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Old July 30th, 2009, 04:56 PM   #21
FlyFish
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Our debt problems started long before Mr. Bush took office. Here's our problem, we always want to look back. Republicans answer to this is that the Democrat Congress made republican President's spend too much. Democrats do what my friend Hoosier did, ignore the question and answer by saying "oh, yeah, what about your guy". Mr. Bush was a fiscal disaster but that was past. To all of those points. So what, what are we going to do NOW?


The fact is this, we spend 14% of the money they take from us on interest. That figure will certainly be higher in 2009 and forward. We can't afford things like this train. If you are an economist what do you think about a trillion in debt for a short term boost (maybe) in an economy that will recover on it's own if we have a little patience. Is that worth the inevitable inflationary effect this will have?


You wouldn't run your own household this way.
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Old July 30th, 2009, 05:22 PM   #22
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You're right, I wouldn't run my household in that way. That said, I wouldn't run my household the way an average US household is run either. For starters I don't have a credit card. And, I bought my house only after having 30% of the money in hand. Call me an oldfashioned European...

Strictly as an economist I must insist that most of what the US is currently in is due to an overindebtedness of households and private companies over the last 5-10 years rather than an overidebtedness of the state. The relevant measure of national (e.g. government debt) is not how many trillions of dollars the state owes but how many percent of (one year's) national income are owed to the creditors. Currently, this "debt ratio" of the United States stands around 65%, which is close to the European average.

The reason US of A are not in a worse situation after almost 10 years of big spending is that your national income grew so briskly. Real growth of 3-4% per year plus 2% inflation created an environment where debt COULD rise without triggering a disaster. The problem arises now when the deficit is 13% of national income and growth is sharply negative. This can give rise to some awful debt dynamics - especially as we're unlikely to see strong growth for the next 1-2 years as the households are struggling to bring down their own indebtedness.

One way out would of course be - as you hint at - to print a load of dollars, triggering levels of inflation that render the government bonds almost worthless. However, this was done by Germany in 1920... with disastrous results that no one wants to repeat. If I were Secretary of the Treasury I'd scrap expensive spending programmes (one example would be the F-22 planes...) and raise taxes on the middle class. What I would probably NOT do is to cut investment in education, research and infrastructure. The latter are not policies that equip the United States well to face the future.

Last edited by hans280; July 30th, 2009 at 05:41 PM.
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Old July 30th, 2009, 06:48 PM   #23
JustinB
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Quote:
Originally Posted by hans280 View Post
raise taxes on the middle class.
Here is an even better idea. Roll back the Reagan, and Bush(II) tax cuts for the Rich. You cannot really raise taxes on a class of people who are mostly out of work.
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Old July 30th, 2009, 07:09 PM   #24
davsot
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Quote:
Originally Posted by FlyFish View Post
Our debt problems started long before Mr. Bush took office. Here's our problem, we always want to look back. Republicans answer to this is that the Democrat Congress made republican President's spend too much. Democrats do what my friend Hoosier did, ignore the question and answer by saying "oh, yeah, what about your guy". Mr. Bush was a fiscal disaster but that was past. To all of those points. So what, what are we going to do NOW?


The fact is this, we spend 14% of the money they take from us on interest. That figure will certainly be higher in 2009 and forward. We can't afford things like this train. If you are an economist what do you think about a trillion in debt for a short term boost (maybe) in an economy that will recover on it's own if we have a little patience. Is that worth the inevitable inflationary effect this will have?


You wouldn't run your own household this way.
I thought the Clinton Administration left the US with a huge surplus and low poverty?

Quote:
Originally Posted by Slate
By the end of the Clinton presidency, the numbers were uniformly impressive. Besides the record-high surpluses and the record-low poverty rates, the economy could boast the longest economic expansion in history; the lowest unemployment since the early 1970s; and the lowest poverty rates for single mothers, black Americans, and the aged. Real wages, after declining over the course of the Reagan and Bush years, rose under Clinton. To be sure, the gap between the very rich and everyone else widened—as it has continued to do since—but gains for the rich, for once, didn't leave behind the poor and lower middle class.
http://www.slate.com/id/2183941/pagenum/all/#page_start

Back your shit up, I've seen too much crap on these forums whether it's Latinscrapers or here.
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Old July 30th, 2009, 07:32 PM   #25
FlyFish
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Clinton's term did end on an economic high, but in truth it wasn't anything he or Congress did or in any way a result of controling spending. During 98 to 2000 we had historic stock gains. One result of those gains was a huge collection of capital gains taxes during those years. So, yes there were surpluses at the end of his term, but it was more luck in revenue generation than any set policy.


Justin, why raise taxes on anyone? How does that help anything? Do you want the Gov't to have an even larger sghare of the GDP? You are taking money out of the economy just to feed a beaurocracy. I cannot understand this rush to take people's money. Do you think the Gov't can spend it better than the private individual? A four year old with a handfull of quarters will spend money more efficiently than the United States government......no matter what party is in charge.
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Old July 30th, 2009, 08:00 PM   #26
JustinB
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Quote:
Originally Posted by FlyFish View Post
Justin, why raise taxes on anyone? How does that help anything? Do you want the Gov't to have an even larger sghare of the GDP? You are taking money out of the economy just to feed a beaurocracy. I cannot understand this rush to take people's money. Do you think the Gov't can spend it better than the private individual? A four year old with a handfull of quarters will spend money more efficiently than the United States government......no matter what party is in charge.
Because taxes pay for the life that we take for granted. Who pays for the police? Firefighters?, Transit Services? The Military? TAXES!! You want a good life? You have to help pay for it. Tax Cuts only benefit a small minority who are so rich, and powerful, they can afford to pay for everything themselves. The average US citizen actually never really saw a significant tax cuts. Only the 1% of the population who hold most of the wealth in the country. They got the tax cuts, and you are going to be stuck with the bill. It's sad that you future children(assuming you have any), are going to have to pay for the debt to China, because of the idea that taxes are bad. If the Rich actually paid their share, the US would not be in this problem. I do not like to play partisan politics, but the Republicans, especially Reagan are to blame for this mess.


Yes, the (proper) government can spend it better than the individual. There are services that we simply cannot pay for ourselves, healthcare being the biggest one right now. Too bad, citizens are voting in governments whose main goal is to serve the corporations, and the super-wealthy. THAT is the problem. It's amazing that the ones who say government are the ones who were voted into power! It's nuts. It's such a hypocritical ideology, yet the average American fell for it hook, line and sinker.

Look at the Nordic European States. They pay a lot of taxes, and they are happy! Why? Because those taxes pay for services that would cost the individual a fortune, if they had to pay for it themselves.

I am going to assume you're a Libertarian, and I am going to leave it here.

This thread is about rail. Not taxes, and ideology.

Last edited by JustinB; July 30th, 2009 at 08:18 PM.
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Old July 30th, 2009, 08:38 PM   #27
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True, this is not the place for this arguement. I obviously disagree but we will, as you say, leave it here.

Cheers
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