• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

Americans Blame Wasteful Government Spending for Deficit

phattonez said:
I'll accept your concession on that point now. Effective tax rates remained the same.
Click to expand...
Get an external source that actually shows up.

phattonez said:
You know what happened in 2009? Government spending as a percentage of GDP skyrocketed. Government doesn't tax itself, so of course revenue/GDP would fall. :)
Click to expand...
Since most federal reciepts are on payroll and income taxes, yes, the federal government does tax itself. But that was a clever try.

phattonez said:
What are you talking about?
Click to expand...
The content of the Wikipedia article. Since you apparently do not agree with the Heritage Foundation's frankly silly explanation of the reduction, it is irrelevant.

phattonez said:
And guess what causes the difference. Are those countries spending more as a percentage of GDP? Think that has an effect on the ratio? Either way, raising taxes to balance the budget is a horrible idea. We want growth. Higher taxes suck away capital for investment and decrease growth. There is no way around that fact.
Click to expand...
Are you arguing that countries that spend more then increase this ratio? Because that's:

-The opposite of the argument you made earlier in your very same post. Admittedly, the argument is wrong, so I could believe this one.
-However, if higher spending artificially inflates this metric, it means that, because we have had high spending for decades and extremely high spending of late so our tax by GDP metric would have been overinflated, the US government is recieving taxes at an absurdly low rate compared to what we should be.

The Prof said:
Fiscal Commission Co-Chairs Simpson And Bowles Release Eye-Popping Recommendations | TPMDC

ALL FOUR hits to ss are in order if the entitlement is to SURVIVE for future generations
Click to expand...
Never said in the article; you are making things up.

Please stop fabricating claims for your arguments.

Also, please try to actually read sources so that you understand what you are talking about.

TheProf, I get the distinct impression that you are completely uninterested in actually holding a discussion in good faith. Your arguments are disjointed and it doesn't look like you read either my citations, or even your own. You seem more interested in making silly, Fox-style talking points than making any meaningful discussion.

:(

cpwill said:
:lol: yes, so long as you can plug in whatever multiplier you like, gosh, the model always works!
Click to expand...
Except there is a very real multiplier based on what percentage of the money is saved versus spent each time it goes through the cycle.

20 bucks isn't going to get spent more than a few times before someone saves it - likely as an investment - and it stops moving through the economy in liquid form.
 
bowles-simpson, link above:

Social Security cuts:

1. Index the retirement age to longevity -- i.e., increase the retirement age to qualify for Social Security -- to age 69 by 2075.

2. Index Social Security yearly increases to a lower inflation rate, which will generally mean lower cost of living increases and less money per average recipient.

3. "Increase progressivity of benefit formula" -- i.e., reduce benefits by 2050 for middle, and, especially, higher earners, relative to current benefits.

4. Increase the Social Security contribution ceiling: while people only pay Social Security taxes on the first $106,800 of their wages today, that's only about 86% of the total potentially taxable wages. The co-chairs suggest raising the ceiling to capture 90% of wages.
Click to expand...

a program, especially one of such scale, that can't keep the fundamental promises its assured to hundreds of millions of americans over four generations is a failure

americans pay in to the system under specified terms for a lifetime, and then they're all gonna see the rules changed on em?

if social security is so great why does it need fixing in the first place?
 
Joe Steel said:
First of all, I'd like to see your numbers.
Click to expand...

that not enough people make enough money to get us out of the cartoonishly humongous crater of our debt and unfunded liabilities? :lol: easily done.

If everyone earning more than $100,000 was taxed at 100 percent, the earnings would not cover the current budget.

Repealing all of those Bush tax cuts, for rich and middle class alike, gets you about $3 trillion — over ten years

There Aren't Enough Rich People to Pay for Medicare and Medicaid

Taxing Those At $100,000 And Up at 100% Will Not Get Us Out Of This Year’s Deficit

;) it's not the revenue.

Former Head of the CBO: It's the Spending


Secondly, who said anything about doing it all in one year? I'm proposing long-term changes.
Click to expand...

you are mistaking my meaning. the deficits are projected to get much, much, much, much worse as the baby-boomers explode the entitlements. and even a ridiculously destructive caricature of a confiscatory tax policy can't meet the deficit that we face now.
 
Last edited:
cpwill said:
that not enough people make enough money to get us out of the cartoonishly humongous crater of our debt and unfunded liabilities? :lol: easily done.

If everyone earning more than $100,000 was taxed at 100 percent, the earnings would not cover the current budget.

Repealing all of those Bush tax cuts, for rich and middle class alike, gets you about $3 trillion — over ten years

There Aren't Enough Rich People to Pay for Medicare and Medicaid

Taxing Those At $100,000 And Up at 100% Will Not Get Us Out Of This Year’s Deficit



you are mistaking my meaning. the deficits are projected to get much, much, much, much worse as the baby-boomers explode the entitlements. and even a ridiculously destructive caricature of a confiscatory tax policy can't meet the deficit that we face now.
Click to expand...

We may as well pull a Latin America and inflate the currency 20000%....
 
Indon said:
Except there is a very real multiplier based on what percentage of the money is saved versus spent each time it goes through the cycle.
Click to expand...

except that the theory assumes that the government gets that money from the magic money tree. instead, government gets it either from taking it in the form of taxes, or by selling bonds. either way, it pulls money out of the market before it puts it back in. so the TRUE multiplier must subtract the economic productivity of privately spent and invested funds from the economic productivity of bureaucratically spent and invested funds.

oh, but they have done some interesting study of the "multiplier" effect of the government "stimulus". care to guess? negative. :) as in, a multiplier of less than 1.
 
cpwill said:
except that the theory assumes that the government gets that money from the magic money tree. instead, government gets it either from taking it in the form of taxes, or by selling bonds. either way, it pulls money out of the market before it puts it back in. so the TRUE multiplier must subtract the economic productivity of privately spent and invested funds from the economic productivity of bureaucratically spent and invested funds.

oh, but they have done some interesting study of the "multiplier" effect of the government "stimulus". care to guess? negative. :) as in, a multiplier of less than 1.
Click to expand...

Let me guess. They gave the stimulus money to the "banksters" and they kept it.! Who woulda thunk it? A non-productive part of the economy. Just so they wouldn't have to mark to market their real estate "mortgage" tranches. Bent over is good, don't stand up, nothing to be seen here. Move along.
 
cpwill said:
...it's not the revenue.
Click to expand...

Thanks for the links but I have to disagree.

One of the links you provided included a link to Reducing the Deficit: Spending and Revenue Options. Figure 1-2 in that document (page 19 of the .pdf) is quite enlightening. If we do nothing, over the next 10 years, current law will increase revenue significantly and somewhat decrease expenditures. The effect will be to return the deficit to just slightly above its average of the last 40 years as a percentage of GDP. Enhancing revenue to a point just a bit greater than that already scheduled, then, will return the deficit to what we've experienced and, presumably, find comfortable.

In fact, it is the revenue.
 
cpwill said:
Former Head of the CBO: It's the Spending
Click to expand...

In the article, Douglas Holtz-Eakin, the author, says:

Montgomery also devotes a bit of space to the particulars of the 2001 and 2003 tax laws. With the need for tax reform looming, this is a discussion that deserves attention. Good tax policy involves more than just taxes going up or down. In my view, there was a clear case for the 2001 tax cuts, but not much to defend regarding the quality of the cuts. In contrast, undertaking the 2003 cuts was a much tougher call, but they were of much higher, pro-growth quality.
Click to expand...

But here's a different view:

In 2003, Holtz-Eakin left Syracuse University and the Council of Economic Advisers to become Director of the Congressional Budget Office.[3]

Under his leadership, the budget office undertook a study of tax rates, which found that any new revenue that tax cuts brought in paled in comparison with their cost.[4] He left the appointment in 2005.

Douglas Holtz-Eakin
Click to expand...

Looks like a significant discrepancy to me. On the one hand, he likes the tax cuts and, on the other, he doesn't.
 
The Prof said:
bowles-simpson, link above:



a program, especially one of such scale, that can't keep the fundamental promises its assured to hundreds of millions of americans over four generations is a failure

americans pay in to the system under specified terms for a lifetime, and then they're all gonna see the rules changed on em?

if social security is so great why does it need fixing in the first place?
Click to expand...

It needs fixing because the people in charge of the Social Security funds spent the money. That would be your politicians. Ain't they special? It's OK, just make an electronic entry and all is hunky-dory, but I don't think hunky-dory is an accounting term.
 
cpwill said:
except that the theory assumes that the government gets that money from the magic money tree.
Click to expand...

No it does not!

it pulls money out of the market before it puts it back in.
Click to expand...

Accounting identities are taught in act 101. By taking a loan (accumulating capital) the Treasury increases both their assets and liabilities; assets in the form of cash and liabilities in the form of structured debt.

On the lenders balance sheet, the asset (cash) is "swapped" for an interest bearing asset e.g. a bond. However, in this case no liability or owners equity was created as the nominal value of the cash was equal to to value of the bond at the time of purchase.

Therefore, you "pulls it out before it puts it in" comment is invalid.

so the TRUE multiplier must subtract the economic productivity of privately spent and invested funds from the economic productivity of bureaucratically spent and invested funds.
Click to expand...

You are assuming the private sector would have spent it. As monetary velocity and the short term asset accumulation by the private sector would indicate, that was not the case in the midst of the financial crisis.

oh, but they have done some interesting study of the "multiplier" effect of the government "stimulus". care to guess? negative. :) as in, a multiplier of less than 1.
Click to expand...

An actual study published by and accredited economic journal?
 
Goldenboy219 said:
Accounting identities are taught in act 101. By taking a loan (accumulating capital) the Treasury increases both their assets and liabilities; assets in the form of cash and liabilities in the form of structured debt.

On the lenders balance sheet, the asset (cash) is "swapped" for an interest bearing asset e.g. a bond. However, in this case no liability or owners equity was created as the nominal value of the cash was equal to to value of the bond at the time of purchase.

Therefore, you "pulls it out before it puts it in" comment is invalid.
Click to expand...

In terms of real goods, there is no difference. Capital is held out of the private sector because it is taken by the public sector. You can play plenty of accounting games and mess with the monetary supply, but you cannot change that fundamental fact.

You are assuming the private sector would have spent it. As monetary velocity and the short term asset accumulation by the private sector would indicate, that was not the case in the midst of the financial crisis.
Click to expand...

Without the FDIC, where would most people have their money today?
 
Indon said:
Get an external source that actually shows up.
Click to expand...

It shows up fine for me. The image shows from 1979 to today that effective tax rates are virtually the same.

Since most federal reciepts are on payroll and income taxes, yes, the federal government does tax itself. But that was a clever try.
Click to expand...

So when the government builds a new road, 100% of the money it spends is taxed? You sure?

Are you arguing that countries that spend more then increase this ratio? Because that's:

-The opposite of the argument you made earlier in your very same post. Admittedly, the argument is wrong, so I could believe this one.
-However, if higher spending artificially inflates this metric, it means that, because we have had high spending for decades and extremely high spending of late so our tax by GDP metric would have been overinflated, the US government is recieving taxes at an absurdly low rate compared to what we should be.
Click to expand...

Spending more in general will get you lower revenues/GDP, all other things being equal.

Now are you going to answer my argument about raising taxes stifling a recovery?
 
phattonez said:
In terms of real goods, there is no difference.
Click to expand...

If the private sector did not demand the "taken capital", then it does not matter.

Capital is held out of the private sector because it is taken by the public sector. You can play plenty of accounting games and mess with the monetary supply, but you cannot change that fundamental fact.
Click to expand...

Again, unless the public sector accumulation of cash forces businesses to pay more in terms of interest, it does not matter.



Without the FDIC, where would most people have their money today?[/QUOTE]
 
Goldenboy219 said:
If the private sector did not demand the "taken capital", then it does not matter.
Click to expand...

Better that capital is abandoned than kept alive with phony spending. At least then you can free the labor to do something more useful.

Again, unless the public sector accumulation of cash forces businesses to pay more in terms of interest, it does not matter.
Click to expand...

I'm pretty sure that businesses care if the cost of capital increases.

phattonez said:
Without the FDIC, where would most people have their money today?
Click to expand...

You forgot a snarky answer to this question.
 
phattonez said:
Better that capital is abandoned than kept alive with phony spending. At least then you can free the labor to do something more useful.
Click to expand...

This is your opinion, based on a crude understanding of financial economics.

I'm pretty sure that businesses care if the cost of capital increases.
Click to expand...

Of course they do, if and when public spending begins to crowd out the private sector. But this is not the case now.

You forgot a snarky answer to this question.
Click to expand...

It was my intention to simply ignore your red herring!
 
Goldenboy219 said:
This is your opinion, based on a crude understanding of financial economics.
Click to expand...

Which is better than theories that treat capital as homogenous.

Of course they do, if and when public spending begins to crowd out the private sector. But this is not the case now.
Click to expand...

At any level we know a priori that it happens. There is no way around that fact. You can point out all kinds of econometrics, but the fact is that capital would be cheaper today than it is now if government borrowing were out of the picture.

It was my intention to simply ignore your red herring!
Click to expand...

It certainly was not a red herring. You said that there was not enough private investment. I was just answering the contention by asking you a question.
 
phattonez said:
he fact is that capital would be cheaper today than it is now if government borrowing were out of the picture.
Click to expand...

The user cost of capital is near its historic low. WTF are you even talking about?

It certainly was not a red herring. You said that there was not enough demand for private investment. I was just answering the contention by asking you a question.
Click to expand...

You are being purposely indirect for lack of a valid response.
 
phattonez said:
It shows up fine for me. The image shows from 1979 to today that effective tax rates are virtually the same.
Click to expand...
Well, since I can't see your source, I'll just look it up, shouldn't make you do so.

A Note on Effective Federal Tax Rates: 1979-2002

The source seems to say that between 1979 and 2002, that total effective federal tax rates dropped across the board, by about five percent. That doesn't look "virtually the same", that looks like a fairly significant drop.

phattonez said:
So when the government builds a new road, 100% of the money it spends is taxed? You sure?
Click to expand...
It doesn't have to be - only about 20% of the money needs to be taken out in tax to maintain that ratio.

phattonez said:
Spending more in general will get you lower revenues/GDP, all other things being equal.
Click to expand...
The evidence wildly disagrees with you. To reiterate it: List of countries by tax revenue as percentage of GDP - Wikipedia, the free encyclopedia

By your statement, those nations with high tax-and-spend rates should have depressed values on this metric. But nations like Finland have extremely high rates compared to the US!

How do you reconcile that - or are you just giving up on trying to defend "Hauser's Law"?

phattonez said:
Now are you going to answer my argument about raising taxes stifling a recovery?
Click to expand...

I'm sorry, I must have missed this claim, as I don't recall you making it. World War II saw a substantial increase in federal taxation rates - as well as a recovery from a deep depression into a strong and stable economy.
 
Last edited:
UtahBill said:
one begets the other....
Click to expand...

Although in this case it is in reverse order. Regardless of the claim that there was a surplus during the Clinton years, and we must credit both Clinton and the Republican congress for that, it never took into account the unfunded liability projections which BLOW AWAY the current debt (like by 9 times!!!). The trend is clear, entitlement growth since 1950 is sucking budget and the percentage of GDP calculation allocated to federal government spending is steadily increasing.

IT DOES NOT MATTER IF WE RAISE TAXES TO COVER PART OF OUR GOVERNMENT SPENDING! TAX REVENUES WILL STAY BETWEEN 14% AND 20% AND WE STILL RUN A 40% DEFICIT.

WE MUST CUT SPENDING AND IT MUST BE MANDATORY SPENDING.
 
UtahBill said:
one begets the other....
Click to expand...

I don't think so.

Governments are created to do things. That takes money and, presumably, legislators know it. If they don't fund the spending, the defict is caused by politics not necessarily the economics of the situation.
 
pzycho said:
Although in this case it is in reverse order. Regardless of the claim that there was a surplus during the Clinton years, and we must credit both Clinton and the Republican congress for that, it never took into account the unfunded liability projections which BLOW AWAY the current debt (like by 9 times!!!). The trend is clear, entitlement growth since 1950 is sucking budget and the percentage of GDP calculation allocated to federal government spending is steadily increasing.

IT DOES NOT MATTER IF WE RAISE TAXES TO COVER PART OF OUR GOVERNMENT SPENDING! TAX REVENUES WILL STAY BETWEEN 14% AND 20% AND WE STILL RUN A 40% DEFICIT.

WE MUST CUT SPENDING AND IT MUST BE MANDATORY SPENDING.
Click to expand...

I agree, cut spending first, then raise taxes if needed....
Each govt agency gets its money, and the performance of that agency is based on living within the funds allocated.
If they can so the job with less than was allocated, the employees get a bonus based on a percentage of savings.
If they can detect fraud and end up saving the govt money, they get a bonus.
The employees most responsible for saving money are first in line for promotions and/or pay raises.
There needs to be real incentives to do these things.

BTW, if GWB had been required to ask congress for higher taxes to fight his war in Iraq, we might have done things differently.
 
pzycho said:
The trend is clear, entitlement growth since 1950 is sucking budget and the percentage of GDP calculation allocated to federal government spending is steadily increasing.
Click to expand...

Typcially, budget extremists lump Social Security with Medicare and Medicaid when they rant against entitlements. We have to be clear, SS is funded by its own tax and is not a burden on the budget. Medicare and Medicaid are adversely affected by the folly of treating health care as an economic good. The laws of supply and demand are not applicable to health care and that's what's causing the problem with Medicare and Medicaid. Additionally, Medicaid suffers from the apathy State legislators have for the poor. For the most part, the poor don't vote so legislators don't care all that much what happens to them.
 
You must log in or register to reply here.
Back
Top Bottom