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Revelation
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US Government Financial Summary

Fri Dec 23, 2011 2:08 am

I received a chain e-mail, so I can't substantiate any of the claims, but the main part of the e-mail was:

Quote:

US Government Financial Summary:
• U.S. Tax revenue: $2,170,000,000,000
• Fed budget: $3,820,000,000,000
• New debt: $ 1,650,000,000,000
• National debt: $14,271,000,000,000
• Recent budget cuts: $ 38,500,000,000

Let's now remove 8 zeros and pretend it's a household budget:
• Annual family income: $21,700
• Money the family spent: $38,200
• New debt on the credit card: $16,500
• Outstanding balance on the credit card: $142,710
• Total budget cuts: $385

*IF* it is true, it's quite sobering, no?
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Klaus
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RE: US Government Financial Summary

Fri Dec 23, 2011 2:34 am

Chain emails are almost always intended to manipulate their receivers to a specific end.
 
prebennorholm
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RE: US Government Financial Summary

Fri Dec 23, 2011 3:09 am

And what is the problem? As long as the Chinese lend you $1,650bn more every year.

It only becomes sort of problem when the Chinese put conditions on new loans and on extending old loans.

Even then there will be a positive side effect. You will save a lot of costs on running the Congress and the Senate and all such things since the US of A will be managed free of charge from Beijing.
Always keep your number of landings equal to your number of take-offs
 
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pu
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RE: US Government Financial Summary

Fri Dec 23, 2011 3:28 am

Quoting Revelation (Thread starter):
National debt: $14,271,000,000,000

A common deception used by many for their own political purposes, or by America-haters for petty reasons.

The more accurate figure is "only" $10,438,000,000,000 as shown by official figures here.

Debt held by the public is the relevant figure, as this is the only figure comparable to what every other nation reports as its national debt.

Intragovernmental debt is nothing more than what part of the American government owes to another part and really is not part of the national debt because it is owed to no one. No one can file suit to recover it, it can be cancelled at anytime with no one able to claim damages - it exists as an accounting placeholder only. Essentialy it represents the amount the US government over-collected in Social Security taxes but which were spent in areas besides social security. Or, put another way the intragovernmental debt figure represents part of the future obligations to pay social security under current pay scales...again no other country counts as national debt that which may be owed to future generations.

BTW, the more accurate 10 trillion figure at around 71% of GDP is rather modest compared to most of Europe, Japan, etc...

Pu
 
TheCommodore
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RE: US Government Financial Summary

Fri Dec 23, 2011 6:02 am

Quoting Revelation (Thread starter):
*IF* it is true, it's quite sobering, no?

Not only sobering, but terrifying !

Quoting Pu (Reply 3):
The more accurate figure is "only" $10,438,000,000,000 as shown
Quoting Pu (Reply 3):
BTW, the more accurate 10 trillion figure at around 71% of GDP is rather modest compared to most of Europe, Japan, etc...

Mere semantics !

10 or 14, who cares, its shocking, which ever way you look at it.
“At first, they'll only dislike what you say, but the more correct you start sounding the more they'll dislike you.”
 
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RE: US Government Financial Summary

Fri Dec 23, 2011 6:07 am

Quoting Pu (Reply 3):

A common deception used by many for their own political purposes, or by America-haters for petty reasons.

Is denialism the new Conservative tactic? There's no environment problem. There's no financial problem. There's no debt problem. There's no problem with healthcare. There's no problem with the infrastructure.

I don't get it.
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pu
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RE: US Government Financial Summary

Fri Dec 23, 2011 6:29 am

Quoting DocLightning (Reply 5):
Is denialism the new Conservative tactic?

I actually think a conservative is more likely to use the higher debt figure and champion the fear of high debts, right? Aren't they the ones wanting to attack Obama on spending and a large government?

My point is that few people know about intragovernmental debt and how it plays into the overall "total debt" figure for America. This is important mainly in comparing US national debt to other first world nations. For domestic politics, understanding the intragovernmental debt situation probably doesn't matter as much.

Germany's public debt is 82%, France is 82%, Japan 200%, Canada 84%, China 33%, Australia 26% and America's is 71%. It's relevant to use the accurate figure of public debt and not include intragovernmental debt.

Quoting TheCommodore (Reply 4):
10 or 14, who cares,

14 is of course 40% more than 10, which for me is not a 'who cares' difference. Also, since the US economy is roughly 14 trillion we are talking about America potentially owing a years worth of GDP versus owing 8 months GDP to its creditors.

Pu
 
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RE: US Government Financial Summary

Fri Dec 23, 2011 6:35 am

Quoting Pu (Reply 6):
Also, since the US economy is roughly 14 trillion we are talking about America potentially owing a years worth of GDP versus owing 8 months GDP to its creditors.

As I said above, "who cares" !

8 months or 12 months, its still a terrible situation whichever way you look at it  Wow!
“At first, they'll only dislike what you say, but the more correct you start sounding the more they'll dislike you.”
 
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RE: US Government Financial Summary

Fri Dec 23, 2011 8:04 am

Quoting prebennorholm (Reply 2):
As long as the Chinese lend you $1,650bn more every year.

Two-thirds of US debt is financed by Americans, one-third by foreigners and China owns aabout 8 percent of US debt held by the public...so assuming China continues its US investment at the same rate, it "only" needs to lend somewhat less than one-tenth of the figure you mentioned.

Of course a country with a large trade deficit must run a corresponding capital account surplus....in other words if China wants to sell so much of its gross domestic product to America it has no choice but to finance American debt. Much as a car manufacturer that offers financing to a consumer to buy its cars needs customers it is instructive to look and see if China needs buyers for its goods more than America needs a buyer of 8% of its government debt.

Quoting TheCommodore (Reply 7):
8 months or 12 months, its still a terrible situation whichever way you look at it

Well everyone has an opinion but compared to the rest of the world America is hardly in a terrible situation with its national debt.

Pu

[Edited 2011-12-23 00:18:04]
 
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RE: US Government Financial Summary

Fri Dec 23, 2011 8:19 am

Quoting Pu (Reply 8):
Well everyone has an opinion but compared to the rest of the world America is hardly in a terrible situation with its national debt.

So what is it exactly that your saying.....

Americas indebtedness is a figment of everyone's imagination and the level of debt is nothing to be concerned about. Another words, carry on like nothings wrong ?
“At first, they'll only dislike what you say, but the more correct you start sounding the more they'll dislike you.”
 
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RE: US Government Financial Summary

Fri Dec 23, 2011 8:50 am

Quoting TheCommodore (Reply 9):
So what is it exactly that your saying.....

Americas indebtedness is a figment of everyone's imagination and the level of debt is nothing to be concerned about. Another words, carry on like nothings wrong ?

I've explained it in posts above, but some are just tickled to imagine America is in bad shape with its national debt, regardless of the evidence.

Germany, Japan, Canada, France, etc.. all have higher debt as a percent of GDP than America. All are wealthy countries with great standards of living and good economies. All have much less of an asset base to borrow from. None of these countries have the world's only reserve currency and all of these countries borrow at much higher rates than the USA. The USA can and does monetize its debt (simply print more money to pay off debt) with no effect on inflation and even as America prints more money to pay off its debt its currency continues to appreciate as the demand for dollars increases in the ongoing euro crisis.

Furthermore, the interest rate paid on a recent US government auction of Treasury notes is a trivial .125 percent. (Yes, that is a decimal in front of the 125) In other words, America is capable of borrowing money for very little cost. Did you ever pause to think how it might be desirable to borrow money from those willing to lend it as opposed to tax those who don't want to give their money to the government? Especially if borrowiing costs are so low?

Would you care so much about your credit card use if the only interest you paid was POINT 125 percent?

America had well over 100% of its GDP in debt during WW2 and that was the event that brought America to superpower status. Is more debt a good thing? Probably not. Is America "terrible" on a world scale? Far from it.

Pu

[Edited 2011-12-23 00:51:05]

[Edited 2011-12-23 00:53:52]
 
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RE: US Government Financial Summary

Fri Dec 23, 2011 2:35 pm

Quoting DocLightning (Reply 5):
Is denialism the new Conservative tactic? There's no environment problem. There's no financial problem. There's no debt problem. There's no problem with healthcare. There's no problem with the infrastructure.

I don't get it.
Quoting Pu (Reply 6):
I actually think a conservative is more likely to use the higher debt figure and champion the fear of high debts, right? Aren't they the ones wanting to attack Obama on spending and a large government?

Both interesting points.

It shows it's hard to use a word like conservative.

It just seems to me some people act as if what they do has no impact on others, and that they are totally self-reliant. It might be nice if that was true, but it isn't. We all need to work with each other to get by, and try to leave this world a better place than the way we found it. If that sounds uber-liberal, so be it.

Quoting Pu (Reply 8):
Of course a country with a large trade deficit must run a corresponding capital account surplus....in other words if China wants to sell so much of its gross domestic product to America it has no choice but to finance American debt. Much as a car manufacturer that offers financing to a consumer to buy its cars needs customers it is instructive to look and see if China needs buyers for its goods more than America needs a buyer of 8% of its government debt.

Very interesting points, especially the one above!

I'm not very knowledgeable about China, but I imagine at some point it'll be more about internal consumption instead of exports.
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casinterest
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RE: US Government Financial Summary

Fri Dec 23, 2011 4:06 pm

Quoting Pu (Reply 10):
Would you care so much about your credit card use if the only interest you paid was POINT 125 percent?

'
Excellent posts above on ths matter.

However this interest rate is bound to go up when the economy approves, and much like the housing bubble and ARM's. when new debt is incurred it won't be at this luxury rate, so the spending needs to come a bit more under control.

Of course when the economy recovers, the Governemnt will have a lot more income as less folks will be on welfare, and more will be paying taxes. Inflation may make the current debt looks small, but it still remains that the US Government needs more stability in it's fiscal policy.

Quoting Pu (Reply 3):
Intragovernmental debt is nothing more than what part of the American government owes to another part and really is not part of the national debt because it is owed to no one.

It's real debt. Now the governemnt could wipe it away, but that is just because the US Governemnt can print dollar bills. However that 4 billion is still real enough that they borrowed it from a surplus department.

Quoting DocLightning (Reply 5):
There's no financial problem. There's no debt problem

Let's not go to far there Dpc..... financial and debt problems are the bread and butter of the Tea Party movement and the driver for what led the GOP to a rather embarrasing brink this week when it crossed squarely with a tax cut.
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seb146
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RE: US Government Financial Summary

Fri Dec 23, 2011 4:39 pm

Quoting Revelation (Reply 11):
It just seems to me some people act as if what they do has no impact on others, and that they are totally self-reliant. It might be nice if that was true, but it isn't. We all need to work with each other to get by, and try to leave this world a better place than the way we found it.

Don't say that about tea people. That is socialism! Tea people hate socialism. Unless they personally benefit from it.

What I don't understand: Since corporations are people, why not tax them as people?

Also, let's keep in mind the House of Representatives make all the spending and taxing.
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RE: US Government Financial Summary

Fri Dec 23, 2011 6:30 pm

Quoting Revelation (Reply 11):
I'm not very knowledgeable about China, but I imagine at some point it'll be more about internal consumption instead of exports.

I'll try to keep on the topic of this thread except to say that where China is concerned, you can be sure predictions about its future are wrong insofar as they are adopted by more and more people and become conventional wisdom.

Quoting CasInterest (Reply 12):
Excellent posts above on ths matter.

However this interest rate is bound to go up when the economy approves,

Probably true, although there have been historical periods where interest rates stayed the same for a decade or more. My point is that borrowing at .125 percent is hardly different from collecting revenue in taxes yet it allows those to give money to the government who choose to as opposed to simply taxing everyone.

Quoting CasInterest (Reply 12):
so the spending needs to come a bit more under control.

Agreed.
All the 1st world democracies need to get their borrowing under control.
The major problem IMO is that politicians have to run for office and thus have no incentive to do anything but spend and borrow for quick gains...and have little incentive to practice restraint, prudence, cost-cutting or do anything that doesn't pay off big time before the next election.

Quoting CasInterest (Reply 12):
but it still remains that the US Government needs more stability in it's fiscal policy.

Yes and yes again.
But really it needs a government that doesn't so closely fit the definition of dysfuctional. The Republicans and Democrats are happy to go to war with each other for short term political points while the American people pay the price.

Quoting CasInterest (Reply 12):
It's real debt. Now the governemnt could wipe it away, but that is just because the US Governemnt can print dollar bills. However that 4 billion is still real enough that they borrowed it from a surplus department.

No, big disagreement here.
Printing dollar bills is not necessary because there is no one to pay off this "debt" to. It is a fiction created for political purposes.

No other country has this 'intragovernmental debt' as a reported part of national debt. It was only created in the US as a political tool to remind everyone that taxes which on your paycheck are marked 'social security' are being used to fund things beside soscial security.

But this is only an accounting placeholder, if both the lender and the debtor are the same entity, then the debt does not exist, which is the case here.

It is like if you have two bank accounts and moved money from Account A to cover an overdraft in Account B. You may imagine just for your own thought process that Account B owes money to Account A...but really its all your money anyway so you can't owe money to yourself!

Pu
 
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RE: US Government Financial Summary

Fri Dec 23, 2011 7:04 pm

Quoting DocLightning (Reply 5):
Is denialism the new Conservative tactic? There's no environment problem. There's no financial problem. There's no debt problem. There's no problem with healthcare. There's no problem with the infrastructure.

I don't get it.

None of the points you made actually represent conservative positions and instead show the inability of liberals to prioritize and execute in an effective manner. This is an expected outcome given the number of leaders in today's Democratic party who entered politics without real-world experience in a results-driven environment.

There's plenty of ways we could improve environmental standards and healthcare, but we must implement them during a demand-depressed economy and we must choose the policy options with highest compliance cost for employers at a time of high unemployment? The status quo is so unacceptable that we can't wait for economic recovery to address these issues?

Debt and infrastructure are real problems, but we can't fund an effective government with the $2.6 trillion in federal receipts? That is an astronomical sum of money. How can the role of government be so poorly defined that $2.6 trillion isn't sufficient for our public needs?

The purpose of liberal and conservative philosophies should be to provide alternate and competing solutions to our policy needs in government. The problem with today's leaders is that they can't properly prioritize, define, or propose solutions to the right problems. My suggestion is to start at the top and throw the idiots out ASAP.
 
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RE: US Government Financial Summary

Fri Dec 23, 2011 7:15 pm

Quoting Pu (Reply 10):
Germany, Japan, Canada, France, etc.. all have higher debt as a percent of GDP than America. All are wealthy countries with great standards of living and good economies. All have much less of an asset base to borrow from.

That is debatable.

Quoting Pu (Reply 10):
None of these countries have the world's only reserve currency

You're reminiscing about a time that is already in the past. The Euro is already a major reserve currency today, with all the associated consequences.

Quoting Pu (Reply 10):
and all of these countries borrow at much higher rates than the USA.

The difference is not very large. And there are quite a few differences which are quite troubling on the american side:
– A deadlocked political situation with a rabidly destructive right which sets its priority on the destruction of the state, on the interests of the rich at the expense of everything and everyone else and on a social and religious reversal towards the middle ages instead of finding ways for a constructive way forwards, including reasonable compromises with political opponents.
– A severely decayed infrastructure.
– A decaying and in many respects uncompetitive industrial base.
– Very high and unsustainable levels of private debt at and below the middle class.
– Rising social and societal costs of poverty.

Quoting Pu (Reply 10):
The USA can and does monetize its debt (simply print more money to pay off debt) with no effect on inflation

Printing money does not necessarily result in inflation right away when the newly printed money is still soaked up temporarily. It is when it's sloshing back without sufficient value to back it up that inflation will start to climb. That can be delayed, but such a delay is not "proof" that inflation will just never happen as a result.

Quoting Pu (Reply 10):
Did you ever pause to think how it might be desirable to borrow money from those willing to lend it as opposed to tax those who don't want to give their money to the government? Especially if borrowiing costs are so low?

Are you for real? Taxes are not repayable. Even if you're getting a loan at 0% you still have to repay those 100%.

I shudder at the thought that there actually are politicians who can't distinguish between the two.

Taxes are not a panacea, but loans by their very definition are not a sustainable way of financing – they are only temporary tools for certain purposes.

The actual expenses of a state must always be paid from the taxes and other revenues – loans can only bridge temporary gaps.

That politicians have failed to understand this perfectly simple and obvious principle has got us into the mess most of us are in (to varying degrees).

Quoting Pu (Reply 10):
Is more debt a good thing? Probably not. Is America "terrible" on a world scale? Far from it.

The USA have a dangerous imbalance between their debt levels and the productivity of their real economy and a political blockade of necessary reforms.

There are plenty of challenges in the EU as well, but in many respects we're much farther along in the modernization of our economies, with a much healthier ratio of real vs. financial industry and a much more constructive political culture (unfortunately Britain must be exempted on all counts).
 
Klaus
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RE: US Government Financial Summary

Fri Dec 23, 2011 7:24 pm

Quoting Pu (Reply 14):
Printing dollar bills is not necessary because there is no one to pay off this "debt" to. It is a fiction created for political purposes.

No, it is very much real and has absolutely real consequences – these consequences are just deferred, not nullified.

That is exactly the shortsighted way you get into an inflationary downturn or into a debt crisis later when you think that consequences of your current actions which aren't obvious right away won't ever come back to you.

But they will. That's the whole point of the current crisis.
 
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RE: US Government Financial Summary

Fri Dec 23, 2011 7:46 pm

Klaus, 10 years and 20000 posts later you are still taking every opportunity to predict America's failure and European triumph! I join you in hoping the next 10 years turn out somewhat better in acheiving your dearest dreams, at least where EU success is concerned, as I have every hope for continued American prosperity!

Quoting klaus (Reply 16):
You're reminiscing about a time that is already in the past. The Euro is already a major reserve currency today, with all the associated consequences.

The dollar is the 2:1 favourite as the reserve currency and the euro is being sold briskly.

Quoting klaus (Reply 16):
That is debatable.

In no way is it debateable that France or Germany have far fewer assets than the USA, in no way is it debateable that their debt in public hands is higher than America's.

Quoting klaus (Reply 16):
It is when it's sloshing back without sufficient value to back it up that inflation will start to climb. That can be delayed, but such a delay is not "proof" that inflation will just never happen as a result.

America has been printing its way out of debt for 30+ years, and most especially in the last 10 years yet its inflation is mild.

German historical fear of inflation will cause the EU to fall into at least a mild recession again in 2012 as America and maybe Britain surge forward. They may have one or two points higher inflation but they do and will have growing economies which through their very growth are inherently inflationary.

America has repeatedly inflated its way out of recessions and is doing so again - with the rise in production and prosperity outpacing the very mild rise in inflation.

Quoting klaus (Reply 16):
Are you for real? Taxes are not repayable. Even if you're getting a loan at 0% you still have to repay those 100%.

Are you for real?
Or living in an economics textbook?....did you notice we were talking about America's ability to print money to pay off its debt?
For some, namely America, paying off its debt is essentially NOT repayable or at least only partially repayable, since they create money out of thin air that the rest of the world greedily gobbles up.

Quoting klaus (Reply 16):
unfortunately Britain must be exempted on all counts).

The UK and America have long outgrown Europe and doubtless will continue to do so...and btw I wouldn't be so sure that the other more healthy states in the EU will be marching down the Franco-German path as loyally as you no doubt desperately hope.

Quoting klaus (Reply 17):
No, it is very much real and has absolutely real consequences – these consequences are just deferred, not nullified.

In first year economics textbooks and in the minds of German-dominated central bankers - yes. But in reality America prints money and runs large fiscal and trade deficits with none of the inflation or devalued dollar so unfairly absent from their world. The "intragovernmental debt" shown on America's books is merely taxes already collected under the caption 'social security' but spent on other government programs. No country in Europe counts as national debt the future payments allegedly owed to future generations so it is not correct to consider intragovernmental debt as anything but a housekeeping number used by the Americans for domestic political arguments.

Pu

[Edited 2011-12-23 11:55:55]
 
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RE: US Government Financial Summary

Sat Dec 24, 2011 1:05 am

Quoting Pu (Reply 6):

I actually think a conservative is more likely to use the higher debt figure and champion the fear of high debts, right?

It was the Tea Party a few months ago saying, "We can default on our debts. It won't be bad at all."

I was flabbergasted. Just absolutely floored.
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prebennorholm
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RE: US Government Financial Summary

Sat Dec 24, 2011 3:12 am

It scares me a bit to see how some posters are downplaying the severity. It sounds much like some former prime ministers of Greece and Italy one year ago. The real problem is not so much the total debt today, but rather...

Quoting Revelation (Thread starter):
%u2022 U.S. Tax revenue: $2,170,000,000,000
%u2022 Fed budget: $3,820,000,000,000
%u2022 New debt: $ 1,650,000,000,000

Spreading that over 300mn Americans, then for a family of four that is exactly $22k new debt per year. It's like scrapping the family car every year and buying a new one on the credit card without ever intending to pay. The grandchildren will pay.

Many Americans will say that they can afford that debt, while others won't care mainly because they know that they can never pay. The former (upper class + upper middle class) must know that they will have to pay a lot more than the $22k/yr, since the latter are right when they figure that they can't pay.

It is correct that the German per capita debt is slightly larger than the US. But that's not the main issue. Over two decades Germany has spent a lot on rebuilding one fifth of the country from slightly above stone age. The market believed in the effort and was not let down. Today the German economy is fairly well balanced even when they are faced with new "Merkozy" rescue plans. The US situation with very fast escalating debts is a different issue, and has a much higher risk of getting out of control.

One day the interest rate goes up. Then the Fed will have to borrow a lot more to cover the interests. "The market" will react by being reluctant to lend more money, and you are caught in the debt trap. Forced to pay back the whole debt in a few years time with little ability to borrow, and only at short term and horrendous interest rates.

It has been posted here that the US $ has suffered little inflation lately. That is correct when comparing to currencies of other mismanaged countries such as many EU countries, Japan etc. But it wasn't so long time ago the that one US$ bought you 2.5 or 3 Swiss Franks, while today you get 90 rappen. And that's only because when it hit 70 rappen the Swiss national bank started pumping out enormous amounts of Franks in order to keep Swiss industries competitive in a Euro dominated market.

And please remember, the US of A does not have a "Merkozy" to come to their rescue.

It really doesn't matter whether the debt is domestic or international. Major US investors, such as pension funds etc, invest their money where they get the best profit, the inflation taken into account. That means that when inflation is EXPECTED, then they add the inflation rate to their interest rate, or they invest abroad. It is as simple as that. There is one way to get around that, it is to close the national economy like the former USSR.
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AsianDude
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RE: US Government Financial Summary

Sat Dec 24, 2011 3:59 am

I never understand why so many so-called American conservatives think the US government is comparable to a family or a family's finances. The US government by its very definition of the above numbers shows that it is anything but that, but rather a large insurance company with an army. What am I missing?


 
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DeltaMD90
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RE: US Government Financial Summary

Sat Dec 24, 2011 4:34 am

Quoting DocLightning (Reply 19):

Quoting Pu (Reply 6):

I actually think a conservative is more likely to use the higher debt figure and champion the fear of high debts, right?

It was the Tea Party a few months ago saying, "We can default on our debts. It won't be bad at all."

I was flabbergasted. Just absolutely floored.

I think it was the TP's borderline obsession with making Obama look bad that trumped their real values. When I say TP I mean the politicians that hijacked the movement. Although I didn't participate in the initial TP events, it was a great, innocent grassroots movement aimed at smaller government. Today, it has a tarnished rep (partially due to their own actions.) I wonder what the TP would look like today if they didn't get hijacked by social conservatives.......
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RE: US Government Financial Summary

Sat Dec 24, 2011 4:24 pm

Quoting Pu (Reply 3):
Intragovernmental debt is nothing more than what part of the American government owes to another part and really is not part of the national debt because it is owed to no one. No one can file suit to recover it, it can be cancelled at anytime with no one able to claim damages - it exists as an accounting placeholder only. Essentialy it represents the amount the US government over-collected in Social Security taxes but which were spent in areas besides social security. Or, put another way the intragovernmental debt figure represents part of the future obligations to pay social security under current pay scales...again no other country counts as national debt that which may be owed to future generations.

Oh boy.....prepare to put on your asbestos suit when Ken777 reads that one!!!

While I agree with you in principal, in reality if the government were to try and renege on that debt there would be millions of seniors taking to the streets with pitchforks and torches. And I would agree with them. While the entitlement programs are in serious need of reform to keep them from collapsing, they must be maintained for those that honestly paid into them. Future generations though will probably have to do with much less or without.

After that we differ in our approaches. I as a consumer could not get a loan from a bank with 71% debt ratio. Therein lies the problem, the interest on that debt continues to grow and the interest rates that will be available from all sources will also grow. Already 3 times in the past year the Treasury has had problems attracting buyers at the initial published interest rates on securities and had to go back and make adjustments. Printing more money creates nothing but more paper in the market which devalues that that remains in circulation. At some point the interest rate damn is going to break and we simply will not be able to print our way out of it.

We need to address our debt and while draconian measures such as those being imposed on some countries in the EU are not called for, nor even the austerity measures in the UK are necessary, the types of reforms that Canada performed a few years ago would not be out of place for us.
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Ken777
Posts: 9024
Joined: Thu Mar 11, 2004 5:39 am

RE: US Government Financial Summary

Sat Dec 24, 2011 5:49 pm

Quoting dxing (Reply 23):
Oh boy.....prepare to put on your asbestos suit when Ken777 reads that one!!!

Nah. He's too new at "that" debate. I'll wait.   

Quoting dxing (Reply 23):
in reality if the government were to try and renege on that debt there would be millions of seniors taking to the streets

More than that. Because the loans from the Social Security Trust were formal loans paying interest the financial reputation of the Federal Treasury is based, in part, on those financial obligations.

Of course the politicians can force through a write down, just like they can on all of the other Treasury obligations.

Just think of how our credit ratings would move on that act. We fell when the politicians had their head somewhere (    ) this past year and there were no failures on our obligations.

And, if we were to write off that obligation, what is going to happen to our economy? Not pretty.

There would be more than Seniors taking to the streets.
 
dxing
Posts: 5859
Joined: Wed Nov 12, 2008 5:14 pm

RE: US Government Financial Summary

Sat Dec 24, 2011 7:05 pm

Quoting Ken777 (Reply 24):
More than that. Because the loans from the Social Security Trust were formal loans paying interest the financial reputation of the Federal Treasury is based, in part, on those financial obligations.

Unfortunately you continue to error on that point. Pu is absolutely correct in his assesment of those loans. Writing them off would only make our actual creditors happy. Again, try going to bankruptcy court and explaining to the Judge that your personal savings accounts are on the same level of standing with your creditors. Bring some kleenex as he'll need something to wipe his eyes with after laughing at you so hard.

Or just look at the choices the President and the Treasury Secretary made when describing what would happen if the debt ceiling wasn't increased. Payments to service loans to creditors other than SS were never in doubt. Payments to SS recipients were.

[Edited 2011-12-24 11:07:59]
Warm winds blowing, heating blue skies, a road that goes forever, I'm going to Texas!
 
Ken777
Posts: 9024
Joined: Thu Mar 11, 2004 5:39 am

RE: US Government Financial Summary

Sun Dec 25, 2011 1:59 pm

Quoting dxing (Reply 25):
Unfortunately you continue to error on that point.

Default and watch how far this country's credit rating.

Pregnant is pregnant and default is default.

That is the complex issue that the Tea Party cannot understand:

Default is default.
 
dxing
Posts: 5859
Joined: Wed Nov 12, 2008 5:14 pm

RE: US Government Financial Summary

Sun Dec 25, 2011 2:22 pm

Quoting Ken777 (Reply 26):
Default and watch how far this country's credit rating.

Since it is money the government lent itself from what is essentially a savings account, the credit rating won't change one bit.

Quoting Ken777 (Reply 26):
Pregnant is pregnant and default is default.

A very poor analogy for this case as the two have nothing in common when it comes to lending money to yourself.

Quoting Ken777 (Reply 26):
That is the complex issue that the Tea Party cannot understand:

It is a complex issue when you realize that the longer we wait to reform the entitlement programs the more expensive it will be on many different levels. But that does not change the fact that you fail to understand the difference between money lent to yourself out of a savings account and money lent to you by a third party creditor.
Warm winds blowing, heating blue skies, a road that goes forever, I'm going to Texas!
 
Ken777
Posts: 9024
Joined: Thu Mar 11, 2004 5:39 am

RE: US Government Financial Summary

Sun Dec 25, 2011 7:47 pm

Quoting dxing (Reply 27):
Since it is money the government lent itself from what is essentially a savings account, the credit rating won't change one bit.

Keep believing that. And remember the credit rating hit when the Tea Party was having a circle jerk with the debt ceiling.

As we have been shown, we live in a rather fragile world these days when it comes to credit and the US is obviously not immune to credit drops.

Quoting dxing (Reply 27):
But that does not change the fact that you fail to understand the difference between money lent to yourself out of a savings account and money lent to you by a third party creditor.

Again, the surplus funds in the Social Security Trust could have been loaned to private businesses instead of to the government for capital projects. That would have caused a stir however, as too many Americans trust the US more than Wall Street.

Now the hard right is working hard to destroy that trust in the US and the Treasury. Totally without regard to the price everyone will pay if there is a default.

But, he, it sure will make the Greeks look good.  
 
petertenthije
Posts: 3256
Joined: Tue Jul 10, 2001 10:00 pm

RE: US Government Financial Summary

Sun Dec 25, 2011 8:39 pm

Quoting dxing (Reply 27):
Since it is money the government lent itself from what is essentially a savings account, the credit rating won't change one bit.

But that money had already been earmarked for pensions etc. So you are just kicking the can. Sure, you don't get interest now, but a few years from now when the pensions are due and your savings account is empty, you will need to borrow again. Probably at a higher rate.

It´s like when you´re 16 and saving for your first car. You're mates are going on holiday and ask if you want to join. You can't quite afford it from your current account, but there's always your savings account. So you go on holiday. Fast forward two years, you're 18, got your driving license and you want to buy your first car. Alas, no money is left. Now there are two options, either buy a car with borrowed money, or don't get a car. The latter is not an option cause you need it to get to college and/or work. The government can't choose "not to buy a car" either. The pensioners etc have earned the right to a pension since they paid into the fund.


edit:
changed "bucket" to "can". While "kicking the can" is not a desirable option, it ain't quite as bad as kicking the bucket!  Wink

[Edited 2011-12-25 12:42:13]
Attamottamotta!
 
dxing
Posts: 5859
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RE: US Government Financial Summary

Sun Dec 25, 2011 9:48 pm

Quoting Ken777 (Reply 28):
Keep believing that. And remember the credit rating hit when the Tea Party was having a circle jerk with the debt ceiling.

Yes, because the President refused to make the hard choices that his own debt commission recommended. His State of the Union address only addressed more spending.

Quoting Ken777 (Reply 28):
Again, the surplus funds in the Social Security Trust could have been loaned to private businesses instead of to the government for capital projects. That would have caused a stir however, as too many Americans trust the US more than Wall Street.

None of that has any standing in the fact that the government "borrowed" from itself. Just as if you "borrow" out of your 401K, or any of your personal savings accounts, if you go bankrupt that 401K and any other savings you borrowed from will have little standing in a bankruptcy court when stacked up against third party creditors. You can try and deflect that all you wish but the simple fact remains that our credit rating would not change one bit if the government were to decide to write off those IOU's in the SS trust fund. Not one percentage of one point.

Quoting petertenthije (Reply 29):
Sure, you don't get interest now, but a few years from now when the pensions are due and your savings account is empty, you will need to borrow again. Probably at a higher rate.

The pensioners etc have earned the right to a pension since they paid into the fund.

Those "pesnioners" also voted into office politicians that did not oversee the caretaking of their funds. As Ken777 has stated many times, the money was used to offset wars, other entitlement programs, and general fund items. Unfortunately before doing that the politicans did not come up with a way to repay the pension fund before the funds were necessary to pay the pensioners. So today, and down the road, the government either has to print or borrow more money from an outside source to pay back that debt. That course is unsustainable over the long term as it has been demonstrated many times that the amount of people entering their retirement years versus the amount of people left in the workforce equals a shortfall of money for the pensioner no matter how hard you tax those left working. Something has to give. No changes have to be made to those receiving benefits today, or even a decade from now. But for those like me, 15-20 years out, some sort of changes are going to need to be made in benefits, entrance age, and financial means testing for benefits. That, along with a probable tax hike are the only ways to ensure the system will be stable and secure enough to actually count on by those in the generations behind me. Ken and others his age like him, will most likely be dead by then, but yet rather than work to fix the system they won't be around to see, they'd rather use the program to score political points.
Warm winds blowing, heating blue skies, a road that goes forever, I'm going to Texas!
 
Ken777
Posts: 9024
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RE: US Government Financial Summary

Mon Dec 26, 2011 12:56 am

Quoting dxing (Reply 30):
You can try and deflect that all you wish but the simple fact remains that our credit rating would not change one bit if the government were to decide to write off those IOU's in the SS trust fund. Not one percentage of one point.

The conservatives thought the same thing this past year. They were ready to shut down the government down and. oooops!, there was that unexpected downgrade in our credit rating.

When just stupid politics can downgrade the Treasury rating thinking about a true default on a Treasury obligation.

Quoting dxing (Reply 30):
As Ken777 has stated many times, the money was used to offset wars, other entitlement programs, and general fund items

I'll assume that the Ego War is excluded in that comment as it was carried out on the credit card.

I did notice that you have carefully excluded capital programs, infrastructure development, funding for military spending, etc.

Make it as dark as you want - you income these days is dependent on government infrastructures. Paid for in part by those loans from the Social Security Trust.

Quoting dxing (Reply 30):
But for those like me, 15-20 years out, some sort of changes are going to need to be made in benefits, entrance age, and financial means testing for benefits.

If you believe all the BS from the politicians you might actually give your benefits away for no reason at all. The politicians tell you that "we can't afford it anymore", you just say, "OK" and the top tax tier gets lowered soon after.

Quoting dxing (Reply 30):
That, along with a probable tax hike are the only ways to ensure the system will be stable and secure enough to actually count on by those in the generations behind me.

Well, previous generations (including mine) stood up for the program and paid higher rates. It looks like it is your generations can't man up and do the same.

Quoting dxing (Reply 30):
Ken and others his age like him, will most likely be dead by then, but yet rather than work to fix the system they won't be around to see, they'd rather use the program to score political points.

Thanks for killing me off like that.

And, sorry to point it out again, but previous generations (including mine) did work to fix the problem, we did man up and increase rates and we did pay them without trying to whip out.
 
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pu
Posts: 1316
Joined: Sat Dec 03, 2011 1:08 am

RE: US Government Financial Summary

Mon Dec 26, 2011 1:24 pm

Quoting prebennorholm (Reply 20):
Over two decades Germany has spent a lot on rebuilding one fifth of the country from slightly above stone age.

When will this justification expire? 30 years perhaps? By the 1960s the economic miracle in Germany was booming 20 years after the nation was in rubble, but 20 years after its reunification we are told reunification makes greater German debt more acceptable than lower levels of American debt -presumably because German deficit spending is inherently better than American deficit spending?

Frustrating as it is to German appeals for sympathy since they adopted the poorer East Germans, other nations in the east NOT incorporated into West Germany are among the stars of the EU, with Poland particularly impressive since it -almost alone on the planet- suffered no recession whatsoever in the global financial crisis and managed to continue growing.

....so, instead of offering up the east as a handicap for Germany perhaps we should more correctly look at the likes of Poland and realise it is more accurate to say the east has morphed into a scapegoat for Germany whenever economic figures disappoint???

Quoting prebennorholm (Reply 20):
It is correct that the German per capita debt is slightly larger than the US. But that's not the main issue

hmmmm....that seems to be the issue for America but somehow a larger debt as a percentage of GDP is of less concerrn when considering Germany...methinks German adulation is preventing equal critcisim for equal (greater, actually) debt.

Quoting prebennorholm (Reply 20):
Today the German economy is fairly well balanced even when they are faced with new "Merkozy" rescue plans. The US situation with very fast escalating debts is a different issue, and has a much higher risk of getting out of control.

If by 'fairly well balanced' you mean an economy where government spending is over half the GDP, as is the case with Germany, I agree with you. Personally, I consider balanced economies those where industry takes the lead.

America out-manufactures China by 40% and Germany by 200 to 300% . I don't see anything to match America's 1000+ food outlets and 500 hotels in China, no one matches their global export of entertainment, and I see no German firms (or any entries from the EU) competing with these 4 American companies highlighted in

this DerSpiegel Cover Story about the internet and its American corporations that are literally changing the world.

Germany and the German economy have many admirable features from an American and world perspectivve, but balance is not the area where Germany outranks America - quite the opposite given Germany's reliance on export driven growth. German exports are dependant on the EU, which is predicted by the EU to stagnate or fall into recession next year. So German debt is not as bad as America's even though America will grow and prosper next year, enriching itself further and making it easier to pay down debt...while Germany and the EU stagnate?

Quoting prebennorholm (Reply 20):
Forced to pay back the whole debt in a few years time with little ability to borrow, and only at short term and horrendous interest rates.
Quoting prebennorholm (Reply 20):
The grandchildren will pay.

EVENTUALLY, yes that could happen, if things are left unmanaged.

Although vastly unfair from a EUropean perspective dominated by German central bankers, who have an irrational fear of inflation built into their rigid economic theories unrevised by post-1920s reality, the USA quite easily monetizes its debt virtually every week and THEREFORE does not actually pay back everything it borrows - since it prints money out of thin air and suffers no damaging inflation.
....If this ability changes, which at some point I agree it will if the debt keeps spiraling out of control, then your cherished doomsday predictions are more tangible.

Quoting prebennorholm (Reply 20):
It has been posted here that the US $ has suffered little inflation lately. That is correct when comparing to currencies of other mismanaged countries such as many EU countries, Japan etc. But it wasn't so long time ago the that one US$ bought you 2.5 or 3 Swiss Franks, while today you get 90 rappen. And that's only because when it hit 70 rappen the Swiss national bank started pumping out enormous amounts of Franks in order to keep Swiss industries competitive in a Euro dominated market.

That is very very anti-American analysis of the rise in the Swiss Frank.
First of all - there are so few Swiss Franks in existence that even a small buy order from London or New York shoots it through the roof. Second of all - it isn't so much that the mild American inflation bothers anyone, nor that the Swiss suddenly became so widely admired for their control of inflation, its more that other EUropeans now correctly see the Swiss as offering a more stable currency than the Euro.
...the mass exodus of the Euro explains the rise in the Frank, as opposed to the pejorative idea that the mundane/mild/normal level of American inflation has much to do with it. Reminder: the dollar is being bought briskly, which is counterinflationary and speaks to investor sentiment.

Quoting prebennorholm (Reply 20):
It really doesn't matter whether the debt is domestic or international

Yes, it does quite a bit matter.
That is why everyone takes note, including prebennorholm in this very thread, about China owning "so much" (8%) of American debt. Domestic creditors are far more easier to placate than debt held overseas; furthermore domestic creditors can be managed with a change of law, monetary controls, tax policy and so forth which is not applicable to foreigners.

Quoting prebennorholm (Reply 20):
And please remember, the US of A does not have a "Merkozy" to come to their rescue.

I don't thin they need a rescue, insofar as Merkozy is even rescuing Europe.
...Those 1000+ McDonalds in China, and the Marriotts, Starbucks etc... all over the world but noticeably in China are much better for American than the one-time sale of a turbine or ship from Germany to China. America is colonising the world 21s century style, with each overseas outpost sending back the profits to America - which doesn't count as export income (the only kind Germany seems to acknowledge) but lets America pollinate China and the world with nearly endless, multiple revenue streams from almost country meanwhile the EU/Germany have to constantly pursue a new order of something it can build.

Quoting dxing (Reply 23):
Oh boy.....prepare to put on your asbestos suit when Ken777 reads that one!!!

Asbestos shield activated.

Quoting Ken777 (Reply 24):
Nah. He's too new at "that" debate. I'll wait.

As a special Christmastime treat, I will pre-debate the matter and say that how the USA chooses, internally, to categorize the 'ingtragovernmental debt' is of little concerns to me or most other non-Americans. So please do feel free to consider it debt or something even more noble, perhaps a religious obligation.
....but to the international community looking at the American balance sheet, the intragovernment debt is not debt; it does not belong in your top line National Debt figure. (despite the glee and yearning of many badly informed journalists, especially in Europe, to smugly and falsely announce America is in more debt that the flagship EU economies)

Quoting dxing (Reply 25):
Pu is absolutely correct

Thanks for the kind words!

Pu
 
windy95
Posts: 2658
Joined: Thu Dec 18, 2008 1:11 pm

RE: US Government Financial Summary

Mon Dec 26, 2011 2:25 pm

Quoting Ken777 (Reply 31):
Well, previous generations (including mine) stood up for the program and paid higher rates. It looks like it is your generations can't man up and do the same

If you manned up and jumped off a high bridge would this generation also have to do that? Not our falut that you did not stop them from robbing your SS to pay for your other social projects.
 
dxing
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RE: US Government Financial Summary

Mon Dec 26, 2011 2:28 pm

Quoting Ken777 (Reply 31):
The conservatives thought the same thing this past year. They were ready to shut down the government down and. oooops!, there was that unexpected downgrade in our credit rating.


The downgrade was because spending was not cut enough to offset even increased tax revenue. In other words, we could have gone back to the Clinton era rates and we still would be spending more than we would be taking in. That was the reason for the downgrade, not because anyone suggested writing off the SS trust fund IOU's. Again, your comment is not only inaccurate, but nothing more than a deflection from fact that writing off the SS trust fund IOU's would not cause a down grade, if anything it would increase our rating by showing we are being honest in our accounting.

Quoting Ken777 (Reply 31):
on a Treasury obligation


They are not a true Treasury obligation as it is money borrowed from one program and spent in others. The only government that counts it as an obligation is the United States government. No other credit agency, foreign government, or public/private investor does.

Quoting Ken777 (Reply 31):
I did notice that you have carefully excluded capital programs, infrastructure development, funding for military spending, etc.


Those would be general fund items excluding the interstate highway system which you have been shown was paid for in large part by bonds, tolls, and fuel taxes.

Quoting Ken777 (Reply 31):
Make it as dark as you want - you income these days is dependent on government infrastructures. Paid for in part by those loans from the Social Security Trust.


The federal government adds the following excise taxes and fees (as applicable) to each ticket sold:

7.5 percent tax on the base ticket price.
domestic segment tax of $3.70 per person per segment (a single takeoff and single landing).
international travel facilities tax of $16.30 per person for flights that begin or end in the U.S., or $8.20 per person for a flight that begins or ends in Alaska or Hawaii.
6.25 percent tax on the amount paid for transporting property by air.

So funding for runway and navigation facilities is hardly funded by SS money. As you have been shown before, the majority of airport terminal buildings are either owned by the city or the airline that uses them. They charge their own set of excise taxes and fees for construction and maintenance.



Quoting Ken777 (Reply 31):
The politicians tell you that "we can't afford it anymore", you just say, "OK" and the top tax tier gets lowered soon after.


Since the math involved is unequivocal the politicians don't have to say a word. Since no one is talking about cutting taxes any further the back half of your statement is once again a regurgitation of a talking point.

Quoting Ken777 (Reply 31):
Well, previous generations (including mine) stood up for the program and paid higher rates. It looks like it is your generations can't man up and do the same.

Since your generation didn't really "fix" anything, just kicked the can down the road a couple of decades, higher tax rates are not going to get the job done by themselves. There is simply no way to tax the rich, or even the rich and the middle class, hard enough to avert the problem without creating a revolt. The only way to actually fix the problem now is not only through higher rates across the board, but means testing, a raise in the eligibility age, and most likely a leaning of benefits. Had your generation been honest about where the money was going in the first place and how it was going to be replaced we wouldn't be in this predicament today. Your generation absolutely failed at managing their retirement funds and has decided to let the follow on generations clean up your mess. If the WW2 generation was the "greatest" generation the baby boomers will be remembered as the most "spoiled" generation.

Quoting Ken777 (Reply 31):
Thanks for killing me off like that.

Your profile says you are between 66-75 years old. Taking the low number of 66 and adding the low number of my post of 15 years puts you at 81. The average life expectancy of a U.S. male is 75 and change. Add the high number of 20 and you are at 86. Everyone dies. The chances you will be around when the adjustments to the system would be enacted are lower than higher.

Quoting Ken777 (Reply 31):
And, sorry to point it out again, but previous generations (including mine) did work to fix the problem, we did man up and increase rates and we did pay them without trying to whip out.

Your generation paid more, but did nothing to create a plan of repayment other than an IOU.
Warm winds blowing, heating blue skies, a road that goes forever, I'm going to Texas!
 
windy95
Posts: 2658
Joined: Thu Dec 18, 2008 1:11 pm

RE: US Government Financial Summary

Mon Dec 26, 2011 3:48 pm

Quoting dxing (Reply 34):
The federal government adds the following excise taxes and fees (as applicable) to each ticket sold:

7.5 percent tax on the base ticket price.
domestic segment tax of $3.70 per person per segment (a single takeoff and single landing).
international travel facilities tax of $16.30 per person for flights that begin or end in the U.S., or $8.20 per person for a flight that begins or ends in Alaska or Hawaii.
6.25 percent tax on the amount paid for transporting property by air.

So funding for runway and navigation facilities is hardly funded by SS money. As you have been shown before, the majority of airport terminal buildings are either owned by the city or the airline that uses them. They charge their own set of excise taxes and fees for construction and maintenance

Most runways and expansions are also funded with muni bonds. I have had several for Miami and Tampa. A nice tax free stable revenue.

Quoting dxing (Reply 34):
Your generation paid more, but did nothing to create a plan of repayment other than an IOU

They on the average are receving much more than they paid in. If like an IRA you only received back what you put into it we would not be having this problem. There are many retirees that could live without or with a lessor amount of SS. Means testing would be helpful. Only receiving back what they paid in would be another for this group.
 
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DocLightning
Posts: 19631
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RE: US Government Financial Summary

Mon Dec 26, 2011 4:33 pm

Quoting dfwrevolution (Reply 15):
The purpose of liberal and conservative philosophies should be to provide alternate and competing solutions to our policy needs in government. The problem with today's leaders is that they can't properly prioritize, define, or propose solutions to the right problems. My suggestion is to start at the top and throw the idiots out ASAP.

Quite, but the rest of your point absolutely beggars reality. The reality is quite beautifully summed up below by a non-American. This is America in the new century:

Quoting klaus (Reply 16):
– A deadlocked political situation with a rabidly destructive right which sets its priority on the destruction of the state, on the interests of the rich at the expense of everything and everyone else and on a social and religious reversal towards the middle ages instead of finding ways for a constructive way forwards, including reasonable compromises with political opponents.
– A severely decayed infrastructure.
– A decaying and in many respects uncompetitive industrial base.
– Very high and unsustainable levels of private debt at and below the middle class.
– Rising social and societal costs of poverty.

Not all the idiots in Congress need to be thrown out. The GOP needs to be thrown out. The DNC has actually been doing its job, which is absolutely amazing given the fact that the GOP would probably oppose asteroid deflection if it came up as a pressing need.
-Doc Lightning-

"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
-Carl Sagan
 
dxing
Posts: 5859
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RE: US Government Financial Summary

Mon Dec 26, 2011 5:26 pm

Quoting DocLightning (Reply 36):
Quoting klaus (Reply 16):
– A deadlocked political situation with a rabidly destructive right which sets its priority on the destruction of the state, on the interests of the rich at the expense of everything and everyone else and on a social and religious reversal towards the middle ages instead of finding ways for a constructive way forwards, including reasonable compromises with political opponents.
– A severely decayed infrastructure.
– A decaying and in many respects uncompetitive industrial base.
– Very high and unsustainable levels of private debt at and below the middle class.
– Rising social and societal costs of poverty.

Not all the idiots in Congress need to be thrown out. The GOP needs to be thrown out. The DNC has actually been doing its job, which is absolutely amazing given the fact that the GOP would probably oppose asteroid deflection if it came up as a pressing need.

Perhaps if the democrats in the Senate would actually do some work instead of just calling every bill that comes from the House DOA something could be worked out. Instead we get a 2 month extension to a tax holiday. What business in this country runs on a 2 month cycle? They've done nothing but create more make work for payroll departments and small business owners. If they were only going to tinker around the edges at least they could have been realistic and made it a 3 month extension.

As to the points made, we could just as easily say we have a left that is set on class warfare at all costs and is only concerned with generating more revenue to continue the spending binge that has helped lead to our credit downgrade. As well as a left that speaks of tolerance, only so long as that "tolerance" is in league with their ideas.

We have an infrastructure that is so decayed German car companies and other manufacturers relocated their assembly plants to our shores.

An uncompetitive industrial climate due to the fact that we have one of the highest corporate tax rates in the world. Held in place by the very party that claims they are doing whatever they can to bring jobs back to these shores. Not to mention an industrial base where some industries are championed, no matter how badly they fail fiscally, while others are stunted, no matter how profitable they have been shown to be.

A very high an unsustainable debt that is helped (how?) by a government that taxes savings yet gives tax breaks for spending.

A rising poverty level due to the fact that we have an education system that is broken and yet no matter how much money is thrown at it remains that way, but don't ask for any thing that would smack of demanding results. A level that is also rising as we have a party that presses class warfare at every turn, and suggests that if only government were more involved everything could be resolved. As well as a government that has a program for everyone if only the rich will pay their "fair" share. That last is how you create institutional poverty in a country. Evidently we forgot what we learned with the welfare programs of the 60's, 70's and 80's.

If the GOP hasn't been doing it's job, then the President and the democratically controlled Senate have deserted doing theirs as they have not passed a budget in over 2 years and have ignored or dismissed even their own debt commissions and panels in favor of one continuing resolution after another in a vain attempt to try and hide the ludicrous deficit spending of the past 3 years.

[Edited 2011-12-26 10:00:28]
Warm winds blowing, heating blue skies, a road that goes forever, I'm going to Texas!
 
Klaus
Posts: 20578
Joined: Wed Jul 11, 2001 7:41 am

RE: US Government Financial Summary

Mon Dec 26, 2011 5:54 pm

Quoting dxing (Reply 37):
We have an infrastructure that is so decayed German car companies and other manufacturers relocated their assembly plants to our shores.

That makes absolute sense – german cars have superior handling, and with worsening roads you'll need that more than ever!   
 
dxing
Posts: 5859
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RE: US Government Financial Summary

Mon Dec 26, 2011 6:05 pm

Quoting klaus (Reply 38):
That makes absolute sense – german cars have superior handling, and with worsening roads you'll need that more than ever!

Well if the slightest little chuckhole knocks them off course then what good are they?   
Warm winds blowing, heating blue skies, a road that goes forever, I'm going to Texas!
 
Klaus
Posts: 20578
Joined: Wed Jul 11, 2001 7:41 am

RE: US Government Financial Summary

Mon Dec 26, 2011 6:26 pm

Quoting dxing (Reply 39):
Well if the slightest little chuckhole knocks them off course then what good are they?

It doesn't. That's the whole point.
 
dxing
Posts: 5859
Joined: Wed Nov 12, 2008 5:14 pm

RE: US Government Financial Summary

Mon Dec 26, 2011 7:24 pm

Quoting klaus (Reply 40):
It doesn't. That's the whole point.

Then they don't really have superior handling then do they? My F-150 will plow through a chuckhole (when you can find them around here) and still be headed in the same direction without a twitch of the steering wheel. Here's where Superfly is absolutely on target as my Dad's Crown Victoria would glide through them up in Ohio without hardly a notice. You just have to have the right vehicle for the conditions and loosy goosy steering German cars that have to be "driven" through a chuckhole just don't get it.   
Warm winds blowing, heating blue skies, a road that goes forever, I'm going to Texas!
 
Klaus
Posts: 20578
Joined: Wed Jul 11, 2001 7:41 am

RE: US Government Financial Summary

Mon Dec 26, 2011 8:42 pm

Quoting dxing (Reply 41):
Then they don't really have superior handling then do they? My F-150 will plow through a chuckhole (when you can find them around here) and still be headed in the same direction without a twitch of the steering wheel.

So you're fine with your F-150 just as long as potholes just happen to stay clear of bends in the road. Ours sure don't, but I'm sure american potholes will be considerate enough to stick to the straight parts so your road tank won't flip over right away…!   

Quoting dxing (Reply 41):
and loosy goosy steering German cars

Never drove one of those. What models would that be? I guess such cars wouldn't survive long at speeds and driving demands over here, so maybe those are all shipped across the pond...
 
dxing
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Joined: Wed Nov 12, 2008 5:14 pm

RE: US Government Financial Summary

Mon Dec 26, 2011 9:38 pm

Quoting klaus (Reply 42):
So you're fine with your F-150 just as long as potholes just happen to stay clear of bends in the road.

They can be anywhere in the road they like. Even the Crown would just glide over them.   

Quoting klaus (Reply 42):
Never drove one of those.

By the way you make it sound it seems to be a standard package.      

Our roads were never built with having an actual tank drive down them in mind.  weightlifter 

[Edited 2011-12-26 13:40:22]
Warm winds blowing, heating blue skies, a road that goes forever, I'm going to Texas!
 
Ken777
Posts: 9024
Joined: Thu Mar 11, 2004 5:39 am

RE: US Government Financial Summary

Mon Dec 26, 2011 11:13 pm

Quoting windy95 (Reply 33):
Not our falut that you did not stop them from robbing your SS to pay for your other social projects.

So your preference is that we should have invested in AIG and all of the other private companies who have crashed?

If you would have said that before the financial crash you might have had supporters, but all of those conservative supporters would have ducked for cover when most of the money was lost.

To call the investments as money going from one pocket to another is simply an effort to deflect the Treasury Obligation.

But I guess you will continue to argue that we should have invested the surplus in private companies like AIG so we could make better "profits".

Quoting dxing (Reply 34):
Again, your comment is not only inaccurate, but nothing more than a deflection from fact that writing off the SS trust fund IOU's would not cause a down grade, if anything it would increase our rating by showing we are being honest in our accounting.

And if you had told the Republican candidates in the '10 Election than they would block the decrease in the debt limit and end up with a down grade in our credit rating they would have laughed in your face.

The GOP took control of the House and we got that downgrade.

Default on a Treasury obligation and you will get another downgrade.

Along with some major court battles.

And some major reductions in GOP victories in the next election.

Quoting dxing (Reply 34):
They are not a true Treasury obligation as it is money borrowed from one program and spent in others

Easy to tel that they are true Treasury Obligations - the Treasury pays Earned Interest on those loans.

Just like we pay Interest payments on the War On A Credit Card.

My preference is to invest in infrastructure and capital investments, including for the DoD. You have an investment that can last 25 years then I have no problems loaning money from the SS Trust Fund, with repayments over those 25 years. Be it a new highway or airfare carrier, make no difference.

Build, Baby, Build.

Quoting dxing (Reply 34):
Those would be general fund items excluding the interstate highway system which you have been shown was paid for in large part by bonds, tolls, and fuel taxes.

You actually believe that no federal money goes into infrastructure development (including the Interstate System) in the various states?

You really believe that?         

Quoting dxing (Reply 34):
So funding for runway and navigation facilities is hardly funded by SS money.

Current expenses are paid with current revenues - except when you go to war on the credit card.

You pay your grocery money out of income this year? Probably. The country pays for Food Stamps out of tax revenues received for the same period.

Most people pay for their capital investments (house and car) out of on-going income. They (and financial institutions) look at monthly income and monthly payments.

The government borrows money from various sources for tanks, fighters & tankers, carriers, roads,bridges, etc. and makes payments over the life of those investments.

The problem occurs when governments borrow on a long term basis for current spending. NY City had a Republican Mayor (Lindsey) who did that.

Another problem is when conservatives and Tea Partiers try to shift Treasury Loans from long term spending to current expenses - so they can write off the Treasury Obligations. More irresponsible than Mayor Lindsey but "Responsibility" doesn't seem to be part of the Tea Party/GOP these days.

Quoting dxing (Reply 34):
Your generation paid more, but did nothing to create a plan of repayment other than an IOU.

We didn't realize that your generation was heading our way. We thought your generation would be as responsible as ours when it came to protecting the integrity of the US Treasury, and its obligations.

Are you telling me that is what happens when people put trust in your generation?

Quoting windy95 (Reply 35):
They on the average are receving much more than they paid in.

If they live long enough.

Quoting dxing (Reply 37):
Perhaps if the democrats in the Senate would actually do some work instead of just calling every bill that comes from the House DOA something could be worked out.

As long as Botox McConnell blocks votes of the various bills (and appointments) you will have "delayed" bills. ANd as long as the House acts like a bunch of Freshmen Tea Partiers we will have a deterioration of the political process.

Quoting dxing (Reply 37):
Instead we get a 2 month extension to a tax holiday.

Talk to Botox about that. He is the Republican in the Senate who negotiated it.

Quoting dxing (Reply 37):
What business in this country runs on a 2 month cycle?

Ask Botox.

Quoting dxing (Reply 37):
They've done nothing but create more make work for payroll departments and small business owners.

Tell Botox.

Quoting dxing (Reply 37):
If they were only going to tinker around the edges at least they could have been realistic and made it a 3 month extension.

Or maybe the House could have come up with something besides a Pipeline Bill to cover the various other bits, like the FICA tax cut, the Doc Fix and the Unemployment fix.

Without everything taking second place to the Pipeline issue you could have had a 12 or 24 month "fix".

So talk to the Teas about that "inconvenience" on the small and big businesses.

Quoting dxing (Reply 37):
As to the points made, we could just as easily say we have a left that is set on class warfare at all costs and is only concerned with generating more revenue to continue the spending binge that has helped lead to our credit downgrade.

SOme people seem to forget that we had a REFUND of a TAX SURPLUS. Without Bush/Cheney screwing up more than any other Administration in history we probably could have ended up the 10 year REFUND without a crisis.

Unfortunately Bush & Cheney were, well, Bush & Cheney. Now the ongoing-refund-of-a-surplus-when-there-is-no-surplus isn't affordable. Without the Great Recession (another Bush/Cheney gift to the middle class) we would not be having arguments about "class warfare". the ongoing-refund-of-a-surplus-when-there-is-no-surplus could end.

Sadly we did have the Bush/Cheney Years and the massive shift in wealth redistribution (from the middle class to the wealthy) and that gives the wealthy even more money to produce the propaganda that they are the "Job Creators" and anything to make them pay as much as the Middle Class is "class warfare"

Quoting dxing (Reply 37):
As well as a left that speaks of tolerance, only so long as that "tolerance" is in league with their ideas.

I haven't found much tolerance from the Far Right for even a moderate idea. Intolerance is the watchword for the Teas and those GOP legislations who are terrified of the Teas.

Quoting dxing (Reply 37):
An uncompetitive industrial climate due to the fact that we have one of the highest corporate tax rates in the world.

We also have sue of the juiciest loopholes in the world. Look at the Profits -v- Taxes paid by GE last year.

You want to boost the competitiveness of the US?

Get rid of the employer nanny care costs. Wipe them off the P&L. Dump them from Cost of Goods Sold.

Just like in other countries.

Quoting dxing (Reply 37):
Held in place by the very party that claims they are doing whatever they can to bring jobs back to these shores.

Far better than the GOP costing hobs via their protection of the medical insurance industry, and every other scam with big contributors.  
 
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czbbflier
Posts: 864
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RE: US Government Financial Summary

Tue Dec 27, 2011 3:10 am

Quoting Revelation (Thread starter):
• Annual family income: $21,700
• Money the family spent: $38,200
• New debt on the credit card: $16,500
• Outstanding balance on the credit card: $142,710
• Total budget cuts: $385

Yes, it is thought provoking but it is oversimplified to garner a knee-jerk reaction.

Quoting Pu (Reply 3):
Intragovernmental debt is nothing more than what part of the American government owes to another part and really is not part of the national debt because it is owed to no one.

Highly, highly debatable. See below.

Quoting Pu (Reply 10):
Germany, Japan, Canada, France, etc.. all have higher debt as a percent of GDP than America.

Source?

Quoting Pu (Reply 14):
No other country has this 'intragovernmental debt' as a reported part of national debt. It was only created in the US as a political tool to remind everyone that taxes which on your paycheck are marked 'social security' are being used to fund things beside soscial security.

Alas, a two-edged sword. However, this is also debatable. Your argument also underscores that this is a political issue, not an economic one.

Quoting dxing (Reply 30):
That, along with a probable tax hike are the only ways to ensure the system

A HA!!! THE CORE ISSUE!!!!

Quoting Pu (Reply 32):
America out-manufactures China by 40% and Germany by 200 to 300% .

Source? Name ONE single durable good that does not have a significant competitor in China or does not use components made in China?

Quoting Pu (Reply 32):
Quoting prebennorholm (Reply 20):
It really doesn't matter whether the debt is domestic or international

Yes, it does quite a bit matter.

Pu, on this point I agree completely.

* * * * * * * *

OK. This is all so simplistic and a bunch of facts are getting lost in the debate.

THE UNITED STATES IS SOLVENT.

THE GOVERNMENT OF THE UNITED STATES IS FULLY CAPABLE OF SERVICING EVEN LOWERING ITS DEBT. IT SIMPLY CHOOSES NOT TO.

This is in marked contrast to the issues facing Greece and others whose sovereign debt is completely unmanageable.

Intragovernmental debt is a shell game- but one where it matters little who owes what to whom. While one department may hold in its ledger an income stream from another department, that other department concomitantly holds the liability in its ledger.

Should the first department decide not to repay its obligation to its lender, the department that lent the money can't just pretend it didn't exist. This was a deferred expenditure on something it needed at a later date or a contingency fund for budget shortfalls during a recession (like the one we're experiencing now, for example).

Consequently, the department that loaned the money would itself have to default on a loan it had with another department up the chain so it could spend the money it had anticipated receiving on its own budgeted projects. This defaulting would continue as the shells were lifted to reveal there was no revenue to cover the departmental debts.

Eventually, the Treasury Department would have to externalize the debt. So this intergovernmental debt is real debt. You cannot 'junk bond' government debt through economic obsfucation and deceit like was done in the housing boom.

However, not all debt is "credit card" debt. Money that is spent for real investment in the economy- concrete assets that will enable the government to recoup the investment through taxation in later years is more like a long-term mortgage. Interest rates are lower and amortized over decades, rather than months.

Credit card debt in a sovereign debt context is all the pork barrelling, all the operational costs of government that are not core services (politically defined).

On a side note, German debt incurred to rebuild East Germany is considerably preferable to the expenditures spent in the desert of the Middle East. The infrastructure investments spent in Leipzig, for example, will provide with a multiplier effect not only in the local economy as the money is being spent, it is also providing an environment which is conducive to private sector investment and hence tax revenue for years and decades to come.

Money spent by the United States in Iraq will see almost no return. Ever.

But it's not just the federal government. States are hard up too. California is virtually bankrupt. Actual towns have declared bankruptcy. This sovereign debt is so pervasive throughout the governance of the United States.

What's more, the people who are going to be expected to bail all the levels of governments out of this mess (except the rich) are themselves embroiled in record levels of debt. There is no liquid money left to be had.

Now one bright light is that much of the sovereign debt is on-shore. This means that Americans own the debt of their government as private holdings. At least this means that the United States' sovereignty isn't being compromised by off-shore creditors.

But all of this discussion is futile if we don't remember one point: The United States is solvent. It can easily cover its obligations. Because of the deadlock in Congress, it simply chooses not to.
 
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pu
Posts: 1316
Joined: Sat Dec 03, 2011 1:08 am

RE: US Government Financial Summary

Tue Dec 27, 2011 3:34 am

Quoting czbbflier (Reply 45):
America out-manufactures China by 40% and Germany by 200 to 300% .
Source? Name ONE single durable good that does not have a significant competitor in China or does not use components made in China?
http://www.msnbc.msn.com/id/41349653...-might-us-factories-maintain-edge/

Quoting czbbflier (Reply 45):
Germany, Japan, Canada, France, etc.. all have higher debt as a percent of GDP than America.
Source?

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html

Quoting czbbflier (Reply 45):
Consequently, the department that loaned the money would itself have to default on a loan it had with another department up the chain so it could spend the money it had anticipated receiving on its own budgeted projects. This defaulting would continue as the shells were lifted to reveal there was no revenue to cover the departmental debts. Eventually, the Treasury Department would have to externalize the debt. So this intergovernmental debt is real debt.

There are not a bunch of interlocking debts between the departments. The intragovernmental debt is primarily held by the social security trust fund in the form of non-marketable treasury notes. So the only other department it loaned money to was the US Treasury itself.

Social security (and 1 or 2 smaller trust funds) are the lenders to the US Treasury. If the Treasury defaults to social security, which of course is highly unlikely given the treasury can print its own money, thats where they "chain" you mentions ends. The debt DOES NOT get automatically externalised becauset the social security trust fund has only the legal obligations to pay such social security benefits as the congress may from time to time mandate, and it could mandate they be vastly reduced or eliminated. In any event only the US Treasury issues debt of the United States and since the US Treasury would be the one defaulting in your "shells" scenario, it alone could decide or not decide whether to issue new debt.

Quoting czbbflier (Reply 45):
Money spent by the United States in Iraq will see almost no return. Ever.

Debateable.
1000+ McDonalds in China are returning a lot to the USA every year. Starbucks, Marriotts, Coca-Cola, Hiltons, Facebook and a whole myriad of US companies gain billions in income from overseas which don't count as export income...in fact America does this to such a huge degree that the minute a new market is open it becomes a goldmine for American companies. No other country in the world has this ability to such a huge extent, American brands are everywhere.

Pu

[Edited 2011-12-26 20:13:10]
 
dxing
Posts: 5859
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RE: US Government Financial Summary

Tue Dec 27, 2011 3:11 pm

Quoting Ken777 (Reply 44):
The GOP took control of the House and we got that downgrade.


The credit down grade happened in August, 7 months after the GOP took control of the House. It was driven by a lack of spending reduction and revenue increases.

http://www.bloomberg.com/news/2011-0...e-on-deficit-reduction-accord.html

“The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics,” S&P said in a statement late yesterday after markets closed.

It was because of a lack of candor in negotiating in good faith by the President that the down grade occurred.

Quoting Ken777 (Reply 44):
Default on a Treasury obligation and you will get another downgrade.


Default on a Treasury obligation outside of SS and you're right, there will be a down grade. Default on a SS promissory note and no investor of Treasury securities, or credit agency, will blink an eye.

Quoting Ken777 (Reply 44):
Along with some major court battles.


Interesting, so you are saying the government would sue itself? That would be a first.

Quoting Ken777 (Reply 44):

Easy to tel that they are true Treasury Obligations - the Treasury pays Earned Interest on those loans.


And Congress could just as easily pass a law saying that those obligations, all internal, are null and void. The SS administration was created by law, it could just as easily be eliminated by law. The government has the Constitutional right to tax, but there is nothing in the Constitution that says that the government must spend those collected tax dollars on SS. You simply refuse to see that the notes the SS holds are worthless in anything other than internal accounting.

Quoting Ken777 (Reply 44):
You actually believe that no federal money goes into infrastructure development (including the Interstate System) in the various states?


I didn't say that. Federal excise taxes and fees are federally collected money and they go towards airport runway construction and nav facilities.

Quoting Ken777 (Reply 44):
Current expenses are paid with current revenues


Then you'll have to explain the 1 trillion and change deficits we've been running.

Quoting Ken777 (Reply 44):
The problem occurs when governments borrow on a long term basis for current spending


Like for a stimulus bill, or TARP, or buying a couple of auto companies, or a second stimulus bill, or a jobs bill, or loaning money to a "green" company that almost immediately folds.........

Quoting Ken777 (Reply 44):
As long as Botox McConnell blocks votes of the various bills (and appointments) you will have "delayed" bills.


Please name a bill that has to do with jobs that came from the House that the GOP has blocked via a filibuster? Or even one from a democratic sponsor in the Senate.

Quoting Ken777 (Reply 44):
Without everything taking second place to the Pipeline issue you could have had a 12 or 24 month "fix".


The issue was always about the time frame of the deal.

http://www.washingtonpost.com/politi...S1CP_story.html?wprss=rss_national

Back-to-back voice vote approvals of the two-month special measure by the Senate and House came in mere seconds with no debate, just days after House Republican leaders had insisted that reopening negotiations on a full-year bill was the only way to persuade them to prevent a tax increase on Jan. 1.

Obama immediately signed the bill into law.


The pipeline project was not in debate in the Senate, the time line was.


I don't ordinarily agree with Kleyman but on this he has got his facts right and is what the President and Congress should have been working on all along rather than just robbing SS again.

http://www.huffingtonpost.com/paul-k...fail-to-tell-full-t_b_1168358.html

Quoting Ken777 (Reply 44):
we probably could have ended up the 10 year REFUND without a crisis.


No you couldn't have. Those were projections and the mild recession of 2000-2002 disrupted even those rosy figures. As an example the White House is having to revise projections they made less than a year ago.

http://washingtonexaminer.com/politi...joblessness-new-budget-projections

Under the new forecast, the unemployment rate won't fall below 6 percent until 2017 -- two years later than the White House predicted in February, when Obama released his 2012 budget proposal. Unemployment is expected to remain at about 9 percent well into 2012, when Obama is up for re-election.

The White House budget office also reduced its expectations for annual gross domestic product growth, estimating the economy will grow at a rate of 1.7 percent this year -- down from the 2.7 percent growth rate projected in February. In 2012, the growth estimates fell from 3.6 percent to 2.6 percent.


So anyone who puts faith in a 10 year prediction I'll be happy to bet against every time.

Quoting Ken777 (Reply 44):
Just like in other countries.


Just like other countries have much lower corporate tax rates. Why do you deflect when this is a simple fact?

Quoting Ken777 (Reply 44):
Far better than the GOP costing hobs via their protection of the medical insurance industry, and every other scam with big contributors.


Nothing but deflection since you can't argue the facts.

Quoting Ken777 (Reply 44):
We didn't realize that your generation was heading our way. We thought your generation would be as responsible as ours when it came to protecting the integrity of the US Treasury, and its obligations.
Perhaps you would be willing to explain to the forum members how your generation was "responsible" as it comes to Treasury obligations? Exactly what plan did your generation come up with to repay the TRILLIONS that they spent? Name that plan where your generation repays that debt Ken, please, I'd love to know how, other than passing the debt off to your children your generation, planned on paying it back? The SS deal in 1983 just kicked the can down the road, it didn't "solve" anything. As I've said before, your generation built a mansion (big government), staffed it lavishly (government workers and programs), and left the mortgage as well as overblown operating costs, for your kids to pay off without giving them any say in it.

My understanding is that we are to leave a better country than we found for our successors in allrespects and that would include financial. You are advocating exactly the opposite, that the follow on generations somehow be responsible for cleaning up a fiscal mess that your generation created. It's a perfect example of your "ME" generation's lack of responsibility and spoiled rotteness for which it has practiced and exhibited for its entire existence.

[Edited 2011-12-27 07:35:53]

[Edited 2011-12-27 07:38:04]
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Superfly
Posts: 37735
Joined: Thu May 11, 2000 8:01 am

RE: US Government Financial Summary

Tue Dec 27, 2011 3:21 pm

Quoting dxing (Reply 43):
Our roads were never built with having an actual tank drive down them in mind.   

  

Quoting Revelation (Thread starter):
*IF* it is true, it's quite sobering, no?

This is embarrassing, irresponsible and downright dangerous.
But hey, the President looks good on TV so everything will be fine.
Hope & Change!   
Bring back the Concorde
 
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casinterest
Posts: 5358
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RE: US Government Financial Summary

Tue Dec 27, 2011 3:48 pm

Quoting dxing (Reply 47):
It was because of a lack of candor in negotiating in good faith by the President that the down grade occurred

And it was such a worthless downgrade by the S&P because the US dollar still remains the best choice in town for worldwide investors.

Quoting dxing (Reply 47):
Like for a stimulus bill, or TARP, or buying a couple of auto companies, or a second stimulus bill, or a jobs bill, or loaning money to a "green" company that almost immediately folds.........

Let's not be so choosey here, how about for long term wars , and defense funding , or the post office service that is loosing money?

Quoting dxing (Reply 47):
So anyone who puts faith in a 10 year prediction I'll be happy to bet against every time.

I agree completely with this, which is why I never agreeed with the Bush tax cuts. The benefit to me personally was clear at the time, but we stll hadn't paid down the deficit.
Older than I just was ,and younger than I will soo be.

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