National Debt not that Bad

[boedicca]

I agree with your statement on the tax burden on the middle class, but where does the burden go, where does it shift to?

Yes, we can wish in one hand and do poopie in the other and see which one fills first....in other words, yes we can cut spending, so that all tax groups have less of a burden, but I believe that this can not happen overnight and honestly, will not happen overnight...so who does the tax burden shift to if the middle class is given a break, so that they have more in their own hands, to spend or save?

Care

We do have a Gordian Knot of complexity in government at all levels.

A great deal of spending goes to entitlements (SS & Medicare/Medcaid) as well as the obscene benefits packages for public employee unions.

The only way to get spending under control is to restructure these.

For SS: limit COL increases to real inflation, not the wage based metric that has driven up benefits higher than the cost of living. We are also going to have to institute means testing, which screws people who have contributed in good faith. I like Ryan's idea of phasing in personal accounts while weaning off of SS as it is now.

For Medicare: Part of the health care morass. My preference has been stated in other threads, the germane bit here being tax reform to decouple health care from employment. If individuals could purchase castratophic insurance and save in HSAs for current and future expenditures, much of their health care when they are elderly could be funded out of their accumulated HSA surpluses.

Public Employee Pensions/Benefits: Get rid of all the special programs for government employees. They should pay SS, Medicare and contribute to 401Ks like the rest of us.

If we did these things, we could dramatically decrease government spending, cut taxes, balance the budget, reduce the deficit - and over time, reduce the debt levels.

 

[DE3]

I would suggest it the vast amount of wealth lost during this recession ($12 trillion in spending power) that is sucking the life out of it.

When business is retracting because of lower demand government spending it is all that is left.

No, it most certainly is not.

Even JFK recognized that cutting taxes spurs economic growth.

The total tax burden as a percent of income on a median American family has DOUBLED since the 1950s. That is the problem.

Kennedy made demand side cuts, not supply side cuts. And I think that the evidence is clear that cutting taxes alone does not spur economic growth. The numbers are simply too small in terms of the economy.

Take the Bush tax cuts as our latest example, which were the largest in our history. Those cuts amounted to about $1.4 trillion over 10 years. About 1% of the $140 trillion of the GDP over that same 10 years. Suggesting that 1% will greatly impact/change direction/grow the other 99% is pure folly.

The total tax burden since the 1950's in terms of GDP has been within 2-4 percentage points. It has not doubled. The government has historically received betweem 16% and 20% of GDP. That has remeained pretty constant.

And we cannot simply wish away the loss of $12 trillion in spending power.

 

[DE3]

Against a backdrop of steadily rising tax burdens, the Taxpayer Relief Act of 1997 reduced federal individual income taxes on the median family so dramatically that federal income taxes as a percentage of total income were about the same in 1998 as they were in 1955.

This is from the Tax Foundation.

 

[boedicca]

Kennedy made demand side cuts, not supply side cuts. And I think that the evidence is clear that cutting taxes alone does not spur economic growth. The numbers are simply too small in terms of the economy.

Take the Bush tax cuts as our latest example, which were the largest in our history. Those cuts amounted to about $1.4 trillion over 10 years. About 1% of the $140 trillion of the GDP over that same 10 years. Suggesting that 1% will greatly impact/change direction/grow the other 99% is pure folly.

The total tax burden since the 1950's in terms of GDP has been within 2-4 percentage points. It has not doubled. The government has historically received betweem 16% and 20% of GDP. That has remeained pretty constant.

And we cannot simply wish away the loss of $12 trillion in spending power.

The total tax burden on a median family includes Federal, State, SS, Medicare, Property, Sales and other taxes. It has more than doubled from 17.9% in 1958 to 39% in 2000 (and it is increasing). You are also neglecting the massive amounts of people who receive transfer payments out of that percent of GDP, which under Obama has increased to 25%, on it's way soon to close to 30% (just for the federal government). When many pay no taxes, the burden on the rest individually increases.

The Tax Foundation - The Tax Burden of the Median American Family

The Bush tax cuts were not accompanied by the spending cuts, which I have mentioned repeatedly, so they are not representative of an effective policy.

 

[Care4all]

I'm not a business owner. But if I ever were to open one, I'd open a pizza shop. If my taxes went up - I'd actually try to sell more pizza to make up the difference - I wouldn't close the shop down, bc then I would starve to death.

But that's just me. I guess other business owners don't want to eat.

How long would you stay in business selling at a loss?

Despite the old joke, you can't sell at a loss and make it up in volume, bub.

but you CAN sell your product at a lower profit margin and make up the profit dollars via increased volume...no... I did not say at a loss, but at a lower profit margin (percent) but still make the same or more in ones profit (in dollars) if you increased your sales enough to compensate....

It is a marketing tactic in retail, that we call Promotions, or Sales, or Every Day Low Pricing...increasing volume or sales/ profit dollars, while decreasing our profit margin....

very carefully, strategically....sometimes as loss leaders, to bring customers in to the Store, (who will buy other higher margin items as well) or to capture more of the consumers in the market place or to steal them away from your competitor.

But in general...

''Sales (volume) heals ALL wounds''...this is a term we used....

even selling all of your dead wood inventory, at a very low marked down price was better than it just sitting there on your stock shelves...at least you got some money for it and can use that money to reinvest in an item that would have a faster turn rate and higher margin.

And having a very low volume with a high gross margin...helps to pay the bills to the degree of it's percentage of those very low sales, but does not solve all the problems that a greater volume at a little lower gross margin could solve....

Like all those salaries you projected paying, and all of your fixed overhead that can't be cut....

a lower sales volume makes these expenses a higher percentage of your sales...with lower sales....

with higher sales /volume, these fixed expenses are a lower percentage of your sales, giving you some leeway with a lower gross margin, and could make up the difference...

I'm babbling...NEVER MIND! hahahahaha....

Care

 

[boedicca]

but you CAN sell your product at a lower profit margin and make up the profit dollars via increased volume...no... I did not say at a loss, but at a lower profit margin (percent) but still make the same or more in ones profit (in dollars) if you increased your sales enough to compensate....

It is a marketing tactic in retail, that we call Promotions, or Sales, or Every Day Low Pricing...increasing volume or sales/ profit dollars, while decreasing our profit margin....

very carefully, strategically....sometimes as loss leaders, to bring customers in to the Store, (who will buy other higher margin items as well) or to capture more of the consumers in the market place or to steal them away from your competitor.

But in general...

''Sales (volume) heals ALL wounds''...this is a term we used....

even selling all of your dead wood inventory, at a very low marked down price was better than it just sitting there on your stock shelves...at least you got some money for it and can use that money to reinvest in an item that would have a faster turn rate.

And having a very low volume with a high gross margin...helps to pay the bills to the degree of it's percentage of those very low sales, but does not solve all the problems that a greater volume at a little lower gross margin could solve....

Like all those salaries you projected paying, and all of your fixed overhead that can't be cut....

a lower sales volume makes these expenses a higher percentage of your sales...with lower sales....

with higher sales /volume, these fixed expenses are a lower percentage of your sales, giving you some leeway with a lower gross margin, and could make up the difference...

I'm babbling...NEVER MIND! hahahahaha....

Care

You're not babbling - you're making very sound points about the practical reality of running a business. That is a far cry from rabbi's Investment as Gambling approach.

 

[Rambunctious]

Having a case of the clap isn't that bad if you compare it to having a stroke. Sort of like the National Debt.

So what did all that debt under Truman do to the U.S. that was bad?

Are you kidding? I made the mistake of jumping to a false conclusion of another post. The thread starter was being sarcastic and so I need to know is this some kind of a joke?
The increase in National dept during the Truman administration was due to a little thing called WORLD WAR TWO.
The difference between then and now is #1 we are borrowing all this money were burying ourselves with #2 the spending during world war two was spent to defend our nation and today's spending is spent to keep union pensions whole and Democrats in office.
BIG DIFFERENCE.

 

[Care4all]

Actually, minus the partisan rhetoric, it is primarily being spent on our Defense budget, and on Medicare/the Pill bill, and on paying just the interest payment on the ever growing debt, and some continued bailouts.

Yes, we had some one shot wonders, like the TARP bail outs, the stimulus bills under Bush and Obama, the auto bailout etc...but those are not in our projected future year budgets and our deficit is still through the roof....

it is going to take a booming economy, reduced spending AND some tax hikes to get us out of this imo....and the tax hikes can not be even considered, until the economy is much better...

the best thing we can do for the deficit now, is get people back to work...AND paying taxes.

 

[Claudette]

The Clowns in DC don't care. They are still dicking around with HC. Not jobs or the economy. These guys are such losers.

They will just tax us, businesses and lets not forget those top money earners.

Kinda wonder what they will do if we go bankrupt?? Isn't that a cheery thought.

 

[The Rabbi]

THey hired people. They spent money.
How is that worse than the U.S. gov't sending people checks?
I wrote, if they miscalculated. But if they didnt, they will be successful.
Again, investment precedes growth, not vice versa.

You are purposely misunderstanding my post.

Investment certainly precedes the growth, but it is based upon expectations of future returns. In the current environment, those expectations are much lower than in past recoveries. The heavy role of government is sucking the air out of the private sector.

Pouring money into programs that ensure high government employment at the state and local levels, and hiring a bunch of temporary census workers is not a growth strategy.

We're not disagreeing here. But the key word is "expectation" not actual spending. And sending checks to people has been show--twice now--to be a failure.

 

[DE3]

Kennedy made demand side cuts, not supply side cuts. And I think that the evidence is clear that cutting taxes alone does not spur economic growth. The numbers are simply too small in terms of the economy.

Take the Bush tax cuts as our latest example, which were the largest in our history. Those cuts amounted to about $1.4 trillion over 10 years. About 1% of the $140 trillion of the GDP over that same 10 years. Suggesting that 1% will greatly impact/change direction/grow the other 99% is pure folly.

The total tax burden since the 1950's in terms of GDP has been within 2-4 percentage points. It has not doubled. The government has historically received betweem 16% and 20% of GDP. That has remeained pretty constant.

And we cannot simply wish away the loss of $12 trillion in spending power.

The total tax burden on a median family includes Federal, State, SS, Medicare, Property, Sales and other taxes. It has more than doubled from 17.9% in 1958 to 39% in 2000 (and it is increasing). You are also neglecting the massive amounts of people who receive transfer payments out of that percent of GDP, which under Obama has increased to 25%, on it's way soon to close to 30% (just for the federal government). When many pay no taxes, the burden on the rest individually increases.


The Bush tax cuts were not accompanied by the spending cuts, which I have mentioned repeatedly, so they are not representative of an effective policy.

Total tax burden.

As you see the increase has come at the local and state levels.

Obama has not passed any laws that have increased those transfer payments. They were mandatory, i.e. previous law.

The Bush tax cuts were an attempt at stimulus through borrowed money. I am too new to know your previous takes on that, so forgive me.

When you cut spending and cut taxes, you are making the government smaller, which is not a bad thing. But at the same time you are not increasing or growing the economy. Growth in the economy is based on increasing debt. Meaning that if you have a closed economy all you are doing is shifting dollars from one area to another. it is the whole reason for our fractional reserve banking system.

 

[boedicca]

Actually, minus the partisan rhetoric, it is primarily being spent on our Defense budget, and on Medicare/the Pill bill, and on paying just the interest payment on the ever growing debt, and some continued bailouts.

Yes, we had some one shot wonders, like the TARP bail outs, the stimulus bills under Bush and Obama, the auto bailout etc...but those are not in our projected future year budgets and our deficit is still through the roof....

it is going to take a booming economy, reduced spending AND some tax hikes to get us out of this imo....and the tax hikes can not be even considered, until the economy is much better...

the best thing we can do for the deficit now, is get people back to work...AND paying taxes.

The defense budget is minor compared to the growth of SS & Medicare. Interest payment levels are also pretty low - but that will change as the rest of the world starts demanding a premium to rollover the debt.

 

[boedicca]

Total tax burden.

As you see the increase has come at the local and state levels.

Obama has not passed any laws that have increased those transfer payments. They were mandatory, i.e. previous law.

The Bush tax cuts were an attempt at stimulus through borrowed money. I am too new to know your previous takes on that, so forgive me.

When you cut spending and cut taxes, you are making the government smaller, which is not a bad thing. But at the same time you are not increasing or growing the economy. Growth in the economy is based on increasing debt. Meaning that if you have a closed economy all you are doing is shifting dollars from one area to another. it is the whole reason for our fractional reserve banking system.

That is what I said - total tax burden. The morons who think they are our ruling class do not consider how the additions they place on families and individuals affect behavior.

Your thinking that the burden of the fed being flat is fallacious - that level does not include the accruals for future liabilities which are currently commited. A business would have to accrue those.

 

[SpidermanTuba]

How long would you stay in business selling at a loss?

You ask that as if there is one right answer. Obviously the answer to that depends on a lot of factors.

 

[SpidermanTuba]

The increase in National dept during the Truman administration was due to a little thing called WORLD WAR TWO.

Really? I had no idea.

 

[Rambunctious]

Actually, minus the partisan rhetoric, it is primarily being spent on our Defense budget, and on Medicare/the Pill bill, and on paying just the interest payment on the ever growing debt, and some continued bailouts.

Yes, we had some one shot wonders, like the TARP bail outs, the stimulus bills under Bush and Obama, the auto bailout etc...but those are not in our projected future year budgets and our deficit is still through the roof....

it is going to take a booming economy, reduced spending AND some tax hikes to get us out of this imo....and the tax hikes can not be even considered, until the economy is much better...

the best thing we can do for the deficit now, is get people back to work...AND paying taxes.

A dollar spent is a dollar spent. The military is a huge cost whether it's at war or not, peace time army's are very costly. We still need to feed and train them 24/7.

Medicare and the Pill bill would be in much better shape if the government could get rid of the fraud.

I do agree with you that tax revenue will continue to drop as long as our nation is losing jobs that's why I wonder why our leaders don't see it.

 

[Rambunctious]

The increase in National dept during the Truman administration was due to a little thing called WORLD WAR TWO.

Really? I had no idea.

If your going to quote someone use their whole quote. I sure can't tell by your original post that you had any idea.

 

[DE3]

Total tax burden.

As you see the increase has come at the local and state levels.

Obama has not passed any laws that have increased those transfer payments. They were mandatory, i.e. previous law.

The Bush tax cuts were an attempt at stimulus through borrowed money. I am too new to know your previous takes on that, so forgive me.

When you cut spending and cut taxes, you are making the government smaller, which is not a bad thing. But at the same time you are not increasing or growing the economy. Growth in the economy is based on increasing debt. Meaning that if you have a closed economy all you are doing is shifting dollars from one area to another. it is the whole reason for our fractional reserve banking system.

That is what I said - total tax burden. The morons who think they are our ruling class do not consider how the additions they place on families and individuals affect behavior.

Your thinking that the burden of the fed being flat is fallacious - that level does not include the accruals for future liabilities which are currently commited. A business would have to accrue those.

But you are failing to account for a growing economy. Yes, business would have to accrue those. I'm not saying that we do not face the possibility of impending doom. I think we should tackle the issue of entitlement spending immediately. No politicians of any stripe seem to want to do that. I also think that we can expand our economy to the extent to where those accruals are within our historical norm.

 

[Care4all]

Total tax burden.

As you see the increase has come at the local and state levels.

Obama has not passed any laws that have increased those transfer payments. They were mandatory, i.e. previous law.

The Bush tax cuts were an attempt at stimulus through borrowed money. I am too new to know your previous takes on that, so forgive me.

When you cut spending and cut taxes, you are making the government smaller, which is not a bad thing. But at the same time you are not increasing or growing the economy. Growth in the economy is based on increasing debt. Meaning that if you have a closed economy all you are doing is shifting dollars from one area to another. it is the whole reason for our fractional reserve banking system.

That is what I said - total tax burden. The morons who think they are our ruling class do not consider how the additions they place on families and individuals affect behavior.

Your thinking that the burden of the fed being flat is fallacious - that level does not include the accruals for future liabilities which are currently commited. A business would have to accrue those.

But you are failing to account for a growing economy. Yes, business would have to accrue those. I'm not saying that we do not face the possibility of impending doom. I think we should tackle the issue of entitlement spending immediately. No politicians of any stripe seem to want to do that. I also think that we can expand our economy to the extent to where those accruals are within our historical norm.

to answer a comment you hit on and to honestly answer Spider's original post in this thread...

the reason it was less detrimental to be in debt during both world war periods is because our population was still growing....like a ponzi scheme of sorts....as long as you have new people contributing, the house of cards does not fall.... or even legitimately...there were the boomers being born to absorb the debt....to spread it out, and to recoup it....

we are not faced with a growing population but a decreasing one in the future, plus the added obligations that are to come due with more boomers retiring and drawing SS and Medicare each year till they peak , then another 20 years after that....till they pass on....

it ain't pretty....

 

[SpidermanTuba]

OK, sure, my bad.