U.S. Debt discussion

[SebC]

Originally Posted by Rockin' Flames

How are corporate bailouts are supply-side economics?

Giving money to suppliers = supply side. Giving money to consumers = demand side.

Originally Posted by Calgaryborn

Ya when those guys come home they are still going to be soliders. America will have to feed, house and pay them until their term is up. They will still need ammunition to shoot and gear to wear out. If they use less that that just means less jobs in the manufactoring sector. As the soliders retire out they will need jobs or else begin their secondary education with the government flipping the bill.

Military related manufactoring jobs have been some of the most stable throughout this economic down turn. It helps that the military uses American companies pretty much exclusively. The cuts will hit middle class workers hard.

So now you're arguing that government spending is good for the economy.

Originally Posted by Calgaryborn

The Rockerfeller's and the Trump set use charitable foundations to protect their personal income from the tax man both in life and in death. They control their foundations and do give to worthy causes through them but, they also invest and grow the foundation's money through stocks and other investments. The control of these foundations get passed on to their children which gives their children both income and power because of the millions or billions of dollars controlled by these charities. This should be changed. Charitable foundations should only be allowed to hold a small percentage of invested funds.

I could be mistaken, but once the money goes into a charitable foundation, isn't it permanently set aside for charity? I don't see why these should be considered the same as personal wealth.

[Flames Fan, Ph.D.]

Originally Posted by HotHotHeat

Off topic question.... But why would Apple want to hold that much cash in their reserves? As opposed to reinvesting it or buying up other assets?

Just kinda delving back into this thread...

This is OT, but the reason Apple holds that large chunk of cash is to be able to make bulk purchases of components for their products. With the large orders they put in, they can negotiate better pricing, which then allows them to reduce the price of their products.

This has been Apple's m.o. for the last decade:

1) Spend the time and money to make something of high quality, and put it out there at a premium.

2) As you refine your product, watch competitors try to release ver 1.0 of theirs.

3) Through purchasing clout and market leadership, Apple makes ver 1.0 of their product competitively priced at the entry level, and they also release ver 2.0 at a premium price. At the same time, competitor ends up releasing their ver 1.0 at a premium price to apple's ver 1.0 product.

They've played this beautifully with the Ipod (can anyone name another mp3 player?), are playing it with the iphone (the iphone 3GS is now super cheap) and will do it with the ipad.

The money gives them the leverage to capitalize on their innovation.

[seattleflamer]

Originally Posted by Cowperson

To another extremist with goalposts at the other end of the playing field, I suppose that would look extremist.

Cowperson

Let's look at it beginning of this debate to each side's endgame and the final result:

The President insisted that the focus be on a combination of revenue/tax increases, spending cuts and that a debt ceiling limit that went beyond the next election.

The Republicans focused on spending cuts and capping any increase of the debt ceiling on a dollar for dollar reduction in spending--cut, cap and balance.

Now fast forward to day. The Democrats have no revenue increases, and are arguing over how much and the length of the amortization of the spending cuts will be.

There are no political winners in this but (yes my favourite word) from a policy perspective, the Republicans have clearly won the debate on where we are taking this country going forward.

What is scary is the Tea Party doesn't even know how to celebrate a victory or know when they have won. They have changed DC for the worse imho.

That is not the somewhere in the middle from that metric. But I get what you are saying that it is subjective.

[Calgaryborn]

Originally Posted by seattleflamer

Let's look at it beginning of this debate to each side's endgame and the final result:

The President insisted that the focus be on a combination of revenue/tax increases, spending cuts and that a debt ceiling limit that went beyond the next election.

The Republicans focused on spending cuts and capping any increase of the debt ceiling on a dollar for dollar reduction in spending--cut, cap and balance.

Now fast forward to day. The Democrats have no revenue increases, and are arguing over how much and the length of the amortization of the spending cuts will be.

There are no political winners in this but (yes my favourite word) from a policy perspective, the Republicans have clearly won the debate on where we are taking this country going forward.

What is scary is the Tea Party doesn't even know how to celebrate a victory or know when they have won. They have changed DC for the worse imho.

That is not the somewhere in the middle from that metric. But I get what you are saying that it is subjective.

The Tea party wanted a balanced budget. They argue that if you just shrink government to the 2004 levels of spending there is enough tax dollars to pay the bills. They also wanted Obama care trashed and an amendment to the Constitution that forces the government to have a balanced budget. Instead Obama care is alive and well and there is just going to be an up or down vote on the constutional amendment in the Senate.

What the Democrats got was the largest debt ceiling in US history. They still have the Bush tax cuts coming off the table next year which is a tax increase. The Democrats also got enough money to not have to revisit the debt ceiling before the next election. They got a deal which has no real spending cuts because none of them start right away and they really have no say in future budgets. Whoever is in Congress in 2 years will decide what they are going to spend and going to cut. Probably they won't even consider this Congress' spending plan.

This is what Ron Paul had to say about the deal:

http://thehill.com/blogs/congress-bl...t-is-not-a-cut

[Calgaryborn]

Originally Posted by SebC

Giving money to suppliers = supply side. Giving money to consumers = demand side.

So now you're arguing that government spending is good for the economy.

Hardly, because that money still has to come from somewhere. What I was pointing out is that the savings from shrinking the military would take some time to be realized. It isn't as simple as issuing pink slips and quit buying bullets.

Originally Posted by SebC

I could be mistaken, but once the money goes into a charitable foundation, isn't it permanently set aside for charity? I don't see why these should be considered the same as personal wealth.

It's not the same as personal wealth but, it can provide cover from taxes and a source of personal income for yourself and following generations. Take Bill Gates for instance. He has given most of his wealth to the Gates Foundation which he governs. Yet most of that wealth still sits as shares in Microsoft. Any dividends goes to the charity. If he choses he can take a salary and expanses from the Foundation as its Director. He may chose not to if he has income coming in from other sources still. As director of the Foundation he is still seen as a major stock holder in Microsoft and exercises as much influence as he sees fit. He still in fact controls his fortune through the foundation. When he dies his children will take control of the foundation. They might already be on the board of directors. Their salaries and expenses will be covered by the Foundation at the rate they collectively determine.

Sure the foundation does provide for worthy causes just like individual Americans do. But they do more than just that. I wonder how much wealth one should be able to hide in a charitable foundation. As I said I don't think there should be inheritance taxes at all. We earn and save to give our children better lives. I just think that that money should have been taxed when it was earned rather than hidden in a charitable Foundation. Perhaps the answer is to limit the amount a charity can hold in investments like stocks. That would at least cause the money to be spent quickly instead of over generations.

[seattleflamer]

Originally Posted by Calgaryborn

The Tea party wanted a balanced budget. They argue that if you just shrink government to the 2004 levels of spending there is enough tax dollars to pay the bills. They also wanted Obama care trashed and an amendment to the Constitution that forces the government to have a balanced budget. Instead Obama care is alive and well and there is just going to be an up or down vote on the constutional amendment in the Senate.

What the Democrats got was the largest debt ceiling in US history. They still have the Bush tax cuts coming off the table next year which is a tax increase. The Democrats also got enough money to not have to revisit the debt ceiling before the next election. They got a deal which has no real spending cuts because none of them start right away and they really have no say in future budgets. Whoever is in Congress in 2 years will decide what they are going to spend and going to cut. Probably they won't even consider this Congress' spending plan.

This is what Ron Paul had to say about the deal:

http://thehill.com/blogs/congress-bl...t-is-not-a-cut

Since you want to deal in superlatives: the Republicans get the largest spending cut in US history.

What else did the Tea Party want and didn't get in this debate? You didn't mention the repeal of Social Security and Medicare. Heck, I'm sure they are still miserable about the 16th amendment and the income tax act from 1913.

Sounds absurd to me but so does a having a constitutional amendment debate which ultimately involves going through so many hoops for a simple raising of a ceiling for money Congress has already authorized.

It is akin to passing a federal parliamentary budget that was contingent on a provision that needed to include an elected senate (or throw in the entire Charlottetown accord for that matter) which requires a constitutional amendment: a non sequitur if there was ever one, politically speaking.

All of which doesn't change the trajectory of where this debate went which was essentially spending cuts versus tax increases--the Tea Party won.

Enjoy all the savings and the double dip recession that will result.

[afc wimbledon]

Ironically I suspect the Democrats may come out as the winners on this, the average US voter now looks apon the tea party as the loons we know they are, couple this with the disarray at Murdoch Inc that is likely to increasingly mute FoxNews and the next few elections will be very interesting.

It is also obvious that the republicans are now utterly split.

[Calgaryborn]

Originally Posted by seattleflamer

Since you want to deal in superlatives: the Republicans get the largest spending cut in US history.

What else did the Tea Party want and didn't get in this debate? You didn't mention the repeal of Social Security and Medicare. Heck, I'm sure they are still miserable about the 16th amendment and the income tax act from 1913.

Sounds absurd to me but so does a having a constitutional amendment debate which ultimately involves going through so many hoops for a simple raising of a ceiling for money Congress has already authorized.

It is akin to passing a federal parliamentary budget that was contingent on a provision that needed to include an elected senate (or throw in the entire Charlottetown accord for that matter) which requires a constitutional amendment: a non sequitur if there was ever one, politically speaking.

All of which doesn't change the trajectory of where this debate went which was essentially spending cuts versus tax increases--the Tea Party won.

Enjoy all the savings and the double dip recession that will result.

Tax increases are going to happen next year. Bush's tax cuts will not be continued. There is 800 billion in new taxes right there.

And perhaps you missed it but, there isn't going to be spending cuts. They are all future promises which the future Congress is not constitutionally bound to honour or even look at.

[seattleflamer]

Originally Posted by afc wimbledon

Ironically I suspect the Democrats may come out as the winners on this, the average US voter now looks apon the tea party as the loons we know they are, couple this with the disarray at Murdoch Inc that is likely to increasingly mute FoxNews and the next few elections will be very interesting.

It is also obvious that the republicans are now utterly split.

Yup. There are now 3 parties in Congress. It might be the viseral reaction but the sense of the disgust with DC is palatable. You have to wonder if a Ross Perot type will emerge.

Will be a very interesting 2012. Maybe the Mayans were right after all

[SebC]

Originally Posted by Calgaryborn

Perhaps the answer is to limit the amount a charity can hold in investments like stocks. That would at least cause the money to be spent quickly instead of over generations.

The divestment that would occur might be enough to depress the stock market. Not good for other people who hold the same stocks as these charitable funds, not good for corporations who lose potential investment, and thus just not good for the economy as a whole.

It's also bad for charities, since you take away a method for them to generate income. They have a responsibility to balance future needs with present needs just like any other organization.

[Azure]

The Bush tax cuts expiring, along with a committee that will HAVE to find other cuts might even equal a balanced budget.

Its not that hard to do.

Even the bloated DoD budget is on the table.

[HOZ]

I just hope this turn the US around. I know my investments are certainly in need of a boost.

[Calgaryborn]

Originally Posted by SebC

The divestment that would occur might be enough to depress the stock market. Not good for other people who hold the same stocks as these charitable funds, not good for corporations who lose potential investment, and thus just not good for the economy as a whole.

It's also bad for charities, since you take away a method for them to generate income. They have a responsibility to balance future needs with present needs just like any other organization.

Then at least tax the profits these foundations make from investments.

[seattleflamer]

Originally Posted by Calgaryborn

Tax increases are going to happen next year. Bush's tax cuts will not be continued. There is 800 billion in new taxes right there.

And perhaps you missed it but, there isn't going to be spending cuts. They are all future promises which the future Congress is not constitutionally bound to honour or even look at.

This discussion is a moving target. So now the cuts are an illusion?

Non partisan CBO certified 2.1 trillion in spending reductions over 10 years plus a bipartisan "Super Congress" setup to look at more cuts and if they are stalemate, an automatic reduction takes place.

There is also nothing stopping Congress from extending those tax cuts btw and will be part of the "Super Congress" discussion. Everything is on the table.

[Rathji]

Originally Posted by Vulcan

Well in my opinion these aren't real jobs that contribute to the economy, in fact they are a drain to the economy. A necessary drain in a lot of cases but still a drain. Real jobs are the ones who build bridges, grow food, make cars etc. and actually produce a commodity. This is part of the US's and maybe Canada's problem too, they've become a consumer society and forgotten how to produce and it's catching up to them.

The people working in those jobs, and in industries that support those jobs don't get paid? Because as far as I am concerned, that's all that is required to 'contribute to the economy", but I am not an econ wiz so maybe there is some other secret requirement.

[Azure]

Originally Posted by Rathji

The people working in those jobs, and in industries that support those jobs don't get paid? Because as far as I am concerned, that's all that is required to 'contribute to the economy", but I am not an econ wiz so maybe there is some other secret requirement.

You didn't know that the industry you work in isn't considered real work?

Duh.

[Calgaryborn]

Originally Posted by seattleflamer

This discussion is a moving target. So now the cuts are an illusion?

Non partisan CBO certified 2.1 trillion in spending reductions over 10 years plus a bipartisan "Super Congress" setup to look at more cuts and if they are stalemate, an automatic reduction takes place.

There is also nothing stopping Congress from extending those tax cuts btw and will be part of the "Super Congress" discussion. Everything is on the table.

Yes anything that isn't cut right now is up to the next Congress. It is like Obama projected goals and policy for foreign affairs over the next 10 years. He is free to do it but, whoever replaces him next year or in 5 years can chart a different course.

Congress could also extend the Bush tax cuts as well but, that is highly unlikely to happen. They are set to expire and Obama and the Democrats want them gone. One could argue that the Republicans met the Democrats half way by not throwing them on the table as well. They could have demanded they be extended again.

Also, the Tea party wasn't united against military cuts. There are even Tea party members who want an immediate withdrawl of troops from all foreign conflicts. They did want social security and medicare on the table because they like every American knows that those things will have to be fixed or they will be unaffordable in the near future. Even the Democrats acknowledge that.

I personally don't think the Tea partiers were reckless in their defiance of raising the debt ceiling. They were acting on the platform they ran on and were elected on.

They weren't leading the country to default either. August 2 was clearly made up. You don't default on a debt payment of 29 billon dollars when your sitting on 8000 tons of gold amongst a host of other assets.

The credit rating was also scare mongering. No plan put forward is deep enough to save it from eventual downgrade unless the economy changes soon. Default would have triggered an immediate down grade but, of course that wasn't going to happen. If August 2 did pass without a resolution if anything it might have been looked at as a good thing by creditors. It would have meant that congress was serious about making real lasting changes.

[SeeBass]

Originally Posted by Vulcan

Well in my opinion these aren't real jobs that contribute to the economy, in fact they are a drain to the economy. A necessary drain in a lot of cases but still a drain. Real jobs are the ones who build bridges, grow food, make cars etc. and actually produce a commodity. This is part of the US's and maybe Canada's problem too, they've become a consumer society and forgotten how to produce and it's catching up to them.

What they h##l are you talking about?

So my dad who was a forest ranger, that was goverment paid, and helped control the fishing volume so there would always be fish that would bring in tourists to the regional lodges. So people in remote areas could add to the economy with their service jobs and build more lodges and fill hotels. He didn't have a real job? You don't see a pattern of employment that comes from a balanced society?

Really? Great work, well thought out post.

[Calgaryborn]

Originally Posted by Rathji

The people working in those jobs, and in industries that support those jobs don't get paid? Because as far as I am concerned, that's all that is required to 'contribute to the economy", but I am not an econ wiz so maybe there is some other secret requirement.

Government jobs contribute to the economy at a loss or else the government could just hire the 16 million unemployed and pay their wages with the taxes generate through their purchasing power. Non government jobs are what pays the bills.

[HotHotHeat]

It is beyond mind boggling how there are no tax increases in this plan. The US is so hopeless.