U.S. Government shuts down.

[kandrathe]

I just couldn't let something pass that was so very wrong.

c) a health care facility who had to write off the unpaid health care of the uninsured

This does not happen. I've had this very discussion (insured vs. uninsured) with facilities that have provided my care. Any care that is "written off" is actually rolled into the rates that everyone pays. Our health care costs are a huge game between providers and insurers and we are all under the thumbs of their bean counters. And, their beans are more magical than Jack's. They just keep growing and growing. Provider sets rates. Insurers contract what portion they pay. Provider decides they might lose money and adjust rates up. Insurers adjust contract.... Did you know that you will be billed at lower, somewhat more realistic, rate if you declare yourself uninsured before you ever receive care? Also, if they do bill you at insured rate, it is against the law to adjust down to the lower rate. The bean counters keep an eagle eye on it all. A simple check mark in a box or change in code and they can ruin you, but neither insurer or provider will ever lose! I've had to contest bills that should never have been my responsibility under my insurance plans. My parents are currently in a situation where they went from covered by insurance to paying hundreds of dollars a day because a bean counter moved a check mark from one box to another. They are trying to resolve the problem but being run in huge circles.

Bean counters, both provider and insurer, run our health care. They do not lose. Nothing is ever "written off"!

60 minutes says so. This was 2009, but I doubt it has changed significantly since then.

"Won't hospitals go broke if they give discounts to the uninsured?

That's highly unlikely, according to our research. The hospital industry made near-record $26.3 billion in profits in 2004 (the last year for which figures are available), according to the American Hospitals Association. As many as 25 percent of hospitals – particularly municipal hospitals which handle mostly the poor – lose money, the AHA claims. But other hospitals – both non-profit and for-profit hospitals – make handsome profits. According to the AHA, the average hospital's profit margin is 5.2 percent, the highest in six years. "

and...

The bottom 25% of hospitals reported spending 1.43% or less of expenses toward bad debt. The median hospital reported bad debt totaled 2.45% of expenses. And the top 25% of hospitals spent 3.89% or more of expenses on bad debt.

http://www.modernhealthcare.com/article/.../301069983


So... I think what happens is that "bad debt" is just a foil for justifying outrageous prices for those that will pay them, be they the uninsured, the government, or insurance companies. But, it takes the government to figure out how to spend $110 billion per year to resolve a $40 billion dollar per year problem.

[LochnarITB]

So... I think what happens is that "bad debt" is just a foil for justifying outrageous prices for those that will pay them, be they the uninsured, the government, or insurance companies.

How is this different from what I said? Their "write off" is simply creative accounting. Not only do they take whatever credit they can on the bad debt/charity-care, they raise rates because of it. Nothing is truly written off, their recompense is just delayed.


I'm off to make more cookies.

[Jester]

What budget? Is it balanced? Who can tell? What is stimulus? Is all spending stimulus? How much stimulus do you need? Is it prudent to incur decades of expensive debt, for years of QE "smoothing" of a temporary fiscal correction. Worse yet, much of the "stimulus" is directed at re-inflating the same bubbles that burst in 2009.

*sigh*

Okay. The budget, whether it is spelled out in a bill or not, is government incomings and outgoings, which are carefully tracked, because they're all approved by congress. No, it isn't balanced, although the deficit has fallen dramatically since the sequester. Stimulus is two things: Government deficit spending, and providing high-quality, secure assets to the financial sector (government bonds) with which to patch up their balance sheets. All spending creates bonds, which is stimulus in an environment of flight to safety. Most spending is stimulating in that it creates demand, although I'm sure you could find ways of just wasting resources if you really wanted to. You need enough stimulus to close the output gap, and restore GDP back to its long-run trend growth, before hysteresis permanently degrades the quality of your workforce. For the US, that's about $2 trillion more than you did. Yes, it's prudent to accrue "decades of debt," and no, it's not expensive, government borrowing rates are bottomed out, and have been since 2008. No, QE is not this process, QE is monetary policy. Nor is QE consumption smoothing, although it is countercyclical. Yes, we need to reinflate the "bubbles," not to their 2006 peaks, but back to their long-run historical trends.

If that answers your barrage of questions?

]But it is.

But it isn't.

The US is not like most other nations. We have over extended debt at all levels from personal, to corporate, to civic, to national. The estimated amount of just federal debt every current citizen owes today is $52,885. There are four people in my household, which means we owe federal bond holders about $211,540. My ability to pay off my share is diminishing, as it is with the boomers. Meanwhile, the amount of debt we are incurring has accelerated faster than our ability to pay it off. The legacy of our generation will be a series of financial fiascoes engineered by the greedy, bailed out by governments, and paid for by our children and grand children. Clearly, an intergenerational swindle. I cannot support it.

You largely owe this debt *to yourselves*. You can't literally borrow from the future. That's physically impossible. One saver is another borrower, by simple accounting identity, and one person's 401k is another (younger) person's resources, transferred to the no-longer-earning to keep them alive. I know you weep for the children, but seriously. This is not a realistic picture of US debt, which I might emphasize again can be borrowed at historic lows *at this very instant*.

And... the financing is cheap now... But, most of the federal debt are necessarily in short term notes. So, once it gets more expensive, it careens out of control. As it stands now, we cannot afford to have the economy improve. It would drive up our borrowing costs beyond our ability to pay. I'd say it is a death spiral.

The US prints its own currency. Unless you're expecting inflation to suddenly spike to 20%, you'll be fine. The higher inflation goes, the less the existing stock of debt is worth. If the economy grows, so does the tax base. Unless you are hit by a sharp shock of real inflation (AKA sudden poverty) because your factories rust and your workers lose their limbs, you'll be fine. There is no realistic crisis scenario here, at the federal level, which is what this shutdown gong show is about. This is not a "death spiral."

As for the link, it doesn't seem to suggest anything more to me than "the US rolls over its debt," which is about as interesting as the sun rising. What's supposed to be the story?

More ropadope; Then OMB Director Jack Lew promised us something different.

Well, he lied to you. Or at least had his rose-coloured glasses on. And thank the heavens, because as I cannot conceivably emphasize enough, *now is not the right time to be balancing the budget*.

For who? Do you honestly believe that by forcing the uninsured (who mostly either don't see a need for it, or cannot afford it) onto an insurance plan that it will decrease the rates that the rest of us who can afford it pay?

It will overall decrease health care spending in the country. Whether it moves it onto the government books, probably it will. But it also insures millions of extra people. And don't give me "don't see a need for it." Running around in a country with astronomically expensive medical care and no insurance is, on net, costing everyone extra. That some people can't see it is myopia, but it's not wrong.

I mean let's call it what it is, right? Obamacare is primarily a law that targets those who cannot afford insurance, and forces them to go onto State run exchanges where the are forced to buy an insurance product from a private insurance company, or face penalties. It forces companies to provide an approved health care plan, whether they can afford it or not, or face fines. This is only a great idea if you are a) wealthy enough to not care about insurance premiums, b) an insurance company c) a health care facility who had to write off the unpaid health care of the uninsured d) so poor that had you looked into it, you'd have been on Medicaid anyway.

It is not a single payer system. It is not nationalized health care.

Sure isn't. Wish it was. It's going to save a lot less resources this way.

Worse, the abuses are not rampant yet, but... the system rewards individuals that skip insurance until they need it, then only get it while they need it.

Isn't that what the Individual Mandate is for?

For me personally; My health care will get worse, less convenient, and more expensive because of Obamacare.

I'm sorry to hear it. It's not the plan I would have designed. But then, sausages and laws...

It is irrelevant. It is unpopular with the constituents of the congress people who've dug in their heels.

"We're obviously targeting the programs people don't like" is different (and rather more altruistic) logic than "I'd like to get re-elected so I'll pander to my angry constituents."

Our government, at all levels operates on budgets. And funding bills, and the budget originates in the House. The House has attempted to make a budget for the past three years, and Reid, nor the WH have attempted to address the budget.

The Republicans are *shutting down the government*. If they'd back down on their demands, there would be a budget almost instantly. But you can't pass a budget if the congress is deadlocked, and one side is holding the whole fracking US debt hostage and conceding nothing.

I think this is more likely a last stand.

A last stand before what? Health care? They might pick a better Alamo...

During Obama's first 18 months, when Democrats controlled it all, they bloated all the budgets.

Because they were trying to prevent a second great depression. Obama inherited the largest economic crisis since 1929. If anything, they spent far too little, not far too much, and the retrenchment has slowed recovery.

Since they've lost control of the House, and therefore the purse strings, they've maintained their bloated budgets by a) not renegotiating the budget, and b) forcing budget showdowns with CR's and debt ceilings. These are the key events when the House, can assert whatever flabby muscles they have left.

The Republicans apparently believe they're allowed to veto any passed legislation, not by repealing it (which would require overriding a democratic filibuster) but by simply shutting down the entire government and threatening *default* until the other side just gives in to their demands. This is not responsible governance, this is nihilism. If they wanted to argue that whomever controls the House should control legislation, then they probably shouldn't have filibustered anything and everything when they were in the minority. But that ship has sailed.

It appears they are the underdogs, with the Executive, the Senate, and the Press, and 48% of the people arranged against them.

Judging by their approval ratings, and the polling on who people are blaming for this mess, it's a hell of a lot more than 48% of the people.

-Jester

[kandrathe]

Okay. The budget, whether it is spelled out in a bill or not, is government incomings and outgoings, which are carefully tracked, because they're all approved by congress. No, it isn't balanced, although the deficit has fallen dramatically since the sequester. Stimulus is two things: Government deficit spending, and providing high-quality, secure assets to the financial sector (government bonds) with which to patch up their balance sheets. All spending creates bonds, which is stimulus in an environment of flight to safety. Most spending is stimulating in that it creates demand, although I'm sure you could find ways of just wasting resources if you really wanted to. You need enough stimulus to close the output gap, and restore GDP back to its long-run trend growth, before hysteresis permanently degrades the quality of your workforce. For the US, that's about $2 trillion more than you did. Yes, it's prudent to accrue "decades of debt," and no, it's not expensive, government borrowing rates are bottomed out, and have been since 2008. No, QE is not this process, QE is monetary policy. Nor is QE consumption smoothing, although it is countercyclical. Yes, we need to reinflate the "bubbles," not to their 2006 peaks, but back to their long-run historical trends.

If that answers your barrage of questions?

Sorry, I meant them to be more rhetorical, but... Stimulus, when done by government, as has been evident, is pretty ineffective. The 2009 budget lack of stimulus fiasco clearly shows us that a) the rich people got the bail outs, b) everyone else gets the debt. If spending oodles of money we don't have is sooo tremendous, then why not everyone? Why not borrow a million each, and go out on a huge spending spree? Why don't we just let the government print up 100 trillion dollars, and let them go spend it? Why are we dabbling in excessive spending?

You largely owe this debt *to yourselves*. You can't literally borrow from the future. That's physically impossible. One saver is another borrower, by simple accounting identity, and one person's 401k is another (younger) person's resources, transferred to the no-longer-earning to keep them alive.

I'm going to die (hopefully not soon) and realistically won't be paying off what's been borrowed on my behalf. There will be more boomers, and soon millennials consuming, than there are younger workers able to support us (at least at the level we've been promised). When most boomers were in their teens, there were six future tax payers like them, under the age of 20, for every person over 65. Now there are about three young people for every senior. By 2020, the ratio will be even more severe. Demographic changes will have a major impact on the ratio of retirees to workers; the ratio of the number of people ages 65 and over to the number ages 20 to 64 is expected to grow from about 20% in 1997 to 41% in 2050.

Unless you are hit by a sharp shock of real inflation (AKA sudden poverty) because your factories rust and your workers lose their limbs, you'll be fine.

So, yes, we are literally losing limbs in the form of able bodied work force. What factories? They've mostly moved offshore. But consider the above; More consumers, and fewer producers. Sounds like a recipe for higher demand, and less supply. What happens then?

The US prints its own currency. Unless you're expecting inflation to suddenly spike to 20%, you'll be fine. The higher inflation goes, the less the existing stock of debt is worth. If the economy grows, so does the tax base.There is no realistic crisis scenario here, at the federal level, which is what this shutdown gong show is about. This is not a "death spiral." <Snip> As for the link, it doesn't seem to suggest anything more to me than "the US rolls over its debt," which is about as interesting as the sun rising. What's supposed to be the story?

What it shows is that the majority of US debt is held in short term instruments taking advantage of low borrowing costs. If borrowing costs increase, we instantly lose a huge portion of budget to debt service, or vastly increase debt to cover the debt service costs. Death spiral.

Well, he lied to you. Or at least had his rose-coloured glasses on. And thank the heavens, because as I cannot conceivably emphasize enough, *now is not the right time to be balancing the budget*.

This is a good thing? He's the fricken Treasury guy now. Either a) he's a liar, or b) he's really bad at forecasting the future. Neither are traits I'd want for the fox guarding the national hen house. I'm not one to go for austerity in the face of recession either, but printing money and throwing it in a hole doesn't help us either.

It will overall decrease health care spending in the country. Whether it moves it onto the government books, probably it will. But it also insures millions of extra people. And don't give me "don't see a need for it." Running around in a country with astronomically expensive medical care and no insurance is, on net, costing everyone extra. That some people can't see it is myopia, but it's not wrong.

Actually, having health insurance only helps the insurance company (when you don't need it), or the individual (when you do need bunches of it). It does nothing to the cost of health care, or the demand for health care.

It is not a single payer system. It is not nationalized health care.

Sure isn't. Wish it was. It's going to save a lot less resources this way.

It won't save any. Due to the extra layer of administration in health care exchanges, etc. and issuing fines, it will cost more, for things that are not health care.

Worse, the abuses are not rampant yet, but... the system rewards individuals that skip insurance until they need it, then only get it while they need it.

Isn't that what the Individual Mandate is for?

A healthy 20 something will pay $6000 minimum per year. Or, pay $99 for a fine, and buy health insurance only when they get sick. Which is more likely?

I'm sorry to hear it. It's not the plan I would have designed. But then, sausages and laws...

Yeah, but I'm not the only one. Then, we can look at all the exemptions for the special interests. Trust me. The average middle class worker is getting screwed. This is a law designed by health insurance companies, and those interested in creating more government dependence. The rich self insure, the poor get meager portions for free. Once again, it it the middle that gets squeezed.

It is irrelevant. It is unpopular with the constituents of the congress people who've dug in their heels.

"We're obviously targeting the programs people don't like" is different (and rather more altruistic) logic than "I'd like to get re-elected so I'll pander to my angry constituents."

It's more than that and you know it. We can look at many, many polls. I linked Pew (they're dependable). Here is another; TMC Like I said earlier, 48% approve, 48% disapprove. Those who are dug in represent more of the latter.

The Republicans are *shutting down the government*. If they'd back down on their demands, there would be a budget almost instantly. But you can't pass a budget if the congress is deadlocked, and one side is holding the whole fracking US debt hostage and conceding nothing.

They feel they are doing what they have to do to get anything for their side. Yes, they could just capitulate and tick off their constituents, or they can wait for Obama and the democrats to capitulate and tick off their constituents. Hence, the stalemate.

A last stand before what? Health care? They might pick a better Alamo...

You can't honestly believe the Dems have been working in good faith. Mr. Hope and Change and the promise of bipartisanship, and an end to the rancor is pretty much out the window. I mean how can you with Reid? CNN (not Fox) report Dana Bash asked at a news conference with Reid and other Democrats; "But if you can help one child with cancer, why won't you do it?" He replied, "To have someone of your intelligence suggest such a thing maybe means you're as irresponsible and reckless" (as Republicans).

Because they were trying to prevent a second great depression. Obama inherited the largest economic crisis since 1929. If anything, they spent far too little, not far too much, and the retrenchment has slowed recovery.

Wasteful spending on non-stimulating things does nothing to stimulate the economy. Repeating it for four years is shameful.

The Republicans apparently believe they're allowed to veto any passed legislation, not by repealing it (which would require overriding a democratic filibuster) but by simply shutting down the entire government and threatening *default* until the other side just gives in to their demands. This is not responsible governance, this is nihilism. If they wanted to argue that whomever controls the House should control legislation, then they probably shouldn't have filibustered anything and everything when they were in the minority. But that ship has sailed.

No. They've crafted legislation, and passed it through the House only to have it ignored by Reid. Bipartisanship didn't die a week ago, it's been dead for at least two years.

Judging by their approval ratings, and the polling on who people are blaming for this mess, it's a hell of a lot more than 48% of the people.

It's never very good, but as bad as it's ever been.

[Taem]

I'm off to make more cookies.

Not THAT evil game again!!!

[Taem]

For me personally; My health care will get worse, less convenient, and more expensive because of Obamacare.

[quote='Jester' pid='208234' dateline='1381276317']

[quote]Worse, the abuses are not rampant yet, but... the system rewards individuals that skip insurance until they need it, then only get it while they need it.

Isn't that what the Individual Mandate is for?

A healthy 20 something will pay $6000 minimum per year. Or, pay $99 for a fine, and buy health insurance only when they get sick. Which is more likely?
[/quote]

I'm very curious as to where your getting this information from? Are you already paying this *new* amount now? The higher ups at my work said our rates have not changed through Anthem Blue Cross. My cousin and her daughter (who has chromes disease) applied on The Marketplace and found an insurance at almost HALF OF WHAT THEY PAY NOW with the SAME BENEFITS. Seriously, she showed me the insurance plan online. So, I'm not sure what misinformation you've been fed, but I can most assuredly tell you from the business I work for that employs hundreds, to my cousin and her daughter who are single-payers, that your assumptions are simply incorrect. What I have heard is that some insurances will raise their rates to recoup costs of lost customers due to competition with the smaller insurances on The Marketplace (which literally makes no sense, but try telling that to the mega insurance companies), but this will inevitably cause the big insurance companies to go broke as the smaller insurances offer their care at substantially lower rates. Reminds me of when I had Life, Home, and Auto insurance through Allstate and I was supposedly getting a *discounted* rate on my car insurance for being a good driver for more than 10-years and having multiple coverage plans through them, but then I shopped around and found I could get BETTER coverage and pay half (no shit, HALF) of what I was paying through Allstate by switching to an upstart insurance company (well at the time anyway) such as Geico or Progressive. Forget those mega insurance companies; they will get what they deserve and I'll be insured just find and dandy through my smaller insurance company as they slowly sink. My suggestion to you is to try shopping around, perhaps on the Marketplace; I'm sure there are better rates than what you're paying with the same or better you have now. I honestly hope it works out in your favor.

[Hammerskjold]

I'm off to make more cookies.

Not THAT evil game again!!!

The beta has dungeons. It's not perfect, it still needs a lot of polish and tweaks, but the basic proof of concept does work.

Also. I am somewhere between stage 17-18. I think Stage 18 is ridicilous, but I used to think all the previous stages was ridicilous. Until I seriously considered it. Stage 12 looks sooo....beautiful. This is what the face of God must look like.

Warning spoilers, and semi NSFW.

http://www.buzzfeed.com/awesomer/the-18-...ction?bfan=

[FireIceTalon]

@ Taem

I'm also curios as to where he is getting his figures. But I think it is also a serious stretch to think that this is going to hurt the big insurance companies in any way. They are being subsidized by the state. There is no material evidence to suggest the bigger insurance companies are going to get screwed by this.

Now, if this was a real nationalized healthcare bill, that would be a different story......and that is why we do not have one in this country.

[Jester]

If spending oodles of money we don't have is sooo tremendous, then why not everyone? Why not borrow a million each, and go out on a huge spending spree? Why don't we just let the government print up 100 trillion dollars, and let them go spend it? Why are we dabbling in excessive spending?

Because the output gap is about $2 trillion, not $100 trillion. The first $2 trillion gets aggregate demand back up to where it was, gets people in jobs. The next $98 trillion is pure inflation. Printing and spending money is inflationary when you're at full capacity. But the $98 trillion is not an excuse for not spending the $2 trillion.

Why not get the private sector to do it? That would be great, a better solution than government doing it. Would you like to call them up and tell them to borrow and spend? Because right now, the government is threatening to default on the largest safe asset on their balance sheets, which is having exactly the opposite effect. They aren't going to, so the government has to.

Or, you could just throw away the output, let your workers' skills deteriorate, let people fall off the social ladder. That also works.

-Jester

[eppie]

I have a related question. I am not really an expert in economy but do like playing around on the stock exchange a bit.
So what happens with all the money the US keeps printing? How is this all going to be balanced out? Is the idea that they start paying back the debts once the economy starts running again? I mean the amount is so high, you don't pay that back in a few years right?

[Jester]

I have a related question. I am not really an expert in economy but do like playing around on the stock exchange a bit.
So what happens with all the money the US keeps printing? How is this all going to be balanced out? Is the idea that they start paying back the debts once the economy starts running again? I mean the amount is so high, you don't pay that back in a few years right?

What are you referring to when you say "pay that back"? You don't have to pay back printed money, although you do have to accept it as payment for taxes.

If you're referring to the debt, that's a different issue. The US debt has to be paid back on its schedule - bonds come due, and they are paid. Most of those bills are 1-year obligations, but some are 3, 5, 10 or 30 year. The average maturity for a US bond is about 5 years, up by almost a year since the crisis.

Most of the debt, however, is "rolled over" - that is to say, an equal number of new 1-year bonds are sold to replace the old ones cashed in (plus some new ones to cover the deficit). That way, the "quantity" of the debt stays close to the same, although the interest paid might change.

Each year, new debt has to be financed at the market rate. Right now, that rate is hilariously cheap. (Yes, that's right, the government can borrow money for 1 year at an interest rate of 1/10th of a % interest. That is not a typo.) The nightmare scenario that Kandrathe describes, wherein interest rates rise, is mostly about refinancing this rolled-over debt. During the crisis, this has worked in favour of the government budget, lowering borrowing costs on short-term debt to practically zero. But if it were to ever go up sharply, in response to inflation, economic growth, or the threat of default, it might require extra taxation to finance. I don't think this is a big problem, but it apparently keeps some people up at night.

-Jester

[eppie]

Thanks for the explanation.

What are you referring to when you say "pay that back"? You don't have to pay back printed money, although you do have to accept it as payment for taxes.

I was talking about the national debt. It is true that this increasing enormously and is a very big number now right?

If you're referring to the debt, that's a different issue. The US debt has to be paid back on its schedule - bonds come due, and they are paid. Most of those bills are 1-year obligations, but some are 3, 5, 10 or 30 year. The average maturity for a US bond is about 5 years, up by almost a year since the crisis.

Most of the debt, however, is "rolled over" - that is to say, an equal number of new 1-year bonds are sold to replace the old ones cashed in (plus some new ones to cover the deficit). That way, the "quantity" of the debt stays close to the same, although the interest paid might change.

Yes but the amount of debt is changing right? And there again is a ceiling reached at the end of this month right?

Each year, new debt has to be financed at the market rate. Right now, that rate is hilariously cheap. (Yes, that's right, the government can borrow money for 1 year at an interest rate of 1/10th of a % interest. That is not a typo.)

I know, the germans have received interest when putting out loans (even the dutch for a few weeks earlier this year if I'm correct, because it was the safest thing to do with your money at the time.

The nightmare scenario that Kandrathe describes, wherein interest rates rise, is mostly about refinancing this rolled-over debt. During the crisis, this has worked in favour of the government budget, lowering borrowing costs on short-term debt to practically zero. But if it were to ever go up sharply, in response to inflation, economic growth, or the threat of default, it might require extra taxation to finance. I don't think this is a big problem, but it apparently keeps some people up at night.

-Jester

And this is where my question is really about. Why do you think it is not a real problem? Huge debt and printing of money will eventually lead to inflation right? And it also hopefully leads to a better economy and both things will give higher interest rates.

[Jester]

I was talking about the national debt. It is true that this increasing enormously and is a very big number now right?

$12 trillion US dollars of debt is held by the public (that is, not the fed), 75% of GDP.*

However, the stock of debt is largely irrelevant. What matters are the flows of interest on the debt.

Yes but the amount of debt is changing right? And there again is a ceiling reached at the end of this month right?

The debt ceiling is the point at which the Treasury no longer has authorization from congress to issue new debt, leaving them without enough money to pay the bills. (That is to say, the US defaults on some of its obligations.) This is because congress has both legally commanded them to spend (by passing bills) and legally forbidden them from raising the money (because of the debt ceiling.)

If this sounds incredibly stupid, that's because it is. It is nothing more than the US government preventing itself from borrowing for no good reason.

And this is where my question is really about. Why do you think it is not a real problem? Huge debt and printing of money will eventually lead to inflation right? And it also hopefully leads to a better economy and both things will give higher interest rates.

Huge debt and printing money is a problem *when* it leads to inflation and high interest rates, and through no other known channel. Inflation is very low, and interest rates are practically zero. This is the opposite of a debt crisis - a flight to safety.

The worst that could happen is that inflation starts to bite, and the government will have to raise taxes or cut spending. But US taxes are relatively low, and so investors believe they will pay back the debt and control inflation - and have made *gigantic* bets on that, going forward 30 years. Future borrowing is not going to be a problem.

The real danger is from austerity and deflation, and it's to the macroeconomy, not the government's finances. The danger is to become Japan, not Argentina.

-Jester

*For what it's worth, I think debt/GDP ratios are a terrible way to measure indebtedness, especially as pertains to the odds of a default. But it's the industry standard.

[kandrathe]

What are you referring to when you say "pay that back"? You don't have to pay back printed money, although you do have to accept it as payment for taxes.

If you're referring to the debt, that's a different issue. The US debt has to be paid back on its schedule - bonds come due, and they are paid. Most of those bills are 1-year obligations, but some are 3, 5, 10 or 30 year. The average maturity for a US bond is about 5 years, up by almost a year since the crisis.

Most of the debt, however, is "rolled over" - that is to say, an equal number of new 1-year bonds are sold to replace the old ones cashed in (plus some new ones to cover the deficit). That way, the "quantity" of the debt stays close to the same, although the interest paid might change.

Each year, new debt has to be financed at the market rate. Right now, that rate is hilariously cheap. (Yes, that's right, the government can borrow money for 1 year at an interest rate of 1/10th of a % interest. That is not a typo.) The nightmare scenario that Kandrathe describes, wherein interest rates rise, is mostly about refinancing this rolled-over debt. During the crisis, this has worked in favour of the government budget, lowering borrowing costs on short-term debt to practically zero. But if it were to ever go up sharply, in response to inflation, economic growth, or the threat of default, it might require extra taxation to finance. I don't think this is a big problem, but it apparently keeps some people up at night.

I think my issue with it is that it keeps the government(s) hands in our pockets to the range of about 20-50% of earnings overall. Factoring in government burden to our cost of living, I feel it keeps people from saving money, and induces them to be living pay check to pay check. This is a barrier to entrepreneurship and growth of the private economy.

Another question for you... Private industry over the past decade or three, through the application of technology and process efficiencies has had record increases in productivity (more work, less workers). Why has government gone the opposite direction? We are spending more on government (40% of GDP) as if the same productivity curve did not apply to them.

[FireIceTalon]

Except it isn't government burden that causes or induces people to live paycheck to paycheck, the capitalist system itself does that. The whole "budget deficit" is scam to push through more neo-liberal policies and austerity, nothing more. Whatever resolution they come to, the result will be the same. And the barrier to become part of the ruling class is out of reach for the absolute majority of the population - the American Dream is a myth. The sooner people stop believing in it, the better off they will be (or at least the less disappointed they will be).

[DeeBye]

Another question for you... Private industry over the past decade or three, through the application of technology and process efficiencies has had record increases in productivity (more work, less workers). Why has government gone the opposite direction?

Because the government is not, nor should it be, run like a private industry. A lot of stuff the government is responsible for will always run at a net loss. Private industry would have cut those money-losing divisions.

[Jester]

I think my issue with it is that it keeps the government(s) hands in our pockets to the range of about 20-50% of earnings overall.

You're free to believe the tax burden is too high. I don't think it is - in international comparison, the US is very low, lower than any comparably rich country, at 27%. If it was 50%, you'd be Denmark.



But I don't see what this has to do with indebtedness. If you're worried about government debt per se, rather than just trying to dismantle the welfare state (such as it is), you'd be in favour of higher taxes to improve the fiscal balance, no?

Another question for you... Private industry over the past decade or three, through the application of technology and process efficiencies has had record increases in productivity (more work, less workers). Why has government gone the opposite direction? We are spending more on government (40% of GDP) as if the same productivity curve did not apply to them.

Hasn't it? How are you measuring output productivity of government workers? The amount and type of work that "government" does is not fixed. You need a labour productivity measure.

Plus, I think you're thinking of manufacturing. Productivity improvements in services have been much more muted.

-Jester

[FireIceTalon]

Something just occurred to me. Why the FUCK haven't the federal workers gone on strike? They are not being paid for their labor, after all. Do they fear that the nation would stop functioning as a result? Well, that is kind of the point - which will demonstrate that without labor nothing would get produced or get done. This is absolutely high time and an opportunity for workers to organize, but I suspect it wont happen because the U.S. has probably the lowest class consciousness on the face of the planet, or very close to it. All guised under economic idealism and bourgeois mythology, such as the myth of the "job creators". Or, maybe I could be wrong and it just takes time for organization to develop, but expecting them to suddenly just stop cowtowing to their oligarch masters is probably too optimistic.

[kandrathe]

You're free to believe the tax burden is too high. I don't think it is - in international comparison, the US is very low, lower than any comparably rich country, at 27%. If it was 50%, you'd be Denmark.

Federal. Federal. Federal. But we also pay State, County, locality, sales, service, and excise taxes.

If we go with the tax foundations calculations, 108/265 is close to 30%. The average(middle middle class) US citizen has about 1/3rd of their earnings taken from them. You'd need to be above average, in the 4th quintile (upper middle) in order to be taxed at the 50% or more overall rate.

Then also, in my mind, I don't think we want to be comparable to Denmark (where the avg. tax is 35%). When I think of entrepreneurial growth, I don't think Denmark. I'd rather be comparable to Hong Kong. I think Denmark would be a place that would be comfortable to retire in, but the winters may be too cold.

But I don't see what this has to do with indebtedness. If you're worried about government debt per se, rather than just trying to dismantle the welfare state (such as it is), you'd be in favour of higher taxes to improve the fiscal balance, no?

No. I'm in favour of a higher savings rate, and allowing people to keep more of their income. In general, I think people know better how to spend their own money.

In the OECD then, for savings rates, I wish we were more like Switzerland.

When government gets bloated at all levels, like it is in the US, they take our money away an spend it on what bureaucrats find politically expedient mostly for short term political gain, which is heavily influenced by special interests.

If instead, we allow people to choose how to spend their own money, then only the necessary things get purchased. And... I know this is a vast oversimplification, and as we've discussed numerous times, there are some things that the government is best to do. But, I feel there are many ways in which we can trim out the stuff is less important, or would be better served by the private sector, or more locally. It's not an all or nothing proposition. This is the difficulty in having a healthy diet, or system of taxation. Once you get a little sugar, you want more. Only self-discipline, vigilance and frequent self assessment (on a fair scale) prevents one from getting obese.

We could even look at Obamacare. Why did it cost Minnesota billions of dollars to implement it? We didn't and don't have a problem with vast numbers of uninsured. We'd have been better off just giving everyone of the small % who were uninsured a voucher for free insurance.

But, the states that do have vast numbers of uninsured (like Texas) are avoiding it, they are not implementing it, and cannot afford to enroll their low income people in the Medicaid portion. But, here, we are forced to pay more to resolve a problem we don't have. Beyond that, the additional tax on medical devices threatens the livelihoods of thousands of our citizens.

Another question for you... Private industry over the past decade or three, through the application of technology and process efficiencies has had record increases in productivity (more work, less workers). Why has government gone the opposite direction? We are spending more on government (40% of GDP) as if the same productivity curve did not apply to them.

Hasn't it? How are you measuring output productivity of government workers?

Services provided (hours worked) over what population growth (recipients).

The amount and type of work that "government" does is not fixed. You need a labour productivity measure.

How about these?

Plus, I think you're thinking of manufacturing. Productivity improvements in services have been much more muted.

Not really. Non-manufacturing uses computers too, but maybe not so many robots (the jury is out though on whether there are robots in the government). US corporations have moved to a model of very slim upper and middle management, elimination of clerical positions, and most everyone else becoming a specialized information enabled worker in the trench. I know in my roles over the past decade or two, many examples of where a handful of people are doing with higher productivity, and quality what used to take 20 or more people to do.

There are some professions where this productivity doesn't scale as much when hands on time is the service, like say military, policing, teaching, fire fighting, or in some cases health care. Most of the non-military Federal government is administrative, and not hands on. And, as I understand it, most of the military is administrative too.

[kandrathe]

Because the government is not, nor should it be, run like a private industry. A lot of stuff the government is responsible for will always run at a net loss. Private industry would have cut those money-losing divisions.

Some of it. But, we're talking about net change. What is population growth? What is the growth of government labor as a % of population? What is the growth of government labor spending compared to the growth of GDP? Surely we can replace the room full of accountants with adding machines equally in public and private sectors.