How would you fix the economy and budget issues?

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

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.

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.

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.

- 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.

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

They are capped around that number and there is talk about removing the cap to help fix the SS problem. Its just another way to not fix the real problem. Its what they do in congress. God forbid we fix SS with real solutions. Its a spending problem not a money problem.

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.

The loss of confidence in the housing marked is primarily responsible for the current economic downturn. It's that simple.

The loss of confidence in the housing marked is primarily responsible for the current economic downturn. It's that simple.

I disrespectfully disagree. That's an incredibly incorrect statement. And to think anything in economics is simple is laughable.

I disrespectfully disagree. That's an incredibly incorrect statement. And to think anything in economics is simple is laughable.

I'm glad you feel that way...now let's show work:

The year is 2002ish and the economy is doing reasonably.

Schneed has a job and makes decent money.
Banks are lending at favorable terms and LIAR loans are ready to be consumed by Schneed.
Schneed buys a house he can only afford with a 5 year ARM loan.
It's 2007ish; Everything is peachy and economy is still doing reasonably well.
Poor ol' Schneed's mortgage changes to less favorable terms and he can't pay.
Investors get wind of Schneed and his ilk's LIAR loans, lose confidence in the banks and the credit market freezes.
Banks stop getting paid and consequently stop lending.
Companies can't get money to fund growth and start preparing for the worst.
Mass lawyoffs ensue and corporate spending freezes.
Poor ol' Schneed gets laid off and his house goes under.
His neighbors house's value drops. No more equity to borrow against.
Consumers brace themselves for the worse and stop spending.
More layoffs ensue and Schneed's neighbor gets laid-off.
Schneed loses his mind and starts making retarded arguments about stuff he's not well informed on.


I know you're averse to linking but this whole mess is well documented and sourced. (http://en.wikipedia.org/wiki/Late-2000s_recession)

I'm glad you feel that way...now let's show work:


The year is 2002ish and the economy is doing reasonably.
Schneed has a job and makes decent money.
Banks are lending at favorable terms and LIAR loans are ready to be consumed by Schneed.
Schneed buys a house he can only afford with a 5 year ARM loan.
It's 2007ish; Everything is peachy and economy is still doing reasonably well.
Poor ol' Schneed's mortgage changes to less favorable terms and he can't pay.
Investors get wind of Schneed and his ilk's LIAR loans, lose confidence in the banks and the credit market freezes.
Banks stop getting paid and consequently stop lending.
Companies can't get money to fund growth and start preparing for the worst.
Mass lawyoffs ensue and corporate spending freezes.
Poor ol' Schneed gets laid off and his house goes under.
His neighbors house's value drops. No more equity to borrow against.
Consumers brace themselves for the worse and stop spending.
More layoffs ensue and Schneed's neighbor gets laid-off.
Schneed loses his mind and starts making retarded arguments about stuff he's not well informed on.

I know you're averse to linking but this whole mess is well documented and sourced. (http://en.wikipedia.org/wiki/Late-2000s_recession)

Yeah dude you totally misread me. The fact that consumer confidence shows up in item 12 above only proves my point.

Consumer Confidence was not the cause of this economic downturn. There were 11 causes you listed before it. Consumer Confidence is just another domino, it was not nearly the first.

That was my whole point.