Hey Big Spender..... - Tilted Forum Project Discussion Community

dc_dux · 10-01-2007, 06:06 AM

For the fifth time in the last seven years, Congress has had to raise the debt ceiling in order to keep up with the Bush administration (and the Republican Congress) uncontrollable runaway spending.

The total US debt is now over $9,000,000,000,000 (thats 9 TRILLION) and when Bush leaves office in Jan 2009 likely to be nearly DOUBLE the $5.7 trillion when he took office in Jan 2001.

If thats not bad enough, the percentage of this massive and growing debt held by foreign governments and investors has risen from under 16% in 2001 to a projected 25% (nearly one out of every four dollars of US debt will be held by China, OPEC and other friends) when Bush leaves office.

Just one more pile of shit left on the oval office floor by Bush for the next president to clean up.

host · 10-01-2007, 07:54 AM

........ click to show

This is a reason that they can borrow sooooo much without pushing up the rate that they have to offer on US T-bills to attract bids...half of the amount borrowed to finance the debt has come from manipukating CPI to depress actual inflation stats that would have caused increased SSI payments due ro COLA that was never factored in....and as the dollar collapses...(gold broke $750/oz today...vs, $255 in 2001....) SSI trust fund will become the valueless IOU's that Bush described them as...

Quote:

http://dharmajoint.blogspot.com/2007...-how-bond.html

....In particular, changes made in CPI methodology during the Clinton Administration understated inflation significantly, and, through a cumulative effect with earlier changes that began in the late-Carter and early Reagan Administrations have reduced current social security payments by roughly half from where they would have been otherwise. That means Social Security checks today would be about double had the various changes not been made.

Assuming Mr. Williams' estimate is correct, a doubling of SS outflow from the actual $549B, which produced a SS surplus of $185B, to $1,097B, assuming no changes on the income side, would have created a deficit of $363B. In turn, this would have forced the US Treasury to sell about $800B of securities into the market instead of the $250B they actually sold in 2006. I doubt current US Treasury yields would be at such low levels if such was the case.

But it is the case. Non-marketable debt has risen from the afore noted 33% of total debt to 49%. That's right, half of Treasury bidding comes from captive bidders. So much for a free and open market in US Treasuries.

In sum then, the cumulative effects of SS tax hikes, which inflated SS income, and reductions in outflow due to recalculated COLAs are, I believe, the primary cause of our strangely low bond yield environment in the US. As one who has cited with alarm the growth of Chinese reserves to and above the $1Tln mark, I was amazed to find that Social Security holdings have grown even faster, and now total some $2Tln....

.....

Imagine a financial world in which the managers of the SS Trust were able to diversify out of US assets. Minimally imagine a financial world in which the managers of the SS Trust were able to pick and choose amongst domestic investments. In that world, I doubt the chosen mix would be (as is currently the case) a virtually all US Treasury portfolio with an average interest rate of 5.2% and duration of 7.2 years. Simply shifting to a much shorter duration fund would cause the US yield curve to steepen dramatically.

Captive bidders and the Enron effect

That is, I argue, the captive nature of the SS Trust fund in conjunction with its size has been the main cause which engendered our low and reasonably flat curve yield environment. For it is the US Treasury itself which manages these funds. As those who lost all their retirement funds at Enron could tell you, captive trust funds invested in the company itself does not a diversified portfolio create- just the opposite effect is, in fact, created. When foxes (invariably from Goldman Sachs these days) guard the chicken coop, ultimately you have no chickens.

This too, however, shall pass. According to the SSA (Social Security Administration) by 2017, barring any further increases in taxes or calculation changes in COLAs, outgo will exceed income for SS and DI (Disability Insurance). National Health Insurance (HI) costs will deplete the funds even more rapidly. By 2041 SS and DI will have exhausted their funds and by 2019 HI funds will be depleted. So, within a decade there will no longer be additional surplus funds to be used to purchase US bonds which will have to then be sold on the open market. Call it peak SS Trust Funds, although peak trust might be even more apt.......

roachboy · 10-01-2007, 07:57 AM

threadjack-like aside:

i am greatly cheered to see you again host.
you should come out to play.

end aside and returning to regularly scheduled programming....

host · 10-01-2007, 08:10 AM

...rb...filtherton....thanks click to show

The_Jazz · 10-01-2007, 08:23 AM

In that case, it's good that you bothered to learn how to use the hide command, host. It will save all of us from having to wade through your supporting evidence to find out what you actually think about an issue, which is precisely why the "hide" command was created and why you were encouraged not just by me but by several moderators to use.

For the record, all I did was insert the hide command into his original post, as I told him I was going to do. Nothing else was changed, and if others insert overly-long quotes into their text, the staff reserves the right to insert "hides" into the post to make them more readable.

Willravel · 10-01-2007, 08:52 AM

Very, VERY good to have you back.

So again we find ourselves asking: What can be done? I'll probably be paying for this well into my 80s, and my children, children's children, and possibly even more generations will be dealing with our mess, be it governmentally financial, societal, or economic (leaving things like global climate change and DU munitions alone). I'm reminded of George H. W Bush's famous 'New World Order' speech:

Quote:

Originally Posted by George H. W. Bush

Americans must never again enter any crisis, economic or military, with an excessive dependence on foreign oil and an excessive burden of Federal debt.

Most Americans are sick and tired of endless battles in the Congress and between the branches over budget matters. It is high time we pulled together and get the job done right. It's up to us to straighten this out...

the Congress should, this month, enact measures to increase domestic energy production and energy conservation in order to reduce dependence on foreign oil. These measures should include my proposals to increase incentives for domestic oil and gas exploration, fuel-switching, and to accelerate the development of the Alaskan energy resources without damage to wildlife. As you know, when the oil embargo was imposed in the early 1970's, the United States imported almost 6 million barrels of oil a day. This year, before the Iraqi invasion, U.S. imports had risen to nearly 8 million barrels per day. And we'd moved in the wrong direction. And now we must act to correct that trend...

the Congress should, this month, enact a 5-year program to reduce the projected debt and deficits by $500 billion -- that's by half a trillion dollars. And if, with the Congress, we can develop a satisfactory program by the end of the month, we can avoid the ax of sequester -- deep across-the-board cuts that would threaten our military capacity and risk substantial domestic disruption. I want to be able to tell the American people that we have truly solved the deficit problem. And for me to do that, a budget agreement must meet these tests: It must include the measures I've recommended to increase economic growth and reduce dependence on foreign oil. It must be fair. All should contribute, but the burden should not be excessive for any one group of programs or people. It must address the growth of government's hidden liabilities. It must reform the budget process and, further, it must be real.

We have a Democratic Congress. We have the House. We have a president, and head of the GOP, who's approval is quickly approaching the teens. This is a time where it should be easy to sway the more centrist GOP reps to begin repairing the massive damage done by the now out-of-favor neo-cons. We can use the election to sway the idiots (cept Ron Paul) running on the GOP ticket to pull the rug out from under Bush so that we can get bipartisan legislation moving. If the party turns on Bush, we can undo war funding and wiretapping (as long as the Dems don't turn on us again).

aceventura3 · 10-01-2007, 11:50 AM

Quote:

Originally Posted by dc_dux

For the fifth time in the last seven years, Congress has had to raise the debt ceiling in order to keep up with the Bush administration (and the Republican Congress) uncontrollable runaway spending.

The total US debt is now over $9,000,000,000,000 (thats 9 TRILLION) and when Bush leaves office in Jan 2009 likely to be nearly DOUBLE the $5.7 trillion when he took office in Jan 2001.

If thats not bad enough, the percentage of this massive and growing debt held by foreign governments and investors has risen from under 16% in 2001 to a projected 25% (nearly one out of every four dollars of US debt will be held by China, OPEC and other friends) when Bush leaves office.

Just one more pile of shit left on the oval office floor by Bush for the next president to clean up.

The most obvious question: Given Bush has no discipline when it comes to spending why hasn't Congress done something to bring this obscene level of fiscal irresponsibility under control?

And the follow-up: Why is one branch of our Federal government given the responsibility for the mess when it seems like at least two branches are at fault?

Willravel · 10-01-2007, 11:59 AM

The Senate is at fault, but they were mislead into the war, which is costing us the most, so it's a bit harder to blame them. They do share the blame, though.

dc_dux · 10-01-2007, 01:22 PM

Quote:

Originally Posted by aceventura3

The most obvious question: Given Bush has no discipline when it comes to spending why hasn't Congress done something to bring this obscene level of fiscal irresponsibility under control?

And the follow-up: Why is one branch of our Federal government given the responsibility for the mess when it seems like at least two branches are at fault?

Absolutely, both the White House and Congress are to blame for the $4+ TRILLION rise in the debt in the last six years...during which time, the Congress was under Republican control and Bush never vetoed one spending bill.

Clinton and a Republican Congress demonstrated how it can be done....balancing the budget in his last two years in office and paying down the debt through a "pay as you go" approach.

Bush would also need to recognize that tax cuts to the top 2% and trickle down economics is in fact, voodoo economics (as George HW Bush rightly noted).

aceventura3 · 10-03-2007, 01:18 PM

Quote:

Originally Posted by dc_dux

Bush would also need to recognize that tax cuts to the top 2% and trickle down economics is in fact, voodoo economics (as George HW Bush rightly noted).

I do want to start another lengthy exchange on this issue, but I need to understand one thing from you and others who share the above view. We all know that the affect of federal government fiscal policy can not be measured with precision or predicted with precision because of so many uncontrollable variables (we may never really know the true precise net affect of certain types of tax cuts or increases on the economy, we can only speculate) - that as a given, here is my question regarding a fundamental principle of supply side economics. If a group of people has more disposable income that they re-invested and spend in the economy, is that a good or bad "thing" for the economy?

MrTia · 10-03-2007, 01:31 PM

Quote:

Originally Posted by aceventura3

If a group of people has more disposable income that they re-invested and spend in the economy, is that a good or bad "thing" for the economy?

is that where all those exorbitant CEO salaries and stock dividends are going? back into the economy? from where i'm sitting they appear to be going, by and large, into offshore accounts, hinky speculative investments and big-ticket luxury items. not sure who that's supposed to trickle down to, exactly.

i assume that every time i buy a product at wal*mart, some chinese entrepreneur benefits from the skill of some overpaid american CEO at outsourcing the manufacture of products and services to human-rights-violating subcontractors overseas, but that's good for the economy of chinese entrepreneurs, sweatshop owners and american megarich chairmen of the board. doesn't help me a whit to have my tax dollars subsidizing capital and industrial flight from the US. which, make no mistake, is what all this bush big spending is all about.

dc_dux · 10-03-2007, 02:26 PM

Quote:

Originally Posted by aceventura3

If a group of people has more disposable income that they re-invested and spend in the economy, is that a good or bad "thing" for the economy?

The fallacies of supply side economics have been debated here before and I dont see a reason to rehash the same arguments and evidence.

I subscribe to the Mr. T. school of economic thought.

MrTia · 10-03-2007, 02:34 PM

Quote:

Originally Posted by dc_dux

The fallacies of supply side economics have been debated here before and I dont see a reason to rehash the same arguments and evidence.

I subscribe to the Mr. T. school of economic thought.

i pity the foo' who advocates extreme laissez-faire anarchic capitalism over a sensible, mixed national infrastructure founded on genuine, public-private sector partnerships characterized by competent, vigorous oversight and accountability!

i dunno, doesn't quite fit on a bumper sticker, does it?

little-known fact: the iraq reconstruction is a total showcase of supply-side economic reform at work. and i think we can all learn from the success the friedmanites have met with there. we can argue the economic abstractions but the bottom line (sorry! :P ) is, the supply side thing has been tried over and over. doesn't work except for a tiny minority (for whom it works exquisitely well). the record is clear on this.

i'm reading "shock doctrine" by naomi klein right now. it's making me fighting mad. great book.

aceventura3 · 10-03-2007, 03:23 PM

I can't resist one more attempt, but I generally agree with you DC, this is pointless. The brilliance of the following explanation will be lost.

First, I will assume that DC and Mr. Tia agree that rich (and powerful) people have more options than poor people. Poor people are generally locked into our income tax code, as opposed to wealthy people who have the options available with the Corporate tax code, foreign investment tax code, capital gains tax code, estate/trust tax codes, etc, etc. So, lets look at a poor person as tax cuts may relate to "trickle down".

Let's say we have a single working mother with two minor children and she made $14,900 in 2006. In her case she would have a standard deduction of $7,500 as head of household, she would $9,900 in excemptions (3 people times $3300 each), she would then have a taxable income of $0. She would qualify for two child tax credits or $2,000 and she would qualify for the earned income tax credit, in her case, $4,522 dollars. She would get a tax refund based on those credits of $6,522. So her after tax income is $21,422.

Now let's say she got a better job and earned $39,000, everything else is the same. She would still have a standard deduction of $7,500, and $9,900 in exemptions. Now her (line 27 - 1040A) taxable income is $21,600. And her tax would be $2,706. She still gets the child tax credit of $2,000. However, her earned income tax credit is now $0. Now her after tax income is $38,294.

Her employment income went up by 162%, and her after tax income went up by 78%. Her tax impact was $7,228, on an additional earned working income of $24,100. That is equal to a marginal tax rate of 30%. As a working poor person she gets screwed by the tax code if she tries to improve her life. For every extra dollar she earns the federal government (not talking state, FICA, Medicare) the government takes $.30. What if she had that money for clothing, food, savings, college for her kids, an IRA, would that be good for the economy? Would that be good for her?

These are real numbers using IRS Publication 17 from 2006. Using tax credits or not these numbers have real impacts on real people. Anyone in a 30% marginal tax bracket is getting screwed by the government in my opinion, and to think that the government will do a better job spending the money is to be a fool. Spending in Washington is out of control, tax cuts are not the problem.

MrTia · 10-03-2007, 03:34 PM

hmm, interesting, if a bit of a brow-furrowing read. i need to work on my way marginal tax-rule-parsing skills, for reasons that are currently deeply unfortunate to my finances. so struggling with that was helpful.

i'm questioning whether earned-income tax credits can actually take your tax liability into surplus status: you seem to be saying that in the first instance the woman's tax writeoffs actually get her a refund as though she'd made more money than she actually did? i have no evidence to disbelieve that, but i just find it astonishing the tax code would be put together that way.

but the upshot of what you're posting seems to be that someone whose income is in the lower-middle-class range -- 30s, 40s -- has a tax burden far outstripping someone whose tax burden is negligible due to poverty. the egghead in me wants to say that any sum seems significant when compared to zero, but i actually agree that the middle-class tax burden is oppressive. government at this moment is huge and is consuming lots of tax money, and despite reams of happy-talk about tax cuts, the middle class seems by and large to be paying for it. the question is, why? what is the government spending it on?

aceventura3 · 10-03-2007, 04:52 PM

Quote:

Originally Posted by MrTia

i'm questioning whether earned-income tax credits can actually take your tax liability into surplus status:

With the EIC and Child Tax Credits - yes. But that is not the point. the point is that lowering a net 30% marginal tax rate, gives a person more disposable income which is good. It is good for poor people, good for rich people and good for the economy.

Quote:

you seem to be saying that in the first instance the woman's tax writeoffs actually get her a refund as though she'd made more money than she actually did? i have no evidence to disbelieve that, but i just find it astonishing the tax code would be put together that way.

Don't take my word for it, use Pub.17 and go through some examples, or ask your tax professional.

Quote:

but the upshot of what you're posting seems to be that someone whose income is in the lower-middle-class range -- 30s, 40s -- has a tax burden far outstripping someone whose tax burden is negligible due to poverty. the egghead in me wants to say that any sum seems significant when compared to zero, but i actually agree that the middle-class tax burden is oppressive. government at this moment is huge and is consuming lots of tax money, and despite reams of happy-talk about tax cuts, the middle class seems by and large to be paying for it. the question is, why? what is the government spending it on?

Progress.

Now understand that the major benefactors of Bush's tax cuts are hourly/salaried working class people. Sure the rich benefited but, like i posted they have options, i.e. Bill Gates can have a $1 per year salary, run expenses through his corporations, charities, trusts, etc. to avoid taxes all day long if he were so inclined and if he thought the income tax rates to high. Our current tax system is too complicated and has too many holes in it for rich people to get screwed one way or the other. Why don't Democrats get that?

BigBaldRon · 10-04-2007, 09:46 AM

End taxing individual income and start a nation wide sales tax. Solves the "rich people get tax cuts" argument. Solves the "poor people get more money to have kids" argument. Saves the tax payers uncounted money when the IRS is eliminated.

Rich people buy more stuff. They spend more money. So, tax what they are buying and your nation profits.

aceventura3 · 10-04-2007, 12:10 PM

Quote:

Originally Posted by BigBaldRon

End taxing individual income and start a nation wide sales tax. Solves the "rich people get tax cuts" argument. Solves the "poor people get more money to have kids" argument. Saves the tax payers uncounted money when the IRS is eliminated.

Rich people buy more stuff. They spend more money. So, tax what they are buying and your nation profits.

I agree. We should not take away anyone's incentive to work, nor should we tax savings and investing.

MrTia · 10-04-2007, 08:09 PM

Quote:

Originally Posted by aceventura3

Progress.

thanks! i had to get really, really stoned before i could understand all that stuff. :P

10-01-2007, 06:06 AM	#1 (permalink)
dc_dux Location: Washington DC	Hey Big Spender..... For the fifth time in the last seven years, Congress has had to raise the debt ceiling in order to keep up with the Bush administration (and the Republican Congress) uncontrollable runaway spending. The total US debt is now over $9,000,000,000,000 (thats 9 TRILLION) and when Bush leaves office in Jan 2009 likely to be nearly DOUBLE the $5.7 trillion when he took office in Jan 2001. If thats not bad enough, the percentage of this massive and growing debt held by foreign governments and investors has risen from under 16% in 2001 to a projected 25% (nearly one out of every four dollars of US debt will be held by China, OPEC and other friends) when Bush leaves office. Just one more pile of shit left on the oval office floor by Bush for the next president to clean up. __________________ "The perfect is the enemy of the good." ~ Voltaire

10-01-2007, 07:57 AM	#3 (permalink)
roachboy Super Moderator Location: essex ma	threadjack-like aside: i am greatly cheered to see you again host. you should come out to play. end aside and returning to regularly scheduled programming.... __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

10-01-2007, 08:23 AM	#5 (permalink)
The_Jazz Asshole Administrator Location: Chicago	In that case, it's good that you bothered to learn how to use the hide command, host. It will save all of us from having to wade through your supporting evidence to find out what you actually think about an issue, which is precisely why the "hide" command was created and why you were encouraged not just by me but by several moderators to use. For the record, all I did was insert the hide command into his original post, as I told him I was going to do. Nothing else was changed, and if others insert overly-long quotes into their text, the staff reserves the right to insert "hides" into the post to make them more readable. __________________ "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin "There ought to be limits to freedom." - George W. Bush "We have met the enemy and he is us." - Pogo

10-03-2007, 03:23 PM	#14 (permalink)
aceventura3 Junkie Location: Ventura County	I can't resist one more attempt, but I generally agree with you DC, this is pointless. The brilliance of the following explanation will be lost. First, I will assume that DC and Mr. Tia agree that rich (and powerful) people have more options than poor people. Poor people are generally locked into our income tax code, as opposed to wealthy people who have the options available with the Corporate tax code, foreign investment tax code, capital gains tax code, estate/trust tax codes, etc, etc. So, lets look at a poor person as tax cuts may relate to "trickle down". Let's say we have a single working mother with two minor children and she made $14,900 in 2006. In her case she would have a standard deduction of $7,500 as head of household, she would $9,900 in excemptions (3 people times $3300 each), she would then have a taxable income of $0. She would qualify for two child tax credits or $2,000 and she would qualify for the earned income tax credit, in her case, $4,522 dollars. She would get a tax refund based on those credits of $6,522. So her after tax income is $21,422. Now let's say she got a better job and earned $39,000, everything else is the same. She would still have a standard deduction of $7,500, and $9,900 in exemptions. Now her (line 27 - 1040A) taxable income is $21,600. And her tax would be $2,706. She still gets the child tax credit of $2,000. However, her earned income tax credit is now $0. Now her after tax income is $38,294. Her employment income went up by 162%, and her after tax income went up by 78%. Her tax impact was $7,228, on an additional earned working income of $24,100. That is equal to a marginal tax rate of 30%. As a working poor person she gets screwed by the tax code if she tries to improve her life. For every extra dollar she earns the federal government (not talking state, FICA, Medicare) the government takes $.30. What if she had that money for clothing, food, savings, college for her kids, an IRA, would that be good for the economy? Would that be good for her? These are real numbers using IRS Publication 17 from 2006. Using tax credits or not these numbers have real impacts on real people. Anyone in a 30% marginal tax bracket is getting screwed by the government in my opinion, and to think that the government will do a better job spending the money is to be a fool. Spending in Washington is out of control, tax cuts are not the problem. __________________ "Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers." Last edited by aceventura3; 10-03-2007 at 04:57 PM..

10-01-2007, 11:59 AM	#8 (permalink)
Willravel ... a sort of licensed troubleshooter.	The Senate is at fault, but they were mislead into the war, which is costing us the most, so it's a bit harder to blame them. They do share the blame, though.

10-03-2007, 03:34 PM	#15 (permalink)
MrTia Tilted	hmm, interesting, if a bit of a brow-furrowing read. i need to work on my way marginal tax-rule-parsing skills, for reasons that are currently deeply unfortunate to my finances. so struggling with that was helpful. i'm questioning whether earned-income tax credits can actually take your tax liability into surplus status: you seem to be saying that in the first instance the woman's tax writeoffs actually get her a refund as though she'd made more money than she actually did? i have no evidence to disbelieve that, but i just find it astonishing the tax code would be put together that way. but the upshot of what you're posting seems to be that someone whose income is in the lower-middle-class range -- 30s, 40s -- has a tax burden far outstripping someone whose tax burden is negligible due to poverty. the egghead in me wants to say that any sum seems significant when compared to zero, but i actually agree that the middle-class tax burden is oppressive. government at this moment is huge and is consuming lots of tax money, and despite reams of happy-talk about tax cuts, the middle class seems by and large to be paying for it. the question is, why? what is the government spending it on?

10-04-2007, 09:46 AM	#17 (permalink)
BigBaldRon Tilted Location: St Louis	End taxing individual income and start a nation wide sales tax. Solves the "rich people get tax cuts" argument. Solves the "poor people get more money to have kids" argument. Saves the tax payers uncounted money when the IRS is eliminated. Rich people buy more stuff. They spend more money. So, tax what they are buying and your nation profits.