Third Party & Independents: Archives

David,
Good timly article. I haven’t heard much about the congressional races, but I am sure if Bush falls alot of his supporters will as well.

On the lower bond/higher interest rates we need to revamp our economy. Although Congress is becoming aware of the problem getting them to address the problem will have to wait until January. I just hope that they listen to Mr. Greenspan this time.

We need to have some perspective. Today’s deficit is 3 ½% of GNP. That’s the same as last year. This deficit share of GDP is lower than the combined EU average and about one-third that of Japan. In the 1980s it exceeded 6%. This is a problem, but less of a problem than it was in the past or than it is for most other developed countries.

Treasury-bond yield is around 4%. The 10-year note was yielding around 6 percent in 2000. We need to have fiscal discipline, but we also have to understand how things work. Most of the recent shortfalls have been caused by the economic downturn, i.e. tax revenues dropped. The other side was increase in outlays caused by the necessary reactions to the 9/11 attacks. I think the Bush tax cuts were too large, but they are not responsible for bulk of the deficit and there was logic to them.

The problem with the government is that it can’t save money technically or politically. The goal is to balance the budget, not create a surplus. Unlike you and I, the Feds can’t invest or save in a bank. The Feds can only buy their own debt, a good thing unless you do too much of it.

President Bush initially wanted to “give back the overpayment” so that politicians in Washington couldn’t spend it, which was a perfectly legitimate action. Then when it became clear that the economy had slowed (and especially after 9/11) it became imperative to stimulate the economy. Without the stimulus, the slight downturn at the end of the Clinton term could have a major crash after 9/11.

Finally, why does anyone believe John Kerry will do a better job? Democrats rightly point to Bill Clinton’s work. Bill Clinton did an excellent job in this field, but he was helped immensely by the “peace dividend,” a bubbling stock market that proved to be unsustainable, a budget conscious Republican Congress and what appeared at the time to be the most benign international environment in the history of the United States. Beyond all that, Bill Clinton was a centrist. Kerry is a liberal. Kerry is no Bill Clinton. Kerry has promised 2.5 trillion in new spending. He can’t get nearly that much from taxing the people making more than $200,000 a year. I am disappointed that Bush is not proposing something much better, but at the end of the day I believe Bush will spend less and do a better job than Kerry. And I have to add one more line. The reason I am voting for Bush is not the economy; it is security. Bush will keep us safer. Prosperity is meaningless if you are not safe.

David,

I don’t know much about T bonds, so I can’t really address what you say. I’ll read a bit and learn. I do know that one major complaint from Dems is that budget deficits ballooned during the Reagan years, yet somehow we managed to survive. I’m sure you’d give props to Bill Clinton for fixing that. I don’t believe that sitting presidents have very much control over economic performance, frankly. They just take the credit or get the blame. Greenspan has more impact as does Congress since they allocate our money. Certainly, the prez is instrumental in driving strategery;-) but Congress provides the pork. Regarding corporate outflows being down, I suspect we’ll see a pick up of that once the corporate tax bill is passed. It’s not perfect legislation by any means, but it should stimulate investment money back into this country.

However, you write “The Bush administration has indicated in a number of ways that it views Islamic governments as potential threats.” You don’t list the “ways”, though. I’m not aware that the President has put Islamic governments on notice. Maybe I’m missing something.

The drumbeat of the draft is really getting old. Please. Nobody (including Chucky Rangel) wants the draft. He voted against his own bill. It was a political stunt. The Bush admin doesn’t want it, the military doesn’t want it and 95% of the Congress doesn’t want it, nor the public.

The talk about how to avoid the draft is also very alarmist in nature. Like Bush is playing Risk or something. Almost like the Iraq invasion occurred in a matter of weeks. It was years of Hussein sticking his toungue out at the UN and 14 months of buildup by the administration. I’m not aware of any buildup in preparation to justify another invasion. Maybe you’re privy to things the rest of us aren’t.

To sum up, your writing about T bonds was interestin and I’ll read up. The remainder sounds like election rhetoric.

I have to agree with Alan on this one. Presidents have their bully pulpit, but not much else to affect the economy.

Oil prices, trade deficits, and monetary policies are the big factors. While I still have difficulty with the concept, National debt is money we owe to ourselves. It’s a bookeeping fiction, as I was taught Econ 101.

Well said, Jack! Once again, you bring a voice of reason to the discussion.

Just so I’m clear on this, Jack, Bush started out as a fiscal supply-side conservative letting Americans enjoy the fruits of their labor, unnecessarily taken from them by the surplus. Then he became a fiscal liberal, and decided that he would go with the demand-side idea that you deficit spend to stimulate the economy.

How is it that Bush can be on both sides of the economic theory here? What are these tax cuts, the government subsidizing growth, or the government keeping it’s books straight and it’s cost for the average American as low as is fiscally wise to have them? I’d really pay to see the debate between Bush the supply-sider and Bush the Demand-side maven.

How can a man with a half trillion dollar deficit rightfully attack a man with a record of fiscal responsibility on his tax policy?

Troy, jack, and Greg —- have any of you ever heard of the veto? What a crock - the President has little to do with economics?. His office submits budgets to Congress for Christ’s sake. He can veto spending bills until Congress gets it right. The President has a tremendous power over the economy and you all are just making apologies for a President who never, never, understood deficits and the tremendous damage they can do to our future up to and beyond pushing our economy past a point of no return.

If investors find fixed instruments a better deal elsewhere like China, Japan and the EU, that point of no return could be coming up on this President’s watch. Be apologists, bury your heads in the sand, but, I recommend you keep a copy of the Grapes of Wrath on your night stand for possible use as a survival guide.

The ratcheting up of the debate among economists, think tanks, is a warning sign. Do you all really believe that a concensus in this political environment is going to rise up and declare we must take immediate action now, or face doom? That is not how economic collapses happen, folks. They are incremental, and warnings are suppressed in the public media as being pessimistic, alarmist, and politically incorrect.

A little review of S. American economic history over the last 40 years is very instructive as to how political power avoids responsibility for preemptive economic action designed to forestall downturns because such measures are politically unpopular.

This president may be choosing reelection over saving our economic future. But, like I said in the article, will anyone act? Apparently not many or enough. Believe me, I hope to hell I am wrong along with a host of others, for the sake of my daughter’s future in America.

David, you forgot that a president can use the threat of releasing our oil supply and Japan’s oil reserve to demand that the market lower the price of oil. Bush43 should know this for a fact considering his father pulled the stunt in 1991.

In fact, if a president would come out tomorrow and state that he was going to introduce a 70% tax on all cash investments, I would be willing to bet the large cash accounts would be empty in a day or two.

Henry, releasing oil reserves would by an idle threat and read just that way, today. For everyone in the oil markets knows that if we drew down the reserves, we would, out of national security concerns, need to almost immediately buy surpluses at the spot prices to replenish the reserves.

On this issue, I agree entirely with Pres. Bush, it would be very ill-advised for us to draw down our reserves - it would be read as a vulnerability by our enemies, and quite accurately so.

I apologize, I did not catch your meaning or intent regarding your second paragraph, Henry.

David,
Although I was speaking of Bush41 on the oil release, I to agree that releasing any amount of oil on the market today would be quickly brought up. However, in 91 the price of oil went from about $42/barrel to under $30 in a few days.

On my second paragragh I am refering to the huge amount of cash that is on “The Side Line” in today’s market. Both Bloomberg and CNBC has discussed this problem and some economist see it as investors waiting for something in the market to break. By a president pushing to heavly tax these accounts most people would quickly move their money. While I can’t remember off the top of my head when Bush removed the dividend tax on individuals and placed taxes on those stocks that don’t pay them. A few days later we seen Microsoft start to pay dividends.

Alan said: However, you write “The Bush administration has indicated in a number of ways that it views Islamic governments as potential threats.” You don’t list the “ways”, though. I’m not aware that the President has put Islamic governments on notice. Maybe I’m missing something.

Well, as a matter of fact he put Iraq on notice. And he put Iran on notice with his axis of Evil speech. But, the fact is, I never said he put Islamic governments on notice.

What you are missing is in Bush’s quote in the article. He states he would accept an Islamic government in Iraq, but, that he would be disappointed. That is very telling about what he thinks of Islamic governments.

As for Iran, Bush realizes he can’t back up his axis of evil bluff because he doesn’t have the military manpower, and he has vowed not to reinstate the draft. But, then he said he would do a lot of things before invading Iraq, which he didn’t do, and he criticized Clinton for nation building, and then set about to build a nation in Iraq and Afghanistan. He said he would be fiscally responsible, but he wouldn’t let the government negotitate lower Medicare Rx costs for the tax payers who are footing the bill. He has yet to use a veto pen on spending of any and every kind. Flip-flopping like a fish out of water, from this vantage point.

President Bush initially wanted to “give back the overpayment” so that politicians in Washington couldn’t spend it, which was a perfectly legitimate action. Then when it became clear that the economy had slowed…

Whoa! You almost had me up to there. I thought it became clear the economy slowed six months before Bush took office - before he was even nominated. You can’t have it both ways, jack.

The fact is, Bush was going to get his tax cuts no matter what. It was a political thing and had nothing to do with either “giving back the overpayment” or stimulating the economy.

It turned out to be neither anyhow, didn’t it. Only the small part of the tax cut package that targeted consumers stimulated the economy, and there ended up not being any “overpayment” to give back.

Bush’s economic policy had nothing to do with economics and everything to do with politics.

I notice that US dollars aren’t selling so well anymore either, David. Asia is investing in Euros now. We currently need to borrow $2 billion every day to finance our overextended government. That’s going to be tough to meet as confidence in America’s economy and credibility wanes around the world. Perception is everything.

Good article, David.

and for the first time he is stating on the stump that bringing our troops home as soon as possible

It’s been obvious for some time that Bush was going to cut and run from Iraq ASAP. I was blogging about the indicators back in January. I hate being right about this,

President George W. Bush says he does not envision a longtime presence of U.S. troops in Iraq similar to post-World War II deployments in Europe and South Korea that continue today.

“I think the Iraqi people want us to leave once we’ve helped them get on the path of stability and democracy and once we have trained their troops to do their own hard work,” Bush said Monday in a wide-ranging interview with The Associated Press.

If free and open Iraqi elections lead to the seating of a fundamentalist Islamic government, “I will be disappointed. But democracy is democracy,” Bush said. “If that’s what the people choose, that’s what the people choose.”

So if Iraq ends up with an Iranian-style theocracy that closes off the country from Western ideas and freedoms, what was it all for?

There’s a lot to cover here.

1. Jack is right that the deficit may be large in terms of real dollars but is small in terms of the percent of GDP (the more accurate measure). Much like the homeless, the deficit is only an issue when a republican is in the white house. As soon as it a Dem, the issue will be gone (not fixed).

2. Although I find pork spending disgusting, and I wish Bush used his veto more often, the majority of the increase in discretionary spending was for defense and homeland security. When that is removed, the increase of non-defense, non-homeland security spending is much less.

3. The important part of Bush’s statement about an Islamic Iraq is that it was democratically chosen. The purpose of Iraq was to put the fate of the Iraqi’s in their own hands. Bush believes that given the choice to control their own fate, the people will make choices to improve their lives rather than improve the life of some dictator/king.

4. The draft is not necessary to sustain our military or to confront Iran, or N. Korea. In the 80’s or military had over 2 million volunteers. Since then the size has been reduced. If needed, the government can increase the size of our military through volunteer recruitment, not a draft. A draft is not even desirable because the training needed to use today’s equipment would take too long to train a draftee to use.

-D

If Bush abandons Iraq, the Kurds will declare Independence. Turkey and Iran will invade. Saudi Arabia and Jordan will collapse. Israel will attack.

We live in interesting times.

Aldous.

David,

Your rebuttle regarding Bush admin thinks that the Islamic governments are threats mentions Iraq and Iran. Kinda weak. I wasn’t thinking clearly last night, but I don’t believe that Hussein’s Iraqi government was an Islamic government. The Baathists (sp?) aren’t Islamic, or? Don’t think so. Iran certainly is and it’s no secret the US and Iran aren’t the best of buddies. I did read the quotes regarding Bush being disappointed if an Islamic government was elected, but would respect the decision, reached thru the democratic (vote) process.

You then move on to fiscal responsibility (not sure why), mentioning something about Bush not letting the government negotiate Rx costs. Contrary to popular belief, the government wouldn’t be in a powerful position to negotiate drug prices. 41 million are enrolled in Medicare, yet 3 out of 4 of those (or more) have some kind of coverage for Rx already. That leaves about 10 million beneficiaries that Medicare could negotiate for. Not huge leverage when you consider the big three (AdvancePCS, Medco, Express) cover 75, 65, and 57 million respectively.

I agree that Bush hasn’t met a spending bill he didn’t like. Spends like a drunken sailor. One of my biggest problems with him. Kerry, if he tries to deliver on all his campaign promises, will try to spend even more, and I’m sure the professional politicans in Congress will be more than happy to load up on spending bills with just the right amount of pork to keep their constituents happy. At least, those that are due up for election in 2 years.

I think the Bush tax cuts were too large, but they are not responsible for bulk of the deficit and there was logic to them.

I think I read somewhere recently that the tax cuts were, in fact, responsible for most of the debt. Looking up numbers, I found that the deficit for 2004 is about $414 billion and the taxcuts for 2004 cost $293 billion. I guess “bulk” is a subjective term, but I would label that as the bulk of the deficit.

Oil prices, trade deficits, and monetary policies are the big factors. While I still have difficulty with the concept, National debt is money we owe to ourselves. It’s a bookeeping fiction, as I was taught Econ 101.

I would interpret “bookkeeping fiction” in this case to mean “implicit tax.” It’s a monetary obligation on the American taxpayer and you can call it whatever you want, but it’s really just a tax.

In recent years, our debt has become increasingly money we owe other countries, as David alludes to in his article. It’s only money we owe ourselves if Americans are purchasing the bonds. Americans aren’t buying bonds and if foreign investors, specifically Asians, stop investing in our debt, then we must raise the ante and it *will* cost us real money.

To the point of an Islamic government in Iraq, I think that by having elections only in those areas that are safe, we effectively alienate a large portion of the population that we really don’t want to vote. Isn’t that one of the main reasons why the elections must go on?

1. Jack is right that the deficit may be large in terms of real dollars but is small in terms of the percent of GDP (the more accurate measure). Much like the homeless, the deficit is only an issue when a republican is in the white house. As soon as it a Dem, the issue will be gone (not fixed).

You would seem to be correct when you say that “the deficit is only an issue when a republican is in the white house.” I’m not sure about the “(not fixed)” part.

http://www.house.gov/budget/msrslide4bgt071703.pdf

2. Although I find pork spending disgusting, and I wish Bush used his veto more often, the majority of the increase in discretionary spending was for defense and homeland security. When that is removed, the increase of non-defense, non-homeland security spending is much less.

Here’s an article that would beg to differ:

http://slate.msn.com/id/2095237/

You can read it. To verify the numbers, there is a link in the middle of the page to the whitehouse budget numbers.
http://www.whitehouse.gov/omb/budget/fy2005/sheets/hist08z8.xls

Much like the homeless, the deficit is only an issue when a republican is in the white house. As soon as it a Dem, the issue will be gone (not fixed).

Wow! Sounds like the 90’s just ceased to exist for you, Delzario - much like the $5 trillion surplus Clinton bequeathed to Bush.

Dan,

I agree that there’s been too much spending. But my point is still correct, the non-defense spending increases are much smaller than both the defense, and homeland security increases.

AP,

The ‘$5 trillion’ surplus was a predicted number that relied very heavily on the inflated stock market of the late 90’s. If the stock market continued to irrationally rise, there would be no deficit. Because the dot com bust the market crashed and with it went the surplus. The surplus was long gone before Bush passed tax cut #1. As Greenspan’s said, the tax cuts managed to make this a very short recession.

My point about the deficit and the homeless was to say that when a republican is president, the press suddenly focuses on these issues. There was still a huge debt under Clinton. He choose not to pay off any of it with his surplus, he choose to spend it. But it was not an issue to the press because he was a democrat.

-D

Excellent reply Delzario.

Delzario,

Oops! I misread your statement. I guess my (misdirected) concern was that we cannot lose sight of the other spending. The increase in non-D&HS spending has been very large.

I don’t give the Prez. a free pass on all the defense spending either, since the cost of Iraq is included in that. It’s always been hard for me to believe that we couldn’t make American citizens *much* safer by spending that $120B (so far!) domestically on improving inner cities, protecting our borders, etc.

Dan

Henry

As far as I understand, all the Bush tax changes did was lower the rate on dividend income, which is essentially taxed twice (once at the firm level and then at the individual level). Before this time, it was better forgo dividends, let the stock appreciate and then sell and pay the tax on capital gains. From the fiscal point of view there was little difference between selling, for example, 5% of your holding each year or getting a 5% dividend, but it raised transaction costs and otherwise made the system less efficient by distorting the preferences of both firms and individuals. It was just good sense to lower the rate on dividends. A good illustration is the one you mention. Microsoft immediate declared a dividend to distribute some of the cash it had been piling up. There was no good reason (besides taxes) for the firm to sit on this treasure chest and it is much better to put it to good use.

AP

Giving back the overpayment was Bush’s initial desire. By the time it actually came to pass, it functioned as a stimulus. Perhaps the wrong reason, but the right move. This was serendipity, but it worked well. The slowdown of 2000 was probably not sufficient to require a stimulus, but exacerbated as it was by 9/11 it became imperative. As a general rule, you should cut taxes whenever possible because if you leave money around in Washington, somebody will make up a program to spend it. In this case, the good general principle served a specific purpose.

You actually don’t invest in currencies; you speculate. You can invest in stocks and bonds denominated in various currencies, but in this case the currency is only one factor. If an American invests in Toyota, for example, he will benefit if the currency of most of Toyota’s assets increases. That might not mean yen. Multinational firms tend to have assets in a variety of currencies. In any case, the decision to buy a foreign asset depends on the asset in question. A bad investment might look a little better if the currency is appreciating, but it probably won’t be enough to make it a good investment. If American firms look attractive, they will attract investment. Interest rates affect currencies in a way that is opposite the economy. Higher rates attract more buyers of bonds, which increase the value of currencies, but the higher rates and appreciating currencies are not good for business. In any case, a budget deficit of 3.5% is not sufficient to seriously harm the currency, especially since the collective economies of Euro land and Japan have much higher debt percentages.

Delzario,

I just read your response to AP, and I can agree that the projected surplus of 5 trillion was fictional. It was more related to inflated growth figures, not just the dot com bubble, I think, but I think any surplus is in the “I’ll believe it when I see it” category because Congress will always want to spend it.

The surplus was long gone before Bush passed tax cut #1

“Taking the Bush tax cut into account — and if all Social Security and Medicare receipts are set aside — there is still a projected surplus of $1 trillion over the next decade.”

My point about the deficit and the homeless was to say that when a republican is president, the press suddenly focuses on these issues. There was still a huge debt under Clinton. He choose not to pay off any of it with his surplus, he choose to spend it. But it was not an issue to the press because he was a democrat.

You changed the focus from the deficit to the debt. I would venture to guess that there was much, much more coverage of the debt under Clinton than there is now. The only reason for this is that everyone was excited by the idea of paying off the debt with the projected surplus. I, for one, have no idea what the debt is now. I do know that it is large and I could look it up if I really cared at all.

Dan

Delzario, your spin is just not factual and reflects a lack of appreciation of the structure of our government.

You said: There was still a huge debt under Clinton. He choose not to pay off any of it with his surplus, he choose to spend it. But it was not an issue to the press because he was a democrat.

The President does not choose to pay off the national debt. The President can veto Congressional appropriations bills, and Clinton did that, unlike the current President.

President Clinton, at the time that actual revenues were exceeding annual Congressional Spending, was working with a Congress controlled by Republicans.

It is simply not factual to state that Clinton was spending the surplus. In fact it is illogical. If he spent it, there would be no surplus. The facts are there were surpluses, two years in a row, and Clinton did NOT veto Bills saying we needed to spend more in his last two years. As I recall, he did not veto any appropriations bills at all in his last two years, the years of surpluses.

Dan, the current national debt is over 7.4 trillion dollars. And the debt as a percentage of GDP is meaningless. Someone above said it isn’t a big deal because it is not the highest debt to GDP in history. That person is comparing apples and oranges, and willfully ignoring that today, unlike the past, we are having to trouble attracting investors to underwrite that national debt. If this trend continues, the national debt becomes a time bomb with a short fuse.

David, I’m surprised you still buy into the ‘surplus’ that never existed, it was a project surplus that never materialized because of the fact that the economy slid into a recession during the later part of the Clinton administration. The 9/11 attacks finished off any fantasy of a surplus once and for all, the economic impact from that can be seen at various locations on the internet, when I get time I’ll recollect and post them for you.

Minor point. Futures on currencies or other products can be used to speculate, but often they’re used to simply lock in a predictable future price. Speculation is not bad, by the way, it actually helps provide market
liquidity. Dangerous situations can be caused by speculation when it involves a market panic or manipulation. Case in point; the manipulation by Enron & others to create the appearance of a shortage in electricity markets on the West Coast. The Republican appointees at FERC attempted to look the other way, but the utilites went after Enron (Bush’s largest contributor last election) and others over the huge sums involved.
Also, bond markets & interest rates are huge influences on the US & world economy. Though they lack the excitement of the stock market, the bond markets are far larger and much more important. Interests are on the rise off historic lows. Given the potentially disastrous rise in oil prices, the Fed may well back off any further interest rate increases this winter.

Don, while I agree with some of what you say, the backhanded attempt to smear Enron on Bush is laughable at best, and more so that it keeps coming up. Enron was the largest political contributor for just about everyone, republican and democrat alike. And remember, Lay asked the Bush white house to bail him out and he was turned down, why isn’t that given to him as a plus?

David,

Perhaps you forget that the President submits budgets to congress. Perhaps you forget Clinton’s famous State of the Union address during the great surplus. Perhaps you forget that he proposed to spend the ‘surplus’ three times over during that SOTU. When he was giving gift programs and handouts to every special interest in the country, it was only the ‘right wing nuts’ reporting that he had promised 3X the surplus in new spending. Thankfully, the republican controlled congress kept him from spending it all. Notice that during Clinton’s last year, discretionary non-defense spending had a huge jump. He was doing his best to spend what he could.

The evidence you sight to say that their is overly weak interest in investment from foreign sources is… well weak. It’s more accurate to say that the foreign investors want higher interest rates. Since US interest rates are at historical lows, it’s not surprising that they’d try to push them higher.

Debt as a ratio of GDP is the best measure of the health of the debt. The growth of GDP is what offsets the increase in debt from interest. As long as GDP grows faster than the debt, the debt becomes a smaller and smaller part of the economic pie. Your choice to discount that is just a sign of your own bias. It’s not beneficial for your argument to see that fact so you ignore it, call it apple and oranges comparisons.

-D

Rhinehold,
You mentioned the ‘surplus’ that never existed, are you refering to 98-99 when employment was at 97% and their was a threat of inflation?

Guess what? Greenspan was right, if you think that Bush’s economy is right. The fact of the matter is the Fed put the brakes on the market a little to hard and the dems got slamed for it. Greenspan stated sometime in 2000 that something needed to be done, but nobody listened. Our government first responsiblilty, like your home, should of been to pay down the federal debt. Although it is the popular thing to do, it ensures the future of our country.

By tighting the money supply, the market would of had to come clean. Yes, some companies would of got killed; however, if Bush would have allowed the release of “New Communication Technology” when he came into office our economy would still be boomming. Now we are trying to figure out how to pay off the interest of those funds.

Delzario,
Although you are right in your analyisis(sp) of the debt, the charts are showing a downward trend market over the last year across the board. If this trend continues or the market goes flat over the next few years, America will be forced to raise interest rates and most likely have to allow inflation into the system. While that may be good for the bond market, it will have a serious cooling in the stock market and isn’t it there that we all make money?

Rhinehold, I am surpised that you are either so misinformed or lying here in a public venue.

Note the following excerpt from U.S. Dept. of the Treasury, Financial Management Service (it is in PDF and you must click on Sept 1999, the report for the end of the 1999 fiscal year) This issue includes the final budget results and details the surplus of $122.7 billion for Fiscal Year 1999.

And again for Sept. 2000 this same site reports a surplus of 236.993 billion.

Rhinehold, I would hope it was the case that you were just misinformed.

Rhinehold,
You might like this site:
www.opensecrets.org
It shows, among other things, campaign contributions. The Enron contributions bought what they were supposed to buy: energy policies written by the energy industry, for the energy industry, and they probably bought a FERC turning a blind eye to the ‘energy crisis.’ You’re right, though, the contributions didn’t buy Kenneth Lay a pardon. I lost track of Lay. He was the CEO presiding over one of the biggest financial wrongdoings of all time. How much time in prison has he already served? Was he forced to sell that $7 million dollar house?

Delzario, no debt is sustainable if the the debt is called in and revenue is not available to pay off the note, at the same time as creditors refuse to extend further loans. It is a simple fact of life. You can argue all you wish based on hairs on the back of your neck, or gut feeling or intuition, but, to win this debate, you would have to refute the Treasury Dept. data with a reliable source, and that is something you have not yet done.

Delzario said: “David, Perhaps you forget that the President submits budgets to congress.”

Perhaps you missed reading this thread where I was the first person here to point that out to those on the right who contended the President had little to do with economic policy.

Delzario,

Notice that during Clinton’s last year, discretionary non-defense spending had a huge jump. He was doing his best to spend what he could.

Please post some sort of source. According to this spreadsheet on the whitehouse webpage, non-defense discretionary spending went something like this
1997 292.8 (billion)
1998 296.5
1999 305.9
2000 319.9
2001 334.9
2002 367.3
2003 391.9
2004 417.5 (estimated).

Now seriously, which one of these would you identify as a huge jump and which one would you identify as Clinton’s last year in office?

Dan

I think we are straying from the points here.

Some debt is good. Too much debt is bad. A federal surplus is unsustainable and leads to bigger government, which is bad and leads to more debt at higher levels of spending. The bigger the economy, the more debt it can carry. Debt in unadjusted dollars is scary, but not an accurate measure. A $15,000 mortgage in 1960 was much more of burden than a $150,000 today. What counts is the percentage of your income. The deficit today is about 3-½ % of GDP. It was more almost 5% of GDP ten years ago even though the numbers were lower because the economy was smaller. We should be concerned about the deficit, but there is no cause for panic. At 3.5% the share of GDP is the same as last year (and lower than most countries in Europe and Japan) and the trend is good. The latest numbers for 2004 showed that tax receipts were up more and spending was lower than anticipated, so the deficit is $100 billion less than earlier OMB estimates. We are recovering from the shocks of the dot.com bubble bursting, the downturn at the end of the Clinton administration and – the big dog – 9/11 and its aftermath. Given all that happened, we are doing remarkably well. As the economy continues to expand in the second Bush administration, we will look at this as the resting time before the next growth spurt.

So you should vote for Bush to keep the economic growth on track, but more importantly to keep America safe so the economy is what matters.

Jack, the Dow has lost apporox. a 1,000 points since Feb. 2004 so how is that trending upward?

Jack, that is truly artful spin, and very little of it holds up under scrutiny.

You talk deficits, that is not the issue when it comes to Treasury borrowing. The deficit is going to keep adding to the national debt (currently 7.4 trillion dollars) by GW Bush’s own words. He is proposing to cut the deficit in half over the next 4 years. That means the national debt will increase under GW Bush by another 1 trillion dollars if he keeps his promise.

So, by 2008 under Bush, we are looking at about 8.5 Trillion dollars of national debt, and the interest on that debt will keep rising and adding to the spending tax payers must cover year after year.

Now, if treasury borrowing dries up, or interest rates rise high enough to keep it from drying up, at the very least we are looking a minimum of over 9 trillion dollars of national debt by the end of Bush’s next term. These are historical high figures, and unlike the last half of the 20th century, the full faith and credit of the American government and economy could buckle if American and foreign investors find better deals in China, Japan, India and the EU.

The topic of this article is the national debt. The artful spin of the right is to change the subject to deficits. The threat comes from the historically all time high of the national debt, which even conservative economists and think tanks have already agreed cannot be erased by growing the economy.

Just once, I would like to see someone on the right use government figures to present a factual case that our economy is not coming perilously closer to a potential depression. Given the state of our economy at present, what do you project would happen if Big Dick Cheney is right about one of our cities be hit by terrorist nuclear weapon?

If you really believe under these economic circumstances investors would fork over a trillion or more dollars to the U.S. to rebuild, confident a default would not occur and a depression was out of the question, I have a bridge in N.Y. I would like to sell you.

The national debt is already so high as to preclude our being able to increase it significantly should another immensely expensive event occur. Our nation’s agility and choices to act decisively in the face of adversity are being severely limited by our national debt. And Bush has already promised he will add to it over the next 4 years, as has Kerry.

Henry, that does not sound right. For the Dow to have dropped a thousand points, the Dow would have had to be at 10,900 in February 2004. I don’t think the Dow has ever reached that number in the Bush administration. Might want to check on the historical record of the dow.

David,
The Chart of the Dow shows that in Feb. of 2004 the Dow was at 10,600 and in Sept. 2004 it hit 9,800. Although today the dow close around 9,900 the chart shows a steady decline which follows the release of information coming out of Iraq.

http://moneycentral.msn.com/investor/charts/chartdl.asp?Symbol=%24INDU Dow Jones 2004 Year to Date

That sounds about right, Henry. Thanks for the correction. An 800 point spread is a bit wider than I remembered, I would have guessed about 700 points. I knew 1000 points was too wide though. Appreciate the factual feedback.

I see 10,737 on Feb-11. But, I think the Dow includes a lot of factors besides the state of the economy, including investor optimism/pessimism. I don’t subscribe to the efficient market theory, so I don’t think it gives an accurate picture of the state of the economy.

Jack, I hope you are right. Unfortunately, our policy makers don’t get any points for being optimists, they get points for being right.

Also, the debt is like the mortgage. The deficit is like refinancing every year and taking equity out of the house, thus increasing the mortgage payment. A deficit of 3.5% GDP is small only if the GDP is growing at a sufficient pace. I don’t know what that pace is, but I’m sure it depends on the interest rate the government is borrowing at.

Dan

dan,
According to BEA at http://www.bea.doc.gov/bea/newsrel/gdpnewsrelease.htm: GDP Estimated 2004

Real gross domestic product — the output of goods and services produced by labor and property
located in the United States — increased at an annual rate of 3.3 percent in the second quarter of 2004,
according to revised estimates released by the Bureau of Economic Analysis. In the first quarter, real
GDP increased 4.5 percent.

The GDP estimates released today are based on more complete source data than were available for
the preliminary estimates issued last month. In the preliminary estimates, the increase in real GDP was
2.8 percent

Not looking good

David,
Rumors are starting to say that the market may testing the lows again. I said back a few years ago that I thought the Dow would be close to 9,600 by election; however, I didn’t think I would be this close.

Henry, I heard advisors two months ago on MSNBC state we will test the 9600 to 9800 lows prior to the election. This was not surprising. However, to hear that investors are getting better returns from stock markets overseas, is a real concern.

If capital is significantly reduced over a protracted period of time 5 months or more, this could be a serious blow to our economy and jobs. It is however, too soon to say that this is an investors protracted trend. If after the elections, say December, we don’t see investors returning to our stock markets from overseas markets, it would be cause for concern, IMO.

This winters weather and the actual/fear of high heating cost will hold down any major growth. Nevertheless, the market will spin up should Kerry be elected. If Bush gets elected the market may wait until after Iraq’s Elections before they commmit to any real direction.

The biggest worry we all face is the staflation that is looking more and more possible.

9/11 attacks finished off any fantasy of a surplus once and for all

It was the tax cuts for the rich that did that. A report by the Congressional Budget Office from March 2003 states that without Bush’s tax cuts and spending plan, the federal government would have run almost a $900 billion surplus over ten years.

What part did 9/11 and the war play? According to the CBO, in the tax cuts account for 58% of spending and defense is down at 24%.

It’s the tax cuts for the rich that are killing us.

Bush’s plan to pay for his 3 trillion dollar campaign promises while cutting the deficit in half:

“I sent up my budget man to the Congress, and he says, here’s how we’re going to reduce the deficit in half by five years. It requires pro-growth policies that grow our economy and fiscal sanity in the halls of Congress.”

Uh, huh. I think it involves some prime Florida real estate and a bridge, too.

At least Kerry has a revenue stream lined up - roll back tax cuts on the wealthy - and he’s promised to back off on his proposed programs (he already has) to meet his goal of cutting the deficit in half. I admire a guy like Kerry who can tell you the truth.

I think most people will cut President Kerry some slack when he doesn’t push the healthcare reform as hard as he does restoring fiscal responsibility.

Like Clinton told Ruben, nobody’s going to take the social programs seriously until significant progress is made on the deficit. Actually I think Clinton said “balance the budget”, but after almost a decade of tax rollbacks following Reagan’s initial disastrous economic policy, Clinton’s deficit wasn’t as bad as Kerry’s is going to be.

Sorry, that probably should have been three seperate posts. “Lord, I was born a ramblin’ man.” :)

I think I will have to give up on this post, since I find that we are repeating ourselves with slight variations.

I don’t like deficits. We should address the problem. But we can’t just say we have a problem without assessing its severity and asking how we got there and what we can reasonably do to get out.

A lot of our trouble came from the downturn at the end of the Clinton administration and the catastrophe of 9/11, which froze the economy caused us to pay back the “peace dividend” with interest. Revenues dropped with the economic downturn and expenses rose. The tax cut stimulated the economy. Without it we would be in more trouble, because only a growing economy can generate revenue for taxes. We can’t just say, okay let’s tax another X% because if we do the economy slows and we get (X-Y)%. It is possible for that even to be a negative number.

At 3.5% of GDP the deficit is a problem but no cause for panic. Deficits in the long run are not eliminated by tax increases. The rapid shift from deficit to surplus in the second Clinton term was largely the result of the bubbling economy and increased tax receipts as a result. I say bubbling, not booming because the time from 1998-2000 was a wonderful, but unsustainable bubble. Of course there was a lot of decent economic growth in the 1990s, as there has been since 2002, but we can’t take 1999 as a “normal” year.

There is no reason to believe Kerry will address the budget problem except that he says so. He proposes 2.5 trillion in spending and can get only about 600 billion from taxing the rich. The rich already pay most of the income taxes. 40 million Americans don’t pay any income tax at all and the top 50% pays 96% of the taxes. Raising the rates tends to hurt those building their businesses (the people we want to encourage) and does not affect the super rich that we all know and dislike. As they say, the super rich don’t care about taxes because they got theirs already – and they can defend it. The billionaire Kerry couple is a good example. Their effective tax rate last year was 12.8%. Most of us – most Americans – pay a higher rate.

AP mentioned an interesting thing, that nobody will take social programs seriously until we cut the deficit. This is correct and it shows why we can’t cut the deficit, or at least why we shouldn’t run a surplus. As soon as there is any significant amount of money available in Washington, politicians think of ways to spend it. Politicians behave a lot like teenagers. They will spend their whole allowance and then come looking for more. If you give them more, they will spend that too.

David-

Foreign investors will invest in the US or any country that is stable and growing. Since the US is locked in a bitter election battle, we aren’t the most stable of investments. After the election, US stability will return, and investors will come. Iraq has little or nothing to do with the DOW or treasury bonds. The only reason they are being factored in right now is because of the effect events in Iraq could have an impact on who is the president. The difficulty the treasury is having finding investors is entirely a product of the low interest rates.

Henry-

Not sure what you’re getting at with the GDP figures. A 3 to 4 percent growth in GDP per quarter is a good pace. GDP growth is healthy, the deficit numbers are being revised downward, unemployment is low, inflation is low, and productivity is very high. The only thing missing in the economy is a return to healthy profits, something widely expected for the fourth quarter.

It must be hard to be so pessimistic in the face of such optimistic conditions.

-D

-D,
Although the chart shows a good GDP, the market is looking at a GDP of only 2.8 growth in 2005. Consumer credit along with high energy cost and other factors have many investors worried about “A Debt Bomb.”

Yes, I know some of it’s hype; however, looking at the charts and analysis you quickly realize that the consumer is losing their ability to influence the market. If that trend is not checked America will find itself back to square one.

Jack,

The tax cut stimulated the economy. Without it we would be in more trouble, because only a growing economy can generate revenue for taxes. We can’t just say, okay let’s tax another X% because if we do the economy slows and we get (X-Y)%. It is possible for that even to be a negative number.

You seem to support supply-side economics, I think. Do you have any evidence that decreasing the top marginal rate actually increases tax revenue? I believe the theory, according to the Laffer curve, goes that there is an ideal top marginal tax rate that will maximize government revenues. I’m simply asking why you believe lower is better, when it’s entirely possible that higher is better.

I think it’s entirely possible that you could impose a tax of 50, 60, or 70% on income over $200K and not affect the state of the economy at all. After all, this is a tax on income, not a tax on money that these small business owners reinvest in their own companies by hiring workers and such. Perhaps a higher marginal tax rate will incent these people to keep more money in their business and take less out as annual income. The irony of this is that it is possible that we could achieve more effectively the aim of the supply side tax decrease with a tax increase.

I’m not saying that this will happen if we increase the top tax rate, I’m just saying that, to me, it sounds just as likely, if not more likely, to be true than the theory that “decreasing income tax rates increases income tax revenues.”

I’m not sold on the supply side thing because I’ve never seen any evidence to support it. I’m not saying that I can’t be convinced, but good rhetoric and nice sounding theories are not enough for me.

Dan

Actually they tried a top tax rate of 70% early on in the income tax. Magically, overnight, all but like 5% of the people that paid the top bracket disappeared. The entire tax burden was shifted to the middle class, tax revenue plunged. Like it’s been said so many times before, tax the rich too much and they’ll just move their money, and the companies. Especially in this global economy, the rich have no incentive to keep their company in the US if they must pay a punishing tax rate when they can move anywhere else a do the same job and keep more of their money.

-D

-D,
That is why we need to revamp our economy. While it is hard to do especially with the current Congress, Businesses/Investors and Labor/Consumers need to find a wat together to use Our Government to make it possible to raise prices and wages around the world so everyone can start become self sufficent thus reducing the need for Our Politicians to screw us all.

Delzario said: Not sure what you’re getting at with the GDP figures. A 3 to 4 percent growth in GDP per quarter is a good pace. GDP growth is healthy, the deficit numbers are being revised downward, unemployment is low, inflation is low, and productivity is very high. The only thing missing in the economy is a return to healthy profits, something widely expected for the fourth quarter.

Do you just make this up as you go along, Delzario? It seems time and again you say one thing but, the data and facts say the opposite. For example this article today titled: Leading Indicators Down for Fourth Month in USA Today.

I assume you know that a leading indicator projects future trending for 3 to 6 months. The latest figures are for September, so that indicates at least through December and possibly as far out as March, we are looking at a lackluster economy. So, with 3 years of tax cuts where is this prosperity and jobs burst you all keep predicting should happen if taxes are cut? I will tell you, down the drain with the notion that freeing up capital in a consumer driven recession is the answer.

But, that Right Wing mantra keeps going, and going and going - you all sound like battery powered talking heads. I see where Sessions is singing this tune, and fewer and fewer are believing this supply side one answer fits all situtations tripe, he is running for his life in what should be a slam dunk district around Dallas, Tx.

Our Capitalistic Economy is driven by the exchange of money through everybody’s hand. We either learn to use that fact to our advantage or allow only a few to mass all the money.

D,

Actually they tried a top tax rate of 70% early on in the income tax. Magically, overnight, all but like 5% of the people that paid the top bracket disappeared. The entire tax burden was shifted to the middle class, tax revenue plunged. Like it’s been said so many times before, tax the rich too much and they’ll just move their money, and the companies. Especially in this global economy, the rich have no incentive to keep their company in the US if they must pay a punishing tax rate when they can move anywhere else a do the same job and keep more of their money.

I believe you demonstrate two points I was trying to make.

1) It is possible that you would achieve a greater level of investment by the rich by increasing the marginal tax rate, not decreasing it.

2) There is theory and rhetoric regarding supply side economics, but no evidence. That thought can be summarized in your statement “Like it’s been said so many times before, …” I agree it has been said many times before, just not demonstrated.

Looking at the history of the top tax rates, it looks like it started at 7% in the beginning. Then it was raised to the 70% range during WWI, then decreased to the 20% range during the 20’s, then up to the 60’s during the Depression, then it ranged from 79% to 94% between 1936 and 1963, then down to the 70% range until Reaganomics. Looking at tax receipts, I didn’t notice any significant change in trend until 2001, when it dropped. Also, it would appear that 2000 is the bubble year that Jack refers to, not 1999.

I think the best way to look at it would be to do a correlation between tax rate and receipts as a percentage of GDP. The Tax Policy website has the table for receipts as a percentage of GDP, but I think to get a true measure, you would have to add in the budget deficit to the receipts (I guess this would just be the total budget). The reason I think you need to do that is that the tax cuts in the 80’s and now have largely been subsidized by government debt.

Dan

All serious economists agree that tax rates affect economic growth. They differ on the details about when this happens. It is fairly obvious that a very high tax rate will chock the economy and a very low one will bankrupt the state. Where to draw the line?

You can’t really do an experiment with the economy because you can’t control all the variables. All you can do is observe what happens. In an ideal world, if you raised the progressiveness of the tax rates, the rich would pay more. But the rich got that way by being smart and/or having the ability to hire smart people. They game the system and avoid taxes. The higher the taxes and the more complex the system, the more incentive they have to game. The less rich or the middle class gets to pay more.

Remember that the billionaire Kerrys pay taxes at a 12.8% rate. If John and Teresa Kerry manage to pay less than you do with taxes at today’s rates, why do you think they will pay more than you do if rates change?

We do have a comparison of tax regimes over time and geography. The economies of Europe were catching up with the U.S. in GDP per capita until the middle of the 1980s, when the trend reversed. That is also the time unemployment in the U.S. dropped below unemployment in Europe. Since then the worst U.S. unemployment rate of almost seven percent in 1992 is lower than the best unemployment rate in the average of Germany, France and Italy. This is still the case today, in spite of all the talk of doom and gloom. A lot of things happening in the 1980s, so we can’t say for sure, but that is the time when American tax policy and pro-market ideas began to diverge from those in Europe. I admit the picture is mixed, because European debt is also higher as a % of GDP than America’s, but in any case, we must have been doing something right for the last 20 years. We only had the bubbling tax revenues for three of those years. The future doesn’t always resemble the past, but it is the only evidence we have.

jack,
Do you remember Reagan’s slogan of “Buy American?” Those two words drove our market and put many of us to work. Until recently, even Wal-Mart use to carry mostly products made in the good ole USA.

On taxing the rich: While anyone can hide their money/income through the million of loopholes in our tax system, our government uses it as one of the tools to force the market in one direction or another. The trick or problem (depending on supply/demand view) is to balance the interest of the investors/businesses with the consumer/labor. For example, today’s market is based on supply and thus favors the investor by forcing the businesses to make more of a profit. However, the flaw in this thinking is that the profit comes out of savings not real profits from sells.

As energy cost and other factors have rose over the last four years, the businesses have less and less cost cutting opportunities and the consumers have less “Spendable Cash.” Thus leading our economy into a spiral of higher inflation, higher interest rates, and a flat/lower market. Being that the average family is over extended, the dollar is falling, and most businesses lack any new products, many economist think that our market will remain flat unless additional money is introduced into the system.

Because our citizens are broke and our government has over extended itself in debt, it only leaves our businesses to pull us out of this slump. Thus the rich must be made to move their money from the bond and money market back into venture and stock markets. What happen in 2000-01 is that many of our forgien investors withdrew a huge sum of liquidable assets out of our market once they found out Bush would be president. I’m sorry I can’t remember the rough number, but if you look at how fast the venture capital dryed up in that time you can get a good idea.

What is needed today to heat this market up is a release of new tech which will lead to more products. Than all we have to do is to increase the Spendable Cash people have and we are off to the races once again.

Think of it this way. We can wait until everyone saves enough money to offset the downward factors or we can force the upward factors and hope people are smart enough to use their money wisely. While I don’t think everyone knows how to play with their money properly, I do hope that given the knowledge and opportunity most of us will/has done the right thing with it.

[Comment deleted for failing to observe our critique the message, not the messenger, policy. —WatchBlog Manager]

Henry

There is always cause to be optimistic about the U.S. According to the annual world competitive index 2004 (by IMD- one of the world’s leading business schools and not American) the U.S. is by far the world’s most competitive nation. Other studies rank us similarly. In the long run, competitiveness and productivity make you rich. The rest is only commentary. Ever since I can remember, experts (especially lefty experts) have been predicting the end of U.S. prosperity. And ever since I can remember they have been wrong.

You always have to ask, “Compared to what?”
All this pessimism I hear today is not justified by objective reality. The media is painting an especially bad picture to discredit George Bush. They are finding all the bad news fit to print. We have problems we need to address, sure. But things are not bad at all compared with most other places in the world or most other times in our history.

jack,
Compare today’s market with our market of the late 60’s and 70’s. For example, look at the oil companies profits over that time. See what the average salary for the upper management has been and the average wage earner over the same time.

Without searching the data (cause I just woke up) I can tell you that companies like mobil have seen annaul net profits well above 10%, the upper management salarys have increased about 5-600%, and the average wage earner has remained about flat once you adjust for inflation.

While the companies and upper management has seen extremely good times, the average workers in the company has been left out in the cold. Yes, some people try to promote pessimism; however, I look at it this way. Although it would be nice if everyone could be Cheif, reality tells us that without Indians nothing gets done. Given the finite of the money available and the pay the different positions pay which one do you want? Oh, by the way who is going to do the low paying jobs that actually make the money?

I just finished reading an interesting book called “Cowboy Capitalism” written by a correspondent for one of Germany’s financial magazine. He shows how Euro myths about America are wrong. Many of these Euro myths are familiar because they are also American liberal myths. I recommend it.

One of the interesting things he points to is a difference in attitudes between Americans and Europeans (outside the UK). Americans are much more optimistic and they believe they control their lives. They also resent the wealthy a lot less. This is because most Americans think that they will someday be wealthy. This is not always true, but it is true enough to make sense. The poor of the 1970s are often the rich of today. I have been a member of every quintile in the income distribution and in the course of a working life this is not uncommon.

He also points out that poverty is relative. What we call poor today (in actual buying power) would be quite well off in 1970. Adjustments for inflation understate today’s incomes and improvements in technologies. In 1970 I knew a lot of people who didn’t own cars and even the best cars were mechanically inferior to cheap cars of today. Few people had air conditioning. Vacations meant camping at a nearby park. An airline ticket to Europe could cost more (in unadjusted dollars) in 1970 than it does today and don’t even talk about the cost of a long distance call. Ordinary people rarely ate out. Of course, nobody had VCRs or computers or plasma televisions. Health care costs were lower. Of course you just died from many things that are easily treated today. It might be worth the price. The comparison breaks down over time AND space. More than half the total population of many Euro countries is poor by American standards if you consider what they could actually buy with their incomes. Poor has come up in the world, so poverty is not a measure of what you have, but rather of the level of income inequality. Income inequality can be destabilizing, but in itself is not necessarily a bad thing, as long as you have mobility and Americans have mobility.

You all can go on predicting the end of prosperity, as we know it. Someday you will be right, but probably not today and probably not tomorrow. And probably not if we reelect George Bush.

jack,
Isn’t that the reason we took the power over the economy away from politics in the 70’s. Your right about the market will always grow; however, the speed that it grows and who it effects is what matters. Making the rich richer without lifting up the rest of our citizens up at the same time is the only way our economy will fall.

Now and in the future we just have to figure out how to inclyde the rest of the world in the equation and that will eliminate alot of problems we face as long as our economy remembers to reward its citizens for doing the right thing.

Delzario,
Way back on the 20th on your post with the four points, point No. three you said, The purpose of Iraq was to put the fate of the Iraqis in their own hands. Did you mean this? And why did nobody else call you on this. I could have sworn the purpose of Iraq was to get rid of all those WMD. Flipflopper.

The initial purpose of the Iraq invasion was to get WMD’s, make the entire world a safer place, and to destroy states and dictators who harbor terrorists. Anyone who says we are not accomplishing these goals is living in another planet! First of all, the WMD’s were never physically recovered, but who can honestly say that they are 100% POSITIVE that the WMD’s in Iraq never existed? Sit down and really think hard about this…You have over 4 major players of the UN saying that they all have accurate information indicating Iraq has produced and compiled an arsenal of WMD’s. We all know that Saddam is a very intelligent person, and we now know he had many of these major UN players in his pocket from bribing them. Saddam had discretionary alliances all over the world. So, here’s the question of the year…If you yourself were a brutal dictator of a country who had a stockpile of WMD’s, you had the world watching you through the scopes and about to launch a country-wide investigation to look for WMD’s, and you had secret alliances all over the world and enough money to make them do whatever you ask, WHAT WOULD YOU DO WITH YOUR WMD’S??? WOULD YOU KEEP THEM INSIDE YOUR COUNTRY??? Saddam had access and was linked to various countries, leaders, and potential “hiding spots” for any arsenal he wanted to hide! If you were a drug dealer and you got a phone call from the cops saying they were about to raid your home to look for drugs, are you going to keep the evidence in your home?!? HELL NO! This man was not stupid and we are just assuming that he did not have the capabilities to relocate his WMD’s. I watched FOX News about 6 months ago and they had a former member of Saddam’s regime(he left Iraq in the 80’s), and he spoke about the hiding spots Saddam had in some Islands south of Asia. Now, we are ignorant for not following such an extreme accusation, but that does not give any one of us the right to say the Iraq war was a bad decision. Look at all of the terrorists we are facing right now in Iraq! Do you think these terrorists were non-existent before the war? I admit that U.S. presence may encourage some of these people to join the ongoing insurgents, but most of the people we are battling in Iraq were terrorists before we got there, and we should feel lucky that we are battling these people in Iraq instead of the U.S.!

J.B. There is only one flaw in your logic. Let me point to it by way of a hypothetical example.

Ex. “I believe the military industrial technological complex has been directing the human species toward an evermore authoritarian world government led by capitalists in the U.S. Because, I have ample historical and anecdotal evidence to support this proposition, I must call on all conscientious Americans to take up arms and overthrow the U.S. government which, if left in place, will lead to a modern day version of Aldous Huxley’s 1984.”

Now war and revolution are very serious affairs, the most serious faced by mankind as groups of human beings. Before embarking on such extreme actions, a reasonable burden of proof that conditions are such that war or revolution are the only alternatives should be met.

What your argument lacks is any proof of anykind that the reasons for invading Iraq and used to sell concensus for invading Iraq were valid or proved. In fact, quite the contrary is true. There is no proof.

What you have tried to argue is that in the absence of WMD, all that is proved is that we have not proved there were WMD. This convoluted logic was pinnacle to Adolph Hitler’s and Lennin’s and Mao Tse Tung’s justifications for power and war and revolution. Regrettably, such illogical use of argument and non-empirical justification for action is also very prevalent in the U.S. as you have just demonstrated.

Thus, it shall always be true that for the democracy to succeed, an ever vigilant and informed public is prerequisite. I hope I have served that function in response to your comments.

Have been concerned about Econ and gist of Article posted for several years.

Yuppies and their offspring have ruined the country. Too many paper professionals wanting to live like princes and princesses hemorrhaging the country. The party is over.

A strong economy is primary and decent jobs almost as important to defense of country as a decent military. Besides, our borders and all our facilites protection come first. Many of us who are not weak or chickens do not need to have our military in over 100 countries and such a huge military budget.

Well said, Alex.

I believe what would be best for the long term interests of our nation is a widely developed and highly skilled intelligence web spread throughout the world, with a military designed for surgical strikes where called for, and a ready traditional force for both defense and unanticipated consequences resulting from surgical strikes.

In the short term, it appears obvious to me we need a national guard that guards our borders, not one engaged in nation building overseas. Also, pursue the terrorists abroad surgically, and withdraw from Iraq 6 months after announcing a date certain. A contingency force left in Iraq alongside a much larger regional or multi-national force may make sense and work toward our interests. But, something on the order of 1/4 the number we have there now, and to be drawn down as sufficient extra-national forces are brought in.

It simply boggles my mind that Bush hasn’t seen the immense interest regional nations would have in insuring a peaceful elected Iraqi national government maintained after our announce pull-out. I don’t think there would be any lack of volunteer nations in the Middle East and elsewhere to take up the slack of our pull-out.

Would it be a perfect outcome? Very likely not. But, anyone who thinks there will be a perfect outcome from our continued occupation is blind to the facts at hand.