Why isn't government debt more of a problem in people's minds?

[Stinger]

Conservatives often claim that the capital gains rate cuts during the Clinton Admin was causal to the markets rising, and therefore producing additional capital gains revenue. The problem is that the markets rose long before the cuts were passed, implying that the tax-cuts had nothing to do with the market rises and further implied that the revenue would have been greater had the capital gains rates not been cut.

The last four years of the Clinton Administration there were budget surpluses. After the Bush43 tax rate cuts the deficits returned. I laid this out years ago here.

The problem is the Clinton tax rate increases slowed the rate of revenue iincrease. The Gingrich/Kaisch tax rate cuts got that back on track and helped produce a double digit increase and that with other policies produced the surpluses. The Bush43 tax rate cuts, once accelerated and fully implimented in 2004, also produced double digit revenue increases, record increases doubling the cap gains revenue or Clinton at half the rate.

 

[MTAtech]

The problem is the Clinton tax rate increases slowed the rate of revenue iincrease. The Gingrich/Kaisch tax rate cuts got that back on track and helped produce a double digit increase and that with other policies produced the surpluses. The Bush43 tax rate cuts, once accelerated and fully implimented in 2004, also produced double digit revenue increases, record increases doubling the cap gains revenue or Clinton at half the rate.

As I have shown in my previous post, revenue under Bush43 never reached, adjusting for inflation and population growth, what already existed in 2000.

The revenue increases starting in 2004 was primarily due to the housing bubble, with Americans paying capital gains taxes from selling houses to each other.

There is no evidence that Gingrich had anything to do with getting revenue "back on track." Capital gains revenue surged because the stock markets were surging, because corporate earnings and sales were surging, not because tax-rates were lower. In fact, Gingrich said that Clinton's tax increases would cause a recession.

Regarding deficits:

 

[fmw]

The US owes almost 20 trillion dollars to so many countries. They could easily ask for it back any day. :shock:

At least a default would clean the slate and destroy the government's ability to borrow. There would be some economic hell to pay, of course, but after surviving that, things could well be better - no debt, smaller government.

 

[Stinger]

As I have shown in my previous post, revenue under Bush43 never reached, adjusting for inflation and population growth, what already existed in 2000.

Yea your self-serving attempts to manipulate the numbers. I showed the record revenue increases and deficits falling to a mere $161B.

The revenue increases starting in 2004 was primarily due to the housing bubble, with Americans paying capital gains taxes from selling houses to each other.

No they were due to a broad economic expansion, again housing is only 3-5% of GDP and lots of the gains are tax exempt.

There is no evidence that Gingrich had anything to do with getting revenue "back on track." Capital gains revenue surged because the stock markets were surging, because corporate earnings and sales were surging, not because tax-rates were lower. In fact, Gingrich said that Clinton's tax increases would cause a recession.

The numbers speak for themselves. And all those things mentioned were in part DUE the tax rate decrease. Yes the strength of the economy Clinton inherit was was more than had been predicited but slow down revenue growth his tax rate increase did. He even admitted in his infamous speech saying he raised them too much. That tax rate cuts along with welfare reform and spending restraint all due to Republican policy produced the surpluses.

Regarding deficits:

What about them and why did you stop at 2008?

 

[washunut]

As I have shown in my previous post, revenue under Bush43 never reached, adjusting for inflation and population growth, what already existed in 2000.

The revenue increases starting in 2004 was primarily due to the housing bubble, with Americans paying capital gains taxes from selling houses to each other.

There is no evidence that Gingrich had anything to do with getting revenue "back on track." Capital gains revenue surged because the stock markets were surging, because corporate earnings and sales were surging, not because tax-rates were lower. In fact, Gingrich said that Clinton's tax increases would cause a recession.

Regarding deficits:

Once again this flim-flam using a chart with no perspective. Perhaps some remember the dot com frenzy, then bust. That happens to impact capital gains receipts for the Federal government and states. So Bush got handed the crash, just like Obama got handed the financial mess in 2009.

I find Cherry picking facts with no context to be a cheap trick, but it does seem effective on this site to the ill-informed.

https://taxfoundation.org/federal-capital-gains-tax-collections-1954-2009/

 

[MTAtech]

Once again this flim-flam using a chart with no perspective. Perhaps some remember the dot com frenzy, then bust. That happens to impact capital gains receipts for the Federal government and states. So Bush got handed the crash, just like Obama got handed the financial mess in 2009.

I find Cherry picking facts with no context to be a cheap trick, but it does seem effective on this site to the ill-informed.

https://taxfoundation.org/federal-capital-gains-tax-collections-1954-2009/

First, the was no cherry-picking -- at least on my part. Second, I find it ironic that those who claim that cutting taxes under Bush was causal to revenue increases, conveniently use nominal data which excludes the fact that inflation and population growth increase revenues regardless of tax policy while also hopping over the deficits that reappeared immediately following those tax cuts. The nation had a surplus for four years, ending in 2000. 2001 was the year the first tax-cuts went into effect and deficits skyrocketed. The next tax-cut was 2003 and deficits rose again. Deficits started to come down in 2005, as a result of the beginning of the housing bubble.

Third, blaming the post 2000 deficits on the dot-com bubble is more cherry-picking. Those deficits continued long after those tech stocks rebounded.

So, those who claim that cutting taxes is a key to decrease debt, have no leg to stand on. We have ample examples of raising taxes reducing deficits and many examples of tax-cutting that resulted in increased deficits, which feed debt. Clinton raised overall taxes and deficits moved into surplus; Bush cut taxes twice and each time deficits increased (VP Cheney famously stated, "deficits didn't matter" -- acknowledging responsibility for increased deficits.) Obama raised taxes in 2013, and deficits shrank.

 

[Spartacus FPV]

Because for some, "In the long run we'll all be dead."

Politicians facing reelection are only concerned with the short them, they'll be out of office should the bill come due.

The people? Barely half of them are anxious at the idea of debt and when they're in power suddenly it becomes a case of "everyone in congress sucks but my guy" and with all the separate special interests and sacred cows nothing ever gets cut. These days, a reduction in the amount we increase is considered a cut and unfunded liabilities don't even count.

Fools, the lot of us.

 

[MTAtech]

Because for some, "In the long run we'll all be dead."

Politicians facing reelection are only concerned with the short them, they'll be out of office should the bill come due.

The people? Barely half of them are anxious at the idea of debt and when they're in power suddenly it becomes a case of "everyone in congress sucks but my guy" and with all the separate special interests and sacred cows nothing ever gets cut. These days, a reduction in the amount we increase is considered a cut and unfunded liabilities don't even count.

Fools, the lot of us.

If you consider federal debt a big problem, how do you want to solve it, since there are only three ways. 1) raise taxes; 2) lower spending; 3) keep deficits to below GDP growth as a p% of GDP.
If you chose (2), what do specifically want to cut that will make a significant difference?

 

[joG]

If you consider federal debt a big problem, how do you want to solve it, since there are only three ways. 1) raise taxes; 2) lower spending; 3) keep deficits to below GDP growth as a p% of GDP.
If you chose (2), what do specifically want to cut that will make a significant difference?

- Explain to the voters, what goods are public one that should be produced by governments and which are private and should not be.
- Develop a procedure to phase out of the non public services and production without doing citizens more harm than necessary.
- That would reduce government spending considerably. Use the surplus to pay down debt while reducing taxes slowly.

It is really very simple albeit stands against deep and powerful vested interests.

 

[ttwtt78640]

If you consider federal debt a big problem, how do you want to solve it, since there are only three ways. 1) raise taxes; 2) lower spending; 3) keep deficits to below GDP growth as a p% of GDP.
If you chose (2), what do specifically want to cut that will make a significant difference?

#3 does not work since, by definition, a deficit adds to the national debt. That leaves you with (some combination?) of #1 and/or #2.

Specifically I would cut the entire department of education, end all foreign aid and index many other entitlement programs to the CPI. For increasing tax revenue I would eliminate all FIT deductions except for a truly standard deduction (which I would increase to the FPL) - the 16A says that "income from all sources" may be taxed and makes no mention of basing that on how, or upon who, that income is later spent.

 

[MTAtech]

#3 does not work since, by definition, a deficit adds to the national debt. That leaves you with (some combination?) of #1 and/or #2.

Specifically I would cut the entire department of education, end all foreign aid and index many other entitlement programs to the CPI. For increasing tax revenue I would eliminate all FIT deductions except for a truly standard deduction (which I would increase to the FPL) - the 16A says that "income from all sources" may be taxed and makes no mention of basing that on how, or upon who, that income is later spent.

What #3 does is make the debt irrelevant. As I have explained in other threads, that's what happened to the massive World War II debt. In 1948, the debt was 120% of GDP or, about $220 billion. The government still ran a deficit, but one that was smaller than GDP growth. None of the WWII debt was paid off but $220 billion in a $19-20 trillion economy is peanuts.

That's what would happen if we kept deficits below economic growth.

 

[MTAtech]

- Explain to the voters, what goods are public one that should be produced by governments and which are private and should not be.
- Develop a procedure to phase out of the non public services and production without doing citizens more harm than necessary.
- That would reduce government spending considerably. Use the surplus to pay down debt while reducing taxes slowly.

It is really very simple albeit stands against deep and powerful vested interests.

As I've said many times, the federal government, in terms of spending, is an insurance company with an army. That's where the vast amount of federal spending resides, in five areas: Social Security, Medicare, Medicaid, defense and interest on the debt. So, if someone is talking about reducing federal spending to lower debt, they are either talking about cutting the big five or they have no idea what they are talking about.

 

[ttwtt78640]

What #3 does is make the debt irrelevant. As I have explained in other threads, that's what happened to the massive World War II debt. In 1948, the debt was 120% of GDP or, about $220 billion. The government still ran a deficit, but one that was smaller than GDP growth. None of the WWII debt was paid off but $220 billion in a $19-20 trillion economy is peanuts.

That's what would happen if we kept deficits below economic growth.

I understand that concept but what you have described seems to be more a matter of inflation than GDP growth "shrinking" that WWII debt. We must also keep in mind that even with historically low interest rates now we pay over $250 billion annually (about 6% of total federal spending) on national debt interest alone.

 

[Stinger]

That's what would happen if we kept deficits below economic growth.

Which is more inline with Republican policies than democrat policies. Which is why we recently had surpluses or close to them under Republican fiscal management.

 

[MTAtech]

I understand that concept but what you have described seems to be more a matter of inflation than GDP growth "shrinking" that WWII debt. We must also keep in mind that even with historically low interest rates now we pay over $250 billion annually (about 6% of total federal spending) on national debt interest alone.

Yes, what's interesting is that although the debt level has grown over the last dozen years, the interest level is stable.

....

Also, inflation and economic growth go hand-in-hand.

 

[MTAtech]

Which is more inline with Republican policies than democrat policies. Which is why we recently had surpluses or close to them under Republican fiscal management.

Well, the Democrats have a 'reputation' as big spenders but that's not true. This is spending over the last two presidents, from different parties. During much of the Bush years, Republicans controlled all of government. Their spending increases far outpaced Democratic control.

This is the deficit chart:

Republicans are currently talking about major tax-cuts, which independent groups such as the Tax Foundation, say will balloon the deficit.

 

[Former GOP]

#3 does not work since, by definition, a deficit adds to the national debt. That leaves you with (some combination?) of #1 and/or #2.

Specifically I would cut the entire department of education, end all foreign aid and index many other entitlement programs to the CPI. For increasing tax revenue I would eliminate all FIT deductions except for a truly standard deduction (which I would increase to the FPL) - the 16A says that "income from all sources" may be taxed and makes no mention of basing that on how, or upon who, that income is later spent.

I especially agree with eliminating foreign aid and the department of education. Nations should be handling their own affairs and solving their own problems. Anyone who wants an education should be paying for it themselves. Public schools cost taxpayers an overwhelming amount of money and the system is severely flawed. Private schools are the way to go!

 

[Former GOP]

Well, the Democrats have a 'reputation' as big spenders but that's not true. This is spending over the last two presidents, from different parties. During much of the Bush years, Republicans controlled all of government. Their spending increases far outpaced Democratic control.

Bush increased federal spending more than Clinton, but Obama increased it more than Bush and Clinton combined. The idea that one party is more fiscally prudent than the other is bull****. Politicians in both major parties love to spend our money on their pet projects.

 

[ttwtt78640]

I especially agree with eliminating foreign aid and the department of education. Nations should be handling their own affairs and solving their own problems. Anyone who wants an education should be paying for it themselves. Public schools cost taxpayers an overwhelming amount of money and the system is severely flawed. Private schools are the way to go!

I think you have greatly misunderstood my position on public education. There are no federal schools (except for the service academies) and I have no objection to state/local funding of their public schools. My point is that there is no federal power of education in the constitution and thus no basis to have the federal government attempt to either fund or control a state/local public education function.

As to foreign aid - it is insane to borrow money from future US generations just to give it away to foreign nations now. If congress ever grows a pair and actually demands taxation sufficient to cover their ridiculous spending habits then even giving away money to the world's leading opium supplier, while still unwise, is within their power.

 

[Former GOP]

I think you have greatly misunderstood my position on public education. There are no federal schools (except for the service academies) and I have no objection to state/local funding of their public schools. My point is that there is no federal power of education in the constitution and thus no basis to have the federal government attempt to either fund or control a state/local public education function.

As to foreign aid - it is insane to borrow money from future US generations just to give it away to foreign nations now. If congress ever grows a pair and actually demands taxation sufficient to cover their ridiculous spending habits then even giving away money to the world's leading opium supplier, while still unwise, is within their power.

Agree about the constitutionality of education regarding the federal government's involvement. Disagree about taxes funding it even on a local or state level. Do you own property? If so, look at your property tax bill and notice how much your local school district is draining from your bank account to pay for something which privately funded schools can do with more efficiency and greater quality in most cases.

Get rid of foreign aid, department of education, department of energy, and many other needless federal expenditures, and America would have a surplus instead of a deficit.

 

[ttwtt78640]

Agree about the constitutionality of education regarding the federal government's involvement. Disagree about taxes funding it even on a local or state level. Do you own property? If so, look at your property tax bill and notice how much your local school district is draining from your bank account to pay for something which privately funded schools can do with more efficiency and greater quality in most cases.

Get rid of foreign aid, department of education, department of energy, and many other needless federal expenditures, and America would have a surplus instead of a deficit.

I would much rather live in a state full of educated folks than in a state with only folks that could afford a private education having one. As a self employed person (handyman) I depend on having an educated and employed customer base capable of paying me to do work for them. As such, I consider it to be very much in my best interest to be surrounded by well educated and employed folks.

 

[Former GOP]

I would much rather live in a state full of educated folks than in a state with only folks that could afford a private education having one. As a self employed person (handyman) I depend on having an educated and employed customer base capable of paying me to do work for them. As such, I consider it to be very much in my best interest to be surrounded by well educated and employed folks.

Agree about having an educated populace, so I have to wonder why you're in favor of government-subsidized schools when private schools historically have provided a much higher educational quality. Studies have pinpointed how students who were educated in the private sector are much more likely than public school students to complete a bachelor's degree or higher by their mid-20s.

Here's an interesting article from someone who works in the public school system as a teacher but sends his kids to a private school. https://www.theatlantic.com/educati...l-teacher-but-a-private-school-parent/386797/

Anyone who is in the middle-class bracket or higher can afford private school. All it takes is some sacrifice and prudence on the parent's part. Kids don't need to have xbox games on their home computers, smart phones, or all the other expensive non-essential luxuries. What is more important?

You say you lean libertarian, but doesn't that mean you advocate less government and less spending in all areas including local and state? Education takes a huge chunk out of state and local budgets and burdens property owners with a high amount of taxation. That's not libertarian.

 

[Stinger]

Well, the Democrats have a 'reputation' as big spenders but that's not true. This is spending over the last two presidents, from different parties. During much of the Bush years, Republicans controlled all of government. Their spending increases far outpaced Democratic control.

This is the deficit chart:

Republicans are currently talking about major tax-cuts, which independent groups such as the Tax Foundation, say will balloon the deficit.

Try again, the Democrats took control of fiscal policy and the budget in January of 2007 for FY2008. And every time the Republicans cut tax rates we either get surplus budgets or mighty dang close so spare me "projections".

 

[Stinger]

Bush increased federal spending more than Clinton, but Obama increased it more than Bush and Clinton combined. The idea that one party is more fiscally prudent than the other is bull****. Politicians in both major parties love to spend our money on their pet projects.

First Presidents don't increase spending Congress does. And your statement would only apply if the FY2008 and FY2009 budgets and spending were Republican budgets and spending they were not. Just as the spending restraint in the latter half of the 1990's was Republican restraint. Clinton requested more spending than congress would grant him.

 

[Stinger]

If you consider federal debt a big problem, how do you want to solve it, since there are only three ways. 1) raise taxes; 2) lower spending; 3) keep deficits to below GDP growth as a p% of GDP.
If you chose (2), what do specifically want to cut that will make a significant difference?

2 & 3 yes. 1 no, we brought in double the cap gains tax revenue at 15% than at 29%. Income tax revenues soared hitting record increases after the Gingrich/Kasich ta rate cuts and after the Bush43 tax rates were fully implimented. Growth if tax revenues SLOWED after Clinton increased tax rates.