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Old 02-11-2014, 09:56 AM   #181
NFRs2000nyc
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Originally Posted by 'busa View Post
So I should assume that anytime you don't address my point that you have no rebuttal and therefore you concede that I am right?


This country has almost always been in debt. Yes, it needs to be kept in check, both in terms of spending and tax revenue (yes, some people may have to contribute more). It's not the end of the world. It's not the biggest problem. If the political atmosphere was a little better and our elected officials were actually doing their jobs and working for us instead of lobbies and their (now thanks to Citizens United) invisible donors, that could very easily change.





I think it's a faulty comparison aimed to distract. Is debt costly? Of course it is. Is it a tax? If I eat a burger and that burger contributes to me gaining weight and that weight gain contributes to me wearing out my pants faster, using up a bit more gas, and spending more time in front of the TV because I'm a bit out of shape, thereby causing me to spend more money on movie rentals, hence making me spend more money on pants, gas and movie rentals, then is that burger a tax?

Your analysis reminds me of that Direct TV commercial:



So, having cable is a tax? It costs you money and health after all.

No. It's just one of many things in life that affects your bottom line.

Excessive debt is not good. National debt should be reigned in. But just because debt is high at this very moment, you can't go an conflate the definitions of different terms until they mean what you want them to mean. Otherwise, you'll have to redefine a whole bunch of other things:
Debt held by the public relative to GDP rose rapidly again in the 1980s. President Ronald Reagan's economic policies lowered tax rates (Reagan slashed the top income tax rate from 70% to 28%, although bills passed in 1982 and 1984 later partially reversed those tax cuts.)[21][23] and increased military spending, while congressional Democrats held fast against attempts to reverse spending on social programs.[19][21][23][24] As a result, debt as a share of GDP increased from 26.2% in 1980 to 40.9% in 1988,[22] and continued to rise during the presidency of George H. W. Bush, reaching 48.3% of GDP in 1992.[13][25]
Did Reagan raise or lower taxes now?
IF you are going to compare apples to burgers...eating a burger was entirely your choice. Government spending is not. If I was eating as many burgers as I want, but you had to pick up the tab everytime, then I get burgers, and you are essentially getting taxed (your money is being taken away from you through no choice of your own.)

The definition of tax:

Quote:
a compulsory contribution to state revenue, levied by the government on workers' income and business profits or added to the cost of some goods, services, and transactions.
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Old 02-11-2014, 10:10 AM   #182
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IF you are going to compare apples to burgers...eating a burger was entirely your choice. Government spending is not.
Debatable. We vote these guys into office after all.

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Originally Posted by NFRs2000nyc View Post
If I was eating as many burgers as I want, but you had to pick up the tab everytime, then I get burgers, and you are essentially getting taxed (your money is being taken away from you through no choice of your own.)
You know when people use an example to illustrate a point by using something very different from the original topic so that the example is not killed entirely by overanalysis. That's what I was doing.

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The definition of tax:
Thank you for that definition. I stand by my point. Debt is definitely a burden, but it's not a tax. A tax is a tax. Debt is debt.

So, how have taxes gotten worse for everyone over your lifetimes?
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Old 02-11-2014, 10:17 AM   #183
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So I should assume that anytime you don't address my point that you have no rebuttal and therefore you concede that I am right?
Sure, sometimes that will be true, you are right quite often. But it might be that I don't care about the topic, or I don't care enough to wage never-ending battles with you, or that I simply don't care enough to post. Recall what I have said previously in here - I know what I DON'T know, and I am not so foolish to weigh in on something unless I am certain (when it comes to factual stuff) or extremely confident (when it comes to expressing opinions that are well-considered).

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Originally Posted by 'busa View Post
This country has almost always been in debt. Yes, it needs to be kept in check, both in terms of spending and tax revenue (yes, some people may have to contribute more). It's not the end of the world. It's not the biggest problem. If the political atmosphere was a little better and our elected officials were actually doing their jobs and working for us instead of lobbies and their (now thanks to Citizens United) invisible donors, that could very easily change.
I don't dispute that debt has been around for a long time or that certain amounts of debt are not only not bad, but in fact can be good. At least in this discussion, I haven't even opined as to the wisdom of our current level of debt. I am merely trying to get people to understand that federal government debt is the same as a tax, so they will recognize that the government has more ways to tax its citizens other than a direct levy via increased tax rates, changes in tax brackets, etc. I have explained it quite clearly and no one has posted a rational rebuttal.

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I think it's a faulty comparison aimed to distract.
Thanks for reminding me as to why I don't take you seriously. You know the point I am making is absolutely correct, but you cannot admit it and you certainly cannot refute it. This statement says nothing more than "yea, you're right, but I don't like the point you are making because it doesn't fit the narrative I am trying to write." I have conceded (by failing to dispute) your point to Stickbuilder about income tax rates, etc. Your failure to acknowledge my point is evidence that you are the one keen on distracting, not me.

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Originally Posted by 'busa View Post
Is debt costly? Of course it is. Is it a tax? If I eat a burger and that burger contributes to me gaining weight and that weight gain contributes to me wearing out my pants faster, using up a bit more gas, and spending more time in front of the TV because I'm a bit out of shape, thereby causing me to spend more money on movie rentals, hence making me spend more money on pants, gas and movie rentals, then is that burger a tax?

Your analysis reminds me of that Direct TV commercial:



So, having cable is a tax? It costs you money and health after all.

No. It's just one of many things in life that affects your bottom line.
How on earth are buying and eating and hamburger or paying for cable "taxes?" Those are Liar-type responses, and I expect more from you. I guess I could re-post my Black's Law definition of a tax and the Investopedia quote, but why bother? You understand "debt is costly" but you cannot make the 1 inch leap to understand that the cost has to be paid by someone. Tell me - who pays for the cost of debt? And by what means does the federal government have to pay that cost?

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Excessive debt is not good. National debt should be reigned in. But just because debt is high at this very moment, you can't go an conflate the definitions of different terms until they mean what you want them to mean. Otherwise, you'll have to redefine a whole bunch of other things:
Debt held by the public relative to GDP rose rapidly again in the 1980s. President Ronald Reagan's economic policies lowered tax rates (Reagan slashed the top income tax rate from 70% to 28%, although bills passed in 1982 and 1984 later partially reversed those tax cuts.)[21][23] and increased military spending, while congressional Democrats held fast against attempts to reverse spending on social programs.[19][21][23][24] As a result, debt as a share of GDP increased from 26.2% in 1980 to 40.9% in 1988,[22] and continued to rise during the presidency of George H. W. Bush, reaching 48.3% of GDP in 1992.[13][25]
Did Reagan raise or lower taxes now?
See my previous response about how I am not disputing our nation's debt history, its bi-partisan responsibility, Reagan's role, or whether we have too much debt or not. And I am the one who is trying to distract?
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Old 02-11-2014, 10:56 AM   #184
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I am merely trying to get people to understand that federal government debt is the same as a tax, so they will recognize that the government has more ways to tax its citizens other than a direct levy via increased tax rates, changes in tax brackets, etc. I have explained it quite clearly and no one has posted a rational rebuttal.

Thanks for reminding me as to why I don't take you seriously. You know the point I am making is absolutely correct, but you cannot admit it and you certainly cannot refute it. This statement says nothing more than "yea, you're right, but I don't like the point you are making because it doesn't fit the narrative I am trying to write."
Maybe your concept is just such a stretch that one can't reasonably discuss it without redefining many other concepts at the same time. It's an overly simplistic analysis that relies on lack of data and many assumptions to even begin to be acceptable.

If you go to a playground and no one wants to play basketball with you that doesn't mean you're the best at basketball. That just means no one wanted to play.
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Old 02-11-2014, 10:57 AM   #185
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Further education for those not willing to be distracted...

http://www.economics.utoronto.ca/jfl...ules/reqv.html

NOTE - best if you click the link and read from there, since a few of the math formulas are distorted when I cut & paste into the quote below.

Quote:
Topic 4. Tax Cuts Financed by Issuing Public Debt: Ricardian Equivalence

We now analyze the effects of a tax cut when the short-fall of revenue from expenditure is financed by selling bonds to the public. The government borrows funds from the private sector to finance the expenditure that was previously being paid for by the tax revenue that is now forgone.

Look again at the government's budget constraint developed in the previous topics.

G = T + ***916;B + ***916;H

The government reduces T and increases ***916;B by the same amount. The public receives a reduction in its taxes but ends up buying an equivalent amount of bonds issued by the government.

It would seem that the public gains from this policy since it now receives bonds for the money, and hence goods, it gives to the government and these bonds bear interest. In order to pay the interest on these bonds, however, the government has to levy appropriate additional future taxes.

Let us suppose that the government cuts taxes by $100 per person and sells everyone $100 worth of government bonds bearing interest at 8 percent. In every future year the government must raise $8 additional taxes per person to pay these same people their $8 interest. The public receives a $100 reduction of this year's taxes in return for an $8 increase in taxes in all future years. Letting i be the nominal interest rate, the present value of future taxes is

PV = $8 / i = $8 / 0.08 = $100

which is identical to the tax cut. We assume here that the bonds are perpetuities or consols---if they were not, the result would be the same except that the above equation would take a more complicated form.

Consider, for example, a case where the government cuts taxes this year and finances its revenue short-fall with an issue of government debt maturing in one year. This means that taxes must be raised next year to pay interest on and retire the debt. A per-person tax cut of $100 this year will be financed by $100 worth of bonds which will cost $108 to redeem (at 8 percent interest) next year. This means that each person gets a $100 tax break this year buy pays $108 additional taxes next year. The present value of these tax changes is

PV = ***8722; 100 + 108 / (1 + i ) = ***8722; 100 + 108 / (1 + 0.08) = 0

The tax cut is really nothing more than a tax postponement on which interest must be paid at market rates. If people are forward looking they will realize that they can't get something for nothing---the present value of the future taxes equals the amount of the current tax cut.

THE PUBLIC IS NO BETTER OFF THAN IT WOULD HAVE BEEN BY PAYING THE $100 TAXES IN THE FIRST PLACE. By buying bonds it gives the government $100 for the privilege of paying itself $8 interest each year. By paying taxes it gives the government $100 outright. The transfer to the government is the same in both cases. Wealth does not increase, so there appears to be no reason why consumption should increase.

This idea that the community's wealth and consumption will be the same whether the government finances its expenditure by levying taxes or borrowing from the public is called Ricardian Equivalence after the famous 19th Century British economist David Ricardo (1772 - 1823).

Another way of visualizing the Ricardian Equivalence idea is to recall that when the government makes an amount of expenditure G it must take G-dollars worth of resources away from the private sector to create the government goods it will give free to private individuals. This amount of resources will be the same whether the government borrows them from the private sector or obtains them through taxation. Private sector output will be reduced by the same amount in the two cases. And since the government acts as agent of the public, the public must transfer to it the necessary resources without any ultimate compensation other than the free goods the government is going to produce and distribute using those resources.

In the case of bond as opposed to tax finance the government is perpetrating what seems to be a slight-of-hand. Rather than simply taking the funds directly, the government is giving paper assets in return on which the public gets to pay itself interest every year. This interest is simply a switch of funds from one of the public's pockets to another with no net gain. Why might the government want to do this? [Hmmm, because people like badfast and busa can't understand it and even when it is explained to them in 2nd grade terms they will not shed their partisan bias to accept it, so they keep falling for the same ol trick?] We will see why in the next topic.

Before proceeding it should be noted that the Ricardian Equivalence Principle does not apply unequivocally to situations where the government finances a tax cut by printing money. To be sure, the same resources are taken from the private sector but, when the price level is fixed and there is less-than-full-employment, private wealth will increase because real money holdings rise. In the full-employment case the equivalence principle holds unequivocally because the government is simply substituting a tax on money holdings for a tax on something else.

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Old 02-11-2014, 11:10 AM   #186
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Another source, much longer so I only quote one section that is directly on point:

http://www.econlib.org/library/Enc/G...dDeficits.html

Quote:
To see what is at issue, consider a simple example. Suppose that every year the government buys $100 billion worth of goods and services and pays for them entirely by collecting taxes. Households pay the government $100 billion in tax revenue, and the government uses the revenue to buy goods and services. Revenue equals expenditure, so the government’s budget is balanced. Suppose the government suddenly decides to change the way it finances its expenditures, but not the amount spent. In the first year, the government reduces taxes by $10 billion and replaces the lost revenue by selling $10 billion worth of bonds that mature in one year and carry an interest rate of 10 percent a year. In the second year, the bonds mature, and the government pays the $10 billion principal and the $1 billion of interest. Taxes in the first year are $10 billion lower, but in the second year they are $11 billion higher. How does this temporal rearrangement of tax collections affect people? In the first year, people hand over the same revenue to the government as they did when they paid taxes; the difference is that $10 billion of it is now in the form of a loan that will be repaid in the second year with an extra $1 billion in interest. On this account, people may feel richer because they seem to be paying less in total taxes over the two periods. When the second year arrives, however, people will find that they have nothing extra at all because, to pay the $11 billion in principal and interest, the government must raise taxes by exactly $11 billion, which cancels the payment of the principal and interest. The government giveth with one hand and taketh away with the other. The net result is that people do not get back the $10 billion they lent the government, and the loan is equivalent to having paid the $10 billion in taxes in the first year. This same result emerges from any maturity of debt, whether it is a one-year bond, as in the previous example, a ten-year bond, or even a perpetuity.
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Old 02-11-2014, 12:24 PM   #187
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This sashimi is a tax.
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Old 02-11-2014, 12:30 PM   #188
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This sashimi is a tax.
If it is spoiled, perhaps. Busa must be on page 73 of his google search trying to find something, anything, to rebut my last two posts.
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Old 02-11-2014, 12:41 PM   #189
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Or he found a more entertaining way to waste his time.
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Old 02-11-2014, 12:48 PM   #190
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Or he found a more entertaining way to waste his time.
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Old 02-12-2014, 07:54 AM   #191
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If it is spoiled, perhaps. Busa must be on page 73 of his google search trying to find something, anything, to rebut my last two posts.
Take it up with this guy:
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Unfortunately, for the purposes of illustrating a point, the example wildly overstates the effect that borrowing currently has on the Federal fisc.

Here's an example closer to real world situation:

Federal government plans to borrow 10 dollars in 2014. It issues a 1 year bill at a .1% yield.

2015 rolls around and now the debt is due. The Federal government simply issues another 10 dollar .1% Treasury bill and asks Joe Taxpayer to chip in 1 cent to cover the cost of borrowing the money.

I usually like econlib, but that writing is intellectually dishonest to an extraordinary degree. Unlike individuals, huge organizations like the Federal government can roll over their debt indefinitely. The only cost incurred is the interest.

In a negative real interest rate environment like the one we're currently in, the Federal government essentially gets paid to borrow money. For any money borrowed with a maturity date of 5 years or less, the US government actually profits from borrowing money.

And that is a fact.
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Old 02-12-2014, 09:06 AM   #192
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Take it up with this guy:
I did, thank you. And glad to see you are remaining in the bleachers on this heavy-weight topic. But please, when you think you have an idea as to why our federal government debt is NOT a tax on its citizens, please post up. Until then, I would expect a man of integrity to cease promoting the erroneous argument that our overall tax burden isn't that bad, since your evidence consists of charts and graphs that incorrectly ignore the debt burden.
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Old 02-12-2014, 09:09 AM   #193
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I did, thank you. And glad to see you are remaining in the bleachers on this heavy-weight topic. But please, when you think you have an idea as to why our federal government debt is NOT a tax on its citizens, please post up. Until then, I would expect a man of integrity to cease promoting the erroneous argument that our overall tax burden isn't that bad, since your evidence consists of charts and graphs that incorrectly ignore the debt burden.
OK, you're the heavy-weight champion of this topic.
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Old 02-12-2014, 09:30 AM   #194
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This tank of gas is a tax.
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