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It's a matter of Bidenomics!

Discussion in 'BBS Hangout: Debate & Discussion' started by adoo, Jun 28, 2023.

  1. astros123

    astros123 Member

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    None of those countries are the reserve currency. You can't run deficits unless you run the world's central bank and are able to manipulate your currency through swaps. You keep claiming it won't be sustainable but you have nothing to base this on?

    Bidens latest legislation included 70b for the IRS to go after the tax crooks which the government thinks will bring a 10x return. His legislation also included a minimum tax which will bring in another 200b or so at minimum and will force corporations to pay a minimum 15% tax.

    Again you never mentioned what investments you would be okay with deficits? Bidens deficits come from investments. Deficit spending to help upgrade your infrastructure will bring a positive ROI. Bidens IRA is spending 700b on green energy but that will bring a 2 trillion dollar investment by private companies.



    Not all deficits are bad.
     
  2. Invisible Fan

    Invisible Fan Member

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    That's a tough one. Did FDR's works beat back the depression or did a post-WW2 victory do that for the US? It's debatable.

    Speaking of the last time the US had their Debt:GDP at this level, the government maintained rationing a couple years after the war ended. They starved consumer spending to control inflation and also to promote bond purchases. It took several years of that kind of price control, financial repression and austerity to pay off their debt burden. But hey, this is pre-Bretton Woods, post-gold standard, etc, etc...DOESN'T COUNT

    Either way, the article I posted stated that we're in the red 1.4T after 9 months. That is way more than the 2.4% est growth of a ~27T GDP. How efficiently are you expecting all of these works to go in as investments once you add wage, price, and materials inflation? AP estimates 10% of covid relief went to fraud or abuse. Wouldn't real economic growth feel much nicer? What does productive economic growth mean anymore? Is it from a MBS or other financial derivative? Everything is so distorted to the point we're playing hot potato with traditional business cycles of boom/busts.

    On top of that, if you're selling that this money is entirely "surgically targeted", it's inflationary to the point where Powell already hinted more hikes this year. If hike is plural, then that's 6%.

    If it were a different time, I would answer straight up what I'd be okay with, but the prospect 1,000,000,000,000 per year deficits compounding 3-5% annually is a big deal. That covers either Medicaid or our defense budget. The amount almost covers Social Security. You let it compound, it's like paying double for Medicare or defense. You do something to stop the compounding, you still lose something more in return until those investments outpace the compounding rate. You better hope that multiplier effect for stimulus spending lasts beyond 6-18 months (it didn't for Bush nor Obama)

    Ideally you gain tax receipts or other income to make up for the spending rather than borrowing and hoping other countries aren't doing shittier to extract a low borrowing rate.

    So to answer your question, if I were a pure free market idealist and with politics in a vacuum, I'd spend nothing, prevent further moral hazard through Fed interventions, then let the market settle the rot festering inside our system. Inflation still exists, Main Street is K shaped and the lower rungs feel inflation more than the higher rungs that benefit from rising asset prices. What percentage of Americans own at least one single stock? What percentage owns a place to live?

    Now as a bleeding heart, I would start deficit spending like Obama after some rot is thrust in the sunlight. Let the BBB rated zombie companies burst from being unable to finance their revolving debt. Return some parity to real estate prices once non-individual speculators exit the market. Maybe even coordinate with the Fed so that when they claim to want to curb inflation, you don't add a trillion and change into the economy. I guess it's much simpler with a bust since they'd both want to fight against dis-inflationary and deflationary effects.

    Would the GDP contract? Would we have less tax receipts? Hell yes. You can't avoid a business cycle no matter how much the government tries. If you want to believe deficits don't matter, spend it then rather than letting the top 10% receive most of the gains.
     
    #342 Invisible Fan, Aug 1, 2023
    Last edited: Aug 1, 2023
    astros123 likes this.
  3. adoo

    adoo Member

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    just the opposite is true

    Govt spending / monetary fine tuning
    • lifted the US out of the Great Depression
    • lifted the US out of the W-induced economic depression

    as for Japan, Govt spending / monetary fine-tuning have helped it to recovery from a war-torn economy to be one of the leading economies in the world.
    some 80 years after WW2, to say that the Japanese economy is more than alive and kicking would be a gross understatedment.

    as for China, Govt spending / monetary fine-tuning, described by Deng as "Capitalism with Chinese characteristics", have transformed, China from a 3rd world economy to the world's #2 economy in the world, in the process, lifting over 100 milion citizens out of poverty. the transformation started in the 1970s. some 50 yrs ago

    :rolleyes:, sleight-of-hand, revisionist history on your part.

    WW2 ended in 1945. some 6 years after the end of the Great Depression in 1939​
     
    #343 adoo, Aug 1, 2023
    Last edited: Aug 1, 2023
  4. adoo

    adoo Member

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    ROCKSS and astros123 like this.
  5. Invisible Fan

    Invisible Fan Member

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    Rupert's rag at...checks...The Financial Times running another hatchet job on US spending.

    The trouble with American exceptionalism
    Given the current reality where Cons will pull a 3 for me, maybe 1 for you on spending, I'll take this over whatever Repugs are offering right now. Shoot, I even agreed last year that Dems needed messaging.

    I'm not buying that "good messaging" means you peddle cherry picked indicators as facts, then will the entire thing to happen. That's more or less gaslighting and thinking less of the public with whatever economic hardship they're dealing with right now.
     
    #345 Invisible Fan, Aug 1, 2023
    Last edited: Aug 1, 2023
  6. astros123

    astros123 Member

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    Who's discounting economic hardships people are dealing with? Bidens child tax credit helped cut poverty by half. Biden is pushing for free universities and free childcare. Who's discounting the hurt people have?

    You're stating that we shouldn't deficit spent to help these people when it's the most efficient way?
     
  7. Invisible Fan

    Invisible Fan Member

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    More like Biden and his admin claiming they're not seeing any signs of recession and that inflation isn't a problem. Hinting at raising rates to 6% even when every one involved knows about lag effects means inflation is still persistent enough of a worry to bring it up.

    But people are spending and even making big ticket purchases at current rates. People are doing their patriotic duty by spending, what's the worst that can happen?

    And yes, we shouldn't deficit spend for spending measures like loan forgiveness, even if they are one-off. You're making a promise you can't keep when subsequent admins decide to tackle lowering interest payments by paying off the national debt.
     
  8. astros123

    astros123 Member

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    Huh?? When has biden said inflation isn't bad or everything is good? Biden is trying end the war in ukraine because he knows high gas prices are killing Americans right now! High interest rates are making it impossible for folks to buy a house or car. Times are my all rainbows and sunshine. It's tough to borrow right now.

    My point is biden isn't the cause of these problems and I would argue these bottlenecks and higher inflation is the result of just in time supply chain which were build in the 90s after we allowed into WTO and pushed neoliberal policies.

    Biden is trying to help where he can. He's made college super affordable and has provided the best jobs market in decades. Yes there's tons more hurt and that's why the war needs to end and gas comes back down.

    If biden doesn't get gas prices back to normal he may lose the next election because of it. I'm not blind or dumb to the hurt people are suffering.
     
  9. astros123

    astros123 Member

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    @Astrodome I own a small medical business in rural America and every other small business is being bought out by NYC hedge funds and bigger corporations who want to expand their market. Consolidation is BAD for rural America and lina khan has already stopped over 10 medical mergers. More than any other ftc in history

    If it wasn't for lina khan a big competitor would've bought out the competition in my area and starved me out. Because of lina hedge funds aren't buying out smaller companies cuz their afraid of actions.


    @Invisible Fan this is why I'm a big fan of strong antitrust. It effects every layer of society
     
    Invisible Fan and SamFisher like this.
  10. adoo

    adoo Member

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    how can you make that false claim even after the Biden team had provided these fiscal stimuli

    • American Rescue plan
    • Chip act and
    • infrastucture act.
    the core of Bidenomics


    ur referring to the Fed, not the Biden admin, no?
     
    #350 adoo, Aug 1, 2023
    Last edited: Aug 1, 2023
    astros123 likes this.
  11. Invisible Fan

    Invisible Fan Member

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    What's funny are the Xbox comments in the Twitter replies. Yikes...

    She's not gonna like cave dwellers from Applestan
     
    astros123 likes this.
  12. astros123

    astros123 Member

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    That's what it means to take on corporate America. You will gain alot of haters and enemies. That's why I respect the fk outta her. She's busting amazon and Google up as well. The MFST fanboys are a bunch of morons.
     
  13. adoo

    adoo Member

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    There are a plethora of instances in which government is slow. But sometimes, government can be more swift and effective than its critics can even imagine, as the implementation of the three signature pieces of Biden administration/Democratic Congress legislation is now demonstrating.

    1. The Infrastructure Act,
    2. the CHIPS Act, and
    3. the Inflation Reduction Act
    have spurred the economy, which grew by 2.4 %in the last quarter, well beyond anything the private sector could have accomplished by itself, and in less time than establishment economists,
    such as former Fed Chair Larry Summers, thought possible.

    America is building factories again:
    Learning not just from FDR’s successes but also from the failure of the Obama administration to highlight the projects that its stimulus spending had created, Biden and Democrats are now volubly touting the projects that their own stimulus programs have engendered, many of which are already springing up. Given the public’s skepticism about the effects and durability of this economic revival, and the Republicans’ insistence that no such revival exists, Biden & Company know they will have to keep making this case straight through November of next year.

    That said, can we acknowledge that Bidenomics is not only successful but speedy? Yes, we can.
     
  14. adoo

    adoo Member

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  15. astros123

    astros123 Member

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    Thank you for your posts. This the only thread that hasn't been hijacked by dip **** MAAGAts spreading conspiracies. We finally have a policy driven thread.

    The best news is saudis are brokering a peace deal. I expect the war to be over with this fall which will help sooooo much with energy prices immediately. We need this
     
  16. adoo

    adoo Member

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    Robert Reich was the US Secretary of Labor under Clinton; this is his take on Bidennomics.


    Until recently, I assumed that Joe Biden would get a second term despite worries about his age because most Americans find Trump so loathsome.

    But I’ve underestimated Bidenomics. It’s turning out to be the most successful set of economic policies the United States has witnessed since FDR.

    It may not only give Joe another term but also give Democrats control over both houses of Congress. It may even put the nation on the path to widely shared prosperity for a generation.

    New economic data last week showed that inflation cooled to 3% in June, down from over 9% last year, and close to the Fed’s goal of 2%.

    And as inflation has subsided, real wages – that is, what paychecks will buy – have finally risen.

    Meanwhile, economic growth has accelerated. Consumer spending is solid. Consumers expect the economy to continue to do well.

    This isn’t all. The Biden administration has added three other critical ingredients:
    1. the threat (and, in some cases, reality) of tough antitrust enforcement,
    2. a pro-labor National Labor Relations Board, and
    3. strict limits on Chinese imports.

    Taken together, these policies are beginning to alter the structure of the American economy in favor of the bottom 90%.

    In recent decades, the Fed has been in charge of evening out the business cycle, but no one has taken charge of altering the structure of the economy so that the poor and working middle class get a larger share of the gains.

    In contrast to both supply-side economics and neoliberalism, the Biden administration is focused on altering the structure of the economy.

    Over the past year, manufacturing construction in hi-tech electronics, which the administration has subsidized through Chips and the Inflation Reduction Act, has quadrupled.

    Tens of billions in infrastructure spending has been funneled to the states for road, water system and internet upgrades.

    More clean-energy manufacturing facilities have been announced in the last year than in the previous seven combined.

    Biden understands that these investments must translate into high-paying jobs, which often require unions.

    But a buoyant economy strengthens the hand of workers, making it easier to unionize – which helps explain the ubiquitous labor action this summer.

    If Bidenomics continues to alter the structure of the economy in ways that help the vast majority, voters will give Biden another term and reward Democrats with both houses of Congress.

    And if Bidenomics is successful, it will make the American economy both stronger and fairer in years to come.

    I’m betting on it.
     
  17. Os Trigonum

    Os Trigonum Member
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    https://www.wsj.com/articles/fitch-downgrades-u-s-debt-credit-rating-3b8e71d3?mod=hp_opin_pos_1

    Fitch Downgrades America
    The rating agency may be too optimistic about the U.S. fiscal future.
    By The Editorial Board
    Updated Aug. 2, 2023 at 6:28 pm ET

    The decision by Fitch Ratings on Tuesday to downgrade U.S. debt has jolted Wall Street and Washington, but why is anyone surprised? The downgrade to AA+ from AAA may even be an overly optimistic assessment of the U.S. fiscal outlook, and it ought to be a warning to the political class, which will ignore it.

    “The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions,” Fitch said in explaining its decision.

    The credit raters aren’t perfect oracles. And we don’t agree with Fitch’s complaint about debt-limit standoffs, since those have been the only recent times when anyone in Washington considers spending restraint. But Fitch’s decision captures the unseriousness of America’s economic decision-making.

    For evidence, consider how much the U.S. fiscal and political outlook has deteriorated since the previous debt downgrade in 2011. Standard & Poor’s dropped its AAA rating on U.S. debt while Fitch and Moody’s didn’t.

    The ratio of U.S. debt held by the public to GDP at the time was only 65.5%, while the Congressional Budget Office expects it to be 98.2% this year. That’s up from 79.4% before the pandemic, and it is expected to rise to 115% of GDP by 2033 on present budget trend. As Fitch notes, U.S. “general government debt,” including state and local government, is more than two-and-a-half times greater than the median 39.6% of GDP for a AAA rating.

    The future looks worse. The deficit in the first nine months of this fiscal year hit $1.39 trillion, up 169% from the same period the year before. The deficit is supposed to shrink when the economy grows, but revenue isn’t keeping pace with runaway spending. The debt-ceiling deal this year did little to curtail the spending bulge still in the pipeline from the first two Biden years. Interest on the debt this year is expected to be $663 billion, which is $188 billion more than all corporate tax revenue.

    Democrats are attacking Fitch, and Treasury Secretary Janet Yellen criticized the decision as “arbitrary and based on outdated data.” Outdated? Her own department on Monday increased the government’s expected borrowing from July to September to $1 trillion from $733 billion. That’s for three months.

    She also claims that “governance” has improved under President Biden, citing the infrastructure bill and “other investments in America’s competitiveness.” She must be joking. Since when is blowout spending a credit recommendation?

    Ms. Yellen and Democrats spent months trying to scare markets about even modest future spending reduction. Congress’s budget process is broken and its tax and spending estimates are often wildly wrong.

    The EV subsidies in the hilariously named Inflation Reduction Act were scored at a cost of $14 billion, but Goldman Sachs estimates they will cost $393 billion because the subsidies are open-ended. Goldman estimates the climate spending will total $1.2 trillion—three times more than CBO’s estimate.

    Neither Mr. Biden nor Donald Trump shows the remotest interest in reforming entitlements, which will explode as the baby boomers retire. Mr. Biden and his progressive allies want to create new entitlements that would cost trillions of dollars, while Mr. Trump attacks any Republican who even mentions reform.

    As Piper Sandler’s Andy Laperriere notes, the Trump GOP is moving away from its traditional pro-growth, free-market beliefs to favor protectionism and anti-business policies. As a result, the U.S. may be settling into a slow growth trajectory as Europe has. Without faster growth or policy reform, the U.S. fiscal outlook will worsen.

    ***
    The reason U.S. debt hasn’t been downgraded earlier and more often is because the dollar remains the world’s reserve currency. But that “exorbitant privilege,” as the French like to call it, is not a birthright. It can vanish in a flash if markets perceive a broader American decline in governance or its ability to meet its financial obligations.

    This is where political leadership matters, and where it has failed. The White House criticized Fitch’s decision, but there’s a reason the downgrade happened on Mr. Biden’s watch. It’s a no-confidence vote in U.S. political leaders, and that starts at the top.

    Appeared in the August 3, 2023, print edition as 'Fitch Downgrades America'.



     
  18. rocketsjudoka

    rocketsjudoka Member

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    It’s interesting to see Republicans who were all for Trump’s infrastructure weeks and his rhetoric that he would being manufacturing back to the US complaining that new infrastructure is being built and manufacturing is returning.
     
  19. rocketsjudoka

    rocketsjudoka Member

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    Regarding the credit rating if the concern is the amount of debt the US held that number was rapidly increasing also under GOP administrations. While taking on debt is a
    Problem it seems like doing so to build infrastructure would be a better long term use of it than just tax cuts.
     
  20. adoo

    adoo Member

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    food for thought,
     

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