For the record, it has been a long time since I have picked up a joint. I advocate for people NOT to use drugs, I just know that prohibition is not effective.
Now don't get me wrong, I believe in fiscal conservatism. But I also agree that one must look to the future and government spending coupled with tax rates will increase demand that will fuel further consumption and investment. That will lead to additional tax revenue that should allow the administration to pay off the deficit while we are in a growth phase of the market. An example for the layman would be a company such as microsoft takes out some debt to do marketing for additional services and spends money on Research and development. This is a cost that will fuel future revenue and ultimately, income. Though I don't like as much debt, because the interest paid is a net loss to society, but in this situation the good outways the bad. This isn't political, its simply factual.
And I actually agree with you on this point. I feel its not the governments job to interfere with people's personal lives as long as it is not to the detriment of others. Now if you are high and you do something silly, then of course you will be responsible for it, as with alcohol. But just like I don't believe its the governments job to pay people pensions (social security), pay for their healthcare, or pay people when they lose their jobs, I don't believe its the governments job to determine what we do in our homes and within our lives.
We are going to borrow $400 billion this year and $455 billion next year. Since the vast majority of the tax cut is going to rich people, we are borrowing money and giving it to rich people. Sorry if that doesn't support your views, but that is what is happening. I am not advocating for writing checks to people who don't pay any taxes, but there are better ways to stimulate the economy than the tax cut that Bush passed. There was a reason that the Republicans did not include the deficit trigger the Democrats wanted. They knew the tax cut would start another round of deficit spending, but they had to pay the people who got Bush selected. True, but our children should not be handed a debt that they did nothing to run up. We will add ANOTHER trillion dollars to the debt in the next two years if you include the spending in Iraq. I guess it is OK for the government and big business to run up huge debts and just write them off in bankruptcy court. Funny, the credit card companies just got bankruptcy law changed so that consumers are much more limited in doing the same thing. He who has the gold makes the rules, I suppose. Being asked to pay your share of taxes is not penalizing anyone. If you really think that the rich people actually pay 35%, you are deluded. They hide money, hire lawyers, and pay off politicians to avoid paying taxes, and that doesn't even include the myriad of ways that corporations have to hide income. This tax cut is a dividend to the rich, nothing more. I STILL have not received one penny in tax relief, despite being solidly in the middle class.
This theory doesn't take into account the heavily slanted nature of the tax cut towards the upper classes. The rich don't spend as much when they get tax cuts as do the middle and lower classes. So the money doesn't do anything. Oh, some of it gets invested, but when you have excess capacity and flagging demand, the benefits from more investment are limited. A payroll tax holiday would be more effective if you wanted stimulus through tax cuts. This theory also doesn't take into account the fact that falling federal taxes are offset by rising state taxes This theory also doesn't take into account that a heavily indebted government can borrow money at better rates than private concerns, choking off investment in later years, an effect called "crowding out" This theory looks good on paper, but doesn't work in real life. Given our long term fiscal problems, it's time to give up on the silly fantasy that tax cuts cure everything. They don't.
Although I do not make a habit of returning to cases which I have already closed, such as this one, I will return to provide details on why Rubin-onomics (lower deficit automatically means lower interest rates) is wrong. Andymoon/SamFisher, judging by your posts, you don't even seem to understand the concept that Rubin put forth in the late 90's, much less it's implications on the economy. Rubin has been much maligned in the Wall Street Journal. I am not an electronic subscriber, so I can't pull down the actual articles, but I am happy to provide the analysis myself. Time has not permitted me to do this yesterday or today. Please bear in mind that I am a very busy man, whose financial analysis people depend on for important decisions. I priortize work over educating all of you. Look for a response within the next few days from me.
Not if you support this administration. They have reduced the tax rates at the same time that they have increased spending more than any administration in history, including Clinton. Paying down the deficit is one thing, but we are talking about increasing the DEBT by a trillion dollars this year and next. How, with the tax cut we have now, are we going to pay that down? That is what costs us money, paying interest on our debt. As soon as we had a surplus we could have used to do just that, the Republicans turned the record surplus into a record deficit (in pure dollars) in 2 years. Of course, Microsoft has no debt because their accountants know that having debt costs money. Too much debt did in Worldcom and is strangling the AOL/TW conglomerate. If we were using the money to spur growth, I would agree, but we are giving the money to rich people, who just let it sit in the bank. What establishes that this is "factual"? That is a claim that was made by Reagan (the original "Trickle-down" theory) as well as Bush I and II. These days, they call it "supply side" economics but it is just the rich getting massive kickbacks for electing Bush and then trickling down all over the rest of us.
Bush limits pay increases for many federal workers From John King CNN Washington Bureau CRAWFORD, Texas (CNN) --Citing the "national emergency" created by the September 11, 2001, attacks, President Bush Wednesday exercised his authority to limit the pay increase for many federal workers next January to 2 percent -- well below the 15 percent some employees would have been entitled to receive. The president exercised the same authority last year, as have other presidents in the past. In this case, Bush said the country could not afford to give civilian federal employees who are covered by what is known as the General Schedule the full raises they would get had he not invoked his authority. Those raises would have included a 2.7 percent increase to cover inflation as set by the government's Employment Cost Index. Some federal employees also are eligible for -- but not guaranteed -- locality pay increases that are determined based on inflation and other factors, including housing costs. In some cases, the raises for employees covered by the locality system could have been as high as 15.1 percent. In a letter to congressional leaders, the president said he was invoking his authority to implement an alternative pay plan if he came to the conclusion that allowing the full raises to go into effect would be inappropriate due to "national emergency or serious economic conditions affecting the general welfare." Explaining his decision to limit raises to a total of 2 percent, Bush said granting the full increases would "interfere with our nation's ability to pursue the war on terrorism." He said allowing the maximum raises to take effect would cost the Treasury Department about $13 billion in fiscal year 2004 -- $11 billion more than his call for 2 percent overall raises. "Such cost increases would threaten our efforts against terrorism or force deep cuts in discretionary spending or federal employment to stay within the budget," the president's letter said. "Neither outcome is acceptable."
Your past inability to comprehend such basic, Economics 101 concepts such as externalities, natural monopolies, and the fact that all markets don't function with perfect efficiency means I am forced to anticipate your response will have only one purpose: Will this be you or tradetexxx showing up for the party?
I guess if you just "close a case" and don't listen to anything else, it gives you a chance to stroke your engorged ego and delude yourself into believing that you are right. I am not quoting, supporting, or holding Rubin up at all. YOU are the one who brought up Rubin, not me. I am saying that we are going to add a trillion dollars to the debt this year and next, which at 2% will add $20 billion to our already sizeable interest payment. And I was busy responding to all the virus reports from all of the people who got infected by Sobig.F and making sure that my users were protected on Monday and Tuesday. One reason you should not "close the case" 90 minutes after posting an opinion (are you going to post the proof that was requested?). The list of things that have priority over you "educating" me would stretch from here (Galveston) to the Toyota Center. If I want your opinion, I can connect to the White House website just as easily as anyone.
Question: If you are going to go into debt, isn't NOW the time to do so when interest rates are so low? Inflation is a debtor's friend as the value of your debt decreases with inflation. Right? Actually what's clear in this discussion is that most people seem to be throwing around "sound bites" that they heard on the news (probably from some politician) and don't really understand how the economy works. I'm not claiming that I understand it all, but I do know that the economy is like the weather. You can understand general principals but now one can really predict it. Also, it's clearly cyclical and I think polticians try way to hard to either take credit or lay blame for what is essentially out of their control. Think about it... if Presidents could REALLY "control" the economy, wouldn't it ALWAYS be good? What political purpose would it serve any president to make the economy bad? The truth is it's WAY to coplex to control and all theories are just that, theories. They are probably all right as well but not all right at the same time.
If you are buying a house, yes. Interest doesn't go down for the government when the fed reduces interest rates, that affects us, not them. Inflation may be a debtor's friend, but it is the enemy of the people, you know, the ones the government is supposed to look out for. They can do things that are IN their control like NOT RUNNING HALF BILLION DOLLAR DEFICITS. A combination of a rollback of some of the tax cut along with some cuts in pork barrel funding could retire the deficit and put us on the road to paying the debt. We might have to run a small deficit during wartime, but this is not a small deficit. This is the second biggest deficit this country has seen, compared to GDP, and it will get worse before it gets better, or so says the administration. Personally, I believe the biggest effect a President has on the economy is one of public perception. If the public perceives that the Pres will do things to kick start the economy, that is a first step. Everyone knows that Bush is paying back his cronies and as long as that is the case, the economy will have a hard time recovering. Despite the claims of the Republicans that the Bush I administration was responsible for the expansion during Clinton's presidency, I believe that the American people trusted Clinton to do what was right for them over the corporations, and as such had more confidence. Of course, the last two paragraphs were my opinion and theory, not fact, but according to this administration, the truth and facts are secondary considerations to agendas.
You will never hear me defend the spending policy of the Democrats, but Reagan is the one who put out the budget and pushed his tax cut. The congress could not have done that alone. How is it that the Democrats are big spenders, but this administration (and congress) is fiscally responsible?
Andymoon, you have no idea what you are talking about. None. To say that the central bank's moves with regard to monetary policy do not impact the rate at which the government issues debt is ABSURD. Actually it's beyond absurd and it show that you are once again waxing ignorant about a topic about which you have no information. When the government issues debt, it is priced by the market of investors who purchase it. These investors use comparable rates, such as the Fed Funds and Discount Rates, in order to provide a basis for their valuation of the government issues. The Fed is able to adjust both the Fed Funds and the Discount Rate. The interest rate environment is *hugely* impacted by the Fed, and to answer the orginial question -- YES IT IS A GOOD TIME TO USE DEBT AS AN INSTRUMENT TO FINANCE A BUDGET SHORTFALL. In fact it would be financial ignorance to *not* take advantage of a historically low interest rate environment to provide leverage for the future growth of the American economy.
One interesting aspect to the defense of the present fiscal actions of Bush and co., not that I am among their biggest critics in this regard, but just as an aside, is how they reconcile aspects like defense of Keynes' positions while simultaneously using Smith's reasoning on other points; this being interesting in that the former was constituted as a direct refutation of the latter. Another is that no one has addressed how current spending will be redressed, given the yet to ever be disproven Wagner's Law on govt. spending, in light of the deficit, nor how the former will ever be able to allow for the cuts advocated while simultaneously borrowing against the defecit without incurring a further substantial growth of same. It is theoretically supportable to suppose that, Keynes being correct, govt. spending will incite an overall economic recovery...What is and has been never proven is how and why that will reverse itslef with sufficient weight to address the current drop in WE standing for the US.
So Bush is doing the same thing on the Federal level that Govenor Perry is doing to state employees. I'm not surprised. Every budget Bush proposed while governor had a tax cut and he had the political clout to get them pushed through. The budget crisis Texas has been facing is mirrored now on the national level by Bush's policies... except in Texas, you must balance the budget. You can't borrow hundreds of billions. Here is a sample of how the deficit Bush had a large part in creating is being dealt with by Governor Perry, Lt. Governor Dewhurst and House Speaker Craddick along with the rest of the Texas Republican Leadership. Except now there is a Republican gadfly in their ointment... the Republican State Comptroller. Check out what the Republican Comptroller has to say about some of what the Republican State Legislature did. Texas Republicans, explain this... look at the difference between what's coming out of the pockets of school teachers and school employees (not to mention state employees... and they weren't), health care and children and compare it to new fees for businesses and professionals. The difference is shocking. This is an excerpt from the Houston Chronicle: The fees Strayhorn outlined will hit school teachers, rural and immigrant doctors, mothers tracking down deadbeat dads, private investigators, children needing health insurance and securities dealers, to name just a few. "As the fiscal watchdog for our taxpayers, I want Texans to know who's picking up the tab and how much that tab will be," Strayhorn said. "I don't want anyone being surprised when their out-of-pocket costs for health care increase, when everyone from nurses to plumbers to electricians pay higher professional fees and when granddad has to pay more to go to the lake to fish," she said. Broadly, she broke down the fees, charges and out-of-pocket expenses this way: · Teachers and school employees -- $1.08 billion, including $1,000 cut over two years in cash supplements for teacher health care, which Strayhorn said amounts to a fee. · Health care -- $596 million, including $4.8 million in fees for rural and immigrant doctors. · Children -- $71.5 million, including $57.9 million in new co-pays and premium hikes for enrollees in the Children's Health Insurance Program. · Business and professionals -- $36.4 million, including $3.9 million in new state regulation fees for a wide range of business and industry professionals. If you want to see far more information in much greater detail, go to this link to the Comptroller's website. www.window.state.tx.us.
Changes in Monetary Policy (interest rates) DOES affect the government, because it dictates the rate of interest paid to holders of government debt (i.e. treasury bonds). So as interest rates fall, the interest payment the government pays to debt holders is lower. Please be wary when you are writing of such matters.
