Fightin' Horn II
500+ Posts
About 17 years ago (gosh where does time go?) one of the principal problems with the debt and deficits the country was carrying was the thought that the government's massive spending and borrowing was causing the economy to stagnate. The thought was that the government was crowding out private borrowers who could use the money being lent to the government to invest in production, etc. Hence, with demand for capital exceeding the supply, led to higher interest rates, hence, slower economy and higher inflation.
Then Bush I came along and saw the writing on the wall -- we had to raise taxes and get our spending undr control. In what I regard as one of the most politically ballsy moves since LBJ pushed the Civil Rights Act of '64 through, HW went back on his "read my lips" pledge and raised taxes along with the Dem Congress. What happened?
Well, the economic recovery of the 90's actually began with Bush I. The U.S. Government sent the message to the capital markets that we were serious about getting our finacial house in order and interest rates started coming down, more capital was available, and hence, the springboard for the go-go '90s. [as a Democrat I recognize that Bill Clinton really overtates his credit for the 90s -- although Robert Rubin was a pretty damn good Treasury secretary].
So where are we today. For years the government, has been on an ungodly spending spree, while also cutting taxes. And the effect has been very similar to that of the Reagan years, higher tax revenues (confirming one aspect of supply side economics) but with spending far outpacing revenues, due in no small part to the disaster that is Iraq, we are racking up enormous debt and deficits.
And along comes the subprime disaster. Financial institutions are losing their shirts, and are contracting credit. Couple this with out of control spending by the government eating up any available capital, is there realistically any way out of this unless the government does what it did in the ealy 90s: raise taxes and cut spending?
With the economy teetering on the edge of a very serious recession, can the government risk raising taxes? Is the only solution drastically, drastically cutting spending? But will that further depress the economy at a key time? is this not a compelling argument on its own to shut down operations in Iraq, which costs us literally billions of dollars a week?
Wow. It seems like we're in one heckuva mess.
Thoughts?
Then Bush I came along and saw the writing on the wall -- we had to raise taxes and get our spending undr control. In what I regard as one of the most politically ballsy moves since LBJ pushed the Civil Rights Act of '64 through, HW went back on his "read my lips" pledge and raised taxes along with the Dem Congress. What happened?
Well, the economic recovery of the 90's actually began with Bush I. The U.S. Government sent the message to the capital markets that we were serious about getting our finacial house in order and interest rates started coming down, more capital was available, and hence, the springboard for the go-go '90s. [as a Democrat I recognize that Bill Clinton really overtates his credit for the 90s -- although Robert Rubin was a pretty damn good Treasury secretary].
So where are we today. For years the government, has been on an ungodly spending spree, while also cutting taxes. And the effect has been very similar to that of the Reagan years, higher tax revenues (confirming one aspect of supply side economics) but with spending far outpacing revenues, due in no small part to the disaster that is Iraq, we are racking up enormous debt and deficits.
And along comes the subprime disaster. Financial institutions are losing their shirts, and are contracting credit. Couple this with out of control spending by the government eating up any available capital, is there realistically any way out of this unless the government does what it did in the ealy 90s: raise taxes and cut spending?
With the economy teetering on the edge of a very serious recession, can the government risk raising taxes? Is the only solution drastically, drastically cutting spending? But will that further depress the economy at a key time? is this not a compelling argument on its own to shut down operations in Iraq, which costs us literally billions of dollars a week?
Wow. It seems like we're in one heckuva mess.
Thoughts?
