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Thread: Proof that neither party really cares about the debt....

  1. #1
    Olympic Champ therick's Avatar
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    Default Proof that neither party really cares about the debt....

    "The economic stimulus package agreed to last week by both parties in the House of Representatives, Speaker of the House Nancy Pelosi declared that typical Americans can expect to receive a "stipend" of $300 to $1,200. Stipend -- will we get a federally funded sherry hour, too? Announcing Calling a government check a "stipend," to make it seem lofty and grand, reflects the modern affection CEOs have for calling the cash they receive "compensation" rather than pay, and consultants and speakers insist on saying they are receiving "honoraria" rather than pay. There is nothing wrong with receiving pay! And no reason to employ euphemisms.
    The stimulus bill will cost about $150 billion and consists entirely of deficit spending. The secondary euphemism being employed in Washington is to call the checks "tax rebates." But they are not rebates, meaning partial returns of monies paid -- they are pure borrowing. Which is to say, Congress will award most current American adults $300 to $1,200 each, then send the bill to future American adults. Suppose that instead, each American adult today set aside $300 at 5 percent interest. In 20 years, that money would grow to $800, and likely much more if invested in stocks. Such savings would be good for the U.S. economy, which, since 2001, has seen a negative national savings rate. China's national savings rate is currently almost 50 percent. Savings is one reason the Chinese economy is growing far faster than the U.S. economy; the U.S. savings rate is close to negative-4 percent, and our economic growth is sputtering.

    The framers said, "We mutually pledge to each other our lives, our fortunes and our sacred honor." Today's Congress: "We mutually pledge to pretend to believe what we just promised until the first second it is politically convenient to do the opposite."
    But rather than help the U.S. economy grow in a generous way that forgoes a little today to gain a lot tomorrow, the American people -- through their representatives in Congress -- just reached into the pockets of future citizens in order to spend more on themselves right now. Explain to me why this is considered a populist action by Congress?
    Bear in mind, the stimulus package announced last week is only an agreement between the two parties in the House. Lawmakers on both sides of the aisle in the Senate currently are scrambling to add their own pet projects to the legislation -- whenever a big spending bill moves, there's always a bidding war in which Republicans and Democrats vie to see who can stage the biggest giveaway. The damage to the national debt might get worse because what's happening now is the environment Congress likes best -- an environment of zero fiscal discipline. Lobbyists for retirees, who already are subsidized by the young, are complaining that their special interest isn't being showered with free money by the stimulus bill; lobbyists for pork-barrel projects that could never withstand logical scrutiny are maneuvering to wrap them in the flag and add them to the stimulus bill. By the time the stimulus bill leaves Capitol Hill, the young might be saddled with yet more debt so that members of Congress can congratulate themselves as they hand checks to politically connected fat-cat donors or to retirees already drawing out of Social Security far more than they put in, plus interest.
    Next, recall that on Jan. 4, 2007, both houses of Congress agreed with considerable fanfare on the Paygo measure, which stated that under no circumstances -- under no circumstances, never, regardless of conditions! -- would Congress enact any bill that increases the federal debt. According to the Paygo legislation, the House and Senate are forbidden even to debate legislation that would increase the debt. ("It shall not be in order to consider any bill, joint resolution, amendment or conference report if the provisions of such measure affecting direct spending and revenues have the net effect of increasing the deficit …") Paygo rules specify that all bills causing appropriations increases or tax favors must be offset be spending reductions or tax increases. When Paygo was enacted, many members of Congress from both parties, prominently Speaker Pelosi, patted themselves on the back in public.

    How long did this incredible resolve last? Six weeks ago, Congress passed a reduction of the Alternative Minimum Tax; the bill cut taxes by $51 billion but provides no offsetting revenues. Originally, the measure would have reduced the AMT for the middle class while raising taxes by an equal amount on the upper crust of venture capitalists and hedge-fund managers. All the revenue increases ended up deleted -- hedge-fund managers showered members of Congress with campaign donations -- but the tax cuts were approved. Congress ladled out the $51 billion entirely from deficit spending, then handed the bill to the young. Now, the stimulus package goes even further, at least $150 billion in gravy without spending cuts or offsetting revenue increases. Barely 12 months after pledging never, ever again to add to the federal debt, Congress will add at least $201 billion to the federal debt. The federal deficit for the most recent fiscal year, which ended before either of the new actions, was $163 billion. Congress has, in the past six weeks alone, added more to the federal debt than the entire federal deficit for the most recent fiscal year.
    It's impossible to be sure, but a rough guess might be that every dollar added to the deficit today represents two dollars subtracted from future economic growth -- which in turn means two dollars taken from the pockets of tomorrow's American adults. This is a cynical exercise, robbing future Americans in order to please voters today, and to inspire interest groups to make political donations to incumbents. When are citizens under 30 going to wake up to the disagreeable fact that the country's current leadership, of both parties, is giving them the shaft in order to heap special favors on current voters who refuse to live within their means? Then handing the young the bill."

    I got this from www.espn.go.com. Funny how I had to go to espn to find meaningful commentary on just how much both parties are in the pocket of special interests and the corporate lobby.

    As with any opinion piece it has a slant, but unlike most writers, he's in favor of neither party. He's in favor of those who will ultimately pay the price for the complete lack of forethought by those in power.

    So much for the Democrats keeping a single campaign promise that got them the House and Senate back. I know some of you on this board are blinded by your loyalty to your party, but eventually you have to open your eyes and realize that neither party gives two sh!ts about you. The only thing they care about is getting re-elected and keeping the money flowing into their bank accounts. They'll all tell you whatever you want to hear to get in or stay in office and then do whatever they want. And we let them because our memories are so short and we're so caught up in the wonderful soundbites they construct for us that we don't hold them accountable for anything.

    The creators of Southpark were right. 99% of the elections come down to a choice between a Sh!t sandwich and a giant douche.
    Last edited by therick; 01-29-2008 at 09:04 PM.

  2. #2

    Default Re: Proof that neither party really cares about the debt....

    Wow, what a commentary! There are a month's worth of discussions in the first paragraph. But, a few things I noticed:

    1) We can't call the recent stimulus package a "tax rebate." As the commentary mentioned, a rebate is "a partial returns of monies paid." Our congress has ensured that this is not happening. They have proposed (and the House has passed) a bill in which those with NO tax liability (those who do not make enough to pay taxes -- those who DON'T pay taxes) get a "rebate." That money is coming from you and me and is being given to anybody with an address at which they can receive a check, even if they didn't pay taxes. That certainly isn't a rebate.

    2) The Paygo method assumes that national debt is bad. But, many economists don't think it is necessarily bad and neither do I. Remember that savings bonds and treasury bonds are components of our national debt. If you own either, you have contributed to our national debt -- you have made it bigger. A national debt isn't necessarily bad.

    3) Let's also remember that tax increases don't always equate with more government revenue. Tax increases usually bring more money into the government at first, but that effect usually diminishes in a few quarters to a year. Tax cuts, when perceived to be permanent, have proven time and again to increase government revenues. The latest example is the Bush tax cuts, but the Kennedy tax cuts in 1962 (proposed by Kennedy but not enacted until after his death) increased government revenue. When the government makes it easier for business to be conducted, more jobs are created and more money flows into the government.

    Surely, some government actions are driven by short-term results or even just the ability to feel "good" after a vote. But, I think most government decisions are made following a particular ideology. Because ideologies can differ, perhaps that's why we see different actions.

  3. #3

    Default Re: Proof that neither party really cares about the debt....

    "1) We can't call the recent stimulus package a "tax rebate""

    True, it is misnamed. It's a shuffling of money from one pocket to the other.

    "2) The Paygo method assumes that national debt is bad. But, many economists don't think it is necessarily bad and neither do I."

    I agree with you. As long as the debt load doesn't result in high interest rates, then it's fine in the short to mid-term. The debt is pretty low as a percentage of GDP, so assumedly we can grow out of it at this point.

    "3) Let's also remember that tax increases don't always equate with more government revenue. Tax increases usually bring more money into the government at first, but that effect usually diminishes in a few quarters to a year."

    Agreed. That's because high-income earners (those who pay the most taxes in total) have a greater ability to change their investment strategy and behavior to avoid taxes. If you raise taxes on the rich, they are going to find a way to avoid them. For example, if you raise capital gains taxes to 75%, do you think revenues (to the govt) from capital gains taxes will increase or decrease? The key to taxes is to find rates that people will tolerate to the point where they won't change their behavior to try and avoid them.

  4. #4
    Olympic Champ therick's Avatar
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    Default Re: Proof that neither party really cares about the debt....

    I like getting your opinion on economic matters Skip because of how clearly you state your opinion. I'm certainly not an economics specialist, so it's nice to get info from someone who is. I agree with you that tax cuts can, in the long run, have a possitive effect on government revenue in the way that you stated. I'm just not sure how big of a difference $300 is going to make. I would think that taking some of the tax burden off of small and mid sized business would have a greater effect than a small stipend. I'd like to get your take on that.


    International investors, including central banks, held 51 percent of the $4.3 trillion in publicly offered Treasurys as of December, up from 34 percent of the almost $3 trillion total when President Bush took office in January 2001.

    Japan, with $644 billion in American IOUs, is our biggest foreign creditor. China ($350 billion) is second, followed by Britain ($239 billion) and oil-exporting countries ($100 billion).


    It's those numbers that make me a little uneasy about the increasing debt. If Americans were the majority holders of this dept, which means they would most likely spend any gains in the US economy, I'd feel a little better. I still don't agree that deficit spending is a good thing for the country though.

    I don't agree with higher taxes to take care of this problem. I'm more of a fan of better use of the taxes they're already getting. It can be done, but no one is willing to risk their re-election to make a sound fiscal decision that might hurt in the short term, but pay dividends down the road.

  5. #5

    Default Re: Proof that neither party really cares about the debt....

    Nice rant. You have a future in talk radio. I did like this little pearl you threw out there though:

    "So much for the Democrats keeping a single campaign promise that got them the House and Senate back."

    Would that be rhetoric to the second power perhaps?

  6. #6
    Olympic Champ therick's Avatar
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    Default Re: Proof that neither party really cares about the debt....

    Quote Originally Posted by Flop The Nuts View Post
    "2) The Paygo method assumes that national debt is bad. But, many economists don't think it is necessarily bad and neither do I."

    I agree with you. As long as the debt load doesn't result in high interest rates, then it's fine in the short to mid-term. The debt is pretty low as a percentage of GDP, so assumedly we can grow out of it at this point.
    I don't know if I agree that "the dept is pretty low as a percentage of GDP.."

    Approximately 66% seems like a pretty high number to me, but I agree that we can still grow out of it, if we can eliminate, or at least limit our deficit spending.

  7. #7
    Olympic Champ therick's Avatar
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    Default Re: Proof that neither party really cares about the debt....

    Quote Originally Posted by Password View Post
    Nice rant. You have a future in talk radio. I did like this little pearl you threw out there though:

    "So much for the Democrats keeping a single campaign promise that got them the House and Senate back."

    Would that be rhetoric to the second power perhaps?
    could be, but can anyone point to a single significant piece of legislation that was part of their collective platform?

    As for talk radio, you guys all make me laugh with that sh!t. I don't and never have listened to "talk radio" with the exception of the Dan Patrick show on espn radio.

    I'll bash both sides of the isle in Washington equally if they're screwing up equally. I just had a little hope last November that they might do something constructive, but they've backed down almost every time they've attempted to do anything significant. So, in my mind, they've failed.

    But, at least they're attempting to keep the Whitehouse honest on some things. I'll give them that.

  8. #8
    Olympic Champ therick's Avatar
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    Default Re: Proof that neither party really cares about the debt....

    I especially like what Senator Boxer from California is doing to put the EPA's feet to the fire on why they denied California's emmisions waiver.

    I'm just sorry that the national media isn't covering it more. My favorite part is when the EPA sited US v. Nixon as reason for no producing requested documents.

  9. #9

    Default Re: Proof that neither party really cares about the debt....

    Granted, they have been a let down. They cower when things get tough. They're scared to death to alienate the moderates. They huffed and puffed, but the reality is that when you have a very stubborn Chief Executive from the opposing party, there is very little that can be accomplished.

    This so called "surge" that he threw at them in January completely blindsided them. If it didn't involve the deaths of more Americans, I would say it was a brilliant tactical move. And in a sense it was. The non-informed Americans now think that we are gaining the upper hand and in due time Iraq will be a model of Democracy in the middle east. All one has to do is look at how the fickle proletariat in our country now don't really care all that much about what is happening there.

    I wonder if these folks even have a clue that Afghanistan is boiling over again and that AQ is like Kudzu? There is no "winning" in the Middle East.

    Now, come November, it's all about The Economy Stupid. Hey, we'll see what plays out over the next few months. Our country is in a shitload of trouble in many ways and I don't care who is president as long as we get things going back on the right track.

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