The Tax Cut Myth

[Bern80]

I dont need to know my credit score ,I dont need to borrow money, I have money.

If that is what you think than I sincerely suggest you find out. You will probably be surprised. Personal wealth has little to do with your credit score. Barrowing money in of itself doesn't reduce your credit score. Your credit score can be ruined even if you are the wisest spender but you become a victim of identity theft.

Fianlly please respond to the first paragraph of the post you replied to here. How exactley from my posts did you conclude that I am for more spending? And how were you able to conclude what my spendin habits are?

 

[Toro]

As I mentioned in another thread, or maybe even earlier in this one (I can't remember) a budget deficit really isn't that big deal.

At times, running a deficit is the right thing to do.

But you cannot do so indefinitely. The national debt simply cannot continue to grow at a faster rate than the economy without reprecussions down the road. It is bad, bad fiscal policy to be running deficits when the economy is expanding, as it had been.

Besides, deficits and debt are merely tax increases on your children. For a political party that claims to be so anti-tax and pro-family, it is a funny policy to pursue.

 

[JeffWartman]

Besides, deficits and debt are merely tax increases on your children. For a political party that claims to be so anti-tax and pro-family, it is a funny policy to pursue.

You've hit the nail on the head.

 

[loosecannon]

Meaning you can be for a Dem congress and limited spending?

Yes, tho being for dems or repubs is ludicrous.

Dems spend less that repubs.

It's a fact Jack.

 

[loosecannon]

At times, running a deficit is the right thing to do.

But you cannot do so indefinitely. The national debt simply cannot continue to grow at a faster rate than the economy without reprecussions down the road. It is bad, bad fiscal policy to be running deficits when the economy is expanding, as it had been.

There are two excuses for commiting this sin:

one: you are in a depression or currency collapse and need to spend or devalue your way out.

two: you are in a state of emergency in which economic failure is a risk worth taking.

 

[loosecannon]

But you cannot do so indefinitely. The national debt simply cannot continue to grow at a faster rate than the economy without reprecussions down the road. It is bad, bad fiscal policy to be running deficits when the economy is expanding, as it had been.

The deal is: our economy was in a bubble in 2000. It started to collapse.

Somebody came up with the brilliant idea of printing our way out of it.

First came a wave of 0% interest auto sales. Then the discount rate dropped to 1.25% and money flowed out of the federal reserve like water.

BUT the fed's ability to issue new currency is tied to national deficits via the reserve currency requirements. So we had to have a federal deficit to make it happen.

The EU did the same, so did the Bank of Japan. But we never really recovered much less got giggly vibrant again.

But we did use up our juice and need to keep adding more juice to get giddy at the troughs of GDP growth.

Prob is our monetization fix turned into an addiction. And the economy is now strung out on cheap heroine credit and lots of it just to stay sane.

And the economy is still not too good by normal metrics. Is piss poor to medium to American working class standards, and is balls to the wall for many at the top.

Can we manage our economy forever on cheap heroin credit? I don't think so.

 

[Bern80]

There are two excuses for commiting this sin:

one: you are in a depression or currency collapse and need to spend or devalue your way out.

two: you are in a state of emergency in which economic failure is a risk worth taking.

It's not a sin. as stated carrying some debt is often a good idea. Take again your credit score for example. First taking out debt does nothing to your credit score (i.e. loan for college) what makes your credit score fluctuate is how you pay back the debt. Late payments or defaulting all together will reduce your score from what it was before teh loan was taken out. But paying it off in full and in a timely manner will actually improve your credit score from what it was before the loan was taken out because you have shown that you are capable of handling debt. Many people believe haveing even one credit card is bad, when in fact it is almost essential to have one by the time one reaches college age for no other reason then to establish a credit history.

Now as far as the govt is concerned, it has ways of aleviating it's debts w/o passing it on to tax payers. Primarily in the issuance of bonds. govt bonds are still one of the most secure investments there is and is a cycle that can go on indefinately if need be.

 

[JeffWartman]

It's not a sin. as stated carrying some debt is often a good idea. Take again your credit score for example. First taking out debt does nothing to your credit score (i.e. loan for college) what makes your credit score fluctuate is how you pay back the debt. Late payments or defaulting all together will reduce your score from what it was before teh loan was taken out. But paying it off in full and in a timely manner will actually improve your credit score from what it was before the loan was taken out because you have shown that you are capable of handling debt. Many people believe haveing even one credit card is bad, when in fact it is almost essential to have one by the time one reaches college age for no other reason then to establish a credit history.

This is only true of an individuals finances. The United States government acts in no such way and if the U.S. were to carry no debt it would have no effect on the "credit reputation" of the United States. The United States is still the safest place in the world to invest, and that's why foreign countries like to hold dollars. They have no risk of default (although, obviously, do have risk of devaluation).

Now as far as the govt is concerned, it has ways of aleviating it's debts w/o passing it on to tax payers. Primarily in the issuance of bonds.

Government bonds are nothing more than increased Government debt.

govt bonds are still one of the most secure investments there is and is a cycle that can go on indefinately if need be.

Whether the cycle can go on forever is up for debate, but you're not in good company; most economics do NOT believe this cycle can go on forever. It can go on for a very very very long time, but it WILL hurt a future generation. That's not a legacy you want to leave behind.

 

[red states rule]

The deal is: our economy was in a bubble in 2000. It started to collapse.

Somebody came up with the brilliant idea of printing our way out of it.

First came a wave of 0% interest auto sales. Then the discount rate dropped to 1.25% and money flowed out of the federal reserve like water.

BUT the fed's ability to issue new currency is tied to national deficits via the reserve currency requirements. So we had to have a federal deficit to make it happen.

The EU did the same, so did the Bank of Japan. But we never really recovered much less got giggly vibrant again.

But we did use up our juice and need to keep adding more juice to get giddy at the troughs of GDP growth.

Prob is our monetization fix turned into an addiction. And the economy is now strung out on cheap heroine credit and lots of it just to stay sane.

And the economy is still not too good by normal metrics. Is piss poor to medium to American working class standards, and is balls to the wall for many at the top.

Can we manage our economy forever on cheap heroin credit? I don't think so.

Yea, the US economy continues to suck.............


A record day for Dow, S&P 500
Standard & Poor's 500 index has first record close in more than 7 years


NEW YORK - Wall Street shot higher Wednesday, sending the Standard & Poor’s 500 index to its first record close in more than seven years, as investors grew more confident that the Federal Reserve might cut interest rates in the second half of 2007. The Dow Jones industrials also reached a new high close.

http://www.msnbc.msn.com/id/3683270/

 

[red states rule]

There are two excuses for commiting this sin:

one: you are in a depression or currency collapse and need to spend or devalue your way out.

two: you are in a state of emergency in which economic failure is a risk worth taking.

The Federal Budget Deficit: Bush Benchmark Achieved, Ignored
Filed under: Economy, MSM Biz/Other Bias, MSM Biz/Other Ignorance, Taxes & Government — TBlumer @ 9:02 am
….. and the best may be yet to come.

A huge point has been virtually if not totally ignored since the announcement on Friday that the reported federal deficit for the fiscal year that ended a week ago was $250 billion — The Bush Administration has done what it said it would do about the deficit three years ago, and has done it a full three years early, i.e., in half the time predicted.

Tax receipts have soared by over 35% (with 5.5%, 14.5%, and 11.7% increases in fiscal 2004, 2005, and 2006, respectively) from $1.78 trillion to $2.41 trillion (2004 and 2005 results can be found at Page 2 of this PDF from the Congressional Budget Office [CBO]; 2006’s receipts were estimated by adding the $253 billion revenue increase reported near the end of this longer story).

Despite the costs of the Iraq War, the rest of the War on Terror, Katrina relief, and not nearly enough control over other spending, the administration has accomplished its goal of cutting the reported deficit in half by the time it leaves office a full three years early (fiscal 2009, which ends a little less than three years from now, is the last budget over which the Bush Administration will have responsibility). Andrew Taylor of the Associated Press reported on the deficit yesterday (commented on here) but “somehow” missed this little nugget of good news, even though he reported on the administration’s original fiscal 2004 promise in a “not going to happen” manner just under a year ago on October 14, 2005

http://www.bizzyblog.com/2006/10/08...sion-accomplished-perhaps-a-lot-more-to-come/

 

[Hamiltonian]

It's not a sin. as stated carrying some debt is often a good idea. Take again your credit score for example. First taking out debt does nothing to your credit score (i.e. loan for college) what makes your credit score fluctuate is how you pay back the debt. Late payments or defaulting all together will reduce your score from what it was before teh loan was taken out. But paying it off in full and in a timely manner will actually improve your credit score from what it was before the loan was taken out because you have shown that you are capable of handling debt. Many people believe haveing even one credit card is bad, when in fact it is almost essential to have one by the time one reaches college age for no other reason then to establish a credit history.

Now as far as the govt is concerned, it has ways of aleviating it's debts w/o passing it on to tax payers. Primarily in the issuance of bonds. govt bonds are still one of the most secure investments there is and is a cycle that can go on indefinately if need be.

Doesn't debt negatively affect national savings, which is not good whichever model you're using, be it Harrod-Domar, or the neoclassical Solow, or even the endogenous new growth theories?

 

[red states rule]

Doesn't debt negatively affect national savings, which is not good whichever model you're using, be it Harrod-Domar, or the neoclassical Solow, or even the endogenous new growth theories?

The national debt is about 1% of the GDP

Not much of problem

 

[loosecannon]

The national debt is about 1% of the GDP

Not much of problem

False, the national debt is approaching $9 trillion, while annual GDP is approx $13 trillion.

 

[loosecannon]

Now as far as the govt is concerned, it has ways of aleviating it's debts w/o passing it on to tax payers. Primarily in the issuance of bonds. govt bonds are still one of the most secure investments there is and is a cycle that can go on indefinately if need be.

Let's assume that this is even true, which is not a given. Why would the US choose to incur debt and therefore interest unnecesarily? It makes no sense.

But in any case if it is to be considered that the cycle of issuing bonds could go on forever that possibility will be short circuited very soon because of our massive unfunded liabilities shortfalls.

Our fiscal policy is irrational.

 

[loosecannon]

The Federal Budget Deficit: Bush Benchmark Achieved,

The hundred billion Iraq supplementals are not included in the budget, neither are the unfunded liabilities. IOW your article is meaningless.

 

[loosecannon]

Yea, the US economy continues to suck.............

The US economy has been propped up on credit for 6 years. If you do not include the national, private debts as well as unfunded liabilities in your perspective you are left looking at illusions.

 

[Toro]

The national debt is about 1% of the GDP

Not much of problem

The national deficit is 1.8% of GDP last time I checked. The national debt is 65-70%. That is not problematic, but it isn't great either. It has risen since Slick Willie was President.

 

[JeffWartman]

The national debt is about 1% of the GDP

Not much of problem

Once again, you are dead wrong.

As Toro pointed point, you are thinking of the deficit, not the debt. And in terms of the debate, that's actually a pretty huge difference.

 

[red states rule]

Once again, you are dead wrong.

As Toro pointed point, you are thinking of the deficit, not the debt. And in terms of the debate, that's actually a pretty huge difference.

I stand corrected

 

[red states rule]

Let's assume that this is even true, which is not a given. Why would the US choose to incur debt and therefore interest unnecesarily? It makes no sense.

But in any case if it is to be considered that the cycle of issuing bonds could go on forever that possibility will be short circuited very soon because of our massive unfunded liabilities shortfalls.

Our fiscal policy is irrational.

The day the Bush tax cuts passed, the left were saying how the tax cuts would ruin the economy and drain government resurces

please take take off the blinkers you wear