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Politics : Al Gore vs George Bush: the moderate's perspective -- Ignore unavailable to you. Want to Upgrade?

To: cosmicforce who wrote (3703)	10/26/2000 6:08:00 PM
From: Ben Wa	Respond to of 10042

inevitable - the Reagan supply side budget/defecit question. glad you asked. under Reagan, tax receipts into the government went up a lot, and that was with tax cuts. Those who believe that tax cuts lead to defecits only need to look at that fact. Step two is what the government does with the money. We have the same issue now with the current budget surplus. Defecits are the result of spending too much, on stupid stuff that does not yield a good payoff down the road. Reagan wanted to bankrupt the Soviet commie empire, and that cost money, and in fact, their system broke down from, among other things, structural faults that accelerated the collapse. The result is that after that, we had the luxury of reducing military spending as a pct of GDP. A sidenote to this is that I have heard that part of the cut in military spending was a dramatic reduction in the ability of ships to refuel at sea via oilers. We just had a bunch of fine people die and get injured due to those cuts. On the other hand, money has been increased for programs within the military for programs such as sensitivity training. When I heard about the recent trajedy of our sailors being killed, I asked myself why that raft was not simply shot out of the water when it breached a given perimeter around our ship? The answer is horrifying. But I would like somebody else to chime in with the answer to that question.

To: cosmicforce who wrote (3703)	10/26/2000 7:24:22 PM
From: Hawkmoon	Respond to of 10042

Well, actually Reagan desired both a 25% tax cut MATCHED by a 25% budget cut. But since the democrats controlled the congress, he was only able to pass the more appealing tax cut (which the democrats knew would be short lived due to the 25% deficit spending per annum that would result. Nonetheless, reducing the upper most tax rate from 70% to 50% was a big shot in the arm to releasing capital into the private market and creating economic growth. The Baby Boomers, according the Harry Dent, have been like a "pig moving through a python", altering the landscape of our economies since they were born (I highly recommend his books for all investors interested in understanding demographic impacts on macro-economics). They will have the same impact on the retirement system as they have recently had on the stock markets. But one advantage that the United States does have over its global economically more socialistic competitors is the current IRA system. The fact that IRA are tax-exempt until withdrawals upon retirement creates strong incentive for people to save and invest. But even more important is the fact that withdrawals are taxed as income, not as capital gains. And that may help to provide some of the additional revenue required to meet social security liabilities down the road. Europe is only now starting to grapple with an individual IRA style investment program and Japanese have most of their cash in low-paying postal savings bonds and JGBs. But what is more sinister is that each year's SS surplus creates the necessity for the government to issue more debt and spend more in its budget, THUS DEPRIVING THE PRIVATE MARKET OF SOME $200 BILLION IN CAPITAL EACH YEAR. Of course, if the current surplus is being spent to buy out previous private holders of treasury debt, then the surplus would free up capital to be used in the private market. Right now the US Treasury has TREMENDOUS POWER to reduce interest rates by increasing their buybacks in the T-Bill markets. But to do so would be interpreted as "interference/subsidization" of the T-bill market and interference in the Feds traditional mission of dictating interest rates. I suspect that under a GW administration, we'll see more frequent and sizable government buybacks of privately held government debt.