The Instigator
Bob13
Pro (for)
Losing
0 Points
The Contender
lannan13
Con (against)
Winning
7 Points

Resolved: Deficit Spending does more harm than good.

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Post Voting Period
The voting period for this debate has ended.
after 1 vote the winner is...
lannan13
Voting Style: Open Point System: Select Winner
Started: 6/4/2016 Category: Politics
Updated: 1 year ago Status: Post Voting Period
Viewed: 865 times Debate No: 92348
Debate Rounds (5)
Comments (13)
Votes (1)

 

Bob13

Pro

Definitions
Deficit Spending- "government spending, in excess of revenue, of funds raised by borrowing rather than from taxation." https://www.google.com...

The burden of proof is shared equally.

Round Structure
1. Acceptance
2. Opening Arguments
3 & 4. Rubuttals and Defense (No new arguments in R4)
5. Conclusions

Additional Rules
No trolling.
lannan13

Con

I accept this debate and wish my opponent good luck.
Debate Round No. 1
Bob13

Pro

Contention #1: The economy can recover without deficit spending.
Before the creation of the Federal Reserve, the economy was a long series of depressions separated by brief periods of economic growth. After the federal banking system was established, banks often borrowed and spent money (which is what the government does with deficit spending). This led to the Great Depression, but the economy started to heal itself in 1933. In modern times, the economy can't heal itself because of excessive stimulus. [1]

As you can see in the graph, the stimulus package didn't allow the economy to heal itself, and it just caused further decline.

Sorry for making my argument so short as I have been busy lately, but it's a five round debate, so I might add some in the next round.

Sources
[1] http://economyandmarkets.com...
lannan13

Con

For this round I shall be going over three contentions on two main aspects of stimulas and then move on to status quo deficit spending.

Contention 1: Monetary Stimulas

Monetary stimulas is quite key in many things as in 2008 during the subprime crisis, Federal Reserve Chairman Ben Bernake created a stimulas that far surpassed that of the Federal Government's TARP, which I'll get into TARP later on. Bernake saw the issue in the economy needed a huge fix and it was obvious that he needed to supply credit, not liquidity [1]. The Monetary policy had many types of stimulas, but none more effective, by far, than the Quantitiative Easing (QE from this point forward).



During QE1, the Federal Reserve purchased US treasury bonds that were morgaged based bringing totals up to nearly $2 trillion [2]. This was important as the Federal Reserve had no choice, but to buy these toxic assets as many banks began to go under. Much of these toxic assets were grouped together in CDS, which these toxic assets and bad mortgages were packaged and sold off to other banks as well as other companies. When Lehman Brother's went under, the Fed jumped in and began to start buying these toxic assets. Many of these came from Freddie and Fannie Mae's Mortgage Backed Securities (MBS). In QE3, the Federal Reserve has increased purchasing MBS and GSE (Government Sponsered Enterprises) debt increased to $85 billion per month and this would continue until the markets recovered. To this point, the Federal Reserve's total holding are at $4.4 trillion by the end of 2014 [3]. US unemployment has fallen from 10% to now around 5% by the end of 2014 [4]. Unlike many critics speculation, QE did not lead to the hyperinflation that many had feared as the US economy began to recover. In the purchasing of the toxic assets and public debt, it enfused credit into the markets leading to an increase in AD which is the number 1 driver of the economy as nearly everything and all paths to recovery revolves around the AD and as the public spending increases, it sepdns signals to the consumers that the economy is beginning to recover and they can feel safe to begin continuation of consumer spending and making investments. This has helped pave the pathway to recovery that Free Market policy wouldn't be able to even come close to such a safe recovery as we would have likely have been plunged into another Great Depression as world markets were all beginning to fail.

Contention 2: Fiscal Stimulas

Much of the Republicans have cried foul when the TARP bill was passed, but then blamed Obama when the bill wasn't enough and the economy was in shambles. The thing was, TARP wasn't enough. Economist Paul Krugman stated that the US economy could produce $30 trillion in a year, but under the crisis, the US under produced well under 6.5%. The TARP bill tried to fix a multi trillion dollar problem and came no where close to enough [5]. If you are blaming the slow recovery on Stimulas Spending, then you are in the wrong as there simply wasn't enough of a deficiet undertaken in order to actually fix the problem as many Republicans were going to road block this bill if a higher amount was purposed.



A huge question purposed that many people on the right can't answer is what can we do to increase jobs under a recession? We simply can't sit back and do nothing. What needs to be done, as brought up before, is the encouragement of public spending as well as increase consumer spending. Contrary to the "hole digger" jobs that many think only came out the FDR's New Deal, the US Federal Government helped build the TVA, 2,500 hosptials, 45,000 schools, 7,800 bridges, 700,000 miles of road, and employed 5,000 teachers [6]. Hoover refused to go into debt in order to get the US out of the Great Depression, but he declined to do so. FDR employed over 60% of the unemployed population as well as he reduced unemployment from 25% in 1933 to 9.6% in 1936. All in all, FDR took the unemployment rate from nearly 40% down under 5%. A key thing about fiscal spending in situations like this is that it gives people who would normally not have any money, a paycheck which can be re-entered into the economy through spending which gives more people jobs and helps the economy recover. This was done with new programs like Welfare and Social Security, so now grandparents didn't have to move in with their children as it would put of burden on them forcing them to spend less.

Contention 3: A Balanced Budget won't work.

Unlike many Conservatives say, cutting the budget will only hurt the economy. Economist John Maynard Keynes had argued that the government is a multiplier for growth and their public spending would generate demand. This is important in this debate as the further we go into debt, the better our economy will be. Now I'm not saying we should spend endlessly, but we definately should not only go and spend very little or what we have as income for our government. Doing this would extremely harm us. Sequester also showed that this was an issue as more spending was cut, we saw unemployment rise as well as damage our economy [7]. Our recovery that was well within reach was slowed and it would have been much faster. A huge example of this was when the Republicans tried to shift Medicade into a voucher system and even though it looks good on paper with a shifting of a few Trillion, but when everything and said and done, the program's cost will balloon to $34 trillion which makes things worse on the private sector [8]. You could just argue that the current US budget is fine where it is. The USFG makes about $1.1 trillion per year, but spends $3.3 trillion per year [9]. This means in order to ballence the USFG would need to shrink its spending to a third of its size. Shrinking the budget this size would destroy the economy.

Sources
1. (http://www.sjsu.edu...)
2. (http://www.academia.edu...)
3. (http://www.heritage.org...)
4. ( https://www.theguardian.com...)
5. (http://www.nytimes.com...)
6. (http://rooseveltinstitute.org...)
7. (https://www.washingtonpost.com...)
8. (http://www.huffingtonpost.com...)
9. (https://www.nationalpriorities.org...)
Debate Round No. 2
Bob13

Pro

Additional Arguments

Contention #2: The government needs to pay off its debt or the private sector will lose money.
Approximately 32.5% of government debt is owed to individuals and institutions in the private sector, as shown in this chart:



This means that over $6 trillion have been borrowed from the private sector. If the government never pays off this debt and continues to borrow, the private sector will continue to lose trillions of dollars.
Borrowing from the private sector also defeats the purpose of economic stimulus. Why borrow so much money if you're going to give some of it back without hesitation? It would be much more efficient to let people keep more of their money. The economy is hurt when businesses fail, businesses fail because they don't have enough money, and they lose money when the government takes it. If the government didn't spend so much money, the private sector wouldn't have to give so much away.
You can also tell from the chart that 32.7% of debt is owed to foreign countries, which leads me to my next contention.

Contention #3: Too much reliance on foreign countries makes the U.S. economy vulnerable.
The government has borrowed trillions of dollars from China, Hong Kong, Japan, Belgium, Ireland, Brazil, and the UK. If any of those countries were to have an economic crisis, the government would either lose money or be forced to borrow more from the private sector. If the government wanted to continue deficit spending, they would borrow more from the private sector, which would just make the economy worse as businesses lose money.

Conclusion
The economy can heal on its own. Deficit spending doesn't work and it harms the private sector.
lannan13

Con

For this round I shall refute my opponent's case from the past two rounds.

Contention 1: The economy can recover without deficit spending.

My opponent claims what the Stimulas spending lead to the Great Depression, but in my last round I have shown how this is false and how it was used to get us out of the Great Depression. Even though the economy self recovers, stimulas spending speeds up this process.
Emp5

For my opponent's second part of this argument, we can see that he's really looking at the wrong thing. Here we can see that after the TARP package unemployment began to fall. I also extend my arguments showing how Economist Paul Krugman shown how the TARP bill was way to small which was why it didn't work as fast. After the bill we can see that there were several great effects on the economy that my opponent hasn't brought up: US deflation returned to healthy inflation, Housing ownership began to stablize, prices stablized, Products sold increased, and industrial production had risen [1]. These are key indicators of the economy and we can see that they all began to skyrocket in recovery after the bill.

Contention 2: Government needs to pay off its debt.

My opponent starts to fret that the US can't pay off its debt, but this is simply wrong. Former Chairman of the Federal Reserve, Alan Greenspan had stated, "The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default. [2]” It is also impossible for the US to default since all public debt is paid with by the dollar. We have a zero percent chance of doing so, thus my opponent's contention doesn't really have an impact.

Contention 3: Reliance is bad.

Next, we can see that my opponent's claim on us owing all these nations trillions in debt is simple false. This is completely as well as mathematically impossible. Debt can be seen as a good thing. Alexander Hamilton had actually endorsed this as it would interconnect the US and other nations would not want to let anything bad to happen to the US as it would harm them [3]. If we would get rid of our debt, many nations wouldn't care as much.


Sources
1. (http://economistsview.typepad.com...)
2. (http://www.forbes.com...)
3. (http://www.usnews.com...)
Debate Round No. 3
Bob13

Pro

Bob13 forfeited this round.
lannan13

Con

All points extended.
Debate Round No. 4
Bob13

Pro

When in economic crisis, the economy can heal without excessive government spending. Stimulus spending did help us get out of the Great Depression, but it did not put us in debt, so it was not deficit spending. In addition, the economy ended up healing itself during WW2.
Con even admits that the economy can recover on its own, and as my chart showed, deficit spending only creates a temporary solution to economic problems.
In conclusion, the economy can heal itself, and though deficit spending creates a temporary solution to economic problems, it isn't necessary, it takes money from the private sector, and it increases our dependence on foreign nations.
lannan13

Con

To conclude this debate we can see that my opponent has neglected to contest any of my arguments leaving them droped in this debate. We can see that the Stinmuli through deficet spending does more then allowing the economy to recover on it's own. Even under the status quo, we have no choice, but to deficit spend and there is no true way that we as Americans can ballance our budget as we would be destroying our economy through all of these budget cuts. Deficit Spending can lead to great things just as it had helped the economy recover during the Great Depression. The TARP bill was too small and key economists had argued that if it were bigger we could have fixed the economy. Many of these things are really ignored and must be taken into account when we face economic downturn. The only thing we can do is spend to give the economy that spark it so desperately desires in order to save it and keep it from total collapse.

With that I thank you and urge you to vote Con!
Debate Round No. 5
13 comments have been posted on this debate. Showing 1 through 10 records.
Posted by Hayd 1 year ago
Hayd
RFD Part 2

contention still works), and explaining that public debt is payed with by the dollar, thus the US would not default, thus negating the argument. Con also explains that dependence on other nations is good as it deters countries from wanting anything bad to happen to the US. Thus, the impact of Pro"s argument is turned into Con"s favor.

In the end, all of Pro"s arguments are negated by Con, and Pro dropped all of Con"s arguments. Thus, Con"s impact outweighs Pro"s, and Con wins.
Posted by Hayd 1 year ago
Hayd
RFD Part 1
[Note: my understanding of economics is below average, I really need to do something about that"]

In Pro"s opening arguments, he argues that without deficit spending, the economy is able to heal itself from depressions. But with deficit spending, it is unable to. (Continuing to R3) Pro argues that deficit spending leads to debts to the private sector that the government cannot pay back, resulting in the private sector losing lots of money. Pro also argues that deficit spending makes the US economically tied to countries we are borrowing from. Thus is they have an economic crisis, our economy is hurt as well.

Con"s opening arguments are confusing, partly because of my absent knowledge of economics, but also because it is confusing. Lucidity=strength in debate. Regardless, I interpret it as deficit spending prevented the US from plunging into another Great Depression, so, basically, more economic stability. Con also explains how deficit spending can be used to get out of a recession and help the economy recover. Con"s third argument is very strong, he explains that if we were not to use deficit spending, it would destroy the economy for it would have to shrink to a third of its size. So not only is deficit spending beneficial to the economy, but *necessary* to its existence.

Pro drops all of Con"s arguments due to forfeit. Con responds to Pro"s first argument by citing his opening argument that proves the opposite of what Pro claims true, thus negating it. He furthermore shows that deficit spending did not hurt the economy, but actually helped it by turning US deflation to healthy inflation, stabilizing housing ownership, stabilizing prices, icnreased product sales, and increased industrial production. Con responds to the private sector debt by explaining that the US can always pay it off by printing money (but that rebuttal doesn"t work because the printed money would result in inflation; a net negative. As long as there is a negative the conte
Posted by Hayd 1 year ago
Hayd
I'll vote on this
Posted by lannan13 1 year ago
lannan13
Sure why not.
Posted by Bob13 1 year ago
Bob13
So we'll post conclusions next round?
Posted by lannan13 1 year ago
lannan13
I'll just pass and we'll treat it like a 3 round debate. How about that?
Posted by Bob13 1 year ago
Bob13
Sorry about the forfeiture. I've been having a problem that prevented me from posting my argument. Do you mind if I post it in the comments?
Posted by ResponsiblyIrresponsible 1 year ago
ResponsiblyIrresponsible
Now that I think about it more, even though I don't think my comments necessarily were inappropriate, I do understand how they might have walked a fine line between meaningless commentary and outright advice -- which obviously wasn't my intention.

So, I'll withhold any further comments until the debate is over -- but please, someone, do let me know when it enters the voting period.
Posted by ResponsiblyIrresponsible 1 year ago
ResponsiblyIrresponsible
I don't see a problem with it, especially when I haven't outright critiqued arguments made in the debate. I'm speaking far more to the subject than I did to any argument raised in the debate, especially because Bob's case was admittedly incredibly small. If they really wanted to know what I thought about this, they could read the multitude of forum posts I've written, and even then googling would do just as good.
Posted by tejretics 1 year ago
tejretics
Don't critique mid-debate.
1 votes has been placed for this debate.
Vote Placed by Hayd 1 year ago
Hayd
Bob13lannan13
Who won the debate:-Vote Checkmark
Reasons for voting decision: RFD in comments