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Sequestration 2013

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January 1, 2013 8:17:29 PM

http://www.usdebtclock.org/index.html

Let us discuss the 'fiscal cliff'.

More about : sequestration 2013

January 1, 2013 10:52:45 PM

dogman_1234 said:
http://www.usdebtclock.org/index.html

Let us discuss the 'fiscal cliff'.
It is really disgusting how both parties cannot agree on a compromise that is good for the American people. They are both acting like babies in a candy store which candy is better mine or yours.Remember politicians you work for us not we work for you.
January 2, 2013 6:29:31 AM

Surprise surprise, they came up with an agreement at the very last minute to keep kicking the can down the road just like they did the past several times this has come up. Oh, wait, there are some tax increases on the "1%" and some defense spending cuts. What's funny is that there is new spending in this bill with adding funding for a third year of unemployment payments. It would be ironically funny if the unemployment payments actually end up costing more than the token amount of taxes the IRS will get from the symbolic tax hike on a small handful of people.

We have firmly entered the "bread and circuses" phase the Romans warned us about. Anybody willing to do any significant addressing of spending will be voted out of office ASAP because the populace likes its free handouts. Either there must be a change in the government where it can no longer dole out the entitlement money or the populace must change so that they no longer want the entitlements. I am putting my money on the former because human nature is that we are lazy and will almost never turn down free stuff. I don't think in a million years that the government will ever voluntarily put any real restraint on spending (witness what just happened with the "fiscal cliff" deal) but they WILL eventually run out of money to give away.

The reason that the two parties cannot "get along" is because getting along is bad for elections. You have to strike a stark difference between yourself and your opponent else voters may say "well, they're pretty similar, so we'll just keep the incumbent/incumbent's party in office." Also the ideology is fairly opposed between the two parties. The Democrats are statists and in their ideology more government is the answer to all problems. The Republicans on financial interests are nominally laissez-faire which means that government is usually the cause of the problem, not the solution. Trying to reconcile those differences doesn't really work. The last time we had this kind of an unreconcilable disagreement there was a civil war which forced one side to capitulate. I don't think we'll end up with a civil war, I think we'll run out of borrowing ability which will force the Democrats to abandon/severely curtail their "more government" policies.
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January 2, 2013 10:00:00 AM

Tough times.

"That which does not kill you, makes you stronger." (Friedrich Nietzsche)

:) 


January 2, 2013 3:53:51 PM

You can fool some of the people some of the time, but not all the people all the time, and is why we have 2 parties

Hope was brilliant
January 2, 2013 11:17:38 PM

This problem is not ging to go away ... it will become a regular cliffhanger for the US people and ssoner or later the Republicans will cause a crash ...

I say raise taxes immendiately and pay down some of the debt ...

Join the Greeks ...
January 2, 2013 11:38:13 PM

Taxes are being raised, and so far, only military cuts.
This reminds me of Clinton's balancing budget, where 95% of the cuts came thru the military, and the Dem's like Polosi and Feinstein screamed not to, so they instead cut more else wheres, and not in California.
Just why were they so concerned?
Business, monies coming in, tax bases, all become diminished.
As mostly a conservative base in the military, an easy out for the Dems as well.

Now, we do need more taxes and more cuts, but the low hanging fruit is gone, and theyll actually have to work this time around, and maybe even risk their precious, their reelection capability, as they may have to go after programs and education, mostly liberal
January 3, 2013 1:01:08 AM

Oldmangamer_73 said:
The "Fiscal Cliff" has been designed and orchestrated by the same people who are now proposing the solution to the problem THEY created.

Are we effing insane? They don't care about you. They don't give a whip about how the people are affected. They care about THEIR wealth and power. Not yours.
That are politicians for you greedy and power hungry.Both sides not only one.
January 3, 2013 4:56:37 PM

Once Congress makes a budget, the issue can be addressed. The american people are clueless when a budget doesn't exist.

We know we're overspending. 2% of the people in the US make over $400,000 a year. 0.6% of people make over $1 million.

Somehow, raising taxes on those people is going to solve the issue? I think not.

I'm truly amazed that so much effort has been expended over raising $600 billion over 10 years, as opposed to simply cutting back on spending. They fought tooth and nail to to get $60 billion extra a year... hell, cut $120 bill a year in spending and we have a better solution.
January 3, 2013 5:08:16 PM

musical marv said:
It is really disgusting how both parties cannot agree on a compromise that is good for the American people. They are both acting like babies in a candy store which candy is better mine or yours.Remember politicians you work for us not we work for you.


Thank you gerrymandering. Only about 60 House districts are competitive now, so the natural outcome is for less working together in order to stave off primary challenges (which naturally lend to more radical candidates to begin with). So you get this. And the US Government was NOT designed to work with European style political parties.

At this point, its clear that the time has come to ammend the Constitution to dissolve the House. It no longer serves any useful purpose. Increase the length of a Senate term to 8 years, and give each state 4 senators, one to be elected every two years.

Quote:
I'm truly amazed that so much effort has been expended over raising $600 billion over 10 years, as opposed to simply cutting back on spending. They fought tooth and nail to to get $60 billion extra a year... hell, cut $120 bill a year in spending and we have a better solution.


And what effect does that spending have on the economy? And how much does the economic loss effect incoming tax revenue?

Guess what? $400 Billion or so of the deficit is simply lost revenue due to the economy. That hole will eventually plug itself. Another $200 Billion or so is related to Iraq/Afghanistan.

If you raise taxes, you cut to some degree economic growth, cutting off future revenue streams.
If you cut spending, you cut to some degree economic growth, cutting off future revenue streams.

See the problem? Hence why taxing the wealthy makes the most sense, since it has the least negative economic impact, and thus raises the most revenue at the least amount of economic loss.

And for the record, I was for letting the BTC's expire in their entirety. Combined with the recovering economy, that would give us a balanced budget again without needing to cut a single program.
January 3, 2013 5:11:59 PM

I would also like to remind everyone that tax rates are MARGINAL, so its not like the guy making $500k is getting hammered under this.
January 3, 2013 5:31:58 PM

gamerk316 said:
Thank you gerrymandering. Only about 60 House districts are competitive now, so the natural outcome is for less working together in order to stave off primary challenges (which naturally lend to more radical candidates to begin with). So you get this. And the US Government was NOT designed to work with European style political parties.

At this point, its clear that the time has come to ammend the Constitution to dissolve the House. It no longer serves any useful purpose. Increase the length of a Senate term to 8 years, and give each state 4 senators, one to be elected every two years.

Quote:
I'm truly amazed that so much effort has been expended over raising $600 billion over 10 years, as opposed to simply cutting back on spending. They fought tooth and nail to to get $60 billion extra a year... hell, cut $120 bill a year in spending and we have a better solution.


And what effect does that spending have on the economy? And how much does the economic loss effect incoming tax revenue?

Guess what? $400 Billion or so of the deficit is simply lost revenue due to the economy. That hole will eventually plug itself. Another $200 Billion or so is related to Iraq/Afghanistan.

If you raise taxes, you cut to some degree economic growth, cutting off future revenue streams.
If you cut spending, you cut to some degree economic growth, cutting off future revenue streams.

See the problem? Hence why taxing the wealthy makes the most sense, since it has the least negative economic impact, and thus raises the most revenue at the least amount of economic loss.

And for the record, I was for letting the BTC's expire in their entirety. Combined with the recovering economy, that would give us a balanced budget again without needing to cut a single program.


You are bat poop crazy!

First, the House is there to represent the People. The Senate is there to Represent the States. By your logic, the cities are the only important places in a State since you think only the Senate matters. Whereas the House represents people all across the counties in every state. If you look at Ohio for example, the Cities are Democrat bastions and everything else is Republican - rural farmers, businesses, etc.

$200 billion from Iraq/Afghanistan? You do know that the War in Iraq is over and that Afghanistan has been drawing down. That number should have been decreasing as those operations are far smaller than a few years ago under Bush. Sure, you can fudge the numbers and say what you want. Reality is the spending has remained high and the peak of the wars are long gone.

The economic loss goes up and down. I already posted the numbers and you ignore them. When revenue was at its peak, spending still outpaced it. We're spending $1 trillion a year more than the tax revenue and revenue increased last year. If spending were steady, as revenue increased the deficit would decrease. Solid logic, except spending continues to increase! Look. at. the. numbers. They do not lie.

If you cut US Gov't spending, consumer confidence increases and people will spend more money. As long as government spending is on the rise, people will not spend and consumer confidence will be low. We all know we can't spend our way out of it. If we keep spending money, eventually everyone is going to have taxes raised on them and people want to keep their money. In fact, people are more afraid of having their taxes raised than having their gov't bennies cut.

Taxing the wealthy doesn't solve the problem. It only gives the the government more money to spend and prolongs the issue of too much spending.

It cracks me up that under Bush the Liberal Left was blasting him for spending like crazy. Now that's we're spending *5* times MORE a YEAR, the Liberal Left is perfectly ok with it.

Spending is the issue. Sorry, we need to suck it up and cut entitlements and military. Politicians are affected by those cuts and don't want either to happen. Hell, end all Social Security Disability for anyone under the age of 50 and that alone would put SS in the black.
January 3, 2013 5:40:24 PM

And just to prove how ill thought out your argument about getting rid of the house is:

Population of Ohio, a key swing state: 11.5 Million people.
Population of major cities in Ohio: 1.77 million people.

Get rid of the House and you remove the voice of over 9 million people. You let the cities decide how the State is going to be run.

4.5 million people voted in Ohio. Most were in the cities because of the location and higher densities.

The House repesents all the people of the State. The Senate only represents the government of the State.

I can't believe you would argue against a key component of what made this country a beacon of light for democracy. How foolish.
January 3, 2013 5:41:49 PM

Oldmangamer_73 said:
There just isn't enough wealthy people to tax to make up the difference.

This agreement only taxes the income wealthy, not the asset wealthy. Warren Buffet is still going to be paying the same amount.


The little peons are now happy as the "rich" are getting taxed more. Problem is still there, but the rich have higher taxes. Costs $1 for a soft taco at Taco Bell now.. used to be $0.69 a couple years ago.
January 3, 2013 5:50:13 PM

Sounds like a serious case of, whats mine is mine, whats yours is questionable.
All done for supposed good reasoning, and supposed to make sense as well.

Long term, what harm will be caused by not cutting right away, suffering such cuts vs not?
I am only hearing one immediate side, not the other.
January 3, 2013 5:51:49 PM

riser said:
First, the House is there to represent the People. The Senate is there to Represent the States. By your logic, the cities are the only important places in a State since you think only the Senate matters. Whereas the House represents people all across the counties in every state. If you look at Ohio for example, the Cities are Democrat bastions and everything else is Republican - rural farmers, businesses, etc.


Not really. The House/Senate setup was the first compromise about Slavery, and was always an inefficient setup. Especially now that we have hyper-partisan politics, and the very real posibility of gridlock due to split government.

I could care less what the House is "supposed" to represent; I want a government that works. And with Congressional districts now gerrymandered to the point where the most liberal/conservative candidate always wins, the House no longer is a viable governing body, and should be dissolved. Either that, or poliics continue to get worse, and the country breaks up.

Quote:
$200 billion from Iraq/Afghanistan? You do know that the War in Iraq is over and that Afghanistan has been drawing down. That number should have been decreasing as those operations are far smaller than a few years ago under Bush. Sure, you can fudge the numbers and say what you want. Reality is the spending has remained high and the peak of the wars are long gone.


Remember I work in defense.

The equipment, you know, tanks, planes, guns, are all past their service lifetimes. That requires a LOT of money to repair/replace. So while not directly war related, its worth noting that all three branches have more money allocated to either acquire new equipment, or repair (as best as possible) the old equipment. Then theres the extra defense spending that didn't exist before the wars that is still being allocated to one program or another, and so on and so forth. The country remains on a wartime footing, regardless of the drawdown.

Quote:
The economic loss goes up and down. I already posted the numbers and you ignore them. When revenue was at its peak, spending still outpaced it. We're spending $1 trillion a year more than the tax revenue and revenue increased last year. If spending were steady, as revenue increased the deficit would decrease. Solid logic, except spending continues to increase! Look. at. the. numbers. They do not lie.


And this is why you are wrong: The ONLY thing that matters is revenue/expenses as a share of GDP. I don't care about the dollar amount of the deficit, because it is a meaningless number without considering how much wealth the country has in total. Simple example: You owe $200k. Bill Gates owes $20,000,000. Who has a worse financial situation?

Gates has ONE HUNDRED TIMES the debt you do, but because he has about 50 billion or so in the bank, he's in a MUCH better financial position.

What the GOP likes to do is show revenue and expenses since the year 2000 on a graph, which shows a flatlined revenue stream and rising expenses. Therefore, spending MUST be the problem, right? Of course, this graph ignores the growth in GDP, and thus the question of why revenue isn't going up natrually as GDP rises. Factor in the share of the debt as a part of GDP, and share of expenses as a part of GDP, and you get the exact OPPOSITE graph, with expenses flat and revenue dropping. Thats your BTC's in a nutshell:

GDP|Revenue|Expenses|Revenue/GDP|Expenses/GDP
2000 09.71|2.03|1.78|20.91|18.33
2001 10.06|1.99|1.86|19.78|18.49
2002 10.38|1.85|2.01|17.82|19.36
2003 10.80|1.78|2.16|16.48|20.00
2004 11.50|1.88|2.29|16.35|19.91
2005 12.24|2.15|2.47|17.57|20.18
2006 13.02|2.41|2.66|18.51|20.43
2007 13.67|2.57|2.73|18.80|19.97
2008 14.31|2.52|2.93|17.61|20.48
2009 14.10|2.10|3.11|14.89|22.06
2010 14.51|2.16|3.09|14.89|21.30

(Edit: Good as its getting; should be easy enough to copy/paste into excel. All figures are in Trillions of Dollars, unadjusted for inflation).

Note how expenses are slowly rising over time, yet revenue is dropping as a part of GDP year over year every year? And note the ~$300 Billion dropoff in 2009; thats pure deficit right there.

So you can NOW see the full effects of the tax cuts: Even through you have more economic growth, less of that money is getting taxed overall. While spending is going up, its going up very slowly year over year as a part of GDP (even dropping some years). Look at the data with GDP factored in, and you see Revenue, not Expenses, is the problem. The nation has more money, but a lower percentage of it is getting collected.

This data PROVES that tax cuts do NOT pay for themselves; the rise in GDP did not result in offsetting the tax cuts (otherwise you'd get a flat Revenue/GDP line, rather then a decrease). Revenue IS the problem, spending is not.
January 3, 2013 5:57:06 PM

Is this even inflation driven, or even looked at?
Whats the dollars worth compared to our lenders?
This is not even complete
January 3, 2013 6:01:35 PM

JAYDEEJOHN said:
Is this even inflation driven, or even looked at?
Whats the dollars worth compared to our lenders?
This is not even complete


I used the official budget reports NON-inflation adjusted numbers. Overall trend is still the same when inflation is factored in; I can post those if you want. Should have noted on the first post though.
January 3, 2013 6:06:27 PM

No it isnt, as to whos our main lender, and how that compares to the value of the dollar.
So, Chinas inflation rate is the same as ours, or are they so generous to ignore a weak dollar?
January 3, 2013 6:10:20 PM

I will say gamer, your comments on ridding the people of the house can be interpreted as either a large government junky attitude, or someones whos quit on American design, and its constitution.
January 3, 2013 6:19:27 PM

JAYDEEJOHN said:
I will say gamer, your comments on ridding the people of the house can be interpreted as either a large government junky attitude, or someones whos quit on American design, and its constitution.


I'm simply pointing out that the House no longer is representative of the people. Guess what? Americans prefer a Democratic house; they voted more for Democrats then Republicans in House races. Too bad the official results don't match that outcome, because the districts have been dissected to favor the incumbent in almost all races.

Seriously, how many people are now represented by a different party not because their person lost a race, but because their congressional district changed in 2010? How is THAT Representative?

Make no mistake: The House/Senate setup was all about Slavery, and ensuring the North couldn't end it. The house has served its purpose, now its just an impediment to good government.

By dissolving the house, increasing the size of the Senate, and increasing terms to 8 years (for simplicities sake), you accomplish several things:

1: Smaller government
2: More efficient government (only two bodies, the President and Senate, have to deal)
3: Make it harder for any radical group to gain power (winning a state is MUCH harder then winning a carefully drawn up district)
4: More representive of the people (No gerrymandered districts; one Senator up every two years ensures an unpopular party gets booted out)

I wouldn't even be opposed to switching to a parliamentary democracy, with the President elected by the Senate. Would solve all those annoying "I can't legislate because I have a hostile Congress" problems. Never really makes sense to have a President and a hostile Congress. If you wouldn't elect a CEO without the backing of the executive board in business, why the heck should we do the same exact thing for running our government?

I care, first and foremost, about efficiency. And our government, by design, is inefficient.

EDIT

And yes, I know I'm "out there" on this issue. But I've basically lost faith in functioning government, and am more or less convinced if the country does moderate NOW, we will see the country break up within the next two decades.
January 3, 2013 8:20:41 PM

He's foolish in his understanding of the US Government. Most likely someone either very clueless or from outside the US.

The point of having a house and a senate is to force compromise. If there was just the senate, a simple majority would be easy to get. I would argue you get rid of the senate before the house. The Senate represents the States, the House represents the people. The people out in rural areas tend to be business owners (aka Farmers) and should have fair representation against the people in cities with higher populations.

It is clear he is clueless on how our government was designed to function.

The sheer fact that things have become super partisan was the exact reason the house and senate exist. To force compromise.
January 3, 2013 8:50:30 PM

Understand, what riser just pointed out is the its always been.
Cities in general are more liberal, not so out state.
People in Cali, as liberal as they are, for example, know San Francisans are usually over the top, even for the average lib Californian.
Tho the districts may be larger, the populations arent, and these peoples need representation.

Addressing the larger government issue, leaving this behind, besides forcing compromise, eliminating the house would then degranulate government.
Creating a more statist POV couldnt come easier by doing so, and is what our founding fathers sought to avoid
January 3, 2013 9:15:00 PM

I'm "surprised" none of you responded to gamer's chart relating to the expenses and revenues in regard to GDP.

I understand his point about the re-districting dilema that is gripping states around the country. It would be better to have more rules in place for the process so it cannot be highjacked by whichever party has a majority in the state government. The fact that more people voted democrat in the house and yet there is a majority of republicans clearly demonstrates a lack of equal representation. It's a sad day when the United States counts some peoples votes and ignores others due to the structuring of the voting systems.

I do not agree that dissolving the house would fix the issue though, the process would be to easy to control with a majority. Although, in all fairness, if the number of seats were decided by a total popular vote then democrats would have a majority in both the senate and the house.
January 3, 2013 10:08:59 PM

I would like to see population breakdown of all the districts.
I tend to believe those in the cities tend to be slightly over populated per district requirement, and is why this the way it is.
Adding an extra street in such crowded conditions can do this, time and again in cities, and gerrymandering can be to blame, but because granulation as is done currently isnt exact, dont throw the baby out with the bathwater
January 4, 2013 1:00:15 AM

riser said:
He's foolish in his understanding of the US Government. Most likely someone either very clueless or from outside the US.

The point of having a house and a senate is to force compromise. If there was just the senate, a simple majority would be easy to get. I would argue you get rid of the senate before the house. The Senate represents the States, the House represents the people. The people out in rural areas tend to be business owners (aka Farmers) and should have fair representation against the people in cities with higher populations.

It is clear he is clueless on how our government was designed to function.

The sheer fact that things have become super partisan was the exact reason the house and senate exist. To force compromise.
If you say that the House represents the people they are really doing a lousy way to portray this not caring at all about the people they are representing especially the victims in the Sandy tragedy in New York and New Jersey.People in rural area deserve a break also not only in large cities I agree with you.
January 4, 2013 1:08:17 AM

gamerk316 said:
Not really. The House/Senate setup was the first compromise about Slavery, and was always an inefficient setup. Especially now that we have hyper-partisan politics, and the very real posibility of gridlock due to split government.

Dead wrong. It was a compromise between the Big States Plan and Small States Plan. You are thinking of the three fifths compromise.

gamerk316 said:
I could care less what the House is "supposed" to represent; I want a government that works. And with Congressional districts now gerrymandered to the point where the most liberal/conservative candidate always wins, the House no longer is a viable governing body, and should be dissolved. Either that, or poliics continue to get worse, and the country breaks up.

You "could care less", I'm guessing you meant "couldn't care less". I'm moreso frightened that you think that this will work and that you think that the senators are elected in a different way then house is. Look at California. It is impossible for a republican senator to be elected now.

gamerk316 said:
What the GOP likes to do is show revenue and expenses since the year 2000 on a graph, which shows a flatlined revenue stream and rising expenses. Therefore, spending MUST be the problem, right? Of course, this graph ignores the growth in GDP, and thus the question of why revenue isn't going up natrually as GDP rises. Factor in the share of the debt as a part of GDP, and share of expenses as a part of GDP, and you get the exact OPPOSITE graph, with expenses flat and revenue dropping. Thats your BTC's in a nutshell:

GDP|Revenue|Expenses|Revenue/GDP|Expenses/GDP
2000 09.71|2.03|1.78|20.91|18.33
2001 10.06|1.99|1.86|19.78|18.49
2002 10.38|1.85|2.01|17.82|19.36
2003 10.80|1.78|2.16|16.48|20.00
2004 11.50|1.88|2.29|16.35|19.91
2005 12.24|2.15|2.47|17.57|20.18
2006 13.02|2.41|2.66|18.51|20.43
2007 13.67|2.57|2.73|18.80|19.97
2008 14.31|2.52|2.93|17.61|20.48
2009 14.10|2.10|3.11|14.89|22.06
2010 14.51|2.16|3.09|14.89|21.30

(Edit: Good as its getting; should be easy enough to copy/paste into excel. All figures are in Trillions of Dollars, unadjusted for inflation).

Note how expenses are slowly rising over time, yet revenue is dropping as a part of GDP year over year every year? And note the ~$300 Billion dropoff in 2009; thats pure deficit right there.

So you can NOW see the full effects of the tax cuts: Even through you have more economic growth, less of that money is getting taxed overall. While spending is going up, its going up very slowly year over year as a part of GDP (even dropping some years). Look at the data with GDP factored in, and you see Revenue, not Expenses, is the problem. The nation has more money, but a lower percentage of it is getting collected.

This data PROVES that tax cuts do NOT pay for themselves; the rise in GDP did not result in offsetting the tax cuts (otherwise you'd get a flat Revenue/GDP line, rather then a decrease). Revenue IS the problem, spending is not.

Shouldn't expenses per GDP stay just about the same? What we see with that is continually rising expenses/GDP. Spending problem. You assume that all spending helps the economy. It doesn't always do that. For example unemployment benefits.
http://ftp.iza.org/dp4509.pdf (Based on Switzerland)
This study shows that reducing the time unemployment benefits are given reduces the time it takes one to find work thus become a contributor to the GDP.
January 4, 2013 2:18:00 AM

Reynod said:
This problem is not ging to go away ... it will become a regular cliffhanger for the US people and ssoner or later the Republicans will cause a crash ...

I say raise taxes immendiately and pay down some of the debt ...

Join the Greeks ...


We will join the Greeks if we keep this up. The problem with Greece is that they had unrestrained governmental spending for their massive welfare state. We have the same problem. The reason the Greeks had their collapse now and we haven't yet is that the Greeks went even more wild with their welfare state than we have so far but also the Greeks were not allowed to inflate their money supply because they were part of the Euro zone. They simply ran out of money and then had to make massive entitlement cuts because of it.

The U.S. cannot realistically tax its way out of the debt and deficit. The U.S. spent $3.9 trillion last year and took in about $2.5 trillion in revenues, leaving a $1.4 trillion deficit. The total amount of taxable income in the country was $7.8 trillion. You would have to take 50% of everybody's taxable income to balance the budget if you didn't have any spending cuts. That would not only not pay a single cent toward the $16+ trillion in debt, but you would have to keep increasing the tax percentage annually as government spending keeps increasing every year while personal incomes are flat to decreasing. You would also be guaranteed to worsen the depression and further decrease taxable income as losing 50% of your income (before any state and local taxes!) would be a massive disincentive for economic activity.

If you want proof of "taxing the rich" not being anywhere near a viable option, this current "fiscal cliff" bill will raise about $60 billion per year by increasing taxes to about 45% on people earning over $400,000 per year. That's $60 billion, compared to $1.4 trillion in deficit. Confiscating all income over $200,000 per year would generate about $800 billion per year at the absolute most. We simply can't tax our way out of this, spending cuts HAVE to be done. Either that or we end up like Greece and running out of the ability to borrow any more while running huge deficits will force the government to cut spending since there simply won't be any money.

35424,27,1096732 said:
I'm "surprised" none of you responded to gamer's chart relating to the expenses and revenues in regard to GDP.

Those are non-inflation-adjusted figures and also the GDP calculation includes all federal spending as part of the GDP. What we really care about is inflation-adjusted dollars since there has been significant inflation and also the actual value of production of the country (which does not include government spending as the government taking a dollar from somebody to give to another person does not actually make the economy grow by a dollar, despite the GDP calculation being performed in that way.)

Inflation-adjusted GDP (in 2005 dollars) has increased from $11.3T in 2000 to $13.0T in 2010 while federal spending in 2005 dollars has increased from $2.0T in 2000 to $3.0T in 2010. Taxes in inflation-adjusted 2005 dollars were $1.6T in 2000, reached a high of $1.8T in 2007, and dropped to $1.25T in 2010.

If we look at the inflation adjusted figures, the private sector GDP has been growing very slowly from 2000 to the current time, from $9.3T in 2000 to $10.0T in 2010. The big increases in the listed figures were due to inflation and the big increase in government spending. Tax revenues have remained flat to decreasing, but when you look at the figures by year, what you see are they mirror the recessions. There is a dip in the early 2000s from the early 2000s recession, and we hit a peak of $1.8T in taxes in 2007 (on a private sector GDP of about $11.0T) as the economy rebounded in the mid-2000s, giving us the same taxes-to-GDP ratio during some of the "Bush Tax Cut" years as compared to before they went into effect. Tax revenues dropped off considerably in 2008 and later owing to the current prolonged recession. If you wonder why, I would suggest that our progressive tax rate structure is the cause. If you earn less, you pay an increasingly lower rate on your money and tax revenues drop off much more than would be expected with a flat tax.

So unless you have an agenda to prove, the real data very clearly shows that tax revenue is very strongly related to the amount of private sector economic output rather than tax rates and that federal spending has skyrocketed. However it is easy to lie with uncorrected statistics as the 1950s book so eloquently states...
[/quote]
January 4, 2013 2:28:47 AM

riser said:
He's foolish in his understanding of the US Government. Most likely someone either very clueless or from outside the US.

The point of having a house and a senate is to force compromise. If there was just the senate, a simple majority would be easy to get. I would argue you get rid of the senate before the house. The Senate represents the States, the House represents the people. The people out in rural areas tend to be business owners (aka Farmers) and should have fair representation against the people in cities with higher populations.

It is clear he is clueless on how our government was designed to function.

The sheer fact that things have become super partisan was the exact reason the house and senate exist. To force compromise.


Gamer's IP is in the US ... Indiana as such.

don't think he is foolish ... alternative viewpoints are valued here.

I can still be friends with a gunnut ... :) 
January 4, 2013 2:30:39 AM

MU_Engineer said:
We will join the Greeks if we keep this up. The problem with Greece is that they had unrestrained governmental spending for their massive welfare state. We have the same problem. The reason the Greeks had their collapse now and we haven't yet is that the Greeks went even more wild with their welfare state than we have so far but also the Greeks were not allowed to inflate their money supply because they were part of the Euro zone. They simply ran out of money and then had to make massive entitlement cuts because of it.

The U.S. cannot realistically tax its way out of the debt and deficit. The U.S. spent $3.9 trillion last year and took in about $2.5 trillion in revenues, leaving a $1.4 trillion deficit. The total amount of taxable income in the country was $7.8 trillion. You would have to take 50% of everybody's taxable income to balance the budget if you didn't have any spending cuts. That would not only not pay a single cent toward the $16+ trillion in debt, but you would have to keep increasing the tax percentage annually as government spending keeps increasing every year while personal incomes are flat to decreasing. You would also be guaranteed to worsen the depression and further decrease taxable income as losing 50% of your income (before any state and local taxes!) would be a massive disincentive for economic activity.

If you want proof of "taxing the rich" not being anywhere near a viable option, this current "fiscal cliff" bill will raise about $60 billion per year by increasing taxes to about 45% on people earning over $400,000 per year. That's $60 billion, compared to $1.4 trillion in deficit. Confiscating all income over $200,000 per year would generate about $800 billion per year at the absolute most. We simply can't tax our way out of this, spending cuts HAVE to be done. Either that or we end up like Greece and running out of the ability to borrow any more while running huge deficits will force the government to cut spending since there simply won't be any money.

35424,27,1096732 said:
I'm "surprised" none of you responded to gamer's chart relating to the expenses and revenues in regard to GDP.

Those are non-inflation-adjusted figures and also the GDP calculation includes all federal spending as part of the GDP. What we really care about is inflation-adjusted dollars since there has been significant inflation and also the actual value of production of the country (which does not include government spending as the government taking a dollar from somebody to give to another person does not actually make the economy grow by a dollar, despite the GDP calculation being performed in that way.)

Inflation-adjusted GDP (in 2005 dollars) has increased from $11.3T in 2000 to $13.0T in 2010 while federal spending in 2005 dollars has increased from $2.0T in 2000 to $3.0T in 2010. Taxes in inflation-adjusted 2005 dollars were $1.6T in 2000, reached a high of $1.8T in 2007, and dropped to $1.25T in 2010.

If we look at the inflation adjusted figures, the private sector GDP has been growing very slowly from 2000 to the current time, from $9.3T in 2000 to $10.0T in 2010. The big increases in the listed figures were due to inflation and the big increase in government spending. Tax revenues have remained flat to decreasing, but when you look at the figures by year, what you see are they mirror the recessions. There is a dip in the early 2000s from the early 2000s recession, and we hit a peak of $1.8T in taxes in 2007 (on a private sector GDP of about $11.0T) as the economy rebounded in the mid-2000s, giving us the same taxes-to-GDP ratio during some of the "Bush Tax Cut" years as compared to before they went into effect. Tax revenues dropped off considerably in 2008 and later owing to the current prolonged recession. If you wonder why, I would suggest that our progressive tax rate structure is the cause. If you earn less, you pay an increasingly lower rate on your money and tax revenues drop off much more than would be expected with a flat tax.

So unless you have an agenda to prove, the real data very clearly shows that tax revenue is very strongly related to the amount of private sector economic output rather than tax rates and that federal spending has skyrocketed. However it is easy to lie with uncorrected statistics as the 1950s book so eloquently states...
[/quote]
said:


When you reply to my posts I always feel a little bit ill because I have to read another DISSERTATION !!!

Shheeesh !!!

:) 
January 4, 2013 5:18:56 AM

Im thankful he puts to words my understanding, and doesnt miss much as well.

I will add this.
To those who actually think its the repubs that are the problem, theyve already compromised, we are still waiting on the dems, and yet, theyd have you believe its the repubs fault.
And still waiting, and as for the senate, which has been controlled by the dems for a long time now, Ive lost count, but they havnt submitted a budget, which has spanned years now.
This speaks of irresponsibility in its highest form, as any pol can spend our money, but when they cant even say how much or where, this is foolishness gone mad, way over the top.
January 4, 2013 10:08:45 AM

You made a good point JD.

I am hereby contracting you to convert MU's machine language output into a higher language form for our benefit.

Engineers ... can't live without them ... can't shoot em.

:) 
January 4, 2013 11:11:00 AM

Reynod said:
Gamer's IP is in the US ... Indiana as such.


New York actually, but our network gets bounced to Ft Wayne (company HQ).

Also, stop with the "The House represents the people" BS. It doesn't. You can't represent the people when your district has been gerrymandered to the point where half the people in it wouldn't even in that district 12 years ago, and you are basically guranteed to win once you win your parties primary.

Ever since we passed an ammendment allowing the direct election of Senators, the House has been a redundant function. As its very unlikely gerrymandering will ever be fixed, and given the fact the country will end up splitting (probably violently) if radicals aren't put under control, the only fix would be to dissolve the House.

mjmjpfaff said:
Dead wrong. It was a compromise between the Big States Plan and Small States Plan. You are thinking of the three fifths compromise.


Don't quote history textbooks as absolute truth; its unpopular to admit that EVERY COMPROMISE IN THE CONSTITUTION WAS ABOUT SLAVERY. The south was terrified of being outvoted and having slavery overturned, so they pushed for equal representation. After the compromise for two houses, they then, for the same reason, pushed for slaves being counted as part of their population. Both compromises were about protecting slavery.

Quote:
I'm moreso frightened that you think that this will work and that you think that the senators are elected in a different way then house is. Look at California. It is impossible for a republican senator to be elected now.


Then break from the Republican party and moderate, like Republicans in NY have done. Its not unthinkable here a Republican could get elected to the Senate, I mean, heck, the shining liberal city of NY has a Republican mayor (Bloomberg = Republican, regardless of what it says on the ticket). Senate races are simply more competitive overall, except in a handful of states.

Quote:
Shouldn't expenses per GDP stay just about the same? What we see with that is continually rising expenses/GDP. Spending problem. You assume that all spending helps the economy. It doesn't always do that. For example unemployment benefits.


According to the CBO, Unemployment Benefits create $1.25 in GDP for every dollar spent. REALLY bad example on that one.

Also remember the fact we had two wars and a major recession, so a ~4% increase in Spending/GDP is acceptable under the conditions that existed. The 6% drop in Revenue/GDP is more disturbing, considering its continuous downward line, rather then the jagged line that exists for Revenue.
January 4, 2013 11:55:55 AM

MU_Engineer said:
We will join the Greeks if we keep this up. The problem with Greece is that they had unrestrained governmental spending for their massive welfare state. We have the same problem. The reason the Greeks had their collapse now and we haven't yet is that the Greeks went even more wild with their welfare state than we have so far but also the Greeks were not allowed to inflate their money supply because they were part of the Euro zone. They simply ran out of money and then had to make massive entitlement cuts because of it.


Understand that Greece has had problems for DECADES now; they were close to defaulting before even joining the EU, but got the benefit of the doubt after they joined up. The fact the previous government cooked the books didn't help things either...

I also note the main problem with the EU is lack of a body like the Federal Reserve; you can NOT have monetary unity without fiscal unity. Without the Fed, the individual states in the US would be having the same exact problems as the individual members of the EU.

Quote:
The U.S. cannot realistically tax its way out of the debt and deficit. The U.S. spent $3.9 trillion last year and took in about $2.5 trillion in revenues, leaving a $1.4 trillion deficit.


Again, the dollar amount of the deficit is irrelevent. The only statistic that matters is debt as a percentage of GDP.

You can grow the dollar amount of the debt provided GDP rises fast enough to offset it. That happened, more or less nonstop post WWII, from 1946-1972, 1976-1979, and 1992-2001. [Huh. notice which party was in charge during the times debt/GDP rose...]. The dollar amount of the debt continuously rose, but as a percentage of the nations wealth, the debt shrunk.

Point being, we had a ~120% Debt/GDP post WWII. That shrunk to 32% Debt/GDP post Carter. We didn't have any debt problems until Reagen, mostly because of the decline in taxable revenue being collected (I continue to argue we need the 90% tax bracket back) and the massive increase in defense spending (at the time, to 10% of GDP, and unheard of level. Seems quaint in hindsight). So anyone who claims that Medicare (1965), Social Security changes (1972), and the like are responsable for driving the deficit is full of it; we didn't have a problem until we gave the wealthy massive tax breaks.

Quote:
The total amount of taxable income in the country was $7.8 trillion. You would have to take 50% of everybody's taxable income to balance the budget if you didn't have any spending cuts. That would not only not pay a single cent toward the $16+ trillion in debt, but you would have to keep increasing the tax percentage annually as government spending keeps increasing every year while personal incomes are flat to decreasing. You would also be guaranteed to worsen the depression and further decrease taxable income as losing 50% of your income (before any state and local taxes!) would be a massive disincentive for economic activity.


Again, thinking in dollar amounts, not as a share of GDP. You don't need a balanced budget to shrink the debt, and thats the flaw in your thinking.

Quote:
If you want proof of "taxing the rich" not being anywhere near a viable option, this current "fiscal cliff" bill will raise about $60 billion per year by increasing taxes to about 45% on people earning over $400,000 per year. That's $60 billion, compared to $1.4 trillion in deficit. Confiscating all income over $200,000 per year would generate about $800 billion per year at the absolute most. We simply can't tax our way out of this, spending cuts HAVE to be done. Either that or we end up like Greece and running out of the ability to borrow any more while running huge deficits will force the government to cut spending since there simply won't be any money.


I'm not arguing against smart, targeted spending cuts, but I argue about what to cut. I work in defense, and trust me, the industry has gotten very, very, fat. Cut defense spending in half.

(Seriously, we have SEVEN separate programs to create a laser weapon. Seven. Duplication of effort much?)

Secondly, tax all income at the same rate. Specifically, I'm talking investments here. And no, if it suddenly becomes unprofitable to invest if the income is taxed at the same rate as other forms of income, then guess what? You probably shouldn't be investing in the first place.

johnsonma said:
I'm "surprised" none of you responded to gamer's chart relating to the expenses and revenues in regard to GDP.


Quote:
Those are non-inflation-adjusted figures and also the GDP calculation includes all federal spending as part of the GDP. What we really care about is inflation-adjusted dollars since there has been significant inflation and also the actual value of production of the country (which does not include government spending as the government taking a dollar from somebody to give to another person does not actually make the economy grow by a dollar, despite the GDP calculation being performed in that way.)


Can post those easily enough, though you see the same exact chart.

Quote:
If we look at the inflation adjusted figures, the private sector GDP has been growing very slowly from 2000 to the current time, from $9.3T in 2000 to $10.0T in 2010.


Not according to the official government numbers:

http://www.whitehouse.gov/sites/default/files/omb/budge...

Page 27 has the info you want: Revenues and expenses as a percentage to GDP (in FY2005 dollars).
Revenue/GDP Expenses/GDP
2000: 20.6|18.2
2001: 19.5|18.2 (-0.9|0)
2002: 17.6|19.1 (-1.9|+0.9)
2003: 16.2|19.7 (-1.4|+0.6)
2004: 16.1|19.6 (-0.1|-0.1)
2005: 17.3|19.9 (+1.2|+0.3)
2006: 18.2|20.1 (+0.9|+0.2)
2007: 18.5|19.6 (+0.3|-0.5)
2008: 17.5|20.7 (-1.0|+0.9)
2009: 14.9|25.0 (-2.6|+4.3)
2010: 14.9|23.8 (0|-1.2)

So you get more or less the same numbers I calculated before: a net -5.7% drop in Revenue/GDP to a 5.6% increase in Expenses/GDP. The key here is to remember the last two years had significant short term stimulus, and thus won't be a permanent part of the budget. So if you use 2008 as the last "normal" budget, you get -3.1% drop in revenue/GDP to a 2.5% increase in Expenses/GDP. Revenue dropping faster then expenses are rising, proving my entire argument. Again, I view the 4.3% spending increase in 2009 as anomalous, and expect it to vanish entirely over the next few years.

EDIT: Stupidly, I should have noted in my above chart a few posts back was inflation adjusted to the year 2k. Stupidly forgot to mention what year I indexed to.
January 4, 2013 2:24:28 PM

Quote:
Don't quote history textbooks as absolute truth; its unpopular to admit that EVERY COMPROMISE IN THE CONSTITUTION WAS ABOUT SLAVERY. The south was terrified of being outvoted and having slavery overturned, so they pushed for equal representation. After the compromise for two houses, they then, for the same reason, pushed for slaves being counted as part of their population. Both compromises were about protecting slavery.

No. You cannot tell me Massachusetts battled with New Jersey or Rhode Island because they wanted slavery or that Pennsylvania and Virginia wanted more power to increase the amount of slaves. It was about big states or small states receiving more power. Something tells me you argued with your teachers quite a bit... ;) 
Quote:
Again, thinking in dollar amounts, not as a share of GDP. You don't need a balanced budget to shrink the debt, and thats the flaw in your thinking.

No you don't need it but it would be a hell of a lot easier then trying to get everyone to be payed more. But you do need a balanced budget if you want a debt/GDP ratio to equal 0.
Quote:
Then break from the Republican party and moderate, like Republicans in NY have done. Its not unthinkable here a Republican could get elected to the Senate, I mean, heck, the shining liberal city of NY has a Republican mayor (Bloomberg = Republican, regardless of what it says on the ticket). Senate races are simply more competitive overall, except in a handful of states.

It is impossible in California with the cities. A republican senator has not been elected since 1991, yet a house member has in the time period from 1991-2012, and you want to tell me that we should not have the house. It seems more like the senate is not working and being controlled by the big cities, lobbyists, and unions.
January 4, 2013 4:27:28 PM

Quote:
No you don't need it but it would be a hell of a lot easier then trying to get everyone to be payed more. But you do need a balanced budget if you want a debt/GDP ratio to equal 0.


And why do you need that again? 60% Debt/GDP is typically the point where a nations Debt begins to become a concern. I fully support increasing spending by X% if it results in GDP and revenue growth greater then X%, as it shrinks that debt load.

I also note there is only one year on record where the US didn't owe any money (sometime in the 1840's I believe; I forget the exact year offhand). The US promptly entered a recession the following year. Owing money is not a problem, as long as its a small enough portion of your wealth.

Quote:
It is impossible in California with the cities. A republican senator has not been elected since 1991, yet a house member has in the time period from 1991-2012, and you want to tell me that we should not have the house. It seems more like the senate is not working and being controlled by the big cities, lobbyists, and unions.


Then do what Republicans in New York did, or Democrats down south did: break from the national party and Moderate. California DID elect a Republican Governor, so don't tell me a Republican can't win a statewide election in the state. And if Republican senators are getting out of their primaries too conservative, well, there's your problem.
January 4, 2013 5:21:58 PM

Again, whats NOT being considered here is valuations.
Without them, this is all pointless.
Throw those numbers about all you want, but the true value has been bubbled to death as of late, or has everyones house increased in value, which is a sign.
Also, this current market is global, not nearly so back in the day, when many countries were relying upon the US and its abilities to create and get it done, which simply isnt the case anymore.
So, restoring high taxation on those corporations and the investors in such things, large or small, do people actually think this will help with these changes?
January 4, 2013 5:23:50 PM

gamerk316 said:
Quote:
No you don't need it but it would be a hell of a lot easier then trying to get everyone to be payed more. But you do need a balanced budget if you want a debt/GDP ratio to equal 0.


And why do you need that again? 60% Debt/GDP is typically the point where a nations Debt begins to become a concern. I fully support increasing spending by X% if it results in GDP and revenue growth greater then X%, as it shrinks that debt load.

I also note there is only one year on record where the US didn't owe any money (sometime in the 1840's I believe; I forget the exact year offhand). The US promptly entered a recession the following year. Owing money is not a problem, as long as its a small enough portion of your wealth.

Quote:
It is impossible in California with the cities. A republican senator has not been elected since 1991, yet a house member has in the time period from 1991-2012, and you want to tell me that we should not have the house. It seems more like the senate is not working and being controlled by the big cities, lobbyists, and unions.


Then do what Republicans in New York did, or Democrats down south did: break from the national party and Moderate. California DID elect a Republican Governor, so don't tell me a Republican can't win a statewide election in the state. And if Republican senators are getting out of their primaries too conservative, well, there's your problem.

The debt/ GDP is over 100% now, and you think spending is the way out of it. The loss of revenue in reduced taxes is minimal compared to the unneeded and unhelpful spending. Like I said in a previous post, unemployment benefits should be reduced, not the amount but the time given. It contributes to people finding jobs faster thus they contribute to GDP. Switzerland did that and their unemployment is fine. People do not need a year to get back onto their feet.
http://www.usgovernmentspending.com/federal_debt_chart....

HAHA. Schwarzenegger? A Republican? Furthest from one. Just another Hollywood bi-product. People in California were just sick of Grey Davis. It also scares me that you think Bloomberg is a Republican.

January 4, 2013 7:42:13 PM

Die hard conservative repubs hated Davis, as there were reasons, similar, but not as bad as Bloomberg
January 4, 2013 8:11:43 PM

JAYDEEJOHN said:
Die hard conservative repubs hated Davis, as there were reasons, similar, but not as bad as Bloomberg

As did moderates. He was useless.
January 4, 2013 8:34:03 PM

I remember
I lived out there then
Now, lets turn the tables somewhat.
Dems should embrace Lieberman, as they left the foolishness of radical ....oh wait
http://www.nytimes.com/2011/10/24/nyregion/lieberman-ir...
Here is someone doing compromise, yet, the "good" side, those lovable dems, each n all for the lil guy, well, I guess their tent isnt that big after all, but hey, abandon the dem attitudes and vote for guys like this?
Yes
Abandon repub attitudes and vote for Bloomberg?
Please
January 5, 2013 1:55:09 AM

35451,37,338029 said:


Again, the dollar amount of the deficit is irrelevent. The only statistic that matters is debt as a percentage of GDP.

..which I showed continues to increase, especially when you remove the government spending from the GDP (since it represents no real economic output.)

Quote:
You can grow the dollar amount of the debt provided GDP rises fast enough to offset it. That happened, more or less nonstop post WWII, from 1946-1972, 1976-1979, and 1992-2001. [Huh. notice which party was in charge during the times debt/GDP rose...]. The dollar amount of the debt continuously rose, but as a percentage of the nations wealth, the debt shrunk.


There are two problems with that approach. One, when the economy hits a recession and GDP is stagnant to negative, your debt/GDP ratio jumps way up. Two, the spending isn't anywhere near indexed to private GDP growth and continues to grow no matter what, so your debt/GDP ratio shoots out of control. This is because government spending today is more than half "mandatory" spending on constantly growing entitlement programs and only increases, never decreases. The bad debt/GDP ratio is made worse by the current flawed Keynesian model where the government needs to blow money during a recession to "stimulate" the economy. That's what happened in 2008-2010- spending shot way up and the GDP contracted giving us a massive increase in debt/GDP.

Quote:
Point being, we had a ~120% Debt/GDP post WWII. That shrunk to 32% Debt/GDP post Carter. We didn't have any debt problems until Reagen, mostly because of the decline in taxable revenue being collected.


The global and domestic economic picture was far, far different then than today to the point of not really being comparable.

- We were THE economic power in the world, period. Europe was reduced to a smoking rubble heap from WWII with massive debt from the war. Japan was a glowing, smoking rubble heap with massive debt from the war. Korea and Southeast Asia were little more than rice paddies. It's easy to have an economic boom when you are the only player in the entire game. That is hardly the case today.

- We had a massive increase in the number of workers due to women starting to enter the workforce post-WWII and the Baby Boomers becoming of employment age in the 60s and 70s. Massively increasing your labor force when you are the only economic game in town is a massive economic boost.

- We had a massive increase in the amount of industrial production because of the Second Industrial Revolution which started around the turn of the century and gave us modern electromechanical equipment. We then had a boom in the 1980s and 1990s when computerized equipment further increased productivity. We haven't had a paradigm shift like either of those since then and are now in a mature industrial state. Being in a mature industry is at best is stagnation, and at worst contraction as everybody else figures out how to catch up with you and does it a little cheaper. That is what SE Asia has largely done in the past 10-20 years and one reason why a lot of our business has gone over there.

It's not about tax rates or any of that bullcrap. It's about being stuck in a mature stagnant economy but still spending like we are in a paradigm shift boom economy.

Quote:
(I continue to argue we need the 90% tax bracket back)


That only affected around 200 people per year when it was in effect. The adjusted income level required to be in that 91% bracket would be something around $5 million today, and there were LOTS of deductions that could be taken. The fact that only a couple hundred people were subject to the very high rates due to lots of deductions is what led to the creation of the Alternative Minimum Tax.

Quote:
and the massive increase in defense spending (at the time, to 10% of GDP, and unheard of level. Seems quaint in hindsight). So anyone who claims that Medicare (1965), Social Security changes (1972), and the like are responsable for driving the deficit is full of it; we didn't have a problem until we gave the wealthy massive tax breaks.


That's a load of manure and you know it. Simply look at the pie chart of where federal expenditures go in every federal tax instruction booklet and you'll see the majority of federal spending is Medicare and Social Security. I guess I might be in error in assuming that you actually pay taxes and have looked at the instructions as you may be part of the half of the country that pays no federal income taxes.

Quote:

Again, thinking in dollar amounts, not as a share of GDP. You don't need a balanced budget to shrink the debt, and thats the flaw in your thinking.


You actually do need to balance the budget to shrink the debt, or come very close to it. Your whole rationale for debt-to-GDP ratio being the key metric is that revenues tend to be more strongly based on GDP (see Hauser's Law) than spending and that a higher GDP = more revenues. That does mean that the actual dollar amount of debt isn't as important, as you stated. However, basic math still applies. If you continually spend more than you take in, you WILL run a deficit and add to the debt, regardless of how much the GDP is growing. The only partial exception to this rule is inflation. The debt is worth less in real dollars as you have inflation, as long as the inflation rate is higher than the interest rate on the debt. That is generally NOT the case (although it is right now, which is an anomaly) and why I said inflation is only a partial exception. We have enough debt and deficit that we would need to have roughly the inflation rate of Zimbabwe before they had to give up their currency to make a real dent in the real value of our debt. You do not want to live in such a scenario.

Quote:

I'm not arguing against smart, targeted spending cuts, but I argue about what to cut. I work in defense, and trust me, the industry has gotten very, very, fat. Cut defense spending in half.


Okay, we would still have over a $1T deficit annually as the Pentagon's budget is about $700B and the annual deficit is around $1.4T. That extra $1T has to come from somewhere and the vast majority of what's left would be entitlement programs. Remember what I said above about personal income and taxes, you could confiscate every single dollar anybody makes over $200k/year and still end up with quite a bit less than $1T/year. Spending cuts MUST be made in entitlement programs. There is simply no mathematical way around that.

Quote:
Secondly, tax all income at the same rate. Specifically, I'm talking investments here. And no, if it suddenly becomes unprofitable to invest if the income is taxed at the same rate as other forms of income, then guess what? You probably shouldn't be investing in the first place.


Investment income is taxed twice- once at the 35% corporate income tax rate and then again at whatever rate the individual investor pays on capital gains, dividends, and etc. Having higher taxes on investments will limit the amount of investments that people are willing to take and will cause a significant contraction in the economy. This is because the rate of potential return on your investment money will drop but the potential risk of the investment does not. An investment that may have been potentially worthwhile with a 4% effective rate of return in return for a certain level of risk might not be worth the risk if taxes decrease your potential return to only 2%. The company you would have invested in then has less capital from investors and will not be able to start/expand as they had hoped to, resulting in less overall economic activity. Remember what I said about us being in a mature economy? Rates of return are going to be pretty low as there are very few new and potentially hugely profitable markets. There isn't going to be much for high-likelihood of high rate of return investment out there. It will either be large established companies with very low rates of return (ex: Microsoft, whose share price has been stagnant since the late 1990s) or in very risky little upstarts who try to squeeze in an established market. Blunting the rewards from investing in an upstart will guarantee that few upstarts ever get to see the light of day due to lack of investment. Taxing investment income heavily is about the worst thing you can do if you want an economy to do anything but circle around the drain. I am not necessarily against taxing investment income as normal income but the corporate tax would need to be eliminated or pretty close to it. Heck, I am sure you look up to Europe, even the statists Europeans have lower corporate income taxes than the U.S.

Quote:


Not according to the official government numbers:

http://www.whitehouse.gov/sites/default/files/omb/budge...

Page 27 has the info you want: Revenues and expenses as a percentage to GDP (in FY2005 dollars).
Revenue/GDP Expenses/GDP
2000: 20.6|18.2
2001: 19.5|18.2 (-0.9|0)
2002: 17.6|19.1 (-1.9|+0.9)
2003: 16.2|19.7 (-1.4|+0.6)
2004: 16.1|19.6 (-0.1|-0.1)
2005: 17.3|19.9 (+1.2|+0.3)
2006: 18.2|20.1 (+0.9|+0.2)
2007: 18.5|19.6 (+0.3|-0.5)
2008: 17.5|20.7 (-1.0|+0.9)
2009: 14.9|25.0 (-2.6|+4.3)
2010: 14.9|23.8 (0|-1.2)

So you get more or less the same numbers I calculated before: a net -5.7% drop in Revenue/GDP to a 5.6% increase in Expenses/GDP. The key here is to remember the last two years had significant short term stimulus, and thus won't be a permanent part of the budget. So if you use 2008 as the last "normal" budget, you get -3.1% drop in revenue/GDP to a 2.5% increase in Expenses/GDP. Revenue dropping faster then expenses are rising, proving my entire argument. Again, I view the 4.3% spending increase in 2009 as anomalous, and expect it to vanish entirely over the next few years.


No. Your figures have government spending rolled into the GDP, which is why the GDP has continued to nominally increase for the past several years. The private sector production portion of the GDP peaked in 2007 and remains roughly a trillion dollars below 2007 levels even today. The revenues vs. (GDP - federal spending) have dropped a little bit but are much more closely correlated than you imply. Also you completely refuse to address any of the WHY the revenue percentage of GDP is dropping. Hint: It's not due to the tax rates! The revenue percentage of GDP managed to increase in the mid-2000s after the 2001 recession even after the "Bush Tax Cuts" went into effect. It's all about the health of the economy- people who are doing well make more money and pay increasingly higher rates due to the "progressive" tax rate system. You get a nonlinear drop in tax revenue with dropping incomes. Also with more people working, you get more taxpayers and currently we have high unemployment and a record low taxpayer-to-citizen ratio. That's the vast, vast majority of what is causing the lower revenues.

I suppose you will get to see what higher tax rates won't do for revenues in the next few years. I just got my first paycheck of the new year with the new tax rates- there are certainly more taxes being withheld, that's for damn sure...
January 5, 2013 5:19:35 AM

TY MU
I know much of this as Ive lived alot of it, have seen the changes, and confounds me when others younger than me tell me how it is now vs then doesnt matter.
During lulls in economic growth we normally see new creation of goods and more and better services.
The most productive countries tend to muddle thru til things grow enough for a steady improvement.
While this is happening, other countries dont always do so well, and is when we see war.

To me, whats happened is, as the expression "entitled" is used today is what was not even in existence back in the day.
I believe most of our leaders predacate upon this "entitlement" ideology today, with todays youngest named generation considering their phone as another appendage, where they cant see gun ownership the same, and this is where the "entitled" are often wrong.
They simply dont know they are, nor being taken advantage of by those who bring them all their little toys, but by their own leaders, thus deflecting the real issues.
Of course spending is paramount to such ideas, and as long as the toys keep flowing, the "entitlement" mindset continues, which allows for the deception.
January 7, 2013 12:11:10 PM

musical marv said:
If you say that the House represents the people they are really doing a lousy way to portray this not caring at all about the people they are representing especially the victims in the Sandy tragedy in New York and New Jersey.People in rural area deserve a break also not only in large cities I agree with you.


Marv, if you believe the House is doing a poor job I would like to point out a couple things. First, the House is the that was fighting to keep your taxes the same. The Democrats were the ones who pushed a higher tax rate on you. Democrats are the reason many people's paychecks will be less. $80 a month hurts when you only make a couple hundred a month. In fact, I personally know someone who is working and can't make ends meets. Now she and her husband are $128 a month less because of the tax increase.
Second, I would also like to point out that the Sandy aid package started filling up with so much Pork spending that I would have delayed it as well. On that note, too much money was being spent elsewhere and not for the people hurt by Sandy. The money really isn't the issue though as the work will be done now and the money can come later. Trust me, I know exactly how that works. Passing the bill is very symbolic for the people which would be great, but the fact is nothing is being stopped because that bill wasn't passed.
January 7, 2013 12:13:37 PM

Reynod said:
Gamer's IP is in the US ... Indiana as such.

don't think he is foolish ... alternative viewpoints are valued here.

I can still be friends with a gunnut ... :) 


Ah but to so quickly dismiss the US government is foolish. The design is as perfect as they come. Our government was designed to be inefficient with checks and balances. This is fundamental. Yet, he is quick to get rid of the checks and balances when it doesn't benefit his agenda. Yet, if he recalls a few years ago when Republicans were in control, he would be crying for these checks and balances to come back. I am simply being fair and reasonable understanding that in a time when the balance of power shifts, those same checks and balances will be there.
January 7, 2013 5:07:17 PM

Quote:
Again, [b said:
the dollar amount of the deficit is irrelevent. The only statistic that matters is debt as a percentage of GDP.]Again, the dollar amount of the deficit is irrelevent. The only statistic that matters is debt as a percentage of GDP.


..which I showed continues to increase, especially when you remove the government spending from the GDP (since it represents no real economic output.)
[/b]

And I showed is increasing in part due to declining revenue.

Secondly, anyone who argues government spending contributes nothing is, frankly, an idiot. Its a baseless argument that has been repeated so people start believing it is true (its not).

Quote:
You can grow the dollar amount of the debt provided GDP rises fast enough to offset it. That happened, more or less nonstop post WWII, from 1946-1972, 1976-1979, and 1992-2001. [Huh. notice which party was in charge during the times debt/GDP rose... said:
. The dollar amount of the debt continuously rose, but as a percentage of the nations wealth, the debt shrunk.]You can grow the dollar amount of the debt provided GDP rises fast enough to offset it. That happened, more or less nonstop post WWII, from 1946-1972, 1976-1979, and 1992-2001. [Huh. notice which party was in charge during the times debt/GDP rose...]. The dollar amount of the debt continuously rose, but as a percentage of the nations wealth, the debt shrunk.


There are two problems with that approach. One, when the economy hits a recession and GDP is stagnant to negative, your debt/GDP ratio jumps way up. Two, the spending isn't anywhere near indexed to private GDP growth and continues to grow no matter what, so your debt/GDP ratio shoots out of control. This is because government spending today is more than half "mandatory" spending on constantly growing entitlement programs and only increases, never decreases. The bad debt/GDP ratio is made worse by the current flawed Keynesian model where the government needs to blow money during a recession to "stimulate" the economy. That's what happened in 2008-2010- spending shot way up and the GDP contracted giving us a massive increase in debt/GDP.


Both arguments are flawed. For the first, understand that the reason you shrink the debt/GDP equation during the good times is to give yourself room to work during the lean times. The best way to handle recessions is to tackle them head on, and make them go away, ASAP, debt be damned. Spending a recession to death early is ALWAYS cheaper then letting them hang around for 5-6 years (see FDR in 1936, Carter in 78, Reagan in 82 for reference).

Secondly, the spending you so decry in 2008 did exactly what it was supposed to do: Plug the hole that vanished in consumer spending, and stopped the downward trend in the economy. For those who forget, the economy lost almost 800,000 jobs January 2009. Just a year later, the job numbers were break even. Thats, frankly, a job turnaround unequaled in american history. The reason we're still stuck in an economic quagmire, is that while the stimulus plugged the economic hole, there was never a second stimulus to get the economy moving again, so we're stuck in the "we can't hire because there's no demand, which there won't be until people spend money, which they can't until we hire" loop.

There's a reason why the debt/GDP has jumped so much since Reagan: The abandonment of sound economic policy (Keynesian economics).

Quote:
Point being, we had a ~120% Debt/GDP post WWII. That shrunk to 32% Debt/GDP post Carter. We didn't have any debt problems until Reagen, mostly because of the decline in taxable revenue being collected. said:
Point being, we had a ~120% Debt/GDP post WWII. That shrunk to 32% Debt/GDP post Carter. We didn't have any debt problems until Reagen, mostly because of the decline in taxable revenue being collected.


The global and domestic economic picture was far, far different then than today to the point of not really being comparable.


Lets tackle these one at a time:

Quote:
- We were THE economic power in the world, period. Europe was reduced to a smoking rubble heap from WWII with massive debt from the war. Japan was a glowing, smoking rubble heap with massive debt from the war. Korea and Southeast Asia were little more than rice paddies. It's easy to have an economic boom when you are the only player in the entire game. That is hardly the case today.


No offense, we're still larger then the rest of the world combined. No one else is CLOSE economically. We drive all economic activity, every other economy is dependent on trade from US, not the other way around.

Quote:
- We had a massive increase in the number of workers due to women starting to enter the workforce post-WWII and the Baby Boomers becoming of employment age in the 60s and 70s. Massively increasing your labor force when you are the only economic game in town is a massive economic boost.


Simple solution: Loosen the immigration rules Reagan put into place. No idea why it takes years to get immigrants in; should take hours instead. This will have to happen at SOME point, due to declining birth rates (which itself points to greater economic problems ahead).

Quote:
- We had a massive increase in the amount of industrial production because of the Second Industrial Revolution which started around the turn of the century and gave us modern electromechanical equipment. We then had a boom in the 1980s and 1990s when computerized equipment further increased productivity. We haven't had a paradigm shift like either of those since then and are now in a mature industrial state. Being in a mature industry is at best is stagnation, and at worst contraction as everybody else figures out how to catch up with you and does it a little cheaper. That is what SE Asia has largely done in the past 10-20 years and one reason why a lot of our business has gone over there.


Plenty of new industries come and go with time. Its always in hindsight that we recognize them.

Quote:
It's not about tax rates or any of that bullcrap. It's about being stuck in a mature stagnant economy but still spending like we are in a paradigm shift boom economy.


Yet Clinton had no problems making us money. Or the fact revenue is well below historic norms.

Quote:
(I continue to argue we need the 90% tax bracket back) said:
(I continue to argue we need the 90% tax bracket back)


That only affected around 200 people per year when it was in effect. The adjusted income level required to be in that 91% bracket would be something around $5 million today, and there were LOTS of deductions that could be taken. The fact that only a couple hundred people were subject to the very high rates due to lots of deductions is what led to the creation of the Alternative Minimum Tax.


Hence why I continue to advocate Hunstmans plan: Remove all deductions, and reduce the rates overall for the lower/middle classes. The tax code is NOT the place to try and drive economic activity.

Quote:
and the massive increase in defense spending (at the time, to 10% of GDP, and unheard of level. Seems quaint in hindsight). So anyone who claims that Medicare (1965), Social Security changes (1972), and the like are responsable for driving the deficit is full of it; we didn't have a problem until we gave the wealthy massive tax breaks. said:
and the massive increase in defense spending (at the time, to 10% of GDP, and unheard of level. Seems quaint in hindsight). So anyone who claims that Medicare (1965), Social Security changes (1972), and the like are responsable for driving the deficit is full of it; we didn't have a problem until we gave the wealthy massive tax breaks.


That's a load of manure and you know it. Simply look at the pie chart of where federal expenditures go in every federal tax instruction booklet and you'll see the majority of federal spending is Medicare and Social Security. I guess I might be in error in assuming that you actually pay taxes and have looked at the instructions as you may be part of the half of the country that pays no federal income taxes.


Uh oh, here comes the "lets tax the poorest of us" argument. Nevermind you'll just increase the costs of Medicare and other Federal programs faster then you can tax that segment of the economy.

Secondly, after deductions, I paid my $1 of taxes. Kinda proves my point about needing to get rid of deductions, no?

Quote:
Again, thinking in dollar amounts, not as a share of GDP. You don't need a balanced budget to shrink the debt, and thats the flaw in your thinking. said:
Again, thinking in dollar amounts, not as a share of GDP. You don't need a balanced budget to shrink the debt, and thats the flaw in your thinking.


You actually do need to balance the budget to shrink the debt, or come very close to it. Your whole rationale for debt-to-GDP ratio being the key metric is that revenues tend to be more strongly based on GDP (see Hauser's Law) than spending and that a higher GDP = more revenues. That does mean that the actual dollar amount of debt isn't as important, as you stated. However, basic math still applies. If you continually spend more than you take in, you WILL run a deficit and add to the debt, regardless of how much the GDP is growing. The only partial exception to this rule is inflation. The debt is worth less in real dollars as you have inflation, as long as the inflation rate is higher than the interest rate on the debt. That is generally NOT the case (although it is right now, which is an anomaly) and why I said inflation is only a partial exception. We have enough debt and deficit that we would need to have roughly the inflation rate of Zimbabwe before they had to give up their currency to make a real dent in the real value of our debt. You do not want to live in such a scenario.


But my arguement isn't as much to run an infinite amount of debt (as you said, inflation would eventually kill you), but to try and keep the year by year changes under control. For example, if I had a budget that increased the debt by 2%, but was expected to increase GDP by 3%, I'd sign that budget in a heartbeat, every time, because the debt/GDP would shrink.

Quote:

I'm not arguing against smart, targeted spending cuts, but I argue about what to cut. I work in defense, and trust me, the industry has gotten very, very, fat. Cut defense spending in half. said:

I'm not arguing against smart, targeted spending cuts, but I argue about what to cut. I work in defense, and trust me, the industry has gotten very, very, fat. Cut defense spending in half.


Okay, we would still have over a $1T deficit annually as the Pentagon's budget is about $700B and the annual deficit is around $1.4T. That extra $1T has to come from somewhere and the vast majority of what's left would be entitlement programs. Remember what I said above about personal income and taxes, you could confiscate every single dollar anybody makes over $200k/year and still end up with quite a bit less than $1T/year. Spending cuts MUST be made in entitlement programs. There is simply no mathematical way around that.


I'd do it via overhead. Example: We have about 10 or so Federal healthcare programs that I know of. I find that appaling. Disband ALL OF THEM, and fold them into a single, government run, health plan. The overhead savings alone should save at least $100 Billion or so.

Problem is, when the GOP says "cut", they really mean "disband" or "defund to the point of not being able to do anything".

Quote:
Secondly, tax all income at the same rate. Specifically, I'm talking investments here. And no, if it suddenly becomes unprofitable to invest if the income is taxed at the same rate as other forms of income, then guess what? You probably shouldn't be investing in the first place. said:
Secondly, tax all income at the same rate. Specifically, I'm talking investments here. And no, if it suddenly becomes unprofitable to invest if the income is taxed at the same rate as other forms of income, then guess what? You probably shouldn't be investing in the first place.


Investment income is taxed twice- once at the 35% corporate income tax rate and then again at whatever rate the individual investor pays on capital gains, dividends, and etc. Having higher taxes on investments will limit the amount of investments that people are willing to take and will cause a significant contraction in the economy. This is because the rate of potential return on your investment money will drop but the potential risk of the investment does not. An investment that may have been potentially worthwhile with a 4% effective rate of return in return for a certain level of risk might not be worth the risk if taxes decrease your potential return to only 2%. The company you would have invested in then has less capital from investors and will not be able to start/expand as they had hoped to, resulting in less overall economic activity. Remember what I said about us being in a mature economy? Rates of return are going to be pretty low as there are very few new and potentially hugely profitable markets. There isn't going to be much for high-likelihood of high rate of return investment out there. It will either be large established companies with very low rates of return (ex: Microsoft, whose share price has been stagnant since the late 1990s) or in very risky little upstarts who try to squeeze in an established market. Blunting the rewards from investing in an upstart will guarantee that few upstarts ever get to see the light of day due to lack of investment. Taxing investment income heavily is about the worst thing you can do if you want an economy to do anything but circle around the drain. I am not necessarily against taxing investment income as normal income but the corporate tax would need to be eliminated or pretty close to it. Heck, I am sure you look up to Europe, even the statists Europeans have lower corporate income taxes than the U.S.


I now ask the question that has to be asked: Why is so much of our economic activity driven by investments anyways?

Quote:


Not according to the official government numbers:

http://www.whitehouse.gov/sites/default/files/omb/budge...

Page 27 has the info you want: Revenues and expenses as a percentage to GDP (in FY2005 dollars).
Revenue/GDP Expenses/GDP
2000: 20.6|18.2
2001: 19.5|18.2 (-0.9|0)
2002: 17.6|19.1 (-1.9|+0.9)
2003: 16.2|19.7 (-1.4|+0.6)
2004: 16.1|19.6 (-0.1|-0.1)
2005: 17.3|19.9 (+1.2|+0.3)
2006: 18.2|20.1 (+0.9|+0.2)
2007: 18.5|19.6 (+0.3|-0.5)
2008: 17.5|20.7 (-1.0|+0.9)
2009: 14.9|25.0 (-2.6|+4.3)
2010: 14.9|23.8 (0|-1.2)

So you get more or less the same numbers I calculated before: a net -5.7% drop in Revenue/GDP to a 5.6% increase in Expenses/GDP. The key here is to remember the last two years had significant short term stimulus, and thus won't be a permanent part of the budget. So if you use 2008 as the last "normal" budget, you get -3.1% drop in revenue/GDP to a 2.5% increase in Expenses/GDP. Revenue dropping faster then expenses are rising, proving my entire argument. Again, I view the 4.3% spending increase in 2009 as anomalous, and expect it to vanish entirely over the next few years. said:


Not according to the official government numbers:

http://www.whitehouse.gov/sites/default/files/omb/budge...

Page 27 has the info you want: Revenues and expenses as a percentage to GDP (in FY2005 dollars).
Revenue/GDP Expenses/GDP
2000: 20.6|18.2
2001: 19.5|18.2 (-0.9|0)
2002: 17.6|19.1 (-1.9|+0.9)
2003: 16.2|19.7 (-1.4|+0.6)
2004: 16.1|19.6 (-0.1|-0.1)
2005: 17.3|19.9 (+1.2|+0.3)
2006: 18.2|20.1 (+0.9|+0.2)
2007: 18.5|19.6 (+0.3|-0.5)
2008: 17.5|20.7 (-1.0|+0.9)
2009: 14.9|25.0 (-2.6|+4.3)
2010: 14.9|23.8 (0|-1.2)

So you get more or less the same numbers I calculated before: a net -5.7% drop in Revenue/GDP to a 5.6% increase in Expenses/GDP. The key here is to remember the last two years had significant short term stimulus, and thus won't be a permanent part of the budget. So if you use 2008 as the last "normal" budget, you get -3.1% drop in revenue/GDP to a 2.5% increase in Expenses/GDP. Revenue dropping faster then expenses are rising, proving my entire argument. Again, I view the 4.3% spending increase in 2009 as anomalous, and expect it to vanish entirely over the next few years.


No. Your figures have government spending rolled into the GDP, which is why the GDP has continued to nominally increase for the past several years. The private sector production portion of the GDP peaked in 2007 and remains roughly a trillion dollars below 2007 levels even today. The revenues vs. (GDP - federal spending) have dropped a little bit but are much more closely correlated than you imply. Also you completely refuse to address any of the WHY the revenue percentage of GDP is dropping. Hint: It's not due to the tax rates! The revenue percentage of GDP managed to increase in the mid-2000s after the 2001 recession even after the "Bush Tax Cuts" went into effect. It's all about the health of the economy- people who are doing well make more money and pay increasingly higher rates due to the "progressive" tax rate system. You get a nonlinear drop in tax revenue with dropping incomes. Also with more people working, you get more taxpayers and currently we have high unemployment and a record low taxpayer-to-citizen ratio. That's the vast, vast majority of what is causing the lower revenues.

I suppose you will get to see what higher tax rates won't do for revenues in the next few years. I just got my first paycheck of the new year with the new tax rates- there are certainly more taxes being withheld, that's for damn sure...


Funny, numbers disagree with you again. According to the 2012 budget (pg 25):

GDP (2007): $13,891 Trillion
GDP (2010): $14,508 Trillion
GDP (2012)[Estimate]: 15,812 Trillion

So wheres this mythical missing GDP again? The official numbers show a ~$300 billion loss from 2008-2009 (from 14,394 to 14,097), but a recovery by 2010 (driven by the 3% GDP growth that year). So again, your analysis is proven incorrect.

In this case, the loss in revenue is driven entirely by the decline of people working. No income, no income tax. Hence the argument for a second stimulus, since it gets people to work, and thus starts to restore BOTH GDP and Revenue, all in one stroke. (Even better, get them to work upgrading our infrastructure, so we get a trifecta for one spending measure.)

Next up, the BTC's did NOT increase revenue/GDP. The first of the cuts was implemented in 2001. That year, Revenue/GDP was at 19.5. The next three years, this declined to 17.6, 16.2, and 16.1. 2004 was the one year GDP cracked 3% growth under Bush though, so Revenue/GDP recovered the next few years (17.3, 18.2, 18.5), as one would expect with rising GDP. Note the PERCENTAGE of Revenue to GDP, even at its peak under Bush, was still 1% lower then it was in 2001. This is significant, due to the rise in GDP, so that 1% comes out to a few hundred Billion/year in lost revenue.

Likewise, when the economy recovers from this recession, the revenue/GDP will naturally rise as well. But remember, a 1% difference in Revenue/GDP in a 15 Trillion economy is 150 Billion in lost revenue. Thats how much, per year, was lost at the economic peak due to Bush's tax cuts.
January 7, 2013 5:33:35 PM

You spent a lot of timing writing a book based on your opinion. Hope it was worth it. :) 
January 7, 2013 6:03:47 PM

gamerk316 said:
I'm simply pointing out that the House no longer is representative of the people. Guess what? Americans prefer a Democratic house; they voted more for Democrats then Republicans in House races. Too bad the official results don't match that outcome, because the districts have been dissected to favor the incumbent in almost all races.
The House is still controlled by Republicans, regardless of the few seats gained by Democrats in the November elections. Stating that Americans prefer a Democrat House ignores this simple fact, otherwise, the House would also be controlled by Democrats as a result of the Nov election. Any interpretation of the recent redistricting as favoring one party over another is Democrat disagreement with the Congress fulfilling their constitutional duty for evaluating the voting districts based on the 2010 census data.

gamerk316 said:
Ever since we passed an ammendment allowing the direct election of Senators, the House has been a redundant function. As its very unlikely gerrymandering will ever be fixed, and given the fact the country will end up splitting (probably violently) if radicals aren't put under control, the only fix would be to dissolve the House.
Actually, it was the direct election of Senators that could be considered the second major blow to the American Republic. The direct election of Senators opened the floodgates for a larger and more controlling centralized government. By removing the States representation to the Federal government, it effectively gave all legislative control over to the federal government. Ever since the 17th Amendment, the focus has shifted from the States providing solutions at the State level to a centralized federal one-size-fits-all-government. Without the passing of the 17th Amendment, the federal government never could have implemented the numerous social programs that are now our financial downfall, i.e.; Social Security, military keynesianism, the New Deal, the War on Poverty, the War on Drugs, the ACA, etc.
gamerk316 said:
By dissolving the house, increasing the size of the Senate, and increasing terms to 8 years (for simplicities sake), you accomplish several things:

1: Smaller government
2: More efficient government (only two bodies, the President and Senate, have to deal)
3: Make it harder for any radical group to gain power (winning a state is MUCH harder then winning a carefully drawn up district)
4: More representive of the people (No gerrymandered districts; one Senator up every two years ensures an unpopular party gets booted out)
Let me add some additional accomplishments;
5: a ruling class increasingly out of touch with the electorate
6: a government run by academics, ideologues, and law makers
7: only two branches of government without a third to offset any abuses of power
8: eventual combination of the Senate and Executive under the guise of smaller more efficient government
9: tyranny

gamerk316 said:
Make no mistake: The House/Senate setup was all about Slavery, and ensuring the North couldn't end it. The house has served its purpose, now its just an impediment to good government.
gamerk316 said:
Don't quote history textbooks as absolute truth; its unpopular to admit that EVERY COMPROMISE IN THE CONSTITUTION WAS ABOUT SLAVERY. The south was terrified of being outvoted and having slavery overturned, so they pushed for equal representation. After the compromise for two houses, they then, for the same reason, pushed for slaves being counted as part of their population. Both compromises were about protecting slavery.
WHAT?!?! Wow! This is revisionist history if I've ever heard it, as you said, "don't quote history textbooks as absolute truth" especially whatever text books you've been taught from! Ensuring the North could NOT end slavery? WHAT?! Every compromise in the Constitution is about slavery? WTF?! So, the first 12 Amendments were all about slavery? Right, sure they were... :sarcastic: 

gamerk316 said:
I wouldn't even be opposed to switching to a parliamentary democracy, with the President elected by the Senate. Would solve all those annoying "I can't legislate because I have a hostile Congress" problems. Never really makes sense to have a President and a hostile Congress. If you wouldn't elect a CEO without the backing of the executive board in business, why the heck should we do the same exact thing for running our government?

I care, first and foremost, about efficiency. And our government, by design, is inefficient.

EDIT

And yes, I know I'm "out there" on this issue. But I've basically lost faith in functioning government, and am more or less convinced if the country does moderate NOW, we will see the country break up within the next two decades.
Would your parliamentary government be bicameral or unicameral? As a side note, research the etymology of the word "parliament", it is derived from the word "parley". The definition of the word "parley" is "an informal conference between enemies under a truce, especially to discuss terms, conditions of surrender, etc." Kind of ironic that you would willingly change from a representative republic to a form of government where the very word used to describe the government inherently means that the people are considered enemies of the aristocracy. But, hey! To each his own, you say parliament, I say republicanism!

Ironically in true liberal/progressive fashion, rather than turning your disgust towards learning the principles of republicanism and what you can do to help steer this country back to it's foundations, you seemingly much rather propose ideas intended to destroy it and remake it into the new ideal; hopefully, after learning the etymology of "parliament" you would reconsider your new ideal.

Also, we will not see this country break in the next two decades, because all the Hippies and Baby Boomers who started this "revolution" back in the 1960's will be dead and long gone. Their liberal ideology will no longer influence media and politics as much as they do today. Hopefully the next generation will look back on the sins of their fathers with regret and disdain and not double down on stupid with continued deficit spending, creating rights out of societal benefits, and reverse the trend of political debauchery. Well that's at least what I hope for...

riser said:
Ah but to so quickly dismiss the US government is foolish. The design is as perfect as they come. Our government was designed to be inefficient with checks and balances. This is fundamental. Yet, he is quick to get rid of the checks and balances when it doesn't benefit his agenda. Yet, if he recalls a few years ago when Republicans were in control, he would be crying for these checks and balances to come back. I am simply being fair and reasonable understanding that in a time when the balance of power shifts, those same checks and balances will be there.
I am glad to read that some folks understand that our government was intended to be inefficient. Not only that folks understand it was designed that way, but also the reasoning as to why it was designed that way. Thank you Riser!
January 7, 2013 7:26:37 PM

Whats interesting about those hippies is, they didnt want to become part of the machine the man had created, but instead opted for what other men had previously created, and gained nothing and gave up much in the process.
TY chunky for recognizing this, as its so true, as I was once one of those hippies, til I saw them blindly following a direction that left little for individual merit, individual thought, and lessoned reasoning thru lessoned responsibilities.
January 8, 2013 4:08:32 AM

riser said:

Second, I would also like to point out that the Sandy aid package started filling up with so much Pork spending that I would have delayed it as well. On that note, too much money was being spent elsewhere and not for the people hurt by Sandy. The money really isn't the issue though as the work will be done now and the money can come later. Trust me, I know exactly how that works. Passing the bill is very symbolic for the people which would be great, but the fact is nothing is being stopped because that bill wasn't passed.


Another interesting tidbit is that the Sandy aid package in the Senate was about $60 billion, which is *all* of the money the new tax on the >$400k people is projected to bring in for the entire year of 2013. The bill itself is not symbolic as it is $60 billion. That's a huge amount of money and a lot of pork being brought home by the NY/NJ Congressmen.

gamerk316 said:


Secondly, anyone who argues government spending contributes nothing is, frankly, an idiot. Its a baseless argument that has been repeated so people start believing it is true (its not).


Transfer payments *do* add nothing to the economy and that is the majority of government spending. There is no new production, no added value in any of that. It's just seizing money from one person to give to another. If the government did something like build roads you could argue that spending has economic value but transfer payments do not.

Quote:


Both arguments are flawed. For the first, understand that the reason you shrink the debt/GDP equation during the good times is to give yourself room to work during the lean times. The best way to handle recessions is to tackle them head on, and make them go away, ASAP, debt be damned. Spending a recession to death early is ALWAYS cheaper then letting them hang around for 5-6 years (see FDR in 1936, Carter in 78, Reagan in 82 for reference).

Secondly, the spending you so decry in 2008 did exactly what it was supposed to do: Plug the hole that vanished in consumer spending, and stopped the downward trend in the economy. For those who forget, the economy lost almost 800,000 jobs January 2009. Just a year later, the job numbers were break even. Thats, frankly, a job turnaround unequaled in american history. The reason we're still stuck in an economic quagmire, is that while the stimulus plugged the economic hole, there was never a second stimulus to get the economy moving again, so we're stuck in the "we can't hire because there's no demand, which there won't be until people spend money, which they can't until we hire" loop.


Wow, I wish I were living in the la-la land you are. Keynesian economics and its bailout/stimulus has been discredited several times over- including the lack of effect during the last four years. The spending in 2008 did not do much of anything. The recession was due to the housing bubble going "pop" and people who spent way more than they could afford on over-inflated housing prices suddenly defaulted. Also there was a big oversupply of housing. All of that cleared out in the next couple of years after the people who were grossly underwater ended up foreclosing and a grinding halt of new construction for a few years corrected the housing oversupply issue. The bailouts didn't do much of anything. The banks sat on and continue to sit on the stimulus money. The auto bailout didn't have much effect on the car makers themselves either. They both ended up going through a bankruptcy, investors took a haircut, and contracts got re-negotiated just as if they had not had any government interference with their bankruptcy. All the stimulus did was guarantee that the UAW just got 100% of its obligations met by the taxpayers rather than taking a haircut like all of the other investors.

And if you want real numbers from the so-called "recovery," economically we are no better off than we were in the middle of 2008 and in many cases worse off. The stock markets are pretty much at the exact same level as they were five years ago. Private sector production is actually a touch down. Employment is not good either as the U6 is about twice what it was five years ago. We have decreasing unemployment only because people "fall out" of the calculation from being unemployed for so long. The Obama "recovery" is anything but. That is not surprising as businesses are scared to do much, lest they get whacked with new regulations and taxes. Obamacare was a huge new expense, for example. That's why everybody is sitting on their money, they are scared of what Obama might come up with next.

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There's a reason why the debt/GDP has jumped so much since Reagan: The abandonment of sound economic policy (Keynesian economics).


Keynes was about as correct as a stopped clock, and you know it.

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Lets tackle these one at a time:

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No offense, we're still larger then the rest of the world combined. No one else is CLOSE economically. We drive all economic activity, every other economy is dependent on trade from US, not the other way around.


Last time I checked the EU has a higher GDP than we do and China is about 80% of the GDP as the U.S. We *don't* drive economic activity like we used to.

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Simple solution: Loosen the immigration rules Reagan put into place. No idea why it takes years to get immigrants in; should take hours instead. This will have to happen at SOME point, due to declining birth rates (which itself points to greater economic problems ahead).


That is one thing I actually somewhat agree with you on. Immigration policy does need some tweaking. However relying on massive population growth to sustain Ponzi scheme entitlement programs like Social Security isn't sustainable for very long and those entitlement programs absolutely need to be addressed.

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Plenty of new industries come and go with time. Its always in hindsight that we recognize them.


I am pretty sure the U.S. knew that it was a manufacturing powerhouse after WWII and that the computer boom was well known when it happened. You don't remember all of the "e-this" and ".com" that and "Dow 36,000" during the 90s?

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It's not about tax rates or any of that bullcrap. It's about being stuck in a mature stagnant economy but still spending like we are in a paradigm shift boom economy.

Yet Clinton had no problems making us money. Or the fact revenue is well below historic norms.


The tech boom, a gridlocked government, and the Baby Boomers being in their peak income earning years brought us a roughly balanced budget for a few years. You forget that Clinton was elected in 1992 and had a Democrat Congress until the end of 1994. The economy and budget didn't look very good until the Republicans swept the Democrats out of Congress in 1994 and gridlocked the government for the next 6 years.

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Hence why I continue to advocate Hunstmans plan: Remove all deductions, and reduce the rates overall for the lower/middle classes. The tax code is NOT the place to try and drive economic activity.


That makes sense but it is absolutely opposite of what Obama and the Democrats are pushing. They are pushing for a small minority of the population to pay huge amounts of taxes while the majority pays little to none.

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Uh oh, here comes the "lets tax the poorest of us" argument. Nevermind you'll just increase the costs of Medicare and other Federal programs faster then you can tax that segment of the economy.

Secondly, after deductions, I paid my $1 of taxes. Kinda proves my point about needing to get rid of deductions, no?


You contradict yourself. About half of people pay NO federal income tax due to deductions and exemptions meeting or exceeding their low to moderate incomes and thus having no taxable income. Removing deductions and exemptions will largely result in people who currently pay little to no tax paying significantly more because the high earners already are very limited in the amount of deductions and exemptions they can take (see the Alternative Minimum Tax.) So you are actually in favor of "taxing the poorest." You also don't have to increase the amount of federal spending on entitlement programs. You can control that with something called a budget, which Obama has not had in three years.

I pay five orders of magnitude more than you do in taxes. The only deductions I get to take are the standard exemption and the student loan interest deduction, which really only knocks off a few hundred bucks from my tax bill. I don't have kids, own a house, or drive a Chevy Volt or anything else that the government wants me to do, so I pay out the nose in taxes. FYI, the loan interest deduction works out to less than a week's worth of interest on my loans. Gotta love the federal Department of Education and its 6.8-8.75% monopoly loan program saving us from the evils of private lenders and their 3-4% interest rates.


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I now ask the question that has to be asked: Why is so much of our economic activity driven by investments anyways?


Because we are supposedly/used to be a capitalist economy and investing and business *is* the economy. How do you run a business without money? Even if you put your own money into your business, you are still investing. The alternative to investment is that the government simply controls all economic activity by edict in a command economy. That's full on Communism right there and I don't think you really want to go there unless you relish waiting 10 years for the government to make enough Trabants to give you one.

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In this case, the loss in revenue is driven entirely by the decline of people working. No income, no income tax. Hence the argument for a second stimulus, since it gets people to work, and thus starts to restore BOTH GDP and Revenue, all in one stroke. (Even better, get them to work upgrading our infrastructure, so we get a trifecta for one spending measure.)


I already explained this, I only counted the private sector portion of the GDP. And yes, the decrease in revenue was due to fewer people working and paying taxes. However the stimuli did NOT work, otherwise we would have seen a recovery in the U6 unemployment rate and an increase in the revenue/GDP ratio back to what it was prior to the recession. We have seen neither; the stimulus failed. The money got sat on by banks and went to China via people using their checks to buy madeinchina crap at Wal-Mart. The infrastructure projects weren't useful either. In my locale the money went to upgrading transit buses that already ran around empty and putting in fancy bicycle lanes nobody actually uses. In other words, a complete waste.

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Next up, the BTC's did NOT increase revenue/GDP. The first of the cuts was implemented in 2001. That year, Revenue/GDP was at 19.5. The next three years, this declined to 17.6, 16.2, and 16.1. 2004 was the one year GDP cracked 3% growth under Bush though, so Revenue/GDP recovered the next few years (17.3, 18.2, 18.5), as one would expect with rising GDP. Note the PERCENTAGE of Revenue to GDP, even at its peak under Bush, was still 1% lower then it was in 2001. This is significant, due to the rise in GDP, so that 1% comes out to a few hundred Billion/year in lost revenue.

Likewise, when the economy recovers from this recession, the revenue/GDP will naturally rise as well. But remember, a 1% difference in Revenue/GDP in a 15 Trillion economy is 150 Billion in lost revenue. Thats how much, per year, was lost at the economic peak due to Bush's tax cuts.


And the continued recession due to heavy regulation and threat of yet more regulation from Obama and the Democrats has depressed revenues despite massive failed stimulus programs. You are arguing about $150B/year when Obama increased the deficit by 8 times that much and has continued to run that high of a deficit ever since being anointed. We have a massive spending problem even by your calculations, although you absolutely refuse to admit it.

Also, mark my words, we will not get out of the recession until something gets done about the wet blanket of regulation and threat of more regulation that is smothering the economy.
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