:39 pm
              She’s saying it would be bad”

              So were you just wrong or lying?

              Oh it’s you, so lying.

              I love that you irrefutably prove yourself a liar. It makes things easy.

              1. JesseAz was paltering, again. In this case, misleading by saying that Shika said shutdowns are bad, when she really said they would be bad for Trump’s popularity. Those are two very different claims.

                So, JesseAz’s paltering and lying, not mine.

            3. Sub headlines don’t mean anything. Who did she quote? That means everything. Unless the quotes someone. Then she means nothing. So eat Trumps balls. You can’t can you? Pathetic wanna eat Trump balls loser.

      1. He mentions that a shutdown will affect Federal workers and expresses no opinion about whether that is good or bad.

        1. Why shit you’re tiring. Why mention something if it isnt bad in an article about the effects of a shutdown. He doesnt say it as a good thing. Contrast it to the Seyton or Stossel articles. My god “neutral” mike, are you capable of even semi intelligent thought?

          1. You don’t understand neutrality or neutral analysis.

            1. Lolol what a stupid fucking retort.

            2. “neutrality or neutral analysis”

              Seriously Jeff?

          2. Why mention something if it isnt bad in an article about the effects of a shutdown.

            Maybe to present the item as an information item without injecting opinion into it? You know, the kind of reporting that people around here seem to want?

            1. Suck Tony’s bloody asshole mike.

            2. We aren’t the same person. And my love for Jeff proves it. Don’t be jealous of our love.

              1. I guess this would be an effective insult if we were in 7th grade and I were homophobic.

            3. They don’t really want it. For some reason, they proudly slap each other on the backs, congratulating themselves on spending huge amounts of the precious minutes of their lives hanging out at a website they don’t like.

              That’s a pathetic thing to brag about. Especially for Tulpa, since all he does is troll. He’s proud that he is spending his life trolling.

    2. At least Stossel and Seyton were pro shutdown.

    3. The fear is we may realize how much of it we don’t notice is shut down.

  3. “Is America under $120 billion more military threats since January 2017? Of course not, . . . ”

    On the other hand, it now has to pay for surgeries and maintenance medications for those who don’t understand basic biology. Gender reassignment is not cheap. The green fuels forced on the Navy are considerably more expensive than good old fuel oil. Etc.

    1. The green fuels forced on the Navy are considerably more expensive than good old fuel oil.

      Fortunately no one in DC is even remotely questioning the Navy’s global mission of preserving fossil fuel production and shipping from threats (or perceived threats) to it. Lord knows that doesn’t cost anything or require expenditures of good old fuel oil.

      Maybe you R’s can make the case for coal again. Get rid of all those multiculti PC ships and bring back the Make America Great Again Great White Fleet.

    2. If you’re so concerned about military spending, why not advocate for cutting the military in half?

      Our military is as strong as the next seven nations COMBINED. I think we’d be alright if it was as strong as the next 3.5 nations combined. After all, at the beginning of WWll our nation ranked 19th among the world’s militaries, after Portugal. In just four short years we were the world’s most powerful military. I we could expand massively if really needing starting off at the next 3.5 nations combined.

  4. It’s always a good time to borrow and spend!
    After all, its not the politician’s money they’re borrowing or spending.

  5. It’s only numbers printed on paper.

    1. Just like your mortgage. Doesn’t matter!

  6. This is the bipartisanship that so many high-minded politicos and journalists call for

    Stupid *and* evil!

  7. Donald Trump, Democrats, and Republicans agree on trillion-dollar deficits for as far as the eye can see.

    So why are Democrats and Paul Krugman so unhappy?

    1. Krugman is unhappy because his prediction of a global recession with no end in sight actually underestimated the damage Drumpf would do to the economy.

  8. Are we sure Trump isn’t a Democrat?

    1. Would that make him good?

    2. Of course Drumpf isn’t a Democrat. Democrats don’t put kids in cages.

      #IMissObama

      1. Nice one

    3. He’s been a democrat for far longer than a republican.

  9. The critics of deficit spending would also explain why constantly spending more than you take in is a bad idea. The short version is that persistent high levels of government debt reduce long-term economic growth.

    The shorter version is “Just try this yourself.”

  10. Hot off the presses, it looks like we’ll have a trade deal with China tomorrow morning.

    President Trump is expected to sign off on a limited agreement aimed at ending the trade war with China that would prevent new tariffs planned for Sunday and roll back some existing tariffs, according to a person familiar with the matter.

    Mr. Trump met top economic and trade advisers on the agreement for an hour Thursday, and senior administration officials were making calls to tout the outlines of an agreement that they hope to confirm with Beijing as early as Friday, the person said.

    A spokesman for the Chinese embassy didn’t immediately respond to a request for comment.

    https://www.wsj.com/articles/trump-says-u-s-is-very-close-to-a-big-deal-with-china-on-trade-11576162614?
    “President Trump to Sign Off on Limited Trade Deal With China”

    12/12/19 two seconds ago.

    1. Early indications were that the phase one deal includes Trump slashing present tariffs on Chinese goods by half.

      China will agree to a mechanism to enforce intellectual property rights, and if they violate the agreement, there’s a snapback provision that puts all the slashed tariffs back in place.

      They Chinese also buying a shitload of soybeans–’cause it’s an election year.

      1. Wait! Isn’t that foreign interference with US elections?

      2. Boehm said we couldnt change Chinas behavior with tariffs. Boehm is never wrong.


      3. China will agree to a mechanism to enforce intellectual property rights, and if they violate the agreement, there’s a snapback provision that puts all the slashed tariffs back in place.

        Which will, I predict, be ignored by the Chinese and our government as soon as Trump isn’t in office.

        I don’t think there’s anything that will cause the Chinese to stop violating intellectual property ownership. They just don’t believe in it.

        1. We don’t have the details yet, but if nothing else, it adds leverage we didn’t have before.

          If China doesn’t want to suffer the negative consequences of U.S. tariffs they can choose not to brazenly coerce intellectual property out of U.S. companies as a condition of access to the Chinese market for fear that some future president might trigger the snapback.

          Having more leverage to get better treatment than we would otherwise is better even if it doesn’t completely eliminated the problem or the threat of the problem. I don’t propose that this provision is worth whatever we lost because of the trade war, but having it in the future is better than not having it.

          Just as a reminder, I opposed Trump’s trade war with China from the moment it started, I opposed it the whole time it was going, and if it ends tomorrow, I’ll think that we should never do that again. That being said, if Trump’s trade war has some honest benefits, then reasonable and honest people can acknowledge those benefits and still oppose Trump’s trade war at the same time anyway.

          There was no way Trump could have known he would win when he was gambling with our economy, and the fact that he won is no reason to pretend that gambling with our economy is a smart thing to do in the future. That being said, if it ends tomorrow, I’ll be glad it’s over, and if there are real benefits, I’ll be glad we have them.

          Doesn’t mean I have to start pretending that trade wars are a smart thing to do. People win big in Las Vegas every day. Doesn’t mean that’s the smart thing to do with your life savings–even if someone gets lucky sometimes.

          Meanwhile, there is good reason to believe that if Trump doesn’t get rid of those tariffs, no one from the Democratic Party will either. Has anyone heard the leading Democratic candidates for president criticize Trump because he initiated a trade war with China?

          1. I don’t think we should do the deal at this time.

    2. WSJ: China Offers No Confirmation on U.S. Trade Deal

      https://www.wsj.com/articles/china-offers-no-confirmation-on-u-s-trade-deal-11576234325

      Sounds like China will hold a press conference in about 15 minutes: “… in China, the State Council’s Information Office put out a notice about a press conference scheduled at 9:30 a.m. EST, in which senior Chinese officials are expected to discuss progress with the U.S.-China trade negotiations.”

      1. The press conference has been delayed by 30 minutes. Is it now going to be exactly the same time as the impeachment vote in the House?

        1. Oh, it’s just the Judiciary Committee vote.

  11. Personally, since the world is going to end soon, I am buying as much on credit as I possibly can. Good strategy for the country, too!

    1. You can’t take it with you.

    2. Vegas, baby!

  12. “Just a few years ago, such a scenario seemed unimaginable, at least rhetorically. ”

    Except for those who actually looked at entitlement growth and stated this exact scenario would occur by 2020. Even the CBO stated it would in 2014.

    1. Indeed. It’s amazing that anyone can say with a straight face that this wasn’t written clearly on the wall for decades.

      You know they are super serious about reform when they keep talking about the military as if it’s the lions share of Federal spending when it simply isn’t.

      Sure, you can cut the military budget to the bone but we’d still go broke so it’s a silly argument from the get-go.

      And while Trump and Republicans don’t really cut spending, Democrats want to vastly increase it to nearly 100% of all spending. Hardly a choice, but what choice there is seems clear.

  13. Reagan proved that deficits don’t matter like 40 fucking years ago. That’s right. The Gipper. Same guy that brought the Russkies to their knees. You can say what you want about Trump and the congress but I’m not going to sit silently and let you bad mouth the Gipper.

    1. That 800 ship navy isn’t going to pay for itself!

  14. I’m getting a recommend video ad.

    The place to be – Kenya
    And it’s showing Obama.
    Some funny shit.

    Disclaimer – I don’t think Obama was born there.

    1. Of course not silly, he was born in Manchuria. Don’t you know anything?

      1. In fact, he and Trump are the same person. He went to the same plastic surgeon as Michael Jackson.

        1. Schumon

  15. Looks like Brexit is a go.

    Boris Johnson’s conservatives will have 86 more seats than all the other parties combined!

    I’ve argued here before that the Trump revolution, Le Pen victory, Brexit, German populists, and Italian populists didn’t emerge around 2016 for completely unrelated reasons. The developed world experiences the same technological, cultural, and social changes at about the same time, and the populism of the last four years is no exception*.

    With Boris Johnson winning handily, the Democrats might want to keep that in mind going into 2020.

    *The exception is Canada, which often seems to be striving to be whatever the United States isn’t.

    1. It will be interesting to see if Britain goes crazier or saner once they aren’t part of the European Union any more.

      On one hand, the British seem to put out a lot of batshit crazy laws lately. On the other hand, its just as likely that with their style government the average British person doesn’t actually like those laws.

      1. Labour got beat so bad, and the Scottish National Party did so well. They’re basically a subset of Labour! Now they make up almost a quarter of Labour’s coalition.

        The people of what we used to call England and Wales, even a lot of districts that traditionally go Labour, voted for Johnson’s Conservatives as a proxy for Brexit, and it appears that Scotland used this as a proxy for voting to get Scotland out of the UK, too.

        If Scotland were to leave the UK, it would have an impact similar to if California left the USA in that if California left the USA, it would leave the rest of the country significantly more Republican than it is now. If the Scottish National Party were to disappear along with Scotland, what is left of England and Wales would be far more Conservative than it is now. If Scotland leaves the UK so they can join the EU, which is what all the support for the Scottish National Party probably suggests they want to do, the UK might become a really attractive place to live–something like Switzerland from a government standpoint. And if they manage to secure a free trade agreement with the United States now that they don’t need to ask the EU for permission, it’ll be even better.

        The British Pound is rallying against the Euro. I think their future is brighter today than it was the day before Brexit became the reality.

        https://www.xe.com/currencycharts/?from=GBP&to=EUR

        That’s the market telling you which side of the break they’d rather be on.

        1. Hmmm, interesting. Especially the bit with Scotland. Will still need to wait and set how it shakes out though. Conservative and liberal don’t mail the same way between the states and the UK, so still a chance for a lot of crazy.

        2. For my part, I am glad Corbyn is resigning.

    2. “British public opens door of No. 10 Downing St., puts in Johnson”

    3. “populists didn’t emerge around 2016 for completely unrelated reasons. ”

      Why haven’t populists emerged in Asia, Africa or Latin America?

  16. Donald Trump Jr. Went to Mongolia, Got Special Treatment From the Government and Killed an Endangered Sheep

    During a summer 2019 hunting trip, Donald Trump Jr. killed a rare argali sheep. The Mongolian government issued him a hunting permit retroactively and he met with the country’s president.

    His adventure was supported by government resources from both the U.S. and Mongolia, which each sent security services to accompany the president’s eldest son and grandson on the multiday trip.

    https://www.propublica.org/article/trump-inc-podcast-donald-trump-jr-went-to-mongolia-got-special-treatment-from-the-government-and-killed-an-endangered-sheep

    1. It was coming right at him!

      (Did the sheep offer him $50,000 a month?)

      1. I didn’t realize making money was a crime comrade.

        1. If that was my idea of capitalism, I suppose I’d be a progressive too.

    2. This is the way progressive minds work.

      Trump make a trade deal with the Chinese.

      The people of the UK decide they’d rather suffer the consequences of leaving than stay with the progressive EU.

      So the progressives starts talking about Mongolian sheep.

      Remember that time they were talking about Romney’s dog, Seamus? Jesus. This is how they think.

      1. You’re weird and you’re projecting. I don’t care about Brexit. That’s all you. You’re so boring Ken.

        1. No, of course you don’t care about Brexit. I don’t imagine you care about trade deals with the EU either.

          You just care about Mongolian sheep.

          What could be more important than Mongolian sheep?

          1. You’d be surprised at the importance of the little things.

            1. The shear scope of this scandal is amazing. There’s no way the right-wing media will pull the wool over my eyes. Ewe have to admit this scandal is worse than Watergate.

              1. It’s baaaaaaaaad.

                Sorry, couldn’t resist.

            2. No one cares about your dick.

  17. Millions in military aid at center of impeachment hasn’t reached Ukraine.

    WASHINGTON — 

    More than $20 million of the Pentagon aid at the center of the impeachment fight still hasn’t reached Ukraine.

    The continued delay undermines a key argument against impeachment from President Trump’s Republican allies and a new legal memo from the White House Office of Management and Budget.

    https://www.latimes.com/politics/story/2019-12-12/millions-in-military-aid-at-center-of-impeachment-hasnt-reached-ukraine

    1. This is so important.

      Has anyone else notice the impeachment getting smaller and smaller, losing its relevancy like news from last year?

      The Democrats in the House are hoping the Republicans in the Senate don’t drag this out–so the American people will forget about it sooner.

      Pelosi announced that the Democrats in the House will vote to support USMCA.

      First they’re going to impeach Trump, and then they’ll vote to support the trade deal he renegotiated as promised.

      And then maybe later they’ll get to that oh so important story about the Mongolian sheep, which is the most important story of all. The one we should all care about.

      1. A reliable source informs me that the sheep was about to testify against Trump.

        1. Another source says that the sheep’s hush-money demands to its ex-lover, Brett Kavanaugh, were getting too extreme and extravagant so it was cheaper to just shoot the animal.

          1. I don’t know who the next Supreme Court Justice will be, but if it’s a he and if he’s nominated by Donald Trump, the chances of him being accused of sexual assault by someone are probably over 100%. It’s like part of the nomination process now if you’re a Republican.

            1. “if it’s a he”

              If she’s a she, she’s going to envy the media coverage Sarah Palin got.

          2. Is Trump on the lam? Walls are closing in you know.

        2. Trump is a pussy grabber, and that was after we found out that his senior advisers brutalized Michelle Fields, like a bunch of brownshirts. It wasn’t later until we found out that Trump is on Putin’s payroll. He also abused his power to intimidate the Ukrainians, made Jews a race like he was Hitler, and now, to top it all off, we find out that his son shot Mongolian sheep. And if we don’t believe and feel every part of that narrative, it’s because we’re idiots.

          1. Sheepgate is growing more shocking by the minute. The House should formulate a new article of impeachment to account for this latest revelation. And there needs to be another special counsel, too. And an autopsy, because I bet they hastily buried the sheep before any proper post-mortem examination could be done.

          2. Wow yeah actually. Adios

            1. That’s why we laugh at you.

              1. Zhe’s right and you can’t handle it bigot.

  18. Um yeah. How exactly is this mountain of debt going to be paid back.

    I went and looked at those other countries that had the “debt overhang”. They tended to result when the country fought major wars or suffered major financial catastrophe. What’s our excuse?

    At some point, the decision will be made for us when the dollar is no longer trusted enough by everyone else to be the world’s reserve currency.

    1. You’re a joke and your analysis is moronic. Everyone laughs at you even though you try so hard to be respected. You’re a third rate intellect who confuses talking with being well spoken.

      You know you’re an intellectual lightweight, and it comes through in EVERY SINGLE POST YOU MAKE.

      And you have the worst reading comprehension of any adult anyone has ever seen.

    2. Don’t worry lover. Someday our love will prove that Republicans are responsible for the debt.

    3. Tulpa, you will criticize me no matter what I say or do.

      If I use proper English, you’ll criticize me. If I don’t use proper English, you’ll criticize me.

      If I say something controversial, you’ll criticize me. If I say something utterly conventional, you’ll criticize me. As in the above – anyone here could have written the same thing, and it would have been completely unremarkable. But no, when I say it, then it’s time to bring out the long knives.

      If I don’t respond to your taunts, you’ll criticize me for “running away” from a discussion. If I do respond to your taunts, you’ll criticize me for “crying more”.

      There is nothing I could say or do, absent leaving, that you would not criticize. Nothing. Which I suppose is the point of all your trolling (if it has a point)? That you want to raise the costs of my participation here to be so high that one day I wake up and decide that it’s no longer worth it. Call it Tulpa’s version of deplatforming – silence opposing voices through trolling so that the Reason comment section becomes a “safe space” for a right-wing circle jerk.

      It really is sad. I wish you would find a more productive hobby than sitting around Reason all day tormenting people you disagree with. How about cocaine. That has got to be more productive than doing what you’re doing now.

      1. Whaaa.

  19. Of all the things that annoy me about POTUS Trump, his profligate spending is at the top of the list. We have simply GOT to get our spending under control.

  20. Those silly projections in the red box…kindly increase them by 50% and they will likely reflect some part of reality. And reality has nothing to do with anything happening in the DC Swamp. There is no going back to rational government…it has become a monstrous control freak hellbent on self destruction.

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  22. All these libertarian fiscal conservatives sure are ready to cut programs others want. If they want to cut spending so much, how about cutting something they like.

    Our military is as strong as the next seven nations COMBINED, what a massive waste. At the start of WW2, our military ranked 19th in the world, after Portugal. In four short years it ranked number one in the world, so I think if we cut our military in half we’d still be in a very good position if something really came up. Maybe our government would be less inclined to engage in these wars of choice.

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