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Microsoft Millionaires

"During the boom, nearly every full-time Microsoft employee set up a computer spreadsheet that, with the touch of one key, displayed a real-time accounting of his stock-option fortune."

http://story.news.yahoo.com/news?tmpl=story&cid=1804&ncid=1804&e=2&u=/washpost/20030803/tc_washpost/a15231_2003aug2

Interesting article.

Dave B.
Saturday, August 02, 2003

Hmmm..Sounds like Microsoft has been either directly or indirectly responsible for channeling millions upon millions into charities.

I hope this doesn't degenerate into a stupid flame war, but it would be interesting to see how much money some of the most stringent MS-haters and Open Source advocates have given to charity. I really have no idea. Do folks like Stallman even have money to give away?

And I am referring to money here, not software. One might argue that the Open Source crowd has given billions away through their software, but I don't think the starving kids in the ghettos really have much use for a copy of Linux with a specially configured version of sendmail.

Mark Hoffman
Sunday, August 03, 2003

Heh, you need to space out the old "I detest flamewars, but here's the old Microsoft charity trolll..."  It's just not gonna work so soon after the big opensource flamewar.

ludditetroll 1000
Sunday, August 03, 2003

"how much money some of the most stringent MS-haters and Open Source advocates have given to charity"

The ones with a comparable income (I would guess) have made comparable donations. Unless part of the assimilation into the MS empire includes 'thy shall tithe to charity'.

Mr. E. Lurker
Sunday, August 03, 2003

I can turn it into a different flamewar then. :-)

This is what conservatives and market economists refer to as "trickle-down economics" - if some people get rich, invariably the entire society profits. Those millionaires employ yard workers, construction workers, accountants, etc, etc. They buy American cars. They buy food at the grocery store. A lot of them donate to charities. They pay property taxes, which fund the local schools.

They put money in the bank, which enables the bank to make more loans and hire more employees.

Funny thing is, it generally seems to work. Go figure. ;-)

Philo

Philo
Sunday, August 03, 2003

That's an interesting part of economics.  It seems that under certain circumstances trickle-down is quite healthy for the economy, while other times it just ruins things.  I wonder if anyone can explain the variables involved?  What makes good trickle-down legislation vs. bad?

ludditetroll 1000
Sunday, August 03, 2003

Of course, there's a lot of other things rich people can do with their money, most of which doesn't benefit the common citizen.  They can just as well buy Japanese and German cars, luxury items, they can "invest" their in high-risk ventures, they can build over priced houses and jack up the housing costs for everyone else in the area, they can donate to the G.W. Bush reelection campaign.  (reelection?  okay, election)  Some like to accumulate wealth just for the sake of accumulating wealth ...

The other school of thought is that more government spending can spur the economy ... money that goes into public works, highways, teacher's salaries, the military, etc.

There is an odd little delusion among some libertarians that the moment we're not forced to pay taxes, suddenly we'll just all voluntarily be more generous with our newfound wealth and there will be great gobs more money for worthy causes ...

It depends on your point of view.  Some thing we're too far to the left of the Laffer curve, some think we're too far to the right.  I happen to think we're up near the flat part, and that monkeying with the tax rate in either direction is going to be detrimental.

Alyosha`
Sunday, August 03, 2003

just as well buy Japanese and German cars,

-> many of which use imported American parts or are even built in the US. Those that are imported pay tariffs on the import.

luxury items,

-> Which money goes to pay the salaries of the people that make said luxury items

they can "invest" their in high-risk ventures,

-> Paying salaries of the people working in those ventures.

they can build over priced houses

-> Paying the salaries of the people working for the builder

and jack up the housing costs for everyone else in the area,

-> "Jacking up housing costs" has two effects: 1) people that own houses have to pay more in property taxes (which goes to the government to spend - you should applaud that, right?). 2) People who own real estate can sell at a profit, earning more money.  I fail to see the problem here.

(reelection?  okay, election)  Some like to accumulate wealth just for the sake of accumulating wealth ...

-> Generally they keep it in the bank (I addressed this) or they buy stocks (investing in companies, which raises the value of the stock for every stock holder as well as enabling that company to employ more people)

The other school of thought is that more government spending can spur the economy ... money that goes into public works, highways, teacher's salaries, the military, etc.

-> public works, highways, and teacher's salaries are paid for with state and local taxes, not federal. The military is paid for with federal taxes, but let's admit that it's generally rare for someone to advocate larger government *and* a larger military. ;-) 
FWIW, I personally believe that increased government spending hurts the economy, since that increased government spending has to come from somewhere, and that somewhere is generally taxation - taxation takes money away from people who can spend it on the economy...

Philo

Philo
Sunday, August 03, 2003

"I personally believe that increased government spending hurts the economy, since that increased government spending has to come from somewhere, and that somewhere is generally taxation - taxation takes money away from people who can spend it on the economy..."

Government is part of the economy.  It's not just some black hole where money goes and never comes out again. 
Public spending creates jobs just the same as private spending, whether it's on the federal, state, or local level, and public spending puts money into the hands of regular people.

Private spending has to come from somewhere too, you know.  An general increase in prices has the same effect as an increase in taxes.

In an economic downturn, the problem is that there's too little demand and too much supply.  People are hanging on to their money and businesses are suffering because of a lack of consumer demand.  It's a bit like a Lexus dealership in the ghetto.  Supply-side economics says that if we gave the Lexus dealer more money, he could hire more people to sell more Lexuses.  But the problem isn't supply.  The problem is that the people aren't spending -- they have no extra money to spend.  In a downturn, stockholders will just take their tax cuts and run; the market will not give them a better return for their money.  In times like these,  taxation is actually more effective at getting those dollars out of people's pockets.

Supply-side economics only make sense if there's too much demand and it's the supply side that's hurting.

On the flip side, government is just as prone to waste and corruption as the private sector. You should be careful not to write government a blank cheque.  After a certain point, it's morally objectionable to force someone to pay for items they don't support.  I don't want you to get me wrong and think I'm a big-spending liberal.  I'm as much for fiscal responsibility as the next guy.

Which is why I think the US needs regime change in 2004, btw ...

Alyosha`
Sunday, August 03, 2003

LOL! You voting for Harry Browne? Because as far as I'm aware there's nobody in either of the two major parties that's for fiscal responsibility, cutting government spending, or auditing any of our massive resource wastelands called "Departments"

Philo

Philo
Monday, August 04, 2003

Alyosha`,

Before you go on more about how taxes are good for the economy, why don't you make it a little more clear just what it is that you believe the goal of an economic system should be.  After all, "good for the economy" or "bad for the economy" should be judged by the impact on the stated goal, don't you think?  Based on your analysis, I am certain your idea of what the goal is is quite at odds with what I believe it to be.  It makes me curious.

anon
Monday, August 04, 2003

>>On the flip side, government is just as prone to waste and corruption as the private sector.

and some! In my experience the private sector allocates resources far more efficiently than the public sector does or probably ever can?

Why? Lack of competition and appalling middle management downwards.

(I'm from the UK btw . . .)

Yanwoo
Monday, August 04, 2003

And private companies in the UK have better middle management?  Oh if only _that_ were true.

Simon Lucy
Monday, August 04, 2003

>>And private companies in the UK have better middle management? 

In my experience they tend to be ever so slightly less bad (I refuse to use a positive word!) Historically I guess it's because the pay is less and job security is much higher. So it *tends* to attract 'lesser' people who wouldn't know a risk if it jumped up and bit them on the arse and who think Innovation is a catalogue that comes through your door  full of gadgets . . .

Although public sector wage inflation is soaring so . . .

Yanwoo
Monday, August 04, 2003

http://stateoftheunion.blogspot.com/
May 14th.
Interesting thoughts on trickle down. Don't always agree, but an interesting point.

BigRoy
Monday, August 04, 2003

Middle management is generally risk averse because by and large it isn't empowered to take those kind of decisions on a day to day basis.

Decisions get repeated even if they were the wrong or too conservative in the past simply because the low risk strategy won't get them fired.

Simon Lucy
Monday, August 04, 2003

Hmmm..Sounds like Microsoft has been either directly or indirectly responsible for channeling millions upon millions into charities. - Mark Hoffman

You may have mixed up your "m" and "b" keys. I could be wrong, but I believe that Big Bill himself has donated billions.

Which illustrates another point I learned as a child: You can't judge someone's value until you know the whole story. I never much liked Bill when I only knew him as a brilliant but ruthless businessman. But I tremendously admire that he walks the walk when it comes to using his money. His foundation should serve as a model for other successful businessmen.

"We honor some for what they once were, and others for what they become" -- Lloyd Alexander, The Black Cauldron

Zahid
Monday, August 04, 2003

Philo: no, I'm voting for Howard Dean.

http://www.boomundo.com/dean/fiscalresponsibility.htm

Alyosha`
Monday, August 04, 2003

Another aspect:

http://opengov1.media.mit.edu/linkto.jsp?url=http://www.opensecrets.org/pacs/industry.asp?txt=B12&cycle=2002

Johnny Bravo
Monday, August 04, 2003

The interesting thing about "trickle down" economic ideas is that "trickle up" should work just as well if not better.  If taxes favored the reverse idea of trickle down--say, by eliminating the wage tax for low income workers in the U.S.--the money would be spent in a different way, but would result nonetheless in stimulating the economy by increasing demand for goods.

So tell me again why it's better to cut taxes for the rich rather than the rest of us to stimulate the economy?

not an economist
Tuesday, August 05, 2003

not an economist,

I don't think anyone has ever said that providing more money to even the lower wage earners doesn't have a positive impact on the economy. Remember Bush's tax rebates? That was one of the ideas behind that.

The problem with extending this reasoning any further deals with the momentum of money. Giving small windalls to the lower wage earners only gets you so much economic activity. These aren't the people building $40 million warehouses for their businesses, they aren't building $15 million homes, they aren't employing hundreds of people. How exactly does trickle-up work?

It's really fun to hate the rich people, but the fact is the rich people are the ones that spinning the economic wheels faster. And it's not just their personal consumption.

Richy Rich
Tuesday, August 05, 2003

I thought it was pretty obvious, actually.  The demand for goods (from whatever source, but certainly wage earners are more likely to spend than save) will lead to expansion of production--more factories, more jobs-- than giving away money to rich folk.  Tax relief to the rich has never really been shown to guarantee stimulus to the ecomomy because expansion of production does not take place until demand for goods is demonstrated.

The current situation in the US illustrates this further: we have a slight economic growth fueled by consumer spending, without the concomitant creation of jobs.  In other words, Bush's tax relief to the rich has failed, because more jobs are being lost than are being created, contrary to his prediction.  My point is that he gave the do-re-mi to the wrong people, who promptly socked it away.

not an economist
Tuesday, August 05, 2003

Oh, and the tax rebates never amounted to much for most of us--the rich got the lions share.

And the building of warehouses and factories?  Management is taking a wait-and-see attitude, seeing which way the wind blows before committing to expansion.  In the meantime, the board of is deciding how much to increase the CEO's compensation next year.

(That last bit might be taken as facetious, unless you actually read the annual report of the major US corporations).

not an economist
Tuesday, August 05, 2003

Graduated Income Tax and tax cuts explained:

Every night, ten men met at a restaurant for dinner. At the end of the meal, the bill would arrive. They owed $100 for the food that they shared.

Every night they lined up in the same order at the cash register. The first four men paid nothing at all. The fifth, grumbling about the unfairness of the situation, paid $1. The sixth man, feeling very generous, paid $3. The next three men paid $7, $12 and $18, respectively.

The last man was required to pay the remaining balance, $59. He realized that he was forced to pay for not only his own meal but the unpaid balance left by the first five men.

The ten men were quite settled into their routine when the restaurant threw them into chaos by announcing that it was cutting its prices. Now dinner for the ten men would only cost $80. This clearly would not affect the first four men. They still ate for free. The fifth and sixth men both
claimed their piece of the $20 right away. The fifth decided to forgo his $1 contribution. The sixth pitched in $2. The seventh man deducted $2 from his usual payment and paid $5. The eighth man paid $9. The ninth man paid $12, leaving the last man with a bill of $52.

Outside of the restaurant, the men began to compare their savings, and angry outbursts began to erupt. The sixth man yelled, "I only got $1 out of the $20, and he got 7, "pointing at the last man. The fifth man joined in. "Yeah! I only got $1 too. It is unfair that he got seven times more
than me." The seventh man cried, "Why should he get $7 back when I only got $2?"

The nine men formed an outraged mob, surrounding the 10th man. The first four men followed the lead of the others: "We didn't get any of the $20. Where is our share?"
The nine angry men berated the tenth for an hour until they got tired and went home.

The next night, the nine men met at the restaurant for dinner. The tenth man, tired of their lack of appreciation, chose to eat at another restaurant.

So when the bill came, there was no one to pay it.

*************

Who is footing the bill to run this country?
The 400 wealthiest taxpayers pay about as much in federal income taxes as more than 40 million individuals and families at the bottom of the income scale, according to Internal Revenue Service data." (Glenn Kessler/Washington Post 3/15/01)

Remember - one person, one vote. What happens to us as a nation if those 40 million people continue to vote the money of the top 400 into their own pockets (via welfare and tax credits when they pay no tax)? Think carefully when "the lower class" is saying, in effect, "we think you should give us more of your money."

Philo

Philo
Tuesday, August 05, 2003

During the 2000 presidential campaign, I got hopping mad when Gore tried to make an issue out of the top 1% getting 40% of Bush's tax cut.  They generate 40% of the wealth.  Of COURSE they're going to get the lion's share out of any fair tax cut. 

Yet I opposed tax cuts because it was obvious even in 2000 that the projected budget surpluses were only on paper and may never materialize.  Bush was simply disingenuous when he said "the surplus belongs to the taxpayers, and we're going to give it back to them".  Mr. President, what about our federal deficit?  Who does that belong to?  10% of my federal tax bill every year goes to pay interest alone on the damn thing, in my mind the largest government giveaway to the wealthy in existence -- the poor don't tend to hold T-Bills, after all.

Yet people get more outraged over TANF(welfare) and unemployment UI, which combined consume less than ten dollars out of every $1000 I make.  It's unbelievable!  Talk about straining at gnats and swallowing camels ...

The question is not whether the rich or the poor should get tax cuts.  The question is whether we can afford another tax cut on top of the largest deficit in US history.  The same party that in 1994 preached balanced budgets has gone and blown a carefully built budget surplus, and unlike in Reagan's administration, the Republicans can't blame a Democratic Congress for not reigning in spending.  We will be feeling the effects of this tax-cut-and-spend administration for years to come.

Alyosha`
Tuesday, August 05, 2003

not an economist wrote:

>>giving away money to rich folk

>>he gave the do-re-mi to the wrong people, who >>promptly socked it away

>>Oh, and the tax rebates never amounted to much for >>most of us--the rich got the lions share.

Your language seems to reveal a certain bias.  Tax cuts are not giveaways or charity or payoffs to the rich.  They are simply the government allowing people to keep more of THEIR OWN money. 

You can argue that allowing people to keep more of their earned income does not promote economic growth; that's an honest, arguable point of view. 

But talk of giveaways and such is nothing more than demagoguery and inciting class warfare.

Jason Catlett
Tuesday, August 05, 2003

Alyosha`
The current deficit is not caused by the Bush tax cuts.  Even the ones passed in 2001 have only barely, ($45 billion I believe), have even taken effect yet.  They don't really kick in until 2004 at the earliest. 

The cause of the current deficit is
(1) Lower economic growth
(2) Incredible, inexorable growth in government spending

No matter what happens or how bad the economy is, government spending always increases at least 3-4% a year and lately much more than that.  No way you're going to avoid deficits that way. 

Jason Catlett
Tuesday, August 05, 2003

Jason ... I agree that the downturn in the economy had a lot to do with it (and we should have had the wisdom in 2000 to prepare for the inevitable downturn in the business cycle).  Yet, the tax cuts have already contributed a large part to our deficit, and stand ready to wipe us out if we don't get this clown out of office in 2004.

To inject some more numbers into the debate, here's a pretty graph from the Center on Budget and Policy Priorities, which was itself taking from CBO figures:

http://www.cbpp.org/7-15-03bud2.htm

Alyosha`
Tuesday, August 05, 2003

"Yet, the tax cuts have already contributed a large part to our deficit, and stand ready to wipe us out if we don't get this clown out of office in 2004."

No, reduced income does not create a deficit (unless it's below bare survival levels). Excess spending creates a deficit. It always will.

Want to cut the deficit? Cut federal spending.

Philo

Philo
Tuesday, August 05, 2003

Philo: from the same link I posted above.

"In fact, deficits are caused by the IMBALANCE BETWEEN REVENUES AND SPENDING (emphasis mine).  Under the Nussle-DeLay theory, if policymakers cut spending but cut taxes more, thereby producing a deficit, the deficit would be "spending-driven" because spending would exceed revenues.  Under this odd theory, one could cut taxes year after year — or even eliminate taxes altogether — and deficits would still be spending-driven, rather than caused by excessive tax-cutting.  This construction of how tax cuts cannot cause deficits and deficits are always spending-driven is an example of what George Orwell called "doublethink"."

Alyosha`
Tuesday, August 05, 2003

Alyosha`

First off, I just realized that the report you posted assumes that when you cut taxes you just lose that revenue.  That's static scoring and while I'm not saying that dynamically scoring tax cuts leads to the kinds of gains hard core supply siders say it does, I think it's a stretch to say they don't affect economic decisions at all. 

Second, that report assumes that 3-4% growth in spending every year is the norm for government spending.  It only counts new legislative spending in its "other spending" category.  That's a very slanted and narrow view.  3-4% of the federal budget is between 66 and 88 billions per year and would significantly affect the totals. 

Taken together these two biases are very significant.

Jason Catlett
Tuesday, August 05, 2003

Alyosha - I indicated that there *is* a minimum involved. IMHO the US is far, far above that minimum spending at the federal level.

If a couple is making $50k a year, living in a mansion on caviar and just bought two mercedes, then a pay cut to $45k does not mean their problem is the result of the pay cut. Even if they decide to sell one of the mercedes, the pay cut is still not the problem.

Philo

Philo
Tuesday, August 05, 2003

Philo,
the same Washington Post had an article running in May, written by Warren Buffet, about dividend tax cuts. He concluded: "... government can't deliver a free lunch to the country as a whole. It can, however, determine who pays for lunch".

Johnny Bravo
Tuesday, August 05, 2003

Jason ... keep in mind that when you cut taxes while running deficits, you lose not only that revenue, but you also lose gobs more money by financing borrowed money into perpetuity.  Tax cuts may have some short-term economic stimulus and partially pay for themselves (that's debatable), but at what a enormous long-term cost ...

Also, the report I linked to includes funding for new programs as well as increases in existing programs in the "other" catagory.  For example, federal unemployment is an existing program specifically mentioned which had a large budget increase.  That section marked in grey *IS* the 3-4% annual spending increase you're talking about --they're not hiding it somewhere off the graph.

And while I'm on my soapbox ...

I'm passionate about this issue primarily because this is about optimizing government.  And I love optimizing things -- I'm an engineer.  As an engineer, one of the first things I do when optimizing is to identify where the most waste is. 

It's so easy to stand on the sidelines and say, "well, just cut spending".  But what are you going to cut?  Most folks have got a hazy impression that the waste is all in those "big liberal" programs like welfare, the NEA, farm subsidies, and shrimp aquaculture research -- and these are the programs they single out to be cut.  Quite frankly, this is the political  equivalent of unrolling your for-loops in Bubble Sort.

Last year Citizens Against Public Waste combed through every piece of legislation enacted in 2002 and found $22.5 billion of pork belly spending.  $22.5 BILLION -- that's pretty outrageous, I'll agree.  So it's almost FIFTEEN times more outrageous that the interest on the national debt last year totaled $332.5 billion.  If tomorrow you could magically eliminate every last dime of pork barrel spending, you still wouldn't have put a dent in the average Joe's tax bill.  You could pay for welfare twenty times over with that money.

Interest on the debt is, as I said before, the largest giveaway of middle class money to the wealthy, BAR NONE.  And what's worse is the reason we got into this mess in the first place was because a previous administration could not, would not balance its income and outlays.  I don't think we can handle four more years of this tax-cut-and-spend president.

That's why for 2004 I am supported a governor who's served the state of Vermont through both Bush recessions, cut income taxes, enacted health care for every child under 18, and still managed to balance the state budget -- and who promises to do it again, for the whole country this time, starting with a repeal of Bush's most irresponsible tax cuts.

Okay okay ... we now return to your normally scheduled programming ... =-)

Alyosha`
Tuesday, August 05, 2003

"Jason ... keep in mind that when you cut taxes while running deficits, you lose not only that revenue, but you also lose gobs more money by financing borrowed money into perpetuity.  Tax cuts may have some short-term economic stimulus and partially pay for themselves (that's debatable), but at what a enormous long-term cost ... "

Yeah - like the massive Reagan tax cuts that the Democrats said would sink this country. Trickle-down economists said the effect really wouldn't be seen for about ten years.

And wow, wasn't the economy sucking wind in the mid-90's? Boy, it was really hur.... no, wait - wasn't the 90's "one of the longest periods of prosperity in history"?

By the way, an interesting little tidbit about why it sucks to be President - the economy is not a sports car; it does not turn on a dime. Anything you do tends to take 2-4 years to produce any effect whatsoever. So you're always paying the bill for the guy who just left. And there is absolutely no way in the world that you can pin the current economic situation on GW - whether it was the dotbomb, Clinton's spending, or Greenspan fiddling with interest rates, this was gonna happen no matter who got elected in 2000.

And since you asked:
"It's so easy to stand on the sidelines and say, "well, just cut spending".  But what are you going to cut?"

Department of Eduction, HUD, large chunks of the FDA, make the IRS self-funding based on audit recoveries, probably chunks of the CIA and FBI, get rid of the ATF & DEA...

That's just for starters. :-)

Philo

Philo
Tuesday, August 05, 2003

Philo: I think a case for reform can be made each one of these agencies you mentioned, but I would not eliminate any of them entirely.  Still, let's have it your way and then some -- let's completely trash all the agencies you mentioned, lock, stock, and barrel, and see how much money we save:

US Federal Budget, 2003: $2140 billion

Department of Education: $53.1 billion
Housing and Urban Development: $31.3 billion
Food and Drug Administration: $1.7 billion
Central Intelligence Agency: $4.0 billion
Federal Bureau of Investigation: $3.0 billion
Bureau of Alcohol, Tobacco, and Firearms: $4.3 billion
Drug Enforcement Agency: $1.9 billion

Federal Budget after the Philo reform plan: $2041 billion (4.8% savings)
Federal Budget after the Alyosha` reform plan: $1808 billion (15.5% savings)

So ... you said this was just for starters.  Keep going ... =-)

Look, you're focusing all your optimizations in the wrong place.  Shoot the big dogs first.  The top four items in the US budget are Social Security, Medicaid and Medicare, the military, and the interest on the debt.  If we got rid of these, what would we replace them with?  And would that be better than the current state of affairs?  That's what the debate needs to be about.

I never said that Bush was to blame for the current recession.  Rather I said we would feel the effects of his administration for years to come.  Just the way we are feeling the effects of the Reagan administration today.  If you doubt that we're feeling it today, just consider the fact that for the cost of the interest on the debt, we could fund all the agencies you listed -- three times over.

I understand that in some years the federal government has to run a deficit.  In theory, those deficits should be balanced by surpluses in other years.  But we've only had very modest surpluses for two years out of the past 34, and more disturbingly, the second we start running surpluses is the second our current president says we should fritter it away.  We should have done as Gore said -- pay down the debt when we had the chance.  Paying down the debt is the best tax cut in existence.

We both agree that government has less control over the economy than it lets on.  This is just another reason why government shouldn't be gambling its financial future on short-term economic stimulus.

Alyosha`
Wednesday, August 06, 2003

Alyosha`

Ok my mistake on the "other" spending mixup.  Not sure why I missed it the first time, (other than I was tired when I read it).

Now, it's clear from your posts that you have big problem with an annual budget deficit and a public debt.  You even mentioned that the first thing we should do with a surplus is pay off the debt.  Let me try and explain why neither will or should ever go away completely.

First of all, even if we wanted to we couldn't "pay off the debt" Two big pieces ($1 trillion+) of the debt are (1) The bonds that are currently being purchased and held by the Social Security Administration each year with the FICA tax money that is left over every year after benefits are paid out (2) money owed from one goverment agency to another, (i.e. the Commece department is "in debt to" the Labor department for x,y,z).  And actually, if you think about it (1) is just the largest example of (2)

Secondly, I don't know about you but I didn't pay for my house or my car all up front.  I financed them, so I don't have to recognize their true cost all in the same year.  The federal budget process does not allow for that.  There is no seperate "captial budget" like most businesses have.  If the Defense department wants a $20 billion dollar aircraft carrier, Congress has to appropriate the whole $20 billion in the current year.  Even though the carrier lasts 30 years.  So an annual deficit is, to a large extent, to be expected and is simply the government financing infrastructure:  Military and civilian equipment, government buildings, bridges, roads, etc.  Heck, you can even argue , (but I'm not going to),  that all these social programs are "investments" in human capital that pay off over the lifetime of the recipients.

Also, the deficit and debt as a ratio to government income and the overall economy are no where near "danger" levels, i.e. Japan).

All this is to try and get away from arguing from the position that ideally there never should be any deficits or national debt.  Once that is recognized, then as long as the ratios aren't out of whack, there's not a problem.

Jason Catlett
Wednesday, August 06, 2003

Jason ... I can't disagree much with what you've said.  It's true that about two-fifths of the debt is owed to the government itself ... in a sense, it's like taking a loan out on your 401k -- the interest payments go right back to you.  So I agree ... that's good debt.  Notice I said pay DOWN the debt, not necessarily pay it OFF ...

I still see the remaining 4 trillion owed to the public is a problem.  I understand your analogy, but I don't think it's exact.  A family might spend 40k most years but one year spend 400k on a house.  This is different than the Fed, which reliably takes in about 2 trillion and spends ... well, a bit more than it takes in.  And it's done that for the past 34 years, with the exception of a couple in the Clinton era.

Of course, as long as the economy's booming and that debt is only a small fraction of the GDP, it's not exactly Apocolypse Now.  We only pay a bit more in taxes than we need to.  How much more do we pay?  Well, one way to say it is an amount more than TANF, Head Start, the Department of Education, HUD, FDA, CIA,FBI, ATF, DEA, all combined ...

Like I said, some times government needs to run deficits.  This is why a balanced budget amendment is a bad idea.  However, a balanced budget itself is not.  If government got its revenues in line with its outlays, it could run as a pay as you go system, using debt to cover only short-term shortfalls.

Alyosha`
Wednesday, August 06, 2003

"I still see the remaining 4 trillion owed to the public is a problem"

So we should take more money from the public to give their money back to them! No, wait, hold on...

Personally, I believe that Reagan's tax cuts produced the boom of the 90's. Greenspan's meddling with the interest rates and the Fed's tightening of the money supply in the late 90's caused the current recession. I believe that allowing people to keep more of their income encourages spending which is healthy for the economy.

One other note, Alyosha - if you combine our plans, you get 21% savings. I oppose tax increases for the reasons stated above, but how come those who oppose tax cuts never say they support cutting spending AS WELL?

Philo

Philo
Thursday, August 07, 2003

Philo: the reason I don't spend much time talking about spending cuts is because I feel there is much more danger from folks willing to make drastic cuts to important, useful programs for negligible benefit.  I'm open to more reasonable suggestions on the top four sources of spending (social security, medicare/medicaid, the military, and the debt) -- for example, I've flirted with ideas of phasing Social Security out over the next 20 to 40 years.

And I'll say it again: government is not a black hole where money goes and never comes out again.  Rather, government is like a corporation, but with the power to compel people to use its goods and services.  You can say the allocation of resources is unfair, undemocratic, or unaccountable -- but you can't say that government spending doesn't create jobs.

I'm neither a libertarian nor a communist.  I respect the profit motive to a large degree, but I also understand that the private sector worships efficiency over every other human virtue, and would gladly cut jobs, cut wages, and cut quality wherever and whenever it could get away with it.  And send all our jobs over to India.  =-)  So there needs to be a proper balance.

I disagree with your analysis of the recent economic boom (how can Reagan be responsible for 1999 but not 1991?) Rather I believe it was part of the natural business cycle, and largely fueled by the tech sector bubble.  But agree or disagree as you see fit, as this is just my conjecture.

By the way, if you want some interesting reading, check out http://wfhummel.cnchost.com/ sometime.  It actually has a lot of really good points AGAINST my analysis of the national debt, but also agrees with my point that increased government spending is good in a downturn.

Alyosha`
Thursday, August 07, 2003

Alyosha - my desire for cuts is fueled by two other motivations.
1) Centralization is bad. Centralizing decision making can make it very, very unresponsive to the needs and desires of those the decisions are made to benefit. A current trend in business is decentralization - pushing decisions *down* closer to the people they affect. We're also doing this in our school district - the county is relenquishing a LOT of authority to the individual schools so that they may better respond directly to the needs and desires of the neighborhoods they serve.
When I see the *county* saying that many decisions are best made by the individual *school*, how do you think I feel when the President of the US says that decisions are best made by the Federal Government? Have you ever *tried* to talk to anyone that makes a decision in the fed? (Hint: I live just south of DC. I know these people and have interviewed at these agencies)
2) On top of that, much of current federal spending is unconstitutional. Remember that this nation was founded as a collection of states that the Framers of the Constitution intended to maintain sovreignty over their own affairs. The Federal Government was intended solely to manage affairs between the states and international affairs - it was never meant to run the states themselves.

Given that #2 is gone like a forgotten daydream, I still rail at every attempt to make it bigger, to increase its control, and to make the states even more meaningless. Since neither party really believes in smaller government, then it seems the only way to even begin to tilt at this windmill is to reduce federal revenues and force Congress to cut spending. When one party's reaction to reducing revenues is to proclaim gloom and doom unless they're raised again, then I've gotta go with the other party. :-)

Philo

Philo
Thursday, August 07, 2003

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Prissy D
Thursday, May 13, 2004

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