Thread: What do you think of Obama's proposed Buffett Rule?

Originally Posted by OldManOnFire

I'm guessing debt ratios are meaningless no matter which metrics someone wishes to use because the bottom line is how well we can 'service' the debt. In a few years when we have $20 trillion in debt, how well can we afford to pay $500 billion per year in debt interest payments? I'd rather look at the ratio between the debt service payment and the total government income and place on cap on this.

I don't know what debt interest we pay today, but let's assume it is 2-1/2% on $15 trillion or about $375 billion per year. If we further assume the total income of the government will be $2.5 trillion, this means we are spending about 15% of our resources on debt payments.

So the question for me; is 15% too much of our budget to spend on debt interest?

No matter, Obama and the next president and Congress are not going to slow their spending so this is all BS talk...

We would you assume such a low income for the Govt?

If the Govt collects the same proportionate amount of taxes as it did in 2000, the income would be $3.0 trillion. Which gives us a little more room on the interest rate payment.

But that is certainly not to defend continued deficits.

[quote]

Originally Posted by starcraftzzz

Incorrect given that Interest rates on treasury bills are currently at 0 and below the USA can keep borrowing and deficit spending until the economy is healed again, and when that happens as long as ending the Bush tax cuts, and making it so the rich pay at least the same tax rates as the middle class and the budget deficit is pretty much taken care of

Please explain on this website how all of the debt interest money our government spends equals 0?

http://www.treasurydirect.gov/govt/r...ir_expense.htm

BTW; the Bush/Obama tax cuts effected all income brackets. So ending these tax cuts are a good thing...I agree.

A 10% cut is stupid. Cutting spending just to cut it is stupid; you only should cut wasteful spending; not spending that creates $2-$10 in benefits for every dollar spent (examples include, education, WIC, WAP, AmeriCorps)

Spending must be reduced to offset a lack of income which creates deficits and debt. In no way can this be considered "Cutting spending just to cut it".

If YOU wish to spend more than YOU take in, then this is greed and arrogance and a pathetic disservice to those who follow our self-serving actions who must pay for our recklessness.

Of which a few hundred billion is for short term stimulus in order to create jobs. Also Obama’s budget overall reduced the long term deficit, so if your goal is to reduce the deficit his budget is a step forward. Also Obama has already begun implementing half a trillion in cuts to military spending

Like someone once said; you can put lipstick on a pig but it's still a pig.

Obama just submitted a $3.8 trillion budget! Expected income is $2.5 trillion. Last year it was a $3.5 trillion budget...wrong direction!!

Originally Posted by Iriemon

We would you assume such a low income for the Govt?

If the Govt collects the same proportionate amount of taxes as it did in 2000, the income would be $3.0 trillion. Which gives us a little more room on the interest rate payment.

But that is certainly not to defend continued deficits.

Last I read the income last year was $2.2 trillion and this year should be $2.5 trillion.

"If" is meaningless in this conversation. The facts are the spending/income ratios we know to be accurate. The lack of fiscal responsibility.

Supposedly the government has spent $169 billion this year in debt interest! It would be great to spend some of this money on Americans and infrastructure...

Originally Posted by OldManOnFire

Last I read the income last year was $2.2 trillion and this year should be $2.5 trillion.

"If" is meaningless in this conversation. The facts are the spending/income ratios we know to be accurate. The lack of fiscal responsibility.

Supposedly the government has spent $169 billion this year in debt interest! It would be great to spend some of this money on Americans and infrastructure...

Fair enough, but you were referring to future and hypothetical events, in which case there is no reason to assume that revenues could not be enhanced as well.

We will some some revenue enhancement just growing out of the recession, but not nearly enough.

In my opinion, the wealthiest should be paying "wartime" tax rates even if only during wars on abstractions, merely to better ensure they do not become boondoggles and generational forms of theft.

Originally Posted by Iriemon

Fair enough, but you were referring to future and hypothetical events, in which case there is no reason to assume that revenues could not be enhanced as well.

We will some some revenue enhancement just growing out of the recession, but not nearly enough.

20-25 million Americans remain unemployed. We can subtract about 7 million who are always unemployed (5%) which leaves us 13-18 million. We can assume the 13-18 million are receiving unemployment or other government support and the 7 million are also getting food stamps, SSI, etc. I am going to 'guess' that the 13-18 million unemployed are mostly made of those who earn median wage or less; $50K. So...even if we could employ the 13-18 million, they might not earn much more than 2-3 times what they currently get from government support. The increase in spending by employing 13-18 million, IMO, will be a minor blip on the economy.

The remaining 130-140 million currently employed are also not going to set the world on fire with more spending.

Growing out of this recession is going to be a long process and government should not be expecting windfall tax incomes in the next few years...

What objection can there be to public sector intervention being used to engender a new unemployment equilibrium, hypothetically, below one percent?

Originally Posted by Iriemon

Fair enough, but you were referring to future and hypothetical events, in which case there is no reason to assume that revenues could not be enhanced as well.

We will some some revenue enhancement just growing out of the recession, but not nearly enough.

Once again I will point out some facts the most important of which is that the Federal Reserve has intervened in the "cost (value) of money" which is preventing a recovery from the recession. The Federal Reserve has suppressed the prime interest rate which is tied to Treasury securities and most retirees are highly dependent upon Treasury securities for income. I often cite 4%-6% as being the historical "cost (value) of money" but a review of the prime interest rates might show it to be higher than that amount. Instead of one million dollars in T-bills earning $40K-$60K it's earning less than $10K/yr which means hundreds of billions of dollars are not being paid to retirees and that money is not being spent.

But the problem is worse than that.

On April 18, 1980 the prime rate was 19.5%.

http://www.wsjprimerate.us/wall_stre...te_history.htm

If we were to hit that prime rate again then the interest on just the $15 trillion national debt would be almost $3 trillion and this has to be paid for with tax general revenues (FICA/Payroll taxes are dedicated taxes and not used for general expendatures like interest on the national debt). That's almost double our entire general tax revenues today.

With the current expansionism of the money supply even the Federal Reserve is worried about inflation and it could easily turn into run-away inflation like we had in the 1980's.

http://news.yahoo.com/feds-bullard-s...180011337.html

We literally need draconian cuts in federal spending as well as draconian increases in taxation to not just eliminate deficit spending but to also reduce the national debt which is ten times greater than the government revenues related to the debt. Neither Republicans or Democrats are being honest about how serious of a problem the national debt really is. All of these politicians just hope to be out of office by the time the "crash" occurs but we know it will occur based upon history.

Originally Posted by Shiva_TD

Once again I will point out some facts the most important of which is that the Federal Reserve has intervened in the "cost (value) of money" which is preventing a recovery from the recession. The Federal Reserve has suppressed the prime interest rate which is tied to Treasury securities and most retirees are highly dependent upon Treasury securities for income. I often cite 4%-6% as being the historical "cost (value) of money" but a review of the prime interest rates might show it to be higher than that amount. Instead of one million dollars in T-bills earning $40K-$60K it's earning less than $10K/yr which means hundreds of billions of dollars are not being paid to retirees and that money is not being spent.

What is the basis for you assertion that the lower cos of money is preventing a recovery, putting aside the false premise of your statement that we are not in a recovery?

Originally Posted by Iriemon

What is the basis for you assertion that the lower cos of money is preventing a recovery, putting aside the false premise of your statement that we are not in a recovery?

I did not state we're not recovering but instead that the corrupted control of interest rates by the Federal Reserve for the benefit of the banks and the government has been detrimental to the recovery.

I thought I covered why but I will use specifics. My parents (can't get more specific than that) have about $1 million in T-Bills. Normally they could have expected about $40K/yr in income from those T-Bills but not since 2008. They've only received about $10K/yr since then which means they didn't spend about $30K/yr that they would have spent had they received fair market value on their investment.

The recovery hinges on people spending money to consume goods and services. By the Federal Reserve lowering the "cost of money" it significantly reduced the income to perhaps 30 million retirees that own T-bills. Instead of "make work" spending where each job cost about $300,000 under the Stimulus Bill simply paying fair market value on T-Bills would have pumped more money into the economy expediting the recovery.

T-Bills aren't even paying the prime interest rate today and they should.