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Revenue Problem or Spending Problem?


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#16    Bama13

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Posted 10 July 2012 - 02:50 PM

View Postquestionmark, on 04 July 2012 - 05:10 PM, said:

Now I wonder if these smart people can also tell me where not to spend.

This much is certain, military 24% is sacrosanct, social security and attached (35%) is an entitlement for which the beneficiaries have paid, so it can't be touched. Pensions (23%) can't be touched either. If we then add the interest for the national debt we have almost achieved 100% of the tax revenue. But we are only at 82% of the budget. There are still 18% that needs new debt. And that only if the interest stays at this historical low (which it will not, sooner or later investors will want some return on capital). Because if the interest on the debt should only go up 1% I am afraid that there will be 40% that needs new debt.

Why is the military's budget sacrosanct?

According to your figures Welfare, Education, pay for Federal workers (including the Congress and the President, VP, all staffers, and everyone else that works for the Fed), EPA, FEMA, CIA, NSA, FBI, and the myriad other agencies only consume 18% of federal revenues. I think I need a link for your numbers. :yes:

Edited by Bama13, 10 July 2012 - 02:51 PM.

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#17    Yamato

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Posted 10 July 2012 - 06:08 PM

It's sacrosanct because government bends over and takes it longtime from the Military Industrial Complex.

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#18    questionmark

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Posted 10 July 2012 - 06:19 PM

View PostBama13, on 10 July 2012 - 02:50 PM, said:

Why is the military's budget sacrosanct?

According to your figures Welfare, Education, pay for Federal workers (including the Congress and the President, VP, all staffers, and everyone else that works for the Fed), EPA, FEMA, CIA, NSA, FBI, and the myriad other agencies only consume 18% of federal revenues. I think I need a link for your numbers. :yes:

http://www.usgovernm..._budget_12.html

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#19    Bama13

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Posted 10 July 2012 - 06:33 PM

View Postquestionmark, on 10 July 2012 - 06:19 PM, said:


Thanks for the link. Good site, I bookmarked it.

I see that, according to this sites figures, $48.1 billion in foreign economic aid is included in the Defense budget (along with $14.9 billion for foreign military aid). Right there we can cut $63 billion.

Strange that they don't call it the military budget, but rather the defense budget. I guess we are defending ourselves by attacking others (the best defense is a good offense)?

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#20    questionmark

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Posted 10 July 2012 - 07:32 PM

View PostBama13, on 10 July 2012 - 06:33 PM, said:

Thanks for the link. Good site, I bookmarked it.

I see that, according to this sites figures, $48.1 billion in foreign economic aid is included in the Defense budget (along with $14.9 billion for foreign military aid). Right there we can cut $63 billion.

Strange that they don't call it the military budget, but rather the defense budget. I guess we are defending ourselves by attacking others (the best defense is a good offense)?

While that sounds like an outrageous amount of money, compared to the trillion the budget still is short it is a fly poop. And if you dare to propose that the Israel lobby will be at your throat in a minute.

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#21    ranrod

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Posted 11 July 2012 - 12:04 AM

Genuinely curious, how many here have an economics background?  It seems people in economics also disagree but maybe they can provide a more in-depth explanation.  Looking at Bush Sr and Clinton, for instance, who increased revenue, seems to have led to economic recovery and prosperity including the budget surplus under Clinton.  Why is it even in question that the method works?


#22    Yamato

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Posted 11 July 2012 - 04:04 AM

View Postranrod, on 11 July 2012 - 12:04 AM, said:

Genuinely curious, how many here have an economics background?  It seems people in economics also disagree but maybe they can provide a more in-depth explanation.  Looking at Bush Sr and Clinton, for instance, who increased revenue, seems to have led to economic recovery and prosperity including the budget surplus under Clinton.  Why is it even in question that the method works?
The professor in the OP vid is an economist.  

It's saying a lot to say that a President increases revenue, ranrod.   Congress has a lot to do with it.   So do massive extraneous economic factors like internet, tech, and real estate booms.   Clinton rode the tech wave like the US economy was bound to do on its own.  In a period of golden growth, Clinton and the republicans balanced the budget.  A herculean task, all but impossible now.  The present-day spenders can't even give the Clinton administration the credit it deserves.

I remember the econ textbooks I studied at public university gave positive attention to John Maynard Keynes and were unabashedly Keynesian; I don't remember Austrian school at all so it's likely there are a lot of BBAs and MBAs out there who support Keynesian economics because they're indoctrinated to, but don't have much of an opinion about the political/ideological debate about government spending, or have much of an appreciation for or even knowledge of libertarian models like Austrian school.

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#23    DieChecker

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Posted 11 July 2012 - 05:20 AM

View PostYamato, on 04 July 2012 - 04:48 PM, said:

People say the government has a debt problem. Debt is caused by deficits, which is the difference between what the government collects in tax revenue and the amount of government spending. Every time the government runs a deficit, the government debt increases. So what's to blame: too much spending, or too little tax revenue? Economics professor Antony Davies examines the data and concludes that the root cause of the debt is too much government spending.

Good Post! Good sense! Logic is logic.

View Postquestionmark, on 04 July 2012 - 05:10 PM, said:

This much is certain, military 24% is sacrosanct, social security and attached (35%) is an entitlement for which the beneficiaries have paid, so it can't be touched. Pensions (23%) can't be touched either. If we then add the interest for the national debt we have almost achieved 100% of the tax revenue. But we are only at 82% of the budget. There are still 18% that needs new debt. And that only if the interest stays at this historical low (which it will not, sooner or later investors will want some return on capital). Because if the interest on the debt should only go up 1% I am afraid that there will be 40% that needs new debt.
Social Security is going to be cut to 75-80% what it is now in 20 years anyway. They might as well start reducing it and other entitlements by 2% per year, to reduce the hurt that is Known to be coming. Military budget cuts happen quite often over the past 30 years, another is not going to put America into the Pacific, or allow the Germans or Japanese to invade (Except maybe financially?).

I think Bama is right here. If you kill a hundred programs of 10 billion each, that is a Trillion. And these programs don't actually have to Die, they can be suspended/hibernate. So that once the economy turns around and there is surplus again (or more to spend anyway), then we can re-finance the programs to re-build wetlands, or to patrol swamps for endangered waterfowl. Hopefully the wetlands and waterfowl will make it those 3 or 4 years till their program gets funded again.

View Postninjadude, on 04 July 2012 - 08:01 PM, said:

Running deficit spending is not a bad thing during a poor economy. So his initial premise is wrong. Government spending during a down economy increases GDP and brings it out of that downturn. One needs only to look at the very real results of the Stimulus from 2009. It wasn't nearly big enough, but it had very concrete results. The real question is when we are out of the downturn, then government spending should be gradually curtailed. Are we out yet?
Ninja is right in this occation. The problem with bringing Keynesian thinking out during Recessions is that Keynesian goes out the window during boom times, when the gov is supposed to be stockpiling money and reducing taxes. So the problem is not Recession Spending, it is Boom time spending. If the extra spending was restricted to the 2 or 3 years out of every 20 that there is a recession, we'd be spending a lot less.

View PostYamato, on 04 July 2012 - 08:36 PM, said:

Here's an exemplary parody of the Keynesian mindset:
Please tell me that video is an April Fools joke.

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#24    questionmark

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Posted 11 July 2012 - 01:58 PM

View Postranrod, on 11 July 2012 - 12:04 AM, said:

Genuinely curious, how many here have an economics background?  It seems people in economics also disagree but maybe they can provide a more in-depth explanation.  Looking at Bush Sr and Clinton, for instance, who increased revenue, seems to have led to economic recovery and prosperity including the budget surplus under Clinton.  Why is it even in question that the method works?

The question is whether it works or just applies a patch, we should never forget that the Clinton surplus was mostly created by the dotcom bubble, not by real economic activity (where one could argue that making a few poorer by wild speculation is economic activity).

If you want to increase economic activity by giving tax breaks you have to give tax breaks for specific projects. If you give blanket tax breaks in an economic environment where it is more lucrative to do some revolving door lending the money will not do anything for your economy.

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#25    questionmark

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Posted 11 July 2012 - 02:01 PM

View PostYamato, on 11 July 2012 - 04:04 AM, said:

The professor in the OP vid is an economist.  

It's saying a lot to say that a President increases revenue, ranrod.   Congress has a lot to do with it.   So do massive extraneous economic factors like internet, tech, and real estate booms.   Clinton rode the tech wave like the US economy was bound to do on its own.  In a period of golden growth, Clinton and the republicans balanced the budget.  A herculean task, all but impossible now.  The present-day spenders can't even give the Clinton administration the credit it deserves.

I remember the econ textbooks I studied at public university gave positive attention to John Maynard Keynes and were unabashedly Keynesian; I don't remember Austrian school at all so it's likely there are a lot of BBAs and MBAs out there who support Keynesian economics because they're indoctrinated to, but don't have much of an opinion about the political/ideological debate about government spending, or have much of an appreciation for or even knowledge of libertarian models like Austrian school.

There was no real growth there, just wild speculation as easily demonstrated by the fact that most companies and ideas created then flopped. All Facebook style hype, just a few hundred companies a year.

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#26    questionmark

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Posted 11 July 2012 - 02:05 PM

View PostDieChecker, on 11 July 2012 - 05:20 AM, said:


Social Security is going to be cut to 75-80% what it is now in 20 years anyway. They might as well start reducing it and other entitlements by 2% per year, to reduce the hurt that is Known to be coming. Military budget cuts happen quite often over the past 30 years, another is not going to put America into the Pacific, or allow the Germans or Japanese to invade (Except maybe financially?).



Naturally you can cut it, but that would automatically crash the economies of states like Arizona and Florida where the economy would shrink severely.

The worst thing you can do during recession times is cut spending, especially then when there is a small group who gets an unwarranted tax break and hundreds of loopholes.

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#27    Yamato

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Posted 11 July 2012 - 03:13 PM

View Postquestionmark, on 11 July 2012 - 02:01 PM, said:

There was no real growth there, just wild speculation as easily demonstrated by the fact that most companies and ideas created then flopped. All Facebook style hype, just a few hundred companies a year.
Well I didn't buy Facebook, won't buy Facebook, and wouldn't touch most tech companies with a 10-foot pole right now.

Call it my own little piece of the free market learning from mistakes of the past.  AMD was down over 10% yesterday.  This is the kind of company I would short right now, though I'm not crazy or wealthy enough to short anything.

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#28    Yamato

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Posted 11 July 2012 - 03:28 PM

Revenue is more than three times higher per-capita inflation-adjusted than it was in the 1950s.  Never let a Keynesian tell you we have a revenue problem.   I thought everything was supposed to be great in the 1950s according to the Keynesians?    Amazing what cutting 67% of the government revenue can do, right Maynard?   I think government spending should be cut at least 33%.   That is, the government employs less people, involves itself in less busybody projects and programs, and cuts its overall spending by 30-40%.   Defense spending should be in the $100-200 billion range and it should involve defense.

So many federal employees could be laid off that Washington DC wouldn't have to be the chocolate city with the marshmallow center any longer.  ^_^

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#29    Clyde the Glyde

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Posted 11 July 2012 - 03:51 PM

It's a spending problem due to the ammount of waste, fraud, and abuse.  If government watched its books like an effeciently run company would, there wouldn't be a problem.

For the government, its just too easy to spend other people's money.


#30    Bama13

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Posted 11 July 2012 - 05:16 PM

View PostClyde the Glyde, on 11 July 2012 - 03:51 PM, said:

It's a spending problem due to the ammount of waste, fraud, and abuse.  If government watched its books like an effeciently run company would, there wouldn't be a problem.

For the government, its just too easy to spend other people's money.

To be fair it is easier for individuals to spend other peoples money also. Of course if you spend too much of someone elses money they can cut you we. We can't cut the government off, unless we elect different people than we've been electing for the last 30yrs or so.

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