Up to 2 Million March on D.C. to Protest Big Spending

Thanks. I didn't know that it was 1T cost, not 7-9T. I stand corrected. I'm slightly confused, though, about what the 7-9T more comes from, then. Is that in addition to the 12T debt we already have, making 19-21T? Or that the debt will go down to 7-9T?

We're 7 years into OEF, 6 into Iraq, and the total is $864B (also includes a small amount for veteran care). Those are amounts over what a "peacetime military" is. About 120B per year combined (and ramping down). As a percentage, it's an extra 25% on top of what the "normal" military costs. What a "normal military costs" is ~500B per year. I don't know that it's a "fact" that the wars will "easily cost more than double" health care costs. For your "fact" to be true, that would mean that health care would cost only $424B over its first 7 years. From the budget data I see, it looks like Medicare and Medicaid alone (much less any other "health care reform") are about 800B per year.

And from what I understand, "Bush's budget" for FY09 was written with the projection of 2.71B to a projected outlay of 3.1B, for a deficit of 400B. As of Aug 25, the FY09 receipts projection was down to 2.074B, while increased spending was up to 3.5B, or a 1.5T deficit. So the Bush administration is hammered (and somewhat justifiably) for having a large deficit in the budget, when in reality they got paid about 25% less than they were projected to and increased spending by about 12%. However, the 2010 budget was written with 1.5T of deficit spending in it. Almost 4x more deficit spending than last year. Am I reading this wrong? It seems that the Obama budget of 2010 alone will increase the total national debt by 12%. Quick math shows that if the outlays for national debt interest are 450B now (line item 901 in the above link), they'll be up another 50B or so after 1 year of the proposed budget. 500B in treasury debt interest could just about pay for the department of defense. Just the interest on next year's budget deficit could pay for half of the wars in Iraq and OEF. That's a bit mind-boggling to me.

 

Your ass has arms and legs and a head? Gross.

barfo

 

I've never been much of a deficit hawk. A modest amount of borrowing means a modest amount of less taxes.

The way I look at the deficits are as % of GDP. Bush's $400B-ish deficits were less than 4% of GDP. Between the depression and 2007, there was only one year the GDP didn't grow - 1983 I do believe. So if you're borrowing 4% more and GDP is growing 4%, the leverage seems like a fair play. Especially when you're paying 4% or less interest.

Obama's borrowing 16% of GDP (it's shrunk, folks), and as far as the eye can see (per year). Government doesn't cut spending or eliminate programs very often. More like less of an increase in spending on a program is a cut. Thus we can expect (before Health Care) the spending to be structural. The 16% is clearly not sustainable without some ridiculous explosive (unprecedented) GDP growth.

There's only so much money to be lent to everyone combined, public and private sectors. When govt. is borrowing at this level, the private sector is crowded out. Hence we are losing jobs and a jobless recovery with little job growth forecast for years.

If you don't like Social Security as a program, then you shouldn't sweat the $50B in new debt payments each year. That $50B is 1/10th of ALL the debt payment amount after the entire nation's history of piling up debt. The $50B is going to crowd out other spending (like SS), even if they raise EVERYONE's taxes by 50%. SS currently spends about $1T per year. We're talking about the debt payments being $1T before Obama's done.

The $50B may be on the low side. If and when there are reasonably safe and better paying investments than T-Bills, the govt. will have to offer to pay higher interest to attract interest in the T-Bills. That $50B is interest at a really low interest rate.

 

You seem to be claiming that the stimulus package is permanent spending. It isn't.
Hopefully, the wars aren't permanent spending either, although I'm less hopeful about that.

The government was borrowing, and spending, money precisely because there was no demand from the private sector. That's the whole idea of the stimulus package. There wasn't much of anything to crowd out.

$50 billion is going to crowd out Social Security spending, which is currently $1 trillion?
How does that math work?

$50 billion can't be made up by raising everyone's taxes by 50%? The US collects more than $2 trillion in taxes annually.

If and when there are reasonably safe and better paying investments than T-bills, the government won't need to borrow as much, because the economy will be stronger and tax receipts will be higher, so that problem solves itself.

barfo

 

Yes. 1.5T is not 4x larger than 1.5T. It's actually the same. It's a bit silly to compare to Bush's $400B estimate, because that estimate has proven to be wildly wrong.

barfo

 

What Brian and I are both looking at is $3.6T budgets with $2.1T in receipts. That's not accounting for the stimulus package, which was off budget. That's why it was an EMERGENCY spending bill.

My man, Ron Paul, explains it like this:

http://www.lewrockwell.com/paul/paul310.html

[FONT=Times New Roman, Times, serif]Congress funds the federal government through 13 enormous appropriations bills, but even an annual budget of more than $2 trillion is not enough to satisfy Washington’s appetite for new spending. As a result, a new category of spending bill has emerged, known as the “emergency supplemental” appropriation.

[/FONT][FONT=Times New Roman, Times, serif]So-called emergency supplemental spending bills, once a rarity, have become the norm over the last ten years in Washington. There’s always some excuse why Congress cannot stick to its budget, so supplemental bills are passed to permit spending extra “off-budget” funds.[/FONT]

Completely wrong. There was a credit crunch in the private sector. The borrowing by government only makes that worse, hence the recession is deeper and longer than it should have been.

When you keep on borrowing money, your interest payments keep going up.

If you borrow $100 at 5%, your interest payment is $5. If you borrow a 2nd $100 at 5%, your interest payments combine to be $10.

They go up by $50B this year. Another $50B next year. Another $50B next year. In year 3 it's $150B ($50B+$50B+$50B). In year 10, it's $500B. The $500B is what crowds out other spending. And the total interest payments will be at ~$1T.

For FY 2008, the feds took in ~$2.5T and spent ~$3T (the deficit was $455B). Of that $2.5T, $1.1T came from income taxes and another $900B from social security taxes. That's 80% of the income accounted for (the rest is corporate taxes, fees, etc.).

Raise everyone's taxes by 50% and it will make up another $500B in revenue, assuming people don't find loopholes to shelter their income from this huge burden, or give up working altogether. I mean, it's 50% more tax on the lowest income earners, too, who may have real trouble making ends meet.

For FY 2009, AP reports tax receipts are down 18%.

So 50% increase isn't going to make up for the increased mortgage (of our future) payments.

In that same article, AP says:

"Social Security is in danger of running out of money earlier than the government projected just a few month ago. Highway, mass transit and airport projects are at risk because fuel and industry taxes are declining."

Solves itself? LOL.

It's like getting a $100/month pay raise while your credit card company raises your fees by $150/month.

The Govt. sells a $10,000 T-Bill to someone and offers them 3% interest with the $10,000 due at maturity. They don't actually pay the interest, but sell the T-Bills for $9700 or whatever. When the T-Bills come due, govt. sells another one and pays off the old one. Like charging on a new credit card to pay off the old one's balance. They still have to come up with the $300 difference, though. That's where the $500B interest payments (current) and $1T future ones (certain) come from.

So what happens when they need to pay 5% interest to convince someone to buy the current generation of T-Bills? They're selling a $10,000 note for $9500 (not $9700) to roll over the debt. The entire $500B (current) or $1T (certain) debt payments will go up by 67% (from 3% to 5%). When faced with $1.5T in debt payments, and already shelling out money from the treasury to keep SS afloat, where is the money to pay the debt payments going to come from?

The debt is not going to go away, we will have to pay the payments we owe people or default for the first time in our history.

 

"making the argument" that they should get continued higher funding is not the same as actually getting continued funding. As far as I know, none of the stimulus money is actually in the budget as a continuing item.

barfo

 

But in fact, you are incorrect about that. Yes, it was an emergency spending bill, but it is accounted for in the $3.6T number. Here's a document from the CBO that includes $3.6T in outlays and $2.1T in revenue, and makes it clear that includes the stimulus package.

linky

I read something the other day that made the case that there is a very high overlap between Ron Paul fans and teabaggers. Do you agree?

Except that the deficits, according to the CBO, start going down substantially after 2010. So the new interest doesn't keep growing at the same rate (although it does keep growing).

barfo

 

Whoops! I read your linky and found nothing at all to suggest it is all accounted for in the $3.6T number. You don't book expenses until you actually spend the money, and not much is being spent this year. Remember? What would add to the deficit from this Bill this year is that miniscule tax cut (I got $25 more every two weeks!), because that affects the Revenue side of the P&L equation.

I've not read or seen anything about Ron Paul being involved with the tea party movement.

Last year's debt was about $9T, with $500B in interest payments in the budget. Add $9T of Obama's projected deficits added to the debt and the payments would be $500B more. $500B/10 = $50B/year.

It's still going to be $500B more, assuming that the Chinese keep buying our T-Bills at low interest rates.

 

That's not true. You can carry accrued expenses on your books.

 

Only if they're current.

EDIT: or past due.

 

You didn't read it very carefully then. I'll quote you the relevant passages.

Now, how could outlays go down due to ARRA if ARRA wasn't included in outlays?

Yes, I remember. The document has something to say about that, see the end of the first quote above.

That's nice to know, but is not an answer to the question I asked. The question was not about Ron Paul himself, but his fans.

barfo

 

The American Recovery and Reinvestment Act is the stimulus bill. So you agree with me that the document says that not ALL of the spending from that bill adds to the $3.6T.

Read your own link, sheesh.

"the anticipated economic recovery allows payments for
unemployment compensation and other benefit programs
to return to more typical levels. "

I'm sympathetic to the cause of responsible levels of spending and not mortgaging the future for a bunch of big government programs. I don't agree with much of the agenda of those who marched on D.C. other than these things. But sometimes even the worst of people come to the right conclusions for the wrong reasons.

I am a fan of Ron Paul. Good answer?