We Wasted a Record 500bn on Interest Last Year

[rahl]

Lower spending is the key. Lower tax rates have increased revenue.

It is a mathematical impossibility to reduce the rate at which you collect something, and then collect more of it. Every time in the last 40 years we cut taxes, we took in less revenue because of it.

 

[Bullseye]

It is a mathematical impossibility to reduce the rate at which you collect something, and then collect more of it. Every time in the last 40 years we cut taxes, we took in less revenue because of it.

No, it's not; It's being done continuously. Your comment only applies IF there's no increase in commerce because of extra money being left in the hand of productive citizens rather than give to wasteful politicians.

 

[jonny5]

Have any specifics on that?

According to CBO, outlays in 2011 were 3.6 billion. 2012 3.5bn, 2013, 3.4bn.

Mandatory spending went up, but discretionary went down, mostly defense. IIRC, this was after GOP congress 'shut down' the govt and forced sequestration on Obama.

 

[bomberfox]

Their semiconductors alone matter to our security.

I remember the chip shortage pretty well.

 

[bomberfox]

This: GDP = G + C + I + (X-M). G is government spending, deficit spending included.



If it's deficit spending, then taxpayers are not paying for it. Go ahead and try to track the dollars from taxpayer to deficit spending; you won't find a connection.

Aid to foreign governments largely comes back to U.S. businesses (what else can you do with dollars?). They buy our food, they buy our weapons. Not much different than if our government bought the food and weapons and gave that away as aid.



And deficit spending supports those home-grown businesses. That's why it's in the GDP equation above.



Not sure how that fits into your argument...



So what is your solution to this problem? Make American labor work for the same pittance? Force American consumers to buy more expensive goods? Or adjust our output to higher-end production, like we've been doing?



They need to be better educated before any dose of "reality" can take hold. Case in point: federal finance.

Yeahh unfortunately all that spending on weapons doesnt really trickle down….. I think you are relying on a fantasy to defend foreign aid. Lot of it just creates more dead bodies and riches that most Americans will never see. Lots of economists assume that this money will just circulate. I think recent years puts a lot if skepticism on that claim.

 

[rahl]

No, it's not;

It's a mathematical objective fact of reality. If you collect something at 29%, then reduce that percentage to 23%, you will as a matter of objective fact collect 6% less.

It's being done continuously.

It's never been done, as it defies the laws of mathematics.

Your comment only applies IF there's no increase in commerce because of extra money being left in the hand of productive citizens rather than give to wasteful politicians.

This has never happened. The increase in economic output increases year over year simply due to population growth, barring a recession. It's why there has never been this magical explosion of GDP following a tax cut.

 

[rickc]

It's a mathematical objective fact of reality. If you collect something at 29%, then reduce that percentage to 23%, you will as a matter of objective fact collect 6% less.

It's never been done, as it defies the laws of mathematics.

This has never happened. The increase in economic output increases year over year simply due to population growth, barring a recession. It's why there has never been this magical explosion of GDP following a tax cut.

 

[Bullseye]

It's a mathematical objective fact of reality. If you collect something at 29%, then reduce that percentage to 23%, you will as a matter of objective fact collect 6% less.
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It's never been done, as it defies the laws of mathematics.

This has never happened. The increase in economic output increases year over year simply due to population growth, barring a recession. It's why there has never been this magical explosion of GDP following a tax cut.

Again, you assuming static quantity. But, once again. When you leave more money in the pockets of businesses, entrepreneurs and customers more economic activity occurs and the taxes on that activity increase revenue. It's axiomatic if your want less of something you raise taxes on it; the reverse is also true.

 

[rahl]

Again, you assuming static quantity.

No, I clearly said economic output increases year over year due to population growth. We actually have the data showing there was no magic output increase because you righties slashed revenues.

But, once again. When you leave more money in the pockets of businesses, entrepreneurs and customers more economic activity occurs and the taxes on that activity increase revenue.

And we know empirically that this doesn't actually happen. There was no magical increase in GDP or economic activity.

It's axiomatic if your want less of something you raise taxes on it; the reverse is also true.

Math, doesn't care about your ideology, which has been proven every single time it's been tried, to be a failure.

 

[JohnfrmClevelan]

Yeahh unfortunately all that spending on weapons doesnt really trickle down….. I think you are relying on a fantasy to defend foreign aid. Lot of it just creates more dead bodies and riches that most Americans will never see. Lots of economists assume that this money will just circulate. I think recent years puts a lot if skepticism on that claim.

This isn't "trickle down." "rickle down" is giving money/lowering taxes on the rich/companies in the expectation (hope) that they will invest more in production. They don't, because there is no increased demand to make increased production worthwhile.

Defense spending (like most govt. spending), on the other hand, is consumption, and that money benefits industries and employees as much as any other consumption. Do employees benefit as much as we would like? No, but they do benefit; the arms that the government buys could not have been produced without labor being paid and materials being procured. Walmart employees don't benefit from my spending as much as I would like, either, but that's a labor market problem.

As for foreign aid, much of it is used to buy American arms and other goods. (I would be surprised if that isn't baked into aid packages.) If some of that money ends up in the pockets of foreign politicians, that's not our problem. (It also doesn't cost us anything.) Either it is eventually spent on American goods, or it is just paper that doesn't affect our economy.

 

[bomberfox]

This isn't "trickle down." "rickle down" is giving money/lowering taxes on the rich/companies in the expectation (hope) that they will invest more in production. They don't, because there is no increased demand to make increased production worthwhile.

Defense spending (like most govt. spending), on the other hand, is consumption, and that money benefits industries and employees as much as any other consumption. Do employees benefit as much as we would like? No, but they do benefit; the arms that the government buys could not have been produced without labor being paid and materials being procured. Walmart employees don't benefit from my spending as much as I would like, either, but that's a labor market problem.

As for foreign aid, much of it is used to buy American arms and other goods. (I would be surprised if that isn't baked into aid packages.) If some of that money ends up in the pockets of foreign politicians, that's not our problem. (It also doesn't cost us anything.) Either it is eventually spent on American goods, or it is just paper that doesn't affect our economy.

Benefits whom but defense contractors and their shareholders? You think jim bob American sees any of that? Seems delusional. Defense contractors funnel a lot of that money right back into politicians.

Defense sector spent $101 million on lobbying during the first three quarters of 2022 - OpenSecrets News

The defense sector spent over $101 million on federal lobbying in the first three quarters of 2022 and its affiliates gave $17.5 million to members of Congress during the 2022 midterm election cycle.

www.opensecrets.org

101 million in 3 quarters of ****in lobbying. Yeah really benefitting a lot of Americans here.

Wanna know what actually puts money in the hands of Americans? Infrastructure spending, school spending… ya know the butter we havnt been getting with those ****in guns?

Nah sending money just so another country can buy american arms is just putting another middleman. May as well give em the arms.

I think you should actually demonstrate this happens cause to me it seems like just using our tax dollars to benefit who buys politicians on the market. Politicians are commodities to be bought and sold.

Bullshit it didnt cost us anything

 

[JohnfrmClevelan]

Again, you assuming static quantity. But, once again. When you leave more money in the pockets of businesses, entrepreneurs and customers more economic activity occurs and the taxes on that activity increase revenue. It's axiomatic if your want less of something you raise taxes on it; the reverse is also true.

Growth - and the corresponding increase in tax revenues - happens almost every year, no matter what tax rates are. That is the assumption you should be starting with. Instead, you are crediting lower taxes for what is in all likelihood normal growth.

Why do businesses invest, or increase investment? Because they anticipate demand or increased demand. It has nothing to do with their own tax liabilities, which are still in the future. So if I manufacture, say, toasters, I don't base my investment decisions on my (future) tax liabilities; I base them on the demand I anticipate. I would be far more likely to increase investment if toaster-buying consumers got a tax cut, rather than my company. If my company got a tax cut, I would just decide how to distribute the extra profits - and without extra demand, I would have zero incentive to increase production.

As for the math, Rahl is correct. All else being equal, tax cuts lead to lower tax receipts. And I just explained (above) why your counterargument is incorrect.

 

[JohnfrmClevelan]

Benefits whom but defense contractors and their shareholders? You think jim bob American sees any of that? Seems delusional. Defense contractors funnel a lot of that money right back into politicians.

Somebody assembles those bombs. Others transport those munitions. These are products, like any other products, even if you don't see them sold at Walmart. And EVERY industry funnels money to politicians.

Defense sector spent $101 million on lobbying during the first three quarters of 2022 - OpenSecrets News

The defense sector spent over $101 million on federal lobbying in the first three quarters of 2022 and its affiliates gave $17.5 million to members of Congress during the 2022 midterm election cycle.

www.opensecrets.org

101 million in 3 quarters of ****in lobbying. Yeah really benefitting a lot of Americans here.

Wanna know what actually puts money in the hands of Americans? Infrastructure spending, school spending… ya know the butter we havnt been getting with those ****in guns?

I hate lobbying as much as the next guy, but I'd bet that the butter industry has some lobbyists, too.

The guns vs. butter argument is a false one, in the context of federal spending. It implies that you can only afford one or the other, or only produce one or the other. But when there is excess labor and excess capacity in the economy, manufacturing guns doesn't impact the butter industry one bit. If anything, it helps, because on some level, commerce is commerce. People employed by the defense industry (and these people exist, trust me) have more income with which to buy things like butter. The govt., of course, has plenty of money to buy both; it just chooses not to.

If we ever get to a point where there isn't enough labor or materials to produce both in the quantities we need, then your argument will apply. But we aren't even close to getting there.

Nah sending money just so another country can buy american arms is just putting another middleman. May as well give em the arms.

I think you should actually demonstrate this happens .

Sometimes we do just give them arms.

 

[bomberfox]

Somebody assembles those bombs. Others transport those munitions. These are products, like any other products, even if you don't see them sold at Walmart. And EVERY industry funnels money to politicians.


I hate lobbying as much as the next guy, but I'd bet that the butter industry has some lobbyists, too.

The guns vs. butter argument is a false one, in the context of federal spending. It implies that you can only afford one or the other, or only produce one or the other. But when there is excess labor and excess capacity in the economy, manufacturing guns doesn't impact the butter industry one bit. If anything, it helps, because on some level, commerce is commerce. People employed by the defense industry (and these people exist, trust me) have more income with which to buy things like butter. The govt., of course, has plenty of money to buy both; it just chooses not to.

If we ever get to a point where there isn't enough labor or materials to produce both in the quantities we need, then your argument will apply. But we aren't even close to getting there.



Sometimes we do just give them arms.

But we havnt been getting the butter for those guns. In case you havnt noticed the degrading infrastructure, food, healthcare, etc. where is that spending circulating? Mostly back to politicians.

So wheres the butter buddy? Lots of people during world war 2 had to sacrifice a hell of a lot for the war effort.

You might not like it but the fact remains we are a hegemonic empire in decline despite the massive military spending so yeah guns vs butter is a thing. The times where we had guns and butter was just a fluke.

Seems like you have ideological attachments.

 

[Kushinator]

But, once again. When you leave more money in the pockets of businesses, entrepreneurs and customers more economic activity occurs and the taxes on that activity increase revenue. It's axiomatic if your want less of something you raise taxes on it; the reverse is also true.

How did that work out? As in, how much more economic activity resulted after these tax cuts relative to how much would have been realized in their absence?

GDP increased by 7.7 % from 2018 until 2021, or 7.7% from 2018 until q4 2019. Either way, you can't call that some sort of miraculous lift, given revenue grew by 3.2% or 4.4% by the same token... meaning that even though the economy grew, tax revenue grew by much less than the economy.

 

[bomberfox]

Somebody assembles those bombs. Others transport those munitions. These are products, like any other products, even if you don't see them sold at Walmart. And EVERY industry funnels money to politicians.


I hate lobbying as much as the next guy, but I'd bet that the butter industry has some lobbyists, too.

The guns vs. butter argument is a false one, in the context of federal spending. It implies that you can only afford one or the other, or only produce one or the other. But when there is excess labor and excess capacity in the economy, manufacturing guns doesn't impact the butter industry one bit. If anything, it helps, because on some level, commerce is commerce. People employed by the defense industry (and these people exist, trust me) have more income with which to buy things like butter. The govt., of course, has plenty of money to buy both; it just chooses not to.

If we ever get to a point where there isn't enough labor or materials to produce both in the quantities we need, then your argument will apply. But we aren't even close to getting there.



Sometimes we do just give them arms.

The difference is taxpayers are giving them the funds in which they use to fund politicians so no its nowhere near like the AFL-CIO making political donations.

That shit isnt circulating.

 

[JohnfrmClevelan]

But we havnt been getting the butter for those guns. In case you havnt noticed the degrading infrastructure, food, healthcare, etc. where is that spending circulating? Mostly back to politicians.

Defense industry spending isn't stopping the government from building much needed infrastructure, or providing healthcare, etc. There is no lack of dollars, as I consistently point out. The problem is political, as always.

So wheres the butter buddy? Lots of people during world war 2 had to sacrifice a hell of a lot for the war effort.

WWII was the rare instance in which the guns vs. butter choice was real. Our capacity was actually stretched. Much of our labor force was fighting, so women entered the workforce. People were encouraged to buy war bonds; not to raise money, but to discourage consumption.

But today, we are not stretched. We still have plenty of unutilized capacity to produce stuff. Our defense spending doesn't change that. The spending on other stuff, spending that we would both like to see, is held up by politicians and industries who stand to benefit from the status quo.

You might not like it but the fact remains we are a hegemonic empire in decline despite the massive military spending so yeah guns vs butter is a thing. The times where we had guns and butter was just a fluke.

Seems like you have ideological attachments.

Not at all. I try to approach these questions from a purely economic standpoint - which leads me to the left.

I know we can have the butter. I want the butter. But I also understand that the guns are not to blame here.

 

[JohnfrmClevelan]

The difference is taxpayers are giving them the funds in which they use to fund politicians so no its nowhere near like the AFL-CIO making political donations.

That shit isnt circulating.

How is that different? You pay taxes, you pay union dues.

Also, taxpayers aren't paying for all of that. Don't forget about deficit spending.

 

[bomberfox]

Defense industry spending isn't stopping the government from building much needed infrastructure, or providing healthcare, etc. There is no lack of dollars, as I consistently point out. The problem is political, as always.



WWII was the rare instance in which the guns vs. butter choice was real. Our capacity was actually stretched. Much of our labor force was fighting, so women entered the workforce. People were encouraged to buy war bonds; not to raise money, but to discourage consumption.

But today, we are not stretched. We still have plenty of unutilized capacity to produce stuff. Our defense spending doesn't change that. The spending on other stuff, spending that we would both like to see, is held up by politicians and industries who stand to benefit from the status quo.



Not at all. I try to approach these questions from a purely economic standpoint - which leads me to the left.

I know we can have the butter. I want the butter. But I also understand that the guns are not to blame here.

By ideological i didnt mean right or left.
Also world war 2 wasnt unique, most wars included sacrifice and rationing.

The bolded which industry do you think benefits the most from our over focus on defense spending? Thats right, the defense industry which you think our spending doesnt take away from anything else.

Yes defense spending is taking away from other things, just not in the way most economic models account for .

 

[bomberfox]

How is that different? You pay taxes, you pay union dues.

Also, taxpayers aren't paying for all of that. Don't forget about deficit spending.

Yes i know and most private sector unions get money from union members not tax payers.

 

[phoenix2020]

I'd like to see both reduced spending as well as higher taxes. One or the other alone isn't going to get us to a balanced budget. I do put a bit more faith in "Tax-and-Spend Democrats" than "Tax-Cut-and-Spend" Republicans to get us there but practically speaking, I don't see it happening anytime soon.

We should reduce our DoD spending by 20% - the military should be charged with finding creative ways to execute its existing mission with less money, in the same way virtually every business and household has been able to do.

I'd like to see loopholes closed for extremely high earners - it often seems like it's the upper middle class that ends up holding the bag when it comes to taxes: middle class and lower pay very little in taxes, and truly wealthy can hire a team of CPAs to shield their income from taxes.

The real issue is income inequality - it's a problem when 50% of the population pays only 3% of the taxes because their income is so low. Where other nations are uplifting millions out of poverty and into the middle class, in the United States the opposite trend is taking hold. In this sense I do believe higher minimum wage is critical and would translate quickly to a GDP boost.

 

[bomberfox]

Johnfrmcleveland and i dont have much to argue with eachother about but sometimes the smaller things matter and yeah im bombastic on here.

 

[Tbird19482]

You can't spend more than you take in and then print money to hand out for free and expect to have a balanced budget. We borrow too much and we have to pay the interest. It's likely we will never pay it off.
A balanced budget is the only answer but that takes a very determined Congress and President and I don't see it coming too soon.

first of all a Balanced budget amendment will only stop the debt from going up it will NOT cut the debt
If we ever get a BBA we can keep the debt from going up and IF we have Congress put in to effect a 1% US sales tax , we could pay it off it would take some years to do but we could do it and when it was paid off it should be in the law that put the sales tax into effect that it would be taken off
and I know once we get a tax we never seem to be able to get rid of it that why I said it would have to be put into the original law that it would HAVE to be taken off once the debt was paid off and not kept in effect one day more
Have a nice day

 

[Greenbeard]

All of it. Easiest solution is cut 10% of every agency. Could also could roll us back to 2018 level of normal spending , and we would have a balanced budget.

Since 2018, Medicare and Social Security enrollment have each risen by ~10-12%. Meanwhile, cumulative COLA adjustments to Social Security benefits since 2018 put benefits today ~22% above 2018 levels, whereas Medicare price increases for inpatient hospitals (as an example) put the current prices ~15% above 2018 levels.

 

[rickc]

first of all a Balanced budget amendment will only stop the debt from going up it will NOT cut the debt
If we ever get a BBA we can keep the debt from going up and IF we have Congress put in to effect a 1% US sales tax , we could pay it off it would take some years to do but we could do it and when it was paid off it should be in the law that put the sales tax into effect that it would be taken off
and I know once we get a tax we never seem to be able to get rid of it that why I said it would have to be put into the original law that it would HAVE to be taken off once the debt was paid off and not kept in effect one day more
Have a nice day

Funny how when Clinton left office the federal reserve was worried that America was on track to pay off the 5.7 trillion dollar federal debt.

Bush and the Republicans have sure fixed that.