Brit Hume's Economics

SupplySideInvestor ^ | 09-10-01 | Jude Wanniski

[filterfish]

I'd normally write this directly to Brit, Tony, but you know that only two weeks ago I wrote you a personal e-mail saying that Brit Hume was practically the only commentator on the Sunday talk shows who could see through the sliced baloney being served up about the budget. Besides, the e-mail address I had for him does not work any more. So I'll write this to you and hope you can pass it on to him. All this does go to the heart of the debate about surpluses and lock boxes and Social Security.

[Myrnick]

Jude, you're weak! Brit is right. The money should be put back into the economy - via immediate and sweeping tax cuts. Keynes' belief that the only good stimulus was govenment spending was wrong, but the concept that government can move surplus monies back into the economy for stimulant purposes is correct. As long as the money goes into the hands of the producers for them to decide what to spend it on, the stimulus works.

[mywholebodyisaweapon]

Amen! Business tax cuts increase aggregate supply. Economic growth with no inflation. Why can't people get it?

[XBob]

repeat after me:

THERE IS NO SURPLUS. THEY KEEP BORROWING MORE.
THERE IS NO SURPLUS. THEY KEEP BORROWING MORE.
THERE IS NO SURPLUS. THEY KEEP BORROWING MORE.

THERE IS NO SURPLUS. THE DEBT KEEPS RISING!
THERE IS NO SURPLUS. THE DEBT KEEPS RISING!
THERE IS NO SURPLUS. THE DEBT KEEPS RISING!

THERE IS NO SURPLUS, EXCEPT A SURPLUS OF LIES!
THERE IS NO SURPLUS, EXCEPT A SURPLUS OF LIES!
THERE IS NO SURPLUS, EXCEPT A SURPLUS OF LIES!

The Debt To the Penny

    Current                Amount

  09/06/2001        $5,774,086,630,858.16


   Current
    Month

  09/05/2001        $5,769,122,055,290.29
  09/04/2001        $5,761,532,655,812.62

    Prior
    Months

  08/31/2001        $5,769,875,781,034.48
  07/31/2001        $5,718,303,095,621.12
  06/29/2001	    $5,726,814,835,287.17
  05/31/2001	    $5,656,181,958,605.26
  04/30/2001	    $5,661,347,798,002.65
  03/30/2001	    $5,773,739,949,951.53
  02/28/2001	    $5,735,859,380,573.98
  01/31/2001	    $5,716,070,587,057.36
  12/29/2000	    $5,662,216,013,697.37
  11/30/2000	    $5,709,699,281,427.00
  10/31/2000	    $5,657,327,531,667.14

          
  Prior Fiscal
     Years
     
  09/29/2000        $5,674,178,209,886.86
  09/30/1999        $5,656,270,901,615.43
  09/30/1998        $5,526,193,008,897.62
  09/30/1997        $5,413,146,011,397.34
  09/30/1996        $5,224,810,939,135.73
  09/29/1995        $4,973,982,900,709.39
  09/30/1994        $4,692,749,910,013.32
  09/30/1993        $4,411,488,883,139.38
  09/30/1992        $4,064,620,655,521.66
  09/30/1991        $3,665,303,351,697.03
  09/28/1990        $3,233,313,451,777.25
  09/29/1989        $2,857,430,960,187.32
  09/30/1988        $2,602,337,712,041.16
  09/30/1987        $2,350,276,890,953.00

SOURCE:  BUREAU OF THE PUBLIC DEBT

[XBob]

#5 - BTTT = THERE IS NO SURPLUS

[Myrnick]

Correct me if I'm wrong, but there is a projected surplus of inflows into the 'pay as you go' social security system over the next ten years. If the government takes in more than it needs to pay granny's monthly s.s., I want them to send the difference back to me.

[XBob]

there has been a SSI surplus for many years now, for your granny, and my mother. What they have been doing, is taking your cash money, you put in for your granny and spend it on other things, then they replace it with IOU's, and then they borrow more money, to keep the 'budget' 'balanced', all the while increasing the national debt. So this is what made me so mad at the Republicans, insisting that SSI is not a tax, insisting only income tax was a tax, then spending the SS tax money just like income tax money.

Everything collected goes into one pot - the general fund. There is no lock box because there is no box, anywhere, the fed's do not have a 'bank account' where they 'save money'. They only incur debt or pay off debt. As you can see from the chart, they are not paying off total debt, they are merely using their 'Visa Card debt' to pay off their 'Mastercard debt', while incurring more debt, increasing the national debt.

In a few years, (2010) when the baby boomers start retiring, the SSI tax will go into deficit, taking more out of the illusionary SSI funds than they put in, and the IOU's our govt has put into the SSI 'lockbox' will need to start being redeemed. The only way to redeem them is to raise general revenue taxes or social security taxes - same thing, and then when your income tax rate gets to 81% (this is an estimate - widely published) of your salary, the 'budget' will once again be 'balanced'.

[XBob]

4 - bttt - "Social Security--the more the government hauls in your FICA taxes, the faster it spends that money on everything else, from welfare to farm subsidies to the President's salary. The result? Social Security will be bankrupt when the baby boomers retire. - the social security is a ponzi scheme - but congress likes it. "

PS - they used to separate out he taxes on the airline ticket, but it caused too many problems, when they would list a flight for $100, then charge you $120. And the $20 was going into the airport trust fund (which they also are spending, not on airports).

[n-tres-ted]

Respectfully, Jude is right on the point he is making. Namely, that the feds are using the $160 billion to buy back government debt, so the holders/sellers of that debt receive the $160 billion and re-invest it. The $160 billion is not resting in a government vault, but is back in the economy.

On the other hand, you are correct on your point that a reduction in the rate of capital gains taxes would sweeten the reward for new investment, thereby increasing it, creating new jobs and enlarging the size of the economy. JMO

[XBob]

see #5 - your circular circuit makes no sense, except in politics. If you pay down one debt and create another bigger debt, you are not paying down your debt.