How important is a balanced budget to you?

[Cant trust em]

President Obama's budget remains in the red for the next 10 years. What kind of priority should be brough (if any) to getting it in line?

What options to this poll should I add?

http://money.cnn.com/2009/02/26/news/economy/obama_budget_outline/?postversion=2009022616

[damntexdem]

1. I am very wary of talk of 'entitlement reform.'

As the President has noted, thoroughgoing Medicare (or Medicaid) reform cannot be approached without first addressing the healthcare finance system as a whole. Social Security 'reform' should involve 'revenue enhancement': raising or eliminating the income cap on FICA taxes.

[Cant trust em]

9. Any cuts need subsequent revenue enhancement

If there's a gap, we need to meet it somewhere in the middle.

[stray cat]

2. How about less than trillions of dollars in deficits? Budget balance is an impossibility

[ThomWV]

3. There almost needs to be another graduation

I can't help but think that somewhere in their minds everyone knows you can't just keep going farther and farther into debt forever - eventually the interest becomes greater than your income no matter how great your income. So that failing really demands that over time budgets must be ballanced - all debts paid and nothing due. But of course that day will never come even though it has to remain the ultimate goal while a pragmatic view demands otherwise. You do what you gotta do.

[tech3149]

4. That would be the best option

The problem is dealing with situations that aren't expected or weren't under your control.
It took a long time to dig this hole, I expect it will take longer to get out of it. If we can get our priorities straight, we might get back to a balanced budget before I die.
Ideas for getting back on track? Simplify the tax code and shit can the loop holes that allow corporations and the uber_wealthy to avoid their responsibility.

[Cant trust em]

5. Somewhere there have to be service cuts

in addition to raising revenue.

I do agree that the first thing on the docket should be creating basic fairness in the tax code.

[SmileyRose]

6. are we still paying off WW2? If not, how did we pay it off?

My guess is 92% taxation of the wealthiest of wealthy and war bonds sold to Americans rather than hitting up China for loans. Why aren't we paying ourselves the interest, using it to stimulate our own economy, rather than enriching someone else?

I'm good at accounting but not economics - maybe I'm too stupid to understand why increasing our own poverty and enriching the upper level of some other country is a good thing. Edited to add, don't we pay something like $450 Billion in interest every year? If we paid that interest to ourselves, seems like it would not only really add up to create quite a stimulus but it would free us from being at the political whims of someone else.

[Cant trust em]

7. Are bonds selling as well as they used to?

I think our spending has outstripped the ability to pay it of via bonds. I'm not sure, but I think that's part of the problem.

edited for spelling.

[Alias Dictus Tyrant]

8. Good point

This is the elephant in the room that a lot of people people are trying not to notice. It is rapidly becoming more difficult and more expensive to sell US government debt instruments and if things continue much farther down that road we will no longer be able to borrow money to fund budgets. We are already having to make special deals to move the debt instruments now.

When that funding source dries up, the government will have a very hard decision to make. I suspect they will take the easy way out and simply inflate the currency -- a short-term fix but damaging to our long-term reputation.

[exboyfil]

10. The Fed is already standing at the Treasury window getting

ready to buy Treasuries. In other words to monetize the debt. Right now we still have a rush on Treasuries for security, but the rush is beginning to slow as folks start asking hard questions like what are these Treasuries going to be worth etc. In addition the purchase of the Treasuries has been funded for Japan and China by their trade surpluses with us. Since our trade imbalance is decreasing (not because we are exporting more - we are not of course, but because we have closed our wallets), these foreigners are going to have less dollars to purchase Treasuries with. They have to run a balancing act because, if interest rates rise on Treasuries, their current holdings will be hurt. If I was them I would be looking to sell a substantial hunk (to who I am not sure) and buy hard assets (I don't know maybe a car company or two especially after bankruptcy).

This monetization is only going to be able to go so far because of the inflation indexing in three critical portions of the economy (Social Security, Federal pensions, and Treasury Inflation Protected Securities). In addition the state pension funds are also going to go along for the ride (such as CALPERS which is also inflation indexed). Those folks already on established fixed pensions (mostly private sector retirees) are going to get crushed. They are going to be very thankful for Social Security, unless...

We see a positive feedback loop that brings down the whole system. This would be a fascinating computer model to see if enough inflation indexing is out there to accomplish this.

[SmileyRose]

13. Americans in the 40's

did without an awful lot of luxuries that we now think are necessities so they could buy War bonds to finance WW2. I would think if the astronomical cost of "the War on Terra" is justified then the government could convince America to not buy that 500th chinese made DVD and spring for a war bond.

This goes the same for schools or energy independence or whatever.

[doc03]

11. I notice the so called non partisan Concord Coalition

has suddenly reappeared since a Democrat got elected.

[kohodog]

12. never happens in my house.

we were always a little underwater but after Bush it's really ugly.