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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Hawkmoon who wrote (2657)12/23/2000 4:27:50 PM
From: Henry Volquardsen  Read Replies (1) of 3536
 
you are probably right Ron and if so that is encouraging news. Early on in the budget surplus it was not net of SS. If it now is that is good news.

I like your parking example. It is always worth remembering that government accounting is loaded with quirks. We should get FASB on the case :)

The Treasury has bought back some existing debt. Also a number of recent refundings has been for less than the expiring debt so that would be a mechanism in which the surplus is pulled out of park and pay down at least some of the debt.

I understand your arguement in favor of a tax cut. This is an issue where I side with Greenspan. I would prefer to pay off debt. But if the only alternative is giving it to politicians to spend I would strongly favor a tax cut.

I'll quibble slightly with your statement that the surplus is a drain of liquidity from the system. It is if it is the result of an increase in taxes. But tax rates have been stable for a while so I would consider the surplus marginally neutral. Btw don't get me wrong I am strongly in favor of reducing taxes eventually. But my first order concern is the national debt. We allowed the politicians to spend the money anmd we need to pay id down, at least a big chunk of it. I would keep tax rates where they are till we get the debt below 25% of GNP.

Henry
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