Third Party & Independents Archives

July 12, 2006

The Deficit Hoax

Pres. Bush said yesterday, that we are making real progress on the deficit. “We” in this context meant Republicans under his leadership, and “progress”: well, I will get to the meaning of progress in a moment. First, here are some facts: some of which, were stretched and absent in Republican’s touting their great economy and deficit reduction yesterday.

One fact was straightforward and honest. Our economy is seeing job growth. This fact is not surprising in light of the fact that we have been rebounding from a worldwide recession, and job growth has been rebounding across the globe. That is not to say that corporate tax cuts which, lowered the cost of doing business, did not help create jobs. They did. Whenever businesses see increased consumer demand, as when we are coming out of a recession, and lowered costs of doing business, jobs will be created.

A close look at where the increased federal revenues are coming from, demonstrate this. A good percentage of the additional revenue growth came from corporations, many of which have been experiencing record profit levels. But by twice that amount, was increased revenue from individual and payroll withholding taxes. This of course, would reflect many more persons acquiring jobs than during the recession of 2001 top 2003, and Katrina's high unemployment impact. But, it also reflects in another category of revenue called simply enough, "Other", revenues from new self-employed small businesses started by those who couldn't find jobs, and small partnerships, among other unidentified sources. Finally, it must be noted that individual taxes rose in part due to the expanded wealth of the already fairly well off investor classes, especially those invested in commodities and real estate.

OK, we have more jobholders, the wealthy are wealthier, corporations have higher profitability, and more self-employed businesses started up, all of which contributed to higher revenues. Now how does all this tie into Pres. Bush's boasting of newfound fiscal responsibility in reducing deficits? Well, to answer that, we have to look at the other side of the boast. The White House and OMB projected some time ago higher deficits for this period of 2006, than we have experienced. Partly this is due to unanticipated revenue growth. What the White House is boasting about is the actual deficit for this year coming in lower than its previously inflated projections. But, the deficit is still a record deficit. Its kind of a son storming out of the house saying he is going to destroy the family car, and returning home and saying Dad, Mom, the good news is, when I ran the car into the tree, I didn't total it. A few thousand bucks will fix it up just fine.

The fiscal record of this administration and Congress over the last 5 years has been so abyssmal, that the only way to get good news out of it at election time was to inflate how bad the deficits were going to be, so that it was all but guaranteed that the deficit would be lower than what was projected months before the election. What they don't say is, it is still a record deficit. The White House's OMB inflating of the deficit projection is seen by comparing the White House's projection of deficits (OMB) to Congress's (CBO) which tends to be more accurate. At the beginning of this year, the (CBO) Congressional Budget Office projected a $371 billion deficit, and the White House (OMB) Office of Management and Budget projected $423 billion. This is like the student warning his parents he is going to flunk this semester after his counselor has told him that his grades will be all and C's and D's. Won't his parents love him for salvaging the semester?

Now most Americans, when they hear the deficit has come down, will think, 'Good, Congress and the President are finally controlling spending.' But, they would be wrong. Spending is still setting new records. The deficit came down due to increased revenues. But what did it cost to generate these increased revenues of a couple hundred billion? 2.4 Trillion dollars in lost revenue from the President's tax cuts from 2001 to 2006, according to the Citizens for Tax Justice. (PDF) CTJ reports:

Over ten years, the total cost of the Bush tax cuts has grown to $2.4 trillion, including added interest payments (reflecting the fact that the tax cuts have been financed entirely with borrowed money).

By 2010, when the estate tax is slated to be eliminated, 51 percent of the total tax cuts will go to the best-off one percent of all taxpayers.
This is why the wealthy are now generating more tax revenues; their wealth grew, having received over half of the tax cuts in the first place. But the key here, is that while revenues are up 100's of billions, deficits continue to increase the national debt partially due to the tax cuts canceling out the higher tax revenues, and spending goes on unabated.

In fact, Republicans in Congress are working now to increase the debt ceiling to 9.6 Trillion. Which easily guarantees that the 5.6 trillion national debt left by the Republican Congress when Bill Clinton left office, will double by the time Pres. Bush leaves office. Our children will carry twice the national debt tax burden that we had to carry as a result of national debt. The deficits and growth in the national debt are the measure of fiscal responsibility. The bigger and faster the growth in the national debt, the less fiscal responsibility; and the last 5 years have seen the fastest and biggest growth in the national debt in generations.

One more fact, revenues to the federal government have become very volatile. This means that one quarter's revenues are no predictor of the next quarter's revenues, nor are this year's revenues an accurate predictor of next year's revenues. Also, this is where the great deception in Pres. Bush's and Republicans speeches in the last 48 hours comes in. They are spouting off about how great and wonderful the economy is "today". However, our economy cannot be graded on a 3 month, 6 month, or year snapshot. Our economy today is loaded with obligations far down the road which it either carries, or fails, based on what we do today. Following is an example.

John Q Public is making $45,000 this year. But, he has a mortgage debt of $150,000, a automobile debt of $22,000., and credit card debt of $7,000. Combined, his total annual payments for this debt amount to let's say, $7000 for the mortgage, $4200 for car, and $850 for the credit cards, for a total of $12,050 per year, or almost 25% of his income. Now let's say John Q Public double's his debt over 8 years to $24,100, but his annual salary only increases to $48,000 per year. Is John Q. Public better off or worse off?

The fact is, John Q after doubling his debt will be very near bankruptcy, when you add in all of the other annual costs of living from food and fuel to insurance, medical costs, and taxes. This analogy is actually very accurate as to what is happening to our long-term economic situation. Because in 2014, just 8 years away, our government, on top of already having doubled its national debt, will be adding significant more debt to American tax payers or impoverishing them through spending cuts.

The economic train wreck ahead, beginning in 2014, is Medicare and Social Security. There will be no more Social Security surpluses to make our deficits appear smaller than they really are. And Medicare costs will rise as long as overall, medical cost inflation continues; and there is no end in sight on that front, with dramatic increases in medical care demand taking place with the retirement of the baby boom generation.

And there will be only three ways to deal with the baby boomers retiring in 2014. One is to dramatically increase taxes on workers, another is to cut their benefits and let millions do without medical care or live impoverished which will only increase their need for medical care, and the last is to do a combination of both. That is where the real fiscal irresponsibility of the President and Congress comes in. You see, this year, neither is taking any action to save for tomorrow's need. Quite the opposite, they are spending as if there is no tomorrow. And that kind of reckless fiscal irresponsibility will literally mean there will be no tomorrow for millions of American senior citizens beginning in 2014 and running out to 2065 when the baby boomers are finally all gone.

It is important to bear this in mind in November when you enter the polling booth. Especially if you are one of the baby boomers who is going to be wishing Social Security and Medicare were still around to help you when you retire in the event you outlive your savings or worse, you experience an enormous health care debt, forcing you into bankruptcy in your golden years.

The President and Congress are ignoring the future in order to get votes by saying how great the economy is doing and implying they are being fiscally responsible by showing how deficits went from 423 billion to just under 300 billion. However, the economy and reduction in deficit is only ‘great’ if they, and you, ignore the future of 50 million American citizens who worked hard all their lives to make this nation great, only to have their dignity denied in retirement and their deaths occur in states of poverty.

Posted by David R. Remer at July 12, 2006 10:21 AM
Comments
Comment #166767
But, the deficit is still a record deficit. Its kind of like your son storming out of the house saying he is going to destroy the family car, and returning with home and saying Dad, Mom, the good news is, when I ran the car into the tree, the damage was not so bad that it cannot be repaired.

David:

When I saw this passage I just had to stop reading for a minute. Can the left wing (or the independents, in your case) ever take good news for what it is…good news. We’re climbing out of our deficit, and all you can say is, ‘well, we wouldn’t be here if it weren’t for him anyway.

Give me a break. I’m sick and tired of hearing these pessimistic, doom and gloom, morose rants by Dems and third parties who will spin anything if it’ll make Bush look bad.

The fact is we’re amending our errors, lowering taxes while increasing tax revenue, creating jobs and fueling our bustling economy, and instead of congratulating the President for a job well done, you ridicule him and call his plan a hoax.

It’s disguesting…

Posted by: Alex Fitzsimmons at July 12, 2006 10:48 AM
Comment #166768

I just have a couple of questions:

What was the actual deficit last year? Including the cost of Iraq?

What is the actual deficit now, including the cost of Iraq?

What was the deficit in years previous?

Then I might be able to figure out whether it is up or down, which may seem simple, but I believe it is being manipulated to serve any number of ends.

How about just the facts? Don’t try to tell me it’s higher or lower, particularly not against “projections”. Just tell me what it actually is, in total.

Posted by: womanmarine at July 12, 2006 10:56 AM
Comment #166774

Alex, so 294 Billion dollar deficit this year is great news to you? Must be a Republican supporter. And you should not have stopped reading. It gets a whole lot worse with time.

Did you not get the part where the White House inflated the projection in order to claim reduction in deficit projections a few months before an election? FACT: 294 billion deficit is a record deficit, no matter how you cut it. They didn’t cut the deficit, they inflated the projection of what it was going to be in order to fool folks like yourself and me.

Last years deficit was 318 billion. Getting the picture. This year’s is 296 billion. So with all these billions of dollars in increased revenues, we cut the deficit by only 22 billion. What that says is spending is rising almost as fast as revenue increases. And the volatility of revenues over recent years, indicates these revenue amounts will not continue upward, but will track back down, while spending continues upward.

I understand these facts disgust you and I should be shot for relaying them, but, hey, its good for folks to digest a few facts now and then if they can put their biases aside.

Posted by: David R. Remer at July 12, 2006 11:23 AM
Comment #166776

David, terrific article. This administration has been nothing but a fiscal disaster. How anyone could look at all this uncontrolled spending and total mismanagement and not fear for America’s future is simply beyond me.
I also think womanmarine is making a very good point — What About Iraq?

Posted by: Adrienne at July 12, 2006 11:29 AM
Comment #166777

“Give me a break. I’m sick and tired of hearing these pessimistic, doom and gloom, morose rants by Dems and third parties who will spin anything if it’ll make Bush look bad.”

Fitzsimmons:
The things is, I don’t see how a billion dollar deficit can be seen as good news, furthermore republicans as well as democrats and third parties spin the information around. Everyone has to realize that no political party is prefect and that Bush isn’t a monster but he isn’t a saint either.

Posted by: fnkmaster at July 12, 2006 11:31 AM
Comment #166779

womanmarine, last year’s deficit was 318 billion. This year’s is 296 billion. 2004 set an all time high of 412 billion. Bush is claiming a difference in deficit projection by his White House 6 months ago of 427 billion to the actual deficit, so far this year of 296 billion.

But this is not a cut in the deficit of 131 billion. This is only the difference between their estimate and reality. The ACTUAL deficit reduction from last year is only 318-296, or 22 billion. Given a 296 billion dollar deficit, that’s a move in the right direction but, shored up by unsustainable revenue receipts.

The volatility of revenues over recent years, indicates these revenue amounts will not continue upward, but will track back down, the economy’s growth rate is slowing, while spending continues at or near its current pace for awhile until it spikes as a result of baby boomers retiring.

Posted by: David R. Remer at July 12, 2006 11:36 AM
Comment #166781

David:

Great article, but I can figure the difference myself with the number. What about the cost of Iraq?

And why do they deduct the supposed social security surpluses? It’s even higher if they don’t, right?

Posted by: womanmarine at July 12, 2006 11:39 AM
Comment #166783

Adrienne, thanks. Iraq? Iraq is an unknown quantity. As long as Bush is in office, we won’t be leaving Iraq.

How much? If memory serves, Iraq has already cost us about a third of a trillion dollars. Or, about 100 billion per year. If we pull out of Iraq, and don’t invade Iran or N. Korea, the deficit picture looks better, but, only for a short while. Medicare and Soc. Sec. are still going to eat our deficit lunch because we are not asking future retirees and their employers to pay a bit more NOW!

Posted by: David R. Remer at July 12, 2006 11:41 AM
Comment #166785

Woman, Adrienne,

The administration is continuing to block inclusion of the Iraq costs by refusing to make any projections of the Iraq costs. The current cost is appx $3 billion per week. So, add $150B to Davids numbers.

David,

The only “highlite” in this is as that inflation increases, one cause of income increases, the PV of the debt decreases.

My flame: BushCo is killing off thousands of this generations wage earners in Iraq, who will pay for our entitlements?

Posted by: Dave1 at July 12, 2006 11:48 AM
Comment #166787

Another flame:

What is really disgusting is the view of the Ostriches’ impacted colon as he looks at it from the inside.

Posted by: Dave1 at July 12, 2006 11:49 AM
Comment #166789

womanmarine, quite right. The deficit is actually must higher if you remove the Soc. Sec. surplus. This year the SS administration chart shows the surplus to be a bit under 200 billion, revenues minus costs and outlays this year.

Posted by: David R. Remer at July 12, 2006 11:56 AM
Comment #166790

Dave1 asked: “My flame: BushCo is killing off thousands of this generations wage earners in Iraq, who will pay for our entitlements?”

Why illegal aliens of course, after they are given amnesty.

Posted by: David R. Remer at July 12, 2006 12:00 PM
Comment #166791

Back in June i did a trend analysis of the net change in the Public Debt as an indicator of the “real” deficit; “real” meaning the amount of money required to meet the spending obligations of the government for the fiscal year.

Going back to 2000, we have the following net borriwng (this is yearly borrowing, not aggregate debt):


2000: 18B
2001: 133B
2002: 421B
2003: 555B
2004: 596B
2005: 553B
6/7/06: 440B
*rounded to the nearest billion

The true cost of government operations are the net change in debt, as the equation goes:

Expense-Revenue= Debt required

As stated already, this announcement of “we cut the deficit” is pure hogwash, considering that it does not account for off budget spending or the rollover of maturing debt, which is something the champions of the current fiscal policies refuse to understand.

Before i am labeled a Bush bashing liberal, let it be known that i am a staunch fiscal conservative, and believe me, there are many fiscal conservatives who are incredibly pissed at the GOP for the current state of affairs.

As for the SS Trust Fund in particular- the SS fund holds treasury debt as “intragovernmental holdings” which basically means that when the account goes into deficit in 10-15 years, the money to finance that deficit MUST come from the general fund. I would advise anyone who wants to read more to poke around the GAO website and read some of their presentations. Dare to be enlightened.

Posted by: Greg at July 12, 2006 12:02 PM
Comment #166793

Greg, thanks for the facts and comments. It is one gruesomely ugly economic picture ahead, that is for sure.

Posted by: David R. Remer at July 12, 2006 12:06 PM
Comment #166800

David,

If we give them amnesty then would we have to pay them Social Security?

Posted by: Dave1 at July 12, 2006 12:15 PM
Comment #166801
Did you not get the part where the White House inflated the projection in order to claim reduction in deficit projections a few months before an election?…The White House’s OMB inflating of the deficit projection is seen by comparing the White House’s projection of deficits (OMB) to Congress’s (CBO) which tends to be more accurate. At the beginning of this year, the (CBO) Congressional Budget Office projected a $371 billion deficit, and the White House (OMB) Office of Management and Budget projected $423 billion.

David:

Well, it comes down to who do you trust. You can take your pick between the two, it really doesn’t matter. I read your post, and it’s really nothing more than a conspiracy theory: Bush is the bad guy who cooks books to garner GOP votes in the mid-term, he misleads the American people into thinking our economy is good (even though it is) and his tax cuts certinley don’t help the lower class while increasing market stability which leads to greater spending which leads to more tax revenue…nope, it’s all a hoax…now I’ve heard it all, David.

Here’s the fact: Bush is on track to cut the defecit in half one year ahead of schedule. He’s improving this country, and you either ignore it, or choose to fight it…

Posted by: Alex Fitzsimmons at July 12, 2006 12:19 PM
Comment #166805

Alex, give it up. He promised to cut the deficit in half in his first term. Your comments contain no facts. Just biased conservative faith in your chosen leaders. Happy following.

Posted by: David R. Remer at July 12, 2006 12:25 PM
Comment #166808

David:

All of your doom and gloom theories might become reality if our situation was worsening. But you’re not taking into account the simple fact that our deficit is shrinking, jobs are being created, the economy is growing rapidly, and our lower taxes that help Mr. John Q are actually increasing market spending and stability, resulting in more tax revenue.

So, every class benefits, the rich have market reassurance, while the poor and middle class have more job opportunities and lower taxes.

Posted by: Alex Fitzsimmons at July 12, 2006 12:37 PM
Comment #166811

Alex, again, your comments are devoid of facts and you refuse to recognize reality. The National Debt is growing to double its 2000 size. No matter how you cut it, that is a worsening situation.

If Bush cuts his 400 Billion deficit in half, he is still adding 1/5 of a trillion dollars to the national debt, and future tax payers. The national debt load for my daughter’s payroll taxes is going to be twice what I had to bear.

These are facts all available and demonstrable on government web sites. Facts, you deny with statements that its all coming up roses. NO, its not. That’s a fact.

Posted by: David R. Remer at July 12, 2006 12:44 PM
Comment #166822

To all:

This deficit debate will of course never end. One of the errors of the deficit hawks make consistently is not comparing apples to apples. For instance in David’s very well written article, he mentions that the deficit is doubling. To be intellectually honest you have to compare the size of the economy with the deficit number. In to other words, how much will the economy grow at the same time? There is a very simple formula you can use for general estimations called the rule of 72. The rule of 72 says that you divide the growth rate into 72 to get the approximate number of years it takes to double an investment. With the US economy, the nominal growth rate (inflation plus real growth) is about 6%. This means that our US economy doubles about every 12 years. If the economy doubles every 12 years and the debt doubles every 12 years the debt burden remains constant in real terms.

The second point I would like to make is with regard to “record deficits”. This is like saying if you your investment years ago earned you $1000 at 12% interest, and now it earns you $1101 at 6% interest (because your investment’s principal grew) you are earning a record amount on your investment. The rest of us would say that 12% interest is better than 6% interest. It is the same way with deficits. The record modern day deficits were created by Ronald Reagan. Today’s deficits are less that half what they were in the 1980’s under Ronald Reagan when measured compared to the size of the economy. Incidentally, the rule of 72 works for deficits as well. Since the economy doubles give or take every 12 years in nominal terms, the actual deficit to have the same impact on the economy (be as alarming) needs to double every 12 years as well.

My next point is in agreement with David. I read recently (I can find this if you push me), that in the year 2000 the federal government spent about 18.5% of the GDP. In the last 5 years, this has grown to over 20%. What is interesting about taxes is that with the recent gains, the government is now bringing in about 18.5% of the GDP. What this means is that as of today the deficit is not at all caused by the Bush tax cuts, but rather by the Bush spending.

If you want to wax philosophical for a minute, neither increased spending nor waste are unusual during war time. Fiscal discipline has traditionally been very hard to contain in the middle of a war. I would expect Bush to not rank even close when we look at waste and government fraud during war. Now that we are into this war a “fir piece”, I would expect fiscal discipline to return. I can hear some saying that much of the spending was not defense related. I would argue that fiscal discipline lapses in war time go across the board simply because leaders have other issues they are concentrating on such as winning the war. By that I mean that it is understandable that domestic spending would lake fiscal discipline as well.

What is hopeful to me is that fiscal discipline should return no matter who is elected. First of all because of the age of the war, and we are more to a point of fiscal discipline. Second because the next president will have time to think through international affairs before office, instead of having a huge issue like 9/11 thrown in his desk without warning.

Basically, we are in a period of above average spending and deficits. The next era should be a time of fiscal discipline and lower deficits. These are normal cycles in our history, and not much fiscally to worry about.

Craig

Posted by: Craig Holmes at July 12, 2006 01:21 PM
Comment #166824

Well, I’ve looked at the numbers and the tax revenue per capita increased by 15.7% in 2005 versus 2004. Factoring in inflation, that is approximately a 12% increase in taxes collected per capita. Over half of that was taken from sales/gross receipts.

As such, I can give at least some credit to the idea that spending will increase as taxes are cut. However, going back a bit further to 2001, we see that the tax revenue per capita was more than double what it was in 2005. Going past the Bush administration, we find that during the Clinton administration, tax revenue per capita was consistently double what it is now.

The conclusion I must come to is that President Bush’s tax cuts do not generate as much revenue as they take away.

Therefore, the idea that tax revenues are increasing as a result of Bush’s tax cuts is a falsehood.

Posted by: Zeek at July 12, 2006 01:26 PM
Comment #166826

Foot note: All my numbers are taken directly from the US Census Bureau.

Posted by: Zeek at July 12, 2006 01:27 PM
Comment #166829

Craig:

And how are us lowly non-economically trained folks to understand that? It looks to us like manipulation.

It’s certainly not how we lowly folks figure our budgets.

And in a time of “war” shouldn’t pork stop, or at least slow down? Remember “BUY BONDS”? You can wax philosophical about this all you want, but it sure looks bad to those of us not in the “know” with the complicated economic theories.

Lets get serious and talk actual numbers, what came in, what went out, and how much we still owe. That’s how most folks do their budget.

Posted by: womanmarine at July 12, 2006 01:37 PM
Comment #166839

I did some “poking” around at the GAO site. The figures that come from the government itself tells the whole story.

For those who don’t believe how bad the situation is getting, you need to go to this site; http://www.gao.gov/ Look at the figures and read the articles from the Comptroller.

Posted by: mem beth at July 12, 2006 02:32 PM
Comment #166842

Craig,
I am not a deficit hawk. I believe using fiscal policy to stimulate the economy in times of recession is a good idea. By the same token, I believe using fiscal policy to restrain the economy during times of growth is the required flip side of that philosophy.

For whatever reason, the Republicans continue pursuing deficit spending, which stimulates the economy.

But where is this stimulation applied?

Tax revenue increases are coming from corporations. Individual tax collections are still significantly below what they were in 2001. Zeek is correct. The cuts do not generate enough revenue to replace the revenue.

It is also correct to note the debt is, as a percentage, lower than it was under Reagan. However, the amount of debt is a real number. In absolute terms, the past four years have been the largest budget deficits in the history of the country.

Womanmarine,
The biggest difference between an individual households finance and the governments finances is that only the government can (legally) print money.

We are attempting to inflate out way out of some of the accumlated debt. However, oil prices have driven up inflation beyond what the buyers of our debt- bond holders- are willing to accept.

This results in higher and higher interest rates.

The result is inevitable. Oil prices seem very likely to continue increasing. If you project the current trend, the moving averages, oil will go from $75 today to @$100 in late 2007, a continued clip of 25% or more increase.

Increasing oil prices mean increasing rates, and increasing rates will cause a recession.

It is unavoidable. What makes the impending recession so scary is the gross mismanagement of the economy under Republican economic policies.

Alex,
Want to discuss employment numbers?

Another scary factor is the lack of jobs created in this last recovery. We are “creating jobs,” but not fast enough to match population growth. Economists believe non-farm payroll growth should average 150,000 - 175,000 per month to match growth. Last month the economy added only 111,000 non-farm payroll jobs, and the month before that, less than 100,000.

It was not that long ago that Bush claimed his economic policies would create an average of 300,000 non-farm payroll jobs per month.

To put it another way, Jimmy Carter created 10.8 non-farm payroll jobs during his four-year administration. Bush will fall far short of that during an eight-year administration, despite the fact the US population is tens of millions larger then than today.

But wait! It is not the fault of Republican policy! There was a recession, you know, and creating jobs is hard work!

Despite a recession during his first term, the Reagan administration created over 15 million non-farm jobs in its eight years.

Posted by: phx8 at July 12, 2006 02:52 PM
Comment #166858

phx8:

I am not a deficit hawk.

Actually, you usually come across pretty balanced.

For whatever reason, the Republicans continue pursuing deficit spending, which stimulates the economy.

But where is this stimulation applied?

The stimulation right now is applied in the spending. (War contracts, Katrina spending, medical expenses).

Zeek is correct. The cuts do not generate enough revenue to replace the revenue.

Of course they don’t. They do produce some. Also federal spending increases tax revenues to to a degree. Spend some money, increase tax revenue some. What the relationship is exactly I am not sure, but it should be knowable.

the amount of debt is a real number. In absolute terms, the past four years have been the largest budget deficits in the history of the country.

As has economic growth. We have added over $2 Trillion or more that all of China. We have added a “China” to our GDP. In real terms, economic growth has never been this good. On relative terms, of course arguments can be made.

womanmarine:

It’s certainly not how we lowly folks figure our budgets.

“lowly folks” like you and I have to retire and eventually die. Countries have much longer lifespans. Because of the different life spans you have to look at national economics different than individual budgets.

Craig

Posted by: Craig Holmes at July 12, 2006 04:19 PM
Comment #166859

phx8:

I do agree with David on the need to monitor the future expenses, and obligations. I differ with him because I remember y2K so well. It seems that when we know something is coming, we usually adjust and move around or solve the issue nicely. The coming age wave is something pretty much everyone in leadership knows about. I think it will be more of a wimper, (speed bump) than a crisis.

Craig

Posted by: Craig Holmes at July 12, 2006 04:22 PM
Comment #166865

David:

Totally off topic, but thought you’d be interested in this information, and wasn’t sure how else to provide it to you.

Mark Bitz launches campaign to vote incumbents out of office
Plainville Turkey Farms president and good-government activist Mark Bitz today launched a statewide campaign to persuade New Yorkers to vote against their most powerful representatives in the state assembly and senate.

To scare Albany decision-makers into supporting needed reform, people should vote against all Republicans running for state senate and all Democrats running for the assembly, even if they think a particular politician is doing a good job, Bitz told the editorial board of The Post-Standard.

“The problem is, every district loves their representatives,” Bitz said. “Gerrymandering, pork and positive PR do the trick. All voters believe their representatives are not the problem; the problem lies with representatives in other districts. And that is the problem.”

Both the Republican majority in the senate and the Democratic majority in the assembly have been corrupted by special interests and exchange preferential legislation for campaign contributions, he said. Although many state legislators promised reform during the 2004 campaign, little meaningful reform actually happened, he said.

Bitz’s meeting with the editorial board was the first of many he hopes to have with newspapers and good-government groups throughout the state, he said.

Posted by: joebagodonuts at July 12, 2006 04:46 PM
Comment #166870

Zeek:

Good points you made back there. It is also important to drill down into the numbers and see what taxes are being cut. For instance, I remember when Capitial gains tax rates were cut. For a long time, with high capitil gains rates it just didn’t make sense to sell rental property or stock. It made a whole lot more sense to wait until death and give heirs their steped up basis.

However once the rates were lowered, there was a “windfall” of revenue as now the equation shifted and pent up demand to sell took place. The problem is that once this initial rush to sell is over, predictibably tax selling would return to normal and tax revenues from capital gains would decline or level off at the minimum.

My point in this is that one has to look at the action on a long term basis. In this example, lowering capital gains rates increased revenue and probably “paid for themselves” on the short run. However measurement should be made after the windfall to get a more accurate measure.


Craig

Posted by: Craig Holmes at July 12, 2006 04:56 PM
Comment #166878

zeek-
Per Capita is the sum of all incomes divided equally among the entire population. It’s an Average, and like all income averages, it’s vulnerable to being skewed if you have a number of folks prospering inordinately at the higher end. If everybody’s income stays the same besides that of the rich, any increases there still raise the average.

Additionally, there’s a question of whether the tax cuts are the strong factor that Supply Siders believe. Economies do recover on their own. Other causes can create growth. Have those causes been eliminated or accounted for in any of these testimonials, or are we faced with a self-fullfiling prophecy here? The likelihood is the later. There really hasn’t been any affirmative cases for the beneficial effects of federal income tax cuts outside of cases where truly high taxes are involved. We don’t have high enough taxes to feel all that much relief, especially with the way Bush aims the brackets for the vast majority of taxpayers.

You should read Ron Suskind’s The Price of Loyalty, about former Treasury Secretary Paul O’Neill. It’s interesting in terms of Paul’s conversations with friend Alan Greenspan. They agreed on one point: the beneficial effects of tax cuts are dubious in times of low taxes, and generally outweight by the bad effects of structural deficits.

Posted by: Stephen Daugherty at July 12, 2006 05:23 PM
Comment #166888

Craig, I am not exactly clear on the relation of your post to mine. Are you saying that I did not account for windfall taxes?

Stephen,
“Per Capita is the sum of all incomes divided equally among the entire population.”

I am aware of this.

“It’s an Average, and like all income averages, it’s vulnerable to being skewed if you have a number of folks prospering inordinately at the higher end.”

I could have used the gross revenues, but the results would be, I feel, slightly misleading due to the increase in the number of taxpayers. Of course, it was only about 5,000 more, but there is no reason to use gross revenue anyways.

In any event, your point is irrelevant to mine. I was saying that one way or the other, the tax cuts are not working. They are not generating more tax revenue and they are certainly not going to be enough to deal with our swelling deficit. I am not being biased, I am simply comparing numbers.

It does not really matter to me where the extra money is going. A failing plan is a failing plan.


Posted by: Zeek at July 12, 2006 06:02 PM
Comment #166890

Craig, regarding the your assessment of the Reagan years, here is a true enough and verifiable quote:

“We need to remember that when we reached a deficit of 6 percent of GDP in the 1980’s, there was virtually no Social Security surplus to mask the deficit. Now, the Social Security surplus is projected to be $206 billion in 2010. By spending Social Security surpluses on tax cuts and other things, the administration is masking the true size of the deficit.”

I believe it was you who said we need to compare apples to apples, not oranges.

Posted by: David R. Remer at July 12, 2006 06:29 PM
Comment #166893

Here are some verifiable facts to consider for those who believe the deficits are on track for being cut in half. Some Democrats and true fiscal conservative Republicans agree that:

“However, it is clear that the administration is still omitting large costs from its calculations. According to CBO estimates, ongoing military operations in Iraq and the ongoing war on terrorism could cost an additional $201 billion over the next five years and $333 billion over the next ten years.

And the administration’s deficit projections still fail to account for the cost of reforming the AMT so that it does not become a middle-class tax trap. Because no resources were provided in the budget to reform the AMT, the number of taxpayers hit by the AMT could rise from 3.6 million today to 29 million by 2010. In essence, the administration is relying on this additional AMT revenue – primarily coming from middle-class taxpayers – to claim lower deficit totals in the years ahead.

When omitted costs are factored in and the Social Security surplus is excluded, we see that annual
deficits over the next five years never fall below $481 billion and total more than $2.5 trillion.”

Now Democrats are skewing some facts and numbers too about this year’s deficit numbers, but, the above factors have to be considered when projecting which direction deficits are actually going. I can fudge my debt projection numbers too buy putting in footnotes indicating that I will be selling my cars, washing machine, refigerator and daughter in coming years, and that revenue will mean my projected debt and deficits will be lower than my income and balance sheet show today. But, the truth is, I need all those things in order to keep my humanity and family and income together, and I won’t be selling them for revenue, regardles of what I say to the loan officer (or in Bush’s case, the taxpayers.)

Posted by: David R. Remer at July 12, 2006 06:42 PM
Comment #166897

The little secret most want to avoid though is that many of the jobs created are in our government that continues to grow to nightmare proportions.

The Federal Reserve is a ponzi-scheme.
They perpetuate inflation to be able to print more money, and shrink debt.
But that can’t last forever.
There will be consequences.

Especially since voters keep re-electing the very same bought-and-paid-for, irresponsible, do-nothing, look-the-other-way, big-money-trolling, FOR SALE incumbent politicians, over and over.

  • Stop Repeat Offenders.
  • Don’t Re-Elect Them !
Posted by: d.a.n at July 12, 2006 07:15 PM
Comment #166900

Too many voters haven’t got a clue about the debt, the Federal Reserve, the ponzi-scheme (a.k.a. Social Security), etc.

Back when the budget almost got balanced (1999), my nephew said, but we have surpluses.

I said, HA !

How do you have surpluses when you have 6 trillion in National Debt, and Social Security is $10 trillion in the hole, and the annual revenues for the U.S. government is only $1.4 trillion ?

That was then.

Now the National Debt is $8.4 trillion.

Social Security is $12.8 trillion in the hole.

Surpluses in Social Security are being replaced with worthless bonds.

The Federal Reserve is a huge ponzi-scheme too.
It prints money to have more money, and to spend more, and to shrink the government debt.

Unfortunately, that’s why a cup of coffee that used to be 25 cents is now $1 (or more, if you’re at Starbucks).

We’ve been tricked into thinking 3% or 4% inflaiton is OK.

It is NOT !

It destabilizes the economy, and helps the government perpetuate their ponzi-schemes.

That’s why people are forced to run around like chickens with their head cut off, looking for some place to invest their money, so that it won’t lose principal to the ever present inflation.

  • Stop Repeat Offenders.
  • Don’t Re-Elect Them !
Posted by: d.a.n at July 12, 2006 07:25 PM
Comment #166905

d.a.n

I disagree with you when you say the Federal reserve prints more money to have more money thus attempting to shrink the government debt. If that were true, they would print money to the point where inflation exceeds the “tolerable” levels of 3%.

Furthermore, you did not explain, or even imply a reason why 3-4% inflation is a bad thing.

Posted by: Zeek at July 12, 2006 08:00 PM
Comment #166907

Zeek, Dan raises an interesting question which I don’t know the answer to. Does the Treasury influence the value of the dollar through minting new money in excess of returned money to be destroyed? Who decides when to increase the money supply and by how much? Increasing the money supply would increase inflation while having other positive effects like increasing exports, and vice versa.

I used to know this, but, have forgotten what the process is. I know the fed regulates some money supply through interest rates, but, I forgot the decision making process and other methods.

Posted by: David R. Remer at July 12, 2006 08:09 PM
Comment #166917

Zeek,

The fact that inflation ranges anywhere up to double-digit values is ample proof.

Study the Federal Reserve, and you’ll see what I’m talkin’ about.

The Federal Reserve (which is privately owned; not owned by the U.S. government) is scammin’ people. They print money and buy stuff with it immediately. It’s a huge scam. There would be NO inflation if it were not for irresponsible government and the Federal Reserve printing all the money they want.

Think about it.
What causes inflation?
What causes 3% to 4% inflation?
Why always keep printing more money than exists the day before?
Research it and get back with me.
I’ll be happy to debate it at great length, and many readers here will be educated about the huge ponzi-scheme, also known as the Federal Reserve.
Take a look at who owns the Federal Reserve.
Look at the history of the Federal Reserve.
Look at the suspicious manipulations of interest rates by the Federal Reserve.

Also, the Federal Reserve is not totally stupid.
They don’t want to print so much money that it creates a total collapse of the dollar. But they, and corrupt government has brainwashed us all to believe 3% or 4% inflation is a good thing, despite the fact that 0% inflation is possible, if it were not for our irresponsible monetary system, and manipulation of rates, and consistently printing more and more money.

Also, look at the impact of 3% to 4% of inflation annually.

Of course, double digit inflation of the 1980’s was worse, but that’s no reason to condone any inflation.

Also, the government is running up huge debt instead of running up inflation higher. So, either way, their will be hell to pay eventually.

It will take a while, but there will be consequnces eventually. The fact that things take so long to play out is how the government gets away with it.

Posted by: d.a.n at July 12, 2006 08:49 PM
Comment #166921

Zeek:

I am not exactly clear on the relation of your post to mine. Are you saying that I did not account for windfall taxes?

Actually I was just supporting your conclusion. I remember supply siders talking about how tax cuts paid for themselves. Capital gains taxes do pay for themselves in the short run because of a predictable windfall. That happened in the late 90’s. It’s a bogus argument because once people stop selling highly appreciated items, taxes should predictably fall.

Economically I believe that both tax decreases and spending increases should in theory partially pay for themselves. For instance war spending certainly creates profits in corportations who pay corporate taxes.

Democrats could make the opposite and equally wrong argument that spending increases pay for themselves.

Craig


Posted by: Craig Holmes at July 12, 2006 09:05 PM
Comment #166925
Craig, regarding the your assessment of the Reagan years, here is a true enough and verifiable quote:

“We need to remember that when we reached a deficit of 6 percent of GDP in the 1980’s, there was virtually no Social Security surplus to mask the deficit. Now, the Social Security surplus is projected to be $206 billion in 2010. By spending Social Security surpluses on tax cuts and other things, the administration is masking the true size of the deficit.”

I believe it was you who said we need to compare apples to apples, not oranges.

Good point. Reagan still holds the modern day record for deficit spending not Bush II.

I think we will enter a time of fiscal restraint now that the war has been with us for a number of years. These things tend to trend one way and then the other. All we need to do is reduce spending back to our historical trend line in order to see the federal debt begin to decline as a percentage of GDP.

I think going forward the economy will grow at or near our averages.

Craig


Posted by: Craig Holmes at July 12, 2006 09:15 PM
Comment #166932

David, in a nutshell the Fed Chairman and the Board of Governors will determine whether or not to increase or shrink the money supply in relation to inflation or deflation (the latter being very uncommon). I could go into details about the 3 main “levers” they have, but that would be tedious.

At least when Greenspan was chairman, I have rarely known the Fed to make decisions based on much other than inflation. Although, Greenspan did voice serious concern over our budget deficit (but that’s a different story).

@Craig, thank you for the clarification.

d.a.n

You can debate who “owns” the Fed all you want. The fact of the matter is that the Fed Chairman controls it, and s/he is a government official that is appointed by the president.

Why do you make the Fed out to be some teenager who counterfeits money? The Fed hardly just “buys stuff” when it prints more money. It buys U.S. treasury and federal agency securities only.

And what is this rubbish about “suspicious manipulations of interest rates?” Raising and lowering interest rates is the Federal Reserves job. That’s what they are supposed to do.

Who exactly do you think is profiting in this huge conspiracy theory of yours? The rich? The administration? Alan Greenspan?

Posted by: Zeek at July 12, 2006 09:31 PM
Comment #166997

David, great post. To me this is the issue that Americans are missing and being misdirected from the most.

The criminal theft from the American treasury that has occurred over the last 50 years would likely result in a bloody coup, if the American public actually understood the depth to which their pockets have been picked.

Soon the world to be realized by our seniors, as well as the working classes in America, is the one Dickens described through Scrooge, “let them die and decrease the surplus population.” This is what we are really being told by our government and the elite wealthy class in non-verbal ways.

Posted by: gergle at July 13, 2006 03:32 AM
Comment #167003

gergle, I couldn’t agree more. And Craig Holmes, who is versed in economic data, provides a window on why it can’t improve from here. Craig’s last comment utterly fails to take into account the political and social upheaval ramifications of cutting spending which the U.S. Gov’t. contractually obligated itself to provide its citizens to insure a basic quality standard of existence in their aging years. The Gov’t.’s renegging on those contracts via spending cuts will affect the 100 million children of those retiring too in very political ways. The other tact, of raising taxes on their children to levels unparalleled today, will also have huge political and social consequences, none of them good.

Yet, the American public, like Craig Holmes, dismiss these future realities in a sentence or two with the ‘belief’ that everything will work out just fine. This is precisely what prevents us from taking modest adjusting and correcting steps today to avert the economic train wreck looming ahead.

They would not be so dismissive if they had lived through the 1930’s as working and non-working people. But how easily they forget and refuse to recognize the fact that history can, and very often does, repeat itself.

Posted by: David R. Remer at July 13, 2006 06:01 AM
Comment #167004

Craig, my response to your comment can be seen in my reply to Gergle.

Thanks for the reply.

Posted by: David R. Remer at July 13, 2006 06:02 AM
Comment #167053

Zeek,

Have you looked closely at the Federal Reserve ?
You call it a Conspiracy theory ?
You ask who profits ?
The wealthy profit, of course.
It really is a huge ponzi-scheme.
So is the way the Social Security system is being mismanaged.
And why is there any inflation at all ?
Why have any destabilizing inflation at all
What causes inflation ?

How can you pay the DEBT when you have to borrow the currency to pay the debt, from the same guys you already owe ?

That is like paying off your VISA card using the very same VISA card … the interest just keeps growing, and no principal is ever paid !

It is a ponzi-scheme !
It is a scam !
And the America is the mark !

I’d encourage you to study it closer before you call it a crazy conspiracy theory.

Also, Social Security is a similar ponzi-scheme, and it’s not at all hard to prove.

The surplus tax revenues are taken out, and replaced with guess what ?

The surpluses are replaced with worthless government bonds. Don’t believe it ? Just go to the CATO institute .
Social Security is actually $12.8 trillion in the hole, because surpluses have been stolen and replaced with worthless government bonds. If that isn’t a ponzi-scheme, what is ?

It is absolutely amazing, but those are the facts.
Disprove it if you can.
It is a parasitic system.
Inflation is a clever, hidden form of taxation.
It is a Picardy Third.
It is a wonderful game of smoke-and-mirrors, called Two-Tiered-Structured-Finance.
Our government and the Federal Reserve are doing exactly the same thing ENRON did.
Do you not sense something fundamentally wrong?
There is ample proof of it, if you think out of the box, and ask yourself why we have so much debt, why there is perpetual inflation, who will make good on the $12.8 trillion of debt in the Social Security system, and the $8.4 trillion of Federal Debt ?

So, why do they now call Social Security “Pay As You Go” ?

That in itself ought to be telling you something … where are the surpluses ?

Here’s a link to several links (since I can’t show you more than a few links at a time here):

The Great Ponzi-Scheme (the Federal Reserve)

There is a definite HOAX !

It’s just on a grander scale than most realize.

Posted by: d.a.n at July 13, 2006 10:42 AM
Comment #167057
If Bush cuts his 400 Billion deficit in half, he is still adding 1/5 of a trillion dollars to the national debt, and future tax payers.

David:

First of all, my aforementioned comments may not be supported by mathematical statistics, but they are formulated by common sense and rudimentary economical thought.

But in any case, your theory is laudable only if the federal deficit stops decreasing after it is cut in half. But who’s to say the deficit will stop declining once it’s cut in half? I look at the trends, and the trend says that the deficit will continue to decline until it is no more, if it continues at its current rate.

Also, assert that my comments are “devoid of fact” but you don’t offer any factual basis to debunk my argument, with the execption of your foolishly near-sighted deficit analysis.

The bottom line is that Bush’s new fiscal plan is cutting the deficit, lowering taxes and thus aiding the disadvantaged classes, increasing market stability and thus spending, which results in more tax revenue.

So, less taxes resulting in more tax revenue…I thought you had to tax more to increase tax revenue…at least thats what Ted Kennedy told me…

Posted by: Alex Fitzsimmons at July 13, 2006 11:28 AM
Comment #167060
Alex, Want to discuss employment numbers?

I’d discuss anything with you, phx8.

Posted by: Alex Fitzsimmons at July 13, 2006 11:40 AM
Comment #167070

David:

Thank you for your response. It’s a very valid point.

From your response, I think we may be looking at cuts in a different way. By “cuts” I mean the amount of expenditures the government makes as a percentage of GDP. I think they are above trend right now. (21%?) This is from my perspective unfortunate but understandable because of the war, Katrina etc. It would be my expectation of government that since the war is more mature, that we would be able to gradually reduce this amount back to trendlines.

With regard to one of your main premises about the future. It boils down to demographics. Too many old folks not enough young folks. It would seem obvious to me that we can move away from crisis simply by reforming immigration. This immigration crisis we are having is because there is work here for illegals to do. We need to reform this process to put the illegals out of work with legal immigrants. (Or make illegals, legal). There are many other possibilities such as retiring later, increases in productivity etc etc.

In short, I believe the problem you are so good at describing will create demand that will be filled by our free society. The labor sourse is a “commodity” that works not unlike other commodities. The price will go up because of shortage, and then supply will increase. The world is full of young people. Since we lack young people we will “bid” for their services, and recruit them.

This process will happen in an open market along with thousands of other variables. One of the major variables is productivity. The higher productivity gains the lower the need for immigrants. (sort of).

Another variable will be the price of retirement. As the cost of retirement goes up, fewer people will retire. Price cures price. More seniors working part time. (Walmart should do well).

The free market will sort out the numbers. They are probably impossible to predict with accuracy right now. The concepts should work out over time. Our national economy should continue to grow at or near historical norms.

Craig

Posted by: Craig Holmes at July 13, 2006 12:08 PM
Comment #167075

I can’t help but laugh when politicians talk about cutting a few billion here and there, when there is already $22 trillion of debt ( $8.4 trillion Federal Debt, Social Security $12.8 trillion in the hole, PBGC $450 billion in the hole, etc.).

The common argument is that %Debt-to-GDP, inflation, and unemployment are within historical norms.

Who cares?

That overlooks dozens of many other significant factors.

Like $22 trillion of debt, perpetual inflation, printing more money, and skimming surpluses from Social Security, how can anyone lend any credibility, whatsoever, to such an inept, corrupt, and irresponsible government?

It’s also funny when politicians and their hacks talk merely about balancing the annual deficit. Nevermind that the National Debt still growing, and even if it stopped growing, it is so ridiculously large, nobody in government wants to talk about it. They know it is a problem that will take many decades to resolve. Some politicians know the problem is screwing future generations, but they don’t want to talk about it.

The enomrous size of the nation and economy is the only reason there is not immediate consequences for so much fiscal and moral bankrupcty.

But, the excesses of the early 1900’s showed what can happen. Some say it can’t happen again. Well, they are wrong. The fiscal situation may not seem serious now, but that’s only because it takes a long time for the consequences to catch up. They will, because $22 trillion of debt will not just dissappear, and it’s going to take a lot of inflation and printing a lot of money to erode it. We are most likely already past the point of no return. And, the culmination of thousands of 77 million baby boomers retiring each day (making less, spending less, paying less tax), and expecting to receive their Social Security and Medicare and welfare, combined with current debt, rising %Debt-to-GDP (68% ; up from 33% in 1980), over $40 trillion of nation-wide debt, growing poverty, falling median wages, declining quality of education, energy vulnerabilities, increasing foreign competition, government continuing to grow and grow to nightmare proportions, worsening global corpocrisy and corporatism, rising inflation, rising interest rates, legal plunder (e.g. tens of thousands of cases of abuse of eminent domain laws), etc., etc., etc.,

What’s also funny is that anyone who has a problem with any of that is a doomsdayer, alarmist, Chicken Little.

How can anyone defend such irresponsible fiscal policy ?

How can anyone defend the way surpluses are being skimmed off of the Social Security system and repalced with worthless bonds ? That is a ponzi-scheme if there ever was one.


Posted by: d.a.n at July 13, 2006 12:19 PM
Comment #167077
It would seem obvious to me that we can move away from crisis simply by reforming immigration. This immigration crisis we are having is because there is work here for illegals to do.

There is something sinister about that.
Think about it.
An underpaid, underclass ?
Just immigrate ?
How revealing.

Posted by: d.a.n at July 13, 2006 12:20 PM
Comment #167086

Alex asked: “But in any case, your theory is laudable only if the federal deficit stops decreasing after it is cut in half. But who’s to say the deficit will stop declining once it’s cut in half?”

That is where common sense and rudimentary knowledge of economics falls down in terms of understanding why they won’t. But the short answer is, Soc. Sec. and Medicare, which will add trillions to the deficits and national debt in decades to come. The alternative is kill everyone over 67.5 years old who isn’t rich by withdrawing the Soc. Sec. payments and disallowing them any medical care which they can’t afford out of their meager life’s savings since, pensions are already history for many and will be for far more before all is said and done.

The other answer is international markets/producers which will continue to erode American market share in the global marketplace. We are a net import nation. Money is going to flow to net export nations. It really is that simple. Even conservative think tanks unanimously agree now that we cannot grow our economy out of this national debt nor out from under the baby boom retirement crisis.

So, for these and many political reasons, deficits will not zero out in the foreseeable future. Depending on catastrophes and wars, the deficits will rise and fall, and might even generate a surplus in a given year, but the overall trend is going to be steady deficits until the baby boomers are dead and buried. The big question is, IS America going to show the same compassion and regard for its retiring senior citizens as it has for foreign populations suffering from lack of health care and poverty. Because we have 10’s of millions about to retire over the next few decades who will have little but Soc. Sec. and Medicare to support a retirement and death with dignity.

Will America honor its obligations to them? If it does, deficits are here to stay through 2075, in general.

Posted by: David R. Remer at July 13, 2006 01:04 PM
Comment #167093

Dan:

There is something sinister about that. Think about it. An underpaid, underclass ? Just immigrate ? How revealing.

Think about your comment Dan, it doesn’t make sense. These people right now are breaking the law and risking their lives to come here. There only possible motive is a belief that life is better here for them.

As for the underclass thing, it makes sense to me that new comers should start at the bottom. Where would you suggest they start, at the top?

Craig


Posted by: Craig Holmes at July 13, 2006 01:20 PM
Comment #167095

Craig, I admire your optimism. But, we have been moving toward this day for decades when we lose global market share to emerging economies, and will before too long, be losing investment share to those same foreign nations.

I agree with you on legal immigration being the answer to the demographic problem facing Soc. Sec.

But, the Medicare deficits cannot be solved by adding more people to it, which is what more immigration will bring, albeit, with more contributions. But, the inflation of our medical system, if you can call it a system, cannot be met by immigration which will only increase demand on it. The only way we are going to get a handle on the Medicare crisis is by directly dealing with the causes of profiteering and supply and demand resource allocations and the administrative costs of health care in America.

Believe it or not, Republicans are leading us directly toward a socialist health care system by failing to pass policies which will put health insurance within reach of retiring seniors and workers of tomorrow. This growing national debt is going to mean significantly higher taxes for the next working generation right at the time when they are going to be trying to help their parents with enormous health care expenses.

The public is not going to allow millions of America’s seniors die in cardboard huts in alleys and streets. And if they can’t afford housing and health care, their children workers will be demanding something back for the lifetime of dollars their parents invested in the Medicare payroll deductions.

Bush’s 1.2 trillion dollar Rx drug plan boondoggle is the kind of wealth transfer from taxpayers to pharmaceutical investors that this country simply cannot afford. Yet, the public is going be demanding ever more socialized responses to their parent’s withering in poverty and lacking health care, as they themselves will not be able to afford the support their parents will require.

This is not just an economic problem, but, a sociological and political problem, which must be addressed now while affordable alternatives and choices are still available to meet future demand.
Ignoring and delaying solutions as this government is now doing, is only going to make the solutions far, far more costly down the road.

Posted by: David R. Remer at July 13, 2006 01:21 PM
Comment #167099
d.a.n wrote: Why always keep printing more money than exists the day before? Research it and get back with me. I’ll be happy to debate it …
Zeek wrote: You can debate who “owns” the Fed all you want. The fact of the matter is that the Fed Chairman controls it, and s/he is a government official that is appointed by the president.

Who said anything about debating who owns th e Federal Reserve ?

I’m talking about inflation.

You said/asked:

Furthermore, you did not explain, or even imply a reason why 3-4% inflation is a bad thing.

Why have any inflation ?
Why should the value of currency perpetually fall?
We have been brainwashed for too long to thing some inflation is OK.
That’s the problem.
Even 3% or 4% is destabilizing.
That’s what causes people waste so much time and effort to find something to invest within to stay ahead of inflation.

That’s why it is bad. It wasn’t always that way. Currency used to be backed up by something of value. Now it is virtually worthless, and becoming more worthless as our debt grows.

That’s why a loaf of bread that was not long ago only 25 cents is now $2 dollars.

The value of whatever money you earned is only temporary. Hold on to it long enough, and it will become worthless.

That is all destabilizing and defeats the purpose of money, and makes way for the huge ponzi-scheme known as the Federal Reserve.

Think about it.
There was a time when currency itself had value.
Inflation used to be nearly non-existent …

Why do have have inflation now?
Because our monetary system is a ponzi-scheme that uses inflation to scam the people. It is a hidden tax that eats up debt (and savings too). It is destabilizing and it is by design.

Those aren’t grand conspiracy theories.

Those are the facts.

Posted by: d.a.n at July 13, 2006 01:25 PM
Comment #167106
Think about your comment Dan, it doesn’t make sense. These people right now are breaking the law and risking their lives to come here. There only possible motive is a belief that life is better here for them.

Craig, That’s a clever non-sequitur.
I’m not talking about the desire and motives of the illegal aliens.

I am talking about those in the U.S. that want to exploit the cheap labor, and shift the related costs (currently a net loss of about $70 billion per year to American taxpayers, who are getting fed up with it).

Those that want the cheap labor are sinister.
Not the illegal alien simply looking for a job.
That was a clever mischaracteriztion, but it wont’ work.

Craig Holmes wrote: As for the underclass thing, it makes sense to me that new comers should start at the bottom. Where would you suggest they start, at the top?

Another clever mischaracterization of the issue.
Who said anything about letting illegal aliens start at the top? Where are these non-sequiturs coming from? Perhaps from a weak, unsustainable position? Tactics to change the subject, cloud the issues, obscure the facts?

Want to discuss illegal immigration, or Debt and Monetary policies ?

Posted by: d.a.n at July 13, 2006 01:34 PM
Comment #167110

From the graph above and below, things started to go wrong around 1980, even though decisions of prior decades were also part of the consequences we now see. Double digit inflation followed. There were lots of exacerbating issues, but poor fiscal policy is the primary reason.


Posted by: d.a.n at July 13, 2006 01:41 PM
Comment #167111

And that payment schedule above is for the National Debt alone.

It does not even include the Debt for Social Security, which is a staggering $12.8 trillion in the hole.

Posted by: d.a.n at July 13, 2006 01:43 PM
Comment #167112

Great points, D.a.n.

Posted by: gergle at July 13, 2006 01:43 PM
Comment #167113

Thanks gergle.

Posted by: d.a.n at July 13, 2006 01:48 PM
Comment #167136

David:

we have been moving toward this day for decades when we lose global market share to emerging economies, and will before too long, be losing investment share to those same foreign nations.

I don’t view this as a negative.

Believe it or not, Republicans are leading us directly toward a socialist health care system by failing to pass policies which will put health insurance within reach of retiring seniors and workers of tomorrow.

Consumers are also buying more and more medical treatments that years ago we would not have thought of. A part of the rise in health insurance is not due to inflation, but rather increase in consumption. Individual proceedures going up would be inflation. I admit that is there, but I am talking about asking the medical profession to handle things we handled ourselves in years past. Medical is going up because of consumption.

Craig

Posted by: Craig Holmes at July 13, 2006 02:44 PM
Comment #167140

And gouging for Rx

Posted by: d.a.n at July 13, 2006 03:00 PM
Comment #167326

Craig, but you are ignoring the price of those choices; out of control personal and national debt. Unsustainable debt if both the investment dollar and retail dollar continue to go overseas to circle there and not return here.

Posted by: David R. Remer at July 13, 2006 09:25 PM
Comment #167327

Dan, excellent catch on Craig’s spin and twist of the immigration argument. You are quite right. Though there is a criminal element to illegal immigration, most illegals are morally and ethically sound. It is the exploitation by employers both of politicians with campaign donation promises and threats, of our laws, and our American low wage workers being put out of jobs by employers hiring of illegals, which is morally and ethically bankrupt.

Excellent catch on the twist and spin of those who seek to preserve the status quo, or who uncritically repeat the twist and spin of their leaders who seek to retain the status quo, which is killing our future in America.

Posted by: David R. Remer at July 13, 2006 09:31 PM
Comment #167333

Zeek, the short and simple answer to why inflation is bad, is that it exceeds wage growth without exception, which erodes American workers ability to provide for their families, their retirement years, and a savings safety net of their own.

In 1960 one blue collar worker could enjoy middle class lifestyle for a spouse and 7 kids. Today, it takes two to two and a half blue collar wages to maintain that same lifestyle quality. That is the net effect of inflation. 3-4% does not sound bad in one year. But add it up over decades. The consequence is retiring baby boom population without the means to secure a dignified retirement or death in America. And the consequence is a growing poverty class. 42 Million Americans without health insurance are one injury or illness away from bankruptcy. Rather clever of Republicans to close the bankruptcy route for them, wasn’t it?
Which is going to create 10’s of millions of indentured servants who owe their entire working lives to creditors.

Posted by: David R. Remer at July 13, 2006 09:41 PM
Comment #167359

Dan:

Craig, That’s a clever non-sequitur. I’m not talking about the desire and motives of the illegal aliens.

What you were saying is that increasing immigration was sinister because it created an underclass. I refuted you by saying obviously if the immigrants are willing to break the law to get here they believe it is improving their life to be here. You may think it is sinister, they however think coming here is so good they are willing to risk a great deal.

I am talking about their motives. Why would you call sinister, what is obviously improving their life?

Craig


Posted by: Craig Holmes at July 13, 2006 10:26 PM
Comment #167365

David:

Craig, but you are ignoring the price of those choices; out of control personal and national debt. Unsustainable debt if both the investment dollar and retail dollar continue to go overseas to circle there and not return here.

Not sure. Why do you ignore the growth of the economy is your figures?

First of all debt is sustainable. sighing as we have been here before. You consistently commit the error of extrapolation. The error of extrapolation is assuming that the current trend will continue forever. The truth is that ecnomic trend lines turn.

It is understandable that deficits would rise in a time of recession and war at the same time. (Not to mention Katrina). Also, it is our history that fiscal responsibility is not so great in time of war. Wars are wasteful.

You often look out to 2014. We will not be at war until 2014 in the same way as we are now. Sure the war on terror probably will go on in the same way as the cold war want on for decades, but the war in Iraq, and the shock of 9/11 will be long in the distance.

In your life time you have seen the spendy 60’s with Johnson. You have also seen the spendy democratic congress that got booted out in the nineties and the fiscal conservative Clinton. YOu have also seen the fiscal conservative Republican congress of the 90’s.

Inflation got so low in the late 90’s that it was policy of the fed to create inflation for fear of deflation. Now that core inflation has risen 50 basis points or so, they have switched back to fighting inflation. Watch the trend line turn. Why will it turn? It always has.

The reason this works is our free economy and “free” politics. We react to things quite quickly for a large economy.

Craig

Posted by: Craig Holmes at July 13, 2006 10:35 PM
Comment #167366

Dan:

You really should think through that position on immigration. Our country is based on taking people from around the world and giving them a chance. To call wanting cheap labor sinister, is to call America sinister. When families are starving overseas, and we, we take them in when no one else would, and give them a chance, that is not sinister.

Those poor immigrants work their way up the ladder. Their kids go to college and become all kinds of great things. There is a legal minimum wage in this country. My position (which is close to the bill in the senate), would raise the standard of living of millions of workers from around the world.

It is the American way, not sinister.

Craig

Posted by: Craig Holmes at July 13, 2006 10:40 PM
Comment #167405

Craig Holmes,

You are twisting things around.
Let me repeat. Exploiting immigrants for cheap labor is sinister.
Greedy employers that employ them are sinister.
I don’t need to rethink that.
All of your rhetoric above about working up the ladder is very interesting, since it is really about exploiting cheap labor, and trying to immigrate our way out of our problems.

We can not immigrate our way out of our problems by importing crime, disease, poverty, and the uneducated.

I find that entire theory very offensive.

Listen to it.

We should increase immigration to help pay for our aging population ?

That doesn’t sound sinister to you ?

Got economic problems? Increase immigration.

Disgusting.

I find the previous talk about increasing immigration to create new tax revenues to pay for Social Security for aging America to also be offensive and manipulative.

Republicans want cheap labor,
Democrats want new votes,
and the tax payers get the bill,
since immigration won’t solve the problems.
It will make it worse.

Craig Holmes wrote (to David Remer): You consistently commit the error of extrapolation. The error of extrapolation is assuming that the current trend will continue forever.

No he doesn’t.
Extrapolate the corruption.
Craig, What makes you think government is suddenly stop being irresponsible?

Just based on track-record, things don’t look too good.

Certainly not “VERY GOOD”.

Posted by: d.a.n at July 14, 2006 12:03 AM
Comment #167432

Craig, your arguments are the same ones made by investors in 1928. The debt, deficits, globalization and the baby boom retirement converge to put the writing on the wall. You refuse to read it. Your view is part of the problem, not the solution.

So be it. I trust you don’t have children who may suffer the consequences of this ostrich like optimism which says, if I close my eyes, it will go away. Millions and millions of people suffered the consequences of this kind of blind optimism for many decades in the early 20th century after the stock market and economic collapse of 1929. Some of the hard hit wealthy took the easy way out their 30 story window, while millions of working and unemployed poor suffered through and rebuilt the nation.

Wonder which way you will go, when it happens again.

Posted by: David R. Remer at July 14, 2006 02:21 AM
Comment #194957

Alex Fitzsimmons : “Well, it comes down to who do you trust. You can take your pick between the two, it really doesn’t matter. I read your post, and it’s really nothing more than a conspiracy theory”.

Spoken like a bona fide lunatic. Somehow reality and well-known facts are his “conspiracy theory”, yet his own conspiracy theories by those evil “liberals” is the new reality. Don’t you have a church to go to? Isn’t your Armageddon coming for you? Madmen shouldn’t be talked to. They should be put away and medicated.

Posted by: saynotomadmen at November 14, 2006 03:16 AM
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