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Yamato

Revenue Problem or Spending Problem?

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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.

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Whatever is the cause, it is not likely to be remedied by the government.

As long as so many people are involved in the financial dealings of government, then expect budgetary problems, or whatever you want to call it.

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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.

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Spending is absolutely the problem. But if the pols can't buy votes then how would they ever justify being in power? Sarcasm aside, the system is so broken that if we try to truly reform it there may actually be violence. Maybe that will be better in the long run. There are the millions on the low end who can't, won't or are unable to produce and they demand their fix. On the upper end there are the few thousand who expect to be left alone as they amass their fortunes. In the middle are the rest who bear the burdens under threat of jail time if they complain too loudly. But it all falls apart when the debt gets SO high that it cannot be paid. That's where we are now, I believe. The emperor's got no clothes and boy is he fat :(

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Whatever is the cause, it is not likely to be remedied by the government.

As long as so many people are involved in the financial dealings of government, then expect budgetary problems, or whatever you want to call it.

Or, correct our course politically, American by American, and support good leaders like Rand Paul who's proposing good measures to remedy it.

And you're absolutely right that the government is a terrible arbiter of its own affairs; that's what the Constitution is for. ;)

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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.

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?

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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?

And when annual GDPs correspond with election seasons, it's no wonder we have so many busybodies and bandaids. Thank you, John Maynard.

Here's an exemplary parody of the Keynesian mindset:

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And when annual GDPs correspond with election seasons,

We only measure GDP during elections? We had an election in 2009? I must have missed it just as you missed with this idea.

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We only measure GDP during elections? We had an election in 2009? I must have missed it just as you missed with this idea.

There's nothing wrong with measuring it. Our politicians are constantly jibbing and jabbing about increasing our GDP, and these days election season never ends. International trade shouldn't require 22,000 pages of bureaucratic code to execute. Government is a terrible steward of money, a wasteful mess with its own economic spending, and it has no business dictating the economy to the free market.

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There's nothing wrong with measuring it. Our politicians are constantly jibbing and jabbing about increasing our GDP, and these days election season never ends. International trade shouldn't require 22,000 pages of bureaucratic code to execute. Government is a terrible steward of money, a wasteful mess with its own economic spending, and it has no business dictating the economy to the free market.

NinjaDude is a dyed-in-the-wool big government type. Wasting your time arguing with him for a small, non-intrusive, fiscally responsible government.

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We have always had a spending problem but no one complained as long as they had a job and were told to look the other way. Now we have a revenue problem from the worst economic collapse since the great depression but the bills and govt agencies and wars still need to be paid for. We can't be deadbeats, so we go into debt, even when our president has froze so many fiscal expenditures. This would happen no matter who's party is in control. The republicans always say they're for smaller govt and lowering the budget so they can lower taxes but they never do it. Ever. In the words of Sandra Bullock "Iiieeeee! Hold on, we're gonna crash!"

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Posted (edited)

Revenue Problem or Spending Problem?

Both.

Edited by Likely Guy

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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?

Did Whitehouse.gov tell you that?

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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.

It can be done, but very few politicians have the balls to stand up and say, "folks, it's going to get worse before it gets better."

It's just like Europe. No one had the fortitude to endure the short term pain a decade ago and now they're looking at austerity and, may in fact, bring the rest of us down with them.

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It can be done, but very few politicians have the balls to stand up and say, "folks, it's going to get worse before it gets better."

It's just like Europe. No one had the fortitude to endure the short term pain a decade ago and now they're looking at austerity and, may in fact, bring the rest of us down with them.

Do you seriously think that the US is not looking at austerity mid-term? What has kept the US alive for the last 8 years is the revolving door lending by the FED, or in plain terms: Banks lend money at 0.5% from the FED and put US debt bonds as security, then turn around and buy more bonds yielding 1-2%. Else Greece would be child's play in comparison, at least Greece got the rest of Europe bailing them out.

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Posted (edited)

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

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

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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.usgovernmentspending.com/obama_budget_12.html

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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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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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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?

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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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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.

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.

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.

Here's an exemplary parody of the Keynesian mindset:

[media=]

Please tell me that video is an April Fools joke.

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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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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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