Ten Trillion and Counting

[bigfootedfred]

http://www.pbs.org/wgbh/pages/frontl...trillion/view/

All of the federal government's efforts to stem the tide of the financial meltdown have added hundreds of billions of dollars to an already staggering national debt, a sum that is expected to double over the next 10 years to more than $23 trillion. In Ten Trillion and Counting, FRONTLINE traces the politics behind this mounting debt and investigates what some say is a looming crisis that makes the current financial situation pale in comparison.

The journey begins as FRONTLINE correspondent Forrest Sawyer takes viewers to a secret location: the Treasury's debt auction room, where the U.S. government sells securities backed by the "full faith and credit of the United States." On this day, the government is auctioning $67 billion of Treasury securities.

The money borrowed will be used to fund services and programs that the government cannot pay for through tax revenues alone. Observers warn that the United States' reliance on borrowing to fund essential programs is a dangerous gamble. For the first time, investors are beginning to question the ability of federal government to meet its growing financial obligations, and fading confidence can have dire consequences.

"You might have a situation where there is one day when the government says we need to sell several billion dollars of bonds, and nobody shows," Economist reporter Greg Ip tells FRONTLINE.

"No money to pay the Social Security checks, no money to give to the states for their Medicaid programs. Cut, cut, cut, cut, cut." Yet more borrowing is exactly what the Obama administration plans to do: hundreds of billions to bail out the banks and other financial institutions; tens of billions more for the auto industry; $275 billion for homeowners and mortgage lenders; and a giant $787 billion stimulus package to jump-start an economy spiraling downward. Just like the Bush administrationbefore it, Obama and his team are going to borrow big.

"That's the paradox of the situation that we're in now," observes Matt Miller, author of The Tyranny of Dead Ideas. "Government has got to run big deficits to stimulate the economy, deficits that would have been unthinkable ... because government's the only entity with the wherewithal to prop up a demand in the economy when businesses and consumers are all pulling back."

Very good documentary, well worth the watch if you have an attention span greater than 1 minute.

[Gelgoog]

"you can't spend yourself out of a recession and you can't tax yourself out of a deficit."

this will be the legacy of Obama's economic efforts.

[Freddie]

"you can't spend yourself out of a recession and you can't tax yourself out of a deficit."

Spoiler Alert, click show to read: 

[bigfootedfred]

You know, there actually is evidence that you can spend your way out of both a recession, and a depression. There is no evidence to the contrary...

Its fairly simple. You spend, to create jobs and improve the infrastructure of your country, that badly needs it, and in turn streamline the transportation/logistics issues for the backbone of the American economy, cutting costs, and increasing profits. Its a snowball effect.

Put it this way. Twelve million dollars, a small amount, is going to improve O'hare airports main runway. This will allow for 2 million dollars more profit a week, and around 100 jobs. There are going to be thousands of small, but much needed projects that some of this money will fund. Let alone the large projects. And in the end, it adds up.

Well the documentary covers alot of this. the major problem is, the US is already so knee deep in debt, that there may come a time where simply put, no one will buy it anymore.
If confidence in the dollar is lost, then the house of cards falls.

[Erik]

"you can't spend yourself out of a recession and you can't tax yourself out of a deficit."

America has already managed to spend itself into bubbles and tax itself into a depression.

So I don't see why the reverse can't (theoretically) be achieved as well.
You just need to be responsible and accept you have to slow down the economy in good times before you can boost it during a recession.

[BNS]

America has already managed to spend itself into bubbles and tax itself into a depression.

So I don't see why the reverse can't (theoretically) be achieved as well.
You just need to be responsible and accept you have to slow down the economy in good times before you can boost it during a recession.

Bubbles are caused by overspending, looking to spend your way out of a bubble bust is calling for more bubbles. You can't tax your self into depression, if you mean lowering taxes that is, unless you run on deficits.

Hmm, you seem to contradict yourself, you say we can spend our way out but also tell us to slow it down?

[Erik]

Bubbles are caused by overspending, looking to spend your way out of a bubble bust is calling for more bubbles.

Yes, that's what I mean: if the recession isn't caused by previous overspending but just by the natural economic swings (or instability on the international markets), then there's nothing wrong with spending your way out of it and re-paying your debt later.

You can't tax your self into depression, if you mean lowering taxes that is

No, I meant RAISING taxes when the economy slows down, that's a bad idea.
But if you lower taxes when things are already going good, you won't have a choice.

Hmm, you seem to contradict yourself, you say we can spend our way out but also tell us to slow it down?

I'm saying responsible countries can spend their way out, but America (and Britain, and Iceland, and Greece and Italy, etc. etc.) can't because they have been irresponsible in the past 3 decades.

[Exarch]

hohoho
the US is ed
and they'r4 still spending loads on military

[Gelgoog]

hohoho
the US is ed
and they'r4 still spending loads on military

notice how we covered this in another thread you started exarch. Just because you lost that argument, you need to start it again here?

[ginge51]

Nothing should be done, they should all e left to go bankrupt, wait for new firms to take over then start again.
Simple as that.

[Da Skinna]

All the king's horses and all the king's men couldn't put Humpty Dumpty back together again...

America turned itself into an egg and fell from the wall it seems.

[Sphere]

The US has faced worse. Private saving rates have become quite high as of late, and the trade gap is shrinking. That foreshadows a growing and productive US once the recession ends.

[Da Skinna]

The US has faced worse. Private saving rates have become quite high as of late, and the trade gap is shrinking. That foreshadows a growing and productive US once the recession ends.

That's left to be seen.


Anyway, is it okay to play politics in times of crisis like this?

[s.rwitt]

hohoho
the US is ed
and they'r4 still spending loads on military

Hate to break it to you but the global economy isn't doing much better. Besides that we are spending 4% of GDP on our military, as Justinian showed you when you tryed to say this earlier.

[Ragabash]

Hate to break it to you but the global economy isn't doing much better. Besides that we are spending 4% of GDP on our military, as Justinian showed you when you tryed to say this earlier.

It has to be somewhat more as annual military spending (defence related purposes) for U.S.A is about 1 trillion for 2009. I'm not even sure is extra-budgetary supplements for Iraq and Afghanistan counted to this amount.

[Quadratus]

A ing 5th Grader can figure out that you can't spend your way out of debt.. My ing god this is simple math and logic. If you have nothing, you can't borrow some money from the idiot next to you and think you paid off your debt.

[bigfootedfred]

A ing 5th Grader can figure out that you can't spend your way out of debt.. My ing god this is simple math and logic. If you have nothing, you can't borrow some money from the idiot next to you and think you paid off your debt.

Its pretty much a much larger version of what people do when they max out a credit card..
pay it off with another credit card with a higher limit.
Or get a loan to pay of their credit card.

I.e. its dumb

[Mikelus Trento]

There are still MANY areas of America, and industries, that are doing quite well. The strength of America has always been its diversity, and it is what will pull us through again.

[Tiwaz]

There are still MANY areas of America, and industries, that are doing quite well. The strength of America has always been its diversity, and it is what will pull us through again.

Go on believing that.

You would be right, if not MOST of America would not be doing so badly that those many areas are unable to do well enough to pull the bottom line to positive.

Diversity does not change reality. Reality is that America is going down economically, hard. Diversity where few do OK and huge majority are down the drain is not benefit.

It's sophistication. Economists tend to want to apply an equation to everything, there mathematicians for the most part. Leaving an answer unanswered doesn't float well with many of them.

As any Engineer will tell you, results stemming from flawed starting point are still wrong. No matter how sophistical you are in approaching them.

[Scar Face]

Well considering America's imminent hyper inflation, resulting in a massive depression- potential bankruptcy even, yes the military budget should be cut. Everything should be cut, A LOT, in order to lessen the eventual blow [8 or so months from now?]. Rest of the World is a horrible position as well, but not the same position.