US Budget

[johnsonma]

Taking on unsustainable debt that produces nothing in return is not a normal part of business.

You cannot count the housing market, military vehicles, etc, as an asset. That's such a lie. Owning a home is a liability until you sell it. I seriously doubt selling the housing market is an option for the US Gov't to pay off debt. Therefore it is not truly an asset. In fact, bailing out the housing market, Fannie/Freddie absolutely proves my point that it is a liability until sold. At the point of sale and no longer having to maintain or care for such object, then it becomes an assst. Sure, on the books you can call it an asset, but we're talking reality vs. what some academia person writes on paper.

No all the debt that we have taken on has produced nothing in return. That is a veryyyyyy loose statement. The examples of assets were bad, here are some others. Any technology that was developed for the military or other government assets that is then sold to private industry for further use, gps and patents for many other technological advancements come to mind. Assets are the one thing that is extremely different for the government compared to a business though, you are right.. Its more of a financial firm in that respect. Failed regulation caused the housing market to be considered a liability when the net value of the housing industry dropped due to the unprecedented greed of the banking industry.

Since it is mostly you and I debating this issue, I have a question for you riser, as we have navigated away from the issue at hand. What kind of budget/fiscal policy will right the ship? What kinds of policy do you think would successfully navigate us out of this recession and provide a sustainable future?

 

[JAYDEEJOHN]

Lets get to it/
Manufacturing is important right?
What does the government manufacture?
Nothing, nada zip.
To add anything beyond zip isnt truly what I think Riser, and certainly myself am referring to.
A business no more tells its customers you must buy our product than government creates things.
I can go and carve a piece of wood, sell it, and make some dosh.
The government tells its taxpayers theyre hiring someone to make one, and the taxpayers paying for it.
In the mean time, only certain government personnel are allowed to use it.
The inflated costs of making such a thing is much higher than the true market value, mainly due to governments demand its within its certain specs, where upon they hired someone at higher than market incentives to create those specs, and write them up, as well as dev them.
Now, when the governments done with this item, itd either throw away, destroyed, kept in mothball status, where it costs monies to oversee such things, where upon they hire someone to watch over them, or theyre sold off at incredible under market pricing.
In the meantime, the elected official who started this whole rigmarole, not only gets credit by and from the sheeples, his hired, and paid for by the taxpayers assistants ramp up and deliver such verbiage for this elected official.
So, since this is best case scenario, since theres actually something there you can touch and use, doesnt it appear to go wisely in this direction?

 

[Reynod]

I think we need a group hug.

mingo ... get the camera.

 

[wanamingo]

I think we need a group hug.

mingo ... get the camera.

Everyone DONT smile and sit still for the next 4 hours.

 

[JAYDEEJOHN]

Wheres my pitchfork...

 

[johnsonma]

Lets get to it/
Manufacturing is important right?
What does the government manufacture?
Nothing, nada zip.
To add anything beyond zip isnt truly what I think Riser, and certainly myself am referring to.
A business no more tells its customers you must buy our product than government creates things.
I can go and carve a piece of wood, sell it, and make some dosh.
The government tells its taxpayers theyre hiring someone to make one, and the taxpayers paying for it.
In the mean time, only certain government personnel are allowed to use it.
The inflated costs of making such a thing is much higher than the true market value, mainly due to governments demand its within its certain specs, where upon they hired someone at higher than market incentives to create those specs, and write them up, as well as dev them.
Now, when the governments done with this item, itd either throw away, destroyed, kept in mothball status, where it costs monies to oversee such things, where upon they hire someone to watch over them, or theyre sold off at incredible under market pricing.
In the meantime, the elected official who started this whole rigmarole, not only gets credit by and from the sheeples, his hired, and paid for by the taxpayers assistants ramp up and deliver such verbiage for this elected official.
So, since this is best case scenario, since theres actually something there you can touch and use, doesnt it appear to go wisely in this direction?

No entirely sure what direction your going here but as far as hiring someone at higher than market incentives, they usually take the lowest bidder. Now are they the most efficient when it comes to getting their bang for their buck? I would not put money on it.

 

[JAYDEEJOHN]

Hmmm
Apparently youve entirely missed it.
Who hires whom?
And what about the rest of the process?
You actually think this is done by the private market, and not government?
The ones who write up the dev, the ones who write up the prints, the standards at which they are expected?
And what of these standards?
Are they comparable? To the open, free market?
And those that do all the writing, are they compensated in the same way?At the same level, including incentives?
As far as lowest bidder, if they dont reach the standards placed by the government, they wont be considered to begin with.
Oh, and by the way, what makes anyone think that the government wont hold any private business to these standards, if and when they fail?
Manufacturing have standards, just like the PCI limitations,as example, and again, the governments are higher

 

[johnsonma]

Hmmm
Apparently youve entirely missed it.
Who hires whom?
And what about the rest of the process?
You actually think this is done by the private market, and not government?
The ones who write up the dev, the ones who write up the prints, the standards at which they are expected?
And what of these standards?
Are they comparable? To the open, free market?
And those that do all the writing, are they compensated in the same way?At the same level, including incentives?
As far as lowest bidder, if they dont reach the standards placed by the government, they wont be considered to begin with.
Oh, and by the way, what makes anyone think that the government wont hold any private business to these standards, if and when they fail?
Manufacturing have standards, just like the PCI limitations,as example, and again, the governments are higher

Who hires whom for what?
The rest of the process of what?
Standards in the *free* market = regulation passed by the government.
When something goes to bidding for any company they will have to meet certain standards based on what the company wants out of the bid. Then they will take the most appealing bid once these conditions have been met.

Is there a reason you are speaking in generalities? It is hard to follow your thought process with half statements, it feels like I'm reading a document with half the words blacked out. The standards of manufacturing in the U.S.A are higher than any other country in the world and in fact products from the U.S.A are still widely considered high quality. Even if we don't manufacture that much anymore.

 

[JAYDEEJOHN]

I guess the private sectors standards, which arent as high as government standards in the same fields is what Ive been saying.
In other words, what you get from a manufacturer from a store will cost less, and still meet the needs of the consumer.
Government goes beyond this mark, and those that write such standards, again, for the government, are paid more, raise those standards, and those that dev them, and all along the line.
So, yes, the government pays much more for similar products in the private sector.

The reasons why I left it in general terms is that its widely spread, these determinations made in government vs the private sector, cost more, and are resold at low pricing if they can be, or are mothballed at a cost, which is continual, and the more we add, the higher those costs.
The government has to turn to the private sector, and the public then cries foul when they see the high costs of such things, not understanding the costs and the differences.
Pols take advantage of this, and pick their favorite boogeymen. Otherwise, its hoped to not be found, as its usually pork granted as favorites from fellow back scratching congressmen.
The only thing comparable in the private sector is pharmaceuticals, which are heavily regulated, and is a favorite boogeyman of some pols, whove generally created much of the high pricing.

 

[Reynod]

It's been 4hrs and I am still sitting watching the screen and smiling ... waiting for the flash.

 

[musical marv]

Anyone look it over yet? Apparently the President is going to have one hell of a year for vacations and parties...

More money to add to our deficit. Real great work Obama. I hope he will not cut our military by 80% I just read. This is horrific if this happens.

 

[Reynod]

Welcome Marv !!!

Glad to see you found your way out of Appleland to visit us down here.

Mind the ceiling is a bit lower here in the dungeon and don't mind the sound of water dripping ...

 

[wanamingo]

Yeah "Water Dripping'....... So that's what that sound is. Im surprised anyone else could hear that.

I hope we dramatically cut military spending, end some of our wars maybe get a better standing in the world.

And Bush Jr. took the most vacations of any president I believe.

 

[riser]

Lets get to it/
Manufacturing is important right?
What does the government manufacture?
Nothing, nada zip.
To add anything beyond zip isnt truly what I think Riser, and certainly myself am referring to.

You prove how little you know about our government. The government produces/manufactures a lot of things. Much of what the government does is often with private companies, but that isn't always the case. Often, the government has created their own group to manufacture what they want. Look at DARPA and other agencies that created something. Later on, the government can hand it off to the private sector. Look at the Medical field and how many government employees are producing the work to later hand it off to the private sector. This is because the money from the government exceeds that of what private companies have available.

As my original statement, you listed "assets" which were not assets but vital infrastructure to the US. This cannot be an asset, only a liability. Tally up what is truly and asset and you find a long list of liabilities which is dragging this country down.

Reading further into your statements it is clear to me that your knowledge of economics and insight into R&D and manufacturing is severely lacking. In fact, after reading the quote replied, continuing to debate or converse with you on the subject is idiotic to me.

 

[JAYDEEJOHN]

Thats not what I meant
Most of those things are specialty items, and costs are even higher.
Im not sure youre responding to me?
Few assets exist, and also was my point.
Sorry, but my response was towards johnsonma, not you, as I generally agree with you.
Not sure how you got that mixed.
My whole point was, expenditures are high, assets low, or non existent.

Reread it from that POV, and you may just get it.
Private sector standards are lower in costs, and generally arent overdone.
Thus, they cost much less.
The less R&D, the lower the quality, the less the costs.

The general reasoning behind such liabilities is, bigger is better, and since no ones standing still, they are investing into other companies, which are always borrowing, all to become a bigger entity.
Some branch off into other ventures, but there again, its bigger is better, and again, greater liabilities.
I think you need to see whom I was addressing

 

[musical marv]

Ummm, Paul Ryan has a B.A. in economics. Do you?

Paul Ryan is a BS artist!

 

[jsc]

And Bush Jr. took the most vacations of any president I believe.

True. But you need to look at the vacation costs. Most of his were spent at his home in Texas. He didn't spend millions of our tax dollars in Hawaii or Spain. And he never used a separate aircraft for his dog and a few extra hangers on.

There's plenty to hammer Bush the Younger with - like the Stimulous Part I and the Iraq invasion. But not his vacation costs.

 

[riser]

Interesting enough, Chicago is where Obama is from and was living when he was elected. Bush was in Texas.

Bush vacationed in Texas where he was living when elected. Obama vacations in Hawaii, where he does not own property, and did not live at the time of election, nor had lived for a long time.

Now you see Michelle taking monthly week long vacations. I would say this administration is absolutely out of touch with the American people. While the word Staycation is already propping up, the President decides he should be a vacation jet-setter.

 

[johnsonma]

You prove how little you know about our government. The government produces/manufactures a lot of things. Much of what the government does is often with private companies, but that isn't always the case. Often, the government has created their own group to manufacture what they want. Look at DARPA and other agencies that created something. Later on, the government can hand it off to the private sector. Look at the Medical field and how many government employees are producing the work to later hand it off to the private sector. This is because the money from the government exceeds that of what private companies have available.

As my original statement, you listed "assets" which were not assets but vital infrastructure to the US. This cannot be an asset, only a liability. Tally up what is truly and asset and you find a long list of liabilities which is dragging this country down.

Reading further into your statements it is clear to me that your knowledge of economics and insight into R&D and manufacturing is severely lacking. In fact, after reading the quote replied, continuing to debate or converse with you on the subject is idiotic to me.

My comparison was between the U.S. governments management of the economy vs. the management of a "business". In the end they are different but there are similarities. The housing market is not a liability because we do not have to make payments on it. That is, of course, if you don't count the bailing out the financial institutions as integrated with the housing markets but I would almost consider those as investments since most of it will be paid back.. This is a unusual circumstance though and I doubt it will happen again in our life times (unless another bush comes along to nose dive the economy "bush jr. jr.").


According to the 2009 report, the U.S. owned $2.7 trillion in assets at the end of 2009, up from only $2.0 trillion a year earlier. Many of these are off-limits (we aren’t going to sell the Capitol or the USS Nimitz), but some raise interesting questions.

For example, we own an impressive portfolio of financial assets:

$540 billion in direct loans (e.g., student loans) and mortgage-backed securities
$240 billion in TARP loans and equity investments (some of which have since be repaid)
$24 billion in a trust that invested in AIG
$65 billion in preferred stock in Fannie Mae and Freddie Mac

We also have a tidy amount of gold:

$250+ billion (The official financial statements report the gold as worth $11 billion, but that’s assuming gold is worth $42 per ounce. Gold prices are now about 25 times higher.)

Now when you think about our economy as a whole, you have to view the housing market as an asset. If you don't then you don't understand how accounting works. These are intangible assets however, and we cannot liquidate them to pay bills. If we tallied up all our assets and then considered them liabilities we would be closer to a $200,000,000,000,000 deficit. Luckily, we don't do that because they are not liabilities, and never will be. If they were then, A=L+OE would be completely disregarded and that is just not going to happen.

 

[riser]

What is on paper doesn't mean squat. How you want to classify anything doesn't mean squat.

When you can't pay your debt, you're SOL regardless of what you classify as an asset.

$240 Billion in TARP loans that are at 0% APR and many are not being repaid. This 'asset' is costing the government money. First, the 0% APR doesn't produce additional money. Second, inflation is going up, meaning that it is a diminishing amount of money against the current rate.

You can play the number games however you want with accounting. This I know very well. In the end, if you want to know how well a company is doing, or the government for that matter, you need only look at the Cash Flow statement.

A business that is spending more than they make will go bankrupt. Wait, we've seen this. The government bailed many of them out. When a government goes bankrupt, what happens? Wait, we've seen this too. Greece is bailed out by the IMF. $170 billion or something. Pocket change.

What happens when the largest government goes bankrupt? Who bails them out?

If you look at the cash flow of the US Goverment you know a few things: The country is poor (spends more than it makes). The country is facing a certain bankruptcy in the near future. 'Assets' are costing more than they will ever produce - this is why I label them liabilties. Use your accounting terms as you want, I'll work within the confines of reality.

 

[johnsonma]

What is on paper doesn't mean squat. How you want to classify anything doesn't mean squat.

When you can't pay your debt, you're SOL regardless of what you classify as an asset.

$240 Billion in TARP loans that are at 0% APR and many are not being repaid. This 'asset' is costing the government money. First, the 0% APR doesn't produce additional money. Second, inflation is going up, meaning that it is a diminishing amount of money against the current rate.

You can play the number games however you want with accounting. This I know very well. In the end, if you want to know how well a company is doing, or the government for that matter, you need only look at the Cash Flow statement.

A business that is spending more than they make will go bankrupt. Wait, we've seen this. The government bailed many of them out. When a government goes bankrupt, what happens? Wait, we've seen this too. Greece is bailed out by the IMF. $170 billion or something. Pocket change.

What happens when the largest government goes bankrupt? Who bails them out?

If you look at the cash flow of the US Goverment you know a few things: The country is poor (spends more than it makes). The country is facing a certain bankruptcy in the near future. 'Assets' are costing more than they will ever produce - this is why I label them liabilties. Use your accounting terms as you want, I'll work within the confines of reality.

There is much more that goes into judging whether a country is poor or not other than the budget surplus or deficit. Yes, we have a huge deficit, and its not a good thing. It is mostly due to the recession which caused the need for a influx in money to stave off what could have been much worse. It is not the end of the world however, as long as we manage it and set the groundwork to grow from it.

Now that we have established the principle that the governments management of its economy is similar to the management of a business we can look at this from a different perspective. What must a company do to get itself out of debt? It either expands it operations to create new streams of revenue or it cuts costs and slims down. In the case of the government we can do both, cut costs, and get some badly needed revenue by fixing the tax code. This is a solid plan and I don't understand why people get so defensive about it. It is the best solution to the problem that is our deficit. When the governments deficit is under control then our companies will be more confident about doing business in the United States and we will be that much closer to putting the recession behind us.

By the way fixing our tax code will send a message to the world that we will pay our debts which is pretty good thing too. Maybe we can get our triple AAA rating back.

 

[riser]

I generally have a very open mind and can understand concepts very well. What you propose I cannot understand.

10% of the wealthiest in the US pay 70% of the Federal Budget. 49.5% of tax payers pay no tax at all. 3% comes from the remaining population. The remainder is borrowed.

The US Gov't has to figure out how to balance over a one trillion dollar deficit. Fixing the tax code wouldn't resolve this issue in anyway. While it is desperately needed it is a considerable small part to the problem. If the government were to cut $500 billion in spending a year, they would still need to raise revenue streams by at least 20% to break even!

By October 15th it is estimated we will have reached our borrowing limit of $16.3 trillion dollars. Given today's rate, next year by October 15th we'll be at $17.5 TRILLION in debt.

Cutting a trillion dollars from the deficit spending is going to have a huge impact across the country. Millions of people won't receive their entitlement funds. Social security was set to go broke in 2018 - now a 2% decrease in funding it will advance that timeline. Millions of Americans who are unemployed are falling off Unemployment and switching to Disability - Social Security Disability, furthering the decline of FDR's safety net.

If our current administration wins this coming election, all hope for this country is lost. If another candidate wins, I still have little hope in this country for recovery.

We spending almost 4 trillion a year on the budget. We only generate 2.5-2.7 trillion a year. Cutting a trillion.. wow. That's a major impact. It is necessary though.

Heck, look at the USSR. They tried it, they fell apart. The US had the capabilities then. Today, we do not. Russia is stepping up their defense spending. Something breaks out in the middle east, Russia sides with them.. and the cold war is back on and we're in a position that we can't possibly expect to win.

 

[johnsonma]

I generally have a very open mind and can understand concepts very well. What you propose I cannot understand.

10% of the wealthiest in the US pay 70% of the Federal Budget. 49.5% of tax payers pay no tax at all. 3% comes from the remaining population. The remainder is borrowed.

The US Gov't has to figure out how to balance over a one trillion dollar deficit. Fixing the tax code wouldn't resolve this issue in anyway. While it is desperately needed it is a considerable small part to the problem. If the government were to cut $500 billion in spending a year, they would still need to raise revenue streams by at least 20% to break even!

By October 15th it is estimated we will have reached our borrowing limit of $16.3 trillion dollars. Given today's rate, next year by October 15th we'll be at $17.5 TRILLION in debt.

Cutting a trillion dollars from the deficit spending is going to have a huge impact across the country. Millions of people won't receive their entitlement funds. Social security was set to go broke in 2018 - now a 2% decrease in funding it will advance that timeline. Millions of Americans who are unemployed are falling off Unemployment and switching to Disability - Social Security Disability, furthering the decline of FDR's safety net.

If our current administration wins this coming election, all hope for this country is lost. If another candidate wins, I still have little hope in this country for recovery.

We spending almost 4 trillion a year on the budget. We only generate 2.5-2.7 trillion a year. Cutting a trillion.. wow. That's a major impact. It is necessary though.

Heck, look at the USSR. They tried it, they fell apart. The US had the capabilities then. Today, we do not. Russia is stepping up their defense spending. Something breaks out in the middle east, Russia sides with them.. and the cold war is back on and we're in a position that we can't possibly expect to win.

Numbers on paper don't mean squat! Just kidding, they do.

You cannot understand what I propose? Fix any and all loopholes in the tax code to increase "cash flow". Reduce the budget by as much as possible with out stifling the economic recovery. After that we will have a better picture at what we will need to do to finish closing that gap. This is not an insurmountable problem, only 11 years ago we were in a budget surplus.

The rich will continue to live their lives being rich even if they give the government some more money. One of the first things bush did when he came into office was give them a tax break to help pay back people for his campaign. Looking back at his disastrous economic policy and seeing that, the first step towards the downward spiral of our economy, kind of puts it in perspective. I would also suggest raising taxes on the middle class once the unemployment drops below 7%. That will never happen of course but it would be a huge boost to our budget. You cannot raise taxes on them until the economy is recovered somewhat or it will not be able to absorb the hit it will take from this.

Just to be clear riser, you do agree with closing that tax holes but think that it is insignificant compared to the amount of budget cuts we need to make, correct?

 

[riser]

Closing the loopholes doesn't accomplish anything. That's called a tax increase! Those loopholes were supposed to be there to encourage growth in certain economic sectors!

You essentially propose a tax increase. Here's how it works in the UK:

http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/9097219/50p-tax-rate-failing-to-boost-revenues.html

49.5% of Americans don't pay income tax. The top 10% pay *****70%***** of the US Federal Budget!

In fact, this year I don't think I'll end up paying a dime in taxes because I have a lot of write offs.

We are at a point where we need slash spending, bite the bullet, and in a few short years we'll be adjusted and capable of moving forward again.

 

[JAYDEEJOHN]

What?
We cant live on the bubble anymore?