More USA political questions

[Jim Craik]

My ten-year-old grandson's take on the economy was this:
"You mean that my piggy bank is full and I spend it and borrow the money to replace it, and pay interest on it too, then I'll owe a lot of money and when my bank is empty again because I HAVE to spend it and do it all over" "My allowance and extra work that I do won't be able to keep it up" "That's just STUPID"!

Yes Jack, the Reagan, Bush tax cuts were the equivelent of your Grandson spending all the piggy bank money, borrowing more and at the same time voluntarily telling you to lower his allowance.

Thats really stupid, but thats what happened!

 

[Larry L.]

Yes Jack, the Reagan, Bush tax cuts were the equivelent of your Grandson spending all the piggy bank money, borrowing more and at the same time voluntarily telling you to lower his allowance.

Thats really stupid, but thats what happened!

Aaaaaaaaaaaaaand yet again the king of spin, nuance, duck, dodge and deflection demonstrates just how he won that title! :nice:

 

[Jim Craik]

Larry,

This is a discussion about our huge debt, why we have it and who's to blame, right? There are many to blame..............

Are you really saying that Reagan and Bush did not lower taxes and increase spending?

I'm saying that they did, it contributed greatly to the debt and it was STUPID!!!!!!

Larry that is the equivalent of Jacks grandson spending all the money, borrowing more and voluntarily lowering his allowance.

 

[Pat]

Pat,

I'm no economist either, but if the GDP could be considered the Countries "income" and the debt is it's mortgage, wouldn't "taxes" be equal to the "mortgage" payment?

If thats the case, then a $16 trillion income, with a $16 trillion debt does not seem so outragous, does it?

I mean the numbers are huge and taken by itself the $16 trillion debt seems unbelievable, but when compared to the GDP, it seems slightly less outragous.

Jim, the GDP isn't the government's income, it's the monetary value of all the finished goods and services produced within a country's borders in a specific time period. It's not the government' money but that of the citizenry. Your analogy only works if you have a fully socialized state where all capital belongs to the government.
Just suppose you did that, the government is spending money that would only balance in one year if it literally seized all the means of production, distribution, and exchange in the nation. But even then, you only solve the deficit for one year and haven't touched the debt long term obligations of Social Security, Medicaid etc. You also don't have anything left for what the government may spend the next year. I think you may be confusing the nature of a balance sheet versus an income statement as well as philosophically, do the people's wealth belong to them or the government. No matter how you slice it, you can't annually spend a third more than you take in before at some point there is a reckoning.

 

[Jim Craik]

Pat,

In this analagy..........

The GDP equals total income, the debt is the Mortgage and taxes equals mortgage payments.................

 

[David Morton]

Can some one send me a Stanley knife?

 

[Keith]

Can some one send me a Stanley knife?

Use a spoon....

It works for me....

 

[John Milmont]

No, I'm not.

Using the homeowner analagy, that would be like saying our house payment should be linked to our income, thats not how it works......

The payment (taxes) has to be linked to the amount of debt.

If it takes X$ to sevice the debt, taxes need to be linked to that, right?

Then, if the GDP increases to the point that is higher than the debt, only then would we have the choice of lowering taxes or increasing spending.

It makes sense. But why do we have to connect only taxes with debt? shouldn't the government be accountable as well? If the debt is huge, shouldn't the government tighten up and be more careful about spending/borrowing?

I don't think its possible to argue against that, right now, our government is spending at a rate faster than the GDP's growth...

 

[Jim Craik]

Yes,

But these is not all that much flexibility in Government spending. Social Security, a robust military and Medicare are incredibly popular and incredably expensive. Changing those programs would be hard if not impossible.

Any politician suggesting cutting those programs would be out!

The rest could be cut some, but would make little differance.

In the end, we need to pay for what we want, I can't think of anything other than raising taxes.

Anyone have another way?

 

[Larry L.]

Larry,
Are you really saying that Reagan and Bush did not lower taxes and increase spending?

They DID lower taxes...which resulted in INCREASED revenue...but CONGRESS SPENT EVEN M-O-R-E (it's CONGRESS that writes the budget, Jim - NOT the president). When Bush 43 left office, the debt was around 9T. 'Took Bush/congress EIGHT YEARS, 2 WARS AND A HOUSING MKT COLLAPSE to get it there. 3.5 years later, under Obama, it was 14T! NOW it's up to 17T...in 4.5 years! At that rate, by the time the guy leaves office, the debt will be 20T.

I'm saying that they did, it contributed greatly to the debt and it was STUPID!!!!!!

And in '06, SENATOR Obama said (it's on TAPE - don't deny it) Bush had taken out a credit card from the 'bank of China' ('phrase close to that) in the name of our kids and had run up a huge debt, blah, blah, blah. He said that was IRRESPONSIBLE...UNPATRIOTIC...and 'showed A LACK OF L-E-A-D-E-R-S-H-I-P, and that's why HE (Obama) was going to vote AGAINST raising the debt ceiling, blah, blah, blah (and I'd bet you were right in there with him). Well, HELLOOOOOOOO??? NOW he's deficit spending's BIGGEST FAN - and evidently, so are YOU.

Larry that is the equivalent of Jacks grandson spending all the money, borrowing more and voluntarily lowering his allowance.

See 'paragraph above.

 

[Pete McCluskey.]

David, when you get your Stanley knife can I borrow it please?

 

[Robert May Eng.]

As the current administration need to raise some cash perhaps they should fleece the motorist and home owners as they do in europe. With your consumption of fuel running at the 140 billion gallons mark a hike in fuel duty of 4 dollars a gallon would be a healthy start. Then hit the motorist of which there are around 250,000,000 with an annual road tax of around $320 per vehicle. That would put you in line with europe They could then hit the home owners for some local area council taxes like we have here in England. I have to pay $16,800 a year for my place against the rates I pay on a farm I own in Oklahoma which is $135. How many trillions would that amount to.

Bob

 

[John Milmont]

Yes,

But these is not all that much flexibility in Government spending. Social Security, a robust military and Medicare are incredibly popular and incredably expensive. Changing those programs would be hard if not impossible.

Any politician suggesting cutting those programs would be out!

The rest could be cut some, but would make little differance.

In the end, we need to pay for what we want, I can't think of anything other than raising taxes.

Anyone have another way?

This is where we disagree. I believe there is a lot of waste and fraud in government spending and most of the resistance to changing these are entirely fabricated. Here in Illinois, this kind of fraud is now legendary...

 

[Charlie Farley]

Wouldn't we save a fortune if we just all didn't vote ?
Then the idiots that did could easily be thwarted by having a ' peaceful sit down ' infront of all our parliamentary buildings.
If they can't get in the buildings, they will be f*kd.
Remind some of us of 1968 ??
National Guard for you in the USA would not behave like they did back then.
After all, your local Guardsmen, are all subject to public disclosure now.
Names....Home addresses ... etc
My guess is these days they wouldn't be so happy to be Prawns ( sic )

 

[Al Wohlstrom]

Say Pat,

In 2012, the US GDP was Approximately $16 Trillion..............

Now if our debt is also approximately $16 Trillion..................


Now I know that the gross domestic product is different than "income", but Is that similar to a family with an income of say $100,000 per year having a mortgage on their home of $100,000?

First of all the governments income is not the GDP, it's about 15% of what the GDP is. The GDP is the income of all those that work or produce a profit, citizens and companies. A bank would not qualify the US to borrow for a house worth $16.8 trillion with an income of $2.47 trillion and spending of $3.22 trillion, they would laugh in their face. Someone needs to wake up!
Total federal spending through the first eleven months of the fiscal year was $3.228 trillion

The federal government raked in a record of approximately $2,472,542,000,000 in tax revenues through the first eleven months of fiscal 2013

 

[Jim Craik]

Larry,

The red line is the debt during the Reagan BushI years. Cutting taxes and increasing defence spending blew the economy for generations to come!!

 

[Pat]

But then there is a shutdown...

https://www.fbo.gov/index?s=opportu...&id=de5ea22804dbba1810670a358eb38739&_cview=0

 

[Pat]

The red line is the debt during the Reagan BushI years. Cutting taxes and increasing defence spending blew the economy for generations to come!!

[/quote]

Jim,
Keep in mind that President Bush took office in January 2001 and his first budget took effect October 1, 2001 for the year ending September 30, 2002 (FY2002). So the $133.29billion deficit in the year ending September 2001 was Clinton's. Granted, Bush supported a tax refund where taxpayers received checks in 2001. However, the total amount refunded to taxpayers was only $38 billion . So even if we assume that $38 billion of the FY2001 deficit was due to Bush's tax refunds which were not part of Clinton's last budget, that still means that Clinton's last budget produced a deficit of 133.29 - 38 = $95.29 billion.

The federal budget is normally done annually. One has not been done since 1997 when the democratic party assumed control of the House. Your graph does not include any of the additional spending by the current administration. Compare the two... (see the attached image I can't seem to imbed)

If you access the CBO's "historic budget data" plugging in your chart's dates Debt to the Penny (Daily History Search Application), on the first page you will see that 1998 shows a surplus of $69 billion, 1999 shows $126 billion, 2000 shows $236 billion--the same surpluses claimed by Clinton.

However, further analysis of the document should make it very clear that important information is missing from the CBO document--specifically focusing on the last two columns of the table on page 1. If you take the $3,772.3 billion debt held by the public at the end of 1997 and subtract the "total" $69.3 billion surplus stated for 1998, you would expect to see the debt go down by 69.3 billion to $3,703 billion. Instead, the debt indicated for 1998 is $3,721.1 billion--suggesting a surplus of only $51.2 billion. This alone should tell you that the CBO numbers aren't telling the whole story because they don't add up--and the story they aren't telling is intragovernmental holdings (Like IOUs to Social Security).
The bottom line is that the national debt going down as adjusted for inflation or as a percentage of GDP is a valid metric for evaluating the debt load of the government but it says nothing about whether or not there was a budget surplus or deficit. If the total national debt went up, there was a deficit. Those that think a decrease in the debt load of the federal government as a percentage of GDP or adjusted for inflation is equivalent to a same-year surplus don't understand the definitions and purposes of each of these terms. It's like saying I get great mileage and my socks are a size 10. They measure different things and while you may make conclusions about big feet using more accelerator, the comparison isn't very useful.
You can also get the same effect by lowering the GDP, not a good thing.

 

[Jim Craik]

Jim,
Keep in mind that President Bush took office in January 2001 and his first budget took effect October 1, 2001 for the year ending September 30, 2002 (FY2002). So the $133.29billion deficit in the year ending September 2001 was Clinton's.

So Pat, if this is true, that should also mean that this effected Obamas first budget.

Obama took office in January 2008 and virtually all debt from that date, including the Banking bail out, Investment house bail out, Auto Industry bail out and Stimulus programs have been blamed on Obama...........

So you are saying that all debt before September 30th 2008 should be added to BushIIs incredable debt and subtracted from Obama............

Thanks, that greatly improves Obamas debt numbers, as far as BushIIs numbers, not so much........

 

[Sean]

My understanding is that government revenue is more or less 18% of GDP regardless of the tax rate. Increasing taxes slows growth just like raising interest rates.

As to popular programs, well I guess if we gave everyone here a free GT40 it would be incrediably popular, question is who is going to pay for it.

Currently in real terms the USA has the highest tax rate. On top of federal we have ste social security city property etc, if you make over 250k it comes out close on 55-60% if you live in Ny of california. Not surpringly the economic growth is taking place in other states. In fact California is sinking in a mire of debt. If you want to know how democrat party plans work out look at detroit, or any democrat run state.

yes we all want good stuff for everyone, but it has to be affordable, and more debt and more tax takes us nowhere but down.

As to raising taxes, what the president did was raise taxes on the educated professionals and small buiness people, in other words your upper middle class, the exact group he says people should aspire to. The moneyd class paying cap gains rates like his pal Buffet got another free pass.


If you look at Simpson Bowels which was the Presidents own comission, they came up with a really good idea, a max 28% tax rate no loopholes no seprate tax rates. teh gov here woudl have collected more. Neither party wanted it, too many groups arebenefiting from the distortions caused by outr tax rate and loopholes.

,Considder that small buiness needs capital to grow. The governemnt takes lets say 55% of verything made in good times. Government certainly does not put capital back in bad times. Like a banana republic corrupt ste the gov talkes from profits and invests nothing. the end result is less and less small to medium buisnesses. These are the companies thta employ 50% of people and where new growth comes froim. the entire system now is geared towards taking on company debt in lieu of capital and large institutions. It didnt work in Europe and its going to be sthe same bad here.

As to Social security and medicare, if we cant afford the same programs they need to be reformed. How about raising the retirement age. Its going to happen anyway, I mean who can affod to retire at 65. More to the point we are much healthier nowdays, and working keeps you sharp, so why not raise the age to 67, problem solved. As for Medicare, 80% of the money is spent on the last 6 months of life, perhaps we need a more mature approach to organ tranbsplants for people over say age 80, as an example.

What is lacking is honesty and political will from either party. The fact is the public is fed up, the voters do undertand that more taxes and debt is bad. The dems got elected on social policies as much as anything else, poor economic policies just came witht he deal. Republicans are wrapped up in irrelevant issues like abortion or gay marriage, ironic that the party for freedom from statal interfereance wants to intefere when it suits.

Then you have the Dems who see abortion as a constitutionaly protected right, but if its a right they dont like for eample the right to bear arms suddenly the constitution is an irrlevant old dusty document.

Fact is we are one nation but ruled by two divided houses. Its not a winner take all place, or it never used to be, in the past it was winner had more say and set the tone.

Republicans are getting a free ride by calling for fiscal conservatism, if they got rid of abortion debates gay rights debates and stupid imiigartion statements they might win. Question is do you honestly think republicans would balance the budget, history says not.

Politicians are addicted to free money called taxes, and they have figured out that by taxing and redistributiing or pretending to they get votes, if the taxes are not there then they borrow and or print money.

Consdider that with a balanced budget, we would have far more economic growth and lower taxes which would spur things further. The solution is a balanced budget amendment, after that the paties will be elected on the usual BS social issues, but unable to derail the economy. Taxing and spending does not create economic growth, at best it amerliorates a downturn. But after a downturn you need growth.