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[P]
Is the National Debt Really That Bad?

By Crashnbur in MLP
Tue Jun 05, 2001 at 04:28:10 PM EST
Tags: Politics (all tags)
Politics

The Weekly Standard offered an article called The Joy of Debt on March 26 that discussed the many reasons why paying off the national debt may not be such a good idea. Perhaps it is; perhaps it isn't; but I feel like it offers a very interesting perspective with which any American should be familiar.


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Poll
The federal government proposed investing tax dollars into the stock market:
o yes! excellent! 5%
o good. 1%
o eh. 11%
o bad. 15%
o no! bad! evil! 56%
o not sure. 9%

Votes: 53
Results | Other Polls

Related Links
o Weekly Standard
o The Joy of Debt
o Also by Crashnbur


Display: Sort:
Is the National Debt Really That Bad? | 64 comments (51 topical, 13 editorial, 0 hidden)
Summary: pay interest or go crazy? (4.83 / 12) (#1)
by Speare on Tue May 29, 2001 at 10:54:05 PM EST

The gist of the article is "if the government gets out of debt, all those interest payments will instead be put to nefarious uses."

That's really kinda silly.

Government debt is just like personal debt, but government income is NOT like personal income. Let's explore that.

You have four basic financial ledger items: your income, your expenditures, your assets (savings), and your liabilities (debts).

The question we face is whether debt or savings is better, so let's balance the income and expenditures to get them out of the way. You earn a steady paycheck and you spend almost all of it to keep a steady standard of living. You've gotten used to spending about as much as you earn. Neither debt nor savings are increasing nor decreasing wildly.

Now we can decide which is better, debt or savings. Let's assume you have a personal savings account at the bank, earning you 5% annually. You are also paying off a debt at 10% annually. If you get 100 spare dollars, where should you apply it? The prudent thing is not to put it in the bank, but to pay off your debt first. Any other move will cost you money, because the interest payments on the debt will outweigh the interest payments on the savings. Once your debt is paid off, it's better to put money into interest-earning savings accounts than to spend it immediately: you want to make that money work for you. Only after you've cleared your debts and reached your savings goals, should you take spare money and splurge on a better standard-of-living.

That was personal finances. Now, government finances.

The same principal applies (no pun intended), when it comes to government debt or savings. If there's a windfall, it should be put to service the national debt so that the hefty interest payments don't continue to beat down our budgets. Once that's cleared out, then the money can be used to shore up any savings goals: social security funds, treasury funds, and so on.

The article asks the question, where will all the money go when the government pays off its debts? The assumption is made for the reader: the government will hoard it all and spend it on stupid investments or stupid big-government programs, which is the last thing you want.

The article's assumption is fallacious, though: you wouldn't stand for high tax rates if the government didn't need the money. As soon as headlines read "Big Budget Surplus," you know that next week will read "Tax Cuts Planned."

The capital currency is not money, but political clout. Politicians are in it for the power, not the cash. The most powerful tool in their belt is to "give" you some of your own money back so that you'll keep voting for them.

If the debt is paid off, more spending will happen, but most of that spending will happen in the private sector, not the government sector. The government may grow some, but that will be reigned in by the voters fairly quickly, I expect. Greedy voters won't abide by too much surplus, and power-hungry politicians are all too happy to return much of these surpluses to their constituents.
 
[ e d @ e x p l o r a t i . c o m ]

Bzzt! Wrong Turn! (2.75 / 4) (#4)
by SEWilco on Tue May 29, 2001 at 11:07:16 PM EST

"If there's a windfall, it should be put to service the national debt so that the hefty interest payments don't continue to beat down our budgets. Once that's cleared out, then the money can be used to shore up any savings goals: social security funds, treasury funds, and so on."
Whoa, you forgot that you're talking about Government Income. That is money taken from us. The difference is that your income is in exchange for your doing productive work (work which creates wealth) -- but you don't pay the government in exchange for their doing productive work.

[ Parent ]
Bzzt! Wrong Button! (3.75 / 4) (#5)
by SEWilco on Tue May 29, 2001 at 11:11:44 PM EST

(Oops, clicked the wrong thing and lost my last paragraph)

At any rate, if the government has excess income then it should not be going into "savings" or "investment". The government should not be keeping money, it should never take more than it needs.

[ Parent ]

Minor nit (none / 0) (#57)
by weirdling on Thu May 31, 2001 at 06:27:19 PM EST

The government gets to finance its debt at very low rates, thanks to its credit standing. It expects to be able to borrow as low as 3%, with the average being closer to 4.5%.
That being said, as another poster has pointed out, letting that debt slide while someone works on a personal 22% credit card loan makes sense, so simply reducing taxes will reduce the debt load in society far more than paying off the debt, as long as people take the opportunity. They, of course, won't.
However, it should also be pointed out that people hold bonds. When the government gets money, it can buy back those people wish to sell or not issue new ones, but it can't buy bonds people do not wish to surrender. Essentially, due to this, we can only pay the debt off so fast. Small municipalities fix this problem by prepaying their bonds through investments. The problem with this is that the federal government has enough money and clout to essentially control business with surplusses so invested. Much better to let a 4.5% APY loan lie and pay the interest than to have to deal with the potential interfering that would cause. No, give the money back to the people...

I'm not doing this again; last time no one believed it.
[ Parent ]
I've been saying this for years. (2.50 / 8) (#2)
by Office Girl the Magnificent on Tue May 29, 2001 at 10:57:35 PM EST

Paying off the debt does our country no good. Not because the money won't be well-used; mostly because we owe most of it to ourselves. Sure, it would stimulate the economy -- but it's an expensive way to do it. It's easier (and more socially responsible) to put the money into government programs and stimulate the economy that way -- and we can avoid all kinds of interest payments that way. It's altogether likely that the government will never be out of debt. Will anyone care in the long run? Probably not. As Keynes said, "In the long run, we're all dead."

"If you stay, Infinite might try to kill you. If you leave, the FBI definitely will. And if you keep yelling, I might do it myself."

Government Programs (3.60 / 5) (#3)
by slick willie on Tue May 29, 2001 at 11:05:50 PM EST

Do not, as a rule, create wealth. Nor do they stimulate the economy.

Paying off the serviceable debt, is a good thing. It's like paying your car off early, you get out of paying a bunch of interest, and that money goes back into your pocket, and speaking in governmental terms -- the taxpayers' pockets. (Unless you subscribe to the belief that the federal government can make better use of that money than you can.). Much of our national debt has, for lack of a better term, pre-payment penalties. Paying those off early is never a good idea.

Never leave it to "government programs" to stimulate the economy or create wealth. All you will get out of a government program is a new bureaucracy that will never die.

"...there is no limit to what a man can do or where he can go if he doesn't mind who gets the credit."
--Ronald Reagan, First Inaugural Address

[ Parent ]

Have you actually studied economics? (4.00 / 1) (#6)
by Office Girl the Magnificent on Tue May 29, 2001 at 11:17:12 PM EST

Because according to the most widely accepted theories, any increase in government expenditures will pump "new money" into the economy and cause in increase in spending, which in turn causes an increase in investment and eventually causes the economy to pick up speed as wages and prices both increase. I could explain it better, but you don't have to take my word for it.

A selection: Fiscal policies employ government spending and tax programs to stimulate the national economy in times of high unemployment and low inflation, or to slow it down in times of high inflation and low unemployment. To stimulate the overall level of spending, production, and employment, the government itself will spend more and tax less, even if it incurs a deficit. (It will then have to run an offsetting surplus at some time in the future.)

"If you stay, Infinite might try to kill you. If you leave, the FBI definitely will. And if you keep yelling, I might do it myself."
[ Parent ]

Make sure we're talking about the same thing. (3.50 / 4) (#7)
by slick willie on Tue May 29, 2001 at 11:36:17 PM EST

There is a huge difference between governmental spending, and government programs. When the government spends money, it spends it in the private sector, and the money ends up (eventually) in the hands of consumers, who then spend it at their local shops.

Every dollar a consumer spends turns around 7 times in the local community. 7 times. That means 500 dollars spent by consumers generates 3,500 dollars in circulation.

If we pump that some money into the Bureau of Wealth Creation, then it's a losing proposition. The money then goes to pay a 19 levels of bureaucracy, 18 of which run around playing CYA, and the 18th comes up with the brilliant idea that they must come up with programs to stimulate the economy.

Because according to the most widely accepted theories[...]
At one time, it was a widely accepted theory that the world was flat. They're just theories.

"...there is no limit to what a man can do or where he can go if he doesn't mind who gets the credit."
--Ronald Reagan, First Inaugural Address

[ Parent ]
Where do you think the money goes? (none / 0) (#18)
by Office Girl the Magnificent on Wed May 30, 2001 at 08:47:40 AM EST

"Government programs" refers to any and all of these things:
  • Transfer payments to individuals (social security and welfare)
  • Salaries and wages for civil servants (including, in many cases, teachers employed by the state)
  • The purchase of supplies -- civilian and military -- used in the maintainence of the government (everything from rubber bands to tanks)
Which of these things doesn't put money into the private sector? If you can name a single government program (except foreign aid) which doesn't put money into the private sector, I will gladly concede.

"If you stay, Infinite might try to kill you. If you leave, the FBI definitely will. And if you keep yelling, I might do it myself."
[ Parent ]

Name your favorite government program (none / 0) (#22)
by Sheepdot on Wed May 30, 2001 at 10:44:33 AM EST

Social Security (money goes to bureaucracies and a portion of it goes to individuals that have already payed well more than they are getting out of it)

Welfare (The US government could cut everyone on welfare a $40,000 check each year using the money allocated to welfare programs, but they can't do that because of all the people that work in welfare offices are collecting income)

Toys for Tots (Probably the best "government program" and it really isn't even one)


[ Parent ]
If the people who work in welface offices didn't.. (none / 0) (#34)
by Office Girl the Magnificent on Wed May 30, 2001 at 02:56:45 PM EST

If the people who work in welfare offices didn't collect income, they'd all be eligible for welfare. See how that works? The government doesn't just spend your money. For every dollar spent in welfare for people who can't find jobs, there are (this is a guess) ten civil service jobs created, reducing the number of people on government aid by ten. (If you assume, as I do, that the unemployment rate remains farily static. It's actually too low right now, last time I looked.)

"If you stay, Infinite might try to kill you. If you leave, the FBI definitely will. And if you keep yelling, I might do it myself."
[ Parent ]

If I'm not mistaken.. (none / 0) (#42)
by Sheepdot on Wed May 30, 2001 at 06:23:11 PM EST

..that is the kind of logic that formed communist Russa as we knew it.

Emphasis on *knew*.


[ Parent ]
Let's take a dollar. (none / 0) (#29)
by slick willie on Wed May 30, 2001 at 01:30:37 PM EST

In my hands:
  • I spend that dollar at my local grocery store, for say, a candy bar.
  • Let's say, of that dollar, 60 cents is what the store paid for that candy bar. That leaves 40 cents, which goes back out in the form of wages to employees, and profits in the owners pocket.
  • Some of the wages that the employee earns is going to go back to the store, because she has to eat, too.
  • She is also going to go down to the hardware store, and buy some potting soil for her plants.
  • Lather, rinse, repeat.
In the government's hands:
  • The dollar is taken from my paycheck.
  • An IRS employee is paid from that dollar.
  • Part of that dollar ends up in Social Security
  • Part of it ends up in medicare
  • Of those parts, parts of those end up in the hands of administrators and bureaucrats.
  • Of the remainder, let's put it into the welfare program, and pay it out, where it will also go to more and more layers of paper shufflers.
  • By the time it gets into a welfare check, that dollar of mine is now narrowed down to probably a tenth of the value to the local economy.
I will concede that a portion of that money does make its way back to the private sector, however, it is most beneficial to the economy when the earner can spend it directly.

The greatest, and most efficient, economic benefit is derived when the earner of a dollar gets to spend it, not when it is diluted through umpteen government programs.

"...there is no limit to what a man can do or where he can go if he doesn't mind who gets the credit."
--Ronald Reagan, First Inaugural Address

[ Parent ]

Let's look at this again... (none / 0) (#32)
by Office Girl the Magnificent on Wed May 30, 2001 at 02:43:28 PM EST

The dollar is taken from my paycheck.

So far, so good.

An IRS employee is paid from that dollar.

Let's say he gets ten cents. He spends that ten cents, together with nine other people's ten cents, on a candy bar, putting part of it back into the economy.

Part of that dollar ends up in Social Security

Where, eventually, ten cents will come back to you, so that you can spend it on candy bars after you have stopped working -- and paying taxes.

Part of it ends up in medicare

Where ten cents will be paid to the doctor who gives you medical treatment when you are seventy-five, which he will then spend to purchase his own candy bars. Another ten cents will go to buy parts to make a pacemaker or medical device to keep you alive another fifteen years.

Of those parts, parts of those end up in the hands of administrators and bureaucrats.

I happen to be a government employee. If you prick us, do we not bleed? We've got our own candy bars to buy. Ten cents for me.

Of the remainder, let's put it into the welfare program, and pay it out, where it will also go to more and more layers of paper shufflers.

Ten cents to the welfare agent, ten cents for office supplies, ten cents to the social worker, ten cents to the office secretary.

By the time it gets into a welfare check, that dollar of mine is now narrowed down to probably a tenth of the value to the local economy.

Ten cents to the welfare queen.

On your dollar, you've now supported yourself twice, a doctor, five government employees, and a poor person. Let's look again at what happens if you spend that dollar on a candy bar.

Let's say, of that dollar, 60 cents is what the store paid for that candy bar. That leaves 40 cents, which goes back out in the form of wages to employees, and profits in the owners pocket. Some of the wages that the employee earns is going to go back to the store, because she has to eat, too. She is also going to go down to the hardware store, and buy some potting soil for her plants.

So, sixty cents goes to the candy bar manufacturer, and, at best, thirty cents goes to the store owner and ten cents goes to the employee.

And this is just the first level of transfer. The distribution of wealth becomes far clearer if we continue to extrapolate -- more and more people are reached with the same money. Just because the money doesn't all go to the same place doesn't mean it's not going back into the economy. Government spending of *any* kind will find its way back into the economy -- just like corporate spending. It's just a different kind of corporation -- one that doesn't keep its profits.

"If you stay, Infinite might try to kill you. If you leave, the FBI definitely will. And if you keep yelling, I might do it myself."
[ Parent ]

So, profits are evil, then? (none / 0) (#38)
by slick willie on Wed May 30, 2001 at 04:16:05 PM EST

So, sixty cents goes to the candy bar manufacturer, and, at best, thirty cents goes to the store owner and ten cents goes to the employee.
Not really.

Let's say that the 60 cents goes back to the candy manufacturer. That, in turn, goes back to the employees who work there in the form of benefits and wages, to the truck driver who transported them from Hershey, PA. Of that 60 cents, the candy manufacturer probably gets 4 or 5 actual cents in profit.

Now, let's go back to the store owner. If his profits are growing, he will expand his operations, and he will hire more people. That means that there will be fewer people in need of the government programs, such as welfare. Tell me which government programs are actually getting people off welfare by creating jobs.

Your example of saying that my Social Security and Medicare money is helping me is ludicous. It is not doing a thing for me now. It is helping to keep the population of Florida in Vigara and Zantac. It's keeping 10 layers of needless administration alive because that medicare money needs an act of Congress to even get into the hands of my doctor.

A dollar that is taken out of my pocket by the federal government does not have near the economic impact than if I spend it as I choose.

By your reasoning, we could just as well give all of our money to the federal government, and Uncle Sam could hire doctors to take care of us, and he would give us food and take care of our housing for us, and so forth.

Oh, wait, that's been tried, hasn't it?

There's nothing wrong with earning a profit.

"...there is no limit to what a man can do or where he can go if he doesn't mind who gets the credit."
--Ronald Reagan, First Inaugural Address

[ Parent ]

Profits (none / 0) (#44)
by Begbie on Wed May 30, 2001 at 07:20:28 PM EST

Government spending of *any* kind will find its way back into the economy -- just like corporate spending. It's just a different kind of corporation -- one that doesn't keep its profits.

Ah, but where does the profit go? To a corporation. Who owns corporations? People do. In fact, if you own any mutual funds, or have a retirement plan then you are sharing corporate profit.

Government may seem to distribute wealth in a fair manner but you must rememeber that a LOT of the money goes to people and corporations who don't need it, weather it be through subsidies, new baseball stadiums, defence contracts, or other various forms of corporate welfare.

My opinion is that money is better left in the hands of individuals, who can make their own decisions on how to spend it. Government is just too slow, corrupt and inefficent to do any good with it.

[ Parent ]
Sounds suspiciously like a prejudice to me. (none / 0) (#46)
by Office Girl the Magnificent on Wed May 30, 2001 at 07:48:20 PM EST

Government is just too slow, corrupt and inefficent to do any good with it.

You made the statement, not me. The burden is on you to prove it, because that's an assumption I am not willing to jump to. I hear this kind of talk all the time, and I'm interested to know why the majority of the people seem to beleive it. So if you can, please prove this statement.

"If you stay, Infinite might try to kill you. If you leave, the FBI definitely will. And if you keep yelling, I might do it myself."
[ Parent ]

Government isn't evil ... just incompetent (none / 0) (#47)
by Begbie on Wed May 30, 2001 at 09:29:20 PM EST

I had the pleasure of applying for a summer job through a Government of Canada program (FSWEP) last summer. Never in my life have I been through so much hassle for a job. It wasn't like it was a good, or a particularily well paying one (I'd be working in a wearhouse, making $10/hour). The program was meant to give university students an opportunity to break into the job market with some relevent experience their particular field.

I'm taking a comp sci major ..... They said that I'd be 'using a computer' (to take inventory), thus it was 'in my field'.

Anyway, I wrote a 3 hour test, had 2 interviews and filled out mounds of paper work over the course of 3 weeks to get the crummy job. I had to travel to 3 government offices, in each corner of the city (one downtown, one in Etobicoke, one in Scarborough) for all of this. It was insane.

Turns out that I ended up scoring a job with the Discovery Channel 4 days before I was supposed to start. (Incidentally, it only took a resume, a phone call and a 20 minute interview to land that one). Maybe slow government has benefits ....

Sure, maybe it was a fluke .. maybe it was one small thing that government screwed up, but it seems to me that everyone that I know that has had dealings with government has experienced simular nightmares.

Now, don't get me wrong ... I don't believe that government is inherently evil or anything, just incompetant and wasteful. Large corporations are the same way .. until they start losing money (IBM is a good example of this). Smaller companies always seem to be able to do more with less .. maybe local government should take over some areas that the feds and provinces currently have, maybe smaller government is the solution.

[ Parent ]
That's better...it makes more sense. (5.00 / 1) (#53)
by Office Girl the Magnificent on Thu May 31, 2001 at 09:07:19 AM EST

Thanks for the clarification. You're right -- the bigger any organization gets, the harder it is for it to move. (Like The Blob.) I'm still a proponent of "Big Gub'mint" ('cause I'm a flaming liberal, from what I hear -- unless you happen to be a liberal, in which case I'm a fascist pigdog conservative who likes big government) because I happen to trust the government more than I trust a corporation that's basically out to get my money. (Or to turn a profit, if you prefer.) I work for the government now, and I used to work for an extremely large pharmaceutical company (The makers of half a dozen HIV drugs, which they kept out of South Africa over so-called patent issues -- but that's another story) and I must say the speed with which things are done here (in a state university that houses about as many employees as my old company's U.S. headquarters, where I used to work) has been fairly impressive compared to my old job. About the only thing that takes longer is getting reimbursed for job-related small purchases. In comparable size private businesses, there is every bit as much waste and inefficiency as there is in government -- let me give you a few examples that are not altogether uncommon:
  • A co-worker would order a box of file folders, but would only use the ones with the tabs cut on the far left. She would put the other 2/3 of the box in the storage room, then order more. Not only this, but she had such a strict scheme of color-coding that she couldn't share anyone else's file folders (even a different brand of the same color) because they didn't match.
  • The storage room had a large file drawer completely filled with unopened post-it notes of all shapes and sizes. Nobody would use them except me and another secretary. Why? "They're the wrong color."
  • Every person in that office had a space heater under their desk, which they used almost year-round because the company turned the thermostat down to 60 degrees F in the summer.
  • Our office went out to lunch at least once a month, on company time and on company money.
  • From June to August, every employee is considered to have worked a full work week if s/he works 37 1/2 hours. Permanant employees recieve three weeks of vacation, and if two employees decided they wanted to go play a round of golf, as long as they took the boss they could label it an "off-site meeting" and not have to take any vacation days. If they took the VP, they could get the company to pay for their game. (I didn't because I was a "temp" even though I worked there for a year and my position had been labeled as a "temp" position for five years...don't get me started on that one!)
  • Here's the kicker. For a "team building day," my boss used company money to take everybody in my department (there were nine of us) to the day spa for as many treatments as we could fit into an eight-hour day. Yeah, I went too, but I felt bad about it. Our department spent about $300/person that day -- on top of which we got paid for being there. Six months later, my position was terminated (thank God I had a position somewhere else) and another employee was laid off because the board demanded budget cuts.
So, that's my experience with private industry. I will never again beleive that the government is more inefficient and corrupt than the private sector. Not that any of this is really relevant...just venting, I guess.

"If you stay, Infinite might try to kill you. If you leave, the FBI definitely will. And if you keep yelling, I might do it myself."
[ Parent ]

Not a compelling argument for me at all. (3.66 / 3) (#23)
by marlowe on Wed May 30, 2001 at 12:07:11 PM EST

I'm of the opinion that most, perhaps all, economic theories are nonsense. If economic theories actually worked, we wouldn't be sliding into recession right now.

-- The Americans are the Jews of the 21st century. Only we won't go as quietly to the gas chambers. --
[ Parent ]
But if you believe economic theory... (4.50 / 2) (#27)
by krlynch on Wed May 30, 2001 at 12:29:57 PM EST

It is true that Government spending in the private sector stimulates the economy. But, if you are going to use Keynsian economic theory to support that argument, you can't ignore the remainder of the theory: Government spending (according to the theory) is ALWAYS less efficient at generating economic activity and eventually wealth than private sector spending. Find an introductory text and look up the "multiplier effect".

In outline form, everytime a dollar gets spent, some fraction of that dollar gets spent by the person it was given to, and on and on..... The biggest economic benefit is obtained in that first step. But, government taxation to support spending cuts that first, crucial step in the multiplier process off. The spending by the government generates all of the remaining multiplier, but the largest chunk of it is dead.

All I am saying is that, if your goal is to stimulate the economy, NOT giving the money to the government is the right way to go. I am NOT saying that all government spending is bad (some is in fact very very necessary (defense for example)), just that taxation to support spending to boost the economy is a losing battle.

[ Parent ]

I'm not advocating raising taxes... (none / 0) (#33)
by Office Girl the Magnificent on Wed May 30, 2001 at 02:50:54 PM EST

I'm advocating not cutting government spending. But if you want to go down that road, if you look at my above example, all the money flows through the economy eventually. It's a matter of distribution. The government tends to distribute money more equitably. It's kind of a moral call -- is it more important to support each person in an economy equally, or is it more important the the earner of the dollar decides who s/he wants to support with that dollar? I can't answer that question.

"If you stay, Infinite might try to kill you. If you leave, the FBI definitely will. And if you keep yelling, I might do it myself."
[ Parent ]

my lord, that's stupid (none / 0) (#63)
by streetlawyer on Mon Jun 04, 2001 at 04:54:30 AM EST

Government spending (according to the theory) is ALWAYS less efficient at generating economic activity and eventually wealth than private sector spending.

Economics books are silly, but not as silly as that assertion, which has absolutely nothing to do with the multiplier effect. The Government built Interstate highways and the backbone of the Internet -- what did the private sector do in that time?

--
Just because things have been nonergodic so far, doesn't mean that they'll be nonergodic forever
[ Parent ]

So... (4.33 / 3) (#12)
by delmoi on Wed May 30, 2001 at 12:09:26 AM EST

All those old grannies who thought they could keep their money in gub'men't Bonds for their retirement should just be screwed, then?

The government doesn't owe money to itself it owes money to the people (as well as the people of several other contries).
--
"'argumentation' is not a word, idiot." -- thelizman
[ Parent ]
Gub'mint bonds and my grandmother. (none / 0) (#19)
by Office Girl the Magnificent on Wed May 30, 2001 at 08:51:06 AM EST

Bonds are financed almost exclusively by the sale of other bonds. Granny is going to get her money -- when she decides to cash it in. By that time, the government will have the cash from the bonds she bought each of her seven grandchildren. It's an exponential growth factor, and it's worked for literally hundreds of years. Sure, it's going to stop working someday, but by then money as we know it will pretty much be a thing of the past.

"If you stay, Infinite might try to kill you. If you leave, the FBI definitely will. And if you keep yelling, I might do it myself."
[ Parent ]

Surplus? (3.80 / 10) (#8)
by brent on Tue May 29, 2001 at 11:38:54 PM EST

You can't have a surplus if you are in debt to begin with. You are simply dealing with projections on spending and revenue that may or not be coming in or going out, which are all based on government predictions, estimates, forecasts and "expert" opinion.

Say I have been spending $10 dollars a day for 10 days promising to pay back the $100 on a given day in the future. How do I pay the money back? I simply increase the forecast of income. Simply state that I will have $110 coming in, once the $100 is due, giving me a $10 surplus. The downside is that I now have a terrible habit of spending money I don't have yet and have the assumption that I can increase spending since I now have a surplus.

It is all one big game of musical chairs. Once the music stops no one wants to be left paying the bill. Until people realize what 5+ trillion in debt really looks like, then will they see that no surplus really existed and nothing was done for the generation that will be paying the bill once the music stops. Today, the demographics shows the music is slowing down some.

Excellent analogy (4.00 / 2) (#26)
by krlynch on Wed May 30, 2001 at 12:20:47 PM EST

But you missed one thing...the music never stops! There is no reason to expect the music to stop. And if the music DOES stop, you have far larger things to worry about than who is going to pay back the Debt. Like, where you are going to get food, and whether electricity will be coming out of the wall.

If the debt scares you because "it has to be paid back some day", does the basis of our currency bother you? "Full faith and credit of the United States Government" That's it! If there comes a time when the U.S. Government suddenly falls apart, there are going to be bigger problems, worldwide I might add, than whether the Debt can be repaid.....

[ Parent ]

the music might not stop, but it slows at times (none / 0) (#58)
by eightball on Thu May 31, 2001 at 11:29:24 PM EST

If we hit depression times, I sure would rather be in the position to be able to incur 5 trillion dollars in debt rather than already having that much debt.

[ Parent ]
Oh yes? (1.60 / 10) (#9)
by sasha on Tue May 29, 2001 at 11:40:09 PM EST

Here is another interesting perspective with which any American should be familiar: the rest of the educated world (assuming the US is included) does not care about the American "national debt." Love, Hal
--- Signal SIGSIG received. Signature too long.
really? (5.00 / 1) (#62)
by streetlawyer on Mon Jun 04, 2001 at 04:52:21 AM EST

Given that two-thirds of the supply of dollar banknotes are located outside the USA, the dollar is the main international transaction currency and that half the stock of US Treasury bonds are owned by non-US residents (admittedly, including offshore accounts of US residents), I find this assertion surprising.

You might as well have posted this from first-century BC Gaul, claiming that what was going on in Rome did not matter to you!

--
Just because things have been nonergodic so far, doesn't mean that they'll be nonergodic forever
[ Parent ]

Ah yes, of course not (2.50 / 6) (#10)
by raaymoose on Tue May 29, 2001 at 11:45:23 PM EST

I don't know. I know the US is obsessed with debt. I've heard the average credit card debt of a US citizen is approaching $5000 US apiece, so why not treat the national debt the same way. Who cares who you owe, keep spending and consuming and thinking the economy and the so-called 'free market' will grow forever and create some utopia. Pay the goddamn debt, it's not that hard. You borrow something, you pay it back.
Aside from that, this once again reeks of chimpanzees ;)


Changing face of currency (none / 0) (#56)
by weirdling on Thu May 31, 2001 at 06:22:04 PM EST

Modern man is more incentivised by debt for things he has than money; hence the debt. Essentially, people work harder, inexplicably, when they alread have the things they want to get, as they don't want to ruin future availability. It's a paradigm shift in the use of currency that happened almost unnoticeably, but essentially, cash isn't king anymore.

I'm not doing this again; last time no one believed it.
[ Parent ]
Disaster! Money to fund things! Stop it! (2.66 / 9) (#17)
by imperium on Wed May 30, 2001 at 06:20:17 AM EST

The "excess" could, instead of being given to the rich, be used to
  • Write off 3rd world debt
  • Ensure everyone on earth has access to clean water
  • Pay for research into sources of energy that don't change the climate
  • Set up a proper healthcare system for everyone in America that doesn't depend on their income
  • Buy wilderness land around the world and maintain it as a resource for the future

    Or whatever else worthy the people could come up with. Surely better than subsidising the already wealthy?

    x.
    imperium

  • rebuttal (3.66 / 3) (#30)
    by cory on Wed May 30, 2001 at 01:49:55 PM EST

    The excess the Federal government should not be used for any of the things you list, and here's why:
    1) Write off Third World debt. We are not responsible for other people's inabilities to manage their finances. If we just paid their debt for them, how would we be assured that they wouldn't turn around and get into massive debt again? Especially since most of those countries are ruled by dictators. We would in effect be subsidizing those bastards when we should be taking steps to get them out of power.

    2) Ensure everyone on earth has access to clean water. I think I see the direction you want us to go now. You want the US to be the global parent, taking care of everyone else. You do realize it's a short step from "taking care of them" to ruling them, don't you? Are you sure you want us to go down the route to Empire that quickly? (Though given your username, this shouldn't be surprising.) I, for one, do not.

    3) Pay for research into forms of energy that don't change the environment. There is no such beast. Creating energy means creating heat. Creating heat will, by definition, change the environment. Amend that to pursuing sources of energy that are more sustainable than most of our current ones (like building more nuke plants, for example), and I'll agree with you.

    4) Set up a proper health care system for everyone in America that doesn't depend on their income. Arguing against nationalising the health care system would take too long to fit here. Suffice to say, there are a lot of valid reasons to not do it.

    5) Buy wilderness land around the world and maintain it as a resource for the future. Let's see a show of hands here: how many non-Americans on K5 would like the US Federal government to come in and start buying up large parts of your country "to maintain for the future"?

    Lastly, a tax cut doesn't "subsidize the already wealthy". If people who make more get more back, it's only because they paid more into it in the first place. As an example, comparing my income with a friend's, I grossed roughly ten times as much as he did last year. I paid in taxes more than three times as much as he earned the entire year. So, tell me, why should I receive a tax cut equal to his? How is that fair?

    Cory



    [ Parent ]
    I agree with you, except... (none / 0) (#35)
    by Office Girl the Magnificent on Wed May 30, 2001 at 03:49:43 PM EST

    ...for your last point. You pay more than your friend because you relied on a smaller percentage of your income to feed and clothe yourself. You can afford to give more to the government because you have more. Let me put it another way. Even though you paid more in taxes than your friend made all year, I'm willing to bet that you still had more *net* income than he had *gross* income. Who's worse off? It ain't you, buddy.

    There's a graph that charts the average amount of money one spends based on income. On request, I will endeavor to find a link for you if you haven't ever seen such a chart. There comes a point where one can't possibly spend all his money. What is going to happen to that money? He's going to put it in a bank account and let it draw interest until he has more money he'll never use. I'm not saying everybody should live in poverty, that people with more money than me should give me some. People, in general, work hard for their money. But once you have the house, the cars, the boat, and you've put your kids through college, it's time to get rid of that money so it can do something useful. Which is why I support an estate tax. But that's a whole new can of worms.

    "If you stay, Infinite might try to kill you. If you leave, the FBI definitely will. And if you keep yelling, I might do it myself."
    [ Parent ]

    the problem with that thinking (none / 0) (#43)
    by cory on Wed May 30, 2001 at 06:32:57 PM EST

    The reason I made so much more than my friend is because I worked my ass off to get to that point. Four years ago we were making the same amount, but we chose different career paths and applied different amounts of work to making those careers work. So why should I pay more to the government (proportionally, I mean) just because I worked harder? (I'll leave aside the point that I support not only myself, but my wife and our two-soon-to-be-three children, while my friend is a bachelor, so he spends a much lower percentage of his income on maintenance than I do.)

    Also, as for what the extra income goes to, I try to invest for my family's future. As part of this, money goes into various funds that provide capital for start-up businesses. While I'm doing this for selfish reasons, one effect is to help stimulate further economic growth. I think that's a pretty useful endeavor. (Even just keeping your money in a savings account helps, as banks can then lend that money out to people buying homes, starting businesses, or whatever people get loans to do.)

    It should also be noted that I gave almost as much to charity last year as my friend earned. I do agree that there are only so many toys you can buy, just let me decide for myself where that cutoff is, don't put a gun to my head and force me. (And anyone who doesn't think taxation is having a gun at your head should try not paying taxes for awhile and see what happens.)

    Cory

    [ Parent ]
    I'm glad you've put your money to good use. (none / 0) (#45)
    by Office Girl the Magnificent on Wed May 30, 2001 at 07:44:55 PM EST

    I wan't trying to get personal. But guess what? I work pretty darned hard. I happen to have a degree in History. I have at least eight more years of school before I can start working in my field because I decided I don't want to teach high school -- which is about the only thing you can do with a bachelor's in a liberal arts degree. My fiance is a computer science major. He hasn't even graduated yet, and he makes more in a year of part-time work than I do in a year of full-time work. Is he working harder than me? I don't think so. (He wouldn't think so either.) So I picked the wrong career -- this is something I actually feel pretty bad about. I'm very sensitive about my career choice because I have a broad enough range of interests and skills that I could have done a lot of other things that actually make money. But I majored in history because I love it more than anything. (Even though people who have read my story that's in the mod queue will never believe that...) So just because I chose a different career path doesn't mean I'm not working as hard. I graduated from college a year early, cum laude, and worked part-time on top of 17 and 18 hour course loads every semester while I was in college except my last semester. And I can't get a job in anything close to my field. So don't tell me about hard work, and don't tell me that everyone who doesn't have money should have chosen a different career path. I could have sold my soul and taken a job I hate. But I decided that my sanity is more important. I'm one of the lucky ones -- I have an office job. Most of my friends who have liberal arts majors are spending their days in grad school and waiting tables at night. And although I'm going to marry a computer programmer, and we will probably have more money than we know what to do with (if all goes well), I will never begrudge the government one cent of the money I give them. Hell, I need it like crazy, and I don't complain now. </rant>

    It's great that you've put your money to good use. I'm proud of you. Many wealthy people do good work -- and they don't get the attention they deserve. But is it killing you to have to give some of your money to people who didn't have the chance to get a good education? Or to rebuild a highway so your family can go on vacation? Or to fund the schools that your children go to? Or even to do things that you don't neccessarily approve of?

    If I may ask, do you beleive in democracy? Representative government? If so, do you expect that that kind of government can run without funding? Where is a government going to get the kind of money it needs without taxing its people? Yes, it used to happen -- when we had monarchies. When serfs lived for free and lords paid a duty to the king for the honor of living on their land. (Tell me *that* is fair!) I challenge you to find a more equitable system than the one we have in the U.S. (And I assume here that you are American.)

    One final point: I specifically mentioned making sure you have enough money to put your kids through college. Perhaps I should have been more explicit. Providing for your children is important, and if your tax burden is so heavy that you are unable to do so to the fullest extent of your desires, you have a right to complain. But obviously this is not the case. You don't want to keep your money, you just don't trust the government with it.

    I can't say I blame you. But that lack of trust is an entirely different issue, which I have neither the time nor the energy to argue here.

    "If you stay, Infinite might try to kill you. If you leave, the FBI definitely will. And if you keep yelling, I might do it myself."
    [ Parent ]

    whoa, calm down there (4.00 / 1) (#50)
    by cory on Thu May 31, 2001 at 02:55:45 AM EST

    Let's back up a second. I never said that people who make less than others work less hard than those others. I don't think I ever even implied it. I certainly didn't mean to. What I (thought I) said was, different people make different career choices *and* by working hard you can succeed. In my case, I chose a career that had great promise, then worked hard to fulfill that promise. You've apparently chosen a career which very few other people place a heavy value on, but it's something you love so go for it (money isn't everything, you have to be happy with yourself).

    Now, with that out of the way, let me say that I see taxes as a necessary evil. Not to do income redistribution, but to provide the services that government is there to do...roads, the judiciary/police, military, etc. The whole thrust of the point that started this conversation wasn't that the income tax should be abolished, rather it should be amended. If someone earns more money, I just don't understand why they should pay a higher percentage of their income in tax. You say, because they can afford it. Following that logic, we should put a "maximum wage" in place. Say, $35k per year, plus $5k per year for each dependent. Everything after that goes to the government. After all, noone needs more than that, right? But then why would anyone ever strive to make more money? Sure, some would, but there would be no effect on the economy, as their extra earnings would just go into the sinkhole that is the government. This is an extreme example, but I hope you see my point.

    Let me put it another way. I've read several articles over the past few years, and heard several rants from different people, about supporting other people's children. The usual argument is that having children is a choice, and noone should be forced to help support other people's kids by picking up the slack at work when someone leaves early to watch their kid play baseball, or by getting "paid less" in terms of not having as many benefits, under the theory that parents get "more" when their kids are covered under health insurance (never mind that we parents pay extra for that extra coverage, and by having more people in the plan, whether employees or not, lowers the price for everybody). I find it ironic that many of these same people support a progressive taxation policy. Why? You've made a career choice that you know is going to pay far less than mine, why should I pay more to support your choice? How is that fair?

    You asked if I believe in democracy. No, I don't. I think Mr. Churchill was half right - democracy is the worst system of government ever devised. Period. A representative republic, on the other hand, which happens to be what you and I live under here in the Good Ol', that system suits me just fine. A lynch mob is democratic, but I don't see many people jumping on that bandwagon these days.

    Cory


    [ Parent ]
    Disingenuous argument (5.00 / 1) (#55)
    by weirdling on Thu May 31, 2001 at 06:19:02 PM EST

    What this argument misses is that I'm *already* paying more taxes than the friend I know (presumably different than the other poster's friend). What I'm being asked to do is pay *disproportionately* more taxes. In other words, say, my friend pays 10% total tax load. Under the current scheme, say, I pay 20% total tax load. he makes, for purposes of argument, $10k, while I make $40k. Now, he pays $1k in taxes and takes home $9k. I pay $8k in taxes and take home $32k. If we both paid 10%, I'd still pay $4k, or four times what he does. See, I still pay more with a flat-tax scheme, and if we simply set the tax cutoff point high enough, those who honestly can't afford it wouldn't be pinched.
    Am I making more? Yes. However, let's examine some other things: I wear dress clothes to work. I live in an expensive neighborhood in order to be close to work. I have a more expensive car because a) I can't miss work ever, period, and b) my boss might want to ride somewhere, so I need to make sure I make a good impression. My friend is paying way less on his student loans. Anyway, suffice to say that I spend more on maintenance per year than he makes. That eats up about 60% of my income, just like his. Second flaw in this argument: people don't all live in the same neighborhoods, eat the same foods, and wear the same clothes.
    Now, for my money, the roads suck, the military is majestically mismanaged, and people support such idiotic ideas as gun buybacks (they'll just buy more guns) and forgiving third world debt (they'll just make more debt). My money isn't just taken from me disproportionately; it is also given out disproportionately. I will make all of 0.9% APY on my money that the Social Security Administration is currently stealing to give to him at 4.5%, which is still abysmal. That's before inflation. Yes, children, I'm *losing* money as we speak in Social Security. Is that fair? I can't get a HUD loan. I can't take a deductible for my student loans (boy, did that piss me off). My money is funding food stamps, and, although a lot of people who are on foodstamps need it, the vast majority use it to buy beer rather than milk for their baby.
    I guess what I'm trying to say is that people forget that the money taken in taxes was at some time someone's money. Disproportionate taxes without disproportionate representation amounts to taxation without representation, something we rebelled over. Plenty of people get plenty angry about it, and rightly so. I don't care if you think I'm selfish; it's still my money, not yours, not the drunk down the block, and certainly not some third world country's.

    I'm not doing this again; last time no one believed it.
    [ Parent ]
    Hmm. (none / 0) (#49)
    by Crashnbur on Wed May 30, 2001 at 10:54:43 PM EST

    Aren't all those idealistic "pay for everything in the world" ideas basically socialist? Last I checked, I the U.S. wasn't a socialist republic. Not that socialism is all bad, but it is not the way to go... in my opinion.

    crash.neotope.com


    [ Parent ]
    It's all fun and games until someone gets... (4.33 / 3) (#24)
    by marlowe on Wed May 30, 2001 at 12:11:56 PM EST

    foreclosed. Which, of course, only happens at just the time when we can afford it least. Like when the stock market has crashed and the crops have dried up and blown away. And adding government insurance only adds another level to the pyramid, and makes the collapse that much bigger when it comes. The next bank panic could bring down the entire federal government with it.

    This is a large part of what's wrong with America. Immediate gratification, and deliberate disreagard for the risks. Immediate gratification always works - at first. But only at first. That's why it's so popular with the the shallow and the stupid, and unpopular with those of us who actually think.

    -- The Americans are the Jews of the 21st century. Only we won't go as quietly to the gas chambers. --
    Any government surplus should be refunded... (4.66 / 6) (#25)
    by marlowe on Wed May 30, 2001 at 12:16:17 PM EST

    to the taxpayers, for the simple reason that it's our money. And also because individual private citizens are a little more likely to spend it prudently. Not much more likely, but a little.

    Any questions?


    -- The Americans are the Jews of the 21st century. Only we won't go as quietly to the gas chambers. --
    Surplus ?? (5.00 / 1) (#31)
    by Komodo321 on Wed May 30, 2001 at 02:35:57 PM EST

    If someone owes $30,000 in credit-card debt, and they have a few dollars left at the end of the month, it isn't really a surplus.

    If the US government experiences a boom economy and tax revenues leave a little bit above expenses, it shouldn't institute a ten year tax cut. It doesn't take a cpa to see that a economic slowdown (like the one we are in now) will lead to lower tax revenues next year, and cutting taxes will lead to a bigger deficit soon.



    [ Parent ]
    This or That.... (4.25 / 4) (#28)
    by Elkor on Wed May 30, 2001 at 01:01:51 PM EST

    Paying off the debt is good. We eliminate interest payments and reduce the deficit, giving us more "available credit."

    Giving it back to the taxpayers is good. It returns money to the wallets of the people (which, I believe is where it belongs).

    Stockpiling it against a short fall is good, too. We may experience a shortfall in the future, and having money on hand to cover the short fall would be good to avoid incurring further debt.

    See my own response for further an example.

    Regards,
    Elkor
    "I won't tell you how to love God if you don't tell me how to love myself."
    -Margo Eve
    Look at the Gov like a person.... (5.00 / 1) (#36)
    by Elkor on Wed May 30, 2001 at 04:02:00 PM EST

    This is an example of why the government might not want to pay off the debt it has.

    The government gets a salary in terms of the taxes we pay them. So, let's pretend I am the government.

    I'll provide an example using my own situation. (simplified for ease of math)

    I currently have $30k in debt (mostly school loans). This works out to $1000/month in payments, $200 of which is interest. I will have all my debt paid off in 3.2 years.

    My living expenses alone are $1000 (rent, board, etc).

    My income is $2500.

    I have $6000 in savings/checking. And $20k in credit on credit cards (no balances currently)

    In my situation, I have a surplus of $500/month, but I don't use it to immediately pay down my debt. Instead I put it in the bank against a shortfall. After taking my gf out and buying neat toys, it is acually $200/mo.

    In my situation I can:
    A) Pay of $6000 to my debt, reducing my payments to approximately $800/mo, increasing my montly surplus to $400.
    B) Stockpile my savings against a shortfall.
    C) Increase my debt payments, maintaining my savings, to pay off my debt sooner.
    D) Tell my employer to lower my salary because I am making more money than I need.


    Currently, if I lose my job, I will be able to survive for 3 months on my savings [$6000/$2000/mo](disregard welfare or unemployment for now). Three months is a decent amount of time to find a new job. This isn't taking into account any severence package I get. Let's assume my company bankrupts.

    Ok, let's do A). I pay down my debt to $24k. Now my required monthly expenses are $1800/mo and I have no savings. Now I get laid off.... and have no savings. Unless I can get a new job immediately, I won't have money to pay my rent or the other bills, resulting in a loss of a place to live, utlities and negative effect to my credit rating. Of course, it might not be an issue. But, it takes 14 months before I'll be back where I started from ($5.4k in bank for 3month buffer). And if my car engine blows up, I have to incur more debt to repair the situation.

    Not good.

    B) Ok, let's maintain my $1000/mo debt payment, and stockpile the money into savings until such point as I can pay off the debt completely. At the rate of $200/month, this point will occur after 25 months. Assuming I want 3 months buffer, then it takes 28 months (leaving $3k in bacnk against the $1k rent and food expenses) Further, every 10 months, I increase my "unemployment buffer" by a month (i.e. an extra $2000 in savings).

    That looks like a good plan. Very stable and reliable. It also gives me the flexibility to take care of other issues that might come up. But, I am eating a little extra interest every month.

    C) If I increase my debt payments by my surplus, then I can shorten the pay off period from 38 months to 30 months, with no change to my spending habits, and I maintain my 3 months buffer in case of unemployment. But if I have to buy a new engine cause my current one blows up I either have to eat into my 3 month buffer, or incur more debt to account for it.

    Still, that looks decent.

    D) How many people here would realistically volunteer to have their salaries cut because they made too much money? Very few of you, unless you had to. I mean, you've got debt to pay off, and that surplus would be a good thing to use to do that. If you give it back to the company then yes, you make them happy, but you lost the money....

    Now, if your boss came to you and said "Sorry, Elkor, we are having problems right now. We either have to cut your salary by $100 or let you go" You can afford to say "well, gee, boss, that sucks, but I would rather work here than not."

    Effectively, that is what we have done to the government with this surplus issue.

    Now, don't get me wrong, I am a selfish bastard. I *want* that money back. It's mine, I feel I deserve it. I don't believe the government does enough for -me- to deserve the $500/check they get from me.

    But I am honest enough to admit that, fiscally, it isn't the right choice.

    Hypocritically,
    Elkor
    "I won't tell you how to love God if you don't tell me how to love myself."
    -Margo Eve
    [ Parent ]
    What a bummer, {insert your country here} (none / 0) (#59)
    by eightball on Thu May 31, 2001 at 11:49:37 PM EST

    Heard about you losing your job, {insert your country here}.
    Dude, if you wanna crash at my pad for a little bit, that's ok. I've got plenty of {insert national beverage here} in the fridge.
    Check it out man, I got a date with that cute {insert neighboring country here} down the street..

    Seriously, though, a country just tends to get pay cuts. It very rarely loses its job entirely, and it is usually because of reasons that make it irrelevant as to how they managed their debt anyway (revolution, takeover, etc).

    [ Parent ]
    Stockpile, yeah, that's the ticket (none / 0) (#64)
    by DeanT on Tue Jun 05, 2001 at 11:41:44 PM EST

    Stockpiling it against a short fall is good, too. We may experience a shortfall in the future, and having money on hand to cover the short fall would be good to avoid incurring further debt.
    I'd be more inclined to agree with this point if I had ever seen evidence that the government had any clue about stockpiling.

    Either pay down the debt with the "excess" or give it back to me/us.

    DeanT

    [ Parent ]

    i think most people are missing the purpose (4.20 / 5) (#39)
    by tforce76 on Wed May 30, 2001 at 04:40:18 PM EST

    of the US national debt, when they say that "a high national debt is bad". as Speare noted in his comment, "Government debt is just like personal debt, but government income is NOT like personal income." i'll go one step further and argue that government debt is NOT like personal debt as well. however, in the end, i believe his point is correct in that most politicians will use the stigma of the national debt to their own advantage.

    where is most government debt tied up today? in what we call t-bills and bonds. as the article quoted above notes, "The loans are in the form of U.S. Treasury debt securities--bonds, notes, and bills." these securities pay off interest to private holders. so, if i bought a 5-year T-bill, i'd be lending the US government cash. that's a lot like paying taxes, except i know that i will get that money back with interest.

    maybe someone else has taken a macroeconomics class unlike mine, but i learned that taxes are a leakage from the economy. when economic times are good, taxes are usually higher at that point, in order to forestall inflation. the government needs to pull money out of a good economy to keep it from growing too fast.

    so buying a T-bill at that point is like lending tax money to the government - you're preventing inflation of the US dollar by doing so. even foreign entities who buy T-bills are preventing inflation, because those entities will be paid interest, which will bolster their local economies. therefore, it's a good thing when the government is in debt - it means that there is less money in a good economy, which means that there will be less inflation.

    it's also worth noting that the T-bill is one of the safest investments on the planet. as the article notes: "Another problem is that Treasuries are popular with foreign investors and governments. They are one of the major reasons that the U.S. dollar is the world's reserve currency--a status that keeps the dollar strong and interest rates low."

    i think that the American public has totally been missing the boat with respect to the national debt, and for that matter, taxes. we've been crying for years to eliminate the national debt and lower taxes without really understanding what debt and taxes are and why they are good things.

    now, the article describes something even worse than a huge national debt: the US government having so much cash, it starts investing in private firms. this should scare everyone. when an entity invests in a company, he is giving the firm money in exchange for a stake in the company. guess what? they're talking about the government having a stake in private firms. but, it's funny how no one is talking about that - they're all talking about how they deserve their money back from the government.

    and that's how politicians are going to screw up the economy. by listening to what we want.



    Why national debt is bad - In a few words (2.25 / 4) (#41)
    by Highlander on Wed May 30, 2001 at 05:52:32 PM EST

    The Economy should be a Meritocracy.

    When the government builds up debt, it creates a class of people who can live from rent payments generation after generation.

    Interesting, it is often left-wing parties who are stupid enough to propose taking up debt for some noble cause.

    How then, should the government spend "excess" money ?
    One way is to save it for a bad day, like in a fund for an army buildup, when a bigger army should be needed. The drawback to this method is that there is actually some penalty incurred for saving money that long.
    The better way, I think, is for the goverment to locate people who do nothing, find out why they do nothing, and to make them do something, by educating them, and by setting goals, like a moon settlement project.

    Enough "few" words.

    Moderation in moderation is a good thing.

    A terrible analogy. (5.00 / 1) (#60)
    by ajf on Fri Jun 01, 2001 at 02:42:06 AM EST

    From the article:

    "Of course, debt can get out of hand - but we are far from that stage. Even at current levels, debt owed to the public represents less than one-third of GDP, or about half the level of other developed countries. The analogy is a family making $100,000 a year with total debt, including home mortgage, of $30,000."

    It seems a little misleading to compare the GDP (a measure of the entire economy's income) with the government's debt (rather than all public and private debt).

    And I don't see why government should be responsible for subsidising "safe" investment. Why borrow money if it can be acquired at lower cost through taxation?



    "I have no idea if it is true or not, but given what you read on the Web, it seems to be a valid concern." -jjayson
    It's not the debt, it's the deficit... (none / 0) (#61)
    by _Quinn on Sun Jun 03, 2001 at 09:04:54 PM EST

       ... that bothers me. I feel that the only times the government should operate at a deficit is during war and recession/depression. If the government doesn't operate at a deficit, the debt will go away by itself; I don't feel a particular need to remove it. On the other hand, US Treasury bonds, bills, and notes /do/ play an important role in the national (and international) economy.

       I haven't really though this through, but why not use taxes to pay for ongoing operations and issue bonds for new ones, national projects, which it seems we haven't had many of in recent years. (At least, that I've heard of.) For instance, the ISS would have been financed by bond sales, rather than by gutting the rest of NASA's budget.

    -_Quinn
    Reality Maintenance Group, Silver City Construction Co., Ltd.
    Is the National Debt Really That Bad? | 64 comments (51 topical, 13 editorial, 0 hidden)
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