How would you fix the economy and budget issues?

[MTK]

I'm not an economist even though I majored in the subject for a while. But I'd start with slashing the defense budget. Just doesn't sit well with me when we squabble over education and social programs yet we always find room for defense.

[BuckSkin]

After looking at it again Sammy, not sure where I was headed either. So in the infamous words of Angry: Thank you ladies and gentlemen, but I digress.....ooh, is that rhubarb pie?

[NC_Skins]

Originally Posted by Mattyk

I'm not an economist even though I majored in the subject for a while. But I'd start with slashing the defense budget. Just doesn't sit well with me when we squabble over education and social programs yet we always find room for defense.

...but we like bombing people bro! WE ARE GIVING THEM FREEDOM!!!

[MTK]

Originally Posted by NC_Skins

...but we like bombing people bro! WE ARE GIVING THEM FREEDOM!!!

America!

F Yeah

[Slingin Sammy 33]

Originally Posted by BuckSkin

After looking at it again Sammy, not sure where I was headed either. So in the infamous words of Angry: Thank you ladies and gentlemen, but I digress.....ooh, is that rhubarb pie?

LOL, I like the cherry pie when I digress

[12thMan]

- The first order of business would be to let the Bush tax cuts expire. Personal tax rates in the U.S. are at their lowest level in nearly 60 years, yet the economy has been as sluggish as it's been in recent history. Based on one study I was reading, the Bush tax cuts cost $2.5 trillion from 2001-2010, add on to that interest payments for another $379 billion because the cuts were deficit financed and not paid for. A drop in the bucket maybe, but still. I'm interested to see if anyone has another number that's different for the same time period.

- The Obama administration has failed miserably at addressing the foreclosure crisis. No discernable policy to keep people in their homes, and more importantly, pressuring the cash rich banks to work with homeowners to stay out of foreclosure. I'm not sure what the exact solution is, but as long as the crisis extends we can forget about any kind of long-term economic recovery.

- We have something like 600 military bases abroad (the exact number may be as high as 700); mostly in Europe and Asia. The cost of operating these bases aren't exactly driving our deficit woes, but bringing home all of that personnel would certainly boost the economy over time and cut costs on the margins. Like others have mentioned, we need to scale back military spending significantly. I think the president has done a good job pushing the START treaty through and reducing the costs we spend on nukes. If he gets re-elected, he should continue to work with Russia to reduce our nuclear arsenal. It goes without saying, it's high time to leave Iraq and Afghanistan.

- In terms of energy. Drilling really doesn't affect gas prices in my opinion. It takes years, nearly ten years, for the produced oil to come online and even then, OPEC plays a major role in inventory and the price of oil. That said, it's a good step but probably scaring off oil speculators more than anything else.

[12thMan]

What do you guys think about repealing ethanol subsidies? That could be another $6 bil?

A study from CATO, a conservative think tank done in 1995. I'm curious what our free market conservatives think about ethonal subsidies.

http://www.cato.org/pubs/pas/pa-241.html

[Schneed10]

Originally Posted by NC_Skins

Yes and No. You couldn't put it into anything of high risk that could end up collapsing like many people's 401ks did these past few years.

Obv. You'd mix in the appropriate proportion of stocks, bonds, commercial paper and other short term investments. No unnecessary risks, but no unnecessary conservatism either.

Originally Posted by NC_Skins

Not sure where you get this from. I think you've seen a couple of instances and have decided all universities are doing this. I work for a division I university and I can assure you that there isn't anything like this that you are speaking of. (or any other unnecessary bells and whistles)

Both universities I attended (one undergraduate the other graduate) built these amazing business school buildings in the last five years. Mock stock trading floors, a real stock ticker (same size you see on the floor of NYSE). It's a trend amongst business schools fostered by a keeping up with the Jones's mentality. Wharton was one of the first to have it, so of course the others felt the need to follow suit.

My graduate school (and employer) also just built this insanely beautiful new building for the medical school. Absolutely gorgeous. I just question the need for it.

You clearly don't think investments in plant & equipment are responsible for the growth in college costs. I ask you then, if that's not the cause, what is?

[Schneed10]

Originally Posted by 12thMan

- The Obama administration has failed miserably at addressing the foreclosure crisis. No discernable policy to keep people in their homes, and more importantly, pressuring the cash rich banks to work with homeowners to stay out of foreclosure. I'm not sure what the exact solution is, but as long as the crisis extends we can forget about any kind of long-term economic recovery.

There is no solution. The housing market is a symptom of a weak economy, not a cause of a weak economy.

We had a bubble on home prices for a number of reasons, which all started because creditors were too aggressive in providing funding to people who couldn't afford to make the payments. More people had access to more money, flooding the market with buyers and driving the prices up. Consequently builders saw the prices going up and realized they could make money, so they built tons of homes, driving up inventory. Further, speculators saw the prices going up and placed bets in the market, further driving up home prices.

All of that was possible because people who didn't have the means to pay off the loans were given the loans. Also, most of them had jobs.

Now we have high unemployment taking plenty of people out of the market, so until the job market turns around, you won't have that demand impetus to drive up home prices. And on top of that, we've now instituted sanity into the home loan process, you actually have to be in good credit standing to get a loan at a reasonable rate (imagine that). So all those people who were given the opportunity to shop for homes in the 2000s are no longer able to. As it should be. And consequently home prices are today at the same place they were in 2003-2004. As they should be.

It's such a fallacy to think government can do anything about it at all. You can maybe set tax policy in such a way to encourage hiring and job growth. But you can't do anything to prop up home prices permanently; the first time home buyer credit kicked prices up for a year or so, but you saw what happened when it expired, prices came right back down again.

It costs a lot of money to buy a house. The government can't force people to realize the importance of saving their money and living within their means. If people want to be in the housing market, they need to have jobs and they need to be smart with their money. Judging by the nation's credit card debt and savings rates, it's easy to see that right now too many Americans fall short in those categories.

As unemployment drops, home prices will come up. It will be a very, very gradual process. Just the way it is.

[Schneed10]

Originally Posted by NC_Skins

People have been paying into SS their whole working life, and now you want to reduce that to a mere couple of years? Wow. Advice, never run for office and use that as your platform. Even the Repubs would laugh you out.

1) You didn't ask what I would do to get elected, you asked what I would do to fix the economy/taxes/budget. I'm not concerned whether it's popular, I'm concerned whether or not it's the right thing to do.

2) If we keep the retirement age where it is, then the 30 somethings who have paid into it for the last 10-20 years will be paying into a system that won't even be solvent when they go to retire. You have to make a choice:

- increase payroll taxes to fund the program as is, or
- raise the retirement age
- cut the size of benefits

Not sure why you think raising the retirement age is such a far fetched concept. In fact, it seems I just might be able to get elected after all:

President Obama has recently alluded to changing Social Security benefits to balance the budget, and a national University of Iowa Hawkeye Poll released today suggests most Americans support such a move.
Nearly nine out of 10 respondents supported at least one reform, and two-thirds supported at least two reforms.
Of the five possible reforms proposed, two received majority support: half supported increasing the retirement age by up to three years.

Hawkeye Poll: Majority of Americans supports Social Security reformUniversity News Services - The University of Iowa

[dmek25]

isnt the SS taxes capped at 109000 per year? that could be one change to increase the total revenue

[Schneed10]

Originally Posted by dmek25

isnt the SS taxes capped at 109000 per year? that could be one change to increase the total revenue

Yes. Or thereabouts. That's another one that's on the table.

This of course would only affect individuals making more than $100K per year.

[saden1]

Originally Posted by Schneed10

There is no solution. The housing market is a symptom of a weak economy, not a cause of a weak economy.

We had a bubble on home prices for a number of reasons, which all started because creditors were too aggressive in providing funding to people who couldn't afford to make the payments. More people had access to more money, flooding the market with buyers and driving the prices up. Consequently builders saw the prices going up and realized they could make money, so they built tons of homes, driving up inventory. Further, speculators saw the prices going up and placed bets in the market, further driving up home prices.

All of that was possible because people who didn't have the means to pay off the loans were given the loans. Also, most of them had jobs.

Now we have high unemployment taking plenty of people out of the market, so until the job market turns around, you won't have that demand impetus to drive up home prices. And on top of that, we've now instituted sanity into the home loan process, you actually have to be in good credit standing to get a loan at a reasonable rate (imagine that). So all those people who were given the opportunity to shop for homes in the 2000s are no longer able to. As it should be. And consequently home prices are today at the same place they were in 2003-2004. As they should be.

It's such a fallacy to think government can do anything about it at all. You can maybe set tax policy in such a way to encourage hiring and job growth. But you can't do anything to prop up home prices permanently; the first time home buyer credit kicked prices up for a year or so, but you saw what happened when it expired, prices came right back down again.

It costs a lot of money to buy a house. The government can't force people to realize the importance of saving their money and living within their means. If people want to be in the housing market, they need to have jobs and they need to be smart with their money. Judging by the nation's credit card debt and savings rates, it's easy to see that right now too many Americans fall short in those categories.

As unemployment drops, home prices will come up. It will be a very, very gradual process. Just the way it is.

Economic downturn is usually caused by loss of confidence and the housing bubble was a huge confidence buster. I mean, we were talking trillions not billions.

[Schneed10]

Originally Posted by saden1

Economic downturn is usually caused by loss of confidence and the housing bubble was a huge confidence buster. I mean, we were talking trillions not billions.

Yeah well, duh. But WHY was consumer confidence eroded so badly?

Don't forget, people are reactionary beings. Consumer confidence got crushed because suddenly layoffs were popping up and housing prices were on the decline. When loans can't be had as readily and jobs are hard to find, of course consumer confidence erodes.

Consumer confidence is the ultimate SYMPTOM of a flagging economy. It's never the cause. But it can be the cause of LAG in recovery. A recovery won't happen until people are willing to open their wallets. But they won't open the wallets until they're convinced things are improving, which requires substantial improvements in the job market first and foremost.

[firstdown]

Originally Posted by 12thMan

- The first order of business would be to let the Bush tax cuts expire. Personal tax rates in the U.S. are at their lowest level in nearly 60 years, yet the economy has been as sluggish as it's been in recent history. Based on one study I was reading, the Bush tax cuts cost $2.5 trillion from 2001-2010, add on to that interest payments for another $379 billion because the cuts were deficit financed and not paid for. A drop in the bucket maybe, but still. I'm interested to see if anyone has another number that's different for the same time period.

- The Obama administration has failed miserably at addressing the foreclosure crisis. No discernable policy to keep people in their homes, and more importantly, pressuring the cash rich banks to work with homeowners to stay out of foreclosure. I'm not sure what the exact solution is, but as long as the crisis extends we can forget about any kind of long-term economic recovery.

- We have something like 600 military bases abroad (the exact number may be as high as 700); mostly in Europe and Asia. The cost of operating these bases aren't exactly driving our deficit woes, but bringing home all of that personnel would certainly boost the economy over time and cut costs on the margins. Like others have mentioned, we need to scale back military spending significantly. I think the president has done a good job pushing the START treaty through and reducing the costs we spend on nukes. If he gets re-elected, he should continue to work with Russia to reduce our nuclear arsenal. It goes without saying, it's high time to leave Iraq and Afghanistan.

- In terms of energy. Drilling really doesn't affect gas prices in my opinion. It takes years, nearly ten years, for the produced oil to come online and even then, OPEC plays a major role in inventory and the price of oil. That said, it's a good step but probably scaring off oil speculators more than anything else.

Are we still building Nukes? I don't think they are so that treaty will probably cost money for us before it saves any money.