patrick.net

OK I'll bite percentage of GDP is slightly less insane. Propose away if you like but GOTP is I suspect uninterested in your idea, as it could then be gamed by whoever calculated the GDP figures.

Japan debt to GDP ratio has been 225% for ages and they don't seem to have turned into cannibal anarchy.

Vicente says

Japan debt to GDP ratio has been 225% for ages and they don't seem to have turned into cannibal anarchy.

But they've been hit by multiple earthquakes and tsunamis. Coincidence?

hmmm .... is the GDP easy to monkey with? Anyways, it makes sense to me to tie the debt to the income function

I disagree. You are going further than just not embracing Keynesian theories. You're advocating the opposite of Keynesian policies, which everyone knows would be bad.

Sure for a household it makes sense. But in a household, increasing your spending does not increase your gross income (except to the extent that you might be motivated to make more to minimize debt).

By the way, the "debt" refers to total debt. GDP is a number that can can even decrease. Decreasing spending doesn't decrease debt, it only decreases future debt. So what you are suggesting is that if we go in to a recession, that is when we should pay down debt ? That's like saying that when you are unemployed is the time when you must pay down debt.

But let's assume you mean that the annual deficit should be tied to GDP. Even this doesn't really make sense.

I think everyone knows the following is how it should be:

In times of growing or booming economy we should be running surpluses, with money actually somehow put aside. Then when recessions come, that is when deficit spending should happen (which might only mean keeping the spending the same as it was - while tax revenues decrease or don't increase as expected due to the recession).

I really do think that everyone knows that's is how it should be, but instead we have big wars to wage, and we need to have a military that's bigger than all the others put together, etc. And then there's the politicians, crawling all over each other to get their share, for their "constituents," the corruption, and so on.

Oh, and let's not forget the selfish and greedy crowd that will say (no matter how low tax rates are) that we need to have lower taxes to grow the economy. How has that worked out for us ?

elliemae says

But they've been hit by multiple earthquakes and tsunamis. Coincidence?

No that's just a consequence of not being Christian enough.

Bap33 says

hmmm .... is the GDP easy to monkey with? Anyways, it makes sense to me to tie the debt to the income function

Like any figure, people argue incessantly over how it's measured. Do you agree with official inflation numbers?

Setting that aside, it's the same problem. What is the "right" ratio of debt to GDP? I dunno, neither does anyone else. Whatever ceiling seemed like a great idea when times are good, will seem like a disastrous choice when it conflicts with political needs of the moment. Example back during the 90's Newt & Clinton and that crowd seemed on the verge of balancing the budget and actually paying down the debt. Then Bush Jr. got into office and suddenly as Cheney said "deficits don't matter" and the ratio would have been INFINITE and we were off again. Now that the debt has piled up to something enormous and it's very late in the game I'm sure certain parties would pick a very low number.

Tying deficits inverse to gdp growth might work. If growth is low or negative, you can borrow, if its significantly positive you must pay down debt.

Exceptions could be made for total war as well, but only if there is a draft and the combined gdp of the countries we are at war with are at least two thirds of our own

69 companies left California during the first quarter of 2011, the fastest rate ever.

California ranks # 49 for "Business Tax Climate" and # 48 for "Economic Freedom" (Mercatus).

I know, I know, you lib's will want to explain why it really isn't happening...but it is.

Again, we're losing our prosperity because we're losing our freedom.

simchaland says

Ugh, you know... Really, do any one of you know any teachers personally? Are any one of you in education? Do any you actually know what's really going on in the schools in your neighborhood? Do any of you get involved with your local PTA or even your local schools?

Yes, I know and been involved. There are a lot of issues out there. Teacher unions fight to keep illegals in schools just so they can be paid for attendance, and than bring everyone down to the lowest common denominator. There is way too much crap to list.

http://www.lumosity.com/personal-training-plan

Perhaps more regulation will help stem the tide of companies flowing out of the Golden State. Or perhaps more taxes will surely help. No? Maybe more frivolous lawsuits would do the trick.

Or maybe one of the following could help: higher consumer costs thru additional workplace mandates, increased employer liability, job killing legislation, money "growth", more political correctness, and more tariffs. Heck, any additional intervention by the Leviathan ought to help, yes?

Honest Abe says

Maybe more frivolous lawsuits would do the trick.

Nice talking point, but there's no indication that this is a problem. Care to provide proof that this is out of control or that it's disproportionate to other states or that it has been even increasing? Bet you can't.

In fact, if anything, tech companies should be most afraid of suits in Texas.

Corntrollio, you're right. According to the Institute for Legal Reform, California ranks 46th out of 50. So I guess things could be worse.

Honest Abe says

According to the Institute for Legal Reform, California ranks 46th out of 50. So I guess things could be worse.

Yes, because the US Chamber of Commerce is generally AWESOME at being an objective source based on data.

Nice talking point. Care to provide proof that the Institutes figures are wrong? California's hostile legal environment places the state about as close to the bottom as any state can get...46 out of 50 is right near the bottom, isn't it?

Honest Abe says

Care to provide proof that the Institutes figures are wrong?

Yes, after you answer my questions first instead of display anecdotes from a lobbying organization. :p

"Tort reform" in and of itself is the biggest talking point of all. There is little evidence that tort payouts have been increasing or that some larger number of suits aren't being thrown out. This is particularly true for personal injury suits based on medical malpractice -- if anything, payouts are decreasing relative to inflation.

When G.W.H. Bush signed The Americans with Disabilities Act (ADA) civil rights law in 1990, the intent was to prohibit discrimination based on disability and provide access for the disabled. Instead, sleazy attorneys have abused the law by filing TENS OF THOUSANDS of predatory ADA lawsuits, not meant to improve access for the disabled, but to extract money from small business owners, especially in California.

More than ever, when California companies crack under the strain, they to move to a more business friendly state, why shouldn't they?

DISHonest Abe, please refrain from PLAGIARIZING someone else's work, You should quote and attribute it.

You have lifted text from this article:

http://www.sbsun.com/pointofview/ci_18712378

The article in question leaps from anecdotal example of one possible ambulance chaser abusing the law to TENS OF THOUSANDS without backing up this claim. Didn't even name the one lawyer, making it unnecessarily difficult to verify. It's an assertion, not a proof. I could as easily say because I claim I saw one caregiver using their employers handicap tag to park, that we should eliminate all handicap parking.

Vicente says

DISHonest Abe, please refrain from PLAGIARIZING someone else's work, You should quote and attribute it.

Nice. Someone got pwned.

Again, proof please. Show me that payouts have been increasing. Show me that frivolous cases aren't being dismissed. Show me it's disproportionate to other states. I have given you several frameworks to support your assertion.

The US Chamber "study" (if you can call it that) is also based on anecdote and rumor if you look at the methodology. It's largely a way for GCs to bitch about stereotypes. It does not discuss payouts, it does not compare number of lawsuits, it does not compare lawsuits to dismissal rates, and it doesn't do much of anything except perpetuate stereotypes.

Again, I'm telling you, ask tech companies about patent lawsuits in Texas.

Vicente says

What is the "right" ratio of debt to GDP?

This just hit me Vincent, the ratio used to be a good risk in housing is about 30% , right? So, maybe our debt for the next years budget should never be more than 30% of our GDP (lets use the GDP that finds the CPI they use to figure SSI COLA). Is that stupid of kinda make sense?

Vicente says

What is the "right" ratio of debt to GDP?

Sucks that so much of our debt is housing debt.

http://research.stlouisfed.org/fred2/graph/?g=1Hs

Most of us has been living in this country for hundreds of years, have we not? Where did all the equity go between generations???

Much of that debt is just the cost of the title to land, too. The house is almost secondary in many places.

The land title's production cost is pennies, yet we pay so much for it.

Bap33 says

This just hit me Vincent, the ratio used to be a good risk in housing is about 30% , right? So, maybe our debt for the next years budget should never be more than 30% of our GDP (lets use the GDP that finds the CPI they use to figure SSI COLA). Is that stupid of kinda make sense?

30% sounds good. Now if only we had some grownups who would keep an eye on stuff like this, and when the party gets too rowdy say "hey gang, this is a BUBBLE and y'all should stop!". So far we've been poor at this part. When it's BOOM time nobody wants to hear the Negative Nancies like Patrick. They always laugh at this guy:

I mean it was only a decade ago that all the big investment bankers were colluding to dismantle those staid capital reserve ratios they used to live under just fine.

Honest Abe says

When G.W.H. Bush signed The Americans with Disabilities Act (ADA) civil rights law in 1990, the intent was to prohibit discrimination based on disability and provide access for the disabled. Instead, sleazy attorneys have abused the law by filing TENS OF THOUSANDS of predatory ADA lawsuits, not meant to improve access for the disabled, but to extract money from small business owners, especially in California.

More than ever, when California companies crack under the strain, they to move to a more business friendly state, why shouldn't they?

The ADA is a federal law and has nothing to do with states. Maybe California has the most ADA lawsuits since it is the most populated state?

Bap33 says

Is that stupid of kinda make sense?

I know you're talking to Vincent, but just wondering whether you understand. I'm sure you must, but then I don't understand what you're suggesting.

The deficit is the annual amount by which our government spending exceeds our govt revenues. Currently I believe the annual deficit is near 10% of GDP, which is two high (note GDP growth has been terrible - a big part of the problem).

Our debt is our total accumulated debt, currently near 100% of GDP.
There are three ways (at least) for debt as a percentage of GDP to shrink. Either run a surplus or default, or increase GDP by more than you increase the debt.

But since debt is now 100% of GDP, even running a surplus somehow next year, might only bring the debt down to 95% of GDP.

We need higher GDP and lower deficits. But since government spending (deficit spending) contributes so much to our current economy, this is not a simple problem.

In boom or even just moderately good economic times times, I really like the idea of having a rule that we must run a surplus. That is, I do think there is something to your idea, of forcing the issue, but it is immensely complicated by our government's significant role in the economy, which is appropriate for modern times.

Bush's tax cuts, killing what were overestimated to be "surpluses as far as the eye can see," was one of the greater government mistakes of modern times. But it's easy to understand how it happens. The leaders are all rich, and there is a retarded philosophy out there that says even when taxes are low, lowering them more, will help the economy so much that it will increase revenue to the govt.

You can almost see the wheels turning in the typical rich guy's head. "You mean if I believe this, then I get to believe that more money for me(via lower taxes), is the best thing for everyone ? That is SO AWESOME !!"

Bush probably also saw the cuts as helping to reduce the chance of a bad recession at a time when it was extremely natural to have one (that is dealing with the deflation of the stock market's irrational exuberance we had going in to the millennium.) Bush was right in thinking that a bad recession would have been bad for him politically. But look at the cost of his tax policies.

We put off the big recession, and had a much worse one later instead.

I think something like a balanced budget or surplus when GDP is growing by a certain amount, and a sliding scale, allowing deficits up to a certain level,, maybe 6% of GDP when in a recession , and maybe real small deficits when the GDP growth is flat might make sense.

Strong growth should require surpluses, mostly so that when GDP and revenue drops, it won't cause deficits to be too big.

But it has to rely on well defined measures of past GDP, and I don't know that those exist.

marcus says

We put off the big recession, and had a much worse one later instead.

Wasn't really the tax cuts that made the system unsustainable. . .

Here's an update of an earlier chart:

yellow is the cumulative household debt stimulus
red is the cumulative deficit-spending stimulus under Bush
green is the cumulative deficit-spending stimulus under Obama.

Bellingham Bob says

Wasn't really the tax cuts that made the system unsustainable. . .

I believe that that all three factors:

1) tax cuts

2) war spending

3) bs credit driven continuing real estate bubble

contributed to the bad recession we should have had, starting somewhere around 2002, being postponed to the much worse recession we had starting in 2008.

@Vicente

>Now when my X-Ray machine errors out and gives me a lethal overdose, my family can try to sue a bunch of Chinese subcontractors. Awesome! I'm so glad they are making best use of GE tax benefits to offshore jobs, layoff Americans, and enrich communists. Everything seems going according to the Koch Brothers plan nicely.

Great one! I just read it today...

@Troy

Thanks again for the graph...

HousingWatcher says

Of the 50% of the country that does not pay federal income tax, 75% of them make LESS than $20,000 a year. So youw ant to raise taxes on peopel all the way at the bottom while not raising taxes at the top?

Yes. I never said that it had to be a lot. When I made that little (or less) I had to pay income taxes.