The public policy blog of the American Enterprise Institute

Subscribe to the blog

Discussion: (16 comments)

  1. Jake Huneycutt


    I’m a bit confused by the first chart. It seems to show debt falling under both budget plans. Is this a mistake? To my understanding, neither budget plan would eliminate the Federal budget deficit, implying that US Federal debt should be increasing.

    1. Jake: the chart doesn’t show debt falling as an absolute amount, simply falling as a percentage of GDP.

      1. That can’t be correct either… I’ve seen that ratio elsewhere.

        The current debt: 16.7 Trillion
        The current GDP: 15.2 Trillion

        Isn’t the debt already more than the GDP???

        1. I believe the first chart is showing publicly held debt as a percent of GDP; not total debt.

  2. Here’s the real reason companies are sitting on cash: We don’t think the economy is going to grow at anywhere near the rate it needs to for us to get a nice return on any investment we make in people and/or equipment. What’s the point in hiring someone if the sales/revenue aren’t going to be there to cover those added expenses?

    And that’s for those of us who are merely skeptical about the economy. The real pessimists fear another economic collapse so they’re hoarding their cash for when (not ‘if’, but ‘when’) their revenue falls through the floor.

    Removing the fear of higher taxes will help alleviate some of the fear, but it won’t be enough by itself. You also need to get rid of the constant stream of anti-business regulations, for Obama to stop threatening to step on the neck of any company he doesn’t like, and for him to stop looking to drive up the price of energy, food and health care.

    1. *BINGO*

      It’s the same reason companies sat on cash during FDR’s administration. You are uncertain about what crazy policies, taxes and regulations are going to come out of this administration.

      They’ve already added TWENTY THOUSAND pages to Obamacare.

      That’s why when I read articles, like the one in March; Wired magazine about the guy who wants to tax companies who are holding on to capital too long, you just have to laugh.

      That’s been tried before. The Capital will dry up and move offshore.

  3. Deficits smecifits who cares deficits are overrated.Conservative regimes blow a hole in the budget then when a liberal comes to power all of sudden they care about deficits.History shows a big budget surplus can cause even more economic problems over time.If you check the data the best of prosperous times were when the deficit was around 60 percent of GDP.

    1. If the deficit was 60 percent of our GDP, wouldn’t that be about -$10,000,000,000? I’m pretty sure that would be the end of the country.

      Am i missing something?

    2. Really???

      We were pretty prosperous under Clinton; when Newt gave us a balanced budget.

      We were pretty prosperous under Bush, after the economy recovered (which it would’ve done faster, had Bush acted less like a Progressive). 2007; Unemployment was down to 5.5% and the deficit was 176 Billion.

      So, democrats take over _complaining about the Republican spending_ then turn the faucet *beyond full blast*, and completely obliterating every previous administrations debt and deficit.

      A full 35% of the federal _debt_, belongs to Obama. *AFTER ONLY FOUR YEARS*.

      If we don nothing, a full 70% of the debt will belong to Obama’s policies, and we will still have record numbers of people on food stamps and in unemployment lines.

      That’s *prosperous*?

  4. “Conservative regimes blow a hole in the budget then when a liberal comes to power all of sudden they care about deficits”

    Give me the “unpatriotic” 2-3 hundred billion $ deficits of the Bush/GOP Congress any day over Obama’s annual trillion dollar plus red ink.

  5. Todd Mason

    The CFRB comes to the point here:

    ” In the end, where a budget leaves the debt-to-GDP ratio might be more important than total savings, which can easily be manipulated by different assumptions. We have set $2.4 trillion compared to CRFB Realistic as a target for deficit reduction, as that would put debt on a clear, downward path but the trajectory rather than the total is more important. A sustainable budget would have debt growing slower than the economy over the longer-term, and that is what people should look for in these budgets.”

    Murray’s 10-year reduction as calculated against the CRFB Realistic baseline: $2.264T. Ryan’s reduction by the same measure: $6.140T. So , skipping the curve, I’d say the Murray budget is a B while Ryan’s is D-.

    While it is true that corporations have no pressing need for their cash, it still begs the question of why they don’t pay it out as dividends. A 2012 NBER study said the most likely reasons are 1.) an absence of raiders who would force their hand, and 2.) a post-Enron phenom in which a cash hoard signifies clean books to investors. Tax considerations in repatriation is hokum. Even the StL Fed study cited a separate report saying that taxes play a small role.

    1. “Murray’s 10-year reduction as calculated against the CRFB Realistic baseline: $2.264T. Ryan’s reduction by the same measure: $6.140T. So , skipping the curve, I’d say the Murray budget is a B while Ryan’s is D-.”

      So Ryan’s plan saves $4 trillion more and doesn’t raise taxes. So WTF are you talking about?

      1. Those grades are given by someone who decided upon a grade then wrote a defense (however illogical) rather than basing the grade upon a logical evaluation of the facts. A common tactic of the present administration and it’s avid supporters!

      2. Todd Mason

        What am I talking about? Dislocation. Bankruptcy. Foreclosure. Layoff. You know: The stuff that put the deficit into high gear in the first place. You may be fine stepping over dead bodies in front of the emergency room. Most Americans don’t want to live in a third-world country.

        1. Obama’s trillion dollar deficits have us on a fast track to third world status. Murray’s plan would accelerate spending and raise taxes on top of Obama’s recent hikes, and yet you somehow miss this is a path to bankruptcy, foreclosure, and layoffs.

  6. u ‘avin a giggle m8?

Comments are closed.

Sort By:

Refine Content:


Additional Keywords:

Refine Results

or to save searches.

Refine Content