Quote:
Originally Posted by citizen gary
... and the current administration is incurring more and more debt.
|
There's your sign!
POTUS recently got into it with the leaders of the other developed nations over their austerity plans to reduce debt, especially in Europe. He reckons that there should be more stimulus spending (two word term for debt) to encourage a recovery that will then pay off the debt in taxes. This has never worked anywhere to my knowledge, and for a number of reasons has
no chance of success here.
1) Politicians are reluctant to acknowledge and pay pay debt because it reduces the amount of pork for their state/district.
2) If the economy recovers to some degree and the tax money rolls in, refer to point 1.
3) If the economy recovers to some degree and the tax money rolls in as an election approaches, the taxes will be given back in some way to buy the election.
Notice the common theme? The debt is never repaid, at least not on the incumbents watch. After that, do not confuse them with somebody who gives a rat's.
Europe has realised this and is not about to make the stimulus mistake. They will slash public spending while raising taxes in order to pay off the debt. This can happen because the pork factor is
much smaller than it is in the US. The measures will not be popular. Just go to the BBC News website and look at some of the proposed percentage cuts in some government departments.
Just before the last UK General Election, The Governor of the Bank of England (Eddie George, sort of Fed Chairman equivalent) ran his mouth to a buddy in the US stating that "If the incoming government actually does what is required to straighten out the country's finances, they will likely later find themselves in the political wilderness for a generation". In other words, expect a voter backlash. Personally, I do not believe that. Mrs Thatcher carried out a similar cuts program in the early 80's and her party held power from 1979 until 1997. Maybe Eddie George has underestimated the common sense of the average British voter, which would be a nice surprise.