Journal Bill Dog's Journal: The audacity of austerity 24
A new word has come into my vernacular recently. From wikipedia:
In economics, austerity is when a government reduces its spending and/or increases user fees to pay back creditors. Austerity is usually required when a government's fiscal deficit spending is felt to be unsustainable.
Reasons for taking austerity measures
Austerity measures are typically taken after a government's bond rating is downgraded, making it more expensive to borrow money. Government bonds are typically downgraded when debt grows substantially as a portion of GDP. Government debt grows as spending exceeds tax revenue. Such excess occurs when tax rates are such that revenues are kept low while government spending is increased. Such excess can also occur when the economic activity stagnates or decreases, such as in a recession, thereby reducing the government's tax revenue.
Banks, or inter-governmental institutions such as the International Monetary Fund (IMF), may require that an indebted government pursue an 'austerity policy'. This typically occurs when the government must refinance loans that are about to come due, for which the government cannot pay. The government may be asked to stop issuing subsidies or to otherwise reduce public spending. When the IMF requires such a policy, the terms are known as 'IMF conditionalities'.
Typical effects
Development projects, welfare, and other social spending are common programs of spending for cuts. Taxes, port and airport fees and train and bus fares are common sources of increased user fees.
In many cases, austerity measures have been associated with short-term declines in standard of living until economic conditions improved and fiscal balance was achieved.
Examples of austerity
Israel, 1949-1959
United Kingdom, during and after the two World Wars
Argentina, 1952
Spain, 1979
Mexico, 1985
Cuba, 1991
Nicaragua, 1997
Palestinian Authority, 2006
Latvia, 2009
Greece, 2010
So Greece has a big payment on their debt coming up on the 19th, and they don't have it. So some pseudo-governmental global banking conglomerate (the IMF) or whatever says we'll see to it that you make rent this month, but ya gotta give up the hookers and booze and stop partying like it's 1999 again. Naturally, labor unions there are striking and marching and protesting this. From a USA Today article for this morning:
But turning serious, she added, "This crisis is not our fault. We shouldn't have to pay.
... I work too hard, and I'm not paid very well. Now, they want to cut my salary, and I don't know why. They created this debt. Not me." [...]
Not surprisingly, Greeks are fighting to keep what they have -- no matter how unaffordable it might be. Public sector workers enjoy pensions that are "among the most generous" in the 35-nation Organisation for Economic Co-operation and Development, that body said in a 2009 study. They also get 14 monthly paychecks each year, which the austerity plan would cut to 12.
Aw, poor things, imagine only receiving 12 monthly paychecks per year. Oh, wait...
So it's not just in the U.S. that unions are spoiled brats. But they are the extreme case. In general, tho, haven't we all lived beyond our means? To one degree or another?
In addition to the list of all the countries that have implemented such a plan before, do a Google search on "economic austerity" and you'll see hits dated this month and year on a bunch of other countries that are doing or planning this. Not that "well, everyone's doing it!" is a reason for us to do it, but I think it's fair impetus to ask why we're not doing it.
Our leaders have been taking us in the nearly opposite direction. On taxes, they haven't cut them per se, but diminished federal revenues all the same, with all kinds of "stimulative" rebates and tax credits adnd deductions. And on spending, the danger has been "dealt with" by running, at historically unseen speeds, straight into it. We're like a beserker from Norse folklore. I guess figuring that the only way to survive overwhelming destruction is to overwhelm the destruction itself! So if poison is what is killing us, let us take ten times more of the stuff, if we'll have any chance of saving ourselves, I guess.
But what about "Draconian" cuts? Republicans are reputed to always be in favor of that. And massive tax hikes to punitive levels? Democrats are reputed to always be in favor of that. If we did both, it seems like something both sides could at least theoretically agree on.
Kick bums like me off the public dole. I've been unemployed since the December before last (!), and govt. has been paying me non-stop since then. Including subsidizing my health insurance premiums, for many of those months. I'd prolly have lost my home by now if we had, but other people already have. My parents don't have a basement I could go live in, but worst case I could beg to move in with family. Having 1K of sq ft to oneself is a luxury in some countries.
Tax the piss out of you lucky SOB's with jobs. My sister and her husband are relandscaping and redecorating their home and buying beach community property, all during an economic downturn. They can temporarily afford much higher taxes.
Sure there'd be a lot of pain for many, including me. It's regressive, it's "not fair", it's scary, it hurts, govt. employees have "worked hard" at their cushy jobs so they don't deserve it, they didn't do anything wrong with their ludicrously lucrative compensation and benefits, make someone else pay, yada yada yada.
We've all lived artificially high, so the question is, how much of our lifestyle has been the over-the-top amount, the illusory, unsustainable part? And shouldn't we try actually trying to alleviate the problem, and tightening our belts as a nation, instead of compounding it? Even if it means giving back some std of living for a while, or maybe forever?
If other countries are facing economic reality, and just sucking it up, we can too. Or would we riot as well? To what end?
You were not... (Score:1)
You were not terribly concise, so I may have mis-read the part where you suggest temporarily raising taxes. But are you insane!?! The last thing we need at the moment is to raise taxes.
Of the small business owners I talk to, every one of them are already struggling. My neighbor, who has a pallet shop was at 20ish employees a few years back is down to 3, himself, his wife, and one other guy. He is considering closing up shop and just brokering pallets, but having another shop do the work while he does th
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I will also obligate the feds to protect the people from the corrupt, abusive local authorities, make sure the big boys who pay no taxes start paying their fair share since they enjoy so many benefits, overseas security services under the guise of "national defense" being a big one. How come we're paying that bill? But way beyond the tax issue is corruption, public and personal. It permeates everything and everybody. And the absurd belief in "zero sum". That if your neighbor gains something, you have to los
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Every business other than those suckling at the government teat is struggling.
The US has 600 billion dollars for the budget of the military. The next closest country is only spending about 60 billion USD.
A lot of our defense budget goes to businesses suckling at the government teat.
What we need is the federal government to get it's grabby claws out of anything other than national defense and securing private property which would cut spending considerably.
Oh, so we would keep that 600 billion a year of overkill spending... ok.
And securing private property... actually, that's more of a state, and local government responsibility... they determine how land is transfered, what is property, etc. When I have something stolen from me, I don't call the FBI, I cal
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What makes you think raising taxes in general, especially in the common austerity taxes (which are basically across-the-board tariffs) would hurt small businesses like your friend?
Think of it this way- what if the tax we raised was a fee on bringing pallets across state lines? What would THAT do to your friend's business if he's the local supplier?
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Well, for starters he has contracted out with out of state suppliers to provide pallets when the current orders are too large, not that is likely an issue at the moment. Second, the more he pays to the government, in the form of direct taxes or regulation the less he people he is able to employ. If he cannot make a profit he will simply close up shop and everyone is hurt by higher unemployment, less taxes, and no product being created. One example of regulation is that we live out in farm country which h
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That sounds more like a local county problem than a federal problem. Has he tried running for the county board of commissioners to get things to change?
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Yes, I subscribe to the basic premise of the Laffer curve, so I didn't mean to suggest near 100% tax rates, which would cut govt. revenues even further. But separate the problem of sustainable govt. behavior from the problem of the accumulated result of that, for a moment. I'm afraid we could have balanced budgets from here on out and still economically collapse. I'm only talking about considering a short-term drastic measure to stave that off. Lots of people are struggling, but I don't think we could ever
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My point is it is our spending which is unsustainable. And as a nation, we'll need to have business succeeding to maintain or gain tax revenue.
How would an additional tax on you, who is drawing unemployment, benefit anyone? Even if we confiscate billions from the "rich", how are they going to help create jobs? Taxing business is going to drive them over seas. If you are in the tax categories which are going to be hit, wouldn't you simply move out of the country?
Taxes, Income and the Economy (Score:2)
Raising taxes does nothing to address the root cause of the problem, profligate [reference.com] spending by Congress. Raising taxes simply allows them to continue doing that.
Like you, I was unemployed since the December before last. I just recently (late February) got a job. But, during the downtime I lost just about everything, including my house. I *did* have a grandmother with a basement to move in to, and all 6 of us did that. It was unpleasant, to say the least. Half our belongings went into storage, the other h
Protectionism (Score:2)
Income is not the only potential tax. What if instead of an 8% additional tax on $100,000 of income, we had an 8% VAT on bringing shipping containers through customs, collected at customs? Suddenly, instead of third world $1/day labor undercutting your business, because you're the local supplier and don't have to send your goods through customs, you suddenly gain a 400% increase in market share, but only if you hire employees to take advantage of it.....
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Yup, that is the Founding Fathers solution. Excise and import duties.
I agree with Ron Paul, we should repeal 1913.
Cut our Military Budget in Half (Score:2)
If we did that, we would then only be spending one third of the entire world spending on Militaries, instead of where we're at now: a little short of half.
At 300 billion a year, we could then also pay off our national debt really really fast.
You know, unless it's the case that by doing so, we wouldn't shoot much of our economy in the foot... you know, like Boeing, Northrop-Grumman, and the rest of the economy that relies heavily upon the US handing out money like candy for contracts.
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Hi snowgirl. Welcome.
What you're proposing might have some destabilizing effect, if we in essence announce that we're drastically scaling back our military might, or presence or reach or what-have-you. Not necessarily a reason overall not to, tho. And I don't really want us to be the world's policeman anymore.
But there are two issues I'm with the neocons partially on, and that is terrorism and nuclear proliferation. I'm for being somewhat proactive, without being meddlesome. Let's stop the unconstitutional,
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Note also that about half of "military spending" is really "foreign aid".
Our Military budget is not spent on foreign aid. That is a separate item on the budget.
Besides, our real national debt [usdebtclock.org] is over $100 trillion when you count entitlement obligations we don't have the money to pay. We could cut your $300 billion this year, but we'd need to find another one of those every year for about 333 years.
This $300 billion as a cut to defense is a savings that could be implemented every year.
Measuring $100 trillion as a projected value for national debt isn't exactly genuine when I'm suggesting cutting funding and paying off debt, or rather deficit elsewhere.
Maybe we should go after the bigger line items first, where we'd get the most bang for our buck. Like cutting all of our unconstitutional socialism in half. (It's inherently unsustainable, so it's gonna happen anyways, one way or another.)
The military budget is (according to your debt clock link) the third largest budget item. It is a "bigger line item".
In fact, from the Budget documents provided by t [gpoaccess.gov]
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I didn't say any of it was spent on foreign aid. I said much of it is spent on "foreign aid". And I included what I meant by that.
Great, then we only need to do that for 333 years. Solves nothing with our debt crisis today, but is a nice unrealistic/Leftist dream. Maybe as a result we could fall behind technologically as well as in replacing worn-out equipment and weaponry,
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I didn't say any of it was spent on foreign aid. I said much of it is spent on "foreign aid". And I included what I meant by that.
While I see what you're writing, and kind of what you're intending, I do not get the connotations, and allusions that you are attempting to portray.
Would you mind explaining it to me explicitly?
Maybe as a result we could fall behind technologically as well as in replacing worn-out equipment and weaponry, and then China will conquer us way before 333 years from now, and when they do our debt won't matter any longer!
If we cut our military defense spending in half, we would still be spending about 5 times more than China.
If you're suggesting that somehow another nation spending less than us every year could eventually surpass us, I would like to understand how that doesn't violate the ideas behind money being the primary, and bes
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As I wrote about, for example I think we have no business keeping troops and bases in places where there are no dangers of needing defense or really none that are any of our business, just to pump money into their regions' economies.
What I said was not to say that GW wasn't bad, he was definitely worse, spending-wise, than Clinton. It was only meant to point out that there were no surpluses under Clinton, that
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If this is true, then what surplus did Bush redistribute to the people?
"If this is true"? Wow, you don't let facts get in the way of what you want to believe, do you.
No, this isn't "don't let the facts get in the way". You're making an assertion that there were no surplus. If there were no surplus, then what did George Bush push back out to the people?
He gave every taxpayer money, so where did that money come from? because they said it came from a surplus.
To specifically quote George W. Bush: "the surplus is not the government’s money. The surplus is the people’s money."
Maybe what he is calling a surplus was not actually a surplus, I will definitely grant
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Damn it, I must've accidently used the tab I was replying in to go look something up. Basically, on your credit card example, check the debt clock again, the $100K amount I was using was not what the $13K could potentially grow into, it was in addition to it, it is the amount we currently owe on (federal) entitlements that we don't have the money for. Our current situation might be like having $13K in credit card debt, and $108 in student loans. And where you're continuing to go to school and continuously r
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I looked extensively over the debt clock. There is no "entitlements that we can't pay for" clock on there. Seriously though, they don't list what you're talking about... unless I'm retarded and can't see it.
Japan was heavily sanctioned for their position in World War 2. They got a ton of flak from South Korea just from having their Prime Minister visit a war memorial.
GW used the word "surplus". I'll grant you that it was a projected surplus. This does mean though that Bush was handed a balanced budget
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Gee wiz, it's the "US UNFUNDED LIABILITIES" box in the bottom row. You can hover over a box and get a (barely useful in length) description in the title box.
I had a roommate from Malaysia in college who had a bitter hatred of the Japanese, presumably for their occupation and treatment during the WW2. Left-over ancient resentments in a region are not a reason to continue to militarily babysit. It's the greed of the Right-wingers or uber capitalists of the globalists, who want U.S. military force and expendit
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Gee wiz, it's the "US UNFUNDED LIABILITIES" box in the bottom row. You can hover over a box and get a (barely useful in length) description in the title box.
Ah... found it. I'm a retard and/or blind. Unfortunately my screen is too small to have the help text and the mouse-over location on the same screen.
No, it doesn't. A president saying s/he projects a surplus "over the next 10 years".
I am having a very hard time eliminating the cognitive dissonance that you're pressing upon me.
Firstly, pardon my language, but where the fuck did Bush get the money that he gave everyone on their taxes?
If he didn't have a projected surplus for that year itself, then pushing that tax cut was perhaps the stupidest economic thing to do ever. As I understand it
My own family (Score:2)
Has been following austerity policies since 2001, and it largely worked until a car repair and my son's illness combined with fewer billable hours at work to blow our budget completely out of the water in the last two months.
We went from $260,000 in debt, backed by $250,000 in real assets, to $193,000 in debt, backed by $235,000 in real assets, and now we're back up to $201,000 backed by $225,000 in real assets- and threatening to get MUCH worse by the end of summer, depending on what the neighbor is able t