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477 Billion ....  
User currently offlineDc10guy From United States of America, joined Feb 2000, 2685 posts, RR: 6
Posted (10 years 6 months 2 days 16 hours ago) and read 827 times:

The Federal budget deficit is at 477 billion. A new record. Question, How are the republicans going to blame this on the democrats ???


Next time try the old "dirty Sanchez" She'll love it !!!
12 replies: All unread, jump to last
 
User currently offlineQb001 From Canada, joined Apr 2000, 2053 posts, RR: 4
Reply 1, posted (10 years 6 months 2 days 16 hours ago) and read 817 times:

How are the republicans going to blame this on the democrats ???

They will; I always trust the Republicans to be able to find a way to blame the Democrats.



Never let the facts get in the way of a good theory.
User currently offlineBlatantEcho From United States of America, joined Sep 2000, 1903 posts, RR: 1
Reply 2, posted (10 years 6 months 2 days 15 hours ago) and read 814 times:

Welcome to being a resident of California.......

Huge economic boom, little bump, and all of a sudden negative BILLIONS.

Oh well, you're supposed to run a deficit when the economy lags, but I don't think economists would suggest a deficit this big.

George




They're not handing trophies out today
User currently offlineDLKAPA From , joined Dec 1969, posts, RR:
Reply 3, posted (10 years 6 months 2 days 15 hours ago) and read 808 times:

Anybody but Bush in '04!

DLKAPA


User currently offlineCba From United States of America, joined Jul 2000, 4531 posts, RR: 3
Reply 4, posted (10 years 6 months 2 days 15 hours ago) and read 805 times:

The man that campaigned four years ago on the platform of a decrease in government and less government spending is now spending more to run a larger government. The only thing Bush has done that he promised is to give his irresponsible tax cuts.

User currently offlineAirplay From , joined Dec 1969, posts, RR:
Reply 5, posted (10 years 6 months 2 days 15 hours ago) and read 802 times:

I wonder if Bill Gates can cover that....maybe with some help from Ted Turner....

User currently offlineConcordeBoy From , joined Dec 1969, posts, RR:
Reply 6, posted (10 years 6 months 2 days 15 hours ago) and read 794 times:

Bill Gates couldnt cover a tenth of that.... neither could the majority of the world's total GDPs  Wow!

User currently offlineJutes85 From , joined Dec 1969, posts, RR:
Reply 7, posted (10 years 6 months 2 days 14 hours ago) and read 773 times:

What is the overall deficiat for the US? I herd that is something like over $30 Trillion!  Wow!  Wow!

User currently offlineB2707SST From United States of America, joined Apr 2003, 1369 posts, RR: 59
Reply 8, posted (10 years 6 months 2 days 13 hours ago) and read 764 times:

The current budget deficit projection for FY2004 is $477 billion. Total national debt outstanding is almost exactly $7 trillion, of which $3 trillion is held by various government agencies and $4 trillion is held by private investors. See http://www.publicdebt.treas.gov/opd/opdpdodt.htm for a daily breakdown.

Bush has done a poor job of keeping spending under control, but I see no indication that a Democratic president will do better. Repealing the tax cuts would be a tremendous economy shock that would probably cause another recession. Military and international spending cannot be reduced quickly because of international commitments. The Dems have done nothing but whine about how little Bush on social programs, even though the evidence unambigiously shows the opposite.

In any case, the Democrats are not going to retake the Congress in 2004, especially not the House after redistricting in Texas, so Dem promises to repeal the Bush tax cuts are so much hot air. They would never get through the Ways and Means Committee.

In the long term, regardless of who wins in November, the budget situation is going to get much worse. Catastrophic is the word I would choose. Everyone who is under 30 or has kids should take a hard look at these graphs (from the Congressional Budget Office at http://www.cbo.gov/showdoc.cfm?index=3521&sequence=0):

Federal Outlays, 1962 to 2001, as a % of GDP


Overall, Social Security, Medicare, and Medicaid spending accounted for most of the growth in government expenditures since the 1960s, completely offsetting the decline in defense spending over the same time period.

Federal Outlays by Category, 1950 to 2075, as a % of GDP


Medicare and Medicaid spending and interest on the national debt drive total federal government expenditures to 40% of GDP by 2075. State and local spending could easily add another 20%, meaning that government would consume 60% of all economic output. This much government intervention would imposes huge distortions on the economy and would probably push the long-term growth rate down significantly, compounding the problem as expected revenues do not materialize.

Federal Revenues and Outlays, 1950 to 2075, as a % of GDP


Federal outlays begin to skyrocket past 2025 as interest on the debt compounds exponentially and goes out of control. Deficits today and in the recent past (1980s) are going to be dwarfed by revenue shortfalls in this period. It will take massive tax increases or massive cuts to Social Security, Medicare, Medicaid, and virtually all other areas of government to close this gap.

The lesson? We can return to a balanced budget, offload some of the economic burden of Social Security, Medicare, and Medicaid through sensible reform programs, and start paying off the federal debt now, or we will have an economic meltdown in 50 or 75 or 100 years. We are literally spending the next few generations into poverty. No politician, Democrat or Republican, has any coherent plan to stop the train before it plunges off the cliff; most are too busy stoking the boilers to buy themselves another term in office.

--B2707SST

[Edited 2004-01-27 04:59:38]


Keynes is dead and we are living in his long run.
User currently offlineAloha717200 From United States of America, joined Aug 2003, 4475 posts, RR: 15
Reply 9, posted (10 years 6 months 2 days 13 hours ago) and read 747 times:

Bush has done a poor job of keeping spending under control, but I see no indication that a Democratic president will do better. Repealing the tax cuts would be a tremendous economy shock that would probably cause another recession. Military and international spending cannot be reduced quickly because of international commitments. The Dems have done nothing but whine about how little Bush on social programs, even though the evidence unambigiously shows the opposite.

In any case, the Democrats are not going to retake the Congress in 2004, especially not the House after redistricting in Texas, so Dem promises to repeal the Bush tax cuts are so much hot air. They would never get through the Ways and Means Committee.



You said this once before and I offered a rebuttal, but I'll do so again.

You would be incorrect in assuming that the democrats are going to repeal the tax cuts and leave it at that. This is the rhetoric that the Bush campaign is spewing in order to try and sway the vote. His campaign team is saying that democrats only want to increase taxes. This is untrue.


The democrats want those tax cuts that have benefited the economy, but they want to make them better and more efficient. Bush is of course not going to say this, but the truth is that if you go to the candidates' web sites and have a look at their plans on tax reform, you'll see that the only taxes being REPEALED are those for the wealthiest americans.

Economic tax cuts and tax creidits are going forward and will even go farther than Bush's plan. Did you know, B2707SST, that Kerry plans to give a tax credit to corporations that will keep their headquarters in the USA rather than moving overseas? Did you know that corporations that cut down on their outsourcing to countries with cheaper labor will be rewarded by new tax cuts?


So tell me, how will the economy go into shock and slide back into deep recession if, yes, the Bush tax cuts are repealed, but replaced with new tax cuts that are more efficient and designed to keep american jobs in america? Tax credits that currently do not exist for corporations will be created. Somehow, i doubt that will send the economy into recession, i think in fact, it will help the economy to continue on its road to recovery.


Take a look at both sides. Bush is 100% DEAD WRONG when he says the democrats are increasing taxes. They are not. They're also going to give those tax cuts to the middle class, which will in turn spur the middle class to put more money into the economy, which in turn helps the economy.

The wealthiest americans still pay the lion's share of our taxes. That's a fact. By repealing the tax cuts for the wealthiest americans, why by all rights can afford to spare the cost of those taxes, we put millions to billions of lost dollars back into our federal budget. The middle class contribute much less in taxes and the poor less than that. We give them those tax cuts and it benefits them while hardly putting a dent in the national budget. Their tax cuts are paid for by the repeal of the tax cuts for the rich, with money left over to spare, to help with paying off that deficit, as well as other spending efficiency imrpovements.


Please, do read this, and take it into consideration before writing off the democrats. I know, you're a bush supporter. I'm not. But let's look at both sides of the story. No offense intended whatsoever.


User currently offlineB2707SST From United States of America, joined Apr 2003, 1369 posts, RR: 59
Reply 10, posted (10 years 6 months 2 days 11 hours ago) and read 731 times:

Aloha-

Thanks for the substantive post. Sorry for the long rant that follows, but to me, this is the single most important issue in the 2004 election.

I'm a Bush supporter on certain issues and strongly oppose him on others. I support most of his tax cuts. I supported the Iraq war but think he has done a terrible job justifying it. His space initiative is an absurd feel-good election-year fantasy. I'm appalled by his lack of fiscal discipline on spending. He has been too politically timid to propose the sort of Social Security reform that is necessary for its long-term economic survival. He has not proposed tort reform to get Medicare costs under control. Based on their policy stances, I don't think the current Dem candidates will do any better.

Attacking the "rich" is politically expedient and makes a nice sound bite, but as I pointed out on another thread, 80% of US businesses are sole proprietorships. This means that all business net income is reported on the proprietor's tax return. It is indistinguishable from personal income. So when you support raising taxes on "the wealthy," you also support raising taxes on the successful entrepreneurs that make up a significant portion of that group.

Moreover, transferring the tax cuts from upper classes to middle classes may be more "fair," but it will not substantively effect the overall economy. You're just shifting streams of income around (and incurring extraction costs in the process). Assume you make $100,000 and I make $50,000. If I tax you $10,000 more and spend it myself, is the economy any better off? No; I'm just spending the money instead of you.

The economy-wide benefits from tax cuts are not the direct payments to taxpayers, since the money spent on tax cuts has to be borrowed from private investors as part of the deficit. In this respect, Bush's tax cuts aren't especially unfair: he's borrowing from investors - predominantly the wealthy and large corporations - to fund the tax cuts, and most of the benefits went to those same groups. On the contrary, tax cuts help the economy by strengthening incentives to work, save, and invest. Historically, they have spurred faster growth. Raising taxes, or instituting a more progressive tax structure, is simply penalizing people for being successful. The Bush tax cuts were rather blunt instruments to accomplish this goal -- I wish they had been tailored them much more carefully -- but at this point, repealing them would do more harm than good. Businesses have already begun new projects on the basis of higher depreciation allowances, investors have already priced in lower dividend taxes, etc.

As for Democratic proposals, I don't see much hope here. Dean wants to cancel all the tax cuts. Most of the money would be spent on social programs. He has made vague promises but no substantive proposals on compensating middle-class tax cuts. Kerry wants to cancel the upper income tax cuts, spending part of those funds on middle-class cuts and the rest on social programs (mainly health care). Kerry plans to "cut the budget deficit in half in four years," the same claim made by GW Bush; no progress here. Edwards wants to repeal the cut in dividend taxes, among others, which is tantamount to punishing investment.

All the Democratic front runners have plans to greatly expand social programs. Look at the Medicare spending component on the middle graph; that growth rate does not include the $400 billion prescription drug program Bush passed last fall. All the Democratic candidates support significant expansions in Medicare. They simulataneously plan to "reduce the cost of medical care," as if subsidizing demand will somehow drive the price down. They refuse to consider any privatization intiatives for Social Security. In short, they continue to insist on new entitlement programs while the current set face massive shortfalls. As the Cato Institute put it, it's like building a backyard pool when you're about to default on your mortgage.

Again, I appreciate your comments, but I don't see much of interest to me from either party, to be candid. Securing our long-term economic health will take some radical and sweeping reforms on both the revenue and expediture sides. Arguing about the Bush tax cuts is, in the long term, rearranging deck chairs on the Titanic. Unless spending is dramatically cut or taxes dramatically raised, the only options will be to default on the federal debt or print new money to pay it off. Either would create such dire repercussions that 1929 and the Great Depression would look like a picnic: the US dollar and US treasury debt underlie most of the globalized modern economy, because people are operating under the (false) assumption that they are absolutely secure. I can't even imagine the consequences if the dollar or US bonds became worthless overnight: it would be devastating beyond description.

Most Americans are unaware of how precarious our fiscal situation already is, and how much worse things will become in the next few decades. Until they do -- which will probably require a major fiscal crisis -- neither party has a political incentive to take the needed steps.

--B2707SST

[Edited 2004-01-27 06:54:22]


Keynes is dead and we are living in his long run.
User currently offlineAloha717200 From United States of America, joined Aug 2003, 4475 posts, RR: 15
Reply 11, posted (10 years 6 months 2 days 10 hours ago) and read 712 times:

Well pyt B2707SST. Have you thought about sending your thoughts to your congressmen?


I'd do so. Even if they dont listen at least you took the initiative to make your voice heard. I wrote my congressmen/senators about aviation, this here is defnitely something you should write yours about. If you haven't already.

My one remaining question though is, these tax cuts are only beneficial during this time of recession or are they now going to have to be permanent. The reason i ask is that these cuts didn't exist under Clinton yet we had a fairly good economy...and i say fairly because inflated books at major corporations made the economy look healthier than it actually was, but still, we weren't in a recession. And we didnt have those tax cuts.

Now that we're in recession you're saying that the cuts are necessary, but what about in the future when the economy recovers, will they still be necessary?



User currently offlineB2707SST From United States of America, joined Apr 2003, 1369 posts, RR: 59
Reply 12, posted (10 years 6 months 2 days 9 hours ago) and read 695 times:

One more post before bed...

Now that we're in recession you're saying that the cuts are necessary, but what about in the future when the economy recovers, will they still be necessary?

If historical and theoretical evidence is correct (and this is still fiercely debated), then lower marginal tax rates are in part responsible for initiating and sustaining robust economic growth. Bush and Clinton engineered tax increases, but these were mostly elimination of deductions, not substantial increases in marginal tax rates. These remained much lower than the pre-Reagan rates: some people have pointed to the double-boom of the 1980s and 1990s as products of the Reagan cuts, which is impossible to prove or disprove. In any case, no sane economist would argue that tax cuts are the sole determinant of economic prosperity. Monetary (interest rate) policy is generally regarded as more effective for dealing with short-term cyclical fluctuations, whereas fiscal (taxing/spending) policy impacts long-term growth rates.

The 1993-2000 boom was peculiar for a number of reasons:

First, we had significant, real growth in the technology sector which rippled through the entire economy. Economists call this a "productivity shock:" the emergence of high technology and the Internet were truly revolutionary. Many old industries completely changed the way they did business; many new industries were created from scratch. This initiated the economic boom, just like the then-new technology of radio kicked off the Roaring Twenties.

Second, we had a dramatic expansion in international trade in goods, services, and financial instruments. Although free trade does hurt some groups, it is good for a nation on balance. Expanding trade in the 1990s opened up new markets for US products and allowed cheaper production of labor-intensive goods abroad. Global financial markets saw especially strong growth in the 1990s.

Third, we had relatively low inflation because much of the economic growth was achieved through higher productivity. This doesn't cost anything and should actually push prices down. Low inflation meant the Fed was free to keep interest rates low, allowing businesses to borrow money cheaply. The Fed pumped additional liquidity into the economy in 1997, during the Asian financial contagion, and again before the Y2K rollover. A lot of this money went into the stock market and fueled the bubble.

Fourth, the influx of tax revenue, especially from gains on stocks, produced a federal budget surplus for the first time in decades. President Clinton and the GOP Congress deadlocked on domestic priorities, so federal spending and economic tampering were kept to a minimum. What they could agree on was often beneficial: welfare devolution, for example, certainly didn't hurt. Projections of rising budget surpluses contributed to the general euphoric mentality.

I'm sure corporate shenanigans, in the form of inflated earnings, had something to do with the boom, but I think some people overrate their impact. Enron, WorldCom, etc. remain relatively isolated cases.

This all went on for some time. Gradually, the boom shifted from sustainable real growth to unsustainable speculation. Businesspeople and investors (and governments) got caught up in the euphoria and lost all contact with reality. Technology stocks would shoot up 200-300% on their first day of trading. People talked about a "new economy," as if we had overcome fundamental economic laws, as if 75% annual returns in the stock market can continue indefinitely. Alan Greenspan warned about "irrational exuberance" as early as 1996, but was quickly ignored. He mumbled about a bubble economy for years but didn't do a lot to stop it.

Toward the end of the decade, growth was overheating and the economy was starting to hit resource constraints: we were running out of workers, infrastructure, resources, etc. (remember the CA energy crisis?). Inflation began moving upward. Greenspan and the Fed tried to raise interest rates gradually enough to create a "soft landing," but the bubble could not be popped that easily. Interest rates started to rise more quickly, the yield curve inverted, and we came back to earth with a thud and a recession. The stock market tanked, tax revenues fell sharply, and deficits returned.

I think it's important to note that a great deal of the late-90s economy, including the budget surpluses, was a fantasy. Alan Greenspan was absolutely right when he called it "irrational exuberance." People who blame the economy on Clinton or especially Bush (given that he had been in office for 40 days when recession began) are simply showing their partisan biases. If anyone is to blame, it's Greenspan himself, but cyclical forces are beyond anyone's control. The recession was inevitable: the excesses of the 1990s had to be liquidated somehow.

I don't give Clinton much credit for the 1990s boom, but I don't blame him for the recession either. He got very lucky in the timing of the 1992-93 recovery and the 2000-01 downturn. I think Bush has generally followed the right path on tax policy, but he certainly does not have direct control over the economy. We built up a lot of unneeded capacity during the 1990s, particularly in the tech sector; the economy will have to grow into it before we see job growth resume. Repealing tax cuts now would almost certainly slow that process down. In the longer term, the adjustments needed to put the US on a long-term path of fiscal stability are much larger and more significant than the fiddling with the income tax brackets.

--B2707SST

[Edited 2004-01-27 08:56:28]


Keynes is dead and we are living in his long run.
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