U.S. To Use Federal Pension Money to Pay Down Deficit

[JohnnyMarzetti]

web page (http://english.aljazeera.net/NR/exeres/339AE7B7-F750-412E-AEB0-7480F9B632B3.htm)

US President George Bush's administration has weathered a pre-election mauling by announcing emergency measures to skirt a $7.38-trillion debt limit.

Treasury Secretary John Snow said he would use pension money to keep the government running.

In a letter to US Senate majority leader Bill Frist, Snow said he was immediately suspending payments to a federal employees' retirement scheme, the Government Securities Investment Fund (G-Fund).

The missing money would be repaid in full later, with no net effect on the fund or retirees, he promised.

The treasury secretary said he was forced to take the emergency accounting step because congress had not acted on his 2 August request for the government's legal debt limit to be raised.

Any move by congress to raise the debt limit could be politically embarrassing.

Reaction

Bush, Kerry are in a statistical tie
before the 2 November elections

Democrats pounced on the news as evidence of fiscal mismanagement by the administration, less than three weeks before Bush faces Democratic challenger Senator John Kerry in the 2 November presidential election.

"George Bush continues to make history for all the wrong reasons: He's the first president to go without creating a new job since the Great Depression and now he's run up more debt in [a] shorter period of time than all the presidents combined in the 200 years from Washington through Reagan," said Kerry campaign spokesman Phil Singer.

"On top of that, this is the third time he's broken his promise not to raise the debt ceiling. His fiscal mismanagement is taking its toll on America and it's time for a fresh start," he said in a statement.

Failure

House Democratic leader Nancy Pelosi described Snow's manoeuvre as "a shameful admission" that the administration's economic policies had failed the American people.

"His fiscal mismanagement is taking its toll on America and it's time for a fresh start"
Phil Singer,
Kerry campaign spokesman

The overall US debt - the total accumulated financial liabilities of the country - now amounted to $7.38 trillion, she said.

[b]"The Republican leadership knew that the debt limit would be reached this month but did not want an embarrassing vote on raising the debt ceiling until after next month's election so Republicans are now resorting to extraordinary accounting measures to avoid that vote."

In the year before Bush came to office, his predecessor Bill Clinton produced a $236-billion annual budget surplus.

In fiscal 2004, ended 30 September, Bush's team is estimated to have incurred a record annual budget deficit of $415 billion, according to the bipartisan congressional budget office.

The official 2004 budget figures, showing the gap between annual government spending and income, are due this week.

AFP

AND SOME CALL KERRY A BIG SPENDER?

[Marcus Bryant]

What the fuck are you complaining about? Your side wants to tax and spend us into oblivion. Bush hasn't been the most fiscally conservative but get a fucking clue already you little numbnut.

[JohnnyMarzetti]

You cry about Kerry wanting to spend but sit back while Dubya has broken all previous spending records?

Who is the real numbnut?

[Marcus Bryant]

How much of that is due to social spending programs and population growth? If you think that Bush is primarily responsible for that then you are dumber than I thought.

You do realize that the general criticism levelled at the GOP from the Demos is that there is not enough social spending?

Get a fucking clue already monkeyfuck. I can respect those who post reasoned critiques from the left in this forum but you certainly do not fall into that category.

[JohnnyMarzetti]

I don't have a clue as to what category you fall under but that may be because you have your head so far up Bush's ass.

http://www.bartcop.com/tax-baby.jpg

Your making up stories about liberals wanting more spending just shows how pathetic you really are. Go tell it to someone who really cares.

[Marcus Bryant]

Your making up stories about liberals wanting more spending

Oh man. :lol Priceless.



Go tell it to someone who really cares.

Awwww...is somebody mad?

[SpursWoman]

Your making up stories about liberals wanting more spending just shows how pathetic you really are.


Do you know anything about Democrat ideology at all? That's pretty damn funny.

[Bandit2981]

whats funny is when the GOP talking points dont fit the facts

[Marcus Bryant]

What are those "talking points"?

[Bandit2981]

that democrats do nothing but spend spend spend for one

[Marcus Bryant]

That's reality, kiddo.

[Bandit2981]

really? is that why big spender clinton left office with a huge surplus and fiscally responsible bush has never vetoed a spending bill and has run up the largest deficit in history? <<awaits coming spin from matt>>

[Marcus Bryant]

Who pushed for the creation of Social Security, Medicare, and virtually every other federal social program around?

As for Clinton, he was forced into restraining spending growth thanks to a GOP controlled Congress. You are probably too young to remember Clinton's attempts to nationalize the US health care industry early in his presidency. No doubt that would have been a fiscally conservative move. And a "huge surplus" was directly the result of higher tax rates as well as some significant capital gains tax collections during the height of the unsustainable equity bubble of the late 1990s.

I haven't exactly been a fan of Bush's fiscal policy but in case you haven't been paying attention, the criticism from the left has been that he hasn't spent enough on social programs and those comprise a significant majority of federal spending levels and federal spending growth.

You obviously are not familiar with the ideology of the candidate who you support for president. I suggest you learn a little bit more before you think that liberal Democrats stand for restraining federal spending.

[Bandit2981]

As for Clinton, he was forced into restraining spending growth thanks to a GOP controlled Congress
so why isnt bush forced into restrained spending with a GOP controlled congress? once again, your argument holds no weight

You are probably too young to remember Clinton's attempts to nationalize the US health care industry early in his presidency.
:lol and you are how old?

I haven't exactly been a fan of Bush's fiscal policy but in case you haven't been paying attention, the criticism from the left has been that he hasn't spent enough on social programs and those comprise a significant majority of federal spending levels and federal spending growth.
ah ok, so its only alright to spend like crazy like Bush as long as it isnt on social programs...got it

You obviously are not familiar with the ideology of the candidate who you support for president
you mean the one who broke away from his party and supported a balanced budget and pay-as-you-go in the 90's?

[Marcus Bryant]

so why isnt bush forced into restrained spending with a GOP controlled congress? once again, your argument holds no weight

My argument holds plenty of weight. The GOP congress certainly worked on restraining spending growth when they took over in 1994. Do you not recall Clinton accusing them of cutting too deeply in the 1990s?

As for the GOP Congress v Bush, the biggest problem has been that they haven't resisted Bush's desire to increase spending.

That still does not mean that he wanted to spend more than liberal Dems.


and you are how old?

Well, if you are my age then clearly you haven't been paying attention to politics over the last decade.


ah ok, so its only alright to spend like crazy like Bush as long as it isnt on social programs...got it

No, never said that. I've been quite clear in this forum that I don't like what Bush has done because he has spent more than I would care for. But again, that doesn't mean that the Demos would have spent less. Take a look at the Medicare drugs bill. The Demo complaint is that it wasn't big enough. Look at Kerry's health insurance plan. How exactly is that going to reduce spending?


you mean the one who broke away from his party and supported a balanced budget and pay-as-you-go in the 90's?

Ha. Clinton was forced to deal with a GOP controlled Congress that was inclined to oppose him.

But you just admitted that the credo of Clinton's party was to spend more than the GOP. Oops.

To recap, since you are obviously struggling to understand: I'm not happy about Bush's fiscal policy and neither is the Democrat party. I don't like it because he's spent too much. The Demos don't like it because he hasn't spent enough.

If you think otherwise, you obviously are ignorant of the basic difference between the two parties.

[Bandit2981]

my facts are no match for your :spin spin :spin matt...you win :lol :rollin

[Marcus Bryant]

So you have no response. Not surprising, kiddo.

Accusing me of "spin" is quite rich considering that you are attempting to paint the Democrat party as in favor of restrained federal spending. Get a fucking clue already.

[Bandit2981]

how old are you again?

[Marcus Bryant]

Apparently older and wiser than you.

[Marcus Bryant]

And before I forget:


balanced budget and pay-as-you-go

...does not necessarily mean limiting federal spending.

[Bandit2981]

wussing out of the question? :lol you act pretty tough in cyberspace flamer, how about coming to a GTG sometime so we can talk face to face?

[Marcus Bryant]

I've been to a GTG genius.

Pardon me, but I don't really have the urge to meet men in person from an internet forum. Perhaps you are. Too each his own, I suppose.

[Bandit2981]

no response? not surprising kiddo :lol

[Marcus Bryant]

Respond to what? That you want to meet me in person because you have no answer to my arguments in an online forum?

[Bandit2981]

its cool man, i know you would rather stay at home with your computer and 5 finger discount than going out and socializing with others from this forum...no biggie, have fun

[Marcus Bryant]

Actually, I like going out with people I already know. If you need to use the forum to make friends, more power to you.

[Bandit2981]

just as i thought, you're nothing but a chickenshit acting tough behind the computer...have fun with your hand, lube, and lonely life my friend! cheers! :lol

[Marcus Bryant]

And you are what, exactly?

Yes, I will enjoy the fact that I don't have to use this forum to make friends. Sad that you can't say the same.

[JoeChalupa]

I don't know, but I'm a liberal democrat and I'm all for getting the deficit back in order.
From what I've read, Bush had not vetoed one single spending bill since taking office, so for me, yeah I put some of the blame on him.

We currently have a republican led congress, no?

Why can't they curtail the current spending?

What some don't understand is the tax cuts are being funded by borrowed money that has to be paid back at some time. Or am I wrong on about that?

[Marcus Bryant]

We currently have a republican led congress, no?

Yes.



Why can't they curtail the current spending?

They seem to have trouble saying no to the desires of an administration hellbent on re-election.



What some don't understand is the tax cuts are being funded by borrowed money that has to be paid back at some time. Or am I wrong on about that?

You are wrong in this way: federal spending is financed through either tax receipts or borrowing. Borrowing in turn implies future taxation. But it is the level of spending as well as its growth that is most important. You either end up with high tax rates or large amounts of borrowing. In the long term neither is desirable.

Also, there is the impact of the federal entitlement programs which makes the rest of federal spending look like nothing.

[Bandit2981]

Yes, I will enjoy the fact that I don't have to use this forum to make friends. Sad that you can't say the same.
making friends from Kori's board is a bad thing? i guess it is when no one wants to be yours, eh matt? :lol

[Marcus Bryant]

Bummer. Oh what will I ever do?

[Bandit2981]

awww im sorry no one wants to be friends with you kiddo...cheer up though, you still have five-finger freddy and his magical lotion to comfort you!

[Marcus Bryant]

Who is this "freddy"? Did you meet him in a forum?

[Nbadan]

Also, there is the impact of the federal entitlement programs which makes the rest of federal spending look like nothing.

:rolleyes

Oh God, here we go again with entitlement programs. The debt can't be due to tax cuts we couldn't really afford, a weaker economy than we had 4 years ago, or military spending run amoke. No, of course not it's all about entitlement programs.

[Marcus Bryant]

You do realize that the implied debt of SS and Medicare dwarf the outstanding 'formal' government debt don't you?

Either those programs must be reformed or else there will be benefit cuts and/or payroll tax rate increases. Old people vote, so that means payroll tax rates are likely going to increase barring a significant reform of those programs. I for one think it is time for means testing.

Before I forget, I don't know why you have such a hardon for those programs. Basically they subsidize the lifestyle of whites who enjoyed relatively high incomes during their life at the expense of current lower income non-white workers. Plus, in case you haven't noticed, the payroll tax rates are regressive. I thought Democrats didn't want to screw the "working man" and "minorities"?

I don't know about you, but I can think of a number of things I would rather be doing with my money than having it disappear into those black holes. If you think Uncle Sam is the best money manager around, that's your prerogative. I'd like to make that decision for myself.

But hey, those programs are fucking great, my man. A negative return and no way to pass on that money to future generations. No way to use that money to build wealth over one's lifetime. Less money for a home. Less money for one's kids. Great idea.

To hell with George W. Bush for creating Social Security.

[Marcus Bryant]

The debt can't be due to tax cuts we couldn't really afford

No, the debt is due to spending we really can't afford. Duh.

[JoeChalupa]

I'll have to do some checking but I do know that somewhere down the line, long after Dubya is gone, the tax cuts will need to be paid for and that is why it is like borrowed money, no?

It doesn't take a genius to know that if you cut revenue and increase spending, you will be in the red in record time.

[Marcus Bryant]

Spending is paid for in one of two ways: tax receipts or debt. When the government borrows it is doing so to finance that spending, not the tax cut.


It doesn't take a genius to know that if you cut revenue and increase spending

You said it yourself.

[Yonivore]

Spending is paid for in one of two ways: tax receipts or debt. When the government borrows it is doing so to finance that spending, not the tax cut.



You said it yourself.
And, when tax cuts cause an increase in federal tax revenues -- why bitch about them?

[JoeChalupa]

Because it ain't happening is it?

[Marcus Bryant]

I believe I read recently that it was but the real issue is spending growth. Taxes and debt are how we finance that spending. If the spending growth rate increases then either we end up with higher taxation and/or larger amounts of debt. Neither is a good recipe for the long term health of this economy.

[JoeChalupa]

I concur.

[Yonivore]

But, I think you're both missing an important part of the equation. Tax policy needs to be established based on tax revenues -- not debt and not spending.

The effective tax rate needs to be set according to what revenues it will produce and, as has been discussed (to blue-faced proportions), higher taxes don't always result in higher tax revenues -- just as lower taxes don't necessarily reduce revenues.

The whole argument that taxes need to be higher to cover spending or reduce debt is bogus. Yes, we need to reduce spending. Yes, we need to reduce the debt. But, as Presidents Kennedy and Reagan both demonstrated, you can increase the tax revenue -- to go towards reducing the debt and to cover spending -- by cutting tax rates.

I'll say it again. Tax policy should never be predicated on what are our spending levels or debt. Our tax policy should be crafted to produce the greatest revenue with the least amount of intrusion on the taxpayer.

At some point, and that point floats from year-to-year, (see Laffer Curve discussion), tax rates become so punitively high that those paying the most start devising methods of reducing their tax burden. That is sometimes accomplished by criminality or fraud...however, it is most generally accomplished by being less productive and reducing taxable income or by hiring sharper lawyers to legally avoid the taxes (See Heinz-Kerry's 12.5% effective rate as an example) and thus, you can raise a persons tax rate and actually end up with less in revenues from that person.

So, raising taxes on the evil rich is not necessarily the solution to our inability to stay within a budget or reduce our debt. We already have 20% of the people paying 80% of the burden and, 40% of the taxpayers pay an astounding 95% of the burden. The 60 out of a hundred lowest paid taxpayers only share 5% of the tax burden.

[Marcus Bryant]

You are assuming that tax rates are not impacted by increasing spending growth rates and clearly they are in the long run.

If you want low tax rates then you will want a low spending growth rate.

[Yonivore]

You are assuming that tax rates are not impacted by increasing spending growth rates and clearly they are in the long run.

If you want low tax rates then you will want a low spending growth rate.
But, spending should follow taxing -- not the other way around.