Deficit spending

Discussion in 'Budget & Taxes' started by pjohns, Feb 14, 2017.

  1. pjohns

    pjohns Well-Known Member

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    I fully understand that the national debt is a combination of (1) politicians not wishing to impose austerity measures, or even curb spending a bit--not doing so is how they get re-elected; and (2) their not wishing to increase taxes, to pay for all that spending.

    Even so, I see no reason to have a "debt ceiling" in the first place, if it is going to be routinely ignored.

    Imagine that you had a Visa (or a MasterCard; or a Discover Card; or an American Express Card) that would allow you to far surpass your limit; and would then increase your limit accordingly. In that event, what would be the point of its setting a "limit," anyway?

    Do you see the analogy?

    And do you believe that it is in any way flawed?
     
  2. wgabrie

    wgabrie Well-Known Member Donor

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    Kick the can down the road and make your grandchildren pay by loosing their benefits. We're going to party until we die.

    Well, at least the debt ceiling provides a time for politicians to argue about what we spend our money on. Then things come down the pipeline like Obama's austerity, across the board cuts including the military. Pointless cutting, of course, but it's something.

    The big three Social Security, Medicare, Medicaid are going to eat up an ever increasing amount of the federal budget, so you can imagine where the cuts need to take place, and of course it's where no one wants to go with reform. Throw grandma off the cliff. Someone has to do it sometime, but kick the can down the road and hopefully it's long enough that your grandma will be dead before it needs to take place.
     
  3. AlNewman

    AlNewman Well-Known Member

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    Not a good analogy at all. Why they may seem to be somewhat related, they aren't. When one has credit card debt and files for bankruptcy, no one really gets hurt. The merchant got paid, the credit card company loses income on the interest but risked no money and the debtor will be punished by the IRS.

    However what is little understood under the fractional reserve system practiced by the Federal Reserve is but a hidden tax in the form of interest on the debt which could be avoided if the Treasury just printed it's own money. Both methods result in the same thing the only difference being the added interest. The result is a dilution in the purchasing power of the currency. With more dollars chasing the same amount of goods, prices rise, inflation. That is why what it takes a dollar to buy now was only four cents in 1913.
     
  4. AlNewman

    AlNewman Well-Known Member

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    You have lumped three things together that do not go together in a logical sense. Social Security and Medicare are something that has been paid for by many. Medicare and the unpaid Social Security are entitlements stolen from others in their entirety. But this is just small potatoes compared to that big old bubble that was doubled by Odumbo. Just wait until that idiot Yellen starts to raise interest rates, then things will get extremely interesting.
     
  5. dadoalex

    dadoalex Well-Known Member Past Donor

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    Social Security and Medicare are not supposed to be part of the federal budget. They are separately taxed and paid for. Resolving the issues with these programs lies first with increasing revenues by putting the taxes back at 2008 levels and subjecting unearned income to these taxes. Further tax increases or collections by, say raising the upper income limits, may be needed.

    If by "Obama's Austerity" you mean sequestration demanded by House Republicans along with making the Bush tax cuts permanent and agreed to by Obama in exchange for minor tax increases in the Budget Control Act of 2011 then you should put the blame/title where it belongs. Republicans demanded the Bush tax cuts stay in place and forced sequestration to achieve that goal.
     
  6. Seth Bullock

    Seth Bullock Well-Known Member Past Donor

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    Something is going to give. Very soon we will not be able to kick the can any longer. The day of reckoning is almost upon us.

    By 2021, the interest on the federal debt will equal all defense and all non-defense spending. It will exceed it in 2022 and continue to exceed it on into the future. In a very short time, the U.S. is going to finally have to face reality. We will be forced to raise taxes or cut spending.

    [​IMG]
     
  7. wgabrie

    wgabrie Well-Known Member Donor

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    Well, the big three, unlike the rest of the budget including the military, are mandatory spending and its going up.
     
  8. AlNewman

    AlNewman Well-Known Member

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    Why not just kill the whole system and put the responsibility where it belongs?

    Ah, such a glorious moment, Odumbo with egg on his face but he still managed to run up huge deficits. But then it did accomplish the goals all around, even a more severe division of the red and blue idiots.
     
  9. wgabrie

    wgabrie Well-Known Member Donor

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    So, what, do we just take them out of the budget and mandate a rising tax to deal with the rising cost of expenses? How are we going to reform them then???

    And yes I was talking about sequestration when I said Obama austerity. I forgot what it was called. And it included cuts to the military which is something that the Republicans did NOT ask for. But it was across the board and it was Obama's baby. I'm proud that he did it, by the way.

    - - - Updated - - -

    Well I was hoping we could cut some things AND raise the taxes.
     
  10. dadoalex

    dadoalex Well-Known Member Past Donor

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    Let's us discuss.

    https://www.ssa.gov/oact/STATS/table4a3.html

    In 2016 the SS trust took in $35B more than it spent giving a total value to the SS Trust of nearly $3T. It is agreed that, if nothing changes, the growth of the SS Trust will become negative sometime in the next 40 or so years.

    1. Return SS tax to 2008 levels. This should increase the lifespan by 10 or so years.
    2. Remove the upper income limit for SS taxes and eliminate the employer portion for incomes above $200k. This also will increase the lifespan but probably only by 5-10 years.
    3. Increase the age for full benefits by one month per year to age 70. Over time this will alter the ratios and further extend the lifespan.
    4. Apply the SS tax to unearned income at rates identical to earned income.
    5. Increase incentives to invest in retirement savings. this will serve to reduce pressure for benefit increases.

    You don't like taxes but look at it this way. Social Security and Medicare have served to increase the lifespans of Americans by 15-20 years since their inception. The Republican party depends heavily on the older population for their votes so keeping them alive, healthy and relatively secure is in your political interest.
     
  11. wgabrie

    wgabrie Well-Known Member Donor

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    1. Fine raise SS tax rates to 2008 levels, I don't care. But is SS a Ponzi scheme and it's going to go negative anyway in the end???
    2. Why not uncap SS tax and still keep the employer contribution???
    3. I don't agree with raising the age of retirement to 70, I've heard people are actually living NOT as long as they used to, in other words the life expectancy is going down again.
    4. I don't know why unearned income isn't SS taxed, except it doesn't promote work and work related credits. And wouldn't that just be a mess to compute???
    5. I've heard that 97% of people aren't prepared for retirement. I've also heard that most people don't have $500 in savings, so how are they going to save for retirement if they get the money up front??? They won't. Best to just take it out through taxes.

    I love taxes. Taxes should be raised. I'm self-employed I had to pay taxes on my income even though I'm poor. Why don't we take people's refund and instead invest it in SS???
     
  12. Seth Bullock

    Seth Bullock Well-Known Member Past Donor

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    We'll have to do both.
     
  13. AlNewman

    AlNewman Well-Known Member

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    While I agree with your base statement, the graph used has no validity without some reference to how it was calculated specifically, what interest rate was used.
     
  14. AlNewman

    AlNewman Well-Known Member

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    None of the above is mandatory especially Medicaid and military.
     
  15. Seth Bullock

    Seth Bullock Well-Known Member Past Donor

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    Right, but I didn't take it from "some guy's opinion" or some online blog. The statistics were compiled by the White House, so you can be the judge of its credibility.

    But something is going to have to be done. We cannot have the interest on the national debt using up this increasing amount of the federal budget.
     
  16. wgabrie

    wgabrie Well-Known Member Donor

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    Funny, Social Security, Medicare, and Medicaid were introduced to me as mandatory spending.

    No I said the military is NOT mandatory.
     
  17. AlNewman

    AlNewman Well-Known Member

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    You are correct, you did not imply that military was mandatory, it was I that included it in my statement.

    Medicaid is an entitlement based entirely on theft. Medicaid was a state program for mother's and children, that is until the federal government decided to use it as a tool to further control the states. It has been a mass disaster by the feds demanding the state include others as part of medicaid (ACA real disaster in this area) to receive federal funds. However the feds only partially fund for a limited time and then the state is on the hook to increase their taxes to make up the ever increasing deficit. This has also resulted in ever increasing medical costs as the state ask the medical industry to accept less and less on medicaid payments, a theft of the fruits of their labor. Many doctors just dumped medicaid patients so now the prime purpose, mothers and children, are at risk of no service. This was also the second part of Nat. Fedn. of Indep. Business v. Sebelius, 132 S. Ct. 2566, the Odumbocare opinion in 2012.

    Social Security, that most socialist of acts from FDR. Outside the total socialist nature of the act, what exactly is it? Well it seems those nine mystical beings in black robes seem to have no clue. In United States v. Lee:


    So at page 259 those mystical beings are of the opinion that it is a comprehensive insurance system in which case a reasonable man would inquire as to where in the constitution does it allow the government to be in the insurance business. But now in that same decision:


    So now starting at the bottom of page 259, it has become a tax. So which is it? As a tax one would have to ask quo warranto, by what authority? First, let's look at it from an excise tax as delineated in Article I, Section 8, Clause 1:


    So in what way does it conform to this rule? Is it uniform throughout the United States? Can one avoid the tax by not purchasing that item? Without the attributes of those long winded mystical beings, the answer is no to all.

    So let's examine Article I, Section 9, Clause 4:


    Now we have a restriction on congress regarding capitation or direct taxes. Social Security is a direct tax and that violates the authority. For the purpose of this discussion, we will accept that Amendment 16 is totally valid. So if to do a direct tax required an amendment, where is the amendment for Social Security. There is none and the same can be said about Johnson in 1971 with Medicare.

    Any private insurance company in this country could provide for the citizenry at a much less cost with increased benefits over the government. So what was the purpose other than slavery.

    There are also other cases that I'm not willing to spend the time to reference about the obligations or should we say lack of obligation of the government to pay, period. My law research engine says there are more than 250,000 items in the data base on Social Security.

    And one must also consider that the benefits of old are paid by collections of new and eventually will result in a lack of other's people stolen property to continue paying. That seems to be the theme of this whole thread, how to steal more, not how to solve the problem.
     
  18. AlNewman

    AlNewman Well-Known Member

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    Actually you did. Check the source, it was the Wall Street Journal from a supposed White House source. So just some guy's opinion with not reference to any real tangible data. Now if you would have included a link to the actual article, then perhaps it was explained there but I seriously doubt it, just some guy's opinion.

    Interest on the debt, that is up to a total idiot, the one referred to as Yellen. I hope that in their next meeting they raise interest at least 200 basis points, 400 would be magnificent.
     
  19. Deckel

    Deckel Well-Known Member Past Donor

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    Visa routinely increases my debt limit based on my credit history and income. The flaw in your analogy is that it fails to take into consideration that people want to hold US debt because it is safe. It is why we can sell bonds with a nominal interest rate of near nothing.
     
  20. dadoalex

    dadoalex Well-Known Member Past Donor

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    1. The inability of politicians to address the real needs doesn't make social security a "Ponzi Scheme."
    2. Not a bad idea but it does, at some point, become punitive to the employer. Reducing the tax level and eliminating the employer contribution at higher income levels can make the system as a whole more equitable.
    3. The payer/payee ratio needs to be adjusted and the revenues set to maintain stability. When social security was first enacted life expectancy at birth was around 63 years. With social security and medicare life expectancy has increased to about 78 years. The longer life expectancy combined with the decrease in the danger of jobs like mining and construction and the increase of white collar jobs (not so physically demanding) has caused a severe shift in the payer/payee balance. Extending the age for full benefits will shift that back into a closer balance.
    4. Because only really really really rich people would be impacted by such a tax. They would claim such a tax would reduce investment but, what it would really do is reduce the desire for extravagant lifestyles. Gonna buy that picture of "Billy the Kid" for $60k? It's really going to cost you $75k because you'll need to pay 15% in taxes. People will choose to keep their money invested rather than spending it on yachts and Lamborghinis. Compute? 15% of X = y. No, not that difficult.
    5. Thus the need to incentivize retirement savings. Instead of making the savings tax free, make them tax free PLUS 50%. As in put $5k in a retirement account and get an additional $2,500 deduction at tax time ($7500 rather than just $5000). Meanwhile, increase significantly the penalties for early withdrawal. Incentivize people to save more and leave it alone.
     
  21. pjohns

    pjohns Well-Known Member

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    I am not at all sure that I understand your point.

    My question is not why we have a national debt in the first place--you seemed to give a rather good answer to that; but it is just not what I asked--but, rather, just what the point is in claiming to have a "debt ceiling" if we intend to routinely ignore it, and then just increase the limit accordingly--every year.

    By the way, I would certainly hope that the US would never go "bankrupt"...
     
  22. pjohns

    pjohns Well-Known Member

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    I see nothing inherently wrong with Visa's increasing your debt limit.

    But does it allow you to exceed your current limit--only to increase it in retrospect?

    I think that you are tap dancing around my point.

    I did not say--or even imply--that the US should have no debt. (That is a reasonable topic for discussion; but certainly not in this thread.)

    Rather, my point was that it seems incredible that we would even set a debt ceiling, if we intend to routinely ignore it.

    Could you address that point, please? And the point is: Why do we have a debt ceiling in the first place? What function does it serve?
     
  23. AlNewman

    AlNewman Well-Known Member

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    Ponzi Scheme

    A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves.

    With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes tend to collapse.

    Ponzi schemes are named after Charles Ponzi, who duped investors in the 1920s with a postage stamp speculation scheme. MORE

    It's a ponzi scheme no matter how much you want it to be otherwise, you wish it to be otherwise, you desire it to be otherwise, you dream it to be otherwise or you scheme it to be otherwise.
     
  24. Deckel

    Deckel Well-Known Member Past Donor

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    If I approach my credit limit then the credit card companies increase my credit limit. It is simply what they do hoping I will run up big bills and have to pay mucho interest. As for the federal debt ceiling, It was enacted in WWI to allow the Treasury to issue bonds without having those bonds tied to a specific expenditure/project as they had been in the past. Functionally this has two effects; 1) We never have to pay off the bonds, just refinancing them when they come due (ironically we defaulted on our WWI bonds because we couldn't pay out in US gold as was required). and 2) It constrains any given congress from spending us into an oblivion that a future Congress has to deal with. Paul Ryan could pass $50T in budget items, but they just fall into unfunded and unstated debt land if the Treasurer is not authorized to issue $50T in new bonds.
     
  25. AlNewman

    AlNewman Well-Known Member

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    Bankrupt, this country was bankrupt in 1913. In 2015 the US GDP was 18.036 trillion, the current national debt sits at 19.9 trillion. This means if all the production of the US were applied to the debt, it would take somewhere in excess of 15 months to pay it off. But that can't happen as 19.9 trillion dollars do not exist to pay the debt with interest.

    But for laughs and giggles, let's say the debt was paid off. What would remain, nothing, absolutely nothing. There would be no currency, there would be no products, there would be nothing.

    The whole of the US economy is based on debt. Without debt, nothing exists. This phenomena is better know as the Mandrake Mechanism where all currency is borrowed into existence. The sad news is the interest to be paid on these loans is never bought into existence, so how do you pay the interest, it the magic of cash flow, hoping the flow goes fast enough that this little technical flaw is never noticed.

    Now, all that is needed to start a recession is to stop lending money. If no new cash is injected into the market by new loans and old loans are retired by repayment, somewhere along the way a lot of somebodies are going to find their is no currency in the system to pay their debt. This is called recession where the banks made loans out of thin air and end up with real assets. This is the real mechanism why the rich get richer and the poor get poorer.

    Now to directly answer your question, to be able to steal from the people, they must first give them something to steal. When the current thefts do not match current entitlements to the rich, debt is increased which has a two fold effect, the sheep buys new things they can't afford with funds that don't exist. And with all that new debt, there is an increase in available currency which has a tendency to cause inflation (their goal is stated at 2%) and make things cost more.

    Without that increase, everything comes to a screeching halt and there aren't enough victims to fleece.

    [video=youtube;iP9H5fADC0E]https://www.youtube.com/watch?v=iP9H5fADC0E[/video]
     

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