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Politics : The Castle -- Ignore unavailable to you. Want to Upgrade?

To: Neocon who wrote (135)	11/7/2002 5:22:48 PM
From: TimF	Read Replies (2) \| Respond to of 7936

Perhaps the first thing to know about the federal debt, some $4 trillion at the end of 1992, is that $1 trillion of it is held by government agencies or government trust funds such as those for Social Security. Excluding that amount leaves the more relevant figure of "gross federal debt held by the public" at $3 trillion. If you are not going to count the debt then you shouldn't count the trust fund either. Its just moving money from one pocket to another and calling it both a debt and a trust fund, it might make sense to consider it as neither. However the government does face future liability for SS payments. Even if that is not exactly a debt it should be counted as a liability on the government's books. Tim

To: Neocon who wrote (135)	11/8/2002 6:27:55 PM
From: tejek	Read Replies (1) \| Respond to of 7936

If the economy is in a recession because of a lack of effective demand for what can be produced, a bigger federal debt may be useful. The greater wealth it causes in the form of Treasury notes, bills, or bonds gives people less reason to save and, therefore, induces them to consume more. Businesses, which may also feel wealthier with their holdings of Treasury securities, may be expected to produce more to meet the consumer demand and also to invest more in the capacity to meet that demand. When a person gets into financial difficulty, its rare if ever I hear someone recommend that they spend their way out of their difficulties. I believe its the same for gov'ts as well. Furthermore, the cause of most recessions is not a drop off in demand but rather inflation has become a problem and the federal reserve entity is prompted to raise interest rates to curb expansion. The curbing of expansion ultimately leads to recession and a loss of jobs which, in turn,results in a "lack of effective demand" for goods and services. Frequently, the reason for inflation can be a lack of liquidity in the marketplace caused by the national gov't borrowing monies to pay budget deficits. In other words, we are asking the entity that may have caused the recession inadvertently by spending too much to spend even more to help the economy get over the recession. That seems pretty reckless and not a great replacement for sound fiscal policy. Besides, reducing interest rates has been,until this recession, effective enough in stimulating the economy out of recession. It may not be effective this time because of the unusual geopolitical conditions existing in the market place. If, however, the economy is already at full employment, with few unused resources, consumers' attempts to spend more as a consequence of their greater financial wealth can only generate higher prices. And there's the rub! Too high a federal debt, or a deficit that increases the debt and, consequently, causes aggregate demand to rise faster than production can be increased to meet that demand, brings on inflation. Then, possibly even worse, actions by the Federal Reserve to combat the inflation will raise interest rates, thus choking off investment in new housing, new factories, and new machinery. Of course, my contention is that the above condition is in play even if the economy is not at full employment. Besides what's too much debt? Why not spend within your means? ted

To: Neocon who wrote (135)	11/8/2002 8:07:03 PM
From: Tom C	Read Replies (1) \| Respond to of 7936

The federal government, though, also has real assets: interstate highways, public buildings, and federal land, water, and minerals. How can you count interstate highways as an asset? How would you monetize the interstate highway system? Sell them to a private enterprise or a foreign government? Aren't these part of our homeland security infrastructure? After the citizens paid for these highways (taxes), the government can sell it to someone who will charge us tolls? Things owned by the government are really owned by the citizens. A larger debt may have the effect of forcing the citizens to sell off their assets. When selling off federal land, water and minerals I hope we are getting a decent deal otherwise the effect is that in a tight spot we are transferring wealth from the people to private enterprise. By people I mean ordinary tax payers. But if it wishes, the federal government can always create what money it needs to service its debt. In this fundamental sense, then, federal debt is different from private debt or, for that matter, the debt of state and local governments, which do not have the power to create money. Wow! If all else fails just print money. If this is true why do we have to pay any taxes at all? Every year the government can estimate the total costs and print additional money to cover it. If that's not a bad thing let's do it! ps: Sorry about the spelling... I don't have a spell checker on this machine....

To: Neocon who wrote (135)	11/9/2002 1:46:03 PM
From: MSI	Read Replies (3) \| Respond to of 7936

Cagey dishonesty. You absolutely can calculate the Social Security obligation. Everyone who pays in has an account as of this moment, and a current rate of payout over their actuarial lifespan with a defined calculable amount. Insurance companies are required by law to calcuate these numbers rigorously and often to measure their financial health. Government officials and their apologists are simply lying to avoid accountability. Not even a very good lie, but politically useful. some economists argue that we should include in federal debt the implicit debt from the government's commitment to pay future benefits such as Social Security. If we do so, shouldn't we add assets in the form of the present value of future taxes that might be received? In principle, they are both relevant, but there is a strong argument that in view of the uncertain amounts to be projected for taxes and payments over many decades, it would be better to exclude them from our measures of the debt Tax revenues can only be estimated, but obligations such as Soc Security can be calculated, and must be for an honest accounting. It's unlikely this crowd in Washington is even slightly interested in accountability, if they can continue to hoodwink the media talking heads, and the public.