Employment, Debt, Deficit & Austerity

While it's true that hiring is for providing goods and services for consumption, most consuming is done by the wealthy.
Goods and services are created by working people. They're paid wages...
That doesn't make any sense.

It sounds like you're saying that people that pay wages don't work and don't create goods and services. That's crazy. We both know that building a factory and hiring people is very hard work. We also know that more goods and services are created with the building and hiring than without.
 
...free trade agreements are responsible. It doesn't matter if Americans work three times harder than the average Chinese worker, if the average Chinese worker makes one tenth that of the American worker...
You also got the quotes wrong with my words from Zenguy and Sundial's words from me.

Half the Chinese labor force scratches for food from the ground and the other half is no way anywhere near as productive as American workers. The only reason "the average Chinese worker makes one tenth that of the American worker" is because that's what they're worth.

SUPPLYNLAW.GIF
 
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...most large corporations have large quantities of idle cash, or cash-equivalent. They have the funds to hire with if they wanted to, or if it made sense to do so. But there is a lack of demand...
If that were true then you would have found it out by having seen both the amount of corporate cash and the evidence of the demand, and you'd be able to present the actual dollar amounts with links to BEA, BLS, and Federal Reserve numbers. My guess is you haven't because you can't and that you got those beliefs from leftist political rants bearing no connection to reality.

Or, you could just Google it. From the Leftist political organs, Moody's and The Financial Times.

As much as half US companies’ record $1,240bn in cash balances is being held overseas, according to Moody’s research,

US groups hit as tax keeps cash overseas - FT.com
 
But hiring people, or letting contracts, requires money. If the deficit is already a problem, how can the government spend more money, and where will it come from? The answer is that you have to go where the idle money is, and that location is well known today. It is in the financial accounts of large corporations and very wealthy individuals. If we were to simply return to the taxation policies of 1960's and 70's there would be plenty of money for hiring people and letting contracts. Our financial problems today are in large part due to a steady reduction of the tax rates on high incomes that began in the 1980's and continue today.

Our fiscal problems are because of tax decreases AND spending increases. Even if we went back to the Clinton-era taxation levels, we would still have problems at the end of the decade because of entitlement spending, particularly Medicare and Medicaid. And raising taxes in the middle of a bad economy is a very bad idea.

Your analysis has another problem. Expropriating cash from "large corporations and the very wealthy" will almost certainly worsen the deficit, not improve it. Total indebtedness of the country has remained relatively unchanged. This is because even though government indebtedness has risen, savings of individuals and corporations have risen. IOW, we have transferred the debt of (primarily) consumers and businesses to the government. So if, as you are proposing, we lower the savings of businesses and consumers (the wealthy have a very large proportion of savings), either government savings must rise, i.e. the deficit must fall, or the government deficit will rise. Since the point of your proposal is to increase circulation of money in the economy, not pay down government debt, the deficit would get even worse.
 
Not if those taxes are then used to do things like rebuild bridges, schools and roads.

That money woiuld then end up in the economy generating yet more revenue and savings.

As it is now that money is setting and doing nothing
 
...most large corporations have large quantities of idle cash, or cash-equivalent. They have the funds to hire with if they wanted to, or if it made sense to do so. But there is a lack of demand...
...Here's reality: total market capitalization (how much money investors put in) is still more than a trillion dollars below the pre-crisis peak, and it's been continuing to fall this year (from page 94 of Flow of Funds Accounts of the United States)....
...Or, you could just Google it. From the Leftist political organs, Moody's and The Financial Times.
As much as half US companies’ record $1,240bn in cash balances is being held overseas, according to Moody’s research,
US groups hit as tax keeps cash overseas - FT.com
This is a number problem. The federal reserve and the BEA tell us that--

> $1,176.1 bln was lost by corporations since the beginning of 2008 with investors taking out their money (from page 94 of Flow of Funds Accounts of the United States).

> $622.6 bln additional debt is now owed by corporations over the same time period (from page 61 of Flow of Funds Accounts of the United States).

> $8,262.4 bln yearly is now paid by corporations to employees, that's $278.1 bln more than what they paid at the beginning of 2008 (http://bea.gov/iTable/index_nipa.cfm)​

--and we also know that the UK's Financial Times says that "Moody's research" (that may or may not have included the BEA's and the Federal Reserve's numbers) says "$1,240bn in cash balances is being held overseas".

Even assuming it's all true, this still tells us that raising taxes won't increase hiring.
 
...most large corporations have large quantities of idle cash, or cash-equivalent. They have the funds to hire with if they wanted to, or if it made sense to do so. But there is a lack of demand...
...Here's reality: total market capitalization (how much money investors put in) is still more than a trillion dollars below the pre-crisis peak, and it's been continuing to fall this year (from page 94 of Flow of Funds Accounts of the United States)....
...Or, you could just Google it. From the Leftist political organs, Moody's and The Financial Times.
As much as half US companies’ record $1,240bn in cash balances is being held overseas, according to Moody’s research,
US groups hit as tax keeps cash overseas - FT.com
This is a number problem. The federal reserve and the BEA tell us that--

> $1,176.1 bln was lost by corporations since the beginning of 2008 with investors taking out their money (from page 94 of Flow of Funds Accounts of the United States).

> $622.6 bln additional debt is now owed by corporations over the same time period (from page 61 of Flow of Funds Accounts of the United States).

> $8,262.4 bln yearly is now paid by corporations to employees, that's $278.1 bln more than what they paid at the beginning of 2008 (http://bea.gov/iTable/index_nipa.cfm)​

--and we also know that the UK's Financial Times says that "Moody's research" (that may or may not have included the BEA's and the Federal Reserve's numbers) says "$1,240bn in cash balances is being held overseas".

Even assuming it's all true, this still tells us that raising taxes won't increase hiring.

I agree on the raising taxes and not hiring. Raising taxes on corporations will discourage hiring.

Estimates from Morgan Stanley are that corporations are holding nearly $2 trillion in cash.

  • "Losses" are not necessarily cash flow. Most of the losses were in the financial system due to markdowns of assets.
  • Debt issued does not necessarily mean it is being spent. Cash is not "net cash."
  • Profit margins are at or near all-time highs.
It's actually quite easy to figure out how much cash corporations have. Just download the constituents of the Russell 3000 from Bloomberg into an excel spreadsheet, then you can download the cash held on the balance sheet of each company and sum them up. It takes about 30 seconds to do. But I'm not in the office today, so I can't.
 
We've all been over this countless times in various posts on this board.

The national debt did not cause this economic problem.

The gradual erosion of worker incomes in comparison to the GDP certainly has.

Throwing the poor and the working class under the bus isn't going to solve a damned thing.

Giving the uberwealthy still more tax breaks isn't going to help either UNLESS we insured that the extra dough they got went directly back into this nations PRODUCTIVE economy.

And no creating more complex debt instruments is NOT part of the nation's productive economy.

If we change nothing except the tax burden the wealthy have, they'd put their money in what appears to be the safest investment around.

T-BILLS.

In other words they would not invest much in any JOB creating investments.

PRIME the pump, folks.

That is what is needed.

Nope.
 
...most large corporations have large quantities of idle cash, or cash-equivalent. They have the funds to hire with if they wanted to, or if it made sense to do so. But there is a lack of demand...
If that were true then you would have found it out by having seen both the amount of corporate cash and the evidence of the demand, and you'd be able to present the actual dollar amounts with links to BEA, BLS, and Federal Reserve numbers. My guess is you haven't because you can't and that you got those beliefs from leftist political rants bearing no connection to reality.

Here's reality: total market capitalization (how much money investors put in) is still more than a trillion dollars below the pre-crisis peak, and it's been continuing to fall this year (from page 94 of Flow of Funds Accounts of the United States). Even if your premise were valid then your solution--
...Increase taxes on the rich and use the money to fix and build roads, bridges, railways, airports, high speed internet lines and hospitals. Also use it to train medical workers and technicians in industries with shortages of skilled labor...
--would only produce more of the same disastrous results we've gotten with other tax'n'spending fiascos we've tried in recent years. The reason is that the rich won't use their money for hiring if the gov't takes it.

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I think "priming the pump" Keynsian economics can only work if the underlying fundamentals are favorable to jump-starting economic growth. Taxes, regulations, healthcare, housing, energy, we need to have all these areas more favorable for economic growth. You can prime the pump all you want to, it'll only be temporary until these things are addressed and improved.
 
Before we get into the details, let me point out that when a government reduces spending, it has to fire people. If there is already high unemployment, this makes it worse. Furthermore, these fired people now stop paying taxes, and collect unemployment benefits instead, making the government's financial problems worse. And finally, these newly unemployed people don't have much money for shopping, so the retail industry suffers a hit, and they order less stuff from manufacturers, and so on. A policy like this, sometimes called austerity, just makes matters worse.

Just to be clear, the debt I'll be talking about is the total amount of money that the U.S. government owes, and that it pays interest on. The deficit is the difference between total government spending and total government income, in one year. It should be clear that the debt is the result of having a deficit, year after year. In order to reduce the debt we need to have an annual surplus instead of a deficit.

Deficit and debt are bad over the long haul. It's quite important to reduce the deficit, and reduce it a lot. But it does not have to be done immediately. It's a long term problem. The main reason to pay off the debt is because of the interest payments that have to be made. Those are a significant part of the government's total expenses, but in 2011 they are still manageable, still less than what we spend on the military, for example. But if the deficit remains high, the debt will rise, and the interest payment will eventually become unmanageable. As we approach that point, interest rates will rise, because lenders will worry about the safety of their investments. Fortunately, that point is still a few years away, but the danger must be taken seriously.

Having 20% of the population under or un-employed is a very serious immediate problem. That is the principal cause of our large deficit, because unemployed people don't pay taxes! There is no doubt that stimulus works if it's the right kind. Giving money to wealthy people doesn't do it. Same for giving money to large corporations. What does work is either the government hiring people directly, like Roosevelt did, or letting contracts to private companies for goods or services that require workers immediately. Since the nation has thousands of roads and bridges that are in serious disrepair, this one is a no-brainer. Do you remember the bridge that collapsed in the midwest a couple of years ago? That's pretty serious. That should have been a wake-up call, but it was not heeded by our dysfunctional congress.

But hiring people, or letting contracts, requires money. If the deficit is already a problem, how can the government spend more money, and where will it come from? The answer is that you have to go where the idle money is, and that location is well known today. It is in the financial accounts of large corporations and very wealthy individuals. If we were to simply return to the taxation policies of 1960's and 70's there would be plenty of money for hiring people and letting contracts. Our financial problems today are in large part due to a steady reduction of the tax rates on high incomes that began in the 1980's and continue today.

What I'm saying is: Increase taxes on the rich and use the money to fix and build roads, bridges, railways, airports, high speed internet lines and hospitals. Also use it to train medical workers and technicians in industries with shortages of skilled labor.

When you hire unemployed people you not only remove them from the unemployment lists, but they then have money to spend, which they do. This spending increases demand for goods and services, resulting in more hiring, to produce those goods and services. It's a positive feedback process. OTOH, if you give tax breaks to wealthy people, they invest most of that money, and so the economy is not stimulated very much. (This would be different if the nation had a shortage of capital, but that is not the case.) The newly employed people also begin paying taxes again.

There are false myths being repeated endlessly by some in public life. One is that if you tax the "job creators" you will hurt the economy. Well, the evidence is clear: those job creators have been sitting on huge piles of cash for several years now, and they are not creating jobs. 30 years ago, when they WERE creating lots of jobs, they were paying MUCH HIGHER taxes than they are today.

It's when the economy is strong, and growing, that governments can, and should, reduce spending.

Mitchell Timin

You really could have shortened this quite a bit. It can pretty much be summarzied in one statement. "I think government STILL doesn't have enough money."
 
...It's actually quite easy to figure out how much cash corporations have...
In this age we never have a problem with information being hidden, what we got is a real problem with so much info that we can spit out any answer we want. That's good for party hacks that are out to 'prove' their ideology, and it's bad for guys like us that actually want to know what's going on.

I got an American Association of Individual Investors database on over 10k publicly listed corps with a dozen different fields on 'free cash'. They all vary depending on the definition and accounting method. That's why I stepped back and went for Flow of Funds and GDP numbers for total aggregates and why I steer away from some clown's proprietary hidden-agenda research.

Sure, we can imagine US business' got $2T in stacks of tens'n'twenties in some huge box in the Caymans. Or not. What we know for sure is US corps are out $1.1T from market cap. losses, and they now owe an additional 0.6T to banks. We also know that this year alone they're paying an all time high $8.3T to employees and an all time high record $1.5T in taxes.
 
...most large corporations have large quantities of idle cash, or cash-equivalent. They have the funds to hire with if they wanted to, or if it made sense to do so. But there is a lack of demand...
If that were true then you would have found it out by having seen both the amount of corporate cash and the evidence of the demand, and you'd be able to present the actual dollar amounts with links to BEA, BLS, and Federal Reserve numbers. My guess is you haven't because you can't and that you got those beliefs from leftist political rants bearing no connection to reality....

CDCABSNNCB_Max_630_378.png
Huh.

So all corporations have is $0.5T in cash even while this year they have to pay a record all time high $8.3T to employees plus a record all time high $1.5T in taxes.

Thanks Sundail, it puts paid to Zenguy's crock about corps having lots of cash for more hiring if we raised taxes.
 
...free trade agreements are responsible. It doesn't matter if Americans work three times harder than the average Chinese worker, if the average Chinese worker makes one tenth that of the American worker...
You also got the quotes wrong with my words from Zenguy and Sundial's words from me.

Half the Chinese labor force scratches for food from the ground and the other half is no way anywhere near as productive as American workers. The only reason "the average Chinese worker makes one tenth that of the American worker" is because that's what they're worth.

They make one tenth because they're newly industrialized, have a huge population, much of them in poverty as you point out and are willing to work for much less because of those reasons. Like I said, they are not as productive as the American worker, but when you take into account they make so much less it still make business sense to move production unfortunately.

The liberal elite didn't care too much when it was manufacturing and call center jobs [in the case of India and the Philippines] getting outsourced because they were under the illusion that we were evolving into some sort of a creative class service economy. But just wait, if things continue the way they are you will see more service jobs outsourced at a higher rate. Teachers (online classes), analysis, finance, and perhaps more unfathomable - the medical field. X-Ray technicians, you name it, they are also being outsourced. Basically anything that is done at a computer, no reason to pay someone here five times as much. It's a sad story, however for the medical or educational professional who drives around in a Japanese made Lexus I almost welcome it.
 
...they are not as productive as the American worker, but when you take into account they make so much less it still make business sense to move production...
--only for the menial low paying work. For high-paying brain work Americans are hired. Let's accept reality as it is:

Americans are high paid; household incomes for the past three years is the highest level ever.

American jobs aren't shipped overseas because a Chinese working doesn't mean an American becomes helpless. The average number of Americans working for the past six years is the highest on record.

American factories have not shut down; the value of goods produced in the past six years is the highest ever.​
 
What is this, the year 2000?

Job growth, economic growth, income growth, and growth in factory output has been either slow or non existent for the last decade. None of the above measurements have even re-touched their 2007 peak. Except for maybe GDP Growth but much of that recovery has been due to government spending. Don't play me for a fool please.
 
...they are not as productive as the American worker, but when you take into account they make so much less it still make business sense to move production...
--only for the menial low paying work. For high-paying brain work Americans are hired. Let's accept reality as it is:

Americans are high paid; household incomes for the past three years is the highest level ever.

American jobs aren't shipped overseas because a Chinese working doesn't mean an American becomes helpless. The average number of Americans working for the past six years is the highest on record.

American factories have not shut down; the value of goods produced in the past six years is the highest ever.​

Captain, none of that outpaces inflation or population growth. ALL of these statistics improve decade on decade.
 
If you take a step back and look at the past 40 years, one can make the case that the American policy of providing assistance to Israel has had the effect, if not the express intent, of weakening Israel's political resolve,
(Golda Meir refused to launch a preemptive strike for fear of angering Washington.)
making Israel more easily bend to the American will



[ame=http://www.youtube.com/watch?v=FnCREDWEajo&NR=1]Israel forced to buy worthless US bonds for "aid" - YouTube[/ame]
 
Not if those taxes are then used to do things like rebuild bridges, schools and roads.

That money woiuld then end up in the economy generating yet more revenue and savings.

As it is now that money is setting and doing nothing

Yeah if we could get those proposal thought congress.

But as we can all see based on how Obama's original Stimulus was reduced, that is not likely.

In the unlike event that we start taxing the superwealthy again, much of that dough would go into reducing the national debt.

That is exactly what we don't need.

No if we really want to do this right we need to print money.

THAT IS a tax on wealth but one that does not take their cash away from them.

And if by doing that, and creating WPA type jobs (although building weapons is the better use of Keynesian money) THEN that CORPORATE money will come out of hiding in order to respond to a gowing DEMAND that's coming from a working AMERICA.

Oh yeah, one more benefit of creating FIAT dollars?

By driving down the value of the USD in comparison to other species, we actually make US products easier to EXPORT.

Thus that ALSO stimulates the economy somewhat.
 
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We were creating lots of jobs that were out-pacing the population workforce growth rate until the DEMOCRATS were elected in 2006 & took control January 2007. The jobs creation machine went off the rails 3 months after these assholes took power. A year & 3 months later the jobs train went off the cliff. Their socialistic wet dream that has turned into a nightmare for the now unemployed.

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