If anybody cares, this is the budget simulator I've been using

[Incorruptible]

I tried out the simulator but it needs much more options and to be more detailed, not everything is there which makes it harder to cut spending

 

[Ausm]

So taxes can have an effect. What percentage would make a difference do you think? Obama wants a 13.1% increase for the rich, is that enough to make a difference?

I don't think you could find a wall think enough to bang your head on....()

 

[Brovane]

I tried out the simulator but it needs much more options and to be more detailed, not everything is there which makes it harder to cut spending

It is a good start to give people a good idea of the magnitude of the problem we are facing. Not perfect. However if everything was there I could imagine people getting overwhelmed with the shear number of options.

 

[BigDH01]

Can someone explain to me why the deficit or debt matters outside of inflationary concerns?

 

[Acanthus]

1934 420
1935 527
1936 674
1937 1,092
1938 1,286
1939 1,029
1940 892
1941 1,314
1942 3,263
1943 6,505
1944 19,705
1945 18,372
1946 16,098
1947 17,935
1948 19,315
1949 15,552
1950 15,755
1951 21,616
1952 27,934
1953 29,816
1954 29,542
1955 28,747
1956 32,188
1957 35,620
1958 34,724
1959 36,719
1960 40,715
1961 41,338
1962 45,571
1963 47,588
1964 48,697
1965 48,792
1966 55,446
1967 61,526
1968 68,726
1969 87,249
1970 90,412
1971 86,230
1972 94,737
1973 103,246
1974 118,952
1975 122,386
1976 131,603
TQ 38,801
1977 157,626
1978 180,988
1979 217,841
1980 244,069
1981 285,917
1982 297,744
1983 288,938
1984 298,415
1985 334,531
1986 348,959
1987 392,557
1988 401,181
1989 445,690
1990 466,884
1991 467,827
1992 475,964
1993 509,680
1994 543,055
1995 590,244
1996 656,417
1997 737,466
1998 828,586
1999 879,480
2000 1,004,462
2001 994,339
2002 858,345
2003 793,699
2004 808,959
2005 927,222
2006 1,043,908
2007 1,163,472
2008 1,145,747
2009 915,308
2010 898,549
2011 1,091,473

It seems to me that we lose significant ground in revenue in 2001 that isnt regained until 2006. Again in 2008 we see revenue fall and it wont regain that level until 2012.

Revenue has not continued to increase after tax cuts, nor has there been a positive upward trend in revenue.

Stop spreading ignorance. This isn't even economics. It is how to read a table. That is what, 4th grade?

 

[Balt]

Did I miss the option to defund PBS and Planned Parenthood? That's all I really want.

 

[First]

Can someone explain to me why the deficit or debt matters outside of inflationary concerns?

Interest mostly. Otherwise not much else. But it's still a concern.

 

[BigDH01]

Interest mostly. Otherwise not much else. But it's still a concern.

So the US is running out of dollars to pay interest? What happens (like now) when the Fed gives the treasury money at basically 0% interest? Is it outside the realm of possibility that the Fed could buy US treasuries and simply refund all interest accrued back to the treasury?

 

[First]

So the US is running out of dollars to pay interest? What happens (like now) when the Fed gives the treasury money at basically 0% interest? Is it outside the realm of possibility that the Fed could buy US treasuries and simply refund all interest accrued back to the treasury?

I don't understand what you're trying to say here, as much of our debt isn't issued at those rates but to foreign nations. Interest on the debt will easily top hundreds of billions of dollars and that, quite simply, is a waste of taxpayer money. It needs to be much smaller or kept static so that we grow our way out of this debt mess. It doesn't require drastic action at this very second, but the time is nearing, without a doubt.

 

[BigDH01]

I don't understand what you're trying to say here, as much of our debt isn't issued at those rates but to foreign nations.

I'll get back to square one again.

Interest on the debt will easily top hundreds of billions of dollars and that, quite simply, is a waste of taxpayer money. It needs to be much smaller or kept static so that we grow our way out of this debt mess. It doesn't require drastic action at this very second, but the time is nearing, without a doubt.

What debt mess? Is the US running out of dollars?

 

[First]

I'll get back to square one again.



What debt mess? Is the US running out of dollars?

The U.S. gov't can print dollars, directly via the Treasury or indirectly via the Fed. I know what you mean that the U.S. can simply inflate the currency to diminish the burden of debt over time. And I agree with this. But I don't think inflation could possibly solve the problem in the long-term on its own without being substantially small annually (2% target would be good) so as to not negatively shock and disrupt businesses, and without it being in conjunction with sufficient fiscal action (entitlement spending, tax rate increases and tax code simplification). You still can't inflate away those hundreds of billions in interest just with 2% annual inflation.

 

[buckshot24]

1934 420
1935 527
1936 674
1937 1,092
1938 1,286
1939 1,029
1940 892
1941 1,314
1942 3,263
1943 6,505
1944 19,705
1945 18,372
1946 16,098
1947 17,935
1948 19,315
1949 15,552
1950 15,755
1951 21,616
1952 27,934
1953 29,816
1954 29,542
1955 28,747
1956 32,188
1957 35,620
1958 34,724
1959 36,719
1960 40,715
1961 41,338
1962 45,571
1963 47,588
1964 48,697
1965 48,792
1966 55,446
1967 61,526
1968 68,726
1969 87,249
1970 90,412
1971 86,230
1972 94,737
1973 103,246
1974 118,952
1975 122,386
1976 131,603
TQ 38,801
1977 157,626
1978 180,988
1979 217,841
1980 244,069
1981 285,917
1982 297,744
1983 288,938
1984 298,415
1985 334,531
1986 348,959
1987 392,557
1988 401,181
1989 445,690
1990 466,884
1991 467,827
1992 475,964
1993 509,680
1994 543,055
1995 590,244
1996 656,417
1997 737,466
1998 828,586
1999 879,480
2000 1,004,462
2001 994,339
2002 858,345
2003 793,699
2004 808,959
2005 927,222
2006 1,043,908
2007 1,163,472
2008 1,145,747
2009 915,308
2010 898,549
2011 1,091,473

Mind telling us what this god awful mess is representing?

It seems to me that we lose significant ground in revenue in 2001 that isnt regained until 2006. Again in 2008 we see revenue fall and it wont regain that level until 2012.

So revenue increased after the Bush tax cuts in 2001 and 2003. Thanks for posting that.

Revenue has not continued to increase after tax cuts, nor has there been a positive upward trend in revenue.

Yeah, we had a financial bubble burst, remember?

Stop spreading ignorance. This isn't even economics. It is how to read a table. That is what, 4th grade?

The "graph" shows revenue increased in the years after the tax cuts were passed. The financial bubble bursting had nothing to do with tax rates which is what caused the losses in 2009 and 2010. They teach in 5th grade that tax policy isn't the only thing that affects an economy and therefore tax revenue.

 

[Fern]

-snip-

1980 244,069
1981 285,917
1982 297,744
1983 288,938
1984 298,415
1985 334,531
1986 348,959
1987 392,557
1988 401,181
1989 445,690
1990 466,884

It seems to me that we lose significant ground in revenue in 2001 that isnt regained until 2006. Again in 2008 we see revenue fall and it wont regain that level until 2012.

Revenue has not continued to increase after tax cuts, nor has there been a positive upward trend in revenue.

Stop spreading ignorance. This isn't even economics. It is how to read a table. That is what, 4th grade?

Your own chart contradicts your assertion.

The big tax cuts were done under Reagan in '81 and '86. These are the huge tax rate cuts Progressives complain about and point to often.

You don't see any drop in revenue etc. in your chart.

(Also, 2001 saw a recession and the 9-11 attack that caused a hit to the economy. Additionally, the Dot.Com bubble burst in 2000. This effect was felt over the following years as capital gains income, and taxes from them, declined and capital losses would be taken on returns further repressing tax revenue.)

Fern

 

[Acanthus]

Mind telling us what this god awful mess is representing?

So revenue increased after the Bush tax cuts in 2001 and 2003. Thanks for posting that.

Yeah, we had a financial bubble burst, remember?

The "graph" shows revenue increased in the years after the tax cuts were passed. The financial bubble bursting had nothing to do with tax rates which is what caused the losses in 2009 and 2010. They teach in 5th grade that tax policy isn't the only thing that affects an economy and therefore tax revenue.

You made the claim that revenues increased after the bush tax cuts.

They did not.

Those numbers are the revenue taken in from the federal government, source, whitehouse.gov.

 

[Acanthus]

Your own chart contradicts your assertion.

The big tax cuts were done under Reagan in '81 and '86. These are the huge tax rate cuts Progressives complain about and point to often.

You don't see any drop in revenue etc. in your chart.

(Also, 2001 saw a recession and the 9-11 attack that caused a hit to the economy. Additionally, the Dot.Com bubble burst in 2000. This effect was felt over the following years as capital gains income, and taxes from them, declined and capital losses would be taken on returns further repressing tax revenue.)

Fern

You do see the revenue drop in '81. It stops growing until the GDP rises enough to compensate for the loss of revenue, and then continues to grow on the same path it always has.

 

[Fern]

-snip-

On an unrelated topic, can anyone translate why this guy is saying?
http://rodgermmitchell.wordpress.com/tag/grow-the-army-initiative/

I think he's being ultra sarcastic, but its so thick I cant even get what his actual point is. Either that or he's being incredibly stupid.

Not really worth translating once you read this comment of his:

Unlike state and local governments, the federal government does not spend tax money. It, in fact, destroys the tax money sent to it, and it creates new money, ad hoc, when it credits the bank accounts of creditors. Federal spending is not limited by, or related in any way to, federal taxes. Thus, taxpayers never have, nor ever will, pay for federal spending.

Under his logic there's no need for federal income taxes, or any federal taxes for that matter.

Of course, that is absurd.

Fern

 

[BigDH01]

The U.S. gov't can print dollars, directly via the Treasury or indirectly via the Fed. I know what you mean that the U.S. can simply inflate the currency to diminish the burden of debt over time. And I agree with this. But I don't think inflation could possibly solve the problem in the long-term on its own without being substantially small annually (2% target would be good) so as to not negatively shock and disrupt businesses, and without it being in conjunction with sufficient fiscal action (entitlement spending, tax rate increases and tax code simplification). You still can't inflate away those hundreds of billions in interest just with 2% annual inflation.

If you acknowledge that the US can simply print money, then what I'd like you to think about what it means to have debt in the first place. What is debt to the US if it is, by definition, always solvent (that is, it can always pay dollars)?

Another little thought experiment... if you have a currency that is non-convertible and you want your neighbors to use it in their transactions, how would you do it? One of the ways (if you had monopoly force, like the US govt) would be to tax them and thus make them all demand your currency to fulfill their obligations. However, you can't tax money from people if they don't have it. In other words, the nature of government spending is that the gov't has to spend first and then tax, otherwise how would dollars actually get into the hands of the people? That initial spending would be called a debt and the difference between what you taxed back and what you initially spent would be called a deficit. But it doesn't really mean anything as all it's really measuring is the amount of money still out there circulating among your neighbors as they transact with each other.

 

[BigDH01]

Not really worth translating once you read this comment of his:



Under his logic there's no need for federal income taxes, or any federal taxes for that matter.

Of course, that is absurd.

Fern

If you'd read further you'd see that the limit is and always has been inflation. The control of money supply. When you pay your taxes, the Fed eliminates some amount from your banks holding at the reserves. When the gov't pays someone, someone's bank account at the reserve is credited. Taxes and spending are the government's means to control the money supply. You should've read further.

 

[First]

You do see the revenue drop in '81. It stops growing until the GDP rises enough to compensate for the loss of revenue, and then continues to grow on the same path it always has.

This.

Also, not sure how Fern ignores Reagan's 6 tax increases during his tenure, including one of the biggest in U.S. history. To say nothing of the reality that he goosed economic growth (and thereby tax receipts) by doubling the national debt in 8 years. Also, mentioning 9-11 or the tech bubble is nonsensical, as recessions like those are common, having occurred 10 years prior in the early 90's, and of course 10 years prior to that in the early 80's. It's not an excuse for 0% tax receipt growth for 10 years.

 

[buckshot24]

You made the claim that revenues increased after the bush tax cuts.

They did not.

Those numbers are the revenue taken in from the federal government, source, whitehouse.gov.

Of course they did. Just because they dipped because of the meltdown doesn't mean anything.

 

[buckshot24]

If anything this proves that tax rates shouldn't be raised since revenue keeps pace anyway. We'll just take money out of the economy for no good reason.

 

[Incorruptible]

Did I miss the option to defund PBS and Planned Parenthood? That's all I really want.

This, both of them must be cut and are a waste of money

 

[Acanthus]

If anything this proves that tax rates shouldn't be raised since revenue keeps pace anyway. We'll just take money out of the economy for no good reason.

Where does government spending go?

 

[buckshot24]

Where does government spending go?

Where does it get spent you mean?

 

[Fern]

Can someone explain to me why the deficit or debt matters outside of inflationary concerns?

Ultimately, it does come down to inflationary concerns since the fed govt can, theoretically, just print up as much money as it wants. But very high inflation will destroy an economy. No one will want your money, no one will lend etc.

To avoid hyper inflation you must find a way to fund deficit spending other than just printing up more money. There are two choices: borrow or raise taxes/revenue.

Raising taxes takes money, and demand, out of the private sector. We now need more demand in the private sector, not less. More demand means GDP growth and more jobs, both of which produce more revenue for the govt from increased tax revenue and also result in less spending on things such as Medicaid and welfare/unemployment type programs. I.e., raising taxes is counter-productive.

The ability to borrow is affected by deficits and debt. This has been demonstrated in several European countries. Debt levels considered too high by lenders will result in paying higher interest rates on debt issued. This is undesirable for obvious reasons, additionally to the extent the debt is owned by foreigners it is an outbound drain of our wealth to other countries. In the extreme, debt levels that are too high mean no more borrowing (See Greece). No more borrowing, in the absence of just printing up more money and causing inflation, means drastic cuts to govt spending. Drastic cuts to govt spending means less demand and all that entails (shrinking GDP, decreased tax revenue, more spending for welfare and unemployment etc.)

Once your deficits get too high or remain too long you will end up with debt that is too high. Once the latter happens 'painful medicine' is inevitable. It becomes a matter of 'when' not 'if'.

Fern