How is the state of the United States Economy?

[AggregateDemand]

Poor. Marginal rate of borrowing is still higher than economic growth. After 6 years, and $7T of new debt, and a domestic energy boom, we shouldn't be struggling with tepid growth rates below marginal rate of borrowing.

[AggregateDemand]

The fundamentals are strong but we are about halfway through digging ourselves out of the mess we are in. If things can be stable for another 3 or 4 years, I think things will be doing very well. Of course that depends on their being no major disaster or our nation's politics not sprinting in one direction. 

We are in this mess because people were banking on economic stability to get us through difficult times. We have laws on the books that have created and reinflated a housing bubble. Budgetary instability caused by social security and medicare have been stabilized for 30 years by deficit spending, and the baby boomers were working during that time, not retiring.

California will be the safest place on earth when these damn earthquakes stop. So relevant.

[AggregateDemand]

AggregateDemand, what are the most recent predictions for Medicare spending? Is the trend toward slower growth, or faster?

Why is it growing at all? Revenues as a percentage of GDP have been quite similar since the end of WWII regardless of who is in power. When spending increase as a percentage of GDP and percentage of revenue, cuts have to be made in other programs. Military spending has been cut by 50% since the late 1960s. It sounds dovish and peaceful, but it's actually 1.5M fewer jobs for lower-middle class youths and 1.5M fewer paychecks and job training programs (replaced by student debt). Despite rising vehicle miles traveled, lane miles have been more or less stagnant, and road funding is woefully inadequate to replace the crumbling infrastructure. Maintenance backlogs in the national parks are nearly $15B.

Has any Atlasian actually looked at a federal budget? Does anyone understand how CBO projection differ from those at BEA or other agencies? Intragovernment holdings (mainly borrowing from SS and MED) are over $5T. You're either going to cut benefits or raise taxes to cover that debt. You can't count on long-booming it away, when we've dismantled investment spending to cover SS and MED.

[AggregateDemand]

Given how consistently wrong you are when it comes to very basic facts, the better question is probably this: Have you ever looked at a federal budget?

If you think historical spending is measured in nominal dollars, you lack the requisite intelligence to carry on a conversation.

[AggregateDemand]

That's a really bold statement coming from an R-Texas avatar.

You idolize Lyndon B Johnson who was a war-monger and one of the least savvy economic operators in the history of our country.

Would you prefer that I were a Southern Democrat who pretends Indian-extermination, slavery, and Jim Crow never happened? Or maybe I can be the kind of Southern Democrat who thinks that Great Society programs are economically effective and cost efficient?

Sure. I'll sponsor crimes against humanity so you don't have to look at an R-avatar.

[AggregateDemand]

If you think historical spending is measured in nominal dollars, you lack the requisite intelligence to carry on a conversation.

Oh, so you can't read either. That explains all your ridiculous posts where you pretend to know everything about economics and budgetary matters. Noted.


The top of the graph says "Inflation-adjusted".
[/quote]

I can read the chart. You're supposed to have enough exposure to the US Federal Budget to realize that those are not inflation-adjusted dollars, at least not by any measure economists would recognize.

Federal spending is measured in %GDP and % revenues. In both statistical categories, military spending has been cut in half. Cutting the military budget in half is the main source of power for our inept social bureaucracy, and they know that gullible people are eager to believe that US military spending is perpetually rising, like gun crime or gun ownership rates any other fictitious liberal talking points.

Congrats. You guys fall for it, which would be less annoying, if you'd actually look at the source of the data. Military spending as a % of outlays 1962 = 46.91% by 2015 it's 14.99%. The author doesn't highlight this stat because it doesn't jive with his ideological orientation or the political objective of OMB.



This is what military spending looks like.

[AggregateDemand]

Every time that graph shows rising defense spending, the white working class males you love to talk about suffered economically because of deindustrialization. Reagan's military build-up coincided with a net loss in manufacturing jobs compared to the 1979 peak, and the increase in defense spending during the 2000s saw the loss of a whopping 6.1 million manufacturing jobs (3.8 million of which were lost 2001-2007, before the Great Recession). Oh, not to mention massive run-ups in debt.

The military became the only way out of the now welfare-dependent, drug-infested, poverty-stricken industrial wastelands. "Send your kids into the armed forces! They may get killed or injured or suffer horrible mental/emotional problems afterwards from their experiences, but at least they're not on welfare!". What happens to them after they are 40 and no longer of much use to the armed forces? They can't all be generals. I saw you said the job training programs would be beneficial. Well, why not just spend a couple billion on the job training and not the hundreds of billions on war, pay, military toys, and insane medical treatment costs?

You are confusing me with the "liberals" on this site by accusing everyone who disagrees with you of supporting an inept bureaucracy, yet you worship the military which is the most wasteful (see: F-35 program, War on Terror) and has an enormous amount of evils such as sexual abuse, killing civilians, torture, and pretty much everything bad a military does?

So, pray tell, what would you have America's budget look like? Even more spending on the military industrial complex? Because the vibe I'm getting from you is that you want a military-based welfare state. You don't care where the debt comes from then; it just has to be spent on the military.

You sound as out-of-touch as Mitt Romney did when he kept pushing the "defense spending should be no less than 4% of GDP". Who cares about the percentage? If our military is able to provide for the defense of the nation in a cost effective way, why keep throwing money at such a bloated bureaucracy so Boeing can keep making tons of money? Just pulling an arbitrary statistical number out of the air based on history during different geopolitical realities won't save those communities in the Rust Belt that badly need jobs and income there.

I'd prefer social programs to militarization, but what social programs have actually worked? Eisenhower transferred military money to Interstate infrastructure, which was mildly successful, but, generally speaking, the civilian bureaucracies don't take their responsibilities seriously. Every new social program is another F-35, yet the public never questions whether or not the thing actually flies because they regard social programs as "good". The end result is predictable, but disturbing--civilian programs don't work. Military has a legacy of success, not the least of which is building the post-war middle class from the fallout of the Great Depression.

The decline in military spending highlights how much money has been transferred out of the middle class to the poor and elderly. It's unsustainable, especially during eras when the US faces such intense manufacturing competition from Japan and China. If you want to use civilian programs, you're going to have to get serious about holding the civilian bureaucracies accountable for 50 years of sedition and failure. Promising to slash military spending only makes them salivate. It's not much of a motivator.

As far as I can tell, I'm the only person on Atlas who actually expects the civilian bureaucracies to function. Other people make excuses for federal failure or they deny it exists.

[AggregateDemand]

The shift from a manufacturing-based economy to a services-based economy is a global one, and a trend as inexorable as the shift from agriculture to manufacturing (which is actually still ongoing - over any given period the US economy has lost a greater percentage of agriculture jobs than manufacturing).

True. As you point out, the problem is something for China and Japan to fret about. The issue in the United States is not so much the quantity of jobs, but the loss of manufacturing investment and manufacturing output. The nation that designed the F-22 Raptor can't even find domestic manufacturing businesses to provide the mil-spec fasteners and other relatively cheap components. It's an embarrassment and a threat to our national security.

Under normal circumstances, I'd agree that fighting structural changes in the manufacturing economy is a huge waste of time, but these are not normal circumstances. China and Japan are both legendary currency manipulators, and the US is the world's foremost authority on hollowing out the lower-middle class (particularly American youth) with taxation, benefit mandates, spending cuts for investment programs, reckless demand subsidies, and misguided social welfare policy.

Japan and China have rolled back their debauched foreign reserve policies, but the US is still not competing on equal terms because people cling to the failed socioeconomic technology of 50-80 years ago, as if nothing has changed since then.

Edit: I forgot to mention that we sabotaged our own manufacturing sector by ignoring the ineptitude of labor unions like the UAW.

[AggregateDemand]

The chart shows defense spending as a percentage of GDP. A fraction, basically. So it can change if the numerator (defense spending) or the denominator (GDP) changes.

How do you suppose federal deficits work? Perhaps now you understand why we don't measure historical budgets in real dollars, rather % GDP and % spending. Real dollars are applicable in apples-to-apples cost assessments over time, like CPI or the cost of 1 barrel of a certain oil benchmark.

[AggregateDemand]

You want social spending that helps the middle class work? Whatever happened to more spending on education. Sure, its spent inefficiently, but if you spent enough, you would have enough money to fully fund public schools AND allow choice without having to ration resources through bizarre standardized testing.

I wish it were that simple, but the US already floods primary education with excessive funding. We spend more than any other nation on K-12, except the obscure and wealthy micro-republics in Europe, like Luxembourg.

Most states have reduced collegiate funding, relative to tuition costs. The federal government could intervene with investment, but we really want to risk disrupting our elite private institutions? The average American would probably answer with an unequivocal "yes", but the elite politicians who attended those universities?

Furthermore, if we spend money on collegiate education, from where should we get funding? We've already hacked the military budget to pieces, and we have no assurance that higher taxes will be spent on collegiate education. If we need another $100B or $200B, it will have to come from elsewhere.

[AggregateDemand]

Yeah, I don't think that's what AD is saying.

He is referencing another relevant concept, but you are correct. I was only referencing the general concept of budgeting.

[AggregateDemand]

It seems like such policies face fixable political problems rather than problems with practicality.

Correct, but the political problems have existed since the Great Society. After 50 years, we have only moved farther away from a fix. The situation in the US is turning the electorate irrational reactionaries. Fifty years of ineffective Republican strategy has made libertarians and conservatives fatalistic. Liberals have somehow convinced themselves that unproductive entitlements are actually the result of conspiratorial Republican under-funding, hence the "low-information" moniker for left-wing voters.

Democrats have created an impenetrable political fortress. It consumes everything around it. At one point, Nixon tried to steal the Great Society for Republicans, but he failed. Reagan Republicans changed tactics to full-frontal assault, but they also failed, and they pussed out when Reagan left office. Gingrich tried to renew the offensive, but he ultimately failed. Bush tried to ignore the problem, like his father.

You know how to solve this problem? Good luck.

[AggregateDemand]

God, AD is just the worst.

Read what economists have to say about the US entitlement system. It's not flattering, and the international community are probably the most vocal critics. Organizations like WTO, IMF, World Bank, etc have identified US entitlement spending as an emerging economic threat to global stability.

As I've informed you before, the US uses defined-benefit, pay-as-you-go pension administration for Social Security. Such schemes are illegal in the US private sector, and even the most liberal social democracies steer clear. Couple PAYG defined-benefit with tax-exempt 401k, and historically low tax rates, and you have a formula for disaster. Medicare is not much better.

You've demonstrated consistently that you know virtually nothing about the US entitlement system, which is inexcusable. Ad hominem attacks will not fix the situation.

[AggregateDemand]

Do you have intimate knowledge of these other entitlement systems?

It's hard not to know about foreign entitlement programs, especially during the current era. Both Sweden and Norway are phasing in their new pension programs. Netherlands overhauled their healthcare and health insurance industries in 2006. Australia's superannuation system (their "company-side" payroll taxes go into private accounts) will probably be reformed again.

Everyday brings news of entitlement reform in other nations. In the US, we just keep increasing spending and benefits.