Is the US National Debt Reaching a Dangerous Tipping Point?

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In summary, the conversation is discussing the issue of the National Debt surpassing the GDP and the potential consequences. Some believe that a balanced budget amendment and decrease in spending is necessary to prevent further debt, while others argue that the debt=GDP threshold is not a real danger area and that taxes alone cannot solve the problem. The conversation also touches on the difficulty of addressing entitlement spending and the potential resistance to reducing benefits. It is suggested that raising taxes to match expenditures could solve the issue, but others argue that this may not be feasible.
  • #36
dacruick said:
Those unwilling to learn about the economy and the world that surrounds them tend to be the same people that don't know much about anything. Education doesn't teach you so many important things, but it does teach you how to learn. I'm not learning cylindrical coordinates right now because I'm going to use them tomorrow, or ever, I'm learning them because it is the process that is important to me.

Having a large percentage of population in the middle class is important for the success and balance of a nation. Having a lot of people in the low class creates a vicious cycle.

Paying people to be in the lower class also creates a vicious cycle.

We need to allow people to fail just as we need to allow people to succeed.

I know I am cruel and evil and blah blah but we can not support everyone forever.

Raising taxes on the middle class is a farce if you raise taxes all it does is shift the "middle" up some (some poeple become poor some who were wealthy become the new upper middle).

The Net result is even fewer people paying taxes.
 
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  • #37
FlexGunship said:
...what are you suggesting? :bugeye:

People who are unmotivated can't be told to get motivated. You need to take away their comfort... light a fire under their feet. Giving someone a check once a year and saying "live off of this" might be exactly that they need. Then that person has to say: "oh, geeze, I need to get a house with this, insurance, food... oh no! I'm going to have to go get a job!"

I think you have some misconceptions about the influence of poverty on the youth. We are all a product of our environment. It's not the average "adult on welfare draining the economy" I care about. It's the average kid being raised in projects, around thousands of other equally impoverished kids. You develop a resentment towards "the system" so of course you will never care to learn about it. That system is (in their eyes) responsible for the poverty they were born into. This creates a divide in the social structure of a country in the form of classism, from both sides.
 
  • #38
Oltz said:
The Net result is even fewer people paying taxes.

I never suggested that only the middle class have raised taxes. I suggest that taxes be raised across the board. If you raise taxes and allocate some of that money for social services then maybe the lower class comes out even.
 
  • #39
dacruick said:
I never suggested that only the middle class have raised taxes. I suggest that taxes be raised across the board. If you raise taxes and allocate some of that money for social services then maybe the lower class comes out even.

That is the point we do not have the money to maintain the social services we currently has AND all of the other government functions without borrowing 40 cents of every dollar we spend.

At some level there will be an income cut off where social services end and you need to support yourself currently in many peoples defenitions that cut off plus 10% is the start of the middle class. Others say Median income is the bottom of the middle class, But you can make median income and get foodstamps/welfare/WIC/Housing/EITC based on number of dependants. To the second group some of the middle class does not pay taxes already.

When you raise taxes you shift peoples incomes down. Pushing more of the old middle to the low requiring more benefits be paid or simply making them not owe anything anymore.

We can not Tax the defecit away.

Am I making any sense as far as increasing taxes decreasing the number of poeple taxed?

IMO the middle class is anyone who pays more in income tax then they receive in direct benefits from the Govt. and makes less than 400K as a family or 250 as an individual. or 10x Median depending on the day
 
  • #40
Oltz said:
We Can not Raise significant money without increase the number of people taxed. 47% have a net 0 or negative tax burden (Federal since we are talking about federal)

The poor are either going to loose benefits or loose what little pay they have to an increased burden.
It is next to impossible to get more out of the top 50% then we are now without making the "poverty" level 30K a year which will only mean more benfit pay outs.

There is simply not enough money if you can find it please show me where it is.

This is simply not true. The reason 47% of the people are not being taxed is that they don't make much money. Try looking at the statistics below. The bottom 60% of households earn less than 25% of the total income. Taxing them more heavily is like trying to get blood out of the proverbial turnip. On the other hand, the top 20% of households (households earning over $100,000/year) are bringing in 50% of the earnings, and the top 5% of households (households earning over $180,000/year) are bringing in 21% of the earnings. These people could pay significantly higher taxes and still live quite comfortably. I don't think that all of the deficit gap should come from raising taxes; we need to cut entitlements and make the system (especially health care) more efficient as well. But to say that 'it is impossible to get more out of the top 50%' is simply false.

http://www.census.gov/hhes/www/income/data/historical/household/index.html [Broken]
 
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  • #41
phyzguy said:
This is simply not true. The reason 47% of the people are not being taxed is that they don't make much money. Try looking at the statistics below. The bottom 60% of households earn less than 25% of the total income. Taxing them more heavily is like trying to get blood out of the proverbial turnip. On the other hand, the top 20% of households (households earning over $100,000/year) are bringing in 50% of the earnings, and the top 5% of households (households earning over $180,000/year) are bringing in 21% of the earnings. These people could pay significantly higher taxes and still live quite comfortably. I don't think that all of the deficit gap should come from raising taxes; we need to cut entitlements and make the system (especially health care) more efficient as well. But to say that 'it is impossible to get more out of the top 50%' is simply false.

http://www.census.gov/hhes/www/income/data/historical/household/index.html [Broken]


First you should use IRS data not census data when available.
http://www.taxfoundation.org/news/show/250.html#table3"

Second let's look at the top 25% in 2009 they earned 65.81% of the totoal AGI of the nation.
They paid 87.3% of the total taxes collected.

So the bottom 75% of the population controlls 34.19% of the AGI and pays 12.7% of the taxes. 10.45% of that is payed by those between the top 50 and 25 % marks leaving 2.25% for the bottom half of the population.

Now you tell me how much is fair and you tell me what the base income should be at which you need to support yourself?
 
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  • #42
Oltz said:
First you should use IRS data not census data when available.
http://www.taxfoundation.org/news/show/250.html#table3"

Second let's look at the top 25% in 2009 they earned 65.81% of the totoal AGI of the nation.
They paid 87.3% of the total taxes collected.

So the bottom 75% of the population controlls 34.19% of the AGI and pays 12.7% of the taxes. 10.45% of that is payed by those between the top 50 and 25 % marks leaving 2.25% for the bottom half of the population.

Now you tell me how much is fair and you tell me what the base income should be at which you need to support yourself?

It sounds like we more or less agree on the numbers, we just don't agree on the conclusions. To me it is not unfair that the top wage earners, who are reaping most of the economic benefit of our society, should pay most of the taxes to keep it running. It is also not unfair that the bottom wage earners, who are mostly just struggling to get by, should not pay much of the taxes. You think it is unfair that the bottom half are only paying 2% of the taxes, but isn't it also unfair that the bottom half are only earning 20% of the total earnings? Do the CEOs, entertainers and sports stars that make $10 Million+ really need to keep more of it so that they can buy a bigger yacht? Does this really benefit society?
 
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  • #43
phyzguy: You call for more taxes on the upper fraction of incomes as a solution to the deficit. Consider the following:

  • As you point out, the top 10% bracket earns 43% of income.* That same bracket also pays 70% of federal income taxes.
  • The 70% of federal taxes paid by the top 10% equates to $610B. The deficit is $1600B. Individual income taxes on that bracket would have to raised by 262% just to balance the budget today, leaving the debt standing at near $15,000B, and still more tax increases would be required next year to maintain the balance.
  • The $610B paid in taxes by the top 10% is money not invested in the private economy. While the higher earners may or may not need to consume all of their income, unless they keep it idle under the mattress they most certainly invest that money in the economy. That is investment not made when the income is taken by taxes.

*Adjusted Gross Income, 2009.
http://www.taxfoundation.org/news/show/250.html

H/T https://www.physicsforums.com/showpost.php?p=3384772&postcount=331"
 
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  • #44
The federal government could take all income of the top 1% ($343K and up) and it would still not balance the US budget. To suggest increasing taxes on the 'millionaires' can balance the budget is nonsense, not to mention what it might do to a sluggish economy.
 
  • #45
dacruick said:
How long would it take for a countrywide sales tax increase of 1% to solely pay off the debt?

We can set a lower limit. The total income in wages for the US is about $8-9T. Assuming all of this goes towards something that gets this 1% tax and it raises $85B a year. The debt is $14T, so it will take at least 165 years.

A similar scaling argument can be made for the deficit. The total income is about $8-9T, and about 80% of that is in the upper half. The federal budget is $3.8T. That means that a flat 45% tax rate (direct or indirect) is needed to support this. If we decide that we don't want the bottom 50% to pay taxes at all (the other limit - maximally progressive), the top half need to pay a 56% tax.
 
  • #46
mheslep said:
phyzguy: You call for more taxes on the upper fraction of incomes as a solution to the deficit. Consider the following:

  • As you point out, the top 10% bracket earns 43% of income.* That same bracket also pays 70% of federal income taxes.
  • The 70% of federal taxes paid by the top 10% equates to $610B. The deficit is $1600B. Individual income taxes on that bracket would have to raised by 262% just to balance the budget today, leaving the debt standing at near $15,000B, and still more tax increases would be required next year to maintain the balance.
  • The $610B paid in taxes by the top 10% is money not invested in the private economy. While the higher earners may or may not need to consume all of their income, unless they keep it idle under the mattress they most certainly invest that money in the economy. That is investment not made when the income is taken by taxes.

*Adjusted Gross Income, 2009.
http://www.taxfoundation.org/news/show/250.html

A couple of points on this:

(1) As I said, I don't think all of our current deficit problem can be solved by tax increases - spending cuts are needed as well.

(2) As you said, the top 10% earns 43% of the income, which amounts to 3.3 trillion, according to the table you linked. On this 3.3 trillion, they pay 610 billion in taxes. Suppose their tax rate were doubled, which would put it closer to historical norms. That would reduce the deficit by more than one third, and still leave the top 10% rich by any reasonable standard.

(3) As unemployment comes down, we can expect the deficit to come down as government tax revenues increase and unemployment benefits drop.

(4) If the government takes money from the top 10%, what do you think happens to it, that it just goes away? Part of it will be spent on payments to people with lower incomes, who will promptly spend it. Paying a teacher's salary instead of laying her off is a good thing, both for the teacher and for the economy. The current problem in our economy is a lack of demand, not a lack of investment. Part of it will be spent on much-needed infrastructure improvements, which will help get the moribund construction industry moving again.
 
  • #47
phyzguy said:
A couple of points on this:

(1) As I said, I don't think all of our current deficit problem can be solved by tax increases - spending cuts are needed as well.
Agreed, though the suggestion in your post #2 referencing WWII was there's no hurry, and there I disagree sharply. War spending ends, entitlements never do.

(2) As you said, the top 10% earns 43% of the income, which amounts to 3.3 trillion, according to the table you linked. On this 3.3 trillion, they pay 610 billion in taxes. Suppose their tax rate were doubled, which would put it closer to historical norms. That would reduce the deficit by more than one third, and still leave the top 10% rich by any reasonable standard. ...
That conclusion is not supported by the data. As was shown by the links in posts in 7 and 35 showing yearly tax revenue, federal revenue collected per unit of GDP via income taxes does not increase substantially with high rates. While I concede one can argue the government might collect more revenue (10-20%?) from a sluggish economy, it is ahistorical to say you could double revenue by doubling the current income tax rate.

...and still leave the top 10% rich by any reasonable standard.
The income point for the http://www.taxfoundation.org/news/show/250.html" That's a carpenter and teacher household. Their income after ~20% federal taxes (today's) is then $90K. You would attempt to double the rate (not marginal but total) and leave them with $68K. From that they must still pay state income tax, sales tax, property tax, and so on, leaving them with a take home well under half of AGI. Furthermore, as I and others have posted elsewhere, there is substantial income mobility in the US over time, which includes declines in the upper incomes. So this carpenter and teacher might well be enjoying some fleeting peak income years to bank for the kids college or retirement.

(3) As unemployment comes down, we can expect the deficit to come down as government tax revenues increase and unemployment benefits drop.
Clearly. So the question there is what is the best way to decrease unemployment? The conversation should be focused on how to allow the private economy to create job opportunity, not how to remove more money from the private economy. In the meantime the deficit is large, the debt dangerous, taxing the rich can not resolve the problem, only substantial spending cuts can.

(4) If the government takes money from the top 10%, what do you think happens to it, that it just goes away? Part of it will be spent on payments to people with lower incomes, who will promptly spend it. Paying a teacher's salary instead of laying her off is a good thing, both for the teacher and for the economy. The current problem in our economy is a lack of demand, not a lack of investment. Part of it will be spent on much-needed infrastructure improvements, which will help get the moribund construction industry moving again.
So then why not tax all income at 100%, have the government disperse it all? This is the old Keynesian argument. Without getting into the https://www.physicsforums.com/showpost.php?p=3504713&postcount=57", surely you concede this has been tried recently several times totaling a trillion dollars, and that the results were are at least questionable, demanding more justification than a hand waiving call for more of the same?
 
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  • #48
Oltz said:
We need to end deficit spending until our Debt is below 35% of GDP and we need an amendment capping our debt at 45% with a 10 year average balance requirement of 30%.
I don't see how this could possibly help. Here's what I propose instead. An amendment to end deficit spending until our debt is below 34% of GDP and we need to cap our debt at 46% with a 9 year average balance requirement of 29%.
 
  • #49
Oltz said:
As of yesterday our National Debt surpassed our GDP. Comments?


Those opposed to a balanced budget amendment must know that this symbolic landmark puts us on track to a place we can not recover from.

We need to end deficit spending until our Debt is below 35% of GDP and we need an amendment capping our debt at 45% with a 10 year average balance requirement of 30%.

(as in we can borrow money in bad times up to 45% but need to pay off the additional in time to maintinain the needed average)

The only way to do this is to cut spending and decrease overhead. Taxes alone can not solve this problem.

If you have $600 income per month and write checks totaling $1,000 per month - then borrow from anyone that will loan you money (assuming you will always find someone to loan you money because you have an expensive gun collection) - what will people that respect you think? Should you be respected? Should anyone look to you for advice? Should you be considered a leader? Why shouldn't everyone else get together and tell you NO? How long should you expect everyone else to do as you want? What is the limit?
 
  • #50
Recap
1.We established that Income tax will not generate more then 20% of GDP regardless of rate.
2. We went over the current distribution of Income and Tax Burden on that income.
3. We established the only way to increse revenue is Regressive or flat taxes and fees or lower rates applied to more people.
4. We all agree that spending cuts are needed.


So what percent of the population are we comfortable Fully supporting in the system? (as in living off of benefits) 25% 30% How many should be playing with house money.

What percent are we comfortable having not pay into the system as in no tax burden but receive no benefits? (surive on their own income but not pay into the greater good)
20% 27% 17% 5%? How many should be between the poor and the middle class?

Right now those add up to the 43-47% numbers that are thrown around. IMO it should be more like 35% bottom 25% receiving benefits 10% in the no burden no help and 65% paying some level of income tax.

To those saying the top 50% need to pay more ok fine but what percent should pay nothing?
What percent should get everything?
 
  • #51
Oltz said:
Recap
1.We established that Income tax will not generate more then 20% of GDP regardless of rate.
2. We went over the current distribution of Income and Tax Burden on that income.
3. We established the only way to increse revenue is Regressive or flat taxes and fees or lower rates applied to more people.
4. We all agree that spending cuts are needed.


So what percent of the population are we comfortable Fully supporting in the system? (as in living off of benefits) 25% 30% How many should be playing with house money.

What percent are we comfortable having not pay into the system as in no tax burden but receive no benefits? (surive on their own income but not pay into the greater good)
20% 27% 17% 5%? How many should be between the poor and the middle class?

Right now those add up to the 43-47% numbers that are thrown around. IMO it should be more like 35% bottom 25% receiving benefits 10% in the no burden no help and 65% paying some level of income tax.

To those saying the top 50% need to pay more ok fine but what percent should pay nothing?
What percent should get everything?

I've posted this MANY times. IMO - only people who pay (at least $1.00 federal income taxes should be registered to vote. If you don't contribute - you shouldn't have any say in how the funds are spent.
 
  • #52
WhoWee said:
I've posted this MANY times. IMO - only people who pay (at least $1.00 federal income taxes should be registered to vote. If you don't contribute - you shouldn't have any say in how the funds are spent.

I suppose I agree, but <insert standard slippery-slope argument here>.
 
  • #53
FlexGunship said:
I suppose I agree, but <insert standard slippery-slope argument here>.

I agree that it's a slippery slope - but so is the question of what percentage are entitled and which group of persons should pay more to support some other group.

If everyone wants to be considered "equal" under the law - we should be treated equally by all laws - IMO. If you live your life with your hand out waiting for others to provide - you are not equal and you will never have independence or security.
 
  • #54
WhoWee said:
I've posted this MANY times. IMO - only people who pay (at least $1.00 federal income taxes should be registered to vote. If you don't contribute - you shouldn't have any say in how the funds are spent.

Err, while I agree that everyone who has an income should pay tax, I don't think you could remove the right to vote for a citizen of a democratic country, based on his financial situation. There are a lot of political issues that has nothing to do with money, for example issues like gay marriage or abortion rights. That's not about spending the funds, but on ideology, and every citizen should be allowed to have a say on it.

Take students for example, it may take a long time before you earn enough money to be taxed as a student, should they not be allowed to vote during this time? Or did I misunderstand something in your post (then I apologize)?
 
  • #55
If everyone wants to be considered "equal" under the law - we should be treated equally by all laws - IMO. If you live your life with your hand out waiting for others to provide - you are not equal and you will never have independence or security.

And there it is the difference between the right and left defenition of freedom and Independance.

What they see as equality we see as preferential treatment.

What we see as dependence they see as freedom.

What they see as poverty we see as a higher standard of living then most of the world enjoys.

What we see as fair they see as unbalanced.

These basic differences in definition are the real hang ups in all of these debates.

What we need is to start a thread with standardized defenitions and agree on some then sticky it...hmm
 
  • #56
Zarqon said:
Err, while I agree that everyone who has an income should pay tax, I don't think you could remove the right to vote for a citizen of a democratic country, based on his financial situation. There are a lot of political issues that has nothing to do with money, for example issues like gay marriage or abortion rights. That's not about spending the funds, but on ideology, and every citizen should be allowed to have a say on it.

Take students for example, it may take a long time before you earn enough money to be taxed as a student, should they not be allowed to vote during this time? Or did I misunderstand something in your post (then I apologize)?

Gay marriage involves health insurance and other spousal benefits, abortion also has associated costs.

As for students - do they live in a household that pays or receives tax funds and/or do they have a job and pay $1.00 per year in taxes or perhaps they are being subsidized $20,000 per year to attend school? If a student is dependent upon taxpayer funds to attend college - why should they decide how to spend taxes until they actually begin to make a contribution themselves?
 
  • #57
WhoWee said:
Gay marriage involves health insurance and other spousal benefits, abortion also has associated costs.

As for students - do they live in a household that pays or receives tax funds and/or do they have a job and pay $1.00 per year in taxes or perhaps they are being subsidized $20,000 per year to attend school? If a student is dependent upon taxpayer funds to attend college - why should they decide how to spend taxes until they actually begin to make a contribution themselves?

I assume you mean $1.00 of Net Federal taxes as in at least 1 dollar more paid then received in benefits.

The real question is would the ones receiving benefits actually care or only the politicians that depend on them as a source of power?

The poor want their benefits the left wants the votes.

Reducing benefits increases the voter pool,but given the choice would they pick welfare(insert entitlement here) or the right to vote? The left would never allow the loss of those votes.

I imagine on an individual basis they would pick welfare(insert entitlement here) over voting(and most would say I don't vote anyway give me the money)
 
  • #58
Oltz said:
I assume you mean $1.00 of Net Federal taxes as in at least 1 dollar more paid then received in benefits.

The real question is would the ones receiving benefits actually care or only the politicians that depend on them as a source of power?

The poor want their benefits the left wants the votes.

Reducing benefits increases the voter pool,but given the choice would they pick welfare(insert entitlement here) or the right to vote? The left would never allow the loss of those votes.

I imagine on an individual basis they would pick welfare(insert entitlement here) over voting(and most would say I don't vote anyway give me the money)

I think politicians have exploited the fears and weaknesses of minority groups for a long time. I'm in favor of equal opportunity and believe we should help people that can not help themselves - not create or now maintain a permanent welfare class.

As for the poor wanting increased benefits - what is the limit? Should I want a helicopter because other business owners have them and it's not "fair"(!) and if anyone wants my vote - they better give me a helicopter or at least let me use someone else's?
 
  • #59
Oltz said:
I assume you mean $1.00 of Net Federal taxes as in at least 1 dollar more paid then received in benefits.

The real question is would the ones receiving benefits actually care or only the politicians that depend on them as a source of power?

The poor want their benefits the left wants the votes.

Reducing benefits increases the voter pool,but given the choice would they pick welfare(insert entitlement here) or the right to vote? The left would never allow the loss of those votes.

I imagine on an individual basis they would pick welfare(insert entitlement here) over voting(and most would say I don't vote anyway give me the money)

The left does protect their votes - don't they?
http://advancementproject.org/about/career_opportunities/2011/07/senior-attorney-project-director-of-voter-protection-program [Broken]

http://demaa.org/sites/default/files/wi_voter_protection_team_flowchart.pdf

http://my.democrats.org/page/s/voterprotectny

http://fortbenddemocrats.com/content/heads-obama-voter-protection-team

http://www.asianamericansforobama.c...ection-team-needs-volunteers-for-election-day

http://www.politico.com/blogs/joshgerstein/0311/Eric_Holder_Black_Panther_case_focus_demeans_my_people.html
 
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  • #60
WhoWee said:
Gay marriage involves health insurance and other spousal benefits, abortion also has associated costs.

As for students - do they live in a household that pays or receives tax funds and/or do they have a job and pay $1.00 per year in taxes or perhaps they are being subsidized $20,000 per year to attend school? If a student is dependent upon taxpayer funds to attend college - why should they decide how to spend taxes until they actually begin to make a contribution themselves?

Huh? Are you really arguing that the ideological aspects of those questions are less important than their associated costs? In the typical political debate about these issues I really don't think the costs are the main concern.

And about the students, or any other group, why should they be allowed to vote? Well, because they live in the country, and any decision made by the government affects them too...
 
  • #61
Zarqon said:
Huh? Are you really arguing that the ideological aspects of those questions are less important than their associated costs? In the typical political debate about these issues I really don't think the costs are the main concern.

And about the students, or any other group, why should they be allowed to vote? Well, because they live in the country, and any decision made by the government affects them too...

The Left uses costs to sell gay rights - don't they?

http://online.wsj.com/article/SB10001424052748704562504575022043511627722.html

http://articles.chicagotribune.com/...ay-couples-same-sex-couples-equality-illinois

As for students (my twins are now college "freshpersons")- unless they work - they typically live in an idealistic alternative world - IMO of course.:rolleyes:
 
  • #62
Let try to bring this back towards the debt and how much of the population should be carried and by what proportion of the remaining numbers.

We can have another thread about who really deserves to vote if you like.

With that said 15% of the population is now on foodstamps...

http://www.foxnews.com/politics/2011/11/02/some-15-us-uses-food-stamps/?test=latestnews"

And a Bi partisan group of 100 (60 dem 40 rep)representatives have signed a letter admitting both revenue and drastic cuts are needed and asking for 4 Trillion in debt reduction over 10 years instead of the 1.2 that is mandatory.

http://www.foxnews.com/politics/2011/11/02/dozens-lawmakers-urge-debt-panel-to-consider-all-options/"

With support showing that without at least 4 trillion in reduction the debt will out grow economic growth. (back to the chart on the first page as reference the colored bars will pass the black line with no white bar left and at that point the govt can only pay benefits and service the debt nothing else no army no mailman no roads ect.) I wish we had access to these reports by "Bipartisan budget experts".


Bipartisan budget experts who have produced plans for reducing the debt have urged the committee to produce at least $4 trillion in savings. They say doing less would not significantly alter the long-term financial nightmare the government faces, in which federal red ink continues growing at a faster rate than the U.S. economy.
 
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  • #63
mheslep said:
The federal government could take all income of the top 1% ($343K and up) and it would still not balance the US budget...
That ($343K) was 2009.

Changes across some of the other income brackets during the recession:

Income changes by threshold 2007, 2009
0.1% split point: fell 44%, $2.16M to $1.43M
1% split point: fell 26%, $410K to $343K
50% split point: fell 1%, $33.8K to $32.4K

http://www.taxfoundation.org/news/show/250.html#table7
 
  • #64
Oltz said:
With support showing that without at least 4 trillion in reduction the debt will out grow economic growth.

This has to be a nonsense. 30 year rates on US debt have been at historical lows, and won't rebound unless unemployment picks up and the EU starts to recover. We are paying less to service the debt now then we have in years. The deficit peaked at 1.4 trillion and has been steadily shrinking.

Also, Obamacare will have big impacts on fiscal numbers (if it does what supporters say, and lowers the long-term trend of health costs it will have a huge positive impact on long-term fiscal health. If detractors are right, it will accelerate costs. Either way, it will do SOMETHING to fiscal outlook). Trying to identify major costs now, shortly before the landscape changes, seems a bit silly.

But hey, we have an increasingly broken-down power grid, increasingly awful roads, etc. Its not like we should borrow cheaply to fix this stuff. We should wait until it breaks completely and fix it in the most expensive way possible. That makes sense.
 
  • #65
ParticleGrl said:
This has to be a nonsense. 30 year rates on US debt have been at historical lows, and won't rebound unless unemployment picks up and the EU starts to recover. We are paying less to service the debt now then we have in years. The deficit peaked at 1.4 trillion and has been steadily shrinking.

Also, Obamacare will have big impacts on fiscal numbers (if it does what supporters say, and lowers the long-term trend of health costs it will have a huge positive impact on long-term fiscal health. If detractors are right, it will accelerate costs. Either way, it will do SOMETHING to fiscal outlook). Trying to identify major costs now, shortly before the landscape changes, seems a bit silly.

But hey, we have an increasingly broken-down power grid, increasingly awful roads, etc. Its not like we should borrow cheaply to fix this stuff. We should wait until it breaks completely and fix it in the most expensive way possible. That makes sense.

I agree - Obamacare will have some kind of an effect. But I don't have much confidence in the estimates.

Call me a pessimist, but there were high hopes for this as well. Please see pages 3 and 4
http://www.recovery.gov/About/Pages/The_Act.aspx [Broken]

"Total Job-Years Created
For some purposes, looking at the effects at a single point in time is not the most useful
approach. Since the economy is likely to be operating below capacity for several years, job
creation any time over the next several years is valuable. Thus, a second way to look at the
employment effects of the program is to estimate the number of job-years the program will
create over the President’s first term. A job-year means simply one job for one year.
To estimate the impact of the ARRA in terms of job-years, one simply adds up the
average jobs created per year over the total number of years. Two statistics summarizing the
estimates are presented in Table 2. The first is the familiar estimate that the ARRA will save or
create approximately 3.5 million jobs as of the fourth quarter of 2010. The other is an estimate
that the Act will save or create about 6.8 million job-years by the end of 2012. This estimate is
obtained by simply adding the estimates of the amount the program will increase average
employment in each of 2009, 2010, 2011, and 2012. (The slight difference between the 6.8
million figure and what one obtains by summing the numbers reported in Table 1 is due to
rounding.)"


Based on these projections of job growth - is there any reason to believe the Obamacare estimates?
 
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  • #66
I'd be okay with a VAT tax and some other taxes to shore up the social safety nets and allow us to balance the budget while affording both the military spending we need and the social safety system, but the problem is that the politicians always come up with more ways to spend the money then there is money, so we'd just end up worse off then we are now I think. The government will rarely respond to a huge influx of cash by saying, "Oh goodie, look at all of this additional money, think of the massive surplus we can generate!" no it's always, "Oh goodie, think of all the new ways we can spend this money!"

ParticleGrl said:
This has to be a nonsense. 30 year rates on US debt have been at historical lows, and won't rebound unless unemployment picks up and the EU starts to recover. We are paying less to service the debt now then we have in years.

The problem though is that with a larger and larger debt, which grows by leaps and bounds each year with such a large deficit (even if it is shrinking, it is still very large nevertheless), the amount of money it takes to service the debt will grow and grow, so that if the interest rate has to increase by one percentage point let's say, it can massively increase the amount of money it takes to service the debt if the debt itself is very large. One factor the credit rating agencies look at is how much of the federal revenues go towards servicing the debt. 18% is considered a major red flag. While the U.S. isn't at that point right now, if the interest rate ever has to rise, it could end up there.

But hey, we have an increasingly broken-down power grid, increasingly awful roads, etc. Its not like we should borrow cheaply to fix this stuff. We should wait until it breaks completely and fix it in the most expensive way possible. That makes sense.

Yes, but it also doesn't make sense to assume that interest rates will remain as low as they are for the forseeable future and to thus engage in a massive spending spree. We could get blindsided by a European crisis that causes our financial system to need a second bailout, no one right now knows what exactly is going to happen with China, which looks to be on the verge of a major credit crisis and real-estate bubble bursting. Some say the concern is way overblown, that China's real-estate market is not tied into the global economy as the U.S.'s was and that the Chinese government can deflate the crisis in a controlled manner, others say China is Dubai x 1,000.

With all that risk, I'd wait before spending on infrastructure!
 
  • #67
Also, Obamacare will have big impacts on fiscal numbers (if it does what supporters say, and lowers the long-term trend of health costs it will have a huge positive impact on long-term fiscal health. If detractors are right, it will accelerate costs. Either way, it will do SOMETHING to fiscal outlook). Trying to identify major costs now, shortly before the landscape changes, seems a bit silly.

But hey, we have an increasingly broken-down power grid, increasingly awful roads, etc. Its not like we should borrow cheaply to fix this stuff. We should wait until it breaks completely and fix it in the most expensive way possible. That makes sense.

First name one time that something the government ran ended up being more cost efficient with less over head hten when it was ran privately?

Its called budget Creep every year you are given X amount of money for your department and every year you strive to spend slightly more hten that so that the following year they will give you more. This is great for each little department it allows them to gradually increase staff and ammenities as well as preforming your task. When every government office at every level does it every year we end up with a behemoth government that is layered to create more work for less results.

The phrase "if we don't spend it this year we will get less next year" is common and believed.

Second of course we all want to rebuild the infrastructure that is disturbingly close to failure, But the governement and congress already has substantial means for funding these projects unfortunatly this funding has been consistently routed to pet projects for the last ~35 years.

Lastly think of Federal Debt as an adjustable rate mortgage. Remember how well it worked out for all of those people who took out more in debt then they could handle when the rates changed? More debt now is not the answer period. It will bite us cheap easy money does not exist the rates will go up we need to plan 10 + years ahead just like your family should for major debt choices.

We need to stop planning things in election cycles and start actually looking at an accurate long term forecast.
 
  • #68
Oltz said:
Lastly think of Federal Debt as an adjustable rate mortgage. Remember how well it worked out for all of those people who took out more in debt then they could handle when the rates changed? More debt now is not the answer period. It will bite us cheap easy money does not exist the rates will go up we need to plan 10 + years ahead just like your family should for major debt choices.

I agree with what you've said Oltz, but I want to add one caveat. It does make sense to borrow money when it's spent on an actual long-term investment. An example of a good investment could be scientific facilities... an example of bad investments are roads and education.

Before I get flamed, let me explain: education has always been a gamble. An amount of money given to a top-notch educator is WORTH MORE than the same amount given to an average or poor educator. With unions and tenure policies in place, there's ABSOLUTELY no guarantee that education money is well spent.

Roads are similar for the exact reason outlined above. Almost all infrastructure money goes directly to "pet projects" for Senators and their home states as opposed to expanding and optimizing the national road networks. In New Hampshire we're getting huge poles installed all along Route 16 with cameras on them. About ever half-mile there's a pole with two cameras.

WHY?

Here's four that are already running: http://www.nhtrafficcams.com/towns/spaulding_turnpike_traffic_cam_rochester.htm

It's a toy, at best. But MILLIONS of dollars was allocated to this project. Meanwhile, the road that leads to my house (by several local businesses) is cracked and has pot holes. This was someone's pet project.

In contrast, investment in scientific facilities often yield wonderful results. Technological facilities are well covered by the private sector now including aerospace. However, purely scientific laboratories which promote a better understanding of the physical universe are largely academic or government, and they yield great results.

The James Webb space telescope is a GOOD investment... new desks for a school full of kids that destroy them is a BAD investment.

Let the flaming begin.
 
  • #69
Oltz said:
First name one time that something the government ran ended up being more cost efficient with less over head hten when it was ran privately?

Its called budget Creep every year you are given X amount of money for your department and every year you strive to spend slightly more hten that so that the following year they will give you more. This is great for each little department it allows them to gradually increase staff and ammenities as well as preforming your task. When every government office at every level does it every year we end up with a behemoth government that is layered to create more work for less results.

The phrase "if we don't spend it this year we will get less next year" is common and believed.

Second of course we all want to rebuild the infrastructure that is disturbingly close to failure, But the governement and congress already has substantial means for funding these projects unfortunatly this funding has been consistently routed to pet projects for the last ~35 years.

Lastly think of Federal Debt as an adjustable rate mortgage. Remember how well it worked out for all of those people who took out more in debt then they could handle when the rates changed? More debt now is not the answer period. It will bite us cheap easy money does not exist the rates will go up we need to plan 10 + years ahead just like your family should for major debt choices.

We need to stop planning things in election cycles and start actually looking at an accurate long term forecast.

I think a new discussion of wasted stimulus funds is long over-due - in response to calls for additional (special) infrastructure spending. A quick sample from the list.

http://www.foxnews.com/on-air/hannity/blog/2010/03/12/waste-102-the-final-list/

"81: Six woodlands water taxis getting a new home in Texas ($750,000)
80: Maryland group gets money to develop "real life" stories that underscore job and infrastructure-related research findings ($363,760)
79: Studying social networks like Facebook in North Carolina ($498,000) "


a few more


"14: Arizona universities examining the division of labor in ant colonies (combined $950,000)
13: Fire station without firefighters in Nevada ($2 million)
12: "Clown" theatrical production in Pennsylvania ($25,000)
11: Maryland town gets money but doesn't know what to do with it ($25,000)
10: Investing in nation-wide wind power (but majority of money has gone to foreign companies) ($2 billion)
9: Resurfacing a tennis court in Montana ($50,000)
8: University in Indiana studying why young men do not like to wear condoms ($221,355)"
 
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  • #70
WhoWee said:
I think a new discussion of wasted stimulus funds is long over-due - in response to calls for additional (special) infrastructure spending. A quick sample from the list.

http://www.foxnews.com/on-air/hannity/blog/2010/03/12/waste-102-the-final-list/

"81: Six woodlands water taxis getting a new home in Texas ($750,000)
80: Maryland group gets money to develop "real life" stories that underscore job and infrastructure-related research findings ($363,760)
79: Studying social networks like Facebook in North Carolina ($498,000) "


a few more


"14: Arizona universities examining the division of labor in ant colonies (combined $950,000)
13: Fire station without firefighters in Nevada ($2 million)
12: "Clown" theatrical production in Pennsylvania ($25,000)
11: Maryland town gets money but doesn't know what to do with it ($25,000)
10: Investing in nation-wide wind power (but majority of money has gone to foreign companies) ($2 billion)
9: Resurfacing a tennis court in Montana ($50,000)
8: University in Indiana studying why young men do not like to wear condoms ($221,355)"

5: Storytelling festival in Utah ($15,000)
4: Door mats to the Department of the Army in Texas ($14,675)
3: University in New York researching young adults who drink malt liquor and smoke pot ($389,357)
1: Grant for one Massachusetts university for "robobees" (miniature flying robot bees) ($2 million)
 
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<h2>1. What is the current level of US national debt?</h2><p>The current level of US national debt is over $28 trillion, which is approximately 130% of the country's gross domestic product (GDP).</p><h2>2. What is considered a dangerous tipping point for national debt?</h2><p>A dangerous tipping point for national debt is typically considered to be when it reaches 90% of the country's GDP. At this level, it becomes increasingly difficult for the government to pay off its debt and can lead to economic instability.</p><h2>3. How does the US national debt impact the economy?</h2><p>The US national debt can have both positive and negative impacts on the economy. On one hand, it allows the government to fund important programs and stimulate economic growth. However, if the debt becomes too high, it can lead to higher interest rates, inflation, and a decrease in consumer and investor confidence.</p><h2>4. What factors contribute to the increase in US national debt?</h2><p>There are several factors that contribute to the increase in US national debt, including government spending on social programs, defense, and interest on previous debt. Additionally, economic downturns and tax cuts can also contribute to an increase in national debt.</p><h2>5. How can the US government address the issue of rising national debt?</h2><p>The US government can address the issue of rising national debt by implementing fiscal policies such as raising taxes, reducing government spending, and implementing measures to boost economic growth. Additionally, the government can also consider restructuring its debt or negotiating with creditors to lower interest rates.</p>

1. What is the current level of US national debt?

The current level of US national debt is over $28 trillion, which is approximately 130% of the country's gross domestic product (GDP).

2. What is considered a dangerous tipping point for national debt?

A dangerous tipping point for national debt is typically considered to be when it reaches 90% of the country's GDP. At this level, it becomes increasingly difficult for the government to pay off its debt and can lead to economic instability.

3. How does the US national debt impact the economy?

The US national debt can have both positive and negative impacts on the economy. On one hand, it allows the government to fund important programs and stimulate economic growth. However, if the debt becomes too high, it can lead to higher interest rates, inflation, and a decrease in consumer and investor confidence.

4. What factors contribute to the increase in US national debt?

There are several factors that contribute to the increase in US national debt, including government spending on social programs, defense, and interest on previous debt. Additionally, economic downturns and tax cuts can also contribute to an increase in national debt.

5. How can the US government address the issue of rising national debt?

The US government can address the issue of rising national debt by implementing fiscal policies such as raising taxes, reducing government spending, and implementing measures to boost economic growth. Additionally, the government can also consider restructuring its debt or negotiating with creditors to lower interest rates.

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