How will the market react to downgrade?

[BriarFox]

I can only think of three solutions, other than the three below, what are you thinking?

1. Increase revenue
2. Reduce spending
3. A blend of both the above

Balancing a budget isn't rocket science. I'd like to see justification for everything we spend money on, rather than a status quo budget with x% increases every year.

No, I was just replying to PB's "cuts are the only way to balance the budget; the Tea Party should have pushed harder" notion.

[Parkbandit]

There are other ways to achieve fiscal stability than cutting spending. Obama's original proposition to raise taxes and cut spending would have been far more effective than a cuts-only program.

Obama/Jan '11 would disagree.. saying raising any taxes during an economic difficult period would harm the overall economy. If we were to raise taxes during a strong economy, then I might be persuaded to agree with you.. but this isn't a strong economy.

[BriarFox]

Raising taxes isn't inherently harmful to the economy. The money still gets spent on the other side of the equation, and can in fact bolster programs to assist people troubled by the shaky economy.

[Parkbandit]

Raising taxes isn't inherently harmful to the economy. The money still gets spent on the other side of the equation, and can in fact bolster programs to assist people troubled by the shaky economy.

There is a difference between raising taxes and raising taxes in an economic difficult period.

I agree that raising taxes (even though I am against high taxes) or closing loopholes or removing subsidies for companies during economic boom times is actually sometimes helpful for the overall health of the economy. It's not during an economic hard period where the government should be doing everything it can to create an environment that businesses can flourish in.

[Cephalopod]

There is a difference between raising taxes and raising taxes in an economic difficult period.

I agree that raising taxes (even though I am against high taxes) or closing loopholes or removing subsidies for companies during economic boom times is actually sometimes helpful for the overall health of the economy. It's not during an economic hard period where the government should be doing everything it can to create an environment that businesses can flourish in.

You could make the same argument, replacing 'raising taxes' with 'cutting spending', re: timing.

[Kithus]

There is a difference between raising taxes and raising taxes in an economic difficult period.

I agree that raising taxes (even though I am against high taxes) or closing loopholes or removing subsidies for companies during economic boom times is actually sometimes helpful for the overall health of the economy. It's not during an economic hard period where the government should be doing everything it can to create an environment that businesses can flourish in.

There is a difference between cutting spending and cutting spending in an economic difficult period.

I agree that reducing the deficit (which I'm not at all against) or lowering government spending or removing subsidies for people who won't care for themselves during economic boom times is actually helpful for the overall health of the economy. It's not during an economic hard period where the government should be doing everything it can to create an environment that consume spending can flourish in.

We're ignoring basic keynesian economics right now. You don't balance the budget during a recession. These Tea Party nut jobs that insist on reducing the deficit at a time when the government should be engaged in deficit spending are going to cause another Great Depression if they are allowed to continue.

The government should have been balancing the budget and reducing the deficit when the economy was sound. When things go south they should be increasing spending to jump start the stalling economy. One could argue that the free market economy will right itself in the long run but to quote Keynes:

The long run is a misleading guide to current affairs. In the long run we are all dead.

[Parkbandit]

You could make the same argument, replacing 'raising taxes' with 'cutting spending', re: timing.

Absolutely.

If we were carrying far less debt, I would be on your side of the aisle in saying that we shouldn't worry about the debt right now and that once we get out of this economic shitstorm, we would focus our efforts on lowering it.

[Cephalopod]

Absolutely.

If we were carrying far less debt, I would be on your side of the aisle in saying that we shouldn't worry about the debt right now and that once we get out of this economic shitstorm, we would focus our efforts on lowering it.

So, during the economic shitstorm is a good time to make major policy shifts to cut spending, despite the fact that those decisions will cost jobs and revenues?

If this is the case, what was the critical mass of debt where it became untenable?

[Parkbandit]

So, during the economic shitstorm is a good time to make major policy shifts to cut spending, despite the fact that those decisions will cost jobs and revenues?

I believe it's a good time to go through our budget and start slashing and cutting the waste and fraud of our federal government. And unlike most Conservatives, this includes Defense.

If this is the case, what was the critical mass of debt where it became untenable?

It's been untenable for 5-8 years now... 100% of GDP is a pretty good indicator of our government fucking up.

[Kithus]

If this is the case, what was the critical mass of debt where it became untenable?

Were I agree with PB on this, and I don't, I would say the critical point comes when our total debt passes our annual GDP which it will by the end of the year if it hasn't already. Unfortunately it does not change the fact that a period of economic downturn is not the time to reduce the deficit.