US government in technical default
 

Not only is the National Debt growing faster than we can pay
But now, due to lack of action in Congress,
the Debt ceiling was not raised in time.
The USA is legally in default.
for the first time in history

I wanted to know what this could mean for us
Found this To explain better
From a past time we got dangerously close...November 13, 1995

<a href="http://en.wikipedia.org/wiki/Starve-the-beast">Starve</a> <a href="http://www.urban.org/publications/1000705.html">The</a> <a href="http://www.washingtonpost.com/wp-dyn/content/article/2005/11/28/AR2005112801224.html">Beast</a>.

We can only hope :thumbsup:

a real question (in that i do not know the answer):

what exactly is the significance of national debt levels in a globalizing capitalist context?
i understand the matter (the meaning of national debt levels) to be mostly a residuum of the conflict between keynesian and neoliberal notions of the nature of the state and its role in economic activity--but both retain the same nationalist assumptions---i think logically, analytically and politically, the assumptions are largely obsolete...but i am unclear about whether one would extend this into thinking about indices lilke national debt or how one would do it.

Because in all my time studying economics I have determined only one thing;
there’s no free lunch. Pay now or pay later but pay we will.

This is the easiest way to look at it. We can either be taxed now or taxed later, but in the end it really makes no difference as to when, but as to how much.

stevo: so the framework for thinking about national debt is wholly circumscribed by its relation to taxes?
that would seem a way to not consider the question as to significance of nation-state level data like this in the globalizing capitalist context....but i suppose it makes sense... in a way.....thinking about this.
do you think that this kind of relation between types of data should be rethought if the context changes?
i do, but that's as far as i have gotten in this particular matter.

is this a threadjack?

I don't know if its a threadjack, but I'm having trouble understanding what you are asking. Are you asking for the relationship of the national debt to globalization? I don't know that there is any. Normally people and businesses go in debt to make money. A person or business would take out a note on a capital loan, invest that capital in a worthwhile way earn back the money to pay back the loan, plus some. That is what government deficit spending is supposed to do; spend beyond the budget, spur the economy, increase the tax base, pay off the "loan" and have more money than before hand. The problem we can all agree on is that a lot of the spending going on in the government doesn't relate to spurring the economy or increasing the tax base, but is the fat in the pork-barrel. What this has to do with the significance of nation-state level data like this in the globalizing capitalist context, I don't know. But what I do know is that tax money is going to have to pay for the deficit spending one day. Today, tomorrow, it doesn't matter as much as how much we'll have to pay in taxes. In other words, by the look of it either the tax rate is going to go up or the tax base will have to expand, while at the same time the politicians remember that the money is already spent.

not so much the relationship per se, but what national debt would mean in a globalizing context---in other words, if so much economic activity is transnational, from ownership to production...

maybe i'm not being clear because i dont have the question i am trying to pose quite straight in my head.

i have to go, but i'm thinking about this and with any luck will have a better way of asking next time around.

but thanks.

OR be forced to reduce spending......... :D

Let a man dream here.

I really do not understand the dynamics of the national debt. In my household budget I understand when I am carrying too much debt and have to ease off or increase income to pay for it but the government seems to have more options to deal with their (our) dept.

For instance what if we decide to forgive our debt to ourselves or what if we just continue to increase it and never pay it off? If we can forgive the debt that other countries owe us why can't we forgive the debt we owe to ourselves?

I guess I have no feel for how much government debt is too much, it could be 2 times the present amount or 100 times or 1000 times, when do we start to get into economic trouble? Why can't each generation continue to increase the debt and just pass it on to the next and so on.., and it never gets paid back?

I guess I also don't really understand money, it' seems to be just paper whose value fluctuates against other countries' paper (many of which have huge national debts as well).

I agree we must reduce spending
the interest alone we are paying on our debt is insane.
I sincerely hope this dream comes true.


[Figuritivly speaking]
I don't agree completly with the starving the beast theory,
Not because it's not important, but because the "beast"
has gotten large enough to eat it's handlers (we the tax payers)
The beast needs to be put on a serious diet
No more pork for starters.[/Figuritivly speaking]

When foreign countries go into default to the IMF
they are forced to restructure,
to show a "good faith effort" to reduce debt.
The US is a bit different because we are in debt to the federal reserve
The same principals should still be followed.

Sure, we could raise the debt ceiling again
If we continue to do that we will get to the point
where we can not even cover the intrest.
I suspect we are close to that tipping point.
The credit card is maxed out

A question to the people who know more about goverment finance:
Can a goverment be forclosed on?
Not to long ago goverment debt was collected by the lenders Navy.
Now that is no longer a common practice...
what could the federal reserve leagally do
to collect on our default to them?

It's times like this when I yearn for something as simple as a BJ controversy. I suggest the federal reserve call the government on the debt. If they can't pay, they shut down. We become Canada Jr. and I can finally stop paying $1200 a month on medical.

If they did that, all those people and industries that have leant the US govt money by buying treasury bonds will lose everything they invested.
Essentially, it would be the govt saying "We're not paying you back."

Meltdown.

Debt is ok, as long as there's a flow of capital.
Once the money stops moving around the circle, that's when it becomes time to start growing your own food.

The government can always print more money. This act would de-value the currency causing inflation but they can wipeout the debt in an instant.

I don't suggest they do that, but the reason no one cares is because the national debt is in-line with national historical averages.

Personally I think the federal government is too big and needs to reduce spending, simplfy the tax code, and lower tax rates. A system based on a consumption tax would be even better.

I know I don't understand this very well but not all the national debt is in T-Bills/Bonds is it? Don't we run a deficit every year and the fed issues more money and what we spend over that which is collected in taxes etc.. just gets added to the debt?

If I am informed right didn't Bush bankrupt a few of his own companies .... fastforward ... 2006 US is bankrupt ... history repeats?

That may be true.
I have not heard of it.
However......
Congress controls the purse strings this is their responsibilty.

The soviet communists said the exact same thing. Look where it got them.

You are partly correct
As I understand it...
The Debt is owed to the Federal Reserve Bank (the Fed)
The Fed is a private non goverment organization (a bank)
The US Goverment does not print money, the fed does.
Our national debt is the same sort of debt a bank would issue to you
When we go into default, we cannot legally borrow money or
make interest payments on the debt.
The fed is the first lien holder.....So those bonds
cannot be legally be paid untill the fed is satisfied.

Only 40% or so of the debt is owned to the fed. The rest is owed to foreign investors, banks, insurance companies, and others.


No, it is a government organization. Its 7 member board of directors is appointed by the president, and confirmed by the senate, to 14 year terms.


the fed IS part of the US government, and it does not print money. The US Bureau of Engraving and Printing prints the money. The US Mint makes the coins. Both are part of the Treasury department.

This is what Sovereign Debt got them

http://research.stlouisfed.org/publi...iodoOwyang.pdf

Plus:
The US Goverment cannot just print more money.
The US Goverment does not print money.
The Federal Reserve Bank (NGO) prints the money.

Yes. The only reasons we can finance our debt at such low rates is based on our national reputation, national stability and a relative low debt to GNP ratio. If other nations felt their money was not safe or that we had too much debt those nations would not invest in our government obligations, nor would you and I.

I guess you should send GW and the Republicans a thankyou note. :thumbsup:

http://www.frbsf.org/federalreserve/money/funfacts.html

Thats the best thing I have heard all day ... but it is too warm for hell to have frozen over ... ya think?

Cool I'm glad someone with more knowledge is here to post
In searching around for more information about this I found this:

So it Is both goverment and indepandent
I stand corrected thank you.

I'm a meat eating vegitarian. :D

Me too! :lol:
Hey, I learned my new thing for today.

Ok I have another question.....
if only 40% or so of the debt is owned to the fed. The rest is owed to foreign investors, banks, insurance companies, and others

When we go into default can those "foreign investors, banks, insurance companies, and others" call in their loan to be paid in full?

Well, technically yes. They can't FORCE us to pay (we do, after all, have something the average bankruptcy filer does not, namely an army), but as confidence in the dollar drops worldwide they can stop lending us any MORE money. That could lead to all sorts of economic troubles for us.

The problem with government isn't how much they spend it is how they spend it.

If you give tax cuts to companies that move jobs overseas..... you lose in 2 different ways. You lose the tax from the company and you lose the workers payroll taxes.

What government should be doing is investing in the people and building new tax bases. This is how a government moves forward.

Small business loans, education loans, Tax cuts or incentives for Rsearch and Development NOT just tax cuts for the sake of tax cuts, all need to be put into play.

A government must invest in the people to improve the tax bases. Something the Right seems to blow off. They think tax cuts for the sake of tax cuts will improve the tax base. But there is no incentive to improve the tax base and we are seeing it, in the form of jobs being shipped overseas, in the form of tax base erosion, in the form of higher deficits and trade imbalances.

The government's #1 priority is the safety of the people it governs. That means educating them and giving them the chances to fulfiil their highest potential.

By giving small business loans, education loans and research and development tax incentives you allow the individual and the business to live up to that potential.

If the person or company fails, they fail. But, I believe, there will be far more successes than failures.

The government needs to seriously look at spending as investments.

Rebuild the infrastructure (Bridges, highways etc) and you add very good paying construction jobs, that in turn help local economies that in turn build tax bases.

Give loans to private businesses and people that want to build things and hire people, which increases the job market, increases tax bases and helps the economy.

Give car companies tax cuts to research and develop cars that don't need oil.

Notice I said LOANS. Not grants, not entitlements, not tax cuts, LOANS. Low interest loans to help spur people's potential.

What we have right now is a government giving away money in the forms of tax cuts but no true stimulus to the tax base.

We have lower paying jobs cutting into the tax base, small businesses going broke because the tax cuts given to places like Wal*Mart. And that eats away the tax base that was created by the mom and pop shops, their employees and the economic stimuli
they create.

Our government has it backwards. They cut the richest taxes and ignore the fact that the tax base they need they are destroying, because there is no incentive from the government to use those tax cuts to stimulate the economy.

Tax cuts can only work if you have a new base to make up for the cuts. We don't. Instead we see the richer get richer and the rest of us just trying to make a living.

Tax incentives, putting money into rebuilding, loans and higher tarriffs on imports will indeed revive the tax base you need to function and bring in money.

Another way, is to say any worker anywhere in the world working for a US company or a company that does business in the US, must make minimum wage, must pay US taxes and the company must meet US federal laws on safety and pay the same taxes outside the country as they do inside the country. But that would never work..... I doubt the Chinese actually want their workers to make enough money to actually live and enjoy life. Nor do I doubt the fatcat CEO's would be willing to take paycuts so they would just up the prices on everything and make excuses why they "deserve the money and the workers don't".

the part of 'starving the beast' htat worries me most..is that it won't work and we'll either "pay now or really pay later"


and in 2008, be it dem or republican in control, you can bet there will be some major tax hikes going on or some major economic troubles or something.

"On January 24th they breached it brazenly and openly and with nary an
accompanying explanation. Neither have any lawmakers have broached this
indelicate subject.

I suppose we could write this off as merely an unsurprising development from
a government that no longer bothers to even appear to be adhering to rules,
laws and procedures, let alone actually doing so." and this is going to be bush's summary in the history books...

They don't have to call the debt, all they have to do is sell off their debt fast and it would cause a run on the US dollar.
Previously, there was no other currency to 'run' to, but with the Euro and Iran and others wanting to trade oil in Euros instead of dollars...

We had a nice little debate here until you started blaming the Right for all the governments financial problems.
Some would think "the safety of its people" would mean providing a national defense, not an education.

I guess you haven't seen the reports that show 2 years after wal-mart opens a new store there are More jobs in the area than before. And not just people working at Wal-mart either, other shops and services open near wal-mart. When I get a chance I'll post those findings for you.

Its funny that you keep taling about how the republicans aren't doing it right and aren't increasing the tax base. If thats true, then why were tax revenues up when tax rates fell these last 2 years?

If the shoe fits. . .

Look at the debt. Look at the deficit. Look at how much we're spending. Look at how many times they've had to raise the debt ceiling (hint: 3 times in 3 years). Look at the fact that they've spent beyond the debt ceiling even though it's illegal.

Blaming the right for the financial problems is pretty logical.



Because the GDP went up and we collected taxes on it. The GDP went up due to lowered interest rates (that would be Greenspan, not Bush) and the war, which always stimulates the economy. But the tax cuts to the wealthy means the middle class and poor are shouldering a disproportionate amount of the tax burden. That's simply not sustainable.

So what we have is a weak economic recovery which will be followed by a long term, painful period of crappy economic growth coupled by us eventually having to face the massive debts that Bush has racked up.

shakran to quote one of your posts here, bullshit, bullshit, bullshit.

The wealthy pay more taxes than ever right now, and those 'tax cuts for the wealthy' gave me a full tax break when I was making a grand total of 50k a year with my wife combined.

Whenever someone says 'tax cuts for the wealthy' some logic dies in the world. As it is the poor don't pay any federal income tax. I really wish that the left would come to grips with the fact that lowering taxes can INCREASE tax revenue for the government as people are willing to do more transactions (taxable) and less sheltering.

i am still confused.

if the dominant economic ideology were still more or less keynesian, this would be a non-issue: state debt would be understood as a function of its activities geared toward spurring economic activity in general--which would include infrastructure, etc.

the neoliberal approach, which is a priori opposed to state action in the economic domain (which is posited as a discrete sphere of activity--an assumption that is totally incoherent, but no matter here), frames debt as a problem.

neoliberalism can be seen as a way of refusing to think about globalizing capitalism, an ideolgy that enbales people to pretend that the nation-state is still the operational hub of economic activity. that is increasingly not the case.---but neoliberalism is more than one thing, and the above only obtains for how the question of national debt is framed.

the point is that this question, like many others, seems to me little more than a frame-effect: if you start from neoliberal assumptions, you parse the state in a particular way and read cause/effect relation as a function of that. so what seems to me to be happening in this thread is cycling through assumptions and ways of combining them particular to a specific ideological frameowrk that is not acknowledged.

so: in the present context, characterized by transnationally organized modes of production, within whcih even relatively simple production elements are fabricated in multiple places around the world, what exactly does gdp still mean? what does it measure? i'm not saying it is meanigless, but i do think that it is increasingly a problematic category.

neoliberalism is certainly functional for a period of transition in the organization of economic activity in that is legitimates a stratum of, say, transnational corporate development and the processes of cost externalization---so for example it legitimates the effective dumping of social regulation functions onto nation states---infrastructure development and maintenance costs are dumped onto states--which at the same time find themselves under tremendous pressure politically to contract, following from the same neoliberal assumptions.

even if you assume that these categories are coherent---and i am simply not sure of that, posing questions here only---the main driver of the ational debt at this time (whatever that in fact means) is bushwar--yet somehow this is understood as seperate from other factors. i ont understand that either.

perhaps folk can help me figure this all out...

What financial problems? inflation is low. Interest rates are low. Unemployment is low. GNP is growing. Homeownership at all-time high. More people invested in equities than ever. Consumer confidence readings hit a three year high today.

What are you talking about?

The market determines interest rates. The Fed Fund Rate is not that important to market rates. Inflation is by far the most important factor in determining interest rates.

Some even debate if we actually went into a recession during the first Bush term. GNP growth is strong, not weak. Growth at about 3 to 4% is considered sustainable, right in the sweet spot.

I wonder - do we actually live in the same country? My view seems to be so much different. I wonder why.

We are not going into default. If you hold a treasury note or bond, you redeem them when they mature. If the French government has a billion in 10 year treasury bonds, they come due in ten years. The government can re-finance the bonds or they can pay it in deflated currency when they mature. Either way there will be no default.

There is a secondary market. If France wants to sell its bonds to Canada, they can do that anytime they want. France might make or loose money on the deal. Or, in some cases the Fed may go into the market to buy bonds in their effort to manage the money supply and interest rates.

I'll say just one thing here:

Governments do not create wealth, individual people investing in their own futures do.

Thats how people move forward.

so let me get this straight: the assumption in this thread is that all of us operate within the limbaugh school of ecnomic pseudo-analysis?
think about it: the notion of the atomized individual heroically undertaking the only real form of economic activity recogized by this "school"--wealth generation---operates in a context-free situation, dependant only upon inward features (spunk, grit, determination--pick your cliche)---factors like socail stratification, unequal distribution of economic (social, cultural) opportunities--not relevant---infrastructure--not relevant.
only the isolated Heroic Entrepreneur...
how on earth is this even remotely like a descriptive base for thinking about economic activity in 2006?

this apart from the false opposition at the heart of the statement (the total seperation state/economy--which is also empirically false).....for example, if the stock market falls more than 500 points in a day, trading gets shut down. what shuts it down? if there is a regulative function carried out by the state that shapes the framework within which stock trading happens (this to take only one example), how can you then argue that there is a total separation of state and "private" economic activity? thing is that this kind of intertwining is a major feature of the development of actually existing states since world war 2. there are tons of histories of the state that you could look at--and it seems to me that the actual history of the state should be a factor in thinking about its actions. this does not seem unreasonable, does it?

how do you manage to bracket the dominant feature of the organization of the actually existing economy--corporate domination tending toward concentration--and still maintain that there is a descriptive aspect to the economic theory?

doesnt an economic theory require something approaching a descriptive basis for the theory to function?

if there is no such requirement, what seperates this economic theory from any other form of metaphysics?

i really dont understand, folks....

No. It is simply true based on the history economics.

Individuals operate in a social context so do entrereneurs. Value and wealth is generated in markets based exchanging goods and services.

You have made assumptions that are not accurate.

my my, what an arrogant response, ace.

you can't wave your hand in the general direction of "the history of economics"and expect more than laughter.....you arent saying anything. if you want to talk about the history of the actually existing state across the 20th century, the varying relations that you see between the state and economy, the various ideologies of the state, of economic relations, etc., or the history of economic ideologies---and who knows, maybe even the hstory of the effects of these various ideologies---then seriously do it--at least in that case there'd be something solid to discuss (and real problems for your position)--but this vague waving in the general direction of some unspecified body of infotainment means nothing.

more general vent:
what is it about conservatism that seems to short circuit any discussion about assumptions? of all the features of this general system that frustrate, this is the most annoying and the most systematic. is part of the belief structure a rejection of basic questions about the belief structure?
if that's the case, then all propositions are non-falsifiable.
which makes all propostions worthless.
it also means that there is no real hope of debate at this level, and so no real reason to even start expecting conversation across political positions.
so there is no point in this or any post that raises questions: the preferred mode seems to be mutual affirmation:
post a: "i think nonfalsifiable propositions a, b, c...."
post b: "o i do too..."
post c: "cool."
post d: "then we agree"
post e: "yes"

let me know if this is the case and i can spare myself alot of time bothering with conversations like this one.

Wrong answer.

(And BTW you DID notice I stated LOANS..... as in Grants but paid back at a lower interest rate than they would get at a private bank. Loans are a nice thing to where a government will say, "you have a good idea here's some money do it." and the money is paid back...... but those don't exist much anymore. Seems government has decided to keep cutting taxes on big businesses by giving tax breaks tax abatements and so on. So who does government favor and who are they making sure keeps the wealth???????)


Microsoft, Apple, IBM, Boeing, McDonald's, Ford, GM, Wal*Mart, Home Depot, Target, Halliburton, GE, and on and on and on..... all have one thing in common, all recieved money from the government and that money changed their profit margins or helped start them. The way these companies got their money = SMALL BUSINESS LOANS, government contracts, government tax abatements, subsidies and so on.

Governments do create wealth, ask any single one of those companies above.

The problem is they stopped investing in the small guy. Small Business Loans and a mom and pop getting tax cuts for opening a little deli shop that had hard to find magazines, newspapers, Cigars (and so on) (even though they researched it found it would make money, and planned to franchise the idea)........ :lol: They won't get that small business loan and without it they don't have the starting capital it takes.

But who got the money?

Meanwhile, Wal*Mart comes in says "we want this piece of land, we want tax abatements, we want you to rezone for food sales." The city jumps over backwards does hand flips and gives Wal*Mart all it wants.

The problem here is their low prices drive their competitors out of business. But their wages are so low very few pay much into taxes (most get all or the vast majority back in "refund".), the store doesn't pay hardly anything in taxes because "abatements" were needed to get it in there to provide jobs that don't pay enough to form a tax base.....


Ask my father and the many like him who started out with nothing, were able to go through college for his degree on student loans, and get employed in his future profession (Civil engineering and land surveying) because of a government mentoring program that Richland Engineering was a part of.

Ask Donald Trump.

Government does control wealth, it can control which company gets a contract and which doesn't (blind bids are bullshit). It can control what the going price for your land in emminent domain is. It can control which states get needed funding and which states "starve".

That is why we are doomed economically, Limbaugh has people so fucking brainwashed with "it's your money and the government is stealing it and should not invest and should cut taxes and blah blah blah"....... they totally ignore the fact that the government needs to put the money into the system in better ways or there will soon be only 1 tax base, the wealthy.


Many a revolution has started because the government went bankrupt as the poor went poorer and the wealthy continued to profit.


But please keep believing Limbaugh the facts and the truth never truly stopped him from spreading whatever manure he wants.

pan

Much of what you say in regards to polititians (government) funelling money and contracts to corporations is probably true, especially if they contribute to their election campaigns. I think we might be better off if they didn't do this at all since we will probably never be able to trust them. Maybe the answer is for them to get out of the distribution of favoritism altogether rather than trust them to redirect it.

I am not sure where you want to go. But if you dispute the fact that people investing in their own future is the only way wealth is created, I simply do not understand why you think that is false.

Certainly you can spend time making false assumptions about the statement, and I can point-out the problems with the assumptions, but isn't it better to start by you saying you agree or disagree and then give the basis for your position?

In my studying sucessful businesses every single one started on individual initiative without any reliance on government. I can not think of one who used government secured loans.

Also, when I talk about individuals investing in their future, I include more than just business owners. I talk about people who invest in their education, people who save, people who sacrifice, people who spend wisely, people who network, people who buy insurance, people who live healthy lives, etc, etc. Government can not do these things for people. Governments can not create wealth no matter how you define wealth. That is the truth, even if you think it is the wrong answer.


Please do some research on how each of those company's got started. Each one started with an individual willing to sacrifice everything because they believed something others did not. Absolutely nothing to do with government.


Walmart is willing to fight for my dollar as a consumer. It is my choice to shop at Walmart. However, price is not always most imortant. When "mom and pop" can give me value for the extra money, I shop with then. It is that simple


I don't understand the reference to Limbaugh. I don't listen to his show.
I agree that governments do award contracts. However the awarding of a contract is not the same as creating wealth. The government has to take before it can give. At best its a wash.

In no way did I say that we need to just give people money. We tried that in welfare and it set up a system of abuses and of reliance.

Whereas, my point a government loan, takes the individual's idea and allows the individual to work hard and to grow financially secure.

Mom and pops built this country not Wal*Marts. They may charge a little more but they keep the local economies and governments moving. When Wal*Mart comes in they buy the land at a set price, they get tax abatements, they get basically whatever the Hell they want. In the process they outprice all the competition, hire 95% part-time employees at minimum wages and the competition has to do the same to stay in business to fight the costs. So yes, with Wal*Marts you truly ruin your tax base, you ruin the mom and pops and you ruin the infrastructure that much more.

If we are truly bringing in more tax money and we have a GOP Congress and a GOP president that are supposedly "conservative" then why are we running record breaking deficits?????? Blame the Dems, even though they hold no power? LOL that's a great excuse.

You still haven't shown me how investing in people through loans (Small Business, Education, R&D, etc.) hurts the economy or hurts the government in anyway, shape or form. They get the money back, plus interest AND produce tax base not just for the Fed. but state and local. I could understand your argument if I had said just give people money, but when I stated my belief that one thing government must do is invest in the people and country, you act like that's some entitlement program just giving money away. Yet, tax cuts and tax abatements and so on are ok.

I believe that rebuilding the infrastructure, such as the bridges, the highways, and so on (as I have proven we need to do in another thread based on the ASCE..... this thread post #35 http://www.tfproject.org/tfp/showthr...highlight=asce). Which not one person on the right disputed the findings or even debated the need. So..... I'm taking it, the Right, acknowledges the need or the Right, just plans to keep ignoring those messy facts.

I have yet to see a true argument on how we fix this mess by giving tax cuts and running deficits. All I see is...... cutting taxes = more money in my pocket.... that's great but when local and state taxes increase with higher sales taxes, higher hidden taxes on consumption.... it is the poor that are most affected.

And then I have yet to see an argument from the war supporters and tax cut believers, tell me how they are sacrificing for the war. Basically every time I bring it up the topic is changed or I hear "tax cuts good..... war good.... you terrorist symapthizer."

Sooooo, on 1 hand you tell everyone to make sacrifices, to spend within their means to do this that and the other thing but keep the fucking tax cuts coming, we're not paying for this war when we need tax cuts?????

To summarize, My belief is that government needs to invest and in doing so they increase the tax base and revenue because of the interest on the loans. The other view is "tax cuts good.... GOP Congress and President care about all of us, fuck the war when it comes to my tax cuts, and run record deficits yet blame the party that has no power whatsoever...... hmmmmm. I'll take my side and agree to disagree with the other.

(BTW Ace, are you telling me that NOT 1 of those companies I listed got any start up loans or help from the government in any way shape or form?... show me your proof I'll show you mine. Fair enough challenge?)

When was that? I'm looking for a year here.



Perhaps, but the dead logic is the "logic" of trickledown economics.


Tell that to the "new" photographer at my station (he's been with us 3 years, which is new at my shop). He's making 20,000 a year, barely making ends meet especially with the increase in energy prices, and, having done his taxes for him, since he can't afford a tax preparer, I can tell you that he most certainly did pay federal income tax. Unless you are defining the "poor" as "people who don't make ANY money" then you are wrong there.


Well that's an economic theory that actually has some merit, but not in the trickledown way that Reagan and the Bushes want to do it. Cut taxes on the poor and middle class. Slash 'em. But giving ANY tax relief to the wealthy is crazy. Let me explain.

There are certain products that you have to buy. Food. Clothing. Shelter. Whether you make 20 thousand or 20 million a year, you're going to buy food, clothing and shelter. Then you get to non-essential expenses. Entertainment, nice cars, nicer food, clothing, and shelter. These cost more money and therefore generate more tax revenue. The rich are already buying all these non essentials because they can afford it even with their taxes. The poor and, to a somewhat lesser extent, the middle classes are NOT buying these items because they cannot afford them. But if we reduce THEIR tax burden, THEY start buying them as well. This results in more of the higher-tax-generating merchandise being bought.

What the trickle down proponents don't seem to understand is that the rich are already buying stuff like crazy. We need to stimulate MORE people into buying stuff that they aren't already buying.

If you really need proof that trickledown doesn't work, Reagan/Bush 1 tried it for 12 years and it tanked.

If you need further anecdotal evidence that it might not be such a good idea, the man that's pushing it now has financially destroyed just about everything he's ever touched, from businesses to the state of Texas. This guy obviously isn't real good with money, especially considering how much he's spending. Any economic theory he touts should be taken with a rather large grain of salt. In fact, you'd better make it a mountain of salt.

ace: i disagree fundamentally with your economic views---but at the same time i have as many questions as anything else about how to think old-style nation-state centered information/indices in the context of globalization. one thing i learned from the thread is that i havent quite figured out how to frame these question right.
so it seems to be hard to communicate.
nothing personal....

Tax rates for the wealthy have been falling since 1945

http://www.tax.org/thp/Articles/taxjustice.htm
Until World War II, only the rich paid income taxes. Lawmakers had traditionally confined the tax to the upper strata of American society, but wartime mobilization prompted change. Policymakers broadened the base, increasing the number of taxpayers tenfold between 1939 and 1945. They also established a highly progressive rate structure, with rates reaching 94 percent for the richest taxpayers.

There is no federal sales tax. When someone buys a $5,000 TV the federal governments gets $0 from the sale.

you're forgetting about the federal corporate income tax. it's not a direct tax on the sale itself, but the sale effects the company's income statement (assuming they don't cheat on their taxes ;) ) and therefore the government does stand to get more tax revenue if more things are purchased.

While that's technically correct, it's not the entire truth. The federal government does not make any money off any single consumer transaction, but they do tax profits and income all the way up the line, from the retailer to the distributor to the manufacturer. It's a more effective way without having the headache of tracking every single transaction. If people start spending more, the federal government most certainly gets their share, although there are some very good ways to minimize that amount.

The problem with the tax cuts that we saw in 2001 and 2002 is that they weren't significant enough for the wealthy or middle class to make any changes in their spending habits. There's some proof that "trickle-down" economics does work, but on a much smaller and slower scale than was predicted in the late 70's and early 80's.

I read books on Walmart, Mcdonalds, GE, IBM, Ford, Standard Oil, and on many other Fortune 500 companies. Never read a word about government lloans being used as start-up money.

You don't like Walmart, but Walmart was a "mom and pop" business once.

Can I ask a loaded question? What kind of computer are you using? Dell? Gateway? HP? Apple? If you dislike Walmart why don't you dislike these companies the same way? Why do you buy their products? Remember the llate '80's and the early 90's when there were thousands of personal computer makers? What happened? Was it good or bad? Wasn't Dell, Gateway, HP Apple, all "mom and pop" at one point? If you ruled the world how would you have deloped the PC market? Consider these rhetorical questions, just something to think about.

I will never change the way you view the world, but you seem like a thoughtful person and I am sure one day you will change your economic point of view.

The basis of my views are grounded in the fact that it is a dog eat dog world. I have no understanding of how your views are developed, and therefore I don't understand your point of view.

As sled dogs would say: the view ain't pretty, unless you are the lead dog.

Actually, I have an MSI MEGA System that is damned good. Only problems I have had in the 2 years I've had it were viruses and that was my fault.

The limited was a mom and pop shop, many were. As for Dell, Gateway, H&P and so on. They are manufacturers. Yes, I am not keen on the cheapness of some of the product but there are many to choose from and like I said I weighed in on many options, some cheaper offering the same specs. some more expensive with better specs. but was sold on the MEGA system and I have no regrets.

My economic view is that which I believe is the most feasible, reliant and productive. Call me old world but I am still sold on a country being self sufficient and putting money back into the system by investing in the people, not just spending it foolishly on pork (bridges in Alaska that go nowhere), or tax cuts for the rich but hurt the poor, or for Corporate welfare.

There is no doubt it can be a dog eat dog world.... but there is no sense in throwing the people to the wolves when we have the resources to make sure all those who can and want to be educated and advance, are invested in.

As for Wal*Mart, I wouldn't be so opposed if they practiced ethically but they don't. Illegal aliens to clean the stores, locking people in, paying minimum wages and only hiring p.t. so they don't have to pay benefits, they are the biggest offenders. Ask Rubbermaid what they did to them, simply because Rubbermaid could not lower their prices any further.

Rubbermaid was pulled off the shelves and Sterilite (which they own interest in) came in.... No big deal you say? Well, that's debateable, I feel it is wrong for any company to dictate to another their prices. Wal*Mart could have very easily put BOTH on the shelves and let the consumer decide, instead they used strong arm tactics and coercion and destroyed the company (Rubbermaid still exists but has shipped most jobs out and ended up having to sell to another company, then and only then would Wal*Mart carry them again.)

If you ever have a chance read about RM and W*M and see for yourself what happened.

I also think it's wrong our government doesn't enforce our trademarks, copyrights and patents. Another company I've talked about on here Gorman Rupp has seen sales fall and it's because the Chinese use GR patents and sell dirt cheap. Hell, the Chinese even use the exact same brochures just photoshopped the Mansfield Waterworks truck into a white truck with Chinese written on it.

So yeah, it is dog eat dog but the Wal*Mart - Rubbermaid shows that the biggest retailer uses bad business to rule the industry. And the GR shows that our government, who's job it is to protect the interests of this nation, refuses to do anything about copyright, trademark and patent infringements.

As for my challenge (fortune 500 companies that have used government funds to advance) I'll post that as soon as I get the links up. It's not just loans it grants, land given, corporate welfare, contracts that paid more than market value for items so that it helped the company (remember the $200 screwdrivers and the $1000 toilet seats?) and so on. To say none of those companies ever recieved a penny for government help is false.

So the question that has to be asked is if government can pay millions upon millions to companies, why can't they invest in the people and give the people loans, educations and the needed resources to help advance everyone, not just the select few?

I find it extremely hypocritical of people that tell others to become self-sufficient when big business is draining our tax money (not paying taxes, getting tax breaks, getting grants and so on) faster than the people ever could.

If you propose that people should be self sufficient should not the companies be also?????? Shouldn't we pull the plug on them faster than we pull it on the people???? We need to invest in our people.

There's this http://www.celcee.edu/abstracts/c200...?version=print that shows, "The study highlights how almost one third of the 275 most lucrative Fortune 500 companies have managed to pay little or no federal income taxes in the first three years of the Bush presidency."


There's this: http://www.heritage.org/Research/Budget/tst052705a.cfm that shows MILLIONS upon MILLIONS are given to Fortune 500 companies from our government and yet they still lay off and ship jobs overseas..... Where is the money going? Obviously not for jobs or to help stabilize the tax base.

This site: http://www.njpp.org/pr_firms.html shows some companies tax rates and tax breaks, very interesting that JPMorgan recieved 3.9 BILLION in tax breaks and a -1% tax rate. Or Phizer recieved 3.9 Billion in tax breaks and a tax rate of 8.2%.

Yet, we can't invest in the people with loans for school and small businesses???????

The point is, we attack each other, the rich and Right believe the poor are at fault and not working hard enough, the poor and Dems. believe tax cuts only benefit the rich and meanwhile these Fortune 500 companies make Billions off our tax monies while the feds cut education, cut programs that advance the middle and lower class people.

If these companies actually stopped getting federal monies for BULLSHIT and the government funded the rebuilding of our infrastructure (again as the ASCE reported our needs) and they spent the money on the people, imagine the possibilities.

But as long as we keep cutting taxes on the rich and giving tax breaks, farm subsidy monies, ATP and other monies to these companies to pay their CEO's millions to live in luxury, we are going to be doomed.

Just like we did with welfare we must make companies demonstrate a definite need for the tax breaks and monies and that they aren't paying the executives millions with great benefits while they pay their workers minimum wages and give no benefits.

I'm not against the rich, I am against the abuse of money and power is lopsided, while the nation is falling apart. Where are these companies' patriotism? Taking tax breaks in time of war?

I have more proof of abuse and the "help" we give these companies while we cut and destroy education and small business loans, if you want.

Pan,

I try not to get lost in the detail you provide, I don't ignore it.

However, corporations are taxed and then shareholders are taxed on the same income. Not fair in my opinion.

The Fortune 500 is not fixed. With some exceptions the companies appearing today will not be on the list in 10 years. Companies on the decline will pay less in taxes or no taxes as profitability suffers or they start loosing money. New growing, highly profitable companies (i.e. GOOGLE) will pay higher taxes because of growth. Kinda like the cycle of life.

I agree some companies have received benefits from government. However, my point is that government does not create wealth.

For the government to give it has to take.
For the government to give it has to take.
For the government to give it has to take.

In your view it is o.k. for the government to take from 'Joe' and give to 'Bob', in my view it is not. Bob certainly benefited, but Joe got hurt. There is no net change in wealth. Odds are there is a net loss in wealth to cover government overhead.

Certainly you can argue that the government can give Bob money to invest in Bob's education to make him more productive thereby making Bob wealthier. But what happened to Joe? Now he has less to invest in his own productivity. It is always more efficient for Bob to invest in his own productivity or receive an investment direct form Joe.

You don't think Joe would help Bob unless forced. I disagree.
You don't think Bob would help himself unless given a benefit from government. I disagree.

Ah but see you stop short on my view.

Government helps Bob, Bob has more money, Bob goes to Joe and is able to buy more of Joe's products.

As for Joe helping Bob..... look at school funding, look at loans for college, look at the state colleges raising their tuitions (such as where I am attending U of Akron right around 10% a year for the past 3-4 years, that's more than inflation.) Look at the school levies that don't get passed because the people refuse to want to pay.

As for Bob helping himself, how? As aid decreases, tuitions increase plus books and wages aren't high enough to pay, I just don't see how Bob is going to help himself. Or what if Bob wants to open a restaurant but can't find private investors and needs that small business loan to make sure he can run the place until he starts getting money coming in?

I just don't see how you can justify Joe's taxes not helping Bob, but rather going to Merck, IBM, Motorola, and so on, to pay for their CEO's 3 houses and multimillion dollar salary, as they layoff 1000's of workers. Makes no sense whatsoever.

You might want to read the highlighted ATP section of my previous post and tell me how that is ok, but small business loans and education apparently are not worthy of our tax dollars.

Again government says, corporate welfare ok....... Education and the health of those who can't pay...... too bad.

If you are going to be of the notion that people don't deserve money from government, shouldn't you also argue against corporate welfare?????

So much for Bush's State of the Union address yesterday when he said, something along the lines....we must not fall behind we must continue to educate our society to achieve the best results.

But go ahead keep building those bridges that lead nowhere and giving millions upon millions to big business while the poor fall farther and farther behind. :thumbsup: and keep making those excuses, why it's acceptable.

link: http://news.yahoo.com/s/ap/20060201/...E0BHNlYwN0bWE-

Funny thing about those medicare/medicade cuts.....
the people who get cut off the roles, and get sick.
Instead of scheduling a $45. doctors appointment, go to the emergency room
and default on the $300. payment.
the hospital then writes the $300. off against their taxes

Read a book.
Learn a trade.
Network.
Practice Public Speaking.
Make Mistakes.
Pray.
Eat Healthy Foods.
Volunteer to help Others.
Associate with Good People.
Work Hard.
Show up on Time.
Have Pride.
Get a mentor.
Treat Others with Respect.

I don't support corporate welfare. Never have, never will.

You on the otherhand, will use big government to protect Disney's copyright of a drawing of a mouse against "mom and pop". I knew a guy who owned a small icecream store, he played Disney cartoon video tapes for the kids, wow was that a mistake. You would have thought he murdered someone the way he was threatend by the folks at the "happiest place on earth".

O.k. I give. We can use tax dollars for business loans and education. I am not sure I ever said we shouldn't, but we should. I just think there are better ways, more efficient ways to help people.

Yes, those would help Bill, to some degree but when you are cutting education, making it more and more unaffordable to the lower classes there isn't much of a way to move up now is there?

I know people are probably sick of hearing it, but my father was dirt poor, one of the poorest families in Mansfield. He got ahead with drive and government sponsored mentor programs and student loans and grants. Now he is one of the richest most well respected men in the area (deservedly so for what he accomplished but he did so with help.... as a person he is still wellllll different, course I am also).

But those programs that he was able to use are gone..... the loans and grants are not keeping up with tuitions andso education is becoming less and less of an option for many which means lower paying jobs, lower tax bases and people stuck in dead end jobs, while the media and people who have money ridicule these people for being lazy and not moving ahead on their own.

If a person does not have a belief they can advance and some form of hope and support from others they probably will not advance. My father among 10,000's his age recieved it from the government and it paid off .... So why can't we do it now? Why are we so damned set on corporate welfare and letting the people suffer?



We agree on corpoate welfare then, but it is funny how most people on the Right will argue against helping people but they don't speak out against corporate welfare.... in fact most defend the need for it.

As for Disney and the scenario above. I believe in copyrights and the protection of such. However, I find that the person owning the store could have very easily fought any lawsuit by proving he was not charging people to view the tapes. That he was showing them freely. And if Disney had issues then he could have said "Fine, I'll show Tom and Jerrys or Bugs Bunnys or Betty Boops or Popeyes." Having owned my own pizza restaurant at one time, I knew what I could show on my television and what I couldn't. As long as I didn't charge or I didn't have a free pay per view airing, I could show anything I wanted.



I agree I think there are better ways, but in society today, noone is coming up with them.

In fact it is the opposite, government is making it harder.

A great example is my profession. It use to be that recovering addicts could easily become counselors through a few years of mentoring, a written test and an oral exam. Then you needed some college work.....

Today you need all the above PLUS college and in 2008 a Master's degree.

It's going to destroy the industry and the true people that want to help. Because most recovering addicts cannot afford college, will not be able to afford the loans (as addiction counselling is a very low paying job dependant primarily on government grants and communities voting for tax increases.) It's why 90% of the industry is turning to corrections and the prison systems for funding. So the people off the street who need help but haven't committed crimes yet are not able to get the help they need, in 75% of the country.

It's like where AA was founded in St Thomas Hospital by Bill W. and Sister Ignatia. It is now owned by Summa health and instead of 2 floors and inpatient treatment they have reduced it to 6-10 beds, one must have insurance and meet criteria.

So how can you help people if the funding is not there?

Yet, fortune 500 companies and billionaires get all kinds of help through programs like ATPs, farm aid and so on, designed to help people get ahead.

I think the starting point is to get rid of the ATPs, the corporate welfare and the loopholes and allow the money to go where it truly is needed. In doing so, less tax money will probably be needed for these programs. As it stands now he who has the most expensive and best lawyers gets the money..... the poor guy who needs it but can't afford the lawyer doesn't get shit, except the blame for the programs and the money spent.

The debt ceiling STILL has not been raised.
Now Treasury bond sales are suspended :|
Not good....Not good

But we need those tax cuts!!!!!!! :rolleyes:

Treasury started selling 30 year bonds last week. All the talk about the inverted yeild curve was because the 30 years sell at 4.48%, the 10 years sell at 4.53%. If you did not have faith in the US Government you don't buy 30 year bonds, or you ask for a real high rate. These bonds indicate world-wide confidence over the long-term in the US government's ability to pay back the principle and pay the interest.

What do you put more confidence in - a reporter or people, companies and governments investing millions in government bonds?

Who do I put more confidence in?
that is a press release from the treasury web site, not some reporter :eek:

If you'd prefer the press version here it is


Robbing peter to pay paul.......
And Peter is the employee's pension fund!

I think you missed the point. And I probably didn't communicate clearly.

If my wife and I agree that our debt ceiling is $500,000 (mortgage, cars, credit cards, etc), we put it in writing and it is the law of our household. Let say we are at the limit. And then let say my son goes to the emergency room and the cost is $1,000. She doen't have the cash, our debt goes to $501,000. Here's what we do, we shift spending to get under the ceiling ASAP, or we raise the ceiling.

Technically she (the treasury), violated our agreement in principle. However if she can shift spending before we add up the debt, "no harm - no foul". Or, if she can get me (congress) to agree to rasing the ceiling, "no harm - no foul". Our networth is lets say $1,000,000 and our income is $100,000. and our debts are $2,000/month. Upping the ceiling $1000 is just a "paper" transaction. We are doing well financiially. The country and the US government is doing well also. No need to panic.

the thing is.... the goovernment's debt far far exceeds what the bring in.

Yopu're example is nowhere near what the truth facing the government is and you know it.

True the US government is spending more than it collects. Howver, the government can take everything we own or dramatically raise taxes anytime it wants. The government can also print as much money it wants. Deficit government spending is meaningful in regards to the impact it has, not on its existence.

Most economist look at GDP as a measure of national income, which assumes it is the same as the income the government could use if needed.

Also true is the fact the the government is in debt. However, the government owns assets; national parks, oil, roads, military equipment, buildings, etc. The government could sell these assets to pay on the debt. The government also has access to our collective wealth. The government could take our property if it wants, or perhaps sell the state of Ohio to Canada. Ok I know I am getting a bit sarcastic, but or national wealth far exceed our national debt. I don't remember the number but lets assume the natioanal debt is $4,000/person, that seems prety bad, but if our national wealth is $20,000/person it isn't so bad. To put the debt in perspective we have to look at the asset/debt ratio. If it is less than 1.0, we are in bad shape and could be on the verge of bankruptcy because our debts are greater than assets. If the ratio is 2/3/4/5/6/7/etc. That means for every $1 of debt we have $2/3/4/5/6/7 in assets, the higher the number the smaller the risk. So when you only talk about the debt, you can make it seem like the sky is falling. But when I look at the debt ratio, I can have high confidence. One the glass half empty the other the glass is half full. Debt can be bad, but it can also be good, if managed properly.

So, the question is - Do you and the media purposefully attempt to miss lead people? Or, do you simply not understand?


You got me on that. I just made those numbers up about the household above and the arbitrary debt ceiling. But the actual numbers where not important to the point. I think you knew that, riight? So we can get lost in debating trivial matters, or we can debate real issues. Your choice. I will do this because it helps me articulate arguments, if I ever write a book, I will give you and others credit. Doing this is helpful even when we seem to avoid the real issues being discussed and focus on trivial issues.

P.S. If I do write a book and use that household example I promise to do research so the ratios are in proportion to our national financial picture. Thanks for pointing that out.