It Never Ends

[Nice Guy Eddie 13412]

14 minutes ago, pepper brooks said:

Here is an exercise for the "tax more" crowd.  Why don't you tell us how much of other people's money is your "fair share", the revenue impact of it, how much of this extra revenue go towards reducing the deficit (note, deficit, not debt), and the impact of taking that money out of the economy and sending it to Washington. How does that impact employment, GDP, etc.  

I'm not entirely sure of what you mean but with the direction of wealth inequality, it's not a question of if but when taxes will go up for the wealthy. As there are more and more poor and lower middle class, they will have more of a power in DC.  Their reps are not going to push for lower spending and higher taxes for poor people.  They're going to push for higher taxes for the wealthy. 

The die is cast.  The currently low taxes for the wealthy will be gone within a generation.   

If it gets bad enough, anything could be open to taxation or confiscation.  Or loss of benefits like SS is you have a 401k.  

[Mojo Hand 4580]

27 minutes ago, pepper brooks said:

yet revenue is up?  How you gonna spin that?  Revenue is up and spending is up.  Where is the model that gets revenue up and spending down?  Nowhere, which is the point.  No matter the tax rate, historically receipts have been 16-20% of GDP.  That is the case when the top rate was 90% and the case when it was 28%.  Oh, and massive deficits are the work of congress and Tip O'Neill.  They are the work of Dennis Child Molester, Nancy Pelosi, Paul Ryan, and Nancy Pelosi.  

 

Saying the spending problem is caused by the taxing problem is akin to someone who makes 150k a year going and buying a 3 million dollar home and then claiming their mortgage problem is caused by their salary problem.  uh....

No, revenue is essentially flat.   It should be way up because of the growing economy.   Regardless, my point is about each individual's tax burden relative to spending. 

And your analogy proves my point.  In the real world, the person in your example either wouldn't buy the house because of the massive mortgage payment or, if he does but can't afford it, would lose the house (or make painful cuts elsewhere).   What you're advocating is, in essence, slashing his monthly mortgage payment for the same expensive house.   Do you think that makes him more or less likely to buy the house he can't afford? 

[Blotto 23434]

WASHINGTON—Federal tax revenue declined 0.4% in 2018, the first full calendar year under the new tax law, despite robust economic growth and the lowest unemployment rate in nearly five decades.

The Treasury Department said Wednesday federal revenue totaled $3.33 trillion last year, while federal spending totaled $4.2 trillion, a 4.4% increase from the previous year.

That pushed the U.S. budget gap up to $873 billion for the 12 months that ended in December, compared with $680.8 billion during the same period a year earlier—a 28.2% increase. Last year was the highest deficit for a calendar year since 2012.

A senior Treasury official attributed the weaker revenue collection in 2018 to the sweeping changes to U.S. tax code that took effect last year, including lower corporate and individual income-tax rates.

A Treasury spokeswoman said the administration has been clear the tax law would reduce revenues in the near-term “due to the front-loading of certain provisions, such as the immediate expensing of capital expenditures to encourage investment in U.S. businesses.”

[Fozzz 152]

2 hours ago, pepper brooks said:

they out spend cash flow by over 1 trillion a year.  That is a spending problem no matter how you slice it.  You could cut military spending by 40% and not make a dent.  Until entitlements are addressed along with defense noting ever matters, and the .01% cannot be taxed into fixing this.  You couldn't tax every billionaire the country 100% and make a dent in a one trillion a year deficit.  It's impossible.  The problem is way bigger than the typical, small minded ,canned, left response of tax the rich and cut defense 

lol you're a fucking dumbass

[pepper brooks 579]

10 minutes ago, Fozzz said:

lol you're a fucking dumbass

good talk russ.  way to address points with salient counterpoint.  either offer something of substance, or find something better to do.  Explain how you tax a few billionaires enough to cover a trillion dollar spending void.  

[Bateshorn 9899]

So, cutting entitlements requires BOTH parties do it together so the olds don't have anybody to take their anger out on.  That means the Dems have to go along with the plan. But the Dems aren't just going to take a machete to entitlements without corresponding increases in income taxes for the wealthy.  Additionally, the Dems don't want to work with the R's on much right now, because the GOP is not an honest broker.  McConnell literally stole a Supreme Court seat.  That shit doesn't heal quickly.  

[Nivek 16859]

WASHINGTON—Federal tax revenue declined 0.4% in 2018, the first full calendar year under the new tax law, despite robust economic growth and the lowest unemployment rate in nearly five decades.

The Treasury Department said Wednesday federal revenue totaled $3.33 trillion last year, while federal spending totaled $4.2 trillion, a 4.4% increase from the previous year.

That pushed the U.S. budget gap up to $873 billion for the 12 months that ended in December, compared with $680.8 billion during the same period a year earlier—a 28.2% increase. Last year was the highest deficit for a calendar year since 2012.

A senior Treasury official attributed the weaker revenue collection in 2018 to the sweeping changes to U.S. tax code that took effect last year, including lower corporate and individual income-tax rates.

A Treasury spokeswoman said the administration has been clear the tax law would reduce revenues in the near-term “due to the front-loading of certain provisions, such as the immediate expensing of capital expenditures to encourage investment in U.S. businesses.”

Fake news. Pepper told me it was down.

[American Swindle 102]

3 hours ago, David Dennison said:

Not if the net worth of that person is in proportion to the net worth of the United States of America, no.

And what are our estimated unfunded liabilities again? 

[American Swindle 102]

2 hours ago, David Dennison said:

Have the seen the Pentagon's budget? It's a jobs program for the private sector.

We love paying for 30K toilets don't we?

[Guest Lobo]

we need more investment in our navy for reasons that are about to become painfully clear 

government promissory notes are our real fiscal issue

our real monetary issue is not monetizing the debt or China or whatever bullshit AOC and Trump tweet about.  It’s that our largest single paper holder is our own Central Bank.  Kinda hard to rely on them to handle rates and inflation when they know we can’t just wage war and build heavy bombers on credit like we did the last 100 years 

we will having a living estate tax within my lifetime, just ‘cause.  But Hispanics will realize estate taxes are the most racist taxes we have.  And that’s saying something.  I can explain later but most of you are smart. You’ll figure it out.  

[DaysOff 7851]

Have the seen the Pentagon's budget? It's a jobs program for the private sector.

The bulk of the federal government is nothing more than a jobs program. NASA is nothing more than a jobs program.

[Fozzz 152]

2 hours ago, pepper brooks said:

good talk russ.  way to address points with salient counterpoint.  either offer something of substance, or find something better to do.  Explain how you tax a few billionaires enough to cover a trillion dollar spending void.  

look at tax revenues relative to GDP in other Western nations that are not quite as barbaric as our own and you will get your answer.  

[Guest Lobo]

revenue to GDP is also tough because we're far and away the most "consumer/retail-driven" economy on the face of the Earth.  Moreso now since we ditched making shit about 25 years ago.  

[pepper brooks 579]

In case anyone is interested in why even if we could convert everything to cash we are too far gone to make a real difference.  

 

 

The debt-to-GDP ratio compares a country's sovereign debt to its total economic output for the year. Its output is measured by gross domestic product. In the first quarter of 2019, the U.S. debt-to-GDP ratio was 105%. That's the $22.028 trillion U.S. debt as of March 31, 2019, divided by the $21.06 trillion nominal GDP.

This ratio is a useful tool for investors, leaders, and economists. It allows them to gauge a country's ability to pay off its debt. A high ratio means a country isn't producing enough to pay off its debt. A low ratio means there is plenty of economic output to make the payments.

If a country were a household, GDP is like its income. Banks will give you a bigger loan if you make more money. In the same way, investors will be happy to take on a country's debt if it produces more. Once investors begin to worry about repayment, they will demand more interest rate return for the higher risk of default. That increases the country's cost of debt. It can quickly become a debt crisis.

Tipping Point

What's the tipping point? A study by the World Bank found that if the debt-to-GDP ratio exceeds 77% for an extended period of time, it slows economic growth. Every percentage point of debt above this level costs the country 1.7% in economic growth.

 

It's even worse for emerging markets. There, each additional percentage point of debt above 64% will slow growth by 2% each year. 

 

How to Use the Debt-to-GDP Ratio

The debt-to-GDP ratio allows investors in government bonds to compare debt levels between countries. For example, Germany's 2017 debt is $2.7 trillion, dwarfing that of Greece, which is $514 billion. But Germany's 2017 GDP is $3.8 trillion, much more than Greece's $281 billion. That's why Germany, the largest country in the EU, had to bail out Greece, and not the other way around. The debt-to-GDP ratio for Germany is a comfortable 72%, while that for Greece is 182%.

 

So, is the debt-to-GDP ratio a good predictor of which country will default? Not always. Japan's debt-to-GDP ratio is 228%. Japan is not in danger of default, because most of its debt is held by its own citizens. A lot of Greece's debt was held by foreign governments and banks. As Greece's bank notes became due, its debt was downgraded by ratings agencies like Standard & Poor's, which made interest rates rise. Greece had to find a way to raise more revenue. It agreed to cut spending and raise taxes to do so.

This further slowed its economy, further reducing revenue and its ability to pay down its debt.

 

The U.S. debt-to-GDP ratio is 104%. Why are investors concerned that it will default? Unlike Greece, the United States can simply print more dollars to pay off the debt. For this reason, the risk of default is very low. On the other hand, the debt holders wind up with money that's worth less. This will eventually make them avoid U.S. debt.

 

As a country's debt-to-GDP ratio rises, it often signals that a recession is underway. That's because a country's GDP decreases in a recession. It causes taxes, and federal revenue, to decline at exactly the same time the government spends more to stimulate its economy. If the stimulus spending is successful, the recession will lift. Taxes and federal revenues will rise, and the debt-to-GDP ratio should level off.

 

The best determinant of investors' faith in a government's solvency is the yield on its debt. When yields are low, that means there is a lot of demand for its debt. It doesn't have to pay as high a return. The United States has been fortunate in that regard. During the Great Recession, investors fled to U.S. debt. It is considered ultra-safe.

 

As the global economy continues to improve, investors will be comfortable with higher risk because they want higher returns. Yields on U.S. debt will rise as demand falls. When yields are high, look out. That means investors don't want the debt. The country must pay more interest to get them to buy its bonds.

 

That creates a downward spiral. High-interest rates make it more expensive for the country to borrow. This increases fiscal spending, which creates a larger budget deficit, which creates more debt. A good example is the Greece debt crisis.

 

That's why the debt-to-GDP ratio, for all its faults, is still widely used. It's a good rule of thumb that indicates how strong a country's economy is, and how likely it is to use good faith to pay off its debt. 

 

How to Calculate the Debt-to-GDP Ratio

To figure the debt-to-GDP ratio, you've got to know two things: the country's debt level and the country's economic output. This seems pretty straightforward until you find out that debt is measured in two ways. Most analysts look at total debt. Some, like the CIA World Factbook, only looks at public debt.

 

That's a little misleading. In the United States, all debt is essentially owned by the public. Here's why. The U.S. Department of the Treasury has two categories. Debt held by the public consists of U.S. Treasury notes or U.S. savings bonds owned by individual investors, companies, and foreign governments. Public debt is also owned by pension funds, mutual funds, and local governments.

 

The other category is Intragovernmental Holdings. This is the category not reported by the CIA World Factbook because it's debt the federal government owes to itself, not to outside lenders. The CIA figures if the government doesn't repay itself, so what? It's just a method of accounting between two agencies.

 

But it does matter a lot. The money the federal government "owes itself" is really owed mostly to the Social Security Trust Fund and federal department retirement funds. Thanks to the baby boomer generation, these agencies take in more revenue from payroll taxes than they have to pay out in benefits right now. That means they have excess cash, which they use to buy Treasurys. The government just spends this excess cash on all government programs.

 

When the boomers retire, Social Security will cash in its Treasury holdings to pay benefits. But the cash to pay this debt will have to come from somewhere. There are fewer working-age people than boomers. As a result, the dependency ratio is worsening. The Treasury will have to issue more debt or Congress must raise taxes.  

 

Therefore, you should always look at the total debt, not just the debt owed to the public. That's because all federal debt is eventually owed to the public. That's why Intra-governmental Holdings should be counted in the U.S. debt-to-GDP ratio.

 

https://www.thebalance.com/debt-to-gdp-ratio-how-to-calculate-and-use-it-3305832

[Hugo Stiglitz 23356]

I’m sorry but the deficit hawks are the absolute worst.  Where did all our money go?  Did it vanish into thin air?  Who has it now?  Why can’t we just take it back? 

/troll but not really 

[David Dennison 18656]

6 minutes ago, Hugo Stiglitz said:

I’m sorry but the deficit hawks are the absolute worst.  Where did all our money go?  Did it vanish into thin air?  Who has it now?  Why can’t we just take it back? 

/troll but not really 

The United States defaulting on its debt or not being able to pay future obligations is literally the last thing anyone should worry about. 

[Guest Lobo]

Well yeah, kinda hard for our central bank to wage a maritime war against our own nation.  

But they will find the countries that do carry out that plan.  

 Best illusion both parties Have pulled off is that Asian countries own most of our paper

[horn4life 3755]

There will be a huge spending and deficit crisis the day a new Dem President is elected to clean up another economy the GOP has fucked up.  Constrain spending when you should have stimulus, and stimulate and borrow when you should be paying down. Same GOP game plain over and over and over.  I just hope the economy is not as fucked up as the last GOP handoff. 

Dems are not much better in the math. but their focus is more on the masses rather than the few of priviledge.  What ould Jesus day, "Borrow to feed the poor" or " borrow so a multi-millionaire can get a cooler jet?"

[elfenix 34171]

1 hour ago, pepper brooks said:

If a country were a household

well, it's not, and the US particularly so.  markets are typically much more concerned about hatchet job austerity policies than they are about the level of debt. 

[swraith 336]

At what point do we wake up and stop sending financial morons to represent us?  I know, never.  Too many votes are too easily bought with promises of someone else's money.  Nobody has a plan to address the spending crisis in Washington.  Not. One. Single. Candidate.  None.  Shameful. 
 
https://www.politico.com/story/2019/07/22/deficit-don-budget-red-ink-trump-1426696?fbclid=IwAR2gHg4WCwbAo-kEGO5SoiayM20tp-3DyEcRxPqKIaZttHWweiUqlqHmj6I

What is your proposal to make things change? You ask when people will wake up. It appears they are awake and actively choose to support continued deficit spending. How that plays out in 5, 20, or 50 years is open to debate...but the voting population clearly doesn’t care about those risks today.

No political party supports deficit reduction...let alone debt reduction. The Tea Party appears impotent at this point. So Pepper, what do you propose to “wake people up”?

[RPM 26227]

Lowering taxes to increase revenue is about as smart as putting less fuel in the airplane so it will fly farther. Both will take you to the scene of the crash.

[Guest Lobo]

State of Illinois just calculated that if they increased their state income tax to 100% on all brackets, they would not be able to overcome their defined benefit deficit based on actuary tables.

[hpslugga 4044]

11 hours ago, fattyflattie said:

Show your work. 

Not how it works. The person asserting that there is a spending crisis has to show work. 

That wouldn’t be very hard to do, though.

[elfenix 34171]

26 minutes ago, Lobo said:

State of Illinois just calculated that if they increased their state income tax to 100% on all brackets, they would not be able to overcome their defined benefit deficit based on actuary tables.

that part of the laffer curve isn't really the disputed part

[American Swindle 102]

[Thetexashammer 1062]

11 hours ago, Blotto said:

WASHINGTON—Federal tax revenue declined 0.4% in 2018, the first full calendar year under the new tax law, despite robust economic growth and the lowest unemployment rate in nearly five decades.

The Treasury Department said Wednesday federal revenue totaled $3.33 trillion last year, while federal spending totaled $4.2 trillion, a 4.4% increase from the previous year.

Federal revenue grew will grow 3% in 2019 and 6% in 2020. Sorry bro.

Edited July 25, 2019 by Thetexashammer

[workswithseed 2036]

12 hours ago, David Dennison said:

Yep. And when one of those things has to give, it's taxes that go up. Every time.

You remind me of this video

[American Swindle 102]

17 hours ago, Hugo Stiglitz said:

I’m sorry but the deficit hawks are the absolute worst.  Where did all our money go?  Did it vanish into thin air?  Who has it now?  Why can’t we just take it back? 

/troll but not really 

During the bailouts, 16 trillion was pumped in the world economy.  What does that do to our money?  Who gets it first?  The corporate fat cats you rail against.  The correction was needed and should have happened.  

Some rally behind Bernie's plank of auditing the fed and are fervently anti-corporatism, but also claim  "we needed the bailouts to prevent a catastrophe." You can't have it both ways though you see. 

[elfenix 34171]

And then we elected Republicans to make sure we couldn't tax the cost of their bailout back out of them