question about the national debt

Yeah whatever.

It's really very simple. You can not, I repeat, you can not, increase spending, while cutting revenue (taxes). It doesn't make fiscal sense. I don't give a shit if you are talking about a corporation, a single person or the federal government. Eventually this money will have to be paid back. How? By raising taxes. These tax cuts are loans.

 

Nut, this short article has the best explanation of what intragovernmental debt covers.

http://cox.house.gov/html/columns.cfm?id=514

Seems like we'd want intra-gov't debt to be as high as possible to cover the social security benefits of baby boomers. Unfortunately we'll know if that's right in just a few years when SS outlays are greater than revenues. Pretty confusing.

 

Good point Barry but we're trying to dig a little deeper here. Try to keep up, you might learn something...

 

Remember back a few years ago when we had a surplus? I wonder how the economy would have went if we used that to pay down the debt instead of cutting taxes?

Oh yeah, and ezy read your own post more carefully. It does advocate reduction, just questions the rate at which one does so.

 

We did use it to pay down debt. From 1998-2001 almost a half trillion dollars was used to pay down public debt. The economy had very obvious signs that we were heading for a recession in 2000. The tax cuts didn't cause the recession.

 

You're right. I never said debt reduction was bad. I just pointed out some consequenses to our overall financial system.

 

IMHO that was because the Fed was raising interest rates, scared of an inflationary trend that did not appear due to the silicon valley bubble bust.

 

I think you're right that it started with the rate hikes when we weren't seeing any inflation. (but you can hardly blame the fed) The market downturn was way past due and that incredible loss of wealth caused a decrease in spending across the entire economy. At the same time corporations reduced inventory levels and cut capital spending in anticipation of a down economy. Everything compounded on top of eachother and then 9-11 happened. Overall, we were due a recession.

 

interesting. one more reason why social security needs to be pulled out of the general revenue.

that article makes a good point. he argues that since more SS money comes in than goes out (currently) and that money is required to be invested in gov't holdings, then the gov't is sorta forced to borrow that money from the SS trust. he says it's not really debt. i would agree if that cash is actually around somewhere.

i think he glosses over the fact that if you really did pull SS money off the table and put it in a safe place, then the gov't would just borrow from the public instead.

i don't see how you can get around the fact that the gov't spent about half a trillion more dollars than it brought in for the 2003 fiscal year. regardless of where the money was supposed to go and what agency is really in control of it.