Published: Monday, Aug. 18 2014 6:22 a.m. MDT
How about naming some of the economists whom you trust so we can do our own
evaluations of their opinion and yours?
Why does the Federal debt grow and how? First, the Federal debt grows when
revenues (taxes) do not rise to the level of expenditures. Second, the debt is
incurred through the sale of U.S. securities of various types.As a
general rule to measure the burden of the debt, economists look at the ratio of
debt to GDP. I believe that is appropriate, based on my work as an economist
the last 40 years.What has been the pattern of debt to GDP over the
years since WWII? The debt to GDP ratio peaked in WWII. It fell steadily
through the 50's, 60's and 70's. Why? Largely because taxes on
the wealthy and corporations remained high. With the arrival of Reagan and his
tax cuts for the top end, the debt to GDP ratio climbed steeply thorough the
Reagan years and Bush I. It leveled off and began to decline under Clinton,
because Clinton taxed the rich. Of course the debt to GDP ratio
grew rapidly under Bush II with his high end tax cuts.The ratio is
now declining under Obama. Conclusion: tax the wealthy! It's good for
them and us!
current and future debt is driven overwhelmingly by 3 issues.MedicareSocial SecurityDefenseEverything else pales in
comparison.Rising health care costs, baby boomer retirements and our
penchant to inject ourselves in every world conflict are the drivers of our
debtSo, next time someone complains about the money spent on foreign
aid, unemployment benefits or Obama's vacations steer them back to the real
issues.Would you rather attack the problem, or make insignificant
political rants?Focus on the real issues.SS, Defense,
Medicare Fix those first, then hunt for the pennies.
Sadly, early in the Bush years, the Republicans gave us a tax cut, sending small
checks to most of Americans in an amount that didn't really mean that much
except to take out and spend for dinner and a movie, and not much more. Those
checks took billions out of the federal treasury, and were accompanied by a
permanent tax cut. While none of us like to pay taxes all that much, we also
know that various government services, whether national security or a variety of
domestic services, are important and wanted. So, most people don't want
these services significantly cut. Now, take this tax cut, add to it the most
costly foreign wars in history, ones we started, by the way, and increase other
spending because it's good politics, and the GOP took a budget surplus and
destroyed it. Bob Bennett was part of that fiasco. The lesson to be learned is
don't let the Republicans be in charge of the budget. They talk a big
game, but reality tells us a far different story. From Red Ink Ronnie to the
modern era, the GOP is bad, bad, bad for the economy.
“Conservatives” continually harp now about the debt. But when
Reagan TRIPLED the debt and when GW more than DOUBLED it again, they
didn’t say a peep.In fact, it was Dick Cheney who famously
said, “Deficits don’t matter.”Low Revenue –
High Spending = High yearly deficits = High DebtThe problem is
either high spending or low revenue, or a combination of both.High
Spending? Well yes. America spends more on our military then the next 8
highest spending nation’s combined. In fact, the over 50 BILLION dollars
we spend on military retirement (for those who have served 20 years or over) is
more than the ENTIRE military budget of Canada.Low Revenue?
Absolutely. In 1969 when we fought the cold war and the Vietnam war, spent
billions on necessary social programs, and went to the moon, we still balanced
the budget because we had enough revenue. Back then the highest tax bracket was
71%. Now it’s down to 38% because of trickle-down-economics forced upon us
by the Reagan administration.It was supposed to create jobs. Where
are the jobs?We need to stop coddling the rich and increase the high
tax bracket again.
Now is the time of the great battle for Americas economic future. Sadly, the
left-wing proponents of entitlement programs are currently winning. Charles Dunoyer famously stated that"one consequence of the industrial
regime is to destroy artificial inequalities, but this only highlights natural
inequalities all the more clearly." Dunoyer continued "superior
abilities . . . are the source of everything that is great and useful . . .
Reduce everything to equality and you will bring everything to a standstill.
" This is why state intervention of any kind must be rejected. Natural
inequalities such as differences in physical, intellectual, and moral
capabilities are crucial to an economy of growth and innovation.That
is the problem. The left-wing egalitarian system attempts to put everyone on
the same level, regardless of effort or ability. There is only one way to make
everyone achieve an equal result, and that is by reducing everyone to the level
of the lowest common denominator. Shame on those who are fostering mediocrity.
The national debt when Bush left the White House was about $10.6 trillion. When
Obama leaves the White House it will be over $20 trillion! Obama ran up our
national debt more than all other Presidents combined and that after he
increased taxes on the "rich"! His foolish experiment with income
redistribution came at the expense of our granchildren! They won't mind
that Obama mortgaged their futures will they? Obama has purchased votes and got
himself elected with entitlements paid for with borrowed money!
@Kass: If you want to read economists who disagree with Krugman start with
Rhinehart and Rogoff. Read "This Time is Different" for a realistic look
at what debt levels like the current one have done historically.@Marxist: You are attributing high tax collections to high tax rates.
It's more accurate to say that high tax collections came because of a fast
growing economy. The economy grew fast after WWII not because taxes were high
but because there was massive growth in population around the world and a big
bounce from depressed levels. The other instance of growth you cite was the
internet boom. Neither of these can be fairly attributed to high tax rates. You
can't just cherry pick a few instances where high tax rates DIDN'T
appear to slow the economy and give the tax rates credit for everything good
that happened in the complex economy at that time.
If Obama taxes the rich, the rich will shut down their operations or move those
operations to nations that have a more favorable tax rate. Companies have no
reason to stay in a country where they are seen as the problem instead of being
seen as the solution.Most revenue comes from income taxes. Income
taxes are generated when people work. People work when companies hire them.
Companies hire employees when the need for their product or service increases.
Obama's threats have made businesses reluctant to hire full time employees.
Those companies don't know how much ObamaCare is going to cost them, so
they refuse to hire new employees.Obama created the mess. He is
responsible for stagflation. His policies caused it. His rhetoric pushes it.
His lack of business experience and his refusal to listen to business leaders
destroys any trust he might have had with the business community when he entered
office. Businesses will wait until he is out of office before expanding their
" Obama ran up our national debt more than all other Presidents combined and
that after he increased taxes on the "rich""Did you know
that Obama's" biggest debt year was 2009. This was using the budget
established in 2008 before he became president.The debt is almost
entirely caused by lower revenue and higher "mandatory spending". This
can be verified on several charts at the Heritage Foundation website.Guess what? Had Romney been elected (or McCain) the debt would have still
skyrocketed. That is just a verifiable reality.Oh, and remember,
Congress spends the money. 100% of it.
Some people want to pretend that our deficits are caused by tax rates being
lower than they should be. If you want to know the real story, google
"federal tax receipts" and see the amount the federal government has
collected and spent each year for the past 60 years.The reason we
are in debt is because we spend way too much. Period. The federal government now
spends twice as much each year as it did just a dozen years ago.The
population has certainly grown, but it hasn't come close to doubling in
that time. Total tax receipts have also continued to grow and the government
takes in more each year than it ever has, but like the population, tax receipts
haven't come close to matching the explosion in spending.You
could argue that the "evil Bush Tax Cuts" have added a few hundred
billion to the deficit over the past 10 years, but that is a tiny sliver of the
huge $Trillion dollar deficits.We can go after "rich
people's money" all day long, but until we get our spending under
control the appetite of "the beast" will drive us to bankruptcy.
Re: Mike Richards "If Obama taxes the rich, the rich will shut down their
operations or move those operations to nations that have a more favorable tax
rate. Companies have no reason to stay in a country where they are seen as the
problem instead of being seen as the solution."That's an
easy one. Let's have Obama and the House Republicans pass a law making
such abandonment illegal. Companies are all-powerful only to conservatives like
This has to be one of the Senator's weakest editorials that is poorly
supported with few facts or references. Looking back over the past 6 years most
everything Krugman had predicated has played out. The GOP is not concerned
about our debt but they are concerned about the tax rates and social
spending(income redistribution). They simply use the debt as a bogey man to
encourage support for distributing less of their wealth to the balance of
Marxist,You may believe that the government owns a company's
private property, but the Constitution doesn't support you. The Federal
Government is limited to "owning only a ten-mile square District, and the
land and buildings required for forts, magazines, and federal buildings. In
other words, your idea is unconstitutional. People have no
requirement to provide jobs for others. People have no requirement to keep
their businesses inside the United States. Private property does not become
public property just because you want to redefine words.Government
got us into this mess when FDR started promising people that the government
would be responsible for their personal welfare. Most presidents since then
have continued to misuse tax revenue. Instead of obeying the constitution and
only handing duties in the 17 areas authorized by the constitution, they have
squandered America's wealth by signing pork projects - vote buying.Government cannot save itself by increasing taxes. If it hopes to
survive, it must decrease spending and it must stop paying people to NOT work.
Tax revenues come from income taxes. Income taxes are paid by people who work.
@marxist: Make "abandonment" illegal? You might as well reinstate
slavery. You want to make business owners continue to operate where you tell
them to and they aren't allowed to stop working lest they be charged with
abandonment. How about we try more freedom instead of less. Lower the corporate
tax rate, simplify the regulatory regime and make America a place where people
WANT to do business instead of forcing them to do it here.
"The reason we are in debt is because we spend way too much"JoeCap I can agree with that.But, While I see the GOP
pushing for tax cuts, tax cuts, tax cuts, I never see them make any significant
spending cuts.Cutting taxes is easy. It cutting what those taxes
cover that gets tough.SS, Medicare and Defense are the deficit
drivers. What has the GOP done to cut costs of those while they push for tax
cuts and more defense spending?What did the GOP house and senate do
under Bush? Cut taxes, go to war and pass Medicare part D.Hardly
the party of fiscal responsibility.I am not suggesting that the dems
are fiscally responsible. But it is unreasonable to blame them without looking
at the historical realities of what the GOP has done.Both parties
overspend. But one wants to do it while lowering taxes.
Our former senator accuses Professor Krugman of "cherry picking" dates
for comparisons, but conveniently ignores the professor's comments about
those who are debt-phobics, like the senator, were warning about inflation and
hyperinflation that never happened. Folks from the senator's own party were
lamenting that we were on the road to becoming the next Greece, yet the senator
cavalierly dismisses Greece now as "too small." That snacks of being two
faced, senator! Your party brought us the Great Recession and then did nothing
to help the Nation fix it! Your concern and advice rings hollow!
@JoeBlow – “While I see the GOP pushing for tax cuts, tax cuts, tax
cuts, I never see them make any significant spending cuts.”Because that’s not the GOP plan – their plan is to “starve
the beast” and come to the rescue when the economy tanks. It’s a
reckless and dangerous plan made all the more difficult by facts on the ground
(i.e., the tax cut policies have not lead to long term economic growth and in
many ways have simply created a less stable economic environment complete with
1920’s style faux-booms & busts).The GOP has zero
credibility on this issue and only found religion on it the day after Obama took
office.That said – both Cheney and Krugman are wrong about
debt. It does matter if for no other reason than it is morally wrong to force
your children & grandchildren to pick up your dinner tab.
Before the Federal Reserve there wasn't any inflation. after they took
control every thing started to increase. Then we went off the gold standard.
Things went into outer space. When you make $25. an hour and spend $35 dollars
an hour then think that to not spend $8 is going to fix the problem.
JoeBlow: "But, While I see the GOP pushing for tax cuts, tax cuts, tax cuts,
I never see them make any significant spending cuts."On the tax
front, the GOP believes that if you have reasonable tax RATES that the
government will maximize its tax REVENUES. Obviously, you can't get the
rate too low and still generate enough money, but liberal proposals to take more
than half of anyone's income will never generate more tax revenues. Rich
people will just spend more time and energy looking for tax loopholes. A flat
tax of about 15% for all income above the poverty line would spur economic
growth and maximize revenues.You are right about the GOP doing too
little to stop the growth of government spending. While they are way better than
tax and spend liberals, they are more Dem 'lite' than anti-Dem on the
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