The Federal Deficit Is Actually Shrinking

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    Re: The Federal Deficit Is Actually Shrinking

    In response to A_Concerned_Citizen's comment:

    In response to massmoderateJoe's comment:

     

    In response to A_Concerned_Citizen's comment:

     

    In response to massmoderateJoe's comment:

     

    In response to A_Concerned_Citizen's comment:

     

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    In response to A_Concerned_Citizen's comment:

     

    Ummm ya, except that's not the point of the article.

     

    In a way, policymakers backed into this shrinking deficit. Both the spending cuts and the tax increases are more the product of government stalemate than any deliberate action.

    The economy is paying a price in slower growth. Even some conservatives like John Makin of the conservative American Enterprise Institute are now warning that austerity has gone far enough.

    That lack of long-term thinking is a different kind of deficit that Washington has yet to overcome.

     



    ...and as I said grid lock is shrinking the deficit.  If the consequence is slow growth that's OK in my book.

     

     




    So you like high unemlpoyment and untrained military forces, amongst other things?

     

    What's the fascination with debt?

    Especially at the expense of growth.

     



    Actually unemployment is slowly droping.

     

    Lower tax rates appear to be resulting in some more business activity and higher tax revenues.

    So we are working ourselves out of a whole without burdoning our grandchildren.

    The expense is slow growth vs. artificial growth.

     

     




     

    So, despite all the naysayers,  this is a good recovery.

     

    And your article says that tax increases is what's paying down the debt.

    Where does your theory that lower tax rates increases revenues? That's not mentioned in the article.

    How do you conclude that there is an increase in business activity? I didn't see that in the article either.

     

     



    Pay roll taxes went up, as the holiday ended.  Other Bush cuts are in place.  Unemployment pay outs are down due to both increased highering and the longterm discouraged dropping off, over all govt spending is down.  

     

    Business activity is fueling higher tax revenue.

    Debt as a percent of GDP is falling.

     

     




     

    Even as the federal deficit has ballooned, U.S. corporations are paying lower tax bills than ever before, according to one measure.

    That's the takeaway from a new report by the Center on Budget and Policy Priorities dissecting the tax structures of corporations, which CBPP Director Chuck Marr says are now paying taxes at "historical lows as a share of the [total] economy."



    You are slipping, angryman...you plumb forgot to label the leftwing thinktank CBPP   "nonpartisan"  :)

     

     
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    Re: The Federal Deficit Is Actually Shrinking

    In response to A_Concerned_Citizen's comment:

     

    In response to skeeter20's comment:

     

     

    In response to A_Concerned_Citizen's comment:

     

    Ummm ya, except that's not the point of the article.

     

    In a way, policymakers backed into this shrinking deficit. Both the spending cuts and the tax increases are more the product of government stalemate than any deliberate action.

    The economy is paying a price in slower growth. Even some conservatives like John Makin of the conservative American Enterprise Institute are now warning that austerity has gone far enough.

    That lack of long-term thinking is a different kind of deficit that Washington has yet to overcome.

     



    The GDP formula was changed recently, inoluding such hard-to-value non-comodities like R&D and unrealized royalties, so, the statement thatthe dept is dropping as a percent of GDP is nonsense.  In real terms, it is growing worse.  GDP, as measured by the "old" formula, as in the formula used last week, when you adjust for federal borrowing, has been shrinking for years, probably about a decade.  During this time, spending has been going up, so, it is actually getting worse, so, the Feds changed the optics by changing the formula!

     

    As far as austerity, the idea that what you call austerity, that is, slowing the growth in the rise of unfunded spending, has somehow gone far enough, is laughable.  

    Government borrowing which cannot be paid back in the existing fiscal cycle is borrowing capital from future generations, and is making it appear that things are ok, but in truth, it is creating a bubble.  We sit on top of a bubble, filled with future capital, which is putting our spending  n the backs of our children.

    Sorry to burst your bubble, so to speak.

     

     




    Another conspiracy theory that is just plain laughable.

     

    No one has changed the official GDP formula.

    If you look at receipts as a percentage of GDP historically it is a full 4% less than it was in 2001 and 5% less than 1999. That is $800 billion less revenue than a decade ago.

    Debt does not, in and of itself, rob anyone of anything.

    If the country borrows to fix the infrastructure, future generations benefit from that investment. That is especially true today when interest rates are at historic lows and the cost of construction is always rising, at least at the rate of inflation if not more.

    So assuming inflation is 2%, and you put off infrastructure spending for 10 yrs, that equates to an increase in costs of $200 million for every $1 billion in spending. You would be getting 20% less return on your investment for every 10 yrs.

    That doesn't include the cost of interest on Treasuries.

    Currently the Fed pays .2% interest rate. If that rate rises at normal levels over ten years it would be 5-6%. That is another $400 million/$1 billion hit on the cost of future projects versus the cost today.

     

     

     

     

    Your overarching beleif is that if government does something, it is good.  Sad to say, economically, that's just not always the case.  some would argue it is almost never the case.  Point-by-point:

    Yes, the GDP formulation used by our government has changed, as I described, formally in July, and many groups are already using the calculation to promote a false sense of GDP growth:

    http://www.marketplace.org/topics/economy/us-economy-grow-3-under-new-gdp-calculation

    Deficit, which is the driver of debt, robs the future stream of capital.  You don't get debt without deficits.  we are adding a trillion to that pile each year, and real GDP, notthe phony stuff in the papers, is declining.  It is most certainly getting worse by the day, and is unlikely toimprove in any meaningful way soon.  I know you are politically invested in this, but I am here to tell you you are being fed economic lies via the press.  Any economist worth their salt will tell you the same or nearly the same that I am telling you.  If they don't , they are lying.

    Future generations benefit from infrastructure, ASSUMING the infrastructure improvement is worthwhile.  Too many bridges to nowhere.  It is unlikely that most of today's infrastructure  improvementswill have any payback in the future. Repaving an existing road is planned mainenance, not some magical investment that is going to have outr children living in the lap of luxury.  In fact, very little meaningful infrastructure improvement is going on.  What is going on is planned mainenance on already planned and executed infrastructure, in some case, moving the timetable in, whihc has a small effect.

    Also consider the opportunity cost of insfrastructure improvements:  you are shifting capital out of the private sector to build new roads, dams, etc. that may not even be necessary if the money is left in the private sector.  Example:  Do you think the infrastructure spending we do on creating and storing helium is worhtwhile today?  Sure, in the 30's, it was critical. Today, not so much.

    Real inflation is well beyond 2%.  Also, real wages have dropped precipitously under both Bush and Obama.  But, besides that, you think infrastrucutre is an investment.  It is not.  it is a cost.  Politicians like to talk about "investing in the future".  It is political babble.  What they are really saying is spend money.  No true investment involved, unless you are a bond holder.  Then your cash in is your investment.

    As far as the interest on the treasures, now, you have a point.  So, we spend money we don't have, on things we don't need, in order to stimulate the economy, whihc it has not.  The inflationary properties of that exchange is going to drive the rate of treasuries somewhere "not good".  Tighten your seatbelt on that one.

     
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    Re: The Federal Deficit Is Actually Shrinking

    In response to A_Concerned_Citizen's comment:

    In response to WhatDoYouWantNow's comment:

     

    In response to WhatDoYouWantNow's comment:

    You simply cannot make a coherent economic argument if it is based only on two factors: Tax rate and revenue.



    And if you do, and you looked at how well we have done historically, you would reach the incorrect conclusion that having top tax rates over 70% created the best economic situation America has enjoyed... 

     

     




    Which also makes the Laffer curve...well laughable, especially in the context of todays tax rates.

     



    The Laffer curve is spot on.  Based on your snarky little quip there, I don't think you even understand it.  It doesn't say that raising taxes/government revenue goes down.  It states that there is an optimal point at which government revenues are maximized. 

     

    Heck, the Laffer Curve isn't even anything new.  It has been around since the days of Adam Smith.  we just have given the concept that there is a point at which revenues and taxes are both optimized a new name.

     

     
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    Re: The Federal Deficit Is Actually Shrinking

    In response to A_Concerned_Citizen's comment:

     

    In response to massmoderateJoe's comment:

     

    In response to A_Concerned_Citizen's comment:

     

    In response to massmoderateJoe's comment:

     

    In response to A_Concerned_Citizen's comment:

     

    In response to massmoderateJoe's comment:

     

    In response to A_Concerned_Citizen's comment:

     

    Ummm ya, except that's not the point of the article.

     

    In a way, policymakers backed into this shrinking deficit. Both the spending cuts and the tax increases are more the product of government stalemate than any deliberate action.

    The economy is paying a price in slower growth. Even some conservatives like John Makin of the conservative American Enterprise Institute are now warning that austerity has gone far enough.

    That lack of long-term thinking is a different kind of deficit that Washington has yet to overcome.

     



    ...and as I said grid lock is shrinking the deficit.  If the consequence is slow growth that's OK in my book.

     

     




    So you like high unemlpoyment and untrained military forces, amongst other things?

     

    What's the fascination with debt?

    Especially at the expense of growth.

     



    Actually unemployment is slowly droping.

     

    Lower tax rates appear to be resulting in some more business activity and higher tax revenues.

    So we are working ourselves out of a whole without burdoning our grandchildren.

    The expense is slow growth vs. artificial growth.

     

     




     

    So, despite all the naysayers,  this is a good recovery.

     

    And your article says that tax increases is what's paying down the debt.

    Where does your theory that lower tax rates increases revenues? That's not mentioned in the article.

    How do you conclude that there is an increase in business activity? I didn't see that in the article either.

     

     



    Pay roll taxes went up, as the holiday ended.  Other Bush cuts are in place.  Unemployment pay outs are down due to both increased highering and the longterm discouraged dropping off, over all govt spending is down.  

     

    Business activity is fueling higher tax revenue.

    Debt as a percent of GDP is falling.

     

     




     

    Even as the federal deficit has ballooned, U.S. corporations are paying lower tax bills than ever before, according to one measure.

    That's the takeaway from a new report by the Center on Budget and Policy Priorities dissecting the tax structures of corporations, which CBPP Director Chuck Marr says are now paying taxes at "historical lows as a share of the [total] economy."

     



     

    The real issue around corporate taxation is not related to taxes, as much as it is related to opportnity cost.  Money stays overseas, or goes into stock buybacks, because the current political environment is to risky, too costly.

    The funny thing is that these liberals don't even understand that they are driving more money into the hands of the 1% based on these liberal policies.  Oh, the irony!

     
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    Re: The Federal Deficit Is Actually Shrinking

    "You are trying to say that upgrading the electrical grid, saving between 20-30% of electricity costs is not an investment? That's just ridiculous.
    If the gov't upgrades the electrical grid and every company saves 20-30% on their electrical costs, what do you call that if not a benefit?"

    The government saving us 20-30% in energy costs? You live in a dream world, where government is efficient and works for the betterment of the taxpayers.
    The reality is , government in its absurd corrupt crony capitalist methods to impose "green energy" has taken actions that , as Obama cronies put it, will "necessarily skyrocket" electricity prices....for our own good, of course...

     
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    Re: The Federal Deficit Is Actually Shrinking

    Br'er Crankup what I find funny about the term "Crony Capitalism" and the way you use it ... it's fits the GOP to a T better than it does Obama . It's the GOP who allows business to suckle off the Government teat !

     
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    Re: The Federal Deficit Is Actually Shrinking

    In response to A_Concerned_Citizen's comment:

     

    In response to skeeter20's comment:

     

    In response to A_Concerned_Citizen's comment:

     

    In response to skeeter20's comment:

     

     

    In response to A_Concerned_Citizen's comment:

     

    Ummm ya, except that's not the point of the article.

     

    In a way, policymakers backed into this shrinking deficit. Both the spending cuts and the tax increases are more the product of government stalemate than any deliberate action.

    The economy is paying a price in slower growth. Even some conservatives like John Makin of the conservative American Enterprise Institute are now warning that austerity has gone far enough.

    That lack of long-term thinking is a different kind of deficit that Washington has yet to overcome.

     



    The GDP formula was changed recently, inoluding such hard-to-value non-comodities like R&D and unrealized royalties, so, the statement thatthe dept is dropping as a percent of GDP is nonsense.  In real terms, it is growing worse.  GDP, as measured by the "old" formula, as in the formula used last week, when you adjust for federal borrowing, has been shrinking for years, probably about a decade.  During this time, spending has been going up, so, it is actually getting worse, so, the Feds changed the optics by changing the formula!

     

    As far as austerity, the idea that what you call austerity, that is, slowing the growth in the rise of unfunded spending, has somehow gone far enough, is laughable.  

    Government borrowing which cannot be paid back in the existing fiscal cycle is borrowing capital from future generations, and is making it appear that things are ok, but in truth, it is creating a bubble.  We sit on top of a bubble, filled with future capital, which is putting our spending  n the backs of our children.

    Sorry to burst your bubble, so to speak.

     

     




    Another conspiracy theory that is just plain laughable.

     

    No one has changed the official GDP formula.

    If you look at receipts as a percentage of GDP historically it is a full 4% less than it was in 2001 and 5% less than 1999. That is $800 billion less revenue than a decade ago.

    Debt does not, in and of itself, rob anyone of anything.

    If the country borrows to fix the infrastructure, future generations benefit from that investment. That is especially true today when interest rates are at historic lows and the cost of construction is always rising, at least at the rate of inflation if not more.

    So assuming inflation is 2%, and you put off infrastructure spending for 10 yrs, that equates to an increase in costs of $200 million for every $1 billion in spending. You would be getting 20% less return on your investment for every 10 yrs.

    That doesn't include the cost of interest on Treasuries.

    Currently the Fed pays .2% interest rate. If that rate rises at normal levels over ten years it would be 5-6%. That is another $400 million/$1 billion hit on the cost of future projects versus the cost today.

     

     

     

     

    Your overarching beleif is that if government does something, it is good.  Sad to say, economically, that's just not always the case.  some would argue it is almost never the case.  Point-by-point:

    Yes, the GDP formulation used by our government has changed, as I described, formally in July, and many groups are already using the calculation to promote a false sense of GDP growth:

    http://www.marketplace.org/topics/economy/us-economy-grow-3-under-new-gdp-calculation

    Deficit, which is the driver of debt, robs the future stream of capital.  You don't get debt without deficits.  we are adding a trillion to that pile each year, and real GDP, notthe phony stuff in the papers, is declining.  It is most certainly getting worse by the day, and is unlikely toimprove in any meaningful way soon.  I know you are politically invested in this, but I am here to tell you you are being fed economic lies via the press.  Any economist worth their salt will tell you the same or nearly the same that I am telling you.  If they don't , they are lying.

    Future generations benefit from infrastructure, ASSUMING the infrastructure improvement is worthwhile.  Too many bridges to nowhere.  It is unlikely that most of today's infrastructure  improvementswill have any payback in the future. Repaving an existing road is planned mainenance, not some magical investment that is going to have outr children living in the lap of luxury.  In fact, very little meaningful infrastructure improvement is going on.  What is going on is planned mainenance on already planned and executed infrastructure, in some case, moving the timetable in, whihc has a small effect.

    Also consider the opportunity cost of insfrastructure improvements:  you are shifting capital out of the private sector to build new roads, dams, etc. that may not even be necessary if the money is left in the private sector.  Example:  Do you think the infrastructure spending we do on creating and storing helium is worhtwhile today?  Sure, in the 30's, it was critical. Today, not so much.

    Real inflation is well beyond 2%.  Also, real wages have dropped precipitously under both Bush and Obama.  But, besides that, you think infrastrucutre is an investment.  It is not.  it is a cost.  Politicians like to talk about "investing in the future".  It is political babble.  What they are really saying is spend money.  No true investment involved, unless you are a bond holder.  Then your cash in is your investment.

    As far as the interest on the treasures, now, you have a point.  So, we spend money we don't have, on things we don't need, in order to stimulate the economy, whihc it has not.  The inflationary properties of that exchange is going to drive the rate of treasuries somewhere "not good".  Tighten your seatbelt on that one.

     




    First of all, that 'new' GDP calculation has never been used, ever. That means the GDP numbers are the same as always.

     

    Second of all, you are the one that is politically invested. You're just throwing out ridiculous theories without a shred of data.

    You are trying to say that upgrading the electrical grid, saving between 20-30% of electricity costs is not an investment? That's just ridiculous.
    If the gov't upgrades the electrical grid and every company saves 20-30% on their electrical costs, what do you call that if not a benefit?

    So when the gov't maintains a bridge over a river, a route that saves 50 miles of travel by other routes, that doesn't save the trucking company 100 miles of travel expesense every time they make a delivery over the maintained bridge as opposed to a circuitous route?

    You are completely wrong about 'shifting' money to do infrastructure projects.

    Who do you think builds the roads, bridges and dams? The Fed doesn't have it's own construction company. Those contracts to build these projects go directly to private industry. The entire Big Dig was built by private companies.

     

     



    You clearly don't understand the current GDP calculation and its' deficiencies.  Any, yes, recalcs are going on right now.

    The sincle biggest problem withthe current GDP calculation, which is not being addressed, is how golong term government borrowing has artificailly inflated the GDP.

    A simple example:

    You take a loan to buy a $200,000 house. you put 20% down, borrow the rest.

    Is your net worth, based on this, and only this, $200k, or $40K?

    Similar with GDP.  

    What I'm throwing out isn't theories, it is economic knowledge and reason.  Yuo can't just cling bitterly to your Keynsian economics, whic is oft quoted, little understood, to the point where no one here understands that he never said long term government borrowng is the way to get out of a long term recession.  You don't understand that, don't you?  

    You are politically invested in a not-so-true representation of the economic picture.  you want it to be all rosy.  Unemployment is down below 8%:  Hooray!  Just don't look at the workforce participation rate, because, if you considered that, you would understand that real unemployment is over 10%.

    Not every government infrastructure project makes sense or is a good investment.  This is where you fail:  you assume ANY government project is good, just because it is a government infrastructure project.

    Your hypothetical bridge that saves a trucking company 50 miles a day might cost millions more than the trucking company will ever save.  Have you ever considered that?

    So, we should build expensive infrastructure projects that might not be needed just to create jobs?  That's an abhorent abuse of the public trust. Figures a liberal would think that's a good idea.

    This is the problem with the left:  they just don't understand basic economics.

     
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    Re: The Federal Deficit Is Actually Shrinking

    In response to WhatDoYouWantNow's comment:

    In response to skeeter20's comment:

    The Laffer curve is spot on.

     


    Here's what you aren't understanding: The general concept is necessarily true, because:


    Tax rate 0% across board = $0 government revenue

    Tax rate 100% across board = One time confiscation, followed by crashing revenue as everyone flees the country.


    Inbetween = varying degrees of government revenue, depending on the interplay of human emotion and a billion factors.

     

     

    The trouble is nobody waving the curve around has ever done the billion-fator analysis and actually plotted the laffer curve. It's just used by idiot pols and their psycophants as a short-cut past thinking.

    The laffer cuver does NOT say "cutting taxes = more revenue, period, always"



    Glad to see you Googled the Laffer curve.  Trust me, I understand it just fine.  Now, apparently, you do as well.  But, you are wrong in your assessment that it is meaningless and that no one has done the calculation.  Obama's own econimists have made the calculation.

    Christine Rohmer says the current number is around 31%, I beleive.  I would have to look it up, as I didn't write it down when she said it.

     
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    Re: The Federal Deficit Is Actually Shrinking

    In response to A_Concerned_Citizen's comment:

    In response to WhatDoYouWantNow's comment:

     

     

     

    In 1961 the top tax rate was 91% and yet that was the start of the longest period of economic expansion in the 20th century.

     

    That rate wasn't lowered to 77% until 1964, by that time the country had 3yrs of booming economic growth. And when the rate was lowered to 77%, that caused revenues to fall, even though GDP continued to rise.

    The top tax rate stayed above 70% for the entire decade and yet that was the longest economic expansion in the history of the country.

    So if the Laffer curve is to be believed then the tax rate at which revenues are optimal must be well over 90%.

     

     




     

    Exactly. And yet, chances are that the reason that was the period of booming growth is because all the returning WWII vet's children were hitting the job market (and not yet being sent to Vietnam), combined with the fact that the United States was the only large economy seriously involved in WWII that did not suffer massive infastructure damage/etc.

     

    Unlike Laffer curve morons, you won't hear me claiming that 90% tax rates caused economic success simply because of a correlation between two out of billions of factors.

     

     




    Exactly!!

     

    The correllation between taxes and economic activity is tenuous at best.

    The easiest thing to do, however, is to disprove the supply-siders idea that higher taxes harm the economy.

    All you have to do is point to the two longest periods of economic expansion came during times when taxes were higher, in fact MUCH higher.

    And that refudiation is in no way an argument in favor of higher taxes or that higher taxes results in economic expansion.

    Rather it is a statement of fact and that the supply-sider's arguments are based on nothing more than opinion and political ideology.

     

     



    What you don't understand is that the Laffer curve does not correlate only two data points. It show the effect of the correlations of everything ON two datapoints:  those two items being REAL tax rate, and government revenue collected.  There is a maximum point given the current situation, at all times.  We may not know it, but it can be estimated.

    Higher taxes is a completely untethered concept.  Higher than what?  At what point are they too high?  

    Look, I understand that you just simply want to raise taxes and spend without any concern as to the impact. But let me ask you this:  Why would you want to collect one dollar past the point where rvenues are maximized?  Is it because, like Obama, you want to do it on some sort of moral grounds?  You are aware that he has made statements that his tax policy is not about raising revenue as much as it is about doling out punishment, i.e. fairness?

    MR. GIBSON: And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

    SENATOR OBAMA: Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.

     
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    Re: The Federal Deficit Is Actually Shrinking

    In response to A_Concerned_Citizen's comment:

     

    In response to skeeter20's comment:

     



    You clearly don't understand the current GDP calculation and its' deficiencies.  Any, yes, recalcs are going on right now.

     

    The sincle biggest problem withthe current GDP calculation, whihc is not being addressed, is how golong term government borrowing has artificailly inflated the GDP.

    A simple example:

    You take a loan to buy a $200,000 house. you put 20% down, borrow the rest.

    Is your net worth, based on this, and only this, $200k, or $40K?

    Same with GDP.  

     

    What I'm throwing out isn't theories, it is economic knowledge.  Yuo are politically invested in a not-so-true representation of the economic pitcure.  you want it to be all rosy.  Unemployment is down below 8%:  Hooray!  Just don't look at the workforce participation rate, because, if you considered that, you would understand that real unemployment is over 10%.

     

    Not every government infrastructure project makes sense or is a good investment.  This is where you fail:  you assume ANY government project is good, just because it is a government infrastructure project.

    Your hypothetical bridge that saves a trucking company 50 miles a daymigh cost millions more than the trucking company will ever save.  Have you ever considered that?

     

    So, we should build expensive infrastructure projects that are not needed just to create jobs?  That's an abhorent abuse of the public trust. Figures a liberal would think that's a good idea.

    This is the problem with the left:  they just don't understand basic economics.

     

     

     




    Wow, you are really bonkers.

     

    A mortgage, if looked at in this context, would be an investment that would appreciate over time. If I take a mortgage on property I expect my net worth to rise as the value of the property rises. So at 0 years I'm worth what the net value of the house is. After 2 yrs my net worth increases because I pay down my debt AND I maintain my property. Only an idiot would spend many times their income on property and not maintain it. So as I maintain my house or expand it, my net worth increases proportionally and as the country maintains or expands it's infrastructure so does the net worth of the country rise.

    I never said every gov't project, that's you just making up stuff because you're losing the argument...BADLY!!

    This is how dumb your argument is.

    You don't account for the cummulative effect of the savings of ALL the people using the bridge and you don't expense that bridge over all the tax payers over the lifespan of the bridge. That is why you are being just plain ridiculous.

    The benefit a trucking company receives far outweighs what that company pays in fuel tax. That bridge will be there long after the trucking company needs to replace it's trucks two or three times, and at basically the fixed cost of the original investment for a period of 50-60-70 yrs.

    How about the net worth of that bridge?

    It's easily calculated by taking the replacement cost minus original cost minus maintenence.

    Look at any proposal for any bridge in the country and the cost is higher than the original cost of the bridge it is replacing. Costs rise over time, material is more expensive, labor goes up etc. As the technology and materials get better, maintenence costs decrease and the lifespans of bridges increase making the initial investment a net benefit to the country.

    The ASCE can quantify infrastructure benefits and they estimate that the current infrastructure problems cost the economy half-a-trillion dollars a year in lost revenue. Multiply that year over year for the average 50 year life span of a bridge and you're talking real money. Multiple trillions of dollars.

    And I noticed that you at least backed of that dumb claim that these projects take money out of the private sector. In fact it's the opposite, the private sector are the ones who build these infrastructure projects so they are directly benefitted.

     

     

     

    Here's an easy analogy that maybe, just maybe, even you can understand.

    What happens to the rent and value of a property in Monopoly when you invest in infrastructure, like add houses or a hotel?

     



    How did I know you would not understand the concept I was trying to get across when I compared the GDP to a mortgage?  Sigh.  the point is not about the mortgage, it is about how you account for borrowed money vs. paid in money.

     

    And, you are correct.  Sometimes bridges are needed.  And, sometimes, it is just an excuse to build something to put a politicians name on it, ie. bridge to no where, the high speed rail Patrick wants to build, the high speed rail Biden wants to build in california between two empty cities. China and Russa are littered with massive infrastructure projects that sit empty.  Do you want that?

    Here's the real point:  that you ASSUME that EVERY infrastructure project has a positive payback.  Let's stick with your bridge analogy.  So, it cost a million, and over the years of use, saves a million and a dollar.  Did you include in your magical calculation the loss of revenue from the gas station next to the previous well-used crossing ten miles away?  How about the dinier on the other side of the old bridge?  How about the need to now repair TWO bridges?  You need to take into account all costs.  It is the ole 'nobody stops at the diner anymore since the interstate went in'.

    Besides, there are no siginificant infrastructure projects going on with Obama's "shovel ready" stimulus.  They just ran around and did basic maintenance and moved a few small planned projects in.  No Hoover dams in this list.

    But, your point that borrowing excessively to build infrastructure, not a big fan of that.  Sure, it makes the GDP look great, but it is a GDP number built on air.  THAT'S the point that you seem to not get.

     
  20. You have chosen to ignore posts from skeeter20. Show skeeter20's posts

    Re: The Federal Deficit Is Actually Shrinking

    In response to A_Concerned_Citizen's comment:

    In response to skeeter20's comment:

     

    In response to A_Concerned_Citizen's comment:

     

    In response to WhatDoYouWantNow's comment:

     

     

     


    Would you please just READ the post before posting your stupid comments.

     

     

    And that refudiation is in no way an argument in favor of higher taxes or that higher taxes results in economic expansion.


    And since when is Gibson an economics expert?

    In addition, numerous economists have said that cuts in capital-gains taxes do not pay for themselves, let alone increase revenue. In an article published in the Journal of Public Economics, N. Gregory Mankiw -- former chairman of President Bush's Council of Economic Advisers -- and Matthew Weinzierl asked, "To what extent does a tax cut pay for itself?" Mankiw and Weinzierl concluded, "In almost all cases, tax cuts are partly self-financing. This is especially true for cuts in capital income taxes" [emphasis added]. Discussing those findings in a 2007 blog post, Mankiw noted, "Matthew Weinzierl and I estimated that a broad-based income tax cut (applying to both capital and labor income) would recoup only about a quarter of the lost revenue through supply-side growth effects. For a cut in capital income taxes, the feedback is larger -- about 50 percent -- but still well under 100 percent." A May 17, 2006, Knight Ridder Newspapers article citing Mankiw's study noted that "paybacks of 50 ... percent still mean a net revenue loss for the Treasury." The article also reported, "Treasury Secretary John Snow conceded Tuesday that the much-touted tax cuts for capital gains and dividend income don't drive today's strong economy. Asked by Knight Ridder if the tax reductions paid for themselves, Snow acknowledged that they don't."

     



    Umm...the point isn't whether or not Gibson is an economic expert.  The point is that Obama doesn't care if raising taxes actually brings more revenue into government.  He just wants to make sure successful people are properly punished for their efforts.  His point about fairness in this case is an illigitimate function of government.

    And, this "Tax cuts paying for themselves" is a broken progressive concept.  It isn't about it, saying tax cuts somehow "pay for themselves" is just stupid progressive claptrap.  Doesn't even make sense.  It is as if you think the money actually belongs to government, not the person who earned it, eh?  Am I warm?

    When you cut taxes, you are letting people hold onto their own money, period.  The economic argument is, that, when you do so, is the impact of lowering taxes in the narrow case being discussed here, raise revenue.  It does this by people taking this money and spending/investing it! This investment produces more good, whihc are sold, producing more jobs, more tax revenue.Many times it has been shown to do so.  So, we are back to the Laffer curve!

    Given that, all this, which surely you understand, why would you not want to maximize the total amount of revenue to government with the PROPER tax rate, not necessarily the HIGHEST tax rate?

    But, let's not forget that the ONLY legitimate taxation is taxation that is to fund the legitimate expenses of government.  ALL other reasons, i.e. "fairness" are not legitimate.  Obama is off his presidential mandate when he says such things.

     

    Are you getting any of this?  This is basic economics.

     
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