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We Wasted a Record 500bn on Interest Last Year

rickc said:
federal reserve was worried that America was on track to pay off the 5.7 trillion dollar federal debt.
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Have a source for that?

I mean I remember reading once that there was a worry when the budget was balanced under Clinton and Speaker Gingrich that there may not be any bonds to issue, and no one really knew what would happen.

Anyways, Clinton and Gingrich did mange to strike a deal that did in fact reduce the deficit, but the debt still grew every year under them.

No shrinkage fund was ever established, and we never retired any debt, we just rolled it over and added to it.
 

I can remember a 15-year CBO forecast during the Clinton surplus showing a very steady line of increasing surpluses and decreasing debt, leading right into the complete elimination of federal debt, and (presumably) the Fed buying private debt. Think about that for a minute.

First, all of those federal budget surpluses come mostly from income taxes, which means they come right out of consumption and investment. Without a trade surplus, that is simply unsustainable. It's bad enough that the government's contribution to GDP is lost during a balanced budget, but subtracting from consumption and investment without running a large trade surplus is a recipe for recession. Remember that we went into a recession soon after the Clinton surpluses. It shouldn't be surprising.

Second, Treasury debt brings stability. It's most of what the Fed holds against the reserves and dollars held by the private sector. The fascination with eliminating these instruments just baffles me. Well, it doesn't really baffle me, I know why people think this way, after politicians pound it into their heads that the nation is truly in debt and the end is near, etc. But it does sadden me.

The CBO projections were wildly optimistic, and wrong almost as soon as they made them. That projection is much of the reason why I have zero faith in anything the CBO says anymore.
 
rickc said:
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.
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and as we can see nobody on the right ever says a word about things like that
all I see is they cry that a DEM President is running up the debt when there has not been a Dem President that had run the debt up OVER 100% in what over 70 years , and there has been TWO Republican Presidents that have
Ragan almost TRIPLED the Debt , G.W. Bush doubled it They cry about Obama but don't say a word when TRUMP ran it up ALMOST as much as Obama did and TRUMP did it in 4 years and it took Obama 8 years
YEP they can ONLY talk about the debt when a Dem is President but NOT ONE WORD when we have a Repuk as President
Have a nice night
 

Yeah, but they could just change the law. A debt limit has to be in the constitution. But obviously, the root cause here is the ignorant apathetic people and who they elect.
 
jonny5 said:
Yeah, but they could just change the law. A debt limit has to be in the constitution. But obviously, the root cause here is the ignorant apathetic people and who they elect.
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Writing questionable economic theory into law is an insanely bad idea.
 
Worked out fine as it has since Kennedy did it back in the 60's. Understand it is a magic wand - not every rate reduction will increase revenue but there is a point - or zone where revenue is maximized. Interesting that you started your chart at 2014 - why?
 
Bullseye said:
Worked out fine
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The data says otherwise. Tax revenue grew less than economic growth, which is what has been the norm every time tax cuts have come to pass.
Bullseye said:
Interesting that you started your chart at 2014 - why?
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The index began in 2018. As expected, you have a problem with reading a simple graph and therefore your take on the situation should be ignored.

But for the sake of humor... indulge us all. Why did revenue boom in 2021?

 
Correct, because our current rates are working to encourage economic growth.
JohnfrmClevelan said:
Why do businesses invest, or increase investment? Because they anticipate demand or increased demand.
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And the more money they retain because of lower taxes allows them to do something about those anticipations.
JohnfrmClevelan said:
It has nothing to do with their own tax liabilities, which are still in the future.
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Nonsense.
JohnfrmClevelan said:
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.
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Again, your plans have to include whether you can afford to grow to accommodate those changes, And paying less taxes allows more money for growth.
When both consumers and producers have more to spend the economy grows and with that growth tax REVENUE grows as well.
JohnfrmClevelan said:
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.
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Point being "all things" are NOT equal. More cash in producers and consumers hands INCREASES economic activity. Rahi assumes that consumers wouldn't buy more with tax saving nor would producers expand production. That has not been the case.
 
I have no problem with the chart, I have a problem with you claiming this little slice of time, with a friggin' pandemic in the middle, proves anything other than your ability to copy and paste images.
 
Bullseye said:
Correct, because our current rates are working to encourage economic growth.
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But they didn't encourage stronger economic growth when the were enacted? Imagine that!
Bullseye said:
When both consumers and producers have more to spend the economy grows and with that growth tax REVENUE grows as well.
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More of your ignorant bullshit. Economic growth isn't predicated on tax cuts. The data is very clear on this. Instead, it's based on excess demand for goods and services. As we see what transpired from 2021 onward, economic growth boomed and tax revenue followed as a direct result in massive growth in aggregate demand.
Bullseye said:
More cash in producers and consumers hands INCREASES economic activity.
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A blanket statement that is absent of economic rationale.
Bullseye said:
Rahi assumes that consumers wouldn't buy more with tax saving nor would producers expand production. That has not been the case.
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That depends on how tax cuts have boosted aggregate demand. And from the data, we know they didn't result in that much more economic growth than what was already anticipated.
 
Bullseye said:
I have no problem with the chart
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Nonsense. You didn't understand what the graph was conveying.
Bullseye said:
I have a problem
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With understanding economic result. That's not necessarily something to be ashamed of, unless of course you jump into these types of conversations spewing foolish rhetoric.
 
Well
Long term graphs prove the fallacy that tax cut promote GDP growth. Huge tax cuts during Reagan's term without this huge jump in economic growth. Fact is we had higher economic growth with higher taxes.


 
Bullseye said:
Point being "all things" are NOT equal. More cash in producers and consumers hands INCREASES economic activity.
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And as the data shows, this never happens. All that happens is deficits explode. There is no magical increase in economic output when republicans slash revenues.
Bullseye said:
Rahi assumes that consumers wouldn't buy more with tax saving nor would producers expand production. That has not been the case.
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We know it's been the case. We have decades of data showing you that.
 



It is not 'wasted'.

The money was paid to the lenders, whose profits where passed to shareholders, American's wealthy.

It's like PONZI only legal
 
We should be taxing those high speed algorithm based stock trades. Not much real labor is going into most of the time they are used.

I tend to think the .com bubble was doomed either way.
 
Money well spent
 
Bullseye said:
Comparing to GDP is misleading, at best.
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It's a good metric because revenue tends to increase because of inflation and population growth. Comparing it to the economy normalizes it.
 
MTAtech said:
It's a good metric because revenue tends to increase because of inflation and population growth. Comparing it to the economy normalizes it.
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No it's not. IF as I claim tax cuts put more money in circulation of course GDP is going to increase as well; so they move roughly in tandem. Deficits are the result of excess spending, not less tax revenue.
 
Bullseye said:
No it's not. IF as I claim tax cuts put more money in circulation of course GDP is going to increase as well; so they move roughly in tandem. Deficits are the result of excess spending, not less tax revenue.
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Arguing that tax rates are irrelevant to revenue fails by inspection. Drop rates to zero and revenue drops to zero.

The Reagan tax cuts reduced government revenue in dollars, not just in comparison to GDP. The Clinton tax increases resulted in enough revenue increase to cause a surplus. The Bush tax cuts erased Clinton’s surplus and caused deficits. Obama allowing those tax cuts to expire increased revenue. The Trump tax cuts lowered revenue from what was projected before the tax cut.
 
MTAtech said:
Arguing that tax rates are irrelevant to revenue fails by inspection. Drop rates to zero and revenue drops to zero.
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Well duh. However I wasn't arguing that.
You conveniently ignore a lot of other events going on at the same time. BTW CBO Shows continual review growth 1981-1988. Same with Clinton 1993-2001. Bush's were a little bouncier but from his 2003 cuts the trends are up
 
Bullseye said:
No it's not. IF as I claim tax cuts put more money in circulation of course GDP is going to increase as well; so they move roughly in tandem. Deficits are the result of excess spending, not less tax revenue.
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Guess you just don't understand the relationship between revenue and expenses.

Want to eliminate deficits then you can either increase revenue or cut spending.

Republicans tried to find those cuts during the Obama years. Their inability to find them led to sequester. Across the board spending cuts. Republicans didn't like that either. They never met the required spending cuts. Always spent more. They killed sequester may 5th 2917.

Sequestration put into place by the Budget Control Act in 2011 (BCA) is still on the books. But Congress, with the acquiescence of the President, has found a way to make that point moot. By invoking another section of budget law, section 251(b)(2)(A)(i) and (ii) of the Balanced Budget and Emergency Deficit Control Act of 1985, Congress circumvented the spending caps by deeming their priorities an emergency.

That action essentially killed the sequester on May 5, 2017. The final blow was felled by President Trump when he signed H.R. 244, the HIRE Vets Act, into law. To be sure, the sequester was mortally wounded the day before when the Senate passed the Consolidated Appropriations Act of 2017, known colloquially as the FY 17 Omnibus.

Now it is quite obvious to anyone who is honest with themselves when this runaway deficit spending started. Why it was when Reagan cut taxes on the rich. Top marginal tax rate dropped from 73% to 28%. Reagan almost tripled the national debt during that period. Republicans have been doubling down on tax cuts and deficit spending ever since. The republican tax plan. Cut taxes for the rich and borrow the money to pay for it.

Pretty obvious it is way past time to raise those taxes. Return the borrowed wealth.

 
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