Tuesday, January 16, 2007
The federal deficit is going away...
...and will be gone entirely within 18 months, all without any increase in taxes. There is no short-term federal fiscal problem, even while fighting a war and subsidizing a reconstruction in Iraq. That's because the American economy is so freaking strong (including, by the way, its manufacturing sector). Of course, there remains no solution for the "entitlement tsunami" headed our way, which is an entirely different matter.
33 Comments:
By 
, at
Tue Jan 16, 02:52:00 PM:
Entitlement Tsunami? More like stock buyback program. The Fed through it's henchmen at Medicare will own much more land and property after they are through with you at the medical last stop before checking out permanently. Social security and Medicare will own the country some day!
By 
Gordon Smith, at
Tue Jan 16, 03:05:00 PM:
Hawk,
I'll bet you a hundred dollars that the federal budget deficit will not have "gone away" in 18 months.
Are we on?
By , at
Tue Jan 16, 07:20:00 PM:
I wouldn't take that bet , with the Dems at the wheel...................
By SR, at
Tue Jan 16, 09:16:00 PM:
Whether the deficit is gone in 18 months or not.
What is undeniable is that tax revenues continue to increase. There is just no justification for messing with the tax code at this time (unless of course it would be to reduce the upper rate).
By Purple Avenger, at
Wed Jan 17, 03:35:00 AM:
Not to worry. The democrats have promised "change", so we won't be bothered by declining deficits again anytime soon ;->
By Middle Man, at
Wed Jan 17, 01:27:00 PM:
The supply-side demagoguery on economic and fiscal issues never ceases to amaze. For starters, the pat stereotype of the free spending Democrat and the fiscally conservative Republican is long antiquated. Posters here might want to ponder the failed war Republicans initiated over false pretenses. That little nugget has thus far cost us more than the Dems could hope to spend in a generation of public spending projects (though presumably there would be a lesser body count and some benefit from that investment- outside the crony constituency- as contrasts sharply with the Iraq war). It also appears to be lost on this blog's readership that Republicans took the art of corrupt plutocratic bridge-to-nowhere capitalism to new heights during their tenure (which Dems are now taking action to curtail). Moving down the litany of right wing crimes against reason in this category of policy, you have the hopelessly futile economic arguments in favor of abolishing the inheritance tax. What exact incentives the proponents of such a policy are hoping to instill remain to be spelled out, but I doubt very much the Walton family care. And finally, you have the astounding feat of cognitive dissonance that credits Republicans with nearly balancing the budget when they inherited surpluses. Remarkable.
But thou shalt not worry- tax cuts have delivered us to the promised land of high growth and prosperity. This conclusion in spite of the fact that the current growth and prosperity increases were not what they were in the 90's under a higher tax regime.
And one other thing. "So freaking strong" is not a modifier typically attributed to economies running 7% of GDP current account deficits. Those things have a nasty tendency to catch up to you. Don't look now, but our net international investment income has turned negative under his naked eminence. The whirlwind cometh, and that right soon.
By Lanky_Bastard, at
Wed Jan 17, 01:44:00 PM:
From that same report: "Interest on Debt 441 billion." We really need to trim down the credit card bill.
I'm with Screwy. Put me in for 200 though. That's an easy 300 bucks here for you Tiger...all you've got to do is believe that the same people who took us from 6 trillion in debt to 8 trillion are going to fix things before they leave. How about it?
By Lanky_Bastard, at
Wed Jan 17, 01:48:00 PM:
Just to clarify, I don't mean fix the >2 trillion extra debt they bought us. No one believes that is possible. I'm betting they can't even stop increasing it. (ie. be in the black over the last 6 months of 2008.)
By , at
Wed Jan 17, 06:33:00 PM:
I wonder if a big part of the reason the defecit is disappearing "Fin 48." The Financial Accounting Standards Board is requiring companies to change how they reserve for potential tax liabilities on their financial statements. Under the new rule (which is supposed to go into effect for this quarter but which may be postponed a year) if a company takes an aggressive tax position, it must reserve for it on its GAAP statements. Such reserve would not only flag aggressive positions for the IRS but also would be a balance sheet hit. This may be causing companies to take less aggressive positions.
By , at
Wed Jan 17, 06:33:00 PM:
Here's the way to think about this: The US Government owns about a third of all businesses. It also effectively "owns" a portion of everyone's paycheck. We can choose to harvest this money now (which essentially takes a part of that business and personal equity) and pay down the debt, or we can choose to allow that money to be reinvested in the economy. If debt is such a terrible thing to be burdened with, why is it that equity has performed so much better over the past century?
I say we're better off funding the deficit with debt rather than harvesting the equity in the economy via higher taxes. Our economy grows and will continue to grow. If you look at a chart of GDP it's almost entirely an increasing line (except for the occasional recession or Great Depression). American business will continue to outperform American debt. With a reasonably low tax rate like we have and without stupid screwups like what was done during the Great Depression (even that we recovered from), the economy will catch up amazingly fast. If not 18 months, then perhaps 5 years.
By Boghie, at
Wed Jan 17, 07:01:00 PM:
Screwy Hoolie,
You are on. I will gladly bet you a hundred bucks that we will be running surpluses within 18 months.
I have number crunched this thing (and have done so for the past two years and have been far more accurate than your CBO and OMB estimations) and this year's annual deficit will be around $65 Billion - rounding error in an economy of $13.5 Trillion, and even small with spending of $2.7 Trillion. Actually, that is fairly conservative. Next month will tell you if we are running a surplus this year>. The only thing that would derail this progress is another Biblical flood or a suitcase nuke…
Check out some of the posts:
'Federal Budget Slashing in Progress'
'Watching the Deficit'
'Brad and Other Libs Miss Deficit by just 39%'
Leave some way to contact you in the comments of the first entry ('Federal Budget Slashing in Progress'
).
When offering a bet it is bad etiquette not to accept the wager.
I could use some quick cash...
By Boghie, at
Wed Jan 17, 07:02:00 PM:
Screwy Hoolie,
You are on. I will gladly bet you a hundred bucks that we will be running surpluses within 18 months.
I have number crunched this thing (and have done so for the past two years and have been far more accurate than your CBO and OMB estimations) and this year's annual deficit will be around $65 Billion - rounding error in an economy of $13.5 Trillion, and even small with spending of $2.7 Trillion. Actually, that is fairly conservative. Next month will tell you if we are running a surplus this year>. The only thing that would derail this progress is another Biblical flood or a suitcase nuke…
Check out some of the posts:
'Federal Budget Slashing in Progress'
'Watching the Deficit'
'Brad and Other Libs Miss Deficit by just 39%'
Leave some way to contact you in the comments of the first entry ('Federal Budget Slashing in Progress').
When offering a bet it is bad etiquette not to accept the wager.
I could use some quick cash...
By Andrewdb, at
Wed Jan 17, 07:08:00 PM:
Virtually all of the war expense has been done "off balance sheet" with Supplemental Appropriations bills. (Noyt the way I would do it, but there we are...)
I cannot tell, but are these "supplemental" expenses included in the "balanced budget" numbers referenced?
By Fatmouse, at
Wed Jan 17, 07:47:00 PM:
Every time I see a pretentious ass like Majorajam, I want to drill a hole in their head and pour this fact in:
Lowering tax RATES increases tax REVENUE.
Rich people are, by their status, very, very good at making money. If you let them keep some of their earnings this year, next year they'll turn around and pay even _more_ taxes next year.
Every time, EVERY time a president has slashed the top tax rate - Kennedy, Reagan, Bush - the economy has gone gangbusters in the following years. And it's _real_ progress, not the idiocy based off AOL stock established under Clinton's watch.
Until you can learn this very simple economic principle, you have to go live in North Korea.
By , at
Wed Jan 17, 07:59:00 PM:
"Posters here might want to ponder the failed war Republicans initiated over false pretenses. "
Which was was that? The Iraq War was perfectly legal and moral, and was voted on by Democrats, and supported by Bill Clinton.
When will leftists actually try to live in the real world?
By Assistant Village Idiot, at
Wed Jan 17, 08:08:00 PM:
As I have outlined often - most recently in November, http://assistantvillageidiot.blogspot.com/2006/11/two-year-delay.html
there is an approximate two-year delay between the time that a president proposes an economic action and its major effect on the economy. Thus, the Bush economy will run from 2003-2010; the Clinton economy ran from 1995-2002. Whoever is president (or congressional majority), from whichever party, it pays to remember this two-year offset.
Presidential actions can have some minor earlier effects; repercussions can of course persist for years after. But the two-year rule yields insights into the economy stretching back fifty years.
By Assistant Village Idiot, at
Wed Jan 17, 08:39:00 PM:
For all of you betting above, BTW, you might want to agree on the ground rules of whose estimate of the deficit/surplus you're going to accept in 18 months. There are usually several to go around.
None of them without problems.
By Middle Man, at
Thu Jan 18, 01:57:00 PM:
Fatmouse,
That's a brilliant factoid. Perhaps you wouldn't mind sharing your source? I didn't think so. Allow me to bring your world crashing down around you. No single serious economist supports the idea that reducing taxes increases tax revenue in all circumstances. Not even the most revered of the right, e.g. Milton Friedman, contend such a thing. None. In fact, serious economists would agree that increasing taxes increase tax revenue in the vast majority of real world circumstances (of course, hypotheticals can be created in which either proposition is unambiguously true). In the case of the Bush tax cuts, the most recent impetus for that wellspring of propaganda in which you've been pickled, these have to date unambiguously lowered tax revenues, and that quite substantially (contrast with Clinton years for illustration). This of course circles back to my original point about the estate tax, (no where in my post did I raise the dividend, capital gains or marginal income tax rate cuts, the arguments against which are persuasive, but more nuanced), the elimination of which has zero positive economic effects unless you happen to be Paris Hilton, despite its vast cost to 99% of Americans.
As for the 'real progress' of the last four years, you may want to ponder the state of the currency and the trade and current account deficits of today vs. those of the Clinton era. All this 'growth' will feel a lot less prosperous when the bill comes due.
This is the problem with the uninformed, misinforming right. Either too trusting, or altogether untrustworthy.
Anon,
The Iraq War was perfectly legal and moral, and was voted on by Democrats, and supported by Bill Clinton.
Makes a great segue. A few facts you might find interesting. First, the majority of Democrats in the legislature voted against the Iraq war. Secondly, the vote that recorded those positions was cynically scheduled by Republicans right before the midterm elections, both to ensure its passage and as a way to exploit the country's post-9/11 trauma for political gain. Check and check. Thirdly, the Iraq war was on the agenda in the first place for the sole reason that a Republican administration put it there. Yes, the same administration that started looking for non-existent links between Saddam and 9/11 on 9/12. Fourth, the Dems who did vote for the war based their vote on a National Intelligence Estimate, (requested by Congress), chalked full of raw intelligence painstakingly cherry picked by a Republican administration with full access to and likely cognizance of the intelligence that undermined its case- which was legion. Not surprisingly, nearly all such information never saw the light of day before the war. Fifth, in addition to manipulating intelligence, i.e. lying to the American people, the Republican administration fired anyone that gave earnest estimates of the cost of the war, both in dollars or the number of troops that would have to be committed, and for how long, to ensure that shills parroting the canard of a cost-free cakewalk would remain the voice of record. Sixth, the administration went straight to the public early and often with their mushroom cloud propaganda, which they knew full well to be false, to further insure the press and Democrats didn't get in their way. Seventh, the war hawks in the press were dominated by the right wing commentariat and their vehicles- rags like the New York Post, Weekly Standard, Wall Street Journal Editorial Page, and cable news stalwarts like Faux News.
I could go on, but I'd say that sufficiently demonstrates the lunacy of the current epidemic of Republicans running away from their record. Not that such inconvenient facts would give pause to the Richard Perles of this world, who's consciences are clean. But history will not be so forgiving. Just as the fault for the Holocaust has been laid almost exclusively on the Nazis, so too will this failure be forever understood as the sole property of Republicans and their leaders both paid and starry eyed- a policy that by itself is more evidence of the bankruptcy of Republican ideology than one could ever have the misfortune of witnessing. Oh, and to my original point, it's done wonders for the deficit.
By , at
Thu Jan 18, 02:40:00 PM:
Majorajam,
dammit, you just Godwin'd the thread. Thanks alot.
*rolls eyes*
two words:
Viet Nam.
*check and mate*
By Middle Man, at
Thu Jan 18, 03:13:00 PM:
Thanks Anon, but no one's being compared to a Nazi here. The analogy regards the simplification process that is blame attribution, although I gather this is probably over your head.
As for Vietnam, it's a shame we didn't elect that peacenik Goldwater or dove Nixon. All the same, as big a mistake as that war was, at least we had a reason to be there. Above and beyond the pockets of the war-profiteers I mean. Thanks for playing.
By Boghie, at
Thu Jan 18, 03:17:00 PM:
Screwy Hoolie doesn't appear confident enough to shake on the bet he offered me... Oh well...
AndrewDB: The expenditures paid for in the 'supplementals' are shown as expenses in the Treasuries 'Monthly Treasury Statement'. They are hidden only in the fact that they are not accounted for in the pre-expenditure budget. You can watch the effect of that spending in the MTS.
Majorajam: Here are the numbers inflation adjusted to 2006 that pretty much refute your claim that tax revenues are not increasing:
FY2001 (President Clinton):
Individual Income Tax: 1,131,895
Corporate Income Tax: 171,971
Total Revenue: 2,265,527
FY2006 (Most recent Bush numbers):
Individual Income Tax: 1,043,908
Corporate Income Tax: 353,915
Total Revenue: 2,406,681
That means that corporations are paying more than double (inflation adjusted) the income tax than in FY01. So much for corporate tax breaks.
That means that individuals are within 8.4% of their inflation adjusted high point.
That means that all sources of tax revenue are up 6.2% over FY01.
It doesn't look too bad from were I sit, eh...
By Middle Man, at
Thu Jan 18, 06:15:00 PM:
Boghie,
The fact that total receipts are greater now than they were fully six years ago is hardly going to be trumpeted by the administration as a positive. Given that the economy has grown by over 2% per annum since then, if they were lower, their cost to future tax payers would've been even more extrodinary than it already has been. As that goes, the true criteria to use to evaluate the cost/benefit of the Bush tax cuts is what receipts would be under the status quo ante. In that, it would take a heroic epic worthy of Homer to argue that they wouldn't be substantially larger (and a gullible listener to buy it).
In any case, I find it odd you chose FY01 tax receipts for comparison given that that particular year happens to incorporate the effect of Bush's first plutocratic welfare package. Surely you should be using fiscal year 2000?
By Boghie, at
Thu Jan 18, 07:13:00 PM:
Majorajam,
The Feds run on a fiscal year that starts October 1 and ends September 30. FY01 started on October 1, 2000 and ended just after 9/11. Once the funding lines are allotted there is not much that can be done - so this was the last of the Clinton era budgets. That is why I use it. It was in surplus by over $120 Billion. Surplus is a good thing.
Tell me again that we had 2% growth in 2002 and 2003. We did not.
FY2001 GDP was 0.8%
FY2002 was 1.6%.
FY2003 was 2.7%
We did have strong positive growth starting in 2004 - which happily coincides with the implementation of the tax code changes by Bush.
FY2004 GDP was 4.2%
FY2005 was 3.5%.
FY2006 was 3.5% (by memory, the Dept of Commerce server is under maintenance)
As an example, look at what the tax treatment of dividends did to the corporate income tax. Evil corporations were forced to provide dividends to their shareholders, and thus have to show more taxable profit to the Feds.
FY2003 Corporate Income Tax: $131,779 Billion
FY2004 Corporate Income Tax: $189,370 Billion
FY2005 Corporate Income Tax: $278,281 Billion
FY2006 Corporate Income Tax: $353,915 Billion
And you are right; the economy - as measured by GDP - has grown by 17% since FY2001. Almost all of that growth occurred from 2004 onward. It had shrunk or remained stagnant for the two years prior. We were in a recessionary period from FY2001 through FY2003. Personal income tax receipts for FY2002 fell by over $140 Billion from FY2001 - and that was before the tax code changes that were enacted in 2003 and implemented in 2004.
But, in the end, aren’t you glad evil Halliburton is paying a fairer percentage of the tax burden.
I have provided direct links to primary sources. Who are the primary sources for your commentary. For example, can you provide a link discussing Bush's Plutocratic Welfare Package of 2001...
By Georg Felis, at
Thu Jan 18, 08:13:00 PM:
I feel a little like an ant interfering in the battles of giants but here goes:
Majorajam, you engaged in a bit of strawman argument up a few paragraphs. Even diehard Republicans agree that reducing taxes does not increase revenue in *all* circumstances, only when tax rates are on one side of the Laffer curve. And the way the Laffer curve works is that the reduction in taxation causes the economy to grow, therefore returning more (or the same) revenue with a lower tax rate. Since the tax rate reductions have gone into effect, and the expected increase in tax revenues and economic growth has occurred, then Mr. Laffer has been exonerated in my and many other opinions. (including that of my Wife, who has worked tirelessly to re-invest our tax savings into the growing local economy)
By Middle Man, at
Thu Jan 18, 08:24:00 PM:
Boghie,
There were two plutocratic welfare packages- the first in 2001 and second after the brain trust realized they could exploit the political capital afforded them by 9/11 to push through another. See the then treasury secretary's account of dubya's confused response when told it was time to pay off the campaign contributors. Again. "Didn't we already give them a break at the top?".
In any case, my understanding is that the effects of the first 2001 giveaway fell at least in part on that year's tax receipts although to what extent I do not know. Hence the question mark at the end of my sentence. Silly me- I figured that would’ve been sufficient to signify that I was asking a question.
Secondly, what's the annualized geometric mean of GDP since 2001? I think you'll find it's over 2%. I think you'll further find that the magnitude of economic growth since 2001 was what my original post alluded to, and that, as such, the p.a. was a reference to average growth since then. Reads fine that way to me. I am aware of the recession of 2001-2002, which by the going definition of a recession- two consecutive quarters of negative economic growth- was not actually a recession. For the last such instance, you'd have to go back to the 90's.
By the way, if you question the veracity of any of the foregoing, then please feel free to look it up and prove me wrong. I assure you I am equally capable of citing statistics that substantiate nothing, simply less inclined. I say that because, if you'd ever taken statistics, you'd know that correlation does not prove causality. The problems such elementary mistakes get you into go exponential when you ignore simultaneous and more plausible explanations, such as the coincident monetary stimulus to the economy that was a few orders of magnitude more effectual. But we can agree that surpluses are good.
Here endeth the lesson.
By , at
Thu Jan 18, 10:43:00 PM:
here endeth the lesson
Had you given a lesson that quote might be humorous.
Facts were quoted, you dismissed them with an airy wave of your hand as statistics. Sources were cited, you refused to provide sources, saying that you could always produce them.
Fine, do so.
By Boghie, at
Thu Jan 18, 10:44:00 PM:
You made a very convincing argument!!!
But, I am still fool enough to bet Screwy that the Feds will actually run a balanced budget this year - even though my pure guesses and SWAGs point to a $65 Billion deficit...
Here is the basic tenant of this post.
We will be running a balanced budget this year.
Now, how are we going to make the case for increased taxes?
By , at
Sat Jan 20, 01:51:00 PM:
Why would you compare 2001 to 2006? Weren't these at pretty significantly different points of the economic cycle? It reminds me of folks using the basement-low 1983 figures when computing revenue "gains" from Reagan (conveniently neglecting, of course, the impact of Volker's disinflationary Fed policy and the six subsequent tax hikes Reagan signed toboot)
By , at
Sun Jan 21, 09:02:00 AM:
Boghie, I'm curious about whether you consider the purported deficit reductions to be worth it, considering the fact that since 2001, they have come at a cost of a $2.3 trillion increase in the national debt, debt that must be serviced, and serviced to mostly foreign investors (about 75% of the debt is to foreign central banks, right?). Given that the entitlements coming due will be large, doesn't this deficit haggling seem kind of less important? I mean, I thought the bipartisan deal from back in the 90s was to use the surpluses to pay down the debt in order to free up more money down the road for our Social Security obligations. The last six years of fiscal policy, regardless of whether you want to claim that there were any supply-side effects or not (and the numbers compared to other historical recoveries isn't so glowing), have essentially undermined that virtual "lockbox" intended to preserve the viability of SS, at least insofar as the debt reduction freed up revenues that are now going to be committed to paying the juice on the vig....
By Boghie, at
Sun Jan 21, 12:37:00 PM:
Dean Moriarty,
I use FY2001 – not calendar year 2001 – because it is the last budget enacted by President Clinton. It was in surplus. Also, the Monthly Treasury Statements are summed to date by fiscal years. To admit that it was in a different economic cycle, as you do, is to admit that the evil Bush campaign statement that we were heading into recession was true and valid. FY2001 started on October 1, 2000.
Additionally, if I were to use FY2002 the growth in tax revenues would be even more impressive. 9/11 knocked out the economic turnaround that was starting in the late summer of 2001. I know, because I had moved my retirement investments to safety in March 2001 thinking the stock market was topped out. Regretfully, I moved about half of my retirement 401(k) back to stock in late August because of the economic numbers coming out.
Also, on another weblog (”Duby’s New Plan to Balance the U.S. Budget, Daily Reckoning” there was a sourced comment that stated:
1. The largest holders of US debt (as of 10/31/06) are 1) the federal government (43%) and 2) US citizens (32%). China holds 4% of our national debt . (http://www.publicdebt.treas.gov/opd/opdpdodt.htm) (http://www.ustreas.gov/tic/mfh.txt)
Thus, foreign states and entities do not own the majority of government debt. Foreign central banks account for about 25% of the total debt. If you think your numbers are more valid please provide a primary source. One thing to remember is that retired folks (or folks nearing retirement) should rebalance their holdings to safety – and there ain’t much safer than treasury bonds. Oldsters are counting on the income generated by Federal debt. Good, bad, indifferent. It is reality. Where else would you have them invest for safety – a mattress?
You quibble about using FY2001 numbers. Why should we compare total debt growth (and it did grow) during a time of ‘peace and prosperity’ with a period of war and biblical catastrophes. You want to match the dot.com boom with the dot.com bust. You want to match an era of growing, but under the radar screen and ignored, radical Islamism with an era in which no President could ignore it. If we just took the inflation adjusted growth in Defense spending, Homeland Security spending, and Social Security spending out of our expenditures we would have been running surpluses for the last couple of years – at least. But, if you are sensible you know we cannot.
Finally, ordinary income tax will be due on all 401(k) and IRA withdraws by America's oldsters. Do you think everyone was counting on living off of a meager Social Security check from the government? And, those folks who thought Social Security was their retirement fund will continue to work - and maybe save for a retirement suppliment from an IRA or 401(k). If you study the MTS I think you might find this is occurring as I type.
The fact that we will be running very close to balance this year is awesome and not predicted by the snipers. We will be running huge surpluses in FY2008 and FY2009 (Bush’s last two budgets) if we have two reasonable years (ie. Clinton era luck – or maybe Bush will just push the problems to the next guy). I am talking about a half trillion dollar surplus in FY2009 – not $120 Billion or whatever. Of course the caveat is that the Democrats do not clobber economic growth with stupid regulation and massive tax code changes. I agree with PayGo, and I am actually amiable to tightening the DOD and Health and Human Services belts to pay down the deficit. I am not amiable to implementing further Federal bloat with tax code changes that could clobber the economy – if you want to change tax code than simply win the Presidency…
By Boghie, at
Sun Jan 21, 12:54:00 PM:
Dean,
On my blog you asked the question:
"Does that figure include the costs associated with Iraq and Afghanistan?"
The answer is yes...
I generate my numbers using actual expenditures - not projected budgets.
Thus, the number in the MTS reflect the expenditures associated with the supplementals.
Bush et. al. are hiding the expense of the war from the budget process - and that is a bit wrong of them, but who actually knows with certainty what will be required. However, he cannot hide the expenditures as they are paid out.
When you listen to Randi Rhodes or some of those folks they carefully claim that we are not 'budgetting' for the war. That is true - but it is a half truth since it leads the listenners to think Bush is completely hiding the budget effects of the war. He cannot, and is not.
By Middle Man, at
Mon Jan 22, 11:28:00 AM:
Boghie,
The link you gave for China's ownership interest in the US was a dead end. In any case, you'll find the 4% figure is hooey. China owns something on the order of 20% of outstanding treasury debt, (with total foreign ownership of these terrible investments over 50%), not to mention has a sizable amount of government agency and corporate bonds as well as cash which altogether make up its $800bn holding of US paper (there is no definitive estimate, but 80% of official reserves is the figure typically quoted in the press as being the dollar component- the renminbi's peg against a 'currency basket' notwithstanding).
The 4% figure probably takes into account the iou's treasury's has written to the social security trust fund. I find that ironic seeing as you've ignored that debt by way of homage to the current path to a 'balanced budget'. This just in, the government should have to run considerable surplus's by such a standard to truly be running a general fund surplus.
Speaking of this quite basic and rather salient factoid, you want to know how do I justify raising taxes? Well, for starters there's the massive officially quoted debt. On top of that, there is the debt to social security, the revenue owed to which was over the last few years been absconded to fund such things as, oh I don't know, falsely sold invasions cum fiascos that are a blight on our nation now and for generations to come. Then there's the future massive unfunded liabilities that are continually being accrued. On top of that, there's the structural deficit. This is to say, at the height of the business cycle- fyi, where we're at right now- if you're not running surplus's you're actually running (structural) deficits.
So, it's really not difficult to see why some extra revenue in the treasury might be a good thing. And that is without the critical consideration that running surpluses rather than deficits helps to address the savings crisis we find ourselves in and the soon to be more than nettlesome current account situation, (many economists have called for increasing taxes for this reason alone). But I've probably I lost you long ago, so I'll stop there.
By , at
Wed Jan 24, 11:37:00 PM:
http://www.optimist123.com/photos/uncategorized/piechartmar06.gif
China owns very little of our national debt.
