posted
It's now being said the US government's deficit for next year will top $480 billion. And personally, I believe this is an optimistic estimate.
The deficit predicted is based upon what we expect to spend and what we expect to bring in in the form of taxes. Our expectations, in both cases, are going to be off. I firmly believe that expenditures in Iraq and Afghanistan will be going strong and climbing and balance it out with the need to replace munitions used in both conflicts and you've got an expensive bill to pay. Combat pay for the soldiers and sailors in those areas will also be continuing and chances are very good that we will end up sending more troops to those areas. Death benefits to the families of those killed in the conflict also need to be figured in (not that the expense is the worst part of it).
Also, slap a few billion on the top for disaster relief this year since predicitions are pointing to one of the biggest hurricane seasons ever. If the wet weather nationally continues into the winter, even more will be spent.
Look at the revenues, as well. Middle America has taken the greatest hits in the economic downturn of the past three years. Remember all of the lay-offs and down-sizing? All of the growing unemployment numbers? Sure unemployment levels are dropping, but here's what they aren't saying: Droves of folks have dropped off of the unemployment rolls as their benefits dried up. No more benefits, no more place in the statistics. Also think of the numbers of folks who have taken lower-paying jobs, just to have some form of income. That's tax revenues lost to the federal and state governments.
I usually refuse to discuss my personal finances, but it serves as a good example in this case. My wife (a functional analyst) and I (a freelance writer/editor) posted an income of $109,000 jointly in 2000. In 2001 it rolled down a bit to $102,000. The tax return in 2002 (after my wife had been downsized from AT&T Wireless and the newspaper business started cutting back due to dropping advertising revenues) collapsed to $36,000. This past year, we posted a paltry $18,000. Luckily, things are looking up a bit for 2004, but to be honest, we'll be lucky if we break $55,000. Strangely, we're not alone and we're finding a number of folks who have also seen a collapse of their finances. Income tax revenues from the middle class are falling.
Corporations are finding more loopholes and off-shore bolt holes for their money as well. The income of mortgage companies and secondary mortgage purchasers is also collapsing (the refinancing bubble is beginning to burst). Manufacturing is also down and hemorhaging. Let's face it, the money coming in is dwindling, dwindling, dwindling.
Sheesh, I thought the Republicans were pro-business, pro-responsibility and against big government. Sadly, I'm thinking that it took very few licks to get to the center of the Republican Tootsie Roll Pop. And what we, as a nation, have found in the center looks like the traditional Tootsie roll center, but it sure isn't tasting right.
posted
I remember when they first explained trickle down theory. That it was like a roof with water falling on it. Most of the water would be caught by the roof, but some would always leak through, wetting what was beneath it.
What has been proven, using the above metaphor, is that given the chance, the wealthiest will use their money to repair the roof, preventing those leaks...
Posts: 2848 | Registered: Feb 2003
| IP: Logged |
posted
The party of fiscal responsibility surely is not the Republicans, nor is it the Democrats. MAYBE the Libertarians could do something along those lines, but only if a Libertarian ever got elected to anything.
We are digging our own fiscal graves as well as those of our children.
Posts: 4548 | Registered: May 2001
| IP: Logged |
posted
I remember when trickle-down economics was first explained to me. I was in ninth grade. I laughed, and replied, "You're joking, right? Really? Someone actually thought that would work?"
Sopwith--I like the roof analogy, with your modification of wealthy fixing the roof. I've never heard it put quite like that before.
Posts: 4077 | Registered: Jun 2003
| IP: Logged |
posted
Personally, while I've been slightly conservative in my recent political views, I've found that neither the Republicans or the Democrats have made much headway. The budget was balanced just a few years ago and we were actually beginning to pay down the deficit.
I'm not sold on the Libertarian party, though. Honestly, just too many kooks in the limelight there.
What I would love to see, however, is an anti-incumbent movement. I believe it is time to clean house. There are so many "Contract With America" members of the House and Senate right now that have forgotten their vows. I think it would be nice to have a real, honest to goodness Contract requiring balanced budgets, line item vetos, term limits and REAL campaign finance reform.
Then again, I wish the Easter Bunny was real...
Posts: 2848 | Registered: Feb 2003
| IP: Logged |
posted
Sopwith-Amen. The Libertarians are always heavy on the kooky, conspiracy-theory side.
We really need an amendment requiring a balanced budget from the Federal gov. Throw the bastards in jail if they don't comply.
I think that turnover in congress can only be good. Let's put in term limitations too (how about a single term?).
Posts: 4548 | Registered: May 2001
| IP: Logged |
posted
Well, I don't know what to do. The other day I was thinking: You know, capitalism in its current form has failed us. It seems a little naive in the faith that the economy will set itself straight. As you do, Sopwith, I see the rich just hedging their bets.
It's like the current state of gas prices. Is it a coincidence that for the last few three-day weekends, petroleum prices have shot up to record levels? There is always some excuse, like pipelines or power outages, but I think that the real reason just may be that the oil companies' profits have not met their dreams of wild avarice.
Again, though, I have no solution. It's easy to state the problem, but harder to find a novel solution.
(nice topic)
Edit: I hate it when days think, so I took the blame!
[ August 27, 2003, 11:49 AM: Message edited by: Erik Slaine ]
Posts: 1843 | Registered: Aug 2003
| IP: Logged |
posted
Yeah, capitalism has it's pitfalls just as any other system does. The problem is nobody has come up with anything better so far (unless you want to argue that communism worked ) So until then, I think we need to work on fixing the system we have. Requiring a balanced budget sounds like a great idea, but what happens when there's an emergency? I don't know. It's easy to sit here and point out what I don't like about things, much harder to have a viable answer to them.
Posts: 155 | Registered: Aug 2003
| IP: Logged |
posted
Actually, in many cases, I believe that the corporate mentality has changed immensely, and poorly, in the past 20 years.
Once upon a time, a company attempted to create a product, get that product to market and then prided itself in quality of service to their customers. It was very much about the customer comes first. The biggest and brightest companies made this their bellweather for business. And it worked. Profits were good and steady. Stocks in the companies rose at manageable paces, dividends were paid out and holding onto stocks was a good way to have security. It wasn't sexy, but it worked.
Then came the baby boomers lurching towards retirement age. Running a few years behind in their retirement plans, they started mad investing in the stock market. This caused Black Monday back in the 80s as the market readjusted itself after a big chunk of money was invested. Yuppies everywhere tried to hang themselves with their power ties...
But, the Stock Market was resilient and the early and mid-90s were a great time of growth. New offerings were everywhere and folks plunked down their money and took their chances. And then something changed, a worm turned as the WWII generation started stepping down from CEO and Chairman of the Board positions.
Stocks, and the re-selling of them, became the trend rather than steady investment, dividends and security. Day traders (classically the stupidest investors) began to run the show. Steady companies started spinning off their innovative businesses (AT&T spun off Lucent, their R&D division, then AT&T Wireless and AT&T Broadband). Stockholders were happy because they got huge shares of stocks with each split, even though they were selling out the future of the parent company.
Some companies even sold off their traditional business in an effort to find "sexier" lines of work to produce heavier stock sales activity. Check out the story of Montana Light and Power to see how poorly they performed. (A government-supported monopoly ditched electrical generation, sold off its assets and then tried to move into telecommunications). Some folks made a killing, many folks found their stocks worth, literally, pennies on the dollar.
But it was an active market and fortunes were being made. Many stock brokerages moved to bargain pricing and online trading to entice the get rich quick crowd. Most didn't even realize that the el cheapo $15 per trade price tag was hitting them on both ends, buying and selling. Stock brokers had originally only charged a commission on the sale of stocks...
Then you got companies investing their 401Ks back into themselves, creating false demands for their stocks and manipulating the market. But the engines kept churning and the big corporations began their earnest bloodletting...
They started working to please the short-term stockholders rather than the customers. Once noble corporations sold their reputations for quick bucks (American Express went from being exclusive clout to high interest, telemarketing, pressure sales of dubious "enhancements") and a fast bottom line. Some companies even started slashing and burning their own workforce in an effort to "sex-up" their profit margins.
It's a bad, bad time and some bad, bad people have been watching the cookie jars.
Posts: 2848 | Registered: Feb 2003
| IP: Logged |
I think we should tap into the Founding Fathers for energy. Their spinning so fast right now, we could light the entire eastern seaboard!
Posts: 1843 | Registered: Aug 2003
| IP: Logged |
posted
I'm not suggesting that we move to a more socialistic society, far from it. I believe in capitalism. Someone somewhere, however, just handed the keys to the kingdom to the barbarians at the gate.
Corporate leaders in so many cases have a rape, pillage, plunder mindset. And until they take their golden parachute prize packages and settle in to their retirment, be ready for the rollercoaster ride to move faster than it ever has before.
How would I fix it? Clean house at the SEC and institute some down home, common sense rules. Limit self-investment of retirement/pension funds to 20% in the parent company. Set up a monthly margin call (an amazing amount of stocks are bought on credit nowadays --- didn't anyone learn from 1929???).
Or possibly, quite possibly, institute a rule that bans proxy voting at stock holders meetings. If you're not in attendance then your vote counts as a "No" vote against whatever measure is introduced. So many times mass proxy votes are cast at the direction and in the direction of the CEO...
Posts: 2848 | Registered: Feb 2003
| IP: Logged |
quote: Or possibly, quite possibly, institute a rule that bans proxy voting at stock holders meetings. If you're not in attendance then your vote counts as a "No" vote against whatever measure is introduced. So many times mass proxy votes are cast at the direction and in the direction of the CEO...
I won't argue that there are possibly problems with the way proxy voting is used, but to ban it outright seems like it would halt the voting completely. What with all the easy ways to get your feel wet in the stock market, how many default "no" votes would there be in your scenario? I bet there's a pretty large percentage of investors who don't follow the company closely enough to give an informed vote, and it seems like as many good propositions would be voted down as bad ones.
Posts: 6394 | Registered: Dec 1999
| IP: Logged |
posted
Ahh, very true, Karl Ed, very true. Was just struggling for something. It's just that big bundles of proxy votes are used pretty much at the whim of the board. In some cases, the proxies may actually outnumber the individual shares of board members.
Posts: 2848 | Registered: Feb 2003
| IP: Logged |
posted
I don't see why people think economic downturns are a failing of capitalism.
Pssst--- That's just capitalism working as advertised. Before the Great Depression, with all the government regulation, err, "interference" that followed from it, there was a fairly regular cycle of bubbles and bursts. Only then, if you got caught in the burst, you were screwed.
As for the $480B deficit, I believe it does not include ongoing expenditures in Iraq.
It'd be interesting to see how much people's state and local taxes/fees have gone up, versus any new tax benefits received from the federal government?
posted
You guys don't seriously think there's any way to fix the economy, do you?
There are basically two ways the government can provide for the needs of the American people--1) run a massive deficit or 2) tax everybody to death. Sure, from time to time when everything is going right, you can send the emergency funds back and temporarily get rid of the deficit, but everything isn't going to go right forever.
I really think this is fairly hopeless.
Posts: 1041 | Registered: Feb 2002
| IP: Logged |
Or rather, I would be if the Republicans actually believed in what they claim to believe in: responsibility, minimal government, balanced budgets, etc.
However, the Republican Party in practice is tied inexorably to Big Business and the "Moral Majority". You get guys like Dubya who claims to be pro-democracy, yet he steals the election, claims to be caring about the poor, yet is responsible for turning a record surplus into a record deficit, claims to care about peace but then starts fights with almost everybody, claims to believe or military is a hero but then cuts their pay.
The republican principles are good ones. But the Republican Party, on the other hand, is the biggest bunch of evil bastards that I've ever encountered. I can't find strong enough words to describe how much I hate and fear these self-serving maniacs.
There was a record surplus when Dubya stole office. But his tax cut for the wealthiest 1% took care of that in record time. We were already deep in trouble way before 9/11.
posted
And don't forget that $300 or so that so many of us poor schmucks sold our votes for.
Yes, there is a way to fix the government's spending/deficits without raising taxes or slashing vital programs.
First off, we need the GAO to do a means test on every single program we have. Next is an outside oversight on ever department. Third would be a Constitutional Ammendment that bills before Congress could only address one topic at a time -- in other words, no riders with porkbarrel projects.
Posts: 2848 | Registered: Feb 2003
| IP: Logged |
posted
Except, Macc, in case you haven't noticed, the government HAS needed that money. They've had to charge $480B to their credit cards (and that's not including Iraq's ~$5B/month).
Also, thanks to passing laws (No Child Left Behind the most notable example) and then not funding them, it's forced states to raise fees and taxes to pay for them, wiping out any cash back benefits from the feds (though I really want to find some decent stats showing state/local tax increases against the federal tax cuts; Kayla?).
quote: GASP! You mean he actually gave back some money the government didn't need?!!? Horrors!!
You mean we didn't need it? If we didn't need the money, why do we have a record deficit now? If we didn't need the money, why is Bush cutting hazard pay for the military in Iraq? If we didn't need the money, why is Colin Powell begging the United Nations -- who we basically thumbed our noses to over Iraq -- to, um, come in and help us since we can't do it alone?
You joke about the government not needing the money, but clearly the government did need the money. The wealthiest 1% of the country, on the other hand ... poor fellows, can barely afford to buy Australia.
Gave it back? You make it sound like US Citizens own the money. But unless you've been minting money in your basement without telling us, it's federal tender: owned and controlled by the government, who allows us to use to trade between us.
Gave it back? Why not give it to all the unemployed laid off by big businesses while their CEOs collected record bonuses? Why not give it to all the single parents who can't afford to feed their children, who can't afford rent? Why not use it to fix the public schools and give poor a decent chance at education?
But now, much better to give it to the rich. They really need it.
Honestly.
By the way, I'm not pro-democrat. I'm just anti-republican. I only vote democrat because they're the only viable alternative. But it's more a damned if you do, and really, really, really, really damned if you don't situation.
posted
Look, let's face it, when discussing this kind of thing, you can't bash just Republicans, it slaps against the Dems, too.
Congress, lest we forget, is where most of the rampant spending has originated from. Or, at the very least, it's where the go ahead on spending has come from. There are so many entrenched, professional politicians in the House and Senate, it's no wonder we can't get things under control. And best I can remember, we only have one member of Congress who ran as an Independent.
It's time for both parties to come clean, cut some of their sugar-teat ties and get down to running a country rather than running it into the ground.
Posts: 2848 | Registered: Feb 2003
| IP: Logged |
posted
Bokonon, you're right. The government does need the money...now. Who could have predicted a record surplus would collapse so fast, though?
Jeffrey, you're right in that I'd rather the money have gone to the poor than the rich. Better either, though, than in the hands of the free-spending government. At least a deficit will bring back the belt-tightening.
As for your claim that we don't own the money...??? Okay, yes, the government owns the physical legal tender. But if you're suggesting that all the wealth really ought to be controlled by Congress instead of the poor schmucks who work for it, like me, fuhgeddaboutit. Any means the government can use to take money from the rich can be used on the rest of us too, if it only has the will.
Posts: 1041 | Registered: Feb 2002
| IP: Logged |
posted
I would love it if we could eliminate piggybacking/porkbarrel legislation - 1 bill = 1 issue. I also think it would do us wonders to get rid of lobbyists. Term limits would be nice. Bills that introduce/expand/etc. a program should also have to address where the funding for that program will come from. We can't just have programs created willy-nilly by saying we'll grow the money on a tree somewhere. I think the tax system needs to be revamped - a single percentage (I'm thinking 10-13%) to be paid by all (with, perhaps, an exception for those households that make under $20k/year), no ifs, ands, or buts. I honestly believe that this would raise tax revenue for the country while releaving some of the heavy tax burden on the middle and lower classes. If there's a surplus, great! It should rollover to address the next year's budget needs.
quote: Bokonon, you're right. The government does need the money...now. Who could have predicted a record surplus would collapse so fast, though?
Well, pretty much every economist not directly on the payroll of the Republican Party did predict this.
quote: Jeffrey, you're right in that I'd rather the money have gone to the poor than the rich. Better either, though, than in the hands of the free-spending government.
You mean, of course, the Republican government. Clinton left a balanced budget. He busted his tail to do so, and keep that in mind, lest you start chanting that the Democrats love to spend money.
quote: At least a deficit will bring back the belt-tightening.
Yes, and slavery inspired some lovely spirituals. Don't try to bury a tragedy by looking for silver linings.
quote: As for your claim that we don't own the money...??? Okay, yes, the government owns the physical legal tender. But if you're suggesting that all the wealth really ought to be controlled by Congress instead of the poor schmucks who work for it, like me, fuhgeddaboutit. Any means the government can use to take money from the rich can be used on the rest of us too, if it only has the will.
Oh, but those means are used. They're just not used on the rich.
I can't run out of things we could have better used that money for: investigating alternate forms of safe energy, improving education, cleaning the environment, curing AIDS, you name it. Pretty much anything would have been better than Bush's tax cut.
Hell, even if they tossed cash out of a helicopter, it would have been better. At least some needy people might have gotten some.
posted
Maccabeus, the government could have easily predicted that they'd need the money, since Bush revealed that the decision to go to full scale war with Iraq was really made in 2001.
Posts: 622 | Registered: Dec 2001
| IP: Logged |
quote: Personally, I think the responsible thing to do with the surplus would have been to use it to directly pay down the debt...
But that's not much fun, is it?
Yes, that would have made sense. I'd be torn between using it for critical programs and paying down the debt, but possibly getting rid of the debt would have the best long-term results. It's hard to say. Certainly, giving a tax break to the extremely wealthy wasn't the best use of that money.
posted
The problem is that the Republicans are torn between giving themselves huge tax breaks, getting rid of the laws that block their corporations from acting with impugnity, and yet still trying to produce tangible-enough-looking results to get them re-elected.
quote:I think that turnover in congress can only be good. Let's put in term limitations too (how about a single term?).
I too would love to see candidates in office who are truly willing to be fiscally responsible, but the problem with term limits is that they shift a lot of power to the lobbyists. Or at least that's what we've discovered in Calif. Legislators are totally unschooled, they're worrying about that second term, and so they play right into the hands of the special interest groups.
Posts: 3423 | Registered: Aug 2001
| IP: Logged |
posted
Strangely enough, when the government has worked at paying down the deficit, i.e. the 90s, the economy has gotten stronger.
Term limits are attractive, but shifting the power to lobbyists isn't very nice. (Remember though, there are lobbyists working for good causes as well). Perhaps the looming threat of a "get them out of office" push every couple of terms would work to keep politicians on the straight and narrow. Or maybe not. I'm amazed at how many of them are happy to play the short game economically, they'd probably do it with their own careers, too.
Posts: 2848 | Registered: Feb 2003
| IP: Logged |