The national debt is not as dire as it's being portrayed (Vanity)

My letter to the editor of every major paper | October 21, 2003 | Peach

[Brian S]

I'm in denial, if I actually belive that our socialist congress would do such a thing,

Most here are, but I have a solution...if you have a dime!

[annyokie]

Oh, grow up. I first voted in 1977. This IS a canard. I dislike SSI as much as the next sane person, as well as the welfare for oldsters prescription program being entertained.

That said, my 75 year old aunt (whose dimbulb husband (DEAD)didn't believe in insurance)could never have had her wrenched knee repaired. My elderly mother couldn't get her kidney stone lasered.

Many times we must put aside our ideology for the sake of
others. I don't mean welfare. I fully expect to collect my $200 a month in SSI. It would be more, but I opted out of the work force to raise my kids.

Stop trying to be superior to those you know nothing about.

[Ramius]

You're splitting hairs, but since you started...

OK... deficit *as a percentage of budget* might be a more useful number, but debt as a percentage of GDP is the only meaningful number. Deficit as a percent of GDP is just a somewhat diluted version of the former.

The truth is that deficits don't actually matter so much as the total debt (as a percent of GDP). That's where debt might have some effect on interest rates. It might or might not have a measurable effect. Though now, with interest rates at all-time lows, how can one argue that the debt is a meaningful part of the equation? It just isn't.

[TheBattman]

Clinton 1993 $255 billion deficit 3.9% GDP

I thought Clintoon claimed a budget SURPLUS - he didn't have "no stinkin' deficit".

Of course, the rest of us knew the truth. Unfortunately, the idiot sheeple in the US are too lazy and dense to see or find the truth.

Also - just because the deficit is a smaller portion of the GNP doesn't mean that we shouldn't be concerned about it. In fact, we should still be very concerned. Regardless of what the % of GNP the deficit is, someone has to pay for this debt. That would be those of us who actually have a job and pay taxes. I don't know about you, but I cannot afford any more taxes, but that is where this will eventually lead.

At a time when many Americans are tightening their belts with the slow economy, why shouldn't the government also tighten it's belt?

[Willie Green]

Though now, with interest rates at all-time lows, how can one argue that the debt is a meaningful part of the equation? It just isn't.

Sure it is, no matter what the interest rates are.
The government is no different than any other organization or individual who borrows money.
The lenders are gonna look at three things: the borrower's income, outstanding debts, and assets that can be used as collateral.
If they see that you're already over your head in debt and paying 1/5 of your income just to make interest payments, most reputable firms will refuse to lend you any more until you get your financial affairs squared away. Less scrupulous firms and loan sharks will loan you the money anyway, just so they can squeeze the lifeblood out of you and eventually foreclose and seize your assets.

It's time to get our government's financial house in order rather than sinking ourselves deeper in debt.

[Ramius]

I wouldn't disagree that we should try to get our house in order and focus on less debt rather than more. Of course we should.

But federal debt *is* different from ordinary consumer debt. Partly because of sheer volume, but mostly because that if there is a loss of confidence in federal debt we all have way bigger problems than the scope of this discussion can contemplate.

[Mulder]

There are two main reasons for the massive budget deficits.

Less money is coming in due to a poor economy. Some of this is cyclical. Some is due to corporate scandal, as you pointed out. But a very large portion of it is due to the globalist "free trade" policies that both parties support, where the American technical and manufacturing base is shipped offshore. And a lot of that is due to the massive regulatory and taxation schemes heaped upon American businesses. Neither party is addressing either of those, except for a little nibbling on the tax code, which long term may hurt more than help since while the tax cuts decreased individual and capital gains rates (good), they also decreased the number of taxpayers (bad).

The other reason is the massive increases in spending that have occured in the last 3 years. During the 90s, the GOP Congress held the line on gov't spending, much to Klinton's disapproval. But no real progress was made towards long-term budget reductions. The surpluses of the 90s were only because of the stock market bubble.

Now that the bubble is gone, and Bush is spending money like a drunken sailor, massive budget deficits have resulted.

I expect the deficits to get bigger for the following reasons:

-- There is no guarantee that the economy will improve. Keep in mind that these deficits are occurring in an economy that is supposedly growing between 2-4%. Should the growth rate drop below 2%, the deficit will skyrocket. If it goes negative, I would not be surprised to see $1 trillion annual deficits.

-- Both parties are continuing to increase spending at a rate not seen since the failed "great society" programs of the 1960s. Neither party (at the top) is interested in restraining the growth of the federal budget.

-- The spending in Iraq will continue to increase. There is no exit strategy.

-- Bush wants to add yet another entitlement (prescription drugs). Like the other programs, this will cost much more than what they are telling us.

-- Last, but not least, the debt/deficit numbers don't count unfunded liabilities that are really going to accelerate next decade. That's only going to make things worse.

The only solution to this problem is to deal with both the revenue side and the spending side. Revenues can be increased by reforming the tax and regulatory code. Instead of pursing "free trade" between nations, "free trade" between American citizens and their employers should be sought after.

On the spending side, massive reductions in redistributionist programs need to be enacted. Something like the Grace Commission could be set up to find waste, fraud, and abuse.

[Mulder]

We have been fed one "crisis" after another for 15 years, as we rush headlong toward the end of the republic

Yep. The politicians will always find an excuse to not reduce spending or downsize government.

As a somewhat depressing exercise, can you imagine ANY Republican in a leadership position saying what Reagan did in 1981 ("gov't is not the solution to our problems, gov't is the problem")? Or any Republican proposing to abolish 4 cabinet level department like the Congressional candidates did in 1994?

Unless course is quickly reversed this country is screwed.

[sixmil]

The entire GDP is the government's money? God Lord, where have all the conservatives gone? The debt and deficit should be compared to the budget, which should in turn be compared to GNP. So, here goes it roughly - 400BN deficit on a 2.2TN budget, that's almost 20%. The debt is something like 3 times the yearly budget. Imagine if these were your personal finances, would you be worried?
salary is 22K per year
you spend 26K every year
and you still owe 70K for school loans

[Willie Green]

Government borrowing merely extracts capital OUT of the financial markets.
I think we should not only discontinue deficit spending, we should also pay down the debt. All that capital would then become available for investment opportunities in the private sector.

[Willie Green]

God Lord, where have all the conservatives gone?

Good question. Many of the same people who whine about the government not being able to wisely spend their tax money seem to assume that it's OK if the government lavishly spends borrowed money instead.

[Ramius]

Of course we should. Nobody will argue that deficit spending and/or debt financing is a good thing. Of course we should balance the budget and start paying down the debt. I'm in complete agreement there.

The operative question is *how*. The better mechanism is to cut tax rates, allowing faster growth of growth of federal revenue, while limiting spending. Once the business cycle completes this current upturn and starts moving upward again, as it already is, then the argument becomes moot. Projected surpluses will reappear, and if we can keep congress in check-- the debt can be reduced.

It is the problem of keeping congress in check that is the more intractable issue. Pork is an addictive substance, in local elections.

[Psalm118]

PLEASE PLEASE, NOT SO FAST !

In the "long" wave cycle, 1983, 1992, 1993 and 2003 mark different sign-posts. With all the respect in the world, you are correct, but only in a narrow sense.

Factor in levels of indebtness public and private, and all the aggregate effects within the cycle above mentioned, and the picture changes sharply from bright and sunny.

Myself, I wish we were back in, say, 1982. (Make that August, and top it with ground almonds and bitter cherry syrup).

Please accept my honest apology. I sure don't mean to rain on your particular parade, OKAY ?

[Hank Rearden]

Yeah, it's fine. They should just keep pissing away our money like it's water. It's all perfectly rationalized, and the serfs should just shut up and enjoy Big Stupid Republican Government.

And the $87 Billion will be carefully husbanded in Iraq, too.

[ido_now]

Everyone knows that the sum of the parts does not equal the whole.

Even thought every American family is nearly bankrupt, the entire American economy is in great shape, George said so.

In fact, the worse off each American is financially the better off the stock market, Lawrence Kudlow said so.

If only the FED would reduce interest rates to 0% [My Schwab Gov MMF is now earning 0.05% per year, thanks], it would drive any savings that anyone has left [people who save sanything are stupid] into investing in shit or even worse the stock market.

Maybe we should all just buy a run down California house, about 950 sq ft for $1,250,000 and sell it next week for $5,000,000.

Now that's what I call rational exuberance.

[Peach]

You know, several of you seem to be deliberately missing the point.

Perhaps it is my fault for not being more articulate.

My point is that the national media is constantly telling us how bad the deficit is. Considering that Wall Street uses the GDP and percentage of deficit ratio constantly tells me it's a valid comparison (despite some naysayers on this board). Sorry but if it 's good enough for Wall Street - it's good enough for me.

Bush's deficit percentage is actually lower than it's been for 20 years. Will it go higher? Undoubtedly given a rather sluggish economy, war on terror, etc.

Do we wish we didn't have a deficit? Of course. But we've had one ever since I can remember and the economy somehow manages to chug along just fine. We have highs and lows - life is cyclical and so is Wall Street.

My entire point was to suggest media bias in bemoaning how high the deficit is, when in actuality, on a percentage basis, it's not as bad as it's been portrayed.

[Peach]

Even thought every American family is nearly bankrupt, the entire American economy is in great shape, George said so.

You know, it's easy to stop reading after that first sentence which is mis-spelled, does not make sense and is certainly not true.

[Peach]

Considering that 9/11 cost the national economy over $500 billion, spending $87 billion in Iraq and Afghanistan doesn't seem like a bad bargain to me.

If you have a better idea on how to protect the national economy from another major terrorist attack, why don't you suggest something.

[OldFriend]

Media would NEVER EVER print positive news about this administration, republicans, or America.

[Peach]

Morning, Old Friend.

You speak the truth about the media. Sometimes I think they are the number one enemy; other times they move down to the 2 or 3 slot! LOL