It worries me, on occasion, that I may be the only person left in this forum who thinks it worthwhile to raise the alarm about our national debt. You could attribute it to rampant senility, I suppose, since I appear to be the oldest active enthusiast, but I would like to hear some reassuring facts concerning fiscal responsibility from anyone with greater economic expertise. Being a great-grandfather to two fututre voter/taxpayers, I am concerned about the following facts:
A national debt of $ 7,349,252,011,039.00 (That's 7 trillion, 349 billion, 252 million, 11 thousand and 39 dollars. or seven thousand billion.) A fair sized bit of change. Of course, that's just this moment in time. It is going up at the rate of whatever the current deficit happens to be, plus whatever tax cuts are used to enhance electability, since they are unlikely to be offset by spending cuts
If we could divide it equally between all of our 293 million citizens, every man, woman and child would own a debt of $25,000. In addition to any credit card debt they happen to have accumulated along with their mortgages, etc. Think $100,000 for a family of four.
Obviously, we don't divide anything equally, especially debt. If we don't pay our debts, we pass them on to those who inherit them. That is what bothers me. My conscience tells me that it is irresponsible to run up bills and pass them on to our children and grandchildren. But we can't just ignore the debt and it will just sit there and grow by whatever deficit our government incurs. No, we have to pay the interest on that debt, so we have to collect enough taxes to make the interest payments. Collectively, we pay $309 billion in interest per year at the present rate.
That constitutes a rather sizeable chunk of the National budget. So what happens when we give our taxpayers a 'so-called' tax break? We add to the National debt, that increases the interest on that debt, and we pay it back in higher taxes. Well, we either pay down the debt by eliminating the budget deficit, as we had started doing during the previous administration, or we pass our selfish stupidity and its consequences on to our children, ad infinitum.
I don't think it is accidental that one seldom hears the word "posterity" used in this country any more. $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ 09-29-04, 03:34 PM JohnGalt
quote:Originally posted by frankvan: It is going up at the rate of whatever the current deficit happens to be, plus whatever tax cuts are used to enhance electability, since they are unlikely to be offset by spending cuts.
Because the voters don't hold the politicians accountable. And they don't hold them accountable because the government schools of this nation don't teach basic economics . It's much easier for our massively growing federal government to coral the sheeple of this nation and create fear and panic in them when those same sheeple don't understand the first thing about economics. In fact, just this week I had to point out, here on AP, the fallacy (read "lie!") that Clinton balanced the budget. Had the person who posted that bunch of nonsense had one iota of understanding about economics, they would have known better than fall for that piece of political ****. But our government schools don't teach the first thing about economics (or much else that is practical and useful anymore.) Send your kids to a private school people!
You want to start to do something about the national debt FV? Quit voting for democrats for a start. And to all you republicans out there, your party is not any better. Under republican Presidents the national debt grew $4.5 trillion or 66%. Yes, I know the republican Presidents usually had democrat congresses, but how about a veto every now and then? Has Bush vetoed one single spending bill yet? Republican controlled congresses average an annual increase of $302 billion vs. $130 billion for the democrats. So much for the myth of republicans working for smaller government.
The Libertarian Party is the only party committed to reducing the size and scope of the federal government by advocating the principle of personal responsibility. So if yoru number one concern is the debt, your choice is clear. You don't have to vote for the LP Presidential Candidate. Start out with your members of Congress and your Senators. The LP fields them too.
"...public debt is the greatest of dangers to be feared." –Thomas Jefferson
09-29-04, 03:47 PM JohnGalt
quote:Originally posted by frankvan: So what happens when we give our taxpayers a 'so-called' tax break?
This is not to say that the government shouldn't, at the same time, cut spending. It should. The combination of cutting spending (massively!) and tax cuts will work to help reduce our debt. But your views on taxes and their economic results are viewed through the propaganda glasses created by the DNC. Listen to economists on this one FV, not the politicians and their talking points who have never held a real-world job, never had to meet payroll, never had to draw up (and live by) a budget for either their personal lives or their business lives, and who never took a single economics course in their privileged little lives.
You think your friends in the DNC aren't buying votes with their scare tactics on taxes the same way the RNC buys votes with its various scare tatics on other issues? Get real. You already ignore the republicans. That's a start. Now ignore the democrats and those blinders from your eyes will be lifted! Smile
09-29-04, 07:05 PM frankvan I try, John. I don't listen exclusively to the DNC, or the RNC, or anyone else if I can avoid it. Not even to you. Smile! I had a friend who was an economist and he agreed with me, that it is impossible to decide which economist to believe since no two seem to agree with one another. No, I just try to rely on my own instincts and common sense as to what seems sensible for my small family, applied to the country as a whole. I can see that giving tax breaks to the supply side could increase revenues, but not when production is operating at a percentage of capacity. In those instances, I believe that the tax breaks should go to the people who spend the money, which includes most of us, thus increasing demand and stimulating the economy. Tax relief buys votes, it's popular with politicians of every stripe. Spending cuts? Who advocates spending cuts? Nobody who ever gets elected to federal office, or hopes to.
What bothers me, John, is that no one seems to be bothered by where this must eventualy lead. Does no one give a damn about the future generations? You are the only one who even comments on this and then only to promote your own "Hooray for me, and to hell with everyone else" Libertarian dogma. Frown
09-29-04, 08:04 PM methos I'm concerned as well, Frank. When I've tried to discuss it here before, however, many have gone to lengths to try to demostrate that $7.3 trillion is small. I thought this might be of interest:
Democrats are described as "tax and spend." Logically, you would conclude that those doing the labeling (Republicans) don't tax or spend (or at least do less of it). The problem is, Republicans, like Democrats, have discovered that only one side of that equation is politically feasible. The Republicans think they have found a loophole in the equation, a third term with no constraints. You can spend more than you take in (a deficit) if you borrow the difference.
Now, don't get me wrong, I would love lower taxes. I even like the core principle of the Republican Party: smaller, less intrusive government. The problem is, cutting taxes hasn't made the government smaller or less intrusive. Part of it is that our government is not so inordinately large to begin with. In fact, we are roughly tied with Japan for the lowest taxes as a share of GDP among the 27 countries defined as developed by the Organization for Economic Cooperation and Development. There's waste that should be cut, but that's not what's happening. Republicans seem more interested in cutting programs that have popular support. How do you convince people to let go of something they want? I'm getting ahead of myself, you'll just have to keep reading for that one.
With the party of small government holding the presidency and majorities in the House and Senate (not to mention the Supreme Court), you would think government would be shrinking. It's not. The federal debt is now $7.3 trillion. That’s four times the government’s income for the year. According to the Congressional Budget Office (the costly Iraq war is not even included in their figures), the deficit has reached 5% of GDP, a quarter of total federal spending, and a third of federal income. The projections for future years are slightly better because many of Bush’s tax cuts are scheduled to expire in a couple years so they aren’t included, even though Bush is pushing hard to make them permanent. The government is also anything but less intrusive, but that's more of a civil liberties issue for another time.
Back to the deficit. Republicans used to rightly speak out about the dangers of deficits. Most of them are strangely silent on the issue now that they hold all the power. Yes, some do speak out, but not nearly enough to hold back the tide. One explanation for the new lack of concern is they think deficits aren't a problem. This is the explanation arrived at by the Bush administration through a torturous path. During the 2000 campaign, the line was we would pay down the debt at a record rate. "My plan pays down an unprecedented amount of our national debt." Later it was the deficits are small and won't last long. "We can return to a balanced budget, something I want, as early as 2004." Now, it’s 2004, the budget is still unbalanced (in fact, the deficit is at record levels), and no one’s too concerned because it’s “manageable.” Deficits are a problem. They are sometimes necessary, but not on the scale (either in dollars or decades) that the current economic plan calls for. During his 2003 State of the Union, this president said, "We will not deny, we will not ignore, we will not pass along our problems to other Congresses, other presidents, and other generations." By continuing our current plans, we are passing along more debt to those future Congresses, presidents, and generations than ever before. I've heard two arguments for the benefits of deficits. The first is that it gives people a stake in the success of the government, making them less likely to revolt and establishes strong credit. These were the primary reasons for Alexander Hamilton's support of a deficit. He once said, "A national debt, if it be not excessive, would be for us a national treasure." Using this argument as justification for the current debt holds several problems.
How likely are the people to revolt against the US government these days? The Hamilton quote predates the US Constitution by six years. The revolutionary war was not yet over. The government that was in effect (under the Articles of the Confederation) would be unsuccessfully revolted against a short time later, and ultimately would be peacefully abolished. Armed revolt against the government by its citizens was a very real threat then. It is not now.
Young adults are advised to get a credit card to establish a line of credit so they might later use that credit for larger loans to finance large purchases. Borrowing establishes credit, provided you make payments and don’t overextend yourself. A debt four times annual income, new loans a third of annual income, and plans to continue borrowing - hardly a formula for strengthening credit.
Two more arguments for the benefits of deficits are that they allow us to pay off higher interest rate debts and give us more cash in hand to spend. What's wrong with this? Nothing, "if it be not excessive." The current and projected debts and deficits are excessive.
It's a case of supply and demand. Money to be loaned is not infinite in supply. The higher the demand for loans, the higher the cost in interest rates. Deficit reduction contributes to lower interest rates, which enables more investment, which leads to more jobs and productivity (which leads to more money for investment and paying down the deficit). Rising deficits increase interest rates, decreasing both personal savings and company capital. Decreased capital leads to less innovation, fewer jobs, and lower pay. Decreased personal savings lead to a lower effective income.
Like other Ponzi schemes, running the government on borrowed money benefits those who get in early at the cost of those who get in late. Unlike other Ponzi schemes, those who get in late need not be suckers lured by greed. These "other Congresses, other presidents, and other generations" need only be born after our greed has locked them into debt.
There is a more cynical explanation for the lack of concern than incompetence or greed at the cost of the future. Peter G. Peterson (a Republican who has held offices as high as the Chair of the Blackstone Group and Secretary of Commerce), among others, has said Republicans have told him the true goal of tax cuts is not supply-sided economics but forcing a reduction in the size of the government. Again, there are Republican politicians who would like to go about this the right way, but most of them have bowed to party pressures (a weakness that is certainly not unique to their party).
While this approach had ethical problems even when Republicans did not control all branches of the federal government, the depth of the deception came to light when Republicans gained control. With the Republicans in control, it cannot be the Democrats who they are trying to make relent. It is the voters. We don't want our programs cut, and the Republicans have realized that they cannot cut them without our consent and expect to remaining office. But, if the deficit gets so large that there is no other choice but to cut programs, they cannot be blamed. This is forcing a policy on future generations that lacks enough support from current generations to pass now. The means to this unsupported end is a lower standard of living for generations.
09-29-04, 09:09 PM AMoore Conservative (real conservatives) used to be sticklers for balanced budgets. The criticism of liberals was "tax and spend." Since Reagan, people calling themselves conservatives have quit worrying about the spending side of the equation, however. In my view, this is an error, as more great nations and empires have succumbed to excessive debt than to all other threats combined...
Alan Moore
09-29-04, 10:12 PM JohnGalt
quote:Originally posted by frankvan: I had a friend who was an economist and he agreed with me, that it is impossible to decide which economist to believe since no two seem to agree with one another.
Whether or not it is that loud vocal minority of scenists that is responsible for American's woeful economic understanding (or understanding of biology, for that matter), I don't know. But I do know that overall education of Americans must be pushed more than it currently is. No matter what the problem, only by being educated about it can we ever hope to solve it.
*Again, I must put in the proviso here, that government spending must be cut drastically along with tax cuts!
quote:Originally posted by frankvan: No, I just try to rely on my own instincts and common sense as to what seems sensible for my small family, applied to the country as a whole.
I understand. But this is one of those things that is counter-intuitive. It is common sense that tells us that the world is flat. Only until you step back - WAY back - do you see the big picture and realize the truth: That the world is round. The same goes for tax cuts increasing government revenue. There are a multitude of examples that, when first proposed, seem counter-intuitive and people reject as impossible. Do you think when they first proposed injecting people with diseases to prevent the very same disease, that people were universally responsive to the idea? Heck, even today in the 21st Century there are people (usually the same far-right wingers who reject evolution) who reject vaccines. Or what about the red-light cameras they install at intersections? They are put there to try and prevent accidents, but they actually end up causing an increase in accidents as people slam on their breaks more often at these intersections when they see the cameras at the last second, getting rear-ended in the process. Likewise, when anti-lock breaks first came out, those cars got in more accidents as people drove more recklessly thinking the new fangled breaks would somehow take care of everything. All are examples of this counter-intuitive process that ends up causing the exact opposite of the desired result. Taxes are no different. Economics is a science just like evolutionary biology. Some people, however, reject one or the other of these sciences out of political and/or fundamentalist propaganda. The end result in both cases is our nation suffers. Science and education have done wonders for all of us. We must continue to push it.
quote:Originally posted by frankvan: What bothers me, John, is that no one seems to be bothered by where this must eventualy lead. Does no one give a damn about the future generations?
We are in agreement. And as I usually advocate for most issues: Education is one of the keys to working our way out of this problem. Encourage more people to learn economics. Everyone should take a couple courses (economics AND bioilogy! Smile ) at their local community colleges. People need to demand their local schools teach required economic courses by qualified instructors. Everyone gets worked up about the removal of evolutionary biology in textbooks (as they should), but they need to get just as worked up that economics is not taught to children anymore!
You've posted your concern here on this site. Now everyone who reads this, needs to go write a letter to the editor of their local paper on the same topic. Then they need to write their Representatives in Congress. Then phone them. Then then need to ask everyone they know to do the same. You need to explain the problem to your grand-children and your great-grand-children. Tell them how important it is. Instill in the next generation the understanding that the current generation lacks, so that (hopefully) this problem can start to be tackled.
09-29-04, 10:49 PM coldfuse The Dean of my college Economics Department always had a two question final examination in his Money & Banking course. While the school had an honor system that worked, it was well known that the two questions were the same semester after semester.
When asked about this, he smiled and gave the response economists know all too well: "In Economics, the questions are always the same but the answers change."
11-24-04, 10:00 PM methos I was reminded of this thread by another recent thread, and thought this chart might be of interest to those concerned. It charts the US federal debt per person (adjusted for inflation) from 1800 to the present.
Until the 1980's, all but one of the major increases coincide with the beginning of a major war (the Civil War, WWI, & WWII). That last increase comes shortly after the Great Depression began, and coincides with increased spending to combat it. At the end of all these wars, the debt levels off or decreases.
There are two more sharp increases. The first is the 1982 fiscal year compared to the prior year. That rise continues until the mid-nineties when it slows and then reverses. The second sharp increase is the 2002 fiscal year compared to the prior one and continues through the present. Now what was different about the federal budget those fiscal years compared to the preceding ones?
"On January 20, 1981, Reagan took office. Only 69 days later he was shot by a would-be assassin, but quickly recovered and returned to duty. His grace and wit during the dangerous incident caused his popularity to soar.
Dealing skillfully with Congress, Reagan obtained legislation to stimulate economic growth, curb inflation, increase employment, and strengthen national defense. He embarked upon a course of cutting taxes and Government expenditures, refusing to deviate from it when the strengthening of defense forces led to a large deficit. "
2002 is when the expenses from 9-11 really got rolling.
(waits for opinions to be recast into other opinions)
11-26-04, 07:06 AM methos The 2002 fiscal year started just 2 weeks after 9/11, so yes, it would have started effecting the budget in the 2002 fiscal year, although 9/11 spending doesn't begin to account for that growth.
I like that quote about Reagan obstinatley reducing government expenditures, even if it causes deficits (huh?).
But seriously, yes, what I was getting at was 2002 was the first Bush budget and 1982 was the first Reagan budget. Extenuating circumstances? Sure, but it's an interesting correlation.
11-26-04, 10:18 AM Paul Unless we change the way we treat Currency, we'll never be able to pay off the Debt completely . Currently, for every paper dollar ( federal reserve note ) printed there is a dollar of Debt incurred. Most people think that Currency and Money are the same things. They are wrong!
11-26-04, 11:12 AM methos This page might be of interest. Woolsey, a professor of economics at the Citadel, is no fan of the Fed (or government in general - he is a Libertarian), but he effectively debunks Schauf's conspiracy theories.
11-26-04, 11:31 AM notinmyname "like that quote about Reagan obstinatley reducing government expenditures, even if it causes deficits (huh?)."
Yes I noticed that as well. It's right from the White House so it must be true even if inconsistant.
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