National Debt -- How much is too much?

[Iriemon]

Oi..the concept is rather simple. If the U.S. made money instead of losing it they could use the money they make to pay back the national debt.

One of us is confused. The trade deficit has nothing to do with the government, I don't believe. It is a measure of what US consumers buy (or maybe more specifically, what US importers import) versus what US exporters export. The trade deficit does not represent spending of the US Govt, I don't believed. If we had a trade surplus, that would represent revenue to the Government.

 

[Napoleon's Nightingale]

One of us is confused. The trade deficit has nothing to do with the government, I don't believe. It is a measure of what US consumers buy (or maybe more specifically, what US importers import) versus what US exporters export. The trade deficit does not represent spending of the US Govt, I don't believed. If we had a trade surplus, that would represent revenue to the Government.

Precisely. Revenue = money that could be used to pay off the debt.

 

[Iriemon]

Oi..the concept is rather simple. If the U.S. made money instead of losing it they could use the money they make to pay back the national debt.

Here is a brief explanation of trade deficit:

http://encyclopedia.laborlawtalk.com/trade_deficit

 

[Iriemon]

Precisely. Revenue = money that could be used to pay off the debt.

Trade deficits (or surplus) doe not equal revenue to the Govt.

 

[Napoleon's Nightingale]

Here is a brief explanation of trade deficit:

http://encyclopedia.laborlawtalk.com/trade_deficit

Oh for heaven sakes, I know what a trade deficit is. What I said was that if we make more money the government gets more money which it can use to pay off the national debt.

 

[Napoleon's Nightingale]

Trade deficits (or surplus) doe not equal revenue to the Govt.

Indirectly, it does.

 

[Iriemon]

Indirectly, it does.

How? Suppose there was a $100 billion trade surplus. How would that indirectly result in revenue to the US Govt.

Or conversely, how does a trade deficit indirectly result in spending by the US Govt?

 

[Napoleon's Nightingale]

How? Suppose there was a $100 billion trade surplus. How would that indirectly result in revenue to the US Govt.

Or conversely, how does a trade deficit indirectly result in spending by the US Govt?

If companies and individuals are making more money the government makes more money via taxes.

 

[Iriemon]

Oh for heaven sakes, I know what a trade deficit is. What I said was that if we make more money the government gets more money which it can use to pay off the national debt.

OK -- now I think we are getting on the same page. I agree if we (US citizens) make more money the Govt gets more tax revenue. But that is not very directly related to the US Govt operating deficit. If we have a trade deficit, US exporters lose money but US importers make more money. The net effect is not that great -- a $500 billion trade deficit does not result in $500 billion more Govt debt or anything close to it.

 

[Napoleon's Nightingale]

OK -- now I think we are getting on the same page. I agree if we (US citizens) make more money the Govt gets more tax revenue. But that is not very directly related to the US Govt operating deficit. If we have a trade deficit, US exporters lose money but US importers make more money. The net effect is not that great -- a $500 billion trade deficit does not result in $500 billion more debt or anything close to it.

I understand what you thought I was saying now lol. A trade deficit/surplus indirectly affects the national debt because when companies make less money by trading the government gets less money in taxes. It doesn't cause an increase or decrease in the national deficit in and of itself though. If there were a trade surplus the companies would be shelling out more money in taxes providing more money the government could use to pay off the national debt.

 

[Iriemon]

I understand what you thought I was saying now lol. A trade deficit/surplus indirectly affects the national debt because when companies make less money by trading the government gets less money in taxes. It doesn't cause an increase or decrease in the national deficit in and of itself though. If there were a trade surplus the companies would be shelling out more money in taxes providing more money the government could use to pay off the national debt.

If there were a trade surplus the companies that made more money from exporting would be shelling out more money in taxes providing more money the government could use to pay off the national debt.

I think we are in line.

 

[Napoleon's Nightingale]

If there were a trade surplus the companies that made more money from exporting would be shelling out more money in taxes providing more money the government could use to pay off the national debt.

I think we are in line.

There we go lol. My summation skills aren't the greatest :lol:

 

[Missouri Mule]

If it is our money the Govt spends, whose money is it the Govt borrows?

Based on your definition of Conservatives and Liberals -- we sure haven't had Conservatives in power over the last 5 years. But they call themselves conservative, which is why I call myself a liberal.

The strangulation theory didn't work particularly well in 1980-1992 nor in 00-05. In both those time periods, tax revenues were "strangled", but all that happened was the Govt borrowed huge somes of money to make up the difference.

Which is why the interest expense was about $350 billion this year. We could have built two New Orleans but for the interest expense on the Republican debt.

At some point the straglelization of federal revenue will reduce spending. If they print more money it will cause inflation and the politicians will lose their jobs on that alone. As I said, the only real way is to cut off the flow of money, otherwise the politicians will only figure out new ways to waste it. Reagan applied this principle and eventually the Democrats were out of power because they were associated with run away spending. If the Republicans are now associated with it, as they may very well be, then they will be voted out of office, as they should be. The real difference between the Democrats and Republicans these days is in the area of defense, terrorism and cultural issues; not stewardship over the public purse. One party is as bad as the other. They are almost, without exception, political whores to the highest bidder.

The interest expense is important but not a significant issue at this point in time.

 

[galenrox]

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.

Alright, then suppose the vast majority of the building of that yacht happens in China, and the materials used were made in China too. Then we realize that we have over $100 billion dollar trade defecit with China and we never see that money again.
Thus what I'm saying, if we're gonna use the trickle down effect, we might as well just right China the check to begin with.

 

[galenrox]

At some point the straglelization of federal revenue will reduce spending. If they print more money it will cause inflation and the politicians will lose their jobs on that alone. As I said, the only real way is to cut off the flow of money, otherwise the politicians will only figure out new ways to waste it. Reagan applied this principle and eventually the Democrats were out of power because they were associated with run away spending. If the Republicans are now associated with it, as they may very well be, then they will be voted out of office, as they should be. The real difference between the Democrats and Republicans these days is in the area of defense, terrorism and cultural issues; not stewardship over the public purse. One party is as bad as the other. They are almost, without exception, political whores to the highest bidder.

The interest expense is important but not a significant issue at this point in time.

Considering our vast amounts of differences on other issues, I have to say that was very well put. Neither party really has any real sense about how to spend money. The republicans used to, and the democrats never did.

I agree completely.
I think even economically speaking the interest expense isn't a significant issue.

Man, I have to say I'm shocked! Well said!

 

[George_Washington]

Alright, then suppose the vast majority of the building of that yacht happens in China, and the materials used were made in China too. Then we realize that we have over $100 billion dollar trade defecit with China and we never see that money again.
Thus what I'm saying, if we're gonna use the trickle down effect, we might as well just right China the check to begin with.

But how do you know that China won't bring in business and revenue through free trade that will compensate use for that loss?

 

[galenrox]

But how do you know that China won't bring in business and revenue through free trade that will compensate use for that loss?

Our trade defecit with China. I think it's to the tune of $140 billion.
Dude, my dad taught economics at the University of Chicago, I'm just about as free trade as they come (or else I'd've been disowned long ago)
But there is importance in fair trade. We can't practice free trade with nations that do not give us the same courtesy. Since labor is a market, just as any other market, trading with any nation that does not allowed their currency to be valued on the open market and does not allow their workers to unionize is ridiculous. We should only trade with members of the WTO, and we should bring complaints to them about unfair labor pracitces.

 

[Canuck]

CHINA uses WALMART to sell its yachts
and America gobbles it up like candy
wont be long chinese vehicles, knock offs of cadilacs, will hit American shores, and sell for half price.
the YACHTs are on the way
140 billion$ , is the tune of the death march of america.

 

[galenrox]

CHINA uses WALMART to sell its yachts
and America gobbles it up like candy
wont be long chinese vehicles, knock offs of cadilacs, will hit American shores, and sell for half price.
the YACHTs are on the way
140 billion$ , is the tune of the death march of america.

lol it's sad but true. If we don't force fair trade on China, we're on the fast track to losing the cold war, essentially.
As much as I hate communism, it reminds me of a Stalin quote: "When we hang the capitalists, they will sell us the rope."

We are practicing in an unfair unfree trade environment where everything is stacked against us, and we're just walking right into the fire, it's proposterous.

 

[Napoleon's Nightingale]

lol it's sad but true. If we don't force fair trade on China, we're on the fast track to losing the cold war, essentially.
As much as I hate communism, it reminds me of a Stalin quote: "When we hang the capitalists, they will sell us the rope."

We are practicing in an unfair unfree trade environment where everything is stacked against us, and we're just walking right into the fire, it's proposterous.

:lol: And how would you go about forcing fair trade on China?

 

[galenrox]

:lol: And how would you go about forcing fair trade on China?

Don't trade with them, it's as simple as that. They make $140 billion profit from us each year, and we lose that $140 billion. Sure a few people get rich, but we're killing America, and those few people aren't enough for us to tolerate trading with someone who has absolutely zero regard for free trade.
So screw them, make it illegal. We've got a frickin embargo on Cuba, but we trade with China, are you joking?

 

[Napoleon's Nightingale]

Don't trade with them, it's as simple as that. They make $140 billion profit from us each year, and we lose that $140 billion. Sure a few people get rich, but we're killing America, and those few people aren't enough for us to tolerate trading with someone who has absolutely zero regard for free trade.
So screw them, make it illegal. We've got a frickin embargo on Cuba, but we trade with China, are you joking?

Do you have any idea what that would do to our market? Do you have any idea the kinds of products we import from China? If we stopped trading with them it would destroy our economy along with theirs. The asian markets send us essential products that cannot be imported from anywhere else or grown/made in the U.S.

 

[George_Washington]

Yeah I agree with Nightingale. I don't think we can possibly stop trading with China. That would kill our economy.

 

[Missouri Mule]

Don't trade with them, it's as simple as that. They make $140 billion profit from us each year, and we lose that $140 billion. Sure a few people get rich, but we're killing America, and those few people aren't enough for us to tolerate trading with someone who has absolutely zero regard for free trade.
So screw them, make it illegal. We've got a frickin embargo on Cuba, but we trade with China, are you joking?

China has never really threatened us as has Cuba. Cuba is still ruled by the psychopath named Fidel Castro. For those too young to remember he was the one who wanted to blow up the world in 1962.

China and the U.S. will continue to trade as it is mutually beneficial. We get cheap goods and they get to employ their people. That's it in a nutshell.

 

[Iriemon]

At some point the straglelization of federal revenue will reduce spending. ... As I said, the only real way is to cut off the flow of money, otherwise the politicians will only figure out new ways to waste it.

Again, this strategy was tried in the 80s and 00s. In both cases it did not result in cutting spending. In both time periods spending rates actually increased because defense spending was rapidly increased and domesitic spending was not cut. In both time periods the result of this strategy was huge anmounts of borrowing, for which our Govt paid about $350 billion in interest last year.

Reagan applied this principle and eventually the Democrats were out of power because they were associated with run away spending.

Reagan applied the priciple with the result of the highest deficits of all time. The debt quadrupled from $1 trillion to $4 trillion from 1980 thru 1992.

The Dems were not voted out of office because of spending. They were voted our of office in 1994 because they had the guts to raise taxes in 1993 (over the opposition of every Republican) to stop the debt bleeding. The paid the price, but it worked. By 2000 the budget was balanced. But then the Republicans had control and slashed taxes.

If the Republicans are now associated with it, as they may very well be, then they will be voted out of office, as they should be.

Completely agree. If they want to cut taxes, fine. But cut spending too. They failed. Get them out of there.

The real difference between the Democrats and Republicans these days is in the area of defense, terrorism and cultural issues; not stewardship over the public purse.

Disagree. Democrats are in favor of a balanced budget and fiscal responsibility. The Republicans have proved they are not.

One party is as bad as the other.

Disagree. Democrats took the politically painful course and raised taxes to be fiscally conservative. Republicans pandered to the electorate by cutting taxes and increasing spending. As a result they took a budget that was in surplus yet have managed to turn it around and put us another $2.4 trillion (and counting) in debt.

They are almost, without exception, political whores to the highest bidder.

That strategy has worked since 2000. It is up to us to tell them to stop it. Write your representatives.

The interest expense is important but not a significant issue at this point in time.

$350 billion is pretty significant from my perspective! If we didn't have to have that expense every year that would cut the deficit in half by that alone. We could rebuild New Orleans two or three times every year.