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 Post subject: Balance the Budget?
PostPosted: Sun Nov 14, 2010 11:18 pm 
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How would you balance the budget?

I'm not convinced they provided all available options, but there's my shot at it.

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PostPosted: Mon Nov 15, 2010 6:11 am 
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Balancing the budget is possible, it has happened a few times in U.S. history, including in five of the 50 years since 1960 (with surpluses each time). But budgets are not stable nor are budgetary decisions very consistent, so a surplus one year is often consumed the next. Johnson left a surplus in 1969 that Nixon decided to use to fight inflation; and the four consecutive years of surplus budgets under Clinton prompted Bush Jr to implement tax breaks to give the surplus "back to the people" (and the surpluses and breaks were then quickly overshadowed by the costs of two wars, etc).

But keep in mind that all a balanced budget means is that the cumulative deficit (i.e., the national debt) does not grow for a year (and even that is not entirely accurate when you count interest on borrowing that is done to cover the national debt). The real problem is not that the budget doesn't balance in any one given year, but that the national debt has grown so large due to so many years of annual deficits. The debt reached $1 trillion under Reagan, $10 trillion under Bush Jr, and is now at $13 trillion under Obama, a balanced budget is not going to lower that.

In fact, none of the five surpluses in the past 50 years have been used to reduce the national debt. While annual deficits are automatically added to the national debt, annual surpluses are not automatically subtracted from the national debt and those surpluses can be used for other purposes besides debt reduction (hence the decisions of Nixon and Bush, and Clinton as well because he just kept the surpluses revolving rather than use them to pay down the debt). If you want to look at the last time the national debt was decreased you have to go back to 1957 under Eisenhower.

So while a balanced budget is certainly a worthwhile goal, ultimately the real question is how do we significantly lower the national debt?

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Last edited by Glenn on Mon Nov 15, 2010 4:23 pm, edited 4 times in total.

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 Post subject: Well. . .
PostPosted: Mon Nov 15, 2010 10:53 am 
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Lets print more money!!! :)

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 Post subject:
PostPosted: Mon Nov 15, 2010 12:24 pm 
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What matters isn't the national debt, but rather the debt as a percentage of GDP. So the absolute numbers thrown about to disparage one or another party is a bit disingenuous.

Historically the best way to balance the budget is to have fiscal conservatives in the legislative branch of government and an opposition party in the executive mansion. Dynamic tension works. Priorities change as times change, so one formula isn't going to cut it.

Democrats like to engage in class warfare arguments about "tax breaks for the rich", when these kinds of tools have a counter-intuitive result. Under the Bush tax breaks, my dad had a lower tax RATE and yet paid more TOTAL taxes. If the goal is to maximize revenue, then these class warfare idiots need to be shut up. The small number of people in any economy who make things happen are the ones most capable of bringing the bacon home for Uncle Sam. Punishing them with extremely high tax rates - because you can - is a sure way to shoot yourself in the foot.

And yet idiots like Krugman will preach it. And he gets the support of socialists from Norway who are in love with socialism.

Fighting two wars and terrorism has proven a major drain on the US economy. And we're not getting any help from countries (e.g. Korea) which depend on our military to keep them whole while they sell in our markets and block our goods and services from entering their own. At some point, the US needs to start charging for that which is not free. This includes asking the Saudis to pony up. We keep their oil flowing by keeping stability in the region and keeping the Persian Gulf open. Fair is fair.

Mistakes were made in both Iraq and Afghanistan. But that's water under the bridge. The sooner those entities run their own countries, the better. Nation building is not a profitable activity.

Debt isn't necessarily a bad thing. But this country needs to invest wisely. The space program made us the world's high tech leader. Similar initiatives like a Manhattan Project on making a better battery could have profound changes in our economy and our trade deficit. It's all about building an economy which makes things people need rather than obsesses over consuming.

- Bill


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 Post subject:
PostPosted: Mon Nov 15, 2010 4:17 pm 
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Bill Glasheen wrote:
What matters isn't the national debt, but rather the debt as a percentage of GDP.

And in that respect we are not doing too badly, staying less than 100% every year since the late 1940s:

Image

Of course even that is going in the wrong direction with the past decade of international and economic turmoil. Still, we are doing better than many countries of the world, including many other industrialized countries. Here is a map of how the countries compare in debt as a percentage of GDP:

Image

The driver here is the GDP, if we can maintain a strong (growing) economy and get past the wars and recession we may be able to reverse the current trend of the debt-to-GDP ratio increasing. But like Bill said, national debt can be beneficial if invested wisely in ways to keep the economy effectively going/growing. That was the whole argument behind the New Deal and recent bailouts (of course how wise and effective such programs are will always be debated).

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 Post subject: Re: Well. . .
PostPosted: Mon Nov 15, 2010 4:46 pm 
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gmattson wrote:
Lets print more money!!! :)


:lol:

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 Post subject: I heard. . .
PostPosted: Mon Nov 15, 2010 8:24 pm 
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That there are quite a few multi billionaires in the USA and that if the government took some percentage (don't remember the number) of that wealth and returned it to the treasury, the USA would have solved the debt problem.

I know most of the multi billionaires would complain. . . but. . . do they really need that much money? and, what do they do with those billions that contribute towards helping the economy. (I'm sure most don't pay a great deal of taxes either, since they have the money to buy the tax breaks necessary to keep multiplying the billions without putting very much into the economy.)

Interestingly enough, Bill Gates is for this plan.

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 Post subject:
PostPosted: Tue Nov 16, 2010 12:31 am 
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Gates is also for forced population reduction to 500 million people along with all of the tenets put on the Georgia Guidestones...

Just because he's got a lot of money doesn't make him right. Just like it doesn't make George Soros right either.


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 Post subject:
PostPosted: Tue Nov 16, 2010 2:58 am 
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This rich vs poor thing has been going throughout recorded history. As long as the rich are rich, they'll be targeted by those who can get rich complaining about them.

Gates is a salesman and a tech geek. If a policy geek like Obama can't get it right, WTH listen to Gates?

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 Post subject: Re: I heard. . .
PostPosted: Tue Nov 16, 2010 5:25 am 
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gmattson wrote:

That there are quite a few multi billionaires in the USA and that if the government took some percentage (don't remember the number) of that wealth and returned it to the treasury, the USA would have solved the debt problem.

I know most of the multi billionaires would complain. . . but. . . do they really need that much money?

Two problems:

1) Your implicit assumption is wrong.

You are assuming that the generated gross income of the hyper wealthy will stay constant as the tax rate goes up. This is on face value false. For detail on this, see The Laffer Curve

2) This is discriminatory, and thus un-American.

My friend Mr. Jefferson had a few things to say about such thinking.

  • A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned - this is the sum of good government.
  • All, too, will bear in mind this sacred principle, that though the will of the majority is in all cases to prevail, that will to be rightful must be reasonable; that the minority possess their equal rights, which equal law must protect, and to violate would be oppression.
gmattson wrote:

and, what do they do with those billions that contribute towards helping the economy.

Their income doesn't come via spontaneous generation, does it? The time-tested method for generating wealth is via the time value of money. In other words, you invest for long periods of time, and allow your gains to compound on the gains. This means that the wealthy get that way by making their wealth available to private industry. And these industries in turn use that wealth to make products (which can be sold and generate taxes) and to pay salaries (which are taxed).
gmattson wrote:

I'm sure most don't pay a great deal of taxes either, since they have the money to buy the tax breaks necessary to keep multiplying the billions without putting very much into the economy.

First... The wealthy both pay the vast majority of total taxes AND are taxed at the highest rates.

Second... The tax breaks they do get from itemization and other tax shelters essentially allow them to control where their donations to "the cause" will go. And given they pay the most taxes, that seems fair enough.

ANY money churning through the economy gives Uncle Sam an opportunity to dip into the revenue flow at multiple points.
gmattson wrote:

Interestingly enough, Bill Gates is for this plan.

Good news for Mr. Gates - The US Treasury accepts all unsolicited donations.

- Bill


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 Post subject:
PostPosted: Tue Nov 16, 2010 4:52 pm 
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An additional consideration with requiring multi-billionaires to use their money to pay off the national debt is, what would happen after that? There is currently nothing in place that would prevent the national debt from shooting right back up into the trillions in a few decades, so what happens then, we hit up the multi-billionaires again?

And if multi-billionaires essentially buy the national debt for $13+ trillion, how much control of the government and economy are they going to want/expect in return?

Bill Glasheen wrote:
Good news for Mr. Gates - The US Treasury accepts all unsolicited donations.

And they are even tax deductable. In the 2008-2009 fiscal year, people donated almost $3 million toward paying down the national debt. The largest single donation ever made since the donation program started in 1961 was $3.5 million (not sure when that was). I'm sure Gates could top that.

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 Post subject:
PostPosted: Tue Nov 16, 2010 5:12 pm 
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I don't know but I was raised on the charm of Scrooge McDuck being able to dive into his bank vault to enjoy himself, and it was always the evil Beagle Brothers who were trying to get their hands on his money.

I never did like the Beagle Brothers and support Scrooge's right to keep what he has.

Not a billionaire myself, nor a millionaire or even a respectable fraction of being one.

But somehow I feel safer with Scrooge hanging onto his own cash than letting any congress get their hands on it.

Being equal opportunity I don't feel either party has ever done anything for me, just a working stiff.

Go Scrooge!

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 Post subject:
PostPosted: Wed Nov 17, 2010 2:26 am 
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Glenn

About this picture...

Image

It's been used before to make a point... which is a non-point.

Congress - and not the president - controls spending.

- Bill


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 Post subject:
PostPosted: Wed Nov 17, 2010 2:37 am 
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When President Wilson implemented what was the first modern style taxation it was aimed at the wealthiest 10% of the population. The middle and lower classes were not taxed. Prior to this tax money came from the sale of western lands and import duties. (tax Chinese imports hmmm???)

Having tax money taken out of weekly pay was an invention of Hitler, that Roosevelt implemented. During the 30's the Nazi's had an amazing economic recovery while everyone else was in the hopper. So it is no surprise Roosevelt copied the idea of the taxes. One cause of the economic boom was the military buildup, another was the road building projects like the autobahn.

Printing lots of money like Sensei Mattson said was a trick of Benjamin Franklin. By printing tons of paper currency and then having inflation you can pay off your debts cheaper. Hence the term "not worth a continental."

History major rant off :lol:
f.

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 Post subject:
PostPosted: Wed Nov 17, 2010 3:28 am 
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f.Channell wrote:

Printing lots of money like Sensei Mattson said was a trick of Benjamin Franklin. By printing tons of paper currency and then having inflation you can pay off your debts cheaper. Hence the term "not worth a continental."

It has been suggested that this may be one way to handle the money owed to China if they don't stop manipulating their currency to give an unfair trade advantage to their own manufacturers. Well... wouldn't you know that Tim Geithner recently announced a little money printing to "boost the economy."

And Obama got called on it during his most recent Asia trip. :oops:

- Bill


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