OT: US National debt

[Will]

The Bush campaign's claim that Kerry wanted to cut military and intelligence budgets came from votes in the late 80's/early 90's, when he voted to cut back on the annual increases to those areas. At the time, it was at the urging of then Secretary of Defense... Dick Cheney. I always thought it was funny that the Bush campaign was criticizing Kerry for going along with what Cheney wanted.

But, regardless of past votes, Kerry wanted to INCREASE military and intelligence budgets, by adding two active divisions to the US Army, and increasing the prominence of Special Forces throughout the military. If his platform isn't up on his website anymore, I'm sure you can find a copy Online somewhere.

What Kerry was going to do to decrease the deficit was to repeal the tax cuts for the upper brackets ($200,000+ yearly income), close loopholes in corporate tax code that gives tax breaks for offshoring workers, put back capital gains taxes to their 90s levels (that's the tax levied on the sale of stocks), etc. Basically bring taxes to a point between what they are and what they were under Clinton for those in the highest tax bracket, while leaving the middle-class and lower brackets as they are now. He also wanted to accellerate the training of the Iraqi security forces, and try to bring in UN troops to alleviate the pressure on US forces. But probably the best that could be hoped for is half the troops in Iraq after two years.

The deficit is so large now, that it probably would have taken the entire term for Kerry to even make a dent in it. Probably what would have been the biggest thing to bring the budget down is the clash between a Republican Congress and Democratic Presidency. That combination under Clinton caused the budget to fall to the lowest common denominator politically, just so it could pass, which resulted in the surpluses. With the plans to increase military size, the deficit probably would have increased, who knows.

As for the civics lesson... it's late. I need to sleep and go to work in the morning. I'll write up something about the relation government debt has to the economic status of individual citizens (especially in the US) later. The very, very short Version: The bigger the government debt, the more taxes citizens have to pay to cover interest payments on the debt, which lowers the availible capital for citizens. In an economy like the US, driven by consumerism, this has an impact on how much people buy. As it is now, it's being made up by people accumulating their own debt to buy more things, which they then have to pay interest on, giving them less money to buy stuff. Which they make up for by borrowing to buy more, accumulating more debt, giving them less money to buy... vicious cycle. Eventually, the debts will get so high, that the economy will crash. We're already seeing warning signs with increased bankruptcies with individuals and companies, but those are just minor shockwaves. When it really hits... well, take a look what happened during the Great Depression. Then multiply it over the entire globe.

The dangers of debt...

[deccan]

Will said:
What Kerry was going to do to decrease the deficit was to repeal the tax cuts for the upper brackets ($200,000+ yearly income)...

I recently read this in "The Economist":

On the domestic side, Mr Kerry would repeal Mr Bush's tax cuts for people earning more than $200,000 a year. But he proposes to keep the middle-class tax cuts. The overall effect would be to cut taxes by $600 billion over ten years compared with the current position. That is still less than the sum of the reductions Mr Bush is proposing, and Mr Kerry plans to spend all -or possibly more than all- the difference on health care. In simple terms, he poses a clear domestic choice in the election: do you want more tax cuts or more health care?

It seems to me that based on campaign rhetoric, Kerry would have done no better than Bush in cutting the deficit. However, in all honesty, Kerry, if he had been elected into office, would probably not go so far as what he promised on the campaign trail and saved more money. The same issue of The Economist included a poll of 100 academic economists and concluded:

Although Americans overall seem relatively unconcerned about the budget deficit, a large majority of the economists rate it as a serious problem for the economy, with almost one in five describing it as a crisis. And they back Mr Kerry by a large margin (79% to 18%) to do more to promote fiscal discipline than Mr Bush.

[Starhawk]

It's amazing that the whole globe is tied so closely to the US economy, heh wow.

Well thanks for the lesson it was interesting (and scarry) all I can say is I hope those campaign rhetoric types are blown out of proportions because I would hate having to raise my kids (if I ever have any) in a depression era WORLD (then again that would be one hell of a way to change world economics eh?)

Well I do doubt Kerry would do any better to be honest as democrats have shown no better spending policies then republicans it's just that they are better at covering up their bullsh!t (sorry but I don't like politics at all and both parties tick me off at times).
Though for the most part my family is republican (parents, grand parents, aunts uncles the whole shabang) most of them will vote democrate if they beleive the candidate is better then the republican and so will I when can vote, but I still have to say I would not have voted Kerry.

[Fyron]

When it really hits... well, take a look what happened during the Great Depression. Then multiply it over the entire globe.

The Great Depression did affect the entire globe. That is why it was so "Great." Recall what happened in Europe during those years...

[Raging Deadstar]

If i recall my history it was in 1930's, and was one of the main causes for allowing Hitler to rise to power with the Nazi Party, the rest as they say, is History.

[Will]

It was global, yes, but not to the degree that it would be now. There isn't a substantial economy in the world that is not directly and intricately tied to the US economy. Even the planned economy of China, which would normally be able to (theoretically) ignore the value of money in the outside world and focus only on internal production, would be affected since a large portion of the economy is now dedicated to foreign trade. In the Great Depression of the 1920's and 1930's, the shockwaves sent out from economic collapse were buffered somewhat by multiple layers between some economies, simply because of geographic limitations to trade. Now most of the geographic limitations are lifted, and anyone can trade with practically anyone else.

Time for work...

[parabolize]

Will said:
It was global, yes, but not to the degree that it would be now. There isn't a substantial economy in the world that is not directly and intricately tied to the US economy. Even the planned economy of China, which would normally be able to (theoretically) ignore the value of money in the outside world and focus only on internal production, would be affected since a large portion of the economy is now dedicated to foreign trade. In the Great Depression of the 1920's and 1930's, the shockwaves sent out from economic collapse were buffered somewhat by multiple layers between some economies, simply because of geographic limitations to trade. Now most of the geographic limitations are lifted, and anyone can trade with practically anyone else.

Time for work...

Asia would fall as fast or faster then the USA but... Europe? I think the EU would be fine this time. South/Central America wouldn't do to well.

[solops]

National debt is easy to eliminate. You just cause enough inflation that the debt becomes insignificant. The accompanying recession might be uncomfortable.

[Starhawk]

Wouldn't that cause a "great depression" that everyone is afraid of? Or was that just a joke you were making?

It's hard to tell sometimes

[Renegade 13]

parabolize said:

Asia would fall as fast or faster then the USA but... Europe? I think the EU would be fine this time. South/Central America wouldn't do to well.

I doubt that. There's a reason why it's called a "world economy". No part of the world would be spared in the event of a second great depression, not the EU, not Asia, not North America. It's simply a question of how badly any given country is affected. Some would undoubtedly be worse than others.

For instance, during the Great Depression, the Soviet Union did fairly well, since they were barely industrialized, and were not exporting hardly anything. Therefore, the "global" disaster didn't really affect them a lot. Of course, the same thing could not happen in the event of another Depression, since the same situations no longer exist.