I keep saying that tax cuts don't cause deficits, rather reckless, pork barrel spending does. Just a sample of tax-payer money being wasted in droves. I really wish Bush would step up and use the power to say "no" to some of this pointless BS.

WSJ Editorial

quote:

Riding the Omnibus The Senate finally passed that $820 billion "omnibus" spending bill last week, and omnibus is certainly the word for it. According to an analysis by Taxpayers for Common Sense, this bill to finance much of the government for Fiscal Year 2004 contains an unprecedented 7,931 "earmarks" at a cost of $10.7 billion. Put another way, that's 15 sweetheart projects per Member. There's $500,000 for a water taxi in Pittsburgh, $225,000 for the Wheels Museum in New Mexico, and $100,000 for "streetscaping" a tony Salt Lake City neighborhood. In the cholesterol-subsidy category is $2 million to market specialty Wisconsin cheeses and goods. Alaska alone, home of Senate Appropriations Kingpin Ted Stevens, got 296 earmarked expenditures. Among cutting-edge research grants are $450,000 to study "Sudden Oak Disease Syndrome" and $90,00 for an olive fruitfly study. . . in France. Some lucky folks at the University of Hawaii bagged $200,000 to produce "Primal Quest," a film about Kalahari Bushmen who pursue their prey until either man or animal drops from exhaustion. Which sounds a lot like the appropriations process. Congress is now entering a brave new budget year, with President Bush promising to restrain spending, for a change. Word is that his budget proposal, due next week, will cap domestic non-defense discretionary spending growth at 1%, except for homeland security, which will grow by 10%. Congressional veterans know what that means: All of those earmarks will have to be stuffed into the homeland security basket. Unless, of course, Mr. Bush breaks type and exercises his veto power. Failing that, we see that this year's omnibus bill contained $500,000 for the University of Akron to finance its "Exercise in Hard Choices" program -- a simulation of the federal budget process. Maybe Congress should enroll.

Yes well if Bush wants to pay for everything he's asked for he's going to have to raise taxes. But the man has writer's block when it comes to vetoing any spending package. Hmmmmm curb the deficit ... or spend $1.5 billion to promote marriage??? I've adopted the viewpoint that most of the democratic candidates would be signifcantly more fiscally conservative than bush has been.

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Retro ...

quote:

Originally posted by occrider Yes well if Bush wants to pay for everything he's asked for he's going to have to raise taxes. But the man has writer's block when it comes to vetoing any spending package. Hmmmmm curb the deficit ... or spend $1.5 billion to promote marriage??? I've adopted the viewpoint that most of the democratic candidates would be signifcantly more fiscally conservative than bush has been.

I have a feeling Occ that Enron and Parmalat would be more fiscally responsible than clueless George in the White House. I am yet to see him put forth a plan to deal with the ballooning deficit, here's an idea, its maybe because he doesn't have a plan. All the more reason that he must go.

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Trance = Heart, Mind, Body and Soul all in 1

Current fav. Global Experience = Madras

I await Bush's proposal in Feb. to cut the deficit. I honestly don't know how he'll be able to do it. Here's an article that shows some possibilities, none seem very truthful:

http://money.cnn.com/2004/01/26/new...dex.htm?cnn=yes

Or he could just cut more programs, thus losing more jobs.

Either way it's a pickle that he helped contribute with.

Cutting taxes with big deficits is always bad economics. Why did he think he could get away with it?

___________________
Whence September dusk grows crisper still,
with leaves all crimson conquered,
I yearn to shout,
and dance about,
and stick pickles in my honker...

quote:

Originally posted by MisterOpus1 Or he could just cut more programs, thus losing more jobs. Either way it's a pickle that he helped contribute with. Cutting taxes with big deficits is always bad economics. Why did he think he could get away with it?

Because Reagan did the same, and arguably it worked rather well. My concerns are more to the effect that massive government spending will crowd out private investment, thus muting any real economic recovery we may have.

I agree on the jobs front though--it's difficult policy to cut funds which in turn lead to job cuts--though if the programs are senseless in the first place, it would seem to me that we've been wasting money all along, essentially overstating our actual employment statistics! Maybe they just need to work on more efficient ways to streamline operations to cut fat out of the budget without necessarily sacrificing too many jobs. Still a daunting task though.

Reagan engaged in deficit spending at a time when America was going through crises domestically and abroad when one could argue that deficit spending was truly necessary. The economy was in far worse condition and competition with the Soviet Union was immeasurable. Now, although I was for the tax cuts to stimulate the economy ... it is now stimulated. We are nowhere near recessionary conditions. True job growth is lagging, but hey ... full employment is considered 5.5%, we're used to being spoiled with 3% unemployment and that's not going to happen. It is time to reign in the spending and cut costs while we can before we start seeing upward pressures on interest rates.

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Retro ...

NYCTrancefan will probably like this ... it appears that everybody is in the spend spend spend mood!

I love the economists' subtle humor at times ...

http://www.economist.com/agenda/dis...tory_id=2367033


One Europe, united in fiscal misrule

Jan 23rd 2004
From The Economist Global Agenda


In the realm of public spending, many of the European Union’s new entrants are faithfully living up to the standards of the union’s founding members. Oh dear



IN MAY of this year, the European Union (EU) will take in ten new members. Four of the biggest, Poland, Hungary, the Czech Republic and Slovakia, are all struggling with mounting budget deficits and contemplating awkward spending cuts. As such, they will fit right in among the union’s existing members. France, Germany, Italy and Portugal all have their own fiscal troubles. When it comes to fiscal imprudence, Europe, old and new, is in perfect harmony.

As members of the EU, the new entrants must strive towards membership of the single currency. Unlike Britain, they do not have a formal opt-out and most are eager to opt in as soon as possible. But to qualify for membership, the EU’s new countries must show that their economies have “converged” with those of the euro area. Convergence must be fiscal as well as monetary. Public debt must be kept under 60% of GDP and budget deficits held to 3% or less. Maastricht is moving east. Unfortunately, central Europe is not yet ready to meet its standards. Poland’s deficit was reckoned to be 4.2% of GDP in 2003. Slovakia’s was 5%. Hungary’s might be anything from 5.6% to 6%. And the Czech Republic, with a deficit of 7.6%, is displaying a positively bohemian attitude to fiscal responsibility.


The European Commission's economics and financial affairs department rules on the breaches of the stability and growth pact. The European Central Bank provides monetary-policy information. The Centre for European Reform, a think-tank, publishes research and policy briefs on EU economic policy.


Need they worry? After all, the founding members of the euro have themselves conspicuously failed to live by the single currency’s fiscal rules. Last November, finance ministers from the 12 euro member states voted by a majority to suspend the stability and growth pact, which enshrines the rules of the Maastricht treaty in EU law. Their insouciance is now being challenged by the European Commission at the European Court of Justice. But as with many clubs, once you are inside the door with your feet under the table, the rules can be relaxed or fudged.

For those waiting at the door, it's a different story. Hungary had hoped to get past the velvet rope and enter the euro in 2008. The new finance minister, Tibor Draskovics, may now concede that this is unrealistic. His predecessor was ousted earlier this month after admitting a massive fiscal overshoot: the deficit for 2003 was not 4.5% of GDP as planned, but 5.6%. Even that career-ending confession failed to disclose several large outstanding bills for motorways, jet fighters and farm subsidies which will drain another 100 billion forints ($480m) from state coffers.

Mr Draskovics does not have much time to re-establish the credibility of his office. The forint is struggling and yields on government bonds are punishingly high. The finance minister announced cuts worth 120 billion forints last week, but is still casting around for ways to save money. Indeed, he has invited anyone with a suggestion for trimming public spending to call a free phone-line.

In Poland, the public has had three months to offer their two-zloty’s-worth on the government’s fiscal plans. Jerzy Hausner, the economics minister, wants to cut the deficit from 5-6% in 2004 to 3% or less in 2007. But the country goes to the polls next year. His plans are therefore vulnerable to disgruntled unions, willing to strike to protect their subsidies, and disloyal coalition partners, unwilling to take the electoral heat for unpopular cuts. The timing of many of his schemes reflects this political reality. Enacted this year, they will not begin to hurt for several years. The retirement age of women, for example, will be raised to match that of men, but not until 2014.

The Czechs do not even pretend they will be ready to join the euro before 2010. Their deficit has widened from a troubling 4.4% in 2000 to an alarming 7.6% last year. If left unchecked, the budget gap could reach 9% within a year or two. The government is hiking duties on alcohol, fuel and cigarettes (the former president, Vaclav Havel, famous for his chain-smoking, is no longer in a position to protect the rights of smokers). It will also raise VAT. The government hopes to cut the number and pay of public servants, “re-index” (ie, cut) pensions, and “rationalise” (ie, cut) sickness benefits. But the governing coalition rules by a majority of just one. Not all of the coalition partners are happy with the package on offer, and the current president, who must sign off on the plan, is no great fan either.

The Slovaks to the east are putting their faith in the solutions of the right. Taxes, both personal and corporate, have been flattened to a uniform 19% rate. The flat-taxers hope this will discourage tax evasion and attract foreign investment. But just in case the much-touted Laffer curve lets them down (as it let Ronald Reagan down before them) they also propose to postpone retirement, cut sickness benefits and tighten eligibility for unemployment benefits. New Europeans indeed.

Despite these fiscal heroics, the Maastricht criteria remain daunting and distant. They are also quite arbitrary, plucked out of the air more than a decade ago for the sake of political convenience not economic logic. There is no magic in the deficit-to-GDP figure of 3%. Willem Buiter, chief economist at the European Bank for Reconstruction and Development, dismisses the deficit and debt limits as “fiscal numerology”.

The accession countries need to get to grips with their budgets for their own sakes. They do not really need to curb them for the euro’s sake. Central Europe’s deficits are worryingly large as a percentage of their GDP. But they are still small as a percentage of the euro area’s total output. Deficits of 5% or 6% in a country as small as Slovakia hardly threaten the monetary stability of Europe.

Nonetheless, it is this fiscal numerology that will determine when and whether new members join the euro. The four central European countries celebrating EU membership this year will probably have to wait until next decade to celebrate entry into the single currency.

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Retro ...

09/30/2003--------$6,783,231,062,743.62
09/30/2002--------$6,228,235,965,597.16
09/28/2001--------$5,807,463,412,200.06
09/29/2000--------$5,674,178,209,886.86
09/30/1999--------$5,656,270,901,615.43
09/30/1998--------$5,526,193,008,897.62
09/30/1997--------$5,413,146,011,397.34
09/30/1996--------$5,224,810,939,135.73
09/29/1995--------$4,973,982,900,709.39
09/30/1994--------$4,692,749,910,013.32
09/30/1993--------$4,411,488,883,139.38
09/30/1992--------$4,064,620,655,521.66
09/30/1991--------$3,665,303,351,697.03
09/28/1990--------$3,233,313,451,777.25
09/29/1989--------$2,857,430,960,187.32
09/30/1988--------$2,602,337,712,041.16
09/30/1987--------$2,350,276,890,953.00


http://www.publicdebt.treas.gov/opd/opdint.htm

hehe funny how there is NO year with a decreasing dept...

Deficits Eroding Our World Standing
by John Tanner, Guest Columnist
The (Memphis) Commercial Appeal
October 18, 2003

Some Republicans have long tempted to characterize Democrats as fiscally irresponsible big spenders – at times with merit. However, the Republicans’ budget plan now endangers our economy and our security.

Over the past 2 ½ years, the Bush administration and the Republican Congress have pursued fiscal policies that have resulted in a colossal increase in the federal debt. Increased interest payments mean higher taxes on Americans next year and every year thereafter.

This reckless increase in federal debt has exposed another troubling aspect of the administration’s budget plan, passed by a Republican House and Senate: Asian countries are purchasing our debt in record amounts, and China has registered the most rapid increase. These developments not only adversely affect our economy, they also leave our country susceptible to a potential national security threat.

According to the Treasury Department, major foreign holdings of U.S. Treasury securities total $1.35 trillion. Over the first seven months of 2003, mainland China and Hong Kong accumulated $177 billion of U.S. debt.

Currently, China is the world’s second-largest buyer of our debt, exceeded only by Japan. Furthermore, China’s purchases of U.S. government securities rose 20 percent over the first half of this year and have more than doubled since 2001.

It is a dangerous situation when the administration funds the federal government in part by selling our debt to the Chinese. The Congressional Budget Office (CBO) has estimated that the federal government accumulated a $374 billion deficit in fiscal 2003, not including the President’s $87 billion request for Iraq.

Foreign investment in the United States is financing the U.S. budget deficit and the war in Iraq. We need to borrow approximately $1.5 billion a day from foreign investors to meet these deficits. Increasingly, foreign investors, not U.S. residents, will be beneficiaries of the interest paid by us, our children, and our grandchildren.

The high level of foreign holdings of U.S. securities could have a debilitating impact on our economy and foreign policy. How would our economy respond if China threatened to sell large volumes of U.S. Treasury securities? This action could easily fuel higher inflation and put pressure on the Federal Reserve to increase interest rates, putting our economy at risk of a large-scale recession.

The United States does not always see eye to eye with Beijing on foreign affairs. The mere threat by China to sell U.S. debt could reduce our negotiating position on long-standing issues of disagreement such as national security and trade. The United States should not be put on the defensive when conflicts arise with China simply because the Chinese government can hold the U.S. dollar hostage.

Chinese officials are purchasing U.S. Treasury securities in an attempt to keep the value of their currency, the yuan, artificially low. The yuan has been pegged to the U.S. dollar for almost 10 years, despite record growth in the Chinese economy. Such growth should have increased the value of the yuan if it were a free-floating currency.

Economists estimate China is undervaluing its currency by as much as 40 percent. By purchasing U.S. debt, China can manufacture products that cost 40 percent less to make than they do in the United States. This currency manipulation has contributed to the loss of millions of manufacturing jobs in the United States.

The Republican borrowing program, unless it is quickly reversed, will devastate our economy and diminish our role in the world. We cannot be the world’s leading economic and military power if our government’s financing depends on money from foreign countries, many of which oppose our policies.

A former official of China’s central bank, now a private economist, recently told The Washington Post: “The U.S. dollar is now at the mercy of Asian governments.” The only way to get this problem under control is to stop deficit spending.

Interest payments on the national debt will soon surpass all domestic discretionary spending, including defense, health care, education and infrastructure. Unlike those expenditures, interest is a tax on the American people that cannot be repealed.

The “Blue Dog” Democrats proposed a plan that would have reversed this catastrophic borrowing but it was defeated on a largely party-line vote. We will continue this fight, but to succeed we will need the help of citizens outside Congress.


http://www.house.gov/tanner/press108-oped101803.htm

In my opinion, the reason we have such a debt/defecit today, is because our governement (and many governements of the world) have become large, uncontrolled beaurocracies where the cost to "make it run," is as much or more than the services it provides. Our government spends a dollar on paperwork for every 1 dollar spent on a government program. This to me is rediculous and the true cause of the nations fiscal woes. We are a country (and world) so consumed with the fear of litigation, making sure all the "t's are crossed and i's dotted," and the absurd hope of having a regulation or manual for everything, that we have let our madness poison our economy.

This paperwork insanity also leaks over to health care. Today, 31 cents of every dollar spent on health care goes towards administration and paperwork. That's twice what it is in Canada. Just think if we could reduce that by even ten cents. So much more of our money would actually go towards our health instead of in a filing cabinet.

I know I'm sounding like a mad man but this issue goes quiet and I see it as the real reason for our financial troubles. We spend no more today of our GNP on actual government programs than at any other time in our history. What we do spend more on is the paperwork that goes on behind it. It's like we're paying for everything twice, once for the action, and once of the paper trail that comes after it.

Excessive specialization is a product of a highly developed country...

Why don't you keep those programs, as ridicule as they are, and cut your defense spending by half? US military spending is as big as the other 25 countries which spend the most in the world together!

Country 2002 Budget

United States $350.7 billion
Canada $7.6 billion
Czech Republic $1.16 billion
Denmark $2.4 billion
France $29.5 billion
Germany $24.9 billion
Greece $3.5 billion
Hungary $1.08 billion
Iceland No defence budget
Italy $19.4 billion
Luxembourg $180 million
Netherlands $6.6 billion
Norway $3.8 billion
Poland $3.5 billion
Portugal $1.3 billion
Spain $8.4 billion
Turkey $5.8 billion
United Kingdom $38.4 billion

Nato military spending compared