Thursday, February 05, 2009

How are we going to pay for this?

My head is spinning from all the articles, blog posts, talking heads, and water cooler gossip about the Stimulus Bill, and so far I can't figure out how the hell we're supposed to pay for it.

I understand that so far, as a nation, our credit is still pretty good. China and Japan own well over 40% of our foreign debt, and for some reason they keep loaning us money. A sizable percentage of our Gross Domestic Product goes toward servicing this debt, by paying interest. This is money that is being siphoned out of our economy simply to keep up with the loan payments; it's not doing anything useful here.

I guess I have TWO questions now:

1) How much are we paying in interest?

2) How will we eventually pay off this debt?

It seems to me that one of the reasons our nation got into this terrible economic situation is due to people taking out mortgages that they couldn't keep up. Isn't that what we're doing here?

This is an open forum to discuss the issue. If anyone can clarify how we're going to borrow enough money to jump start our economy without bankrupting us at the same time, I'd really like to know. I'm looking for concepts that you can back up with solid economic reasoning. Because looking at the present numbers, it seems that we're caught in a situation that will continue to spiral out of control until we default completely.

In other words, reassure me.

26 comments:

mui said...

Bob. Are you listening to Rell's budget proposal. Please allow me to rant. I am so sick of this stupid woman who plays governor. I am sick of cutting children's health services, education, safety net programs and "consolidating" mental health services, courts and other agencies for the sake of not
raising taxes on people who make 200K. I feel like CT is turning into a mickey mouse state more than ever. And I am sick of Rell making commercials about drunk driving while talking about cutting children's services.
http://www.wfsb.com/politics/18637549/detail.html
http://www.ctkidslink.org/betterchoices.html

CT Bob said...

Rant away, by all means.

I agree that Rell's budget is disastrous in many areas. Already my email is filling up with all sorts of complaints and press releases about it.

But the other local blogs seem to be doing a great job discussing these issues so I'd just be copying their stuff, and I'm seeing very little about the big national stimulus package being debated, so I started this thread.

Hopefully Kirby, who works in the health care sector, has thoughts on Rell's proposals and will post something soon.

Kirby, you got yer ears on?

mui said...

Well, no matter how you look at it fed and state are going to be interrelated. Why propose cuts for children's health services in the wake of the new SCHIP legislation?
http://ctkidslink.org/publications/h09fy10budget.pdf
---
rell should redo the budget and start by cutting her own stupid commercials.
Thanx for letting me rant. I feel like screaming. Especially about more agency "consolidation". Any more agency "consolidation" and places like CVH will have a skyhigh patient population, with a f*cked up ratio of patient/staff. and Rell will spend millions to "consolidate."

Kirby said...

Uh, except that CVH has very few patients anymore because it was decided that back in the 1980s that persons with chronic mental illness should return to the community. Except that "return to the community" meant a bus pass, which deposited discharged people on Main Street in Middletown. Fortunately, the town had a great soup kitchen and a reasonable homeless shelter. There was no follow up to see that these folks would be able to get prescriptions filled (with what money?) so it was only a matter of days before their symptoms were back.

Persons with chronic mental illness and substance abuse make up the greatest single sector of our homeless population. I know, I worked in one for a while and set up a healthcare program to keep our clients out of the ER. I was managing people with diabetes who had to give themselves insulin twice a day in the shelter.

I will be happy to provide some analysis of the state healthcare issue and Rell's budget soon.

Kirby said...

Here's a great analysis by Paul Krugman
http://krugman.blogs.nytimes.com/2009/02/04/about-that-deflation-risk/

His blog is a great resource.

Anonymous said...

As much as I know the the more left-leaning around here will disagree with me, I truly think the answer to this problem is in widespread and substantial tax cuts. I say tax cuts because, by reducing the tax burden on individuals and businesses, people will be more encouraged to spend their money in the private sector. Money spent in the private sector builds GDP. I forget where I saw it, but one of the news channels I was watching recently said that if our GDP grows only by a modest .5% for the next 10-15 years, enough taxes (even at a deprssed rate) would be raised to balance our budget.
This is one area that I believe that the right-wingers have the right idea. The key, though, is to implement these tax cuts WELL.

Gabe said...

As much as I know the the more left-leaning around here will disagree with me, I truly think the answer to this problem is in plentiful spaghetti dinners. I say spaghetti dinners because, by reducing the pasta craving of individuals and businesses, people will be more encouraged to spend their money in the private sector. Money spent in the private sector builds GDP. I forget where I saw it, but one of the news channels I was watching recently said that if our GDP grows only by a modest .5% for the next 10-15 years, enough spaghetti (even at overcooked) would be raised to feed the world.
This is one area that I believe that the right-wingers have the right idea. The key, though, is to implement the spaghetti AL DENTE.

CT Bob said...

LOL! I knew they should have gotten Chef Boyardee for Treasury Secretary!

Anonymous said...

Ya...I bet at least Chef Boyardee pays his taxes

West Haven Bob said...

1) Tax cuts for lower & middle income (up to $100,000 AGI), with corresponding increases for top 5%, for a zero-sum;

2) Tax Incentives for big-ticket durable goods purchases, with corresponding tax incentives for retirement and other savings;

3) Low interest infrastructure loans, financed by T-bills, with 1/2 interest returned to the states for future infrastructure projects.

I could continue....

Anonymous said...

Best Idea: EQUAL distribution of all wealth. Let the janitor make as much as the CEO. Let the janitor make as much as the POTUS. In other words rather than a society of haves and have nots, EVERYBODY will be equal. Now I know rather than respond to my MORALLY correct solution to wealth distribution, you will just insult me. But thats fine, when the workers rise and you CAN see it the world over, progressives who support the staus quo will have a lot of explaining to do to us. Never in the history of the last 200 years have the oppressed had as good a chance to destroy the US beas than right now. Yet all you guys and your idol Paul Krugman say is we need to do this and do that to sav ethe economy. When in fact YOU should be helping the workers destroy capitalism once and for all. In other words you "progressives" seem more interested in preserving a system where a chosen few prosper on the sweat of the workers. Why? I fail to see any difference between a rich republican or a rich liberal democrat. They both directly or indirectly got rich of of the human misery inducing system of capitalism. Raise taxes? no, there should be no taxes for the reason that all wealth should go to a central control that then gives each citizen the SAME amount of money. In an instant EVERYBODY becomes equal. We would have free healthcare, clean air & water because removing the profit motive would eliminate most pollution as well as over production and over consumption. No more people freezing to death because a utility cuts off power. No more war because the capitalists will be gone. Our economic plan is the only MORALLY and intelligent thing to do.

CT Bob said...

Were your parents brother and sister?

Anonymous said...

Again the insults. Give just one MORAL reason anyone should have more wealth than anyone else. To say anyone deserves more than anyone else means you support the status quo of inequity.

CT Bob said...

You expected it, so I didn't want to disappoint you.

I'm good like that.

MIKE said...

CT Bob
Reading thru the blogs de jour I ran across this from Paul Krugman (a pretty smart guy!!!).

Krugman:

A not-so-funny thing happened on the way to economic recovery. Over the last two weeks, what should have been a deadly serious debate about how to save an economy in desperate straits turned, instead, into hackneyed political theater, with Republicans spouting all the old clich├ęs about wasteful government spending and the wonders of tax cuts.

It’s as if the dismal economic failure of the last eight years never happened —

I wish that I could have said myself but without the Nobel background I just didn't have it!!

CT Bob said...

Paul Krugman is getting much love from the people on this blog lately (except from "anonymous", of course; but he hates everything!)

Anonymous said...

Why ask me how we are going to pay our debts? We had an Yale graduate MBA running our country for the past eight years. Did you ever ask him? Did anyone ever ask him? Ooops. I forgot that's what this evil Liberal blog is all about. Thanks to his "Turd Blossom" advisor hanging a giant mushroom over our head. Who would be so unpatriotic to ask? It is too bad we can't drag FDR out of his grave and ask him. He is now being blamed for takeing Hoover's simple little recession into a full scaled depression and topping it off with World War II. Odd we came up with a balanced budget through all of that. Of course that was back when corporations paid their fair share of taxes to do business in this country, including being protected from the pirates of the world and themselves. J.C. Sr.

Anonymous said...

CT Bob,
You should take a look at what no one is talking about. The underfunded State Pension system.
CT is at 44% of the required funding.

http://www.forbes.com/forbes/2009/0216/078b.html

Tien Kou

CT Bob said...

Tien yes, the issue of the state's underfunded pension system is a real cause for concern. I don't understand much about it, except that it seems to be something the state should have been properly funding for years and they haven't. It reminds me of the Social Security situation.

From that graphic you linked, Connecticut ranks the lowest, and only Oregon tops 80% funding. That's obviously an unsound economic situation.

Mike said...

Work twice as hard. Get a second job. Do your bit. Much better

Mike said...

Much better thatn shopping.

CT Bob said...

What if you have trouble finding a first job? ;)

mui said...

Except Kirby, what about those patients of Whiting hospital. Don't you think prevention to keep these patients from going wack in the first place?

mui said...

I think for those involuntarily held at CVH the staff/patient ration is something like 1-23.

mui said...

And please Kirby, do a post on the health/budget cuts.

Jakesmom said...

Wow-I can see why anonymous is anonymous-we should all be equal as far as amount of wealth/assets?let's see. Can you spell Cuba?Russia? Hell-even Europe is teetering on the brink due to their socialistic policies-free healthcare doesn't come free-been to the post office lately? love the service? wait until the government is in charge of healthcare-you'll die while waiting in line. A MORAL reason why we should not be equal? How about individuality? How about some people have the motivation and self-reliance to work HARDER than others -therefore SHOULD BE REWARDED ACCORDINGLY? WHO DO YOU GET YOUR JOBS FROM-SOMEONE ON WELFARE OR SOMEONE WHO WAS WILLING TO SACRIFICE AND WORK HARD DAYS,EVENINGS,AND WEEKENDS TO GET AHEAD TO BUILD A COMPANY THAT WOULD PROVIDE YOU A JOB???? Or perhaps now that Barky is going to fill your gas tank and pay your mortgage and pay for your kids to go to college and pay for your healthcare and pay for your retirement fund and pay for your groceries and pay for your clothes and pay for your haircuts you don't have to work anymore....God help the next generation and give them strong backs-when this president gets done they'll need it to carry the debt burden he's dumping on them. I'm sick of people wanting something for nothing. I've protected the assets I've worked hard for for 30 plus years-I've decided to sit back, relax for a change and watch those who were never willing to pay the price fight over the crumbs - because that's all they'll ever get. I've already written every family member who voted for the messiah out of my will-they voted for him-they can pay for their kid's college education with no help from me-he's THEIR boy- they're on their own. I'm protecting ME and MINE and THAT's IT!