If we just cut taxes on job creators and get our economy going, all the budget issues will be resolved. It's as simple as that. Obama and the Ivory Tower Brain Trust just don't understand.
Wow, just imagine. Someone in moneyed Bellaire (unless we're talking about Bellaire Blvd?), known to keep out the riffraff: a Republican! Will wonders never cease.
There's a simple truth: Either you tax and spend. Or you don't tax, and you don't spend. You can't do both sides; no taxes and spending will eventually lead to ruin. A Republican and Democrat are basically two sides of the same coin on spending, although Republicans tend towards even more useless priorities (defense spending etc.), so I don't expect too much of the second.
Speaking of Sweden, this is weird: http://kommissariecuriosa.blogspot.com/2005/11/swedish-mating-and-dating.html
Revenues have never been higher than 18% of GDP since WWII. Spending is at 25% of GDP. You will never be able to tax enough to close the gap.
You could spend and not tax, create a huge amount of money in the system, cause massive inflation, that devalues the debt, that you cover with the hard assets you secured before you implemented your plan. (too out of the box?)
FY 2015 projected revenue: $3.583 Trillion FY 2015 projected spending: $4.190 Trillion FY 2015 projected deficit: $607 Billion Spending as a % of GDP: 22.3% Deficit as a % of GDP: 3.2% http://blogs.wsj.com/washwire/2011/02/11/a-cheat-sheet-for-obamas-budget/ A pigovian carbon tax supported by Mankiw, Greenspan, and other economic advisers from the left to the right would raise $40 billion in savings for 2015. Returning the estate tax to Clinton-era levels would raise $50 billion. Returning investment taxes to Clinton-era levels would raise $32 billion. Subjecting payroll taxes to incomes above 106k a year would raise $50 billion. Eliminating tax loopholes but keeping tax rates slightly higher would raise $136 billion. Letting all Bush tax cuts expire would save $172 billion dollars. Reducing mortgage deduction and others for high-income households would save $25 billion. Creating a bank tax would save $73 billion. Cap it all off with a national sales tax (a perfectly reasonable bit of economic theory followed precisely by the thriving Nordic countries)---$41 billion. $623 billion in savings! Hey, we got a surplus just by implementing very reasonable forms of taxation supported ardently by economic experts, or moderate backswing to the Clinton administration---you know, one of the most prosperous economies of our times? Never mind the fact that if you look even further back there are even higher rates. We won't dare affront Reagen yet, even though his own Laffer Curve suggests we should. guess i proved your statement wrong. Sources: New York Times analysis of data provided by Alan Auerbach and William Gale; Committee for a Responsible Federal Budget; Tax Policy Center; Congressional Budget Office; Sustainable Defense Task Force; Cato Institute; Economic Policy Institute; National Commission on Fiscal Responsibility and Reform; Joint Committee on Taxation; Centers for Medicare and Medicaid Services; Social Security Administration
Japan has been running massive deficits forever. Debt-to-GDP ratio is well over 220% whereas Greece's debt is roughy 115%. Yet, Greece is bankrupt while Japan has had absolutely no problem remaining solvent. Why? Japan, like the U.S., supplies its own currency in a world-wide freely floating exchange rate system. Greece does not. In a demand-shock recession (like the one we're in at the moment), countries that supply their own currency have the flexibility to prop up demand by increased spending. This isn't to say we can spend and spend endlessly because inflation will become an issue. However, with 8.4% unemployment and demand-pull inflation almost non-existent, I think the government can/should spend more to help spur demand, productivity, and ultimately economic growth. Now, we can argue forever about where the government should be spending to help our citizen's produce more...but that's more a political issue than economic. The bottom line: We can't end up like Greece unless we voluntarily choose to default on our debts. Fiscal austerity for fear of going "bankrupt" will severely hurt economy (like it did in Ireland).
Projections don't prove anything. The great thing about projections is you can put in whatever assumptions you need to to get the result you want. History on the other hand: Never been higher than 20.9%
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... the whole point is to reform that. Just because revenues as a percentage of GDP have never been so high, does not mean they cannot be. As they say, Past Performance is No Guarantee of Future Results. If President Obama turns America on the road to Sweden, those nice future results lie in wait.
You need to add the caveat that the vast majority of their debt is internal, and that they have been running current account surpluses like clockwork, otherwise, I partially agree with your conclusions in that currency inflexibility is a problem with Greece that the United States will not encounter (at least not until Rand Paul 2020).
I guess you and I see things a little differently. About 70% of U.S. debt is domestic (nowhere near Japan's percentage, but still very high). However, I'd say it really doesn't matter who holds our debt as long as the debt is still in U.S. currency. If it were foreign-denominated debt, it'd be a different issue altogether (like the Weimar Republic) The main reason a larger percentage of U.S. debt is foreign is that we run a trade deficit. U.S. citizens/residents keep sending hard-earned dollars over to China and Japan (where their respective central banks convert them to RMB/yen to pay their corporations). These foreign central banks now have a ton of U.S. dollars. What can they do with all those dollars? Easiest thing to do is buy Treasuries and earn some interest on it instead of just letting it sit there idly.
U.S. trade defecit is driven by our need to import oil. Oil in 1998 traded near $20 per barrel and 10 years later in 2008 as high as $130 per barrel. The US is assured of a growing trade defecit as the economy recovers and people drive more miles in their monster trucks. However, imports of crude oil declined from 2007 to 2011 due to decrease demand for liquid fuels caused by price increases. http://www.economist.com/blogs/freeexchange/2010/02/americas_trade_deficit http://useconomy.about.com/od/tradepolicy/p/Trade_Deficit.htm One thing countries with dollar reserves like to do is buy oil and other commodities that trade almost exclusively in American currency. So the need to have more American currency increases when prices go up. Those countries can increase their exports to America and other American currency holding countries, or they can go to the US Treasury. The US Treasury certainly has not denied foreign nations the joy of purchasing US debt during a down economy...nor have they denied money managers here in the US. Which is why I suspect PIMCO has beat many of its competitors' 3 and 5 year averages, as they invest heavily in treasuries and mortgage back securities.
I think when Brody saw numbers and graphs he **** his pants and ran. Why did that quote get a thread?
Japan is a poor example to use to say...hey, look they do it and they're okay! As others have mentioned, their debt is almost entirely internal - and the interest rates are tiny. They've been running prime rates of under 1% for years and years. At some point, you still run out of easy credit. Japan is going to hit the wall as their population ages dramatically and they start spending their money instead of saving it. Then where does the government get the money from? Foreign markets at a minimum of 3-5%. Now your debt payments are 3-5x as expensive. The same thing will happen to the US when our credit rating takes a justifiable hit. Greece actually is a good example - they can't borrow money at a reasonable rate, so they can't afford to operate. The only difference is that they are locked into the Euro so they can't inflate their way out of trouble. I don't believe that our politicians of either stripe will back away from the money trough, so I think the most likely scenario for us is hyperinflation.
Bigger issue is that we print a currency, while Greece doesn't print any currency at all. Greece wouldn't be in nearly the mess they are in if they still had their own currency. They'd have other problems, certainly, but not the mess they are in now. In addition to being massively in debt, their economy is completely uncompetitive because their currency is way overvalued for their needs.
So Commodore didn't look at the graph he posted himself? Odd that he struggles in D&D. I have a lot of respect for his posts in other forums. So tax revenue as a percent of GDP are at their lowest since 1949? Simply brilliant, Republican Party! And what are you running on? Social issues only an extreme minority support and TAX CUTS. Yes, simply brilliant. I would never have guessed that the GOP would be so good at driving the country down a road to ruin, but that's the roadmap they want to follow. For the life of me, though, I can't see what Greece has to do with any of it. Great country to visit on vacation. I've been there several times. Love the islands. (no cars!)
