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

To: Lazarus_Long who wrote (380)	11/12/2002 10:32:08 PM
From: MSI	Read Replies (2) \| Respond to of 7936

Ultimately, the gov't will either inflate the currency or go bankrupt. Or get fiscally responsible leadership. Happens every few administrations: Truman, Eisenhower, JFK, Carter, Clinton.

To: Lazarus_Long who wrote (380)	11/13/2002 12:27:56 AM
From: TimF	Read Replies (5) \| Respond to of 7936

State Coalition Approves Internet Sales Tax Plan Prospects in Legislatures, GOP Congress Uncertain washingtonpost.com

To: Lazarus_Long who wrote (380)	11/13/2002 11:20:26 AM
From: Neocon	Read Replies (3) \| Respond to of 7936

It is very nice to have no outstanding debts, as long as one is not hamstrung. But the average family carries a mortgage for a number of years, makes loans for cars, and takes out loans for big ticket things like weddings, at least, for good reason. I have already explained why one might carry debt on a long term basis: for the same reason that a business carries debt to finance a new factory, because raising prices or cutting dividends might have a deleterious effect on their business, and saving will defer earnings from productive investment, so it is prudent to borrow in order to make more money. Another reason is similar to taking out a mortgage: that one will have to rent anyway, so may as well finance, in order to accrue equity and the long run, and hedge against inflation. If a city can provide adequate levels of service and not gouge taxpayers to balance the budget, more power to it. If the growth of debt, in constant dollars, is about the same or less than the growth of GDP, there is no reason in the world to raise taxes, except in the ordinary sense that when people have more income, they pay more. If GDP growth markedly exceeds the accrual of deficits, you will pay down the debt, net. In a robust economy, and with some prudence, there is no reason to resort to currency inflation or go bankrupt. In any case, the possibility of liquidating assets to reduce indebtedness hedges against either alternative, as well. The reason that this is important is that it was more urgent in the '80s to reduce tax rates then to worry over deficits, and it is now better to give tax relief than to worry over deficits. Yes, spending decreases are desirable too. But tax relief should not be held hostage to coordination with spending cuts.......