Gallup: 58% Of Americans Want Third Party

By Justin Gardner | Related entries in Democrats, Independents, Liberalism, Polls, Republicans, tea party

It’s jumped considerably since the 2008 election.



But do people really want the Tea Party to be the third way?

Gallup with more…



My gut tells me that most folks understand that the Tea Partiers are just really angry conservatives who are lashing out at their own for supporting fiscally irresponsible behavior. And yes, there are some independents who identify with that too, but once those folks scratch the surface of the Tea Party, I guarantee 90% of them will not like what they find. And the other 10% were conservatives who just liked to call themselves independents.

And to that point, note how the number of conservatives wanting a third party has shot up more than any other group. Coincidence?

Still, liberals and independents want a third way more and I think there’s appetite for a moderate left/middle progressive-lite alternative to the Tea Party message. One that stresses fiscal responsibility, social justice and basic fairness…all wrapped up in a populist “let’s get back to work” message. It won’t happen in the next election cycle, but don’t be surprised if it pops up in 2016 if Obama wins or Obama loses in 2012.

Either way, it’s on the horizon.

What say you?


This entry was posted on Tuesday, September 21st, 2010 and is filed under Democrats, Independents, Liberalism, Polls, Republicans, tea party. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

49 Responses to “Gallup: 58% Of Americans Want Third Party”

  1. Alistair Says:

    Personally I think a 3rd Party candidate will emerge from the Libertarian wing of the GOP and I’ll give you a hint, he’s a congressman from Texas with a Ross Perot mentality.

    http://thehill.com/blogs/blog-briefing-room/news/119703-ron-paul-wont-rule-out-2012-presidential-run

  2. kranky kritter Says:

    This poll desperately needs a follow-up question:

    Should this 3rd party be
    A. More liberal than the democratic party
    B. More conservative than the republican party
    C. In the middle and able to make the best ideas from both parties happen

    See, here’s the thing. Most of the disconcerted liberals and conservatives who want a major 3rd party are not interested in moving towards the party that they hate and distrust, but rather want to move further towards their own ideology.

    I do think there’s an appetite for something in the middle, but not anywhere near the 40-50-60% level. And I don’t think there’s much appetite at all for a group that says its big goals are fiscal responsibility _and_ what you call “social justice.” People whose big issue is social justice tend to favor additional government programming and policy to achieve that justice. People whose big issue is fiscal responsibility are not willing to spend on new programs that achieve social justice when the two biggest existing ones (social security and medicare) are not solvent over the long term.

  3. Chris Says:

    I’d be interested in a middle ground party, one that isn’t full of hypocrites that take money from lobbyists.

    Libertarians don’t have a chance beyond the tea party to get voted in, because once the public actually finds out what they stand for the vast majority would never vote for them.

    That’s why the koch brothers have hidden their agenda behind the tea party movement.

  4. bubbaquimby Says:

    Isn’t the Tea Party basically the alternative to the Obama Hope/Change themes of 2008?

    I mean it was a mostly moderate left/middle progressive-lite coalition. Now that is hasn’t been as successful as they hoped, they are less engaged. But I can only imagine that two years of some GOP control of Congress they will come out in force for Obama.

    I just don’t see a real alternative to either party, both bases complain and get riled up about their party but it seems the only way the know how to change that is to work within those two parties.

    I mean I would love to see three viable parties in this country, hell four or five would be great; libertarian, progressive, center right and/or center left, and a conservative party would be fine by me. But I don’t see it ever happening because of they way our government is set up.

    The only thing I can see is that the Tea Party actually does destroy the GOP and a new party comes out of it. But what that party is, not sure.

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  6. Tillyosu Says:

    I just cringe whenever I hear the term “social justice.” It smacks of Orwellian Newspeak…

  7. Wickedways Says:

    Here is why I think the left and the right are growing farther apart and literally are coming to hate each other.

    Yes I mean hate.

    The left wants entitlements and the hell with balancing the budget because the GOP ran huge deficits so they get to run some big ones themselves for awhile.

    The right has come to realize that fiscally these huge deficits are unsustainable and want to see the government shrunk and our budget balanced and our debt paid.

    Both parties are arriving at different phases of their political realities at the wrong time.

    As a conservative who is more moderate. AT least I think I am. I do not want to see the end of Social Security, Medicare, Welfare, Food stamps, Housing, S-chips.

    I simply want to see us afford it. To fund it without borrowing.

    We cannot raise taxes enough to pay for our entitlements folks.

    Medicare, Social Security are going to bankrupt us and we simply cannot keep borrowing to pay for it.

    Additionally even the left has come to realize that higher taxes means less jobs, less income to the treasury so raising taxes substantially to pay off this debt is a no go.

    What does that leave us.

    It leaves the left wanting more and not caring if we borrow and it leaves a contrite right who has come to realize that yes the GOP has borrowed us into a hole and now we want to fix it.

    The devil is in the details but unless we address this deficit and insane spending we are sure to be looking like Greece in 10 years. And whenever a politician tells you that an huge entitlement bill will save us money.

    Its really time guys and gals. Time to call these SOBS liars. Right. Left. Center.

    That is why the American people are now starting to seriously address the third party because the third party hopefully would be that centrist, lets work for America and NOT A PARTY to get things done for ALL Americans.

  8. Mike A. Says:

    I fear having another political party will just end up like commercial product packing….having 5 flavors of Coca Cola on the shelves does not increase Coke sales, but may keep consumers from buying competitive products. Wouldn’t it be advantageous for any 3rd party to be hijacked by either of the two existing parties to maintain market share?

  9. Thomas Says:

    It may be starting to happen already. Such a movement, whether it fundamentally restructures the Democratic party or spawns a party of it’s own won’t have any sway at all with the coming election cycle but might evolve into something of force by the next presidential election.

    I’m excited about the John Stewart rally. That should be something to watch along these lines.

  10. Justin Gardner Says:

    Wickedways,

    Both the left and right are addicted to spending. And you know who started this massive borrowing? Reagan. He essentially defunded the government by slashing its revenue when he dropped tax rates. What happened? He had to borrow like crazy and subsequently had to raise taxes numerous times. But he didn’t cut the spending very much and so, here we are.

    We’re not going to get rid of Medicare and Social Security. Won’t happen. And people on both the left and the right want to keep them. Maybe not conservative politicians, but people who identify themselves as Republicans? Of course.

    As far as higher taxes costing jobs, how many jobs were created during the Bush years when all we did was cut taxes? Virtually none. Reagan raised taxes and jobs were created. Don’t buy into the supply side voodoo. Cutting taxes is not the only stimulative thing we can do to get the economy going.

    Still, I agree we need a third way. But cutting spending isn’t the only thing we need to be doing. We should also consider raising taxes for those who can afford it, cutting our military budget down, getting rid of programs that aren’t working, taking the cap on Soc Sec tax and raising the age for Soc Sec. We also need to pour a ton of money into R&D tax credits for businesses to come up with green energy jobs since we all know the first country to really nail that will make MASSIVE profits from it. Wean ourselves off of foreign oil slowly and be truly self sustaining. True, that might take 50 years, but we have to start sooner or later.

    Last, I know people think I’m beating up on the rich a lot. Listen, nobody begrudges people who make a lot of money, but the policies we’ve implemented pretty much universally help the rich and very few others. Their share of the wealth has collectively skyrocketed, as have their wages, while everybody else has flatlined. That has to change or we’re all in trouble.

  11. Tillyosu Says:

    As far as higher taxes costing jobs, how many jobs were created during the Bush years when all we did was cut taxes? Virtually none.

    Couldn’t you say the same thing about Obama’s stimulus Justin? I mean, for all the faults of the Bush administration, and there were many, unemployment was at around 5% for the vast majority of it. Compare that to Obama, who spent nearly $1 trillion dollars to “stimulate” the economy…and the unemployment rate went up. Now I know what you’re going to say – that the unemployment rate would have been much worse if he wouldn’t have enacted the stimulus, that we avoided some sort of catastrophic economic meltdown. I don’t buy it. The reason is because that’s an argument that you can never prove, and never lose. It’s like the stimulus itself, no matter how ineffective it is, you can always argue that it wasn’t “big enough” (like Krugman does). It’s just a bogus argument. The numbers just don’t add up. There has to be a point where you say “this job is not worth the financial investment.”

    And that is PRECISELY why stimulus doesn’t work. It’s because all a stimulus program does is reallocate capital in an economy. Instead of millions of decision makers making capital allocation decisions based on their own maximized efficiency, you have a few decision makers in Washington making capital allocation decisions based on political considerations. In short, it DECREASES the efficiency of capital allocation. Frankly, I think that the past two years have definitely shown that Keynsian economics is the real voodoo economics.

    But to be honest, at the end of the day, Presidents can do very little to “create” jobs, except to create a tax and regulatory environment that is conducive to job creation. And trust me, higher taxes and greater regulatory uncertainty is no way to do that. Clinton didn’t “create” jobs through his tax policy (though I know the left desperately wants to argue that). He was simply fortunate enough to preside over a technological revolution, rarely seen, that managed to create jobs despite his economic policies.

    But to answer your question, net jobs created under Bush was 3 million. Not impressive, but who wouldn’t rather be working in the Bush economy?

  12. forg Says:

    I’m excited about the John Stewart rally. That should be something to watch along these lines.

  13. Exasperated Says:

    Do you feel like you’re trapped on an iceberg that is breaking apart?
    Genuine worry for the children’s future is what drives the Tea Party, even if they do seem to be flailing around. I don’t think they have any thing like a comprehensive solution, but they have that in common with the rest of the pols. No one has an answer becasue it is hard and painful so we just skirt around the issues and shriek inane melodramatic rubbish at each other.
    Pause for a second the next time you enter a big box store like Walmart and consider the technologies that bring the consumer such a vast array of affordable choices. These business models rely on computing technology (inventory), automation (distribution), instant world wide communication (supply chain). 60 years ago, a grocery store was 10K-20K square feet. Everything was done manually and was very labor intensive. I can picture the stockers pricing every item, each item entered by hand into the register at check out, and managers walking up and down the aisles taking inventory. The variety, flavors, sizes, packaging, and freshness that we take for granted today would have been impossible. Today there is more choice and variety in one or two aisles than there used to be in an entire store.
    The competitive significant price savings afforded by these technologies sucks the business away from the Mom and Pops, and these technologies make outsourcing efficient and advantageous; the global mercantilist mega corporations couldn’t exist without it. It also provides the means for the mega financial firms to exploit small incremental changes in the stock market to the disadvantage of the rest of us.
    Unfortunately, today’s mind boggling efficiencies and staggering economies of scale squeeze out the labor, up and down the supply chain, eliminating many jobs, concentraing the wealth in the hands of the few or sending the wealth out of America . (The only class to have gained economic ground in the last 30 years are those with advanced degrees, everyone else has been slipping backwards.) In tandem with technology, outsourcing drives a perfect storm for American economic decline. As for outsourcing, it compounds the problem and hobbles the effort to generate jobs that create real wealth in America. It is INFANTILE to blame others for this, and even if you could, you wouldn’t want to turn the clock back. But, it would make more sense to lay the blame at the feet of Bill Gates or George Laurer, the inventor of the bar code; or, in other words, human ingenuity.
    The political parties missed the memo that the Industrial Revolution is over and the “New Economy” is pretty unappealing from a middle class perspective. What the parties, all of them, have in common is NO SOLUTION and an unwillingness to step up to the plate and engage in a forthright honest dialogue. We have to figure out a way to balance the trade offs between good jobs and cheap goods and it will be painful. The other choice is to engage in a race to the bottom and that may take 20 or more years to establish equilibrium or longer given our capacity to leverage ourselves.
    But, fix the broken jobs machine and a lot of other problems just go away. 33% of the workforce was forced out of agriculture between 1900 and 1970 but they had jobs to go to in automobile related fields, manufacturing, construction, transportation. I don’t see from where the jobs of the future will come. Notice no politician addresses the heart of the matter. We have had stimulus upon stimulus, tax cut upon tax cut (yes, 1/3 of the $800B Obama stimulus was tax cuts) to no avail. That, as a consequence and inadvertantly, our politicians created jobs in the third world low production cost economies was entirely predictable and stupid. Oh there is demand; imports increased $400B (extrapolated) over last year, just not for American stuff. And that is the REAL problem..

  14. jjray Says:

    “My gut tells me that most folks understand that the Tea Partiers are just really angry conservatives who are lashing out at their own … .”

    Don’t disagree with the above statement on its face but believe it misses the point. The Tea Party is an astroturf movement. It’s fund by the billionaire Koch brothers. Their headline speakers have their speeches written from them by Washington operatives. The Tea Party is not a grassroots herd of angry uber right leaning wingnuts. In my view, the Tea Party is a tool of an elite wing of the Republican party.

  15. Tillyosu Says:

    The Tea Party is an astroturf movement. It’s fund by the billionaire Koch brothers. Their headline speakers have their speeches written from them by Washington operatives.

    Garbage. Have you actually ever been to a tea party event? Met any tea party organizers?

  16. Chris Says:

    Tilly, this then should be an enlightening read for you:
    http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer

    But the Koch brothers are Libertarians jjray, they just team up with the Republicans because their agendas overlap sometimes.

    Tilly: which bush economy is that? because I seem to remember the economy sucking far before Obama got elected.

  17. WHQ Says:

    The “Bush Economy” was largely fueled unsustainably by increases in household debt (and partly by deficit spending, of which there was plenty, creating little long-term value for the US economy – blowing stuff up on the other side of the world is like that).

  18. kranky kritter Says:

    Ought any reasonable person to dismiss the sentiments and perceptions of a very substantial group of unsatisfied citizens because of the sources of some of that group’s financial backing and the authorship of some of its speeches?

    The dissatisfaction and the emotions are real. I am happy to confine myself to the issue of which concerns raised by the Tea Party have merit.

    The tea party movement has legs because it represents legitimate discontent. Od course, any such movement left-wing or right is prone to being co-opted to some extent by organized interests with big money.

    The next step is always that the opposition declares that the movement is not a real grass roots movement representing legitimate views of real everyday Americans. I don’t buy it. I am happy to notice that with co-option comes some distortion, that’s inevitable. But don’t forget. An opportunist can grab a baton, run to the front of the marching crowd and yell parade. But that crowd is going to go where it wants to go. If the baton-holder tries to lead the crowd some other way, he’ll get trampled.

  19. The Main Gauche of Mild Reason Says:

    In a first-past-the-post voting system, equilibrium will tend to be two parties. A national third party of significance wont’ arise without changes to the voting system.

  20. Tyler Says:

    The idea of a third party is great, but it simply isn’t sustainable in a winner-takes-all system. Eventually two of the parties will compromise and join forces for the sake of power. It’s why most of the Tea Party folks will always return home to the GOP. If they truly spit into a new party, they would be handing most elections to the DNC. Once they get tired of losing, the Tea Party will dissolve back into the GOP.

    A third party is a great idea, but I don’t see it working with the way that our electoral system is structured.

  21. Chris Says:

    No, I’m not dismissing the emotions or perceptions of the TPers, but I am questioning the validity of the reasons they have behind those emotions. I also question if they know the agenda of the banner they are marching under. I’m sure many agree that there are many problems in the Federal Government, but do they all want it to be dismantled, which is the Koch Bro agenda?

    I don’t care if it’s a grass movement or not, but are their views legitimate if they are being misled into believing something?

  22. kranky kritter Says:

    Misled? By and large I don’t think TP folks are being LED in any particularly substantial way.

    I agree that some of their viewpoints may be mistaken. But I think these viewpoints have largely emerged from the existing sentiments of everyday people. For better and for worse.

    And yeah, I’m certain that various opportunists are trying to shape the TP to suit their own agenda(s). My personal opinion is that populist movements are very difficult to shape. Primarily because the organizing principle, if there is one, is based on emotion, not policy perspective. History has shown this many times. The only truly over-arching organizing principle behind the Tea Party is angry dissatisfaction. Then there are a variety of issue-ish perspectives that 3 of 4 or 2 of 3 or 1 of 2 folks agree on.

    These Koch bros can try to herd these angry cats to suit their own libertarian purposes if they want. It’s their dime. I believe they are largely kidding themselves. When push comes to shove, only a small minority of folks believes in more than 1 or 2 capital-L libertarian positions. At the end of the day, financing the Tea Party isn’t really going to change that.

    First and foremost, the tension between libertarianism and social conservatism is FAR too vast to be bridged. Social conservatives don’t really value liberty when it comes to things keeping religion out of government, allowing homosexuals to marry and have a full place in society, and so on. Libertarians are no more welcome in conservatism than they ever were. They are welcome on fiscal grounds and small government grounds, but are pariahs on social issues. And on small government grounds, there are PLENTY of Americans who support the notion of smaller government in the abstract, but largely support most existing government functions when they are asked on an item by item basis.

  23. Chris Says:

    They’re not being led by the information that is released from shadow think tanks putting out bogus reports that gets conservatives all riled up? Or by speech writers and givers who are paid by those same organizations. Or by rallies that are funded and organized by those same organizations?

    Their anger is legitimate, but their beliefs and reasons are not.

  24. kranky kritter Says:

    Not even the belief that gross overspending by the government during the last 3 budgets threatens our long-term solvency? That’s an illegitimate belief?

    I’m happy to acknowledge that some members of the tea party have kooky beliefs. But it troubles me how easy their opponents fall into criticizing the group as a whole by calling attention to the kookiest beliefs of subsets of the tea party without any regard to how widespread each of these given beliefs is across the entire range of supporters.

    Seems to me that there are plenty of issues that tea party folks are concerned about which are legitimate. Obviously not all of them. But it’s a broad brush smear to say that the beliefs and reasons of folks in the tea party are illegitimate. And it’s lazy.

    Folks who disagree with the tea party need to do much better than to focus on and discredit the most easily attackable of their positions.

  25. Chris Says:

    The gross overspending by republicans for 8 years didn’t seem to bother them at all…

  26. WHQ Says:

    Why is my short, not-vulgar, link-free comment from two days ago still in moderation?

  27. kranky kritter Says:

    @whq

    I think that maybe that when one opens a thread by clicking on one of the recent comments in the the column, that seems to trigger moderation. Haven’t paid close enough attention to be sure about that.

  28. kranky kritter Says:

    That’s because we haven’t HAD gross overspending for 8 years.
    It’s extraordinarily disappointing to see that even folks here are so incapable of paying attention and developing a good faith understanding of the nature of recent government overspending.

    Beginning with the very last Bush admin budget, the scope of our government’s overspending increased dramatically. Do yourself a fricken favor, don’t believe me, look it up.

    Prior to the last Bush budget, the government was collecting 10 dollars and spending $10.50 or $11. This was troublesome. But for going on 3 or 4 years now, the government has been collecting $3 and spending $5. This is both frightening and unsustainable. And necessary has nothing to do with it. The meters runs at the same rate regardless of the importance of your trip.

    Now. unlike many conservatives, I don’t lay the blame for this at the feet of President Obama. I don’t even really try to lay the blame at the feet of anyone else, like congress. Because right now, blame doesn’t matter. The point is that it has to stop very very soon. And if it doesn’t stop voluntarily, it will stop in response to the actions of foreign investors who become unwilling to keep financing it.

    I cannot stress how important it is for all Americans to understand the fundamentals of this. If we don’t address this aggressively within the next couple of budget cycles, we’ll face a sovereign debt crisis within 10 or 20 years at the outside. That would be far, far worse than what we’ve been experiencing recently.

    The saddest thing about me saying this? It’s that many folks who don’t want to face the inconvenient truth about the precariousness of US finances think that my view is unnecessarily alarmist and even kooky. Even when we have a real debt crisis, such folks will still be saying that the government had no choice but to keep spending 5 while collecting 3 for 5, 6, 7, 8,9, or 10 years.

  29. WHQ Says:

    I opened this one by clicking on your comment, kk, so this will be a test.

  30. WHQ Says:

    This was my comment from two days ago, if it gets through:

    The “Bush Economy” was largely fueled unsustainably by increases in household debt (and partly by deficit spending, of which there was plenty, creating little long-term value for the US economy – blowing stuff up on the other side of the world is like that).

  31. kranky kritter Says:

    @Chris
    When I say gross overspending, I’m taslking about the levels seen since the last Bush Budget. We haven’t HAD gross overspending for 8 years.

    It’s extraordinarily disappointing to see that even folks here are so incapable of paying attention and developing a good faith understanding of the nature of recent government overspending.

    Beginning with the very last Bush admin budget, the scope of our government’s overspending increased dramatically. Do yourself a fricken favor, don’t believe me, look it up.

    Prior to the last Bush budget, the government was collecting 10 dollars and spending $10.50 or $11. This was troublesome. But for going on 3 or 4 years now, the government has been collecting $3 and spending $5. This is both frightening and unsustainable. And necessary has nothing to do with it. The meters runs at the same rate regardless of the importance of your trip.

    Now. unlike many conservatives, I don’t lay the blame for this at the feet of President Obama. I don’t even really try to lay the blame at the feet of anyone else, like congress. Because right now, blame doesn’t matter. The point is that it has to stop very very soon. And if it doesn’t stop voluntarily, it will stop in response to the actions of foreign investors who become unwilling to keep financing it.

    I cannot stress how important it is for all Americans to understand the fundamentals of this. If we don’t address this aggressively within the next couple of budget cycles, we’ll face a sovereign debt crisis within 10 or 20 years at the outside. That would be far, far worse than what we’ve been experiencing recently.

    The saddest thing about me saying this? It’s that many folks who don’t want to face the inconvenient truth about the precariousness of US finances think that my view is unnecessarily alarmist and even kooky. Even when we have a real debt crisis, such folks will still be saying that the government had no choice but to keep spending 5 while collecting 3 for 5, 6, 7, 8,9, or 10 years.

  32. WHQ Says:

    If we don’t address this aggressively within the next couple of budget cycles, we’ll face a sovereign debt crisis within 10 or 20 years at the outside.

    What’s your numerical basis for this projection, kk? What do you mean specifically by “address this agressively?”

  33. Chris Says:

    KK I don’t disagree with you on our fiscal policies, but my point is that none of them were complaining when we financed two wars off of borrowed money.

  34. WHQ Says:

    I’d like to get people’s thoughts on this blog post:

    http://bilbo.economicoutlook.net/blog/?p=11716#more-11716

    Excerpts to whet your interest:

    A national government in a fiat monetary system has specific capacities relating to the conduct of the sovereign currency. It is the only body that can issue this currency. It is a monopoly issuer, which means that the government can never be revenue-constrained in a technical sense (voluntary constraints ignored). This means exactly this – it can spend whenever it wants to and has no imperative to seeks funds to facilitate the spending.

    (…)

    A sovereign government does not need to save to spend – in fact, the concept of the currency issuer saving in the currency that it issues is nonsensical. A sovereign government does not need to borrow to spend. A sovereign government can sustain deficits indefinitely without destabilising itself or the economy and without establishing conditions which will ultimately undermine the aspiration to achieve public purpose.

    Further, the sovereign government is the sole source of net financial assets (created by deficit spending) for the non-government sector. All transactions between agents in the non-government sector net to zero. For every asset created in the non-government sector there is a corresponding liability created $-for-$. No net wealth can be created. It is only through transactions between the government and the non-government sector create (destroy) net financial assets in the non-government sector.

    (…)

    The only economic constraint that a sovereign government then faces is what we term the real constraint. Nominal public spending may be unlimited in capacity but given that the object of such spending is to garner public control of real goods and services then clearly the availability of these goods and services for sale becomes a binding constraint at some level of economic activity.

    The government desires to access these real goods and services so that it can advance its conception of public purpose which is derived from the socio-economic mandate it received upon its election. Clearly, if the government was to push nominal spending beyond the capacity of the economy to respond by increasing real output then it would be in breach of this responsible charter – all it would be doing is promoting inflation once there was no capacity for the economy to grow further in real terms.

    You really have to read the whole thing. Going solely on what I excerpted will give you a slanted perception of the concepts being presented. I purposely quoted what I thought would make people want to find out what sort of madness was going on, compelling them to read further after thinking “But what about this? And what about that? This is lunacy!”

    P.S. Preview is showing bolding in my blockquote which is not intended. I don’t know if it will show up when the comment posts, but it’s not my doing.

  35. kranky kritter Says:

    @Chris: the “gross” overspending has only been occurring since 2007. So it makes perfect sense that many Americans became far more concerned at that point. Probably the “them” in your comments were already troubled by the debt we’ve seen in the past decade, and they got WAY more concerned when the deficit went WAY up. How is that not astonishingly obvious?

    @WHQ

    “Address aggressively” would mean to cut the deficit back down to a single digit percent by the next budget, pass another balanced budget act, balance the budget within 5 years, and to make changes to social security and medicare. On SS, this would been raising the retirement age, capping or even cutting payouts, removing the income cap on contributions. I have no good answer to medicare.

    My basis for thinking we’ll face a sovereign debt crisis is much more broad based than simply being based on numbers. It’s based on reading from many, many sources. The primary theoretical basis is this: the real-world value of a fiat currency is constrained by the beliefs of the whole world as to its worth. So in the context of the current American dollar, the US finances its deficit by issuing promises to foreign investors to give them, say, 20 dollars in 10 years in exchange for 10 dollars now. (Or whatever the actual numbers are).

    When a government finances deficit spending via selling bonds this is essentially the same thing as printing more money. If the world loses faith in the solvency of that fiat currency, the currency gets revalued at what the world thinks its worth based on the issuing country’s current economic circumstances.

    I looked at billyblog. I was looking for an explanation of how a sovereign government could escape a reckoning at the hands of debtholders, and did not find one. I am not the sort of person who is drawn towards reading a lengthy article by outlandish claims. Instead, I need some sort of taste of what sounds like real insight.

    To my knowledge, there IS no escape from an eventual reckoning when an entity spends far beyond its means. Either there’s a re-balancing, or there is an eventual collapse. Because the external financiers eventually shut off the spigot. As billy concedes, the real constraint on a sovereign government’s finances is inflation in its fiat currency. Like in the famous post-wwII collapse of the mark, wherein impoverished germans needed a wheelbarrow of currency to buy a loaf of bread.

    If you can give me the reader’s digest version of why Billy believes this is not inevitable, then I’d consider reading the rest of that extremely lengthy post in good faith.

    One thing worth noting. At one point or another, I may have used the term “solvency” in an imprecise way. I’m not an economist. Solvency refers to the ability to pay one’s debts. Technically, a government that issues its own currency can always pay its debts by issuing more money, raising taxes, etc. So a government can’t be insolvent in the same way in individual can. But that’s not especially consoling when the value of a fiat currency can plunge to near worthlessness. Probably there’s a better and more accurate technical word to describe that condition. But whatever the semantics, we can agree that it would be disasterously bad for everyday Americans if we saw serious inflation.

    At Billyblog, Billy repeatedly asserts the idea that a sovereign nation is unconstrained in its ability to issue more debt. IMO, this is at best a misleading assertion. If the rest of the world loses faith in the worth of a dollar, and we lack genuine ongoing domestic productivity on which to base the worth of the dollar, America will suffer badly.

    And that’s what a sovereign debt crisis would look like…America continuing to borrow money to finance spending beyond what its debtholders felt was defensible given their understanding of actual American wealth.

    We’ve already seen some decreased outside interest from foreign investors. The treasury department has begun buying substantial portions of some of the bonds that America periodically issues, for reasons which escape me in the explanations I’ve read.

  36. kranky kritter Says:

    WHQ, I read the Billyblog post and commented, and got banished to moderation. I responded to Chris, too.

  37. Chris Says:

    Is justin MIA or something? Why are all these posts failing?

  38. mdgeorge Says:

    kk,

    Thanks for making that clear – I went and looked at the numbers and found that indeed, in 1999 we spent 167% of what we brought in, while under bush the maximum was 122%. This is indeed troubling. However, we also spent considerably more than that during the end of WWI (over 350% during 1918 & 1919), during the great depression (surprisingly starting during Hoover’s administration – over 200% from 1932-1936), and during WWII (over 200% from 1942-45).

    Here’s a chart of income/outlays from 1900-present (with estimates until 2015): http://dl.dropbox.com/u/3989078 /deficit-chart.pdf

  39. mdgeorge Says:

    way to lose a decade – I meant 2009.

  40. mdgeorge Says:

    way to lose a decade – I meant 2009 of course. Also the link got broken:

    http://dl.dropbox.com/u/3989078/deficit-chart.pdf

  41. kranky kritter Says:

    Nice graph. Notice that the high deficit periods were short in duration and followed by a surplus. We had the post-wwii prosperity to pay for the debt accrued by the depression and wwii. There’s no reason to expect similar high growth in 2010 America, plus we have the demographic issues affecting both social security and medicare, against a backdrop of slow population growth.

  42. WHQ Says:

    WHQ, I read the Billyblog post and commented, and got banished to moderation. I responded to Chris, too.

    If it keeps up, it’s going to kill this blog. It’s no way to have an on-line conversation.

  43. WHQ Says:

    If you can give me the reader’s digest version of why Billy believes this is not inevitable, then I’d consider reading the rest of that extremely lengthy post in good faith.

    I don’t know that a debt crisis, given the way we choose to do things, wouldn’t be inevitable. Modern Monetary Theory (MMT) would suggest that there is no need to issue debt in the first place. What purpose does it serve?

    The example of the German Mark doesn’t apply because it wasn’t a fiat currency and there were debts not denominated in Marks. From Wikipedia:

    It is sometimes argued that Germany had to inflate its currency to pay the war reparations required under the Treaty of Versailles, but this is misleading, because the treaty did not allow payment in German currency.

    and

    The total reparations demanded was 132,000,000,000 (132 billion) goldmarks which was far more than the total German gold or foreign exchange.

    It was a currency backed by gold, of which they didn’t have enough, and they had debts that could not be paid with their currency. These things don’t apply to the United States today. The real constraints are different, and have more to do with the amount of productive slack in our economy as regards inflation. That’s not to say that the government couldn’t induce hyperinflation by net spending. It is to say that we don’t need to borrow money to spend it and we don’t need to tax to spend it.

    Taxation and borrowing perform functions not related to funding anything, really (or they shouldn’t). What they should do is allow the government to manage the economy in aggregate through net spending/taxation, provide the public service of a safe savings vehicle for its citizens, and make distributional adjustments (sub-aggregate) as necessary.

    To be honest, I’m not sure how much I buy into MMT. I do to some extent, but I’m not expert enough to do so with a great deal of confidence. It appeals to me because it gives me an entirely different way of looking at macroeconomics, particularly with regard to the role of the government.

    I know it sounds nutty when you read some of what Bill writes, particularly if it’s not entirely in context, which it often isn’t in the mind of someone reading it for the first time. Part of it, I think, is because he writes from a particular perspective in reaction to established, mainstream, economic “conventional wisdom,” for lack of a better term. This makes him emphasize his points of disagreement, which pushes his writing in one direction more than the other, if that makes sense. But it’s interesting stuff, and he’s no amateur.

  44. WHQ Says:

    I replied to your recently moderation-liberated reply, kk, but now I’m in moderation. Maybe we should send each other letters via snail mail.

  45. Chris Says:

    anyone email justin yet?

  46. kranky kritter Says:

    Folks, feel free to drive by the cranky critter. I’ve opened up an open thread in case WHQ or anyone else wants to continue to conversation about government debt or related ideas that have ground to a standstill here.

    Toss out some thread ideas. Tell me what you’re up to. Whatever. I’m interested to hear what’s on folks’ minds. I’ll try to get up some more posts to keep the juices going, especially since Donklephant seems pretty quiet given the currently charged political atmosphere.

  47. Wickedways Says:

    1. Our economy would creep along if it was not for credit. In fact it would most likely nose dive into a massive depression with 40 percent unemployment.

    2. We do in fact fund our expansion with credit. It is the main reason for recessions. Recessions happen when the credit limit is reached by the populace and they have to stop spending and start paying. Even though we are still spending we are not spending as much on new items because we are credit crunched.

    2A. America will soon be reaching the recessionary trend of being credit crunched just like many other nations around the world.

    3. The reason both Dems and Repubs allow illegal immigration to flow into this country year after year is because we need NEW and immediate consumers to purchase and keep our economy expanding.

    4. America is in a bubble, and has been since ww2 ended. The reason no politician will end our borrowing is because they understand to do so would create a depression in this country.

    5. America will borrow till she drops dead. Then the politicians will continue to point to the other side of the isle while they jet away to bermuda and spend their millions they bilked from US because they knew this was coming.

    6. The Tea Party is about fiscal responsibilty and trying to end this charade both sides of the isle have inflicted on America. Barak Obama has hinted at reality and no one listens. He said get used to 10 percent unemployment. Cut back. Get used to having less.

    7. No ones listening.

    8. We will vote Democrats out of office and put Repubs back in and the same problems will exist with no solutions.

    9. Only the tea party has the solution but no ones listening because the other side is so busy trying to paint them as racists they do not hear the message that we cannot keep spending like this because……

    10. The Republicans spent like drunken sailors so now its the democrats turn.

    11. Thus ends the sermon for today….no berate me and go back to screaming how GWB was Hitler and Barak Obama is Hitler….that really solves problems.

  48. Justin Gardner Says:

    Hey all,

    I’ve been busy with work and producing a web series, so I haven’t been checking the back end. Not sure why the comments are going into moderation so often because they don’t seem to have any keywords that would put them there.

    Genuinely sorry for any confusion. I’m still here, but life has gotten in the way.

    Thanks for understanding.

  49. Drasties - Dutch on the World - World on the Dutch Says:

    [...] overwhelmingly dominated by two major political parties: the Democratic and Republican parties. Yet polling shows that Americans, by a wide margin, feel that there needs to be more diversity and more choices in [...]

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