That is true, but you also have to acknowledge that, at least for my entire lifetime we've been trillions of dollars in debt, so that level of debt is to be assumed.Iriemon said: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.
galenrox said:That is true, but you also have to acknowledge that, at least for my entire lifetime we've been trillions of dollars in debt, so that level of debt is to be assumed.
The fact is debt at a certain degree bogs down the economy due to interest payments, but the defecit is what hurts our currency. The fact is domestically the actual economic indicators aren't so bad, i.e. inflation low, relatively low unemployment, but the fact is with our defecit we are just falling deeper and deeper into the little hole we've dug for ourselves, and a good domestic economy doesn't mean all that much, considering our trade defecit.
both, seperately. Budget defecits and trade defecits, in combination with the debt, which is now assumed, is what hurts the currency. It's hard cause the budget and trade defecits have been so attrocious under Bush that it's hard to tell which of them is hurting us the worst.Iriemon said:Are you talking about trade deficits or budget deficits?
SouthernDemocrat said:A lot of people get focused on the total debt. Otherwise, they wonder how much total debt is too much. That focus is a bit misguided. The reason being is that in the global economy, there is plenty of money out there to float our debt. The real problem is in the costs of servicing that debt. The more that is spent servicing debt, the less that can be spent on any other function of government. For example, right now it costs the government about 23 cents on the dollar to service debt. The more we borrow, the higher the costs of serving that debt, which only means we have to borrow more. What can happen is that it can eventually be crippling to the economy to service the national debt. At the rate we are going, in ten years, it could be that it could costs as much as 50 cents on the tax dollar to service debt.
What a lot of people don’t seem to get is that you cannot just pay down the national debt. The government pays it down as the debt come due. The whole point to balanced budgets and budget surpluses is to not to have to borrow more money and to be able to service debt as it comes due without incurring additional debt.
The point in all of this is that the debt itself is not so bad, the problem is the costs of servicing it.
Hamilton was a brilliant man, but he was a bit of an ideologue.George_Washington said:It was Alexander Hamilton that once said, "A Nation must never default on its debts." So I suppose we should try to pay them off. But realistically, I don't think we're in the financial state to do that right now and we probably won't be for at least another 50 years.
But then again, Alexander Hamilton also said that a national debt would be a blessing for a country. I'm not an economist so I can't really say for sure. But I do believe that we won't be able to pay off a large chunk of the debt for many more years to come. We just have to many other expenses, the money has to go other places.
Napoleon's Nightingale said:Galen, the wealthy get more back in tax cuts because they pay more in taxes...theres even an additional tax for the wealthy. It's called the Luxury Tax. Everyone got money back from the tax cuts. I do agree that the "trickle-down effect" doesn't work. The insanely wealthy would rather buy $50,000 shower curtains than raise salaries and provide well paying jobs.
George_Washington said:Yeah but think about it. Suppose they do go buy $50,000 shower curtains. Then it helps the company that sells them and might allow them to hire more workers, thereby helping lower the unemployment rate.
Napoleon's Nightingale said:Assuming that the owners of the company decide to doll out the money instead of pocketing it. It doesn't matter if the unemployment rate goes down if the jobs are temporary and poor paying. That is the dilemna the republicans won't face. They love to claim that they've created jobs but don't tell anyone that most of the jobs are temporary and low paying. Besides, we've seen the job market being exported to foreign workers instead of Americans because the companies know that it's cheaper to hire a foreign worker than an American citizen.
George_Washington said:Well suppose the owners of the company go buy a $50,000 yacht. Then it helps the yacht company, which also might help the workers in return.
I agree that we should be careful that jobs aren't too low paying but people are also free to go to college and thus earn a higher income.
Also, keep in mind that if companies pay their workers too low a wage, the quality of the product will suffer and the company will lose money anyway.
Napoleon's Nightingale said:Might is the key word. It's not worth the gamble especially while our national deficit is through the roof and the government keeps handing out billions of dollars in IOUs left and right. People aren't completely "free" to go to college..college costs money and scholarships aren't open to everyone not to mention the ridiculous affirimative action policy the colleges and universites have. Colleges and Universities don't take an applicants academic reccord into consideration anymore..now its about meeting a racial quota and how many zeros daddy can pencil in on a check. Most college students are up to their eyeballs in debt by the time they graduate. Even if graduates get a well paying job alot of that money is spent paying back the loans. It might not neccessarily cause the quality of the product to suffer..especially when the primary work force is overseas. Just look at McDonalds..it's a minimum wage job but their burgers are still tasty :lol:
George_Washington said:It was Alexander Hamilton that once said, "A Nation must never default on its debts." So I suppose we should try to pay them off. But realistically, I don't think we're in the financial state to do that right now and we probably won't be for at least another 50 years.
But then again, Alexander Hamilton also said that a national debt would be a blessing for a country. I'm not an economist so I can't really say for sure. But I do believe that we won't be able to pay off a large chunk of the debt for many more years to come. We just have to many other expenses, the money has to go other places.
George_Washington said:Yeah but think about it. Suppose they do go buy $50,000 shower curtains. Then it helps the company that sells them and might allow them to hire more workers, thereby helping lower the unemployment rate.
George_Washington said:Well, I agree we should pay off the national debt but I still think we should still believe in free market economics. To an extent, anyway.
Iriemon said:Taxes on the wealthy were increased in 93. We had in this country phenonemal job growth 93-2000. Taxes on the wealthy were slashed in 00-03. (Taxes the working poor pay were not cut at all.) Job creation has been basically non-existent in 00-05. This despite the fact that the economy has grown about 25% (in actual dollars) during this time frame.
The theory that cutting taxes on the wealthy creates jobs, as an absolute proposition, has proved to be utterly false.
Iriemon said:Paying down the debt has nothing to do with free market economics.
It has to do with fiscal (and moral) responsibility. Something completely lacking with our current crop of leaders.
George_Washington said:We can pay down the debt by believing in the free market system and by cutting expenses.
George_Washington said:No, it hasn't because the job growth of 93-2000 wasn't caused by increased taxes or by anything the government did. It was caused by the computer revolution and Silicon Valley. The reason why the tax cuts of 00-03 didn't have as huge an impact as they did back in the 80's was due to a natural slowing down process of the economy, hence a natural recession. There's no way to eliminate the economic cycle. However, the economic cycle would be locked into a stagnate position if we were to stop working with free market economics.
Iriemon said:True as a theoretical matter. But in 2004 spending was $2.3 trillion. The Govt borrowed $600 billion. Therefore you would have to cut spending across the board by 25%. That is just not political feasible, and not even possible because you can't cut interest expense, which was $320 billion in 2004.
We aren't going to balance the budgets just by cutting spending. The politicians don't have the guts to do that, and that is when Republicans hold the power.
On the other hand, the economy did just fine in the 90s with a 39% tax rate. Returning taxes to the levels there were at in the 90s would produce roughly $400 billion a year in extra revenues. Wouldn't completely solve the problem but that would go a long way to help.
We won't solve the problem with just cutting spending or just raising taxes. People must be willing to compromise and do both. But I see little willingness to do this. After all, we are the pass the buck generation.
Iriemon said:We won't solve the problem with just cutting spending or just raising taxes. People must be willing to compromise and do both. But I see little willingness to do this. After all, we are the pass the buck generation.
Missouri Mule said:Raising taxes will never solve the budget problem. The politicians will always find ways to spend the additional money.
Any rational person knows that if the political will was there, the budget deficit could be closed immediately. We hardly need to spend $260 million to build a bridge to nowhere as we have proposed in Alaska.
This is why our founding fathers did not believe the riff-raff ought to have the vote.
And the senate was to be appointed instead of elected. I could go on and on but I'll leave it there.
The nation is virtually ungovernable. It is probably about time we consider a new constitutional convention to clean things up.
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