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Archive for Sunday, October 26, 2008

Debt reduction

October 26, 2008

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To the editor:

Here are the facts, contrary to what Hugh Wentz (Public Forum, Oct. 24) would have us believe.

Neither France nor Sweden has a socialist government, as he implies. France currently has a conservative prime minister and president; Sweden has a moderate prime minister.

Also, France enjoyed identical growth rate as the U.S. in 2007 (2.2 percent, World Bank), both of which were outperformed by the U.K. (3.0 percent), which does have a socialist government, and China (11.9 percent), which has a communist government.

Having said all that, Sen. Barack Obama is not a socialist. His tax plans simply reverse the tax policies of George Bush, which was socialism reversed, the "trickle down" myth, decreasing the relative tax burden for the top 1 percent of society and increasing it for the rest us. Between 2000 and 2007, for example, despite an 18 percent increase in hourly productivity, middle-class working families' income fell in real terms by 3.5 percent (source, Economic Policy Institute).

Finally, history does not support Wentz's assertion regarding spending, either. The only time we have seen national debt reduction in the past 60 years was when Democrats were totally in charge of our government or when one party was in the White House and another ran Congress. In the same period, when Republicans were in control of the presidency and both houses of Congress, neither debt nor government spending was ever reduced. The last time a Republican Congress reduced the national debt was in 1947, under Truman's leadership.

Phil Deamer,
Lawrence

Comments

verity 5 years, 11 months ago

Like John McCain, economics is not my strong suit, but I do know that personal economics and public or government economics are not equal or identical. And if it were as simple as you're saying, we wouldn't be in the economic mess we are now in.

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notajayhawk 5 years, 11 months ago

verity (Anonymous) says: "Like John McCain, economics is not my strong suit, but I do know that personal economics and public or government economics are not equal or identical. And if it were as simple as you're saying, we wouldn't be in the economic mess we are now in."As I mentioned, there is the political aspect. It doesn't help a politician get re-elected if they cut into 'entitlements' or social welfare programs. It's virtually impossible to get a bill passed, even an important and necessary one, without someone loading it up with pork. And yes, I do know this applies to both sides of the aisle.But other than that, yes, it really is that simple - to avoid or reduce or eliminate a deficit, you have to spend less than you take in. As has been pointed out, "the economic mess we are in now" happened over a period of time when nobody from either party cut spending. So again, I reiterate, maybe it's time we tried that approach. But it won't happen - the explosion of blubbering and sputtering that immediately happened after McCain suggested freezing spending is a pretty good indication that way too many people (again, on both sides of the aisle) have bought into the 'inevitability' of raising taxes instead.

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britstyx 5 years, 11 months ago

Thank you RougueThrill & Verity.To answer some of Verity's questions, here is an edited version of a post I made in the discussion of Mr. Wentz's original letter:China is not truly a communist country any longer, any more than the UK is truly a socialist country. The reality of so-called socialist economies, such as the UK, France, China, or capitalist economies, such as the USA, is that they are neither capitalist nor socialist, but mixed economies. Truth is, we already have some socially liberal, ("socialist") programs in place: Medicare, Social Services, etc. The difference is in the degrees.Socialist leaning economies tend to embrace Keynesian or demand side economics. Under this theory, by taxing the rich more and the middle and working class less in conjunction with spending more on public programs, more jobs are created amongst the working and middle class in addition to more cash for them to spend. This leads to a domino effect of more and more jobs being created in subsidiary and tertiary industries. Much the same as the ads on the radio that encourage us to spend our dollars in Lawrence, because for each dollar you spend in Lawrence it benefits on average 17 (or whatever the figure is, sorry, don't have the information to hand) different Lawrence businesses by being spent and respent.But technically, pure socialism is the public ownership (meaning government ownership) of the means of wealth creation, combined with the even distribution of that wealth. Meaning nationalizing all of industry and the redistribution of wealth: an egalitarian society.Capitalism, on the other hand, is the freedom of markets to do what they will (hence "free market economy") in the belief that markets will effectively regulate themselves, and that the law of supply and demand is the ultimate regulator.Supply side economics, as preferred by President Reagan is a variation of capitalism. It theorizes that by cutting government spending in order to reduce taxes, in combination with limiting the money supply to keep inflation low leads to greater spending in the economy at large, ergo, more jobs. Where Bush and the neo-cons differ is by spending massively while borrowing instead of taxing, thus creating huge problems and inevitably massive cuts in services with the ultimate aim of reducing the role of government to merely military spending by forcing it (through bankrupting the economy) out of social programs. Problem is, ever since Walter Mondale promised to raise taxes and got reamed in the election, no presidential candidate has been able to be honest and say that taxes will inevitably rise with any hope of winning either. But that is the truth, given the amount of government spending, the aging population and the scale of the national debt.Somehow, sometime, something's gotta give. Sooner or later we are going to have to start paying more in taxes or the entire country will go bankrupt, realizing the aim of the neo-cons.

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jonas_opines 5 years, 11 months ago

"The 'neocons' agree with you that "something's gotta give.""True, the only problem is they seem to think that "give" is in the form of loans to be paid back later, when it can't be tied to individual politicians who need to get reelected. "Why is it that the liberals' only answer is more taxes?"Maybe they think it's better than borrowing if you're not going to cut spending."How about less spending?"Sure, as soon as you find a legitimate politician willing to do this with the power to ram it through the multitude of special interests. Are you suggesting we have a viable option in this regard right now? (Please say McCain, I want to laugh before bedtime)"How about cutting into what so many people in this country have come to view as entitlements?"Good idea. Let's start with national defense, and then people can pay for their own protection in the free market. I hear that defense spending is a rather big ticket item on our budget. "Or if raising taxes must be done, how about if the lower 50% of taxpayers start paying more than the average 3% of their income in taxes, instead of having the top 1% pay over 20% of the taxes?" Ooh, ooh! Is this where I get to say "if you don't like it, why don't you leave?" I've always wanted to say that!"I don't suppose any of these thoughts have occurred to you."Sure. Problem is, all of them are extremely complex problems that you have cast out in a set of simplistic one-liners.

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jonas_opines 5 years, 11 months ago

"Maybe it's time we tried that."Maybe the reason that we haven't is that too many fiscal conservatives in the electorate, perhaps in denial and frustration, spend all their time blaming out of control government spending on "The Liberals."

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verity 5 years, 11 months ago

Thanks for that explanation. It seems to fit with what I have observed.What I will never understand is that unfettered (unregulated) capitalism seems to be a religion for any number of people, despite the fact that is has never existed and is not in their economic or any other kind of interest.

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britstyx 5 years, 11 months ago

Verity, most people do not vote in their own best economic interests now, but in the interests for the position they aspire to, no matter how unlikely it is that they will rise to the top tier of society. Thus it is that you will find poor folks the world over voting for an economic system that is clearly geared firmly against them. nota, please reread both the last portion of my letter in which I point out that the only time we have seen national debt reduction in the past 60 years was when Democrats were totally in charge of our government or when one party was in the White House and another ran Congress, that in the last 60 years when Republicans were totally in charge of our government, neither debt nor government spending has ever reduced and my explanation of the theory behind Keynesian economics. If you read the words carefully you will find the answers to all your questions.You would suppose wrong.

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jonas_opines 5 years, 11 months ago

verity (Anonymous) says: "What I will never understand is that unfettered (unregulated) capitalism seems to be a religion for any number of people, despite the fact that is has never existed and is not in their economic or any other kind of interest."You don't understand that? For some, it's that large deduction on their paycheck after FICA. For others, it's the check they have to send before April. For many, it's taking many services for granted, and for most its operating under the fictitious belief that the free market never runs across externalities that it can't properly address.

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RogueThrill 5 years, 11 months ago

This is how LTEs are meant to be written. Clear, concise and full of information supporting or refuting a point.

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notajayhawk 5 years, 11 months ago

britstyx (Anonymous) says:"You would suppose wrong."Actually, it seems you've proven my supposition correct. Just because it hasn't been done doesn't mean it can't be. As a matter of fact, considering where (as you so aptly point out) politics as usual has gotten us over the past several decades or so, maybe it's time to try something new. Like cutting spending or something. And maybe the reason it hasn't been done is because no politician wants to face his electorate after cutting off the money they've come to believe they're entitled to - so they all eventually do what you have done, and simply give up, justifying it with the 'inevitability' of raising taxes.Another thing you don't seem capable of supposing is that someone who disagrees with you might actually understand the issue as well as or better than you do. I'm a pretty intelligent guy, and fairly well educated (one of my degrees is in business). Not that any of that matters since this is a pretty simple concept, despite your attempts to complicate it. When a government (or a business or a person) spends more than it takes in, there's a deficit. To correct that situation, you can do either (or both) of two things: 1) raise taxes, which seems to be your preference, or 2) cut spending. I'm fully aware of the history and agree the latter choice has not been done - yet. Maybe it's time we tried that.

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Richard Heckler 5 years, 11 months ago

It all depends on how the tax dollars are spent. The matter is quite complex...anything but black and white.Constantly removing sources of revenue from the cookie jars = tax increasesWhy is it so many repubs believe that a nation can run without tax revenues? Think about if tax dollars were not constantly being used to bail out that gambling casino aka Wall Street, bank robbers were not being reimbursed with tax dollars and Fortune 500 corporations were not being subsidized with tax dollars and the defense industry were receiving 50% of every tax dollar likely there would not be a shortage of tax dollars. All of the above could qualify as socialism. Instead we could invest tax dollars into directions that matter. Thus a constant source of new wealth and jobs for the nation. The answer then is to subsidize new industry thus creating new jobs that make money thus an increase in revenues across the board thus a constant source of revenue. Thus eliminating a need for tax increases. Could also be considered a form of socialism. Then maybe tax cuts after the cookie jars are working again. But maybe reinvesting would make more dollars and sense.Food for thought:http://www.democracynow.org/2008/1/18/free_lunch_how_the_wealthiest_americanshttp://www.dollarsandsense.org/archives/2001/0301miller.htmlThere is a commonly accepted myth that buying stock in the stock market provides funds directly to businesses that they can use for new investment. This is completely incorrect. Only when someone buys stock that is part of an initial public offering (IPO) does the money go directly to the firm. If you were to buy a share of General Motors stock tomorrow, the money you pay would go to the stockowners and not to General Motors. If a large number of people were to suddenly enter the stock market, it would drive up the selling price of stock and create a windfall for those who currently own stock, but it would not provide a penny to the firms whose stock is traded. Economists Dean Baker and Bob Pollin did a study a decade ago during the IPO boom that illustrates this distinction. They found that for every $113 in stocks traded, only $1 actually went to businesses to finance real investment.http://www.dollarsandsense.org/archives/2005/0505orr.htmlWhy should tax dollars bail out Wall Street? Isn't this an example of socialism?It seems the USA is not free of socialism. How tax dollars are spent could determine the difference between fiscally prudent socialism and fiscally reckless socialism.Lawrence city hall is socialism...

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verity 5 years, 11 months ago

I agree with RogueTrill---it's nice to see a rational and well-written letter, not a rant in support of some questionable ideology.I do have some questions.What makes a country socialist? Is there any country that is not a combination of capitalism and socialism? Does the fact that Sweden has a moderate prime minister or France has a conservative prime minister and president mean that they are not socialist? The countries did not change completely because of what their current leaders are. And my understanding is that "conservative" in Europe does not mean the same thing as it does in the United States.I think our definition of words like socialism and capitalism are very important, as they seem to mean different things to different people, so we have conversations and we're not necessarily talking about the same thing.

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verity 5 years, 11 months ago

Sorry, Jonas, I was responding to nota, not to your comment.

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notajayhawk 5 years, 11 months ago

"There is a commonly accepted myth that buying stock in the stock market provides funds directly to businesses that they can use for new investment. This is completely incorrect."For once merrill is at least partly correct. The stock price, however, does affect a corporations ability to raise money, both directly (as the company usually retains some equity it can sell at the higher stock price) and indirectly (as it affects the banks' willingness to lend and the credit terms).Also, merrill, I don't suppose the financial experts at Democracy Now have any idea how much is raised in capital gains taxes every year on those transactions, regardless of whether the money goes back to the corporation? It'll be pretty amusing watching Obamamama trying to figure out where to raise the money to pay for all his promises - there won't BE any capital gains tax revenue, with millions selling off massive holdings at a loss (losses that can be carried forward for a few years, too); he can raise the CG tax rate to 90% if he wants to, 90% of nothing is still nothing."Lawrence city hall is socialism:"Now THAT part wouldn't surprise me.

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notajayhawk 5 years, 11 months ago

"Somehow, sometime, something's gotta give. Sooner or later we are going to have to start paying more in taxes or the entire country will go bankrupt, realizing the aim of the neo-cons."The 'neocons' agree with you that "something's gotta give." Why is it that the liberals' only answer is more taxes? How about less spending? How about cutting into what so many people in this country have come to view as entitlements? Or if raising taxes must be done, how about if the lower 50% of taxpayers start paying more than the average 3% of their income in taxes, instead of having the top 1% pay over 20% of the taxes? I don't suppose those thoughts have ever even occurred to you.

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jafs 5 years, 11 months ago

notaj,That would imply that in fact the only feasible way to reduce our deficit is to increase tax revenue.I'm not sure where your tax statistics come from, but I suspect they're a bit off - my wife and I seem to be paying about 20-30% of our gross income in taxes, and we're certainly in the bottom 50%, with a combined income of about $50K.

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verity 5 years, 11 months ago

I agree that we need to cut spending. But I disagree that it is simple. You want to cut the so-called entitlements, but you end up just kicking the ball down the road. Health care delayed doesn't mean the problem goes away, it just costs more to treat later and perhaps the person becomes unable to work or dies, leaving the family with no means of support.So-called free market health care is not working---this is one of the places where the capitalist ideology fails.We need to look at what programs work, why they are working or not working and make changes or cut programs on that basis, not on our ideology.It seems pretty evident that trickle down or supply side economics is not working, but too many people have invested their belief system in it and can't seem to move on. We need to look to the past to see what has worked, how we can apply it to the present and future and then move on.I have worked in both the public and private sector and have been appalled at the waste and inefficiency on all levels. The president can't do much to control this at the lower levels. This has to start from the ground up.If we want change, and I think most of us agree that we are in serious trouble and can't continue on the path we are on, we all have to start making changes.Calling each other names is not going to change anything. Demonizing those we disagree with only makes the divide greater.I would like to come on these boards and be educated by people who know more about something than I do or who can present a rational argument as to where my ideas are wrong. On a personal level, I have found that I can work with people who I disagree with and often we can reach a compromise that is acceptable to all. And if we can't, than sometimes I just have to shut up and go with it.

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verity 5 years, 11 months ago

To bring this to a practical level, let's start letting our congress people know that we want the pork to stop and that we want better oversight on all programs. You have time to be here, you can certainly send an email to them.

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jafs 5 years, 11 months ago

Also, under President Clinton, the deficits decreased during the first 4 years, then became surpluses (the only time in the last 35 years), and he was re-elected with the question "Are you better off now than you were 4 years ago". I would suggest that despite his other flaws, his economic policies were much sounder than any other in recent history, and Obama seems very similar in his approach.

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Mkh 5 years, 11 months ago

"How about less spending?"Sure, as soon as you find a legitimate politician willing to do this with the power to ram it through the multitude of special interests."-----------------------------------------------------------The American people already had their chance to vote for Ron Paul.... guess you missed it.

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jonas_opines 5 years, 11 months ago

"with the power to ram it through the multitude of special interests""vote for Ron Paul:. guess you missed it."Fail. He didn't even have the power to ram through the primaries.

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britstyx 5 years, 11 months ago

Nota"Actually, it seems you've proven my supposition correct. "No, you supposed that it hasn't occurred to me to cut spending. I think my explanation earlier clearly indicates that it has occurred to me. It may just be that I may not agree with your view point. Which does not make me less intelligent than you, merely that I do not agree with you. Now do I think that it is likely to be necessary to cut spending in light of the huge budget deficit? Yes, I also think it is likely to be necessary to increase taxes at the same time, since Mr Bush has left our economy in tatters and with an unprecedented debt to repay. "Another thing you don't seem capable of supposing is that someone who disagrees with you might actually understand the issue as well as or better than you do. I'm a pretty intelligent guy, and fairly well educated (one of my degrees is in business)."Oh contraire, mon ami. I understand it far better than you may suppose. One of your degrees is business? Very impressive. My degree is in economics. So there is the merest possibility that you are wrong.Incidentally, I didn't suggest that you were unintelligent. I merely implied that you were being obtuse.But with that said, it is clear that you and I are on opposite sides of the political and economic divide, so I suggest that we simply, respectfully agree to disagree with each other. As intelligent men.

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notajayhawk 5 years, 11 months ago

jafs (Anonymous) says: "I'm not sure where your tax statistics come from, but I suspect they're a bit off - my wife and I seem to be paying about 20-30% of our gross income in taxes, and we're certainly in the bottom 50%, with a combined income of about $50K."The statistics are available almost anywhere online, including from the IRS themselves. You might have noticed the word "average" before my numbers; the lowest two quintiles have negative effective tax rates (after credits, etc.). I was also speaking only of federal taxes - if you're paying that much, you seriously need to let someone else do your taxes for you. At that income for a married/joint filing, you're only in the 15% bracket."Also, under President Clinton, the deficits decreased during the first 4 years, then became surpluses..."Which he accomplished by a massive tax increase. You're right about Obamamama having the same philosophy - despite his promises not to raise any taxes except on the rich, the Bush tax 'cuts' (which were just rescinding the Clinton tax increases) will expire in 2010, and I seriously doubt we can expect the Messiah to renew them.

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Mkh 5 years, 11 months ago

"So-called free market health care is not workingthis is one of the places where the capitalist ideology fails."-------------------------------Are you serious? You think we've been operating with a "free market health care" system? I hope this is a joke.Jonas....and what exactly did you do to get leaders elected who will cut spending and waste? What are you doing right now? The point is there are polticians out there who are willing to make a severe change in the way Washington spends money, and most of them are in the third parties, but in order to overcome those special interests who dominate the federal spending machine people like you and everyone on here are going to have to stop crying and start doing something about. Take direct action to get fiscally responsible politicians into elected office both locally and nationally.... Or do nothing and suffer the consequences when the $100 Trillion+ of government debt comes crashing down on you and your children.

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