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Contributor

Re: Interest Rates

We should also be considering ending the process of the Federal Reserve lending us OUR money, then charging us interest to pay it back. Whose thinking back in 1913 considered this a good move, even if it did give us an "easy exit" from Bankruptcy.

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Honored Advisor

Re: I really wonder about the value

Kraft,

Your example is a perfect one.  Having 20K income or 15K income does not create deficit.  Deficit exists when we spend more than we take in.  

I just questioned your singling out tax cuts as the cause of the problem.

IMO ---the two cannot be seperated.  Without revenue flow there is no opportunity to spend or borrow to spend.  Deficits are created by the comaprison or contrast between Revenue and spending when more is being spent than collected.  Revenue levels cannot be controled.  Raising taxes slows economic activity, creates disincentives, and does not guarantee more revenue.  Lowering taxes does not always create less revenue.  Too many other variables fall into play, like regulation and production leaving the country...example --fertilizer production, manufacturing, new economic activity operating tax free, etc.

 

Spending is significant because, even in your simple example, it is the side of the contrast that we have direct control over.  Revenue is not in direct control.  Taxes do not necessarily decrease deficits, but lowering spending always decreases deficits.

 

Until our drunken uncle stops pouring,  I am not in favor of sending him any more money to buy another bottle.

 

 

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Senior Advisor

Re: I really wonder about the value

There is no evidence that cutting taxes produces more revenues. Or raising them produces any less. We have historical low tax rates as we speak and we sure don't have much revenue. The GOP cuts taxes and if revenues incrrease it doesn't matter if its ytearr later ten years later or a decade later. Yup that is what those tax cuts produce. More revenue.

 

Compare to the Clinton years with higher taxes and the revenue poured in and 22 million jobs were produced. Enter Bush the 2nd and more tax cuts and we have millions out of work and trillions more in deficits.

 

I had enough of that little experiment and how you can claim with authority tax cuts produce more revenue. Does that suggest that revenues will never go up without those cuts? I think not.

 

First you need to determine what spending is causing the deficits. Spocial programs are not the cause. People are paying for them with fica taxes and there are a trillion or so in surplus in those accounts.

 

I have never stopped earning because taxes were too high. If taxes were raised tomorrow I would try to earn more. I think most people are like that.

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Honored Advisor

Re: I really wonder about the value

It makes no difference who is president or what the tax rates are, the 90's gave us a boom economy in technology and we still spent more than we had coming in.

But since you want to include politics------Clinton's government  had the best opportunity to cut the debt down with the tech boom and waisted the opportunity.

As I said it makes no difference how much revenue there is if we are so willing to spend more than we have.

 

I think there is no level of growth that cannot  be overspent by the "Voting public".  There is enough expectation of government assistance and guidance to overcome any level of growth at this point.----------Just my opinion-----and hoping I am wrong.

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Honored Advisor

Re: I really wonder about the value

I tend to lean a little gloomy on days after dirt blows.

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Veteran Contributor

Re: Interest Rates

Our Country has the big problem of NEVER reducing spending. We don't even reduce the increase built into spending ie Baseline Budgeting. If taxes go up spending has always increased exponentially. I'm not sure of the way to battle this but throwing more money will NOT help.

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Honored Advisor

Re: I really wonder about the value

I get your point about a small bump raising concern levels, possibly stimulating some forward economic motion....our biggest problem in some ways is inertia.  People have sat and waited for something to move, possibly thinking that interest would go even lower. 

 

I think the fear of inflationary recession hovers over this mess, too.  No one wants to call a spade a spade.  Europe is talking about a "minor recession", which to me is equivalent to Nero's fiddling while Rome burned.  If you account for real jobless numbers here, including people who have been moved from unemployment to social aid programs, we are in a depression. 

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Veteran Contributor

Re: Interest Rates

Baseline Budgeting. Our wonderful boys and girls in congress and the white house all know very well how it works. The budget has built in increases and when it is ever proposed to reduce the built in increase there are shouts of draconian cuts.  Your analory of the jobs is completely fraudulent because that has never been the case. The salary has always gone up, and spending has always gone up more. When tax rates have gone down tax reciepts have always gone up. It is the real stimulus package. 

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