25-11-2003 23:24									#61
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I think the deficit will undoubtly drop in the coming years. A new report finds that the US economic growth has gone by 8.2% in the 3rd quarter!

http://money.cnn.com/2003/11/25/new...dex.htm?cnn=yes

	25-11-2003 23:39									#62
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quote: You Americans have always had a problem with being taxed.

That's what makes us Americans and so lovably irritating.

	25-11-2003 23:42									#63
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quote: Originally posted by The diplomat I think the deficit will undoubtly drop in the coming years. A new report finds that the US economic growth has gone by 8.2% in the 3rd quarter! http://money.cnn.com/2003/11/25/new...dex.htm?cnn=yes

I thought these revisions were always downward? Che? Kid? What's going on here?

	25-11-2003 23:42									#64
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Conservative talk radio is apopletic about the new Medicare Bill due to its enormous cost. Trent Lott is beside himself and stormed out of the Senate. Democrats are condeming the AARP because the Repubs have stolen their issue and the AARP. Liberals condemn the deficits and blame the tax cuts. But the economy is now booming as it never has before. 7.2% growth last quarter. 8.3% this quarter.

This is a very bizzare world. Times they are a changing.

Bush has protected the farmers with subsidies and the steel unions with tarriffs. He has given the elderly prescription drugs and a lot more. He has waged the war on terror and liberated Iraq. He has done all this and cut taxes as well.

No terror attacks since 9/11. Tax cuts, subsidies for farmers, unions, and the elderly. The economy is booming!

What are we to make of this? Can we find anything wrong in Bush's America? Deficits? But how long can they last if the economy begins to generate higher tax revenues due to dramatic growth?

The Democrats are mad as hell. What is their issue? Conservatives have no party to support. Quo vadis Eisenhower's ballanced budget conservatism?

What is happaning here?

	26-11-2003 00:05									#65
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quote: 7.2% growth last quarter. 8.3% this quarter

Rather, growth last quarter was 8.2% revised from 7.2%. Growth in the 2nd quarter was a lot less.

quote: Bush has protected the farmers with subsidies and the steel unions with tarriffs.

	26-11-2003 00:14									#66
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DanS, yes, I misread the story on CNN. Thanks for the correction.

	26-11-2003 00:16									#67
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quote: Originally posted by DanS Comparing per capita GDP growth create does not create a truer picture when we are comparing budget deficits.

Well you were the one that brought up the differences in growth.
If Nevada (with population growth of 5.2% a year) has a simmilar deficit deterioration as Iowa (population growth 0.5%) how much of Nevada's better growth is due to the budget balance and how much to a higher input of labour?

You are saying:

quote: Originally posted by DanS deficits shouldn't be looked at in a vacuum.

But then saying that population growth has no effect on relative incomes?

Surely this is inconsistant if you were another poster I would assume you were focusing only on that data which would prove your point, but I think you are above that DanS.

Yes the deficit spending has given a kick-start to growth - but the mortgage refinancing boom was at least as responsible - but the question is can the US sustain this level of structural deficit (over 4% of GDP), and if not what is being done to reduce it (nothing as far as I can see).

	26-11-2003 00:20									#68
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I'm confused. Just go with a long-term overall economic growth rate, which takes in population growth. Why are you suggesting we look at per capita growth?

The end goal of this whole analysis is to figure out whether our debt as a percentage of our economy is going up, down, or staying the same. If the deficit % of GDP is greater than the GDP growth %, then that's no good. How much greater the deficit is than GDP growth is an indication of how bad it really is.

quote: but the question is can the US sustain this level of structural deficit (over 4% of GDP)

No, we need to keep it at or below 3% in order for it to be sustainable. And we will not have this structural deficit in the future, since taxes always go up in our system if left untended. The only worrying thing for me is if we continue doing Christmas Tree bills like the Medicare bill just passed.

	26-11-2003 02:21									#69
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The problem with all this comparative analysis is the U.S. economy is so large that when it runs a deficit the effects are very far reaching.

	26-11-2003 03:51									#70
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quote: Originally posted by DanS If the deficit % of GDP is greater than the GDP growth %, then that's no good. How much greater the deficit is than GDP growth is an indication of how bad it really is.

Are you talking about the nominal growth in the economy (money GDP), if so then what you are saying only applies when the debt is above 100% of GDP.

quote: Originally posted by DanS No, we need to keep it at or below 3% in order for it to be sustainable.

make that 2%, to keep the debt/gdp ratio stable at it's current level and to run a deficit of 3% of GDP you would need nominal GDP growth of over 7% a year - as the long-term trend growth rate of the US is 3% to 3.5% then you are implying inflation of 3.5% to 4% a year.
I think that nominal growth will be more like 5%, which equates into a 2% structural deficit to maintain the debt/gdp ratio at it's current level.

quote: Originally posted by DanS And we will not have this structural deficit in the future, since taxes always go up in our system if left untended.

You keep saying this, and yet you also say (correctly) that the tax take as a share of GDP has been remarkably stable over the last 30 years - if there was this bias why has the tax take stayed the same, and if the reason for that is that whenever it rose polititians cut the taxes what makes you think that that will change this time?

	26-11-2003 15:08									#71
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quote: Originally posted by Alexander's Horse The problem with all this comparative analysis is the U.S. economy is so large that when it runs a deficit the effects are very far reaching.

...not to mention it's effects on world geo-politics: the Chinese have been buying up a lot of US government bonds as part of their fixed exchange rate policy. As long as the US government keeps running a deficit, the Chinese grasp on America's short and curlies gets a lot tighter.

	26-11-2003 18:11									#72
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quote: Originally posted by GePap Don't try to figure out US politics, it is all madness.

It's quite possible to argue that all politics is madless and overlooks the fact that politicians exist because most people don't want to be involved in leadership decisions.

It's gives us all someone to point the finger at and say "It's YOUR fault".

	26-11-2003 21:31									#73
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i will vote for a president who says, "hey, this is our ****. we shouldn't force our kids to pay for our long and wild orgy at the trough on their dime!"

too bad all the ****ing old people who are getting electing are ****wits who will be leaving me with the bill. we young people should say **** off and vote for someone who won't shaft us like that.

	26-11-2003 22:14									#74
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quote: Originally posted by Ted Striker there are 2 wars going on duh

Are you on drugs, Ted? Did GWB not declare war was over in Iraq ages ago? At any rate, there is no war in Afghanistan.

Unless you are talking about the War on Drugs and War on Terrorism. Har har har.

	26-11-2003 23:14									#75
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quote: Originally posted by JohnT congratulations on making the 2,510,000th post on Apolyton, KrazyHorse. I wonder who was post 2.5 million? Anyway, back to the bickering... And you are proud that your government is overtaxing the citizenry? While $250,000,000,000 deficits are nothing to be proud about, allowing my government to steal more from my pocket then even they can spend is just as sad.

Ummm...that's an interesting viewpoint, but the last time I checked the government wasn't pocketing the money and running; they were using it to pay down the debt (which is from money previously spent on us, the citizenry....theoretically). This choice is especially valid when you realise that for about 5 straight years in the 90s public opinion polls listed paying off national debt as the top spending priority for the federal gov't. So as I see it, we decided what we would do with our money, and we did it. Whereas it seems that you've identified what you'd like your government to do: borrow money in order to pay for its functioning, instead of paying for it up front. This is your choice, but it might not be the wisest one. Actually, as somebody who will be paying US taxes for the intermediate future and who will then be leaving, I encourage this choice as strongly as possible. Ignore my previous hesitation.

	26-11-2003 23:33									#76
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quote: make that 2%, to keep the debt/gdp ratio stable at it's current level and to run a deficit of 3% of GDP you would need nominal GDP growth of over 7% a year - as the long-term trend growth rate of the US is 3% to 3.5% then you are implying inflation of 3.5% to 4% a year. I think that nominal growth will be more like 5%, which equates into a 2% structural deficit to maintain the debt/gdp ratio at it's current level.

Well 2.5%. The US has a net debt/GDP ratio of 50%. To keep this ratio stable over the long run, and with nominal GDP growth of 5%, you need to have a 2.5% structural deficit or lower.

But my point was that if you look at the here and now, since Germany is doing double or triple dip recessions (let's say 2% nominal growth) and has a 3 or 4% deficit, we at least we can take some perverse solace in knowing that we don't have it as bad as they do.

quote: Are you talking about the nominal growth in the economy (money GDP), if so then what you are saying only applies when the debt is above 100% of GDP.

Yes, you are correct. My bad.

quote: You keep saying this, and yet you also say (correctly) that the tax take as a share of GDP has been remarkably stable over the last 30 years - if there was this bias why has the tax take stayed the same, and if the reason for that is that whenever it rose polititians cut the taxes what makes you think that that will change this time?

Well, even if it is remarkably stable, and is useful in debunking lots of arguments, there is still some variation, which is almost substantial enough to explain away a 4.5% structural deficit. Over the 90s, this variation was about 3.5 percentage points of GDP from trough to peak. Taxes were raised in 1993 by Clinton and the Dems, but the biggest impact was income tax bracket creep during good economic times.

In the political system that we have in the US, such tax increases are free-of-charge to politicians--you can bash your opponents for being tax-and-spend even though you're allowing taxes to increase over time.

	27-11-2003 02:04									#77
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DanS, Bracket creep? I thought Reagan gave us indexing. Who repealed it?

	27-11-2003 03:42									#78
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Indexing to inflation, not income growth. So they increase 2% a year to keep pace with inflation, even though incomes are rising 4% a year. If left untended, as happened during the 90s, this creates a natural rise in tax percentages of income and GDP when economic times are good.

Last edited by DanS on 27-11-2003 at 03:55

	27-11-2003 04:07									#79
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Well, DanS, this indexing is better than none. You can only imagine the dispair of the average Joe back in the good old Carter years when he drove inflation to 20% per year. Not only did this kill pensions, but it provided for a yearly massive tax hike. And, of course, you know who opposed indexing when Reagan proposed it?

The Democrats.

	27-11-2003 07:27									#80
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The more that the demopublican party ****s up, the more chance the lp has in gaining a seat in congress.

	27-11-2003 07:58									#81
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quote: Originally posted by Ned You can only imagine the dispair of the average Joe back in the good old Carter years when he drove inflation to 20% per year.

When was US inflation ever that high?

During the carter years (from Q4 1976 to Q4 1980) inflation averaged 8.7% - pretty high but less than half the level you are talking about.
Inflation peaked at 10.9% in the first half of 1980, below the peak of 11.3% in Q4 1973 under Nixon.

N.B. inflation figures relate to the Consumption Expenditure Deflator.

quote: Originally posted by DanS Well, even if it is remarkably stable, and is useful in debunking lots of arguments, there is still some variation, which is almost substantial enough to explain away a 4.5% structural deficit. Over the 90s, this variation was about 3.5 percentage points of GDP from trough to peak. Taxes were raised in 1993 by Clinton and the Dems, but the biggest impact was income tax bracket creep during good economic times.

So, are you expecting a simmilar rise in taxation over the next 5-10 years?, or will it only come after 2008?

	27-11-2003 08:31									#82
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quote: Ummm...that's an interesting viewpoint, but the last time I checked the government wasn't pocketing the money and running; they were using it to pay down the debt (which is from money previously spent on us, the citizenry....theoretically). This choice is especially valid when you realise that for about 5 straight years in the 90s public opinion polls listed paying off national debt as the top spending priority for the federal gov't. So as I see it, we decided what we would do with our money, and we did it. Whereas it seems that you've identified what you'd like your government to do: borrow money in order to pay for its functioning, instead of paying for it up front. This is your choice, but it might not be the wisest one.

Uh, so you are using the surplus to pay down your debt - a debt that supposedly exists because for a period of time prior to the mid-90s, Canadian citizens preferred to borrow money to pay for government functions.

However, when the US decides to make the same choice that you implied was valid and warranted for your countrymen, it now is somehow illicit... for no other reason than because it is the US that is doing it, right?

OK, I think I get it.

	27-11-2003 10:46									#83
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quote: Originally posted by JohnT quote: Ummm...that's an interesting viewpoint, but the last time I checked the government wasn't pocketing the money and running; they were using it to pay down the debt (which is from money previously spent on us, the citizenry....theoretically). This choice is especially valid when you realise that for about 5 straight years in the 90s public opinion polls listed paying off national debt as the top spending priority for the federal gov't. So as I see it, we decided what we would do with our money, and we did it. Whereas it seems that you've identified what you'd like your government to do: borrow money in order to pay for its functioning, instead of paying for it up front. This is your choice, but it might not be the wisest one. Uh, so you are using the surplus to pay down your debt - a debt that supposedly exists because for a period of time prior to the mid-90s, Canadian citizens preferred to borrow money to pay for government functions. However, when the US decides to make the same choice that you implied was valid and warranted for your countrymen, it now is somehow illicit... for no other reason than because it is the US that is doing it, right? OK, I think I get it.

Dude, I'm not condoning the debt runup, especially that of 1984-1993 (from which, IMO, we saw no use). My point is that it's better to be running in the black than in the red, unless you really think the borrowing is necessary...

	27-11-2003 11:26									#84
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quote: too bad all the ****ing old people who are getting electing are ****wits who will be leaving me with the bill.

I probably hate old people as much as you do, but I would never call them nitwits (or whatever your censored equivalent was ) for making us and our ill-informed and apathetic young bretheren foot the bill for their excesses. Seems pretty intelligent to me.

The crafty old bastards...

	28-11-2003 20:57									#85
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quote: Originally posted by DanS But my point was that if you look at the here and now, since Germany is doing double or triple dip recessions (let's say 2% nominal growth) and has a 3 or 4% deficit, we at least we can take some perverse solace in knowing that we don't have it as bad as they do.

Well, according to the latest OECD forecast their debt is still rising slower than the US's:

Change in Net government debt as % of GDP 2002 and 2005:

United States: 44.2%, 52.4%
Japan: 71.7%, 91.6%
Germany: 47.2%, 55.1%
France: 39.7%, 47.5%
Britian: 28.7%, 33.4%
Italy: 96.7%, 95.7%
Canada: 40.4%, 32.4%
EU15: 47.9%, 50.5%