The boycotting of taxes Re: PATCO: a di

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Mike Schwartz

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Nov 12, 1993, 3:13:23 AM11/12/93
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In article 041193...@fastpath2.npd.provo.novell.com, mwa...@optics.wc.novell.com (Mel Walker) writes:
>In article <CFy0t...@unix.portal.com>, my...@shell.portal.com (Mike
>Schwartz) wrote:
>
>> Mel Walker (mwa...@optics.wc.novell.com) wrote:
>> : In article <CFuu0...@unix.portal.com>, my...@shell.portal.com (Mike
>> : Schwartz) wrote:
>>
>> : > Mel Walker (mwa...@optics.wc.novell.com) wrote:
>> : > : In article <CFpGr...@unix.portal.com>, my...@shell.portal.com (Mike
>> : > : Schwartz) wrote:
>> : >
>> : > : > Mel Walker (mwa...@optics.wc.novell.com) wrote:
>> : > : > : Which means that we are going deeper and deeper into debt only 1/4th
>> : > : > : as fast as we could have. Excuse me if I don't shout with joy.
>> : > : >
>> : > : > Increasing the amount of the debt doesn't mean much. We've got a LONG
>> : > : > LONG way to go before we're in over our heads.
>> : >
>> : > : Well, as long as we can take being a few more trillion dollars in debt,
>> : > : then there's no need to decrease any government spending at all, right?
>> : > : I vote that we start a huge and expensive health care plan, and just
>> : > : "put it on our tab."
>> : >
>> : > Guess what? The president and her husband are doing just that.
>>
>> : Guess what? You just said it doesn't matter. Unless you think that the
>> : health care plan will put us "over our heads."
>>
>> I think the health care is gonna explode sometime between 2025 and 2045.
>> I think it's much more dangerous for us to be assuming unfinanced liabilities,
>> such as social security and this health care plan. However, if we wanted
>> to, we could easily double the debt and still have little problem making
>> the payments on it. But then, it depends on what we spend the money on.
>> I was satisfied to win the cold war and build an infrastructure that was
>> creating jobs with the money we borrowed in the 80s. If we do borrow
>> in the 90s, I want physical assets to be paid for with the bucks. Something
>> like a fiber network/data highway would meet the requirement.
>>
>> The point about Clintons spending us further into debt indicates they feel
>> they can borrow and get away with it.
>
>But, according to you, they can. At least until 2045 or so. Heck, I'll
>probably be dead then (unless the Health Care Plan is a lot better than it
>looks). :-)
>
>Personally, I want EVERYTHING the government does to be paid for NOW, not
>in the future (although I'm willing to make exceptions for wars). Since we
>could create more jobs just by passing NAFTA than we did by borrowing from
>our children, I think that the 80s infrastructure-building was a waste, as
>well. Still, this is an argument for another thread.
>
>> : > : > I pay a higher % of
>> : > : > my income for my mortgage than the govt. does on it's interest payments.
>> : >
>> : > : So? You're paying off part of the balance each month. If all you were
>> : > : paying was the interest (like the government), you would never get out of
>> : > : debt. You'd be wasting your money for the rest of your life (or until you
>> : > : sold the house).
>> : >
>> : > The issue is debt service load ability, not what the debt is used for.
>>
>> : Since I am a citizen and taxpayer, I think the issue is whether or not I
>> : and my children and grandchildren will have to keep paying interest on a
>> : debt forever. I believe it is a waste of money to not pay the debt, but
>> : only pay the interest.
>>
>> Well, you have been paying for the debt from the revolutionary war, chum.
>> If we simply control spending so that the debt and deficit become a smaller
>> and smaller fraction of our GNP and government revenues as time goes on,
>> we'll be fine.
>
>Paying old debt is fine. What I don't want is new debt. Since we are
>constantly getting deeper into debt, we must also not be paying off old
>debt (in a general sense. I'm sure we're paying off _specific_ loans).
>Also, this brings us back to the original point of this whole mess, which
>was that "We, the People" can vote to have people in office that will
>control spending and/or _really_ balance the budget and the like. Since we
>are unwilling to vote for such people, the deficit will continue to
>increase _regardless_of_GNP_growth_. It will increase no matter what the
>economy does. Until we voters vote people into office who will stop the
>increasing the deficit (and the debt as well), we will never "be fine."

Yep, the deficit does increase over time, regardless of what GNP does.
It has no matter _who_ we've elected since 1789. You can blame the people
we elect if you want, I sorta do and sorta don't. You see, people we elect
today stick the people we elect 30 years from now with a mess. The people
who are responsible for making the programs in the first place aren't around
to take the blame when they fail. FDR is dead. So is LBJ. Tip O'Neill hasn't
been Speaker of the house for a long long time. But we frequently do elect
people who would stop increasing the deficit - Gramm, Rudman, and Kasich
are Republicans that come to mind immediately, and Tim Penney is a Democrat
who comes to mind (so does Tsongas, but he's not elected...). George Bush
and Ronald Reagan both offered Balanced Budget Amendments to the constitution.
To say people aren't trying isn't accurate. Talk to someone 20 years older
than yourself, and they'll be able to tell you that all the "sky is falling"
doom and gloom about spending future generations' money has been traditional
political rhetoric all along.

>
>For example, I would assume that the GNP has grown a heck of a lot since
>the revolutionary war. How come that debt hasn't disappeared thanks to the
>GNP growth? If it takes 200 years to pay off a lousy war, why would we, the
>voters, want the government to get more deeply into debt for frivolous
>items (like tea tasting boards and helium supplies)? I'm sure our
>great-great-great-who-cares-how-many-greats grandchildren will love to know
>that they're paying off our tobacco subsidies. I think it stinks.

The answer to your question about GNP growth has some obvious answers. It wasn't
until 1916 that government started taking a % of GNP as its income. Direct income
tax was unconstitutional prior to that. But you pretty much hit the mark in
your first paragraph above - we do pay off specific debts, but we borrow to do
it. Instead of a 30-year T-Bill being paid off in 30 years, a new T-Bill is issued
and the income from that pays off the first. The debt is rolled over.

And I must again reassert that you can't blame any single item of what the government
spends for the debt and deficits. The only way to look at it is government spends
$1.37 for every $1.00 in revenue. That's $1.37 on defense, on health care, on
maintaining public lands, on welfare, on _everything_.

>
>Of course, the voters will probably never vote for people on the basis of
>whether or not they will control spending, because people don't vote on the
>basis of one issue. I believe you made that point earlier.

Fine, score me a point. I agree that people won't vote for people on the basis
of whether they will control spending. If you look at the makeup of congress, you
will find some lawyers, some prosecutors, some businessmen. Some have expertise
at finance, and others have no expertise at all :-) Heck, look at the crime bill
which passed last week. There was a vote on an amendment to DOUBLE the funding
and it passed by a huge margin.

>
>> : > And guess what? The government bought a shitload of homes in the last
>> : > 4 years. It was called the S&L bailout.
>>
>> : (*sarcasm on*) Oh, this was relevant. (*sarcasm off*)
>>
>> Yep, it was. Indeed, the government paid off loans to buy all that Real
>> Estate.
>
>At the expense of lots of people going bankrupt, or close to it. Thanks to
>congress revising some laws affecting real estate, which caused the bottom
>to fall out of the market, which caused the S&Ls that had invested in said
>real estate to go belly up.

Even though I am a Reagan fan, I was disturbed by the 1986 budget deal. There
were a lot of good things to it, and in principle it was quite good. We all knew
about the Real Estate consequences - Reagan's very words were to the effect that
people who were in real estate for the ability to shuffle around funny money on
their tax returns now had to be in the business to make a real profit (if you
don't understand how depreciation worked, let me know and I'll explain it). What
disturbed me about the deal was that it was an exchange of elimination of write offs
in the law for lower tax rates. Simplification of the tax system, and all that.
The flaw is that in 1990 and again in 1993, after Reagan was gone, congress
has raised the tax rates without giving back the writeoffs. It was guarnateed
to happen, it's the nature of the system. And look who's been in office the
whole time (congress). What Reagan ended up doing was eliminating the write offs
in exchange for 4 years of fair tax rates.

>
>> : > : Also, your mortgage and the government loans are not comparable. Credit
>> : > : card consumer debt and the government loans are comparable. The phrase
>> : > : "apples and oranges" comes to mind.
>> : >
>> : > Interest is interest. When you go to a bank, they look at your debt to
>> : > income ratio. Exceed 33%, and the banks may refuse you. For an unsecured
>> : > loan, the banks look at your payment history as well. We've never defaulted.
>>
>> : "We've never defaulted" is no excuse for wasting taxpayer money not paying
>> : off the debt. What are we buying with the debt? Are we buying something
>> : that will last (similar to building equity in a home) or are we just making
>> : our children and grandchildren pay for our standard of living today?
>>
>> What are we buying with the debt? We bought the use of more 1980 dollars
>> then. Compare that to spending the same 1990 dollars, which are worth
>> less even at the low inflation rates we've had.
>
>And we used the 1980 dollars to pretend to win the cold war and jump start
>the economy with temporary jobs that were created at costs that cost more
>than an order of magnitude greater than the private-sector-created jobs. Of
>course, if we had voted people into office that would control government
>spending, we wouldn't be in the mess in the first place.

Maybe you don't believe this, but winning the cold war in 1980 was unthinkable.
The threat of nuclear war was a hot topic of debate during the 1980 election.
Kids who grew up in the 70s grew up with nuclear disaster drills in school.
Go ahead and blame the guys who ended the cold war, if you choose. I would
put the blame on those who built all the nukes in the first place. Ending
the cold war a decade later would have cost a LOT more.

The economy was not jump started with temporary jobs by any stretch of the
imagination. If you examine the employment data for the 1980s, you will find
that women entered the workforce in unprecedented numbers. Numbers-wise,
every woman that entered got a job, as did everyone who came of working age,
as did several million who were previously unemployed. From peak to peak,
we gained almost 23 million jobs. Since 1990, we've lost about 3 million
of them. That's still a 20 million job gain - full-time jobs.

And for all the faults anyone wishes to heap on Reagan, he was the one president
we've had in the last 100 years who really did something about government spending.
THe decreases in the federal deficit for the entirety of Reagan II is unprecedented.
The growth of government was slowed to a rate that doubled it over a decade while
the decade before it tripled in size. Govt. grew by $350B from 1980 to 1985 and
by $300B from 1985 to 1990. It wasn't ideal, but it was a giant step in the
right direction.

>
>[deleted]
>> : > Guess what? The government does indeed have money left over to put in the
>> : > bank. And paying down the debt with the money is pointless if the
>> : > government just borrows it (and then some) right away.
>>
>> : Guess what? I agree that paying off the debt is pointless if the government
>> : borrows more. However, the government clearly has no money left over to
>> : "put in the bank" if it is constantly borrowing more. That's what a deficit
>> : is, right?
>>
>> Go take out a $1K loan tomorrow. You can put that $1K in the bank, you
>> know.
>
>Why should I borrow money that I have no current use for? Do I seem that
>stupid? If I can put money in the bank, then I should probably just pay off
>the loans, otherwise I lose money. Of course, I'm losing money now, since
>we, the voters don't want to the have the government control spending.

You missed the point. Govt. has a savings account with money and a debt.
It could just have a debt. We're gonna be glad to have that savings account
when the rainy day comes that we need it. That day is in 2025 when SS runs
dry.

Here's another way to look at it. You have a $5K charge card maxed out at 20%
interest. You get a windfall inheritance of $2K. You're pretty comfortable
paying the $85/month minimum credit card payment. You can put your $2K to work
for you in the stock market or muni fund (or buy a new car), or you can pay off
your debt and reduce your minimum credit card payment to $65/month. Paying off
part of the credit card hardly seems worth it as long as you can afford that
$85/month.

>
>--
>Mel Walker mwa...@optics.wc.novell.com
> "What if there were no hypothetical questions?" -- John Mendoza


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