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National Debt -- How much is too much?

Iriemon

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RightatNYU said:
Bush hasn't vetoed ANY bill, mostly because he has a firm grasp on Congress, so the only bills that get sent to him are ones that he authorizes. It's less of a reflection on his "unwillingness" to veto legislation than it is a reflection on his ability to set the agenda.

Which is exactly why he gets the lion's share of the blame for squandering the surpluses and the resulting 40% increase in debt since he became president.
 

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RightatNYU said:
There HAS to be a debt, that's how bonds operate. It's a necessity, although the size is certainly negotiable.

We agree the size is negotiable. It can certainly be far far smaller than it is.

Why do there have to be Govt debt for bonds to operate? Commercial bonds will operate just fine without US Govt debt. Why can't our Govt own equities and debt of other nations or entities? Japan has assets -- loans it has made to and debt it is owed by our government -- in excess of $650 billion. Why can't our Govt do the same?

If some small level of debt is necessary because US Govt bonds are essential for certain uses, no problem, the Govt can hold offsetting assets.
 

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RightatNYU said:
Last I heard, 2008 election polls were completely useless until about March of 2008.

Not true. The next presidential election always begins after the day after the last election which was about November 3, 2004. You can go to "Tradesport.com" and see a complete list of candidates that have any possibility of becoming the next president. Don't look for a knight in shining armor to coming riding out of the forest who is not on this list. He's already out there raising money to run if he has any chance at all.
 

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Iriemon said:
The SS trust fund has no independent assets in it.

That's true enough but our government takes in about two trillion every year in tax revenues. Additionally, the government has the power of the printing presses. The SSA obligations will be funded. If nothing else happens in government that will be taken care of. The younger workers will be stuck with the bill. There is little question about that. But the "boomers" will get theirs. And you know why? Because they always vote. The younger people often do not and politicans always count the votes before they do anything. They are not about to let the SSA system go down the tubes because if they did, they would be out of a job.

What do they say? "You scratch my back and I'll scratch yours."
Ditto for SSA.
 

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Iriemon said:
Which is exactly why he gets the lion's share of the blame for squandering the surpluses and the resulting 40% increase in debt since he became president.

I'll agree with you that he party deserves the blame for spending increases (most of it was out of his hands, between entitlements, and the $1,000,000,000,000 cost of 9/11 didn't help either), but there WERE no surpluses. Those were paper surpluses, nothing more, that wouldn't have existed no matter who was president.
 

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Iriemon said:
We agree the size is negotiable. It can certainly be far far smaller than it is.

Why do there have to be Govt debt for bonds to operate? Commercial bonds will operate just fine without US Govt debt. Why can't our Govt own equities and debt of other nations or entities? Japan has assets -- loans it has made to and debt it is owed by our government -- in excess of $650 billion. Why can't our Govt do the same?

If some small level of debt is necessary because US Govt bonds are essential for certain uses, no problem, the Govt can hold offsetting assets.

There has to be debt, because that's what bond's ARE. When the US sells 100,000,000 in bonds to the public, what happens is that the debt increases by $100,000,000. With no debt, there can't be bonds.

Japan does the same thing as us. In fact, their ratio of debt to GDP is 165%, while ours is 65%.
 

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Missouri Mule said:
Not true. The next presidential election always begins after the day after the last election which was about November 3, 2004. You can go to "Tradesport.com" and see a complete list of candidates that have any possibility of becoming the next president. Don't look for a knight in shining armor to coming riding out of the forest who is not on this list. He's already out there raising money to run if he has any chance at all.

I'm well aware of tradesports, the point im making is that none of it matters until about March 2008. How can people say the GOP or Dems will will when they don't know the nominees yet? Guesswork.
 

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RightatNYU said:
I'm well aware of tradesports, the point im making is that none of it matters until about March 2008. How can people say the GOP or Dems will will when they don't know the nominees yet? Guesswork.

Well, I disagree with you to this extent. We don't know who the final nominees will be but we do in fact know who will be in the pool of applicants, don't we? If you do not agree with that statement, who would you add to the list?
 

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RightatNYU said:
There has to be debt, because that's what bond's ARE. When the US sells 100,000,000 in bonds to the public, what happens is that the debt increases by $100,000,000. With no debt, there can't be bonds.

Japan does the same thing as us. In fact, their ratio of debt to GDP is 165%, while ours is 65%.
yeah, it's true that maintaining some debt is neccisary.
But the reason that the US Bond is such a highly regarded bond is because to many they consider it default proof, which is a reasonable assumption.
But that opinion has started to slide slightly, as shown by people no longer desiring to hold US currency as an investment, because they just generally believe that, considering our current defecits, combined with our current trade defecits, combined with our national debt, the idea of the US Bond being default proof is becoming less and less universally accepted as fact.

Businesses put out bonds too, to issue debt and raise capital, which is good for business, but once they're no longer considered as likely to pay off the loan they end up having to pay higher rates to issue debt (since obviously, as risk increases, so must return), and so a certain level of debt is no longer desirable. It's pretty clear considering that the dollar hasn't overtaken the Euro yet, despite the Euro being the most idiotic idea behind a currency in history, that we've reached that point.

What I really don't like is this idea that some people heard that debt is good, and don't understand that debt is only good in relative moderation, since if you have too little that means you haven't raised enough capital to allow innovation, but if there's too much, well, you can see right now what's happening.
 

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^very well said
 

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RightatNYU said:
I'll agree with you that he party deserves the blame for spending increases (most of it was out of his hands, between entitlements, and the $1,000,000,000,000 cost of 9/11 didn't help either), but there WERE no surpluses. Those were paper surpluses, nothing more, that wouldn't have existed no matter who was president.

According to the Congressional Budget Office, there was a surplus in FY2000 of $86 billion -- and that is not counting the SS surplus as general revenues like they do now. The surplus including the SS surplus was $236 billion in 2000.

http://cbo.gov/showdoc.cfm?index=1821&sequence=0 Table 1.

Per the Dept of Treasury, total government debt:

http://www.publicdebt.treas.gov/opd/opd.htm

12/31/99: $5,776,091,314,225.33
12/31/00: $5,662,216,013,697.37

The public debt decreased $116 billion year ending 12/31/00.

Good enough to call it a surplus to me. How is it not a surplus?

Whatever you call it, damn sight better than we are doing nowdays. Govt borrowed $600 billion last year, be around $550 billion this year.
 

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Missouri Mule said:
That's true enough but our government takes in about two trillion every year in tax revenues. Additionally, the government has the power of the printing presses. The SSA obligations will be funded. If nothing else happens in government that will be taken care of. The younger workers will be stuck with the bill. There is little question about that. But the "boomers" will get theirs. And you know why? Because they always vote. The younger people often do not and politicans always count the votes before they do anything. They are not about to let the SSA system go down the tubes because if they did, they would be out of a job.

What do they say? "You scratch my back and I'll scratch yours."
Ditto for SSA.

I agree. The younger workers will be stuck with a huge bill and crushing tax increases to pay the boomers' retirement. Taxes will have to be much higher for them than they would have to be for us if we just paid our own way.

Not good for America's future, not fair to the next generation, and just not right period. And instead of trying to make it better, the politicians pander to the electorate with tax cuts and more spending.

But we are the pass the buck generation.
 

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RightatNYU said:
There has to be debt, because that's what bond's ARE. When the US sells 100,000,000 in bonds to the public, what happens is that the debt increases by $100,000,000. With no debt, there can't be bonds.

Japan does the same thing as us. In fact, their ratio of debt to GDP is 165%, while ours is 65%.

So what. Why do there have to be govt bonds? What is wrong with corporate bonds.

You want to use Japan of a great example of what our nation should aspire to? Have you checked out how Japan's economy or stock market have done over the last 15 years?
 

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galenrox said:
yeah, it's true that maintaining some debt is neccisary.
But the reason that the US Bond is such a highly regarded bond is because to many they consider it default proof, which is a reasonable assumption.
But that opinion has started to slide slightly, as shown by people no longer desiring to hold US currency as an investment, because they just generally believe that, considering our current defecits, combined with our current trade defecits, combined with our national debt, the idea of the US Bond being default proof is becoming less and less universally accepted as fact.

Businesses put out bonds too, to issue debt and raise capital, which is good for business, but once they're no longer considered as likely to pay off the loan they end up having to pay higher rates to issue debt (since obviously, as risk increases, so must return), and so a certain level of debt is no longer desirable. It's pretty clear considering that the dollar hasn't overtaken the Euro yet, despite the Euro being the most idiotic idea behind a currency in history, that we've reached that point.

What I really don't like is this idea that some people heard that debt is good, and don't understand that debt is only good in relative moderation, since if you have too little that means you haven't raised enough capital to allow innovation, but if there's too much, well, you can see right now what's happening.

Exactly. And debt is especially not good when you have a huge chunk of your population retiring soon and expecting untold trillions in benefits.
 

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Missouri Mule said:
Well, I disagree with you to this extent. We don't know who the final nominees will be but we do in fact know who will be in the pool of applicants, don't we? If you do not agree with that statement, who would you add to the list?

So? What does that get you? It's fairly common knowledge that there are about 8-12 main contenders for each party, and that some are ahead of others. Until there's a nominee for each party, it's impossible to predict which party will win, because every nominee stacks up different against every other one. Thus, betting on which party will win is foolish.
 

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galenrox said:
yeah, it's true that maintaining some debt is neccisary.
But the reason that the US Bond is such a highly regarded bond is because to many they consider it default proof, which is a reasonable assumption.
But that opinion has started to slide slightly, as shown by people no longer desiring to hold US currency as an investment, because they just generally believe that, considering our current defecits, combined with our current trade defecits, combined with our national debt, the idea of the US Bond being default proof is becoming less and less universally accepted as fact.

Businesses put out bonds too, to issue debt and raise capital, which is good for business, but once they're no longer considered as likely to pay off the loan they end up having to pay higher rates to issue debt (since obviously, as risk increases, so must return), and so a certain level of debt is no longer desirable. It's pretty clear considering that the dollar hasn't overtaken the Euro yet, despite the Euro being the most idiotic idea behind a currency in history, that we've reached that point.

What I really don't like is this idea that some people heard that debt is good, and don't understand that debt is only good in relative moderation, since if you have too little that means you haven't raised enough capital to allow innovation, but if there's too much, well, you can see right now what's happening.

Which is why the debt should be cut. I'm only arguing that some debt is a necessary evil, and the rhetoric of "pay it all down" is a bit over the top. I will say that if our debt was, say, cut in half, I think that would be more than enough. 30% debt to GDP is pretty good.
 

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Iriemon said:
So what. Why do there have to be govt bonds? What is wrong with corporate bonds.

You want to use Japan of a great example of what our nation should aspire to? Have you checked out how Japan's economy or stock market have done over the last 15 years?

Yea, Japan, that horrible, terrible, most technologically advanced country in the world. Thank god we're not like them.
 

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RightatNYU said:
So? What does that get you? It's fairly common knowledge that there are about 8-12 main contenders for each party, and that some are ahead of others. Until there's a nominee for each party, it's impossible to predict which party will win, because every nominee stacks up different against every other one. Thus, betting on which party will win is foolish.

I don't know that it "gets" you anything but I can be relatively certain who won't be the nominees. There is an old saying in politics. It is still true. "You can't beat somebody with nobody."

I've followed politics since about 1948. After a while one can get pretty good at figuring these things out. Hillary appears to have a lock on the Democratic nomination barring unexpected developments. The Republicans would appear to come down to McCain, Guilliani and Allen, although I think that Jeb Bush could be a real dark horse candidate.

Much will depend on the economy. If the economy is rolling right along and the war in Iraq has wound down then the likelihood is great that the Republicans will retain control of the WH. If the reverse is true then most likely the Dems, but Hillary carries some pretty heavy baggage into the election. A stronger ticket would be Warner and Bayh if Hillary falters. Edwards can't be counted out. Looks like Kerry and Gore want to get back into it but I don't see them as realistic contenders.

The Democratic Party has two major drawbacks to "red" state voters. They are perceived as weak on terrorism and culturally out of step with their lockstep allegiance to abortion, gay marriage, hostile to religion and that sort of thing. They need to get back to their roots (economic issues) and they can start winning elections again. But unfortunately for the Dems is that their most radical wing controls the nominating process. The Republicans are usually all about business and that usually wins the presidency.
 

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Missouri Mule said:
I don't know that it "gets" you anything but I can be relatively certain who won't be the nominees. There is an old saying in politics. It is still true. "You can't beat somebody with nobody."

I've followed politics since about 1948. After a while one can get pretty good at figuring these things out. Hillary appears to have a lock on the Democratic nomination barring unexpected developments. The Republicans would appear to come down to McCain, Guilliani and Allen, although I think that Jeb Bush could be a real dark horse candidate.

Much will depend on the economy. If the economy is rolling right along and the war in Iraq has wound down then the likelihood is great that the Republicans will retain control of the WH. If the reverse is true then most likely the Dems, but Hillary carries some pretty heavy baggage into the election. A stronger ticket would be Warner and Bayh if Hillary falters. Edwards can't be counted out. Looks like Kerry and Gore want to get back into it but I don't see them as realistic contenders.

The Democratic Party has two major drawbacks to "red" state voters. They are perceived as weak on terrorism and culturally out of step with their lockstep allegiance to abortion, gay marriage, hostile to religion and that sort of thing. They need to get back to their roots (economic issues) and they can start winning elections again. But unfortunately for the Dems is that their most radical wing controls the nominating process. The Republicans are usually all about business and that usually wins the presidency.

And despite this analysis, any one of 10 trillion things happening between now and March could (and will) change who the nominee will be, and then any one of 10 trillion more things could (and will) change who will win the election.

My point is that gambling on which party will win is just that. Gambling. Nobody can claim to have any idea what will happen.
 

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RightatNYU said:
Yea, Japan, that horrible, terrible, most technologically advanced country in the world. Thank god we're not like them.

This is true.

The economic growth rate in Japan for the years 1992,1993 and 1994 was 0.4%, 0.5% and 0.6% respectively. The years 1995 and 1996 enjoyed a growth rate of 3% and 3.6% respectively, marking a brief economic recovery. Then a decrease of 0.1% appeared in 1997 and 1.9% in 1998. The GNP in Japan in 1999 was Yen 494 trillion, an increase of 0.5% over the preceding year and the government pre-estimated target of 0.6% was basically achieved, an sign of economic improvement. The economic growth rate reached 1.2% in 2000

http://www.ecdc.net.cn/newindex/chinese/page/sitemap/reports/IT_report/english/03/01.htm
 

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RightatNYU said:
Which is why the debt should be cut. I'm only arguing that some debt is a necessary evil, and the rhetoric of "pay it all down" is a bit over the top. I will say that if our debt was, say, cut in half, I think that would be more than enough. 30% debt to GDP is pretty good.

That would certainly be a vast improvement. If the Govt did that and stopped stealing from our SS trust fund the nation would be in much better position to deal with the upcoming crunch.
 

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RightatNYU said:
And despite this analysis, any one of 10 trillion things happening between now and March could (and will) change who the nominee will be, and then any one of 10 trillion more things could (and will) change who will win the election.

My point is that gambling on which party will win is just that. Gambling. Nobody can claim to have any idea what will happen.

Assuming that you have an interest in who the next president is, don't you want to examine their history and public statements? You might even want to assist in their campaign and education of the available candidates is a valuable asset. It is not enough to simply be against someone.
 

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RightatNYU said:
Which is why the debt should be cut. I'm only arguing that some debt is a necessary evil, and the rhetoric of "pay it all down" is a bit over the top. I will say that if our debt was, say, cut in half, I think that would be more than enough. 30% debt to GDP is pretty good.
yeah, it definately does need to be cut somewhat, but more importantly are some other numbers that need to be changed. The trade defecit, and the overall defecit. In comparison to those two numbers the actual national debt holds relatively little importance, except to shock people because whoever wants to shock someone can always say "We're X trillion in debt, BOOGIDY BOOGIDY BOO!"
The reason people are losing faith in whether we can pay off our debts is because of the defecit and the trade defecit. It's well known that our current economic policy makers believe in the trickle down effect, but considering our current trade defecit, anyone using the slightest amount of logic can just look and see that none of that money is making it down to American citizens of average or below average income, and thus we might as well take these tax cuts, write a check, and send it to China.
And the defecit shows we won't be even able to repay our debt, completely ignoring whether we would if we had the opportunity. Talking about paying off the debt was meritted during the Clinton era, cause we had a surplus, but paying off debt as we go furthur into debt is just proposterous.

The main problem is that neo-conservatives don't believe that defecits are important. No, dead seriously, I read the Neo-Con Reader, which has writtings from all sorts of prominant neo-cons, and all the random crap that spews out of their so-called "brains". And included is their belief that defecits aren't an important number, and they won't believe that it's an important number despite all of the proof that it is, most notably the plummeting value of the dollar, and trust me, if the other main currency wasn't the Euro, we'd be a lot worse off right now, but since it's a multi-national currency, we have to be pretty bad to raise against it (which is funny that we were actually dropping against it for a while!)
 

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Missouri Mule said:
Assuming that you have an interest in who the next president is, don't you want to examine their history and public statements? You might even want to assist in their campaign and education of the available candidates is a valuable asset. It is not enough to simply be against someone.

Yes, and all of what you suggest can be dealt with in, oh, let's say, June of 2007, when people actually start campaigning.
 

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galenrox said:
yeah, it definately does need to be cut somewhat, but more importantly are some other numbers that need to be changed. The trade defecit, and the overall defecit. In comparison to those two numbers the actual national debt holds relatively little importance, except to shock people because whoever wants to shock someone can always say "We're X trillion in debt, BOOGIDY BOOGIDY BOO!"
The reason people are losing faith in whether we can pay off our debts is because of the defecit and the trade defecit. It's well known that our current economic policy makers believe in the trickle down effect, but considering our current trade defecit, anyone using the slightest amount of logic can just look and see that none of that money is making it down to American citizens of average or below average income, and thus we might as well take these tax cuts, write a check, and send it to China.
And the defecit shows we won't be even able to repay our debt, completely ignoring whether we would if we had the opportunity. Talking about paying off the debt was meritted during the Clinton era, cause we had a surplus, but paying off debt as we go furthur into debt is just proposterous.

The main problem is that neo-conservatives don't believe that defecits are important. No, dead seriously, I read the Neo-Con Reader, which has writtings from all sorts of prominant neo-cons, and all the random crap that spews out of their so-called "brains". And included is their belief that defecits aren't an important number, and they won't believe that it's an important number despite all of the proof that it is, most notably the plummeting value of the dollar, and trust me, if the other main currency wasn't the Euro, we'd be a lot worse off right now, but since it's a multi-national currency, we have to be pretty bad to raise against it (which is funny that we were actually dropping against it for a while!)

You have to look at both the level of debt in conjunction with a defict. If there was no debt, a deficit for any given year is not necessarily terrible or even bad -- in a rescission there is an argument that tax cuts/additional spending helps the economy get back into gear.

However, if you have a large debt and a good economy, deficits are not helpful and just add to the debt burden. Ultimately, it is the debt that burdens the nation. The $325 interest expense in 2004 was not because of the deficit -- that was the interest the Govt had to pay because of its large debt. The fact that we are vulnerable to China and Japan is not because of a deficit in any given year, but because we owe those countries hundreds of billions because of continued deficits over a period of many years.
 
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