Posted on 01/12/2005 6:32:22 AM PST by tmp02
I think the root of the problem is that we've got a tax system that is basically insane. I'd have no problem paying more in taxes in exchange for something like the national sales tax, which I'd argue for most people would result in saving money, and it would certainly do more than anything else I know of to remove power from Congress to muck with our economy.
That being said, in the current situation I'm increasingly concerned that the impact of our policy of continuing to cut federal taxes is that we need to continue to increase our borrowing from foreign governments, especially China and Japan, and that we will gradually have to increase interest rates to make U.S. debt attractive. I guess the question you have to ask yourself is are you comfortable with a tax cut paid for by borrowing money from China and Japan?
1LongTimeLurker wrote:
Guess where that money comes from?
Then how do you explain that federal revenues rose at a lesser rate under Reagan than they did under Clinton?
See the CATO analysis I posted.
I wholeheartedly agree! Spending cuts and tax cuts are not mutually exclusive, but complementary.
So you are comfortable with borrowing the money to pay for the tax cut from China and Japan?
Greenspan's monetary policy deserves some accolades for the 1990s boom, but former President Bill Clinton's fiscal policy and other factors were equally responsible, Roach says.
Oh, well then. That explains it.
Yeah, it would have been nice to see Phil Gramm and those in Congress who forced Clinton into accepting a balanced budget plan to get some credit. Oh well, pigs may fly some day.
You're talking like a Democrat. This is the "all money belongs to the government" view. Nobody "pays for the tax cut"! Taxes are paid to the government. A tax cut is the government confiscating a little less of my money.
The fact that China and Japan have invested billions in the US treasury is a simple matter of their seeking a good return on their investment, which, apparently, they cannot get in their own country.
Sounds like Stephen Roach, the chief economist for Morgan Stanley & Co. is upset that Americans are investing more into the stock market. We'd rather own houses and real estate. Personally, if I want to gamble my money, I'll go to a casino and put it on black or red. If I want a better investment, I'll buy some real estate. If I want a guarantee, I'll go to Church.
Anyone even barely conscious during the 90's will recall the "Dot Com boom". Clinton was president during that period by blind luck and nothing further -- except for his VP, Al Gore, inventing the Internet, that is.
A lava lamp could have raised record revenues during that period.
Note that every time marginal tax rates have been cut, revenues have increased. Every time. Clinton doesn't count. For anything.
Mr. Roach has his own agenda and reasons to whine loudly. It's the slight of hand trick that we are missing here. As Tammy Fay Baker said "look to the roar" - when the lion roars the loudest get ready for an attack from the back. Mr. Roach is probably setting the stage for some kind of financial chicanery. Follow the money.
I'm talking like a "realist". Yeah what you are saying sounds all fine and dandy, until you wake up one day and realize that the government has been borrowing heaps of money to fund its massive growth in spending. Given that I have little to no hope of seeing any sort of real cut in spending (and no, I don't consider a cut in the growth of spending to be a "cut") then the choice is either borrow the money or collect it via taxes. Obviously its not one or the other, but I'm increasingly concerned that we're borrowing way too much, especially from the Chinese.
The end result is that the freedom you gain by getting to keep more of your money is traded for less economic security
The fact that China and Japan have invested billions in the US treasury is a simple matter of their seeking a good return on their investment, which, apparently, they cannot get in their own country.
And the trend lines clearly show they are curtailing their buying of U.S. debt, which means that we will have to increase interest rates to encourage more buying of U.S. treasury notes. If interest rates begin to rise, then the effect on the U.S. economy could be devastating. But hey, I guess as long as you feel OK having a few more dollars in your pocket in the short term then all is OK, right?
Me, I've got kids. I'd like to see them grow up in a country where our prosperity isn't dependent on the Chinese government.
Many of us have kids. Some of us would like them to grow up in a country where prosperity is also not dependent on the United States government. Some of us are believers in the free market.
Now you're confusing me. I could have sworn you were against Chinese investment in the US, but now you're concerned because they're curtailing their investment? Sounds like any scenario adds up to doom and gloom in your world.
As for me, I'm far more concerned with the historically demonstrable negative economic impact of our government's oppressive taxation than with a theoretically potential harm from foreign investment. Foreign investment has been occurring for a long, long time. Why no harm so far? Where's the threshold for harm?
Greenspan's monetary policy deserves some accolades for the 1990s boom, but former President Bill Clinton's fiscal policy and other factors were equally responsible, Roach says.
Clinton fiscal policy?? Right!
How about a technical revolution that was as pivotal to furthering the world's economy(ies) as the industrial revolution was in the early 1900s! This had NOTHING to do with Clinton other than pure timing.
As a result, the credibility of the rest of the piece suffers, especially given that Roach's own self-serving interests are not particularly aligned with those things that he is most critical of Greenspan on. I'm also no particular Greenspan fan either.
No harm so far? 30% of your tax dollar goes to service the debt. You don't see any harm of that??
That level of national debt is no more troublesome than the fact that about 30% of my take-home pay goes to service my home mortgage. Would it be better if it was less? Certainly. The government absolutely needs to cut federal spending; I also agree that slowing the growth is not a cut. However, the sky is not falling, and China is not going to take over the USA because it buys treasury bonds.
What we, the people, need to do is completely rethink what we expect the government to do. Clearly, we are permitting it far more than the Constitution allows. Just as clearly, the trend cannot be sustained indefinitely. Spending cuts and tax cuts should be mandated, arm in arm, until a more sane level is reached. I'm no expert, but it seems the US Constitution gives a pretty clear description of what the federal government should and should not be involved in. Reign it back to that level, and the associated tax cuts would result in staggering economic growth for the country.
However, the debt we currently carry as a country is still manageable, for now.
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