Cynical Nation

There are many ways to get to the result you mention. One way is that, due to a lower marginal rate, there is increased compliance among rich people as there is less of a need to hide income. Also, the lower marginal rate might just be an incentive for the rich to earn more and thus pay more taxes.

However, the result could also be achieved by an increasing gap between the rich and the poor. If "Joe Rich"'s income has doubled while "Joe Poor"'s income has stagnated, well Joe Rich will pay an increased percentage of the tax burden even with a reduced marginal rate. That doesn't mean, however, that these are great days for Joe Poor.

My guess is that JMK will soon write a ten thousand word essay on how he knows exactly why this result has been achieved.

Also, for all the talk of how the debt has been reduced, the fact is that it has increased under this administration. If there indeed was a recession starting in 2000, why was the budget balanced that year and not this year?

With the econonmy going moderately well, the budget should be balanced after years of increase during recessionary times. Whether we overspend or are undertaxed.. either way.. what's coming in doesn't match what is going out over the economic cycle.

I understand that the word "balance" has different meanings. A true balancing of the budget would mean that the social security trust fund would be off budget.

In any case, JMK, my brother, tell the choir how brother PE has got it all wrong.

"One way is that, due to a lower marginal rate, there is increased compliance among rich people as there is less of a need to hide income." (PE)


That's why tax rate cuts generally result in higher tax revenues.

It also stands to reason that highet tax rates generally result in lower tax revenues because those with higher incomes can defer more of their money when rates increase.

Looking to cut off those deferment routes kills off savings and investment, so that's not a viable option.

But (1) Why would anyone favor tax increases as a way to limit income disparity?

In fact, where's the proof that income disparity, by itself, is a bad thing in any way? I really don't get that.

And (2) How is taxing higher income earners "taxing the rich?"

The truly wealthy or "rich," don't rely on income for wealth creation. Income is the poorest (least efficient) form of wealth creation.

That's why there's very little overlap between the richest 1% of Americans (the Teresa Heinz-Kerry's, the Gate's, the Kennedy's, the Buffett's, the Gore's and the Bloomberg's) and the top 1% of income earners.

Those who really want to "tax the rich" should be seeking to completely eliminate the income tax, in favor of some form of "assett tax" (a tax on a percentage of your overall holdings each year, from investments, to housing, to pensions, etc.). That would keep ALL people from accruing real wealth!

Yeah, that'd learn'em real good!

But one thing's for sure, the highest income earners are NOT "the rich," and they're not what's wrong with America either....now all those folks who don't work, well, they're at least a big part of what's wrong with America.

Also, for all the talk of how the debt has been reduced, the fact is that it has increased under this administration. If there indeed was a recession starting in 2000, why was the budget balanced that year and not this year? (PE)


I’ve never heard anyone claim the “debt has been reduced,” although the deficit has indeed been halved over the past few years and way ahead of schedule. The national debt, however, has increased EVERY year of the last forty. It did not decrease in any of the Clinton years.

The national debt rose, as did deficit spending during the first two years Bill Clinton was in office.

After 1995, when Gingrich took control of Congress, deficit spending was reined in (Congress controls the purse strings) and GDP rose...the deficit shrunk, the budget was better balanced, BUT the national debt still GREW, as there was still some deficit spending during those years.

The recession began in March of 2000 when the NASDAQ imploded.

The Tech Bubble was largely created by some rules changes at the SEC in margin rates and IPO restrictions and, some of that “loose atmosphere” encouraged the many corporate scandals that flourished during the late 1990s and came to light in the summer of 2001. In fact, the current administration isn’t given enough credit for not only bringing those bad corporate citizens to justice, but for signing onto Sarbannes-Oxley which has kept those kinds of things from happening since.

In a very real sense, G W Bush cleaned up another "Clinton mess" with Sarb-Ox.

Deficit spending has increased dramatically since 2001 because of both the military WoT and domestic security expenses relative to that same WoT.

But even absent that, the national debt and deficit spending is almost destined to rise over the next few decades due to the continual and increasing rise in “entitlement spending” as more and more “Baby Boomers” reach retirement age.

That needs to be mentioned early and often so no one down the road seeks to inanely blame the "growth of entitlement spending" on some wayward Republican.

"The Tech Bubble was largely created by some rules changes at the SEC in margin rates and IPO restrictions and, some of that “loose atmosphere” encouraged the many corporate scandals that flourished during the late 1990s and came to light in the summer of 2001. In fact, the current administration isn’t given enough credit for not only bringing those bad corporate citizens to justice, but for signing onto Sarbannes-Oxley which has kept those kinds of things from happening since."

So blind speculation and, in some regard, simple human nature to want to jump on to a good thing had little to do with the tech bubble? Sort of similar to the present housing meltdown, specifically at least now in the subprime market where every lender wanted to get in on the action and give mortgages to anyone with a pulse. And rampant speculation led so many to buy and flip, buy and flip, buy and flip in the hope of making a quick profit. The result: several dozen mortgage lenders are bust so far this year, delinquencies are rising fast and the subprime market isn't the only one threatened.
Throw in low interest rates in the latter 1990s and a good economy (sort of like recent years) and, in the end, crappy or no business plans at many of these busted dot coms.

If you never read much about 'tulipmania,' it's pretty interesting: http://en.wikipedia.org/wiki/Tulip_mania

"In a very real sense, G W Bush cleaned up another 'Clinton mess' with Sarb-Ox."

Sounds like more meddlesome and overburdensome govt regulation, which negatively affects corporations re: compliance costs, which affects the bottom line, which affects stock prices, which affects investors.

"In a very real sense, G W Bush cleaned up another 'Clinton mess' with Sarb-Ox."

What was the other Clinton mess our hero-prez cleaned up?

"Deficit spending has increased dramatically since 2001 because of both the military WoT and domestic security expenses relative to that same WoT."

Not to mention a)huge Medicare Rx program; b)massive expansion in education spending; and c)behemoth federal Homeland Security agency.

Let me put it bluntly, JMK, because I've pointed this out to you before, but you ignored it before.. but the following statement is NOT TRUE.

"The national debt rose, as did deficit spending during the first two years Bill Clinton was in office."

Deficit spending began to decline STARTING IN 1993.

Also, NOT TRUE is the following statement.

"The national debt, however, has increased EVERY year of the last forty. It did not decrease in any of the Clinton years."

The debt decreased every year from 1998-2001.

READ the historical data tables from the Congressional Budget Office.

http://www.cbo.gov/budget/historical.pdf

Above was me, by the way.

As the CBO Report you referenced showed, the deficit in each of those years (and those minus numbers are still deficits), that’s deficit in billions of dollars, btw, remained in the negative numbers.

As you can see, the surpluses only started AFTER Gingrich came in and took control of Congress.

The first surplus year was 1998.

1993 -255.1
1994 -203.2
1995 -164.0
1996 -107.4
1997 -21.9
1998 +69.3
1999 +125.6
2000 +236.2

The Gingrich Congress was the first to seriously rein in the growth of government.

Don’t be so partisan that you can’t bring yourself to give credit where it's due.

Gingrich was virtually solely responsible for the budget surpluses of the late 1990s – Congress controls the purse strings of government.

If you really support reducing the deficit and reining in the growth of government (as I do), then there’s no Democrat we can support. In fact, perhaps the ONLY candidate we CAN support in ’08 would be Newt. I mean if he was that great as Speaker of the House, just imagine him as President!

Think back to those exciting times; “At what first appeared to be a routine press conference back in 1995, Newt Gingrich opened his mouth and dropped a bomb on the House. He had asked Price Waterhouse to audit the congressional books. And the prestigious international accounting firm had come back with the conclusion that the financial records of the Congress of the United States of America were so bad that they were “unauditable”.

"But Gingrich, who originated the audit in an attempt to bring discipline and accountability to Congress, would be the ultimate victim of this tempest in a teapot. And in this incident, as in many others, Gingrich displayed the power of his incredibly brilliant mind and tenacious political skills...

http://www.johnpike.org/Newt%20Gingrich.htm

Of course, the U.S. National Debt is NOT the same as U.S. Budget Deficit, no matter how “bluntly” (does blunt mean wrong, in this case?) one tries to use those terms interchangeably.

The “deficit” DOES NOT equal the “national debt” and vice versa. They’re two entirely different entities.

The fact is that the U.S. National Debt rose in each one of the years you mentioned;

YEAR U.S. National Debt

1995 = 4,798,116,945,333.39

1996 = 4,988,495,380,113.30

1997 = 5,317,016,511,039.02

1998 = 5,481,924,290,553.50

1999 = 5,606,630,290,821.39

2000 = 5,751,743,092,605.50

2001 = 5,728,739,508,558.96

http://www.treasurydirect.gov/NP/NPGateway

So, can we agree that while the “deficit” decreased in every year between 1998 and 2001, the “national debt” still rose during every one of those years?

I'm thinking we can.

Under the CBO figures, the national debt decreased for four years. Even under the Treasury figures that you cite, the debt was decreasing when Bush took office. (Did you notice?)

The deficit started to decrease UNDER CLINTON AND THE DEMOCRATS and continued to decrease UNDER CLINTON AND THE REPUBLICANS.

Gingrich kept the spending down while Clinton kept the Republicans from massive tax cuts.

"Don’t be so partisan that you can’t bring yourself to give credit where it's due.

Gingrich was virtually solely responsible for the budget surpluses of the late 1990s – Congress controls the purse strings of government."

Funny how you tell me not to be partisan, then you go on to make a completely partisan statement. I am willing to give Gingrich credit. You want to give him sole credit. Who is being partisan?

At one point, in my second post, I typed "debt" when I meant "deficit"... That was a mistake.

In all posts after that, I used "debt" and "deficit" properly.

Yes, let's give credit where credit is FAIRLY due: to the Republican Congress and the Clinton Administration, too. Congress may control the purse strings but the President has the veto threat--and the GOP certainly did not have anything close to veto-proof majorities back then. So enough with the fiction that somehow a cowering Clinton was forced by Gingrich to accept the Congress' budgets--like it or lump it.
The two ends of Pennsylvania Avenue had to work together, and they did for the most part, to the betterment of the country. Ah, the good old days.

Wow, way to lie with statistics Barry. Did you get that from RushLimbaugh.com?

Why should it surprise anyone that a bunch of criminal CEOs giving themselves $60 million bonuses for offshoring hundreds of thousands of high paying American jobs would cause them to >>gasp!

Why don't you post a graph that shows how lottery winners are unfairly taxed? That makes about as much sense as whinging on about how the top 1%, who own about 90% of all the wealth in this country, are somehow abused by paying slightly more than middle class taxpayers who actually work instead of spending their time offshoring jobs and granting themselves lavish bonuses.

"Under the CBO figures, the national debt decreased for four years. Even under the Treasury figures that you cite, the debt was decreasing when Bush took office. " (PE)


The national debt INCREASED every one of those years you mentioned PE, FROM $5,481,924,290,553.50 in 1998 TO $5,751,743,092,605.50 in 2000 (Clinton's last year).

The fact that "the amount of the increase slowed" is NOT equivalent to "debt reduction."

A slower growth debt is still a GROWING debt.

No President is responsible for the economy during his tenure.

Reagan steered the country away from the disastrous Keynesianism that had ruled the day from around 1964 (LBJ) through 1980 (Carter) and those Supply-Side policies have served us well for over a quarter century, but it's Congress that controls the purse strings (spending) and tax policy.

Tax policy can harm the economy - tax increases deter both savings and investment. Especially onerous are the Capital Gains Tax and the Dividends tax, the latter which amounts to a double taxation.

To his credit, Clinton was able to cooperate far better with Gingrich than he ever could with the Tom Foley led Democratic Congress.

One of the best things Clinton ever did was cooperate with the GOP Congress on welfare reform.

"One of the best things Clinton ever did was cooperate with the GOP Congress on welfare reform." (JMK)


That SHOULD READ; "In my view, one of the best things Clinton ever did was cooperate with the GOP Congress on welfare reform," because that one major reorganization saved untold billions of dollars, not to mention giving many of those trapped in that old styled dependancy program, a chance at a better life.

I've avoided getting into this since we've gone around on this boat so many times already JMK.

Table E-11 of Appendix E from the CBO table PE cited sums up all the data nicely.

http://www.cbo.gov/budget/historical.pdf

I've told you time and time again that viewing the debt as a percentage of GDP is the more appropriate means of comparison year over year. You continue to either disagree or ignore that usage.
So if I'm wrong (and I'm not - that's not opinion it's a fact) then ask yourself why the CBO references both the raw numbers and debt as a percentage of GDP?

I've never disputed the raw debt amount with you, nor has PE. However as you know there are many factors involved in this. The dollar is not worth what it was in 1962, we can agree on that can't we?

Let me ask you this, what makes more sense when discussing the debt in terms of whether it's trending well or poorly, or neither. Does it make sense to say that the debt in 1962 was $248 Billion while in 2006 it was $4,829 Billion, which tends to convey that today the debt is monstrously out of control?

Does it make more sense to say that in 1962 the debt was 43.1% while in 2006 it was 36.8% when viewed as a percentage of total GDP?

Which view do you think actually conveys any type of meaningful information?

I've also continuously given credit both the the Clinton administration as well as the Gingrich controlled Congress for reduced deficit spending in the 90's, while as PE noted you prefer to give the credit to Gingrich alone.

The difference between you and I on this issue can easily be summed up on Table E-11.

You only choose to see or acknowledge the first three columns, the remaining five seem to be invisible to you, except in isolated instances where they support you.

I prefer to see all 8 columns at all times regardless of the outcome.

Numbers don't lie, as I said we can disagree on the potential outcome of GWB's spending tendencies, but we cannot disagree on the raw data.

And honestly spitting back raw numbers without referencing GDP every time a discussion comes up seems pointless.

Clearly in terms of raw dollars the debt has always risen and will continue to rise. It's also clear that GDP has always risen and will continue to rise.
That's partially due to inflation.
So unless you capture the corresponding relationship between those two figures you will never know if your true debt is moving up or down.

So please don't come back and spit the raw numbers at me again. I've always been aware of them. You're smart enough to understand what I'm saying - and I'm positive that you do.

"I've told you time and time again that viewing the debt as a percentage of GDP is the more appropriate means of comparison year over year." (GZ)


The national debt as a pecentage of GDP is NOT the National Debt. It IS a ratio, for comparison purposes only and even as such, it is very limited in its uses as a comparison.

As I showed, Brazil's 50% of GDP national debt is far more burdensome than America's 66% GDP debt because of Brazil's "external debt," which comprises about 20% of its overall debt, making their debt burden (annual debt servicing costs), much higher than America's, which stand at a little under 5% of GDP per year.

Tha national debt is NOT the ratio (debt to GDP), it is a specific number and our debt has never gone down, even after the Gingrich Congress became the first and as of today, the last (so far) to have reduced the deficit to postive numbers (rendering the so-called "surplus")...even though the national debt STILL rose in each of those years as well.

The GDP grows AND contracts.

Tax rate increases tend to shrink GDP, as they shrink investment.

The GDP exploded between 1998 and 2000 largely due to a "Tech Bubble" that should never have existed. It was primarily created by SEC rules changes that allowed IPOs to enter the market with far fewer constraints than previous and changed margin rates, making margin investing more appealing despite its inherant risks.

The "Tech Bubble Bust" amounted to an Enron-like scam in many ways. One in which insiders like Gary Winnick (of Global Crossongs), and pals like Terry MacAullife, and other major investors "sheared the sheep" (smaller investors).

The problem I have with Liberals today is that on the one hand they want to argue that reducing the national debt is a major priority for them, while (2) still arguing for increased social spending, which isn't justified by any of the economic indicators present today.

Anyone who values debt reduction MUST acknowledge across the board tax rate cuts, especially Cap Gains cuts and Income tax rate cuts as the best vehicle to attain them. It's also important to rule out any increases in social spending, in fact, some of that spending should be frozen at current levels, avoiding that inevitable yearly rise/burden.

Beyond that, another way to reduce our deficit spending AND ultimately reduce the debt, would be to rein in "entitlement spending," which could easilly be done by, for instance, raising the retirment age for Social Security, freezing payouts, by eliminating the yearly "adjustments," etc.

The former (tax cuts) is relatively painless. The latter would be somewhat painful, but for those who see debt reduction as vital, THOSE are the TWO best ways to achieve that.

If we could agree on that much, that would be a good starting point.

JMK is just a Repug shill, that is why, like Barry, he has to split hairs and lie with statistics.

He doesn't allow it the other way, however. When I said that under Bush we had a million foreign workers taking American IT jobs, he continues to this day to say that I was wrong.

Well, technically, I was completely correct. Even if most of them came into the country under Clinton, even if Bush reduced the number PER YEAR, the fact remains that UNDER BUSH the number hit one million. FACT.

It's an easy game to play. He learned it from Rush.

"Well, technically, I was completely correct. Even if most of them came into the country under Clinton, even if Bush reduced the number PER YEAR, the fact remains that UNDER BUSH the number hit one million. FACT." (BH)


This is why it's hard to take you at all seriously, not only are you prone to making wildly unsupportable statements (like advocating the bombing of Mecca & Medina and claiming that Goetz should've executed those four goons), you steadfastly hold to a lack of understanding of the facts about the things you assert.

The H1-B Visa program is a GOOD and NECESSARY one.

America suffers from structural unemployment in many areas - more work than trained workers available to do it.

Structural unemployment does NOT naturally result in higher salaries beyond full employment of the workers in any given area, it simply results in jobs not getting done...and that is untenable.

Clinton did exactly the RIGHT thing in raising the H1-B Visa limits TWICE, because there are MANY fields suffering structural unemployment and thus needing an influx of specially trained workers.

My wife works for Price Waterhouse Coopers and there is an accountant shortage in the U.S. - PWC has hired many, many foreign born accountants - NOT to replace Americans with "cheaper foreign labor," NOT AT ALL, just to meet the requirements, so that the existing work can get done.

Same with the tech field. My brother Chris has worked for Navigator Technologies and Greenwich Technologies since 1994, without a hitch.

He often says, that "No tech jobs were lost by outsourcing those tech support jobs off-shore. Those guys aren't techs. Hell, I could give you that script and you could walk someone through that process without even a day's experience - a monkey could do those jobs."

And I agree, except for the talking monkey part (I don't believe they really exist...YET), because I've dealt with tech support guys who, once they got through that short checklist, were stumped.

Structural unemployment does NOT create an opportunity for workers to vie for ever higher pay. Absent the current corporate structure which allows companies to collude to pay a set wage for a set skill, it might, but to the detriment of the economy overall and each one of us, as well.

No, once full employment in a given field is reached, the work beyond that either doesn't get done, or is foisted upon those already working - more work, for generally, the same pay.

The Tech Bubble Bust was responsible for the crash in Tech Sector jobs. That's one of the reasons why Bush signed onto returning the H1-B Visa limit back to its original 65,000/year. That "New Economy" just disappeared.

In retrospect, that would seem to have been a mistake, as financial services and other fileds still need more specially trained workers than are available right now.

So, in arguing in favor of continued structural unemployment for the thought of some ill-conceived personal gain, you're arging in favor of putting the desires of mere workers ahead of those of the consumer/customer.

That's a Liberal/socialist argument and one that inevitably leads to a Third World economy.

The H1-B Visa program is here to stay...and thank God!

It's delivered and continues to deliver America from the ravages of structural unemployment. If they resulted in lower wages for Americans, my accountant wife would've seen her wages decline over the past few years (she hasn't) and my brother Chris would've found it impossible to maintain his lifestyle, where he is the sole breadwinner for that family, affording his wife the opportunity to stay home with their two children, while they are still pre-school age (he hasn't).

Those "techs" who lost their jobs and couldn't return to the tech sector in the hiring surge since 2001, are almost certainly the least productive of all those workers in that field.

It seems you erroneously believe that I'd previously argued that Clinton was a "part of the H1-B Visa problem," when in fact, I don't believe that there is/was an "H1-B Visa problem." In my view, Clinton did the RIGHT thing in raising that limit TWICE!

In lowering the limit so drastically, G W Bush may have actually made an error.

After all, we still suffer from structural unemployment.

“The national debt as a pecentage of GDP is NOT the National Debt. It IS a ratio, for comparison purposes only and even as such, it is very limited in its uses as a comparison.” – JMK

I think you know that I already realize this don’t you? I said it’s the more appropriate means of comparison.

I realize they are two different things. However what we refer to as debt is not as simple as one loan, it’s an amalgamation of all debt currently held at a static point in time by the entire nation. That includes new debt, existing debt etc.
The extent to which that debt is manageable is defined by several factors, a major one being GDP. In the same way the extent that an individual’s personal debt is manageable is determined by their individual GDP, for most of us that equates to salary.

Now if we compare two people doing similar jobs at similar skill levels from two different time periods, one from 1962, and one from 2007 can we agree that all things being equal their salaries would still be different due to inflation?
Their expenses would be different as well, and their debt would be different accordingly.

Now I’ll ask you very simply, how can you make a meaningful comparison between these two individuals debt without accounting for their GDP? How can you do the same with the national debt without accounting for GDP? Obviously a ratio is not a substitute for the actual debt, but without it the numbers are meaningless.

GDP has risen consistently year over year, debt will rise with that because as GDP grows, more debt is incurred to finance growth. It’s also true that inflation cause the dollar to lose value every year, and consequentially debt will rise accordingly to cover rising costs.

It’s pretty clear to me that this creates a system where the debt will always be increasing year over year and never be decreasing. So again the only way to tell if we are truly reducing the debt (as an offset against existing established increases) is to compare it with another independently measured variable – GDP. The best way to express this relationship is as a ratio.

Why do you refuse to see this?

“The GDP grows AND contracts.” – JMK

It pretty consistently grows, if you check year over year you should see that.

“Anyone who values debt reduction MUST acknowledge across the board tax rate cuts, especially Cap Gains cuts and Income tax rate cuts as the best vehicle to attain them. It's also important to rule out any increases in social spending, in fact, some of that spending should be frozen at current levels, avoiding that inevitable yearly rise/burden.” – JMK

That’s not true. During the Clinton years they managed to reduce the debt without tax cuts. And it’s not true that you have to rule out any increases in social spending (not that I’m necessarily advocating increases) what you have to do is reduce spending overall. Right now the biggest money pit is Iraq. Whether you agree or not I think you should acknowledge that it’s an option just as much as reduced social spending.

“Beyond that, another way to reduce our deficit spending AND ultimately reduce the debt, would be to rein in "entitlement spending," which could easilly be done by, for instance, raising the retirment age for Social Security, freezing payouts, by eliminating the yearly "adjustments," etc.” – JMK
That’s easy to say when you have a fireman’s pension coming I’d imagine. Shouldn’t those be eliminated as well? Let’s do it across the board for all federal, state and city workers. Why don’t we start capping out and eliminating those benefits? I’m tired of my taxes paying for benefits programs for public workers that I don’t have myself. Let’s eliminate those ridiculous congressional pensions as well. Why should we pay those buffoons a salary for life? While we’re at it let’s cap off their raises. I know it’s a pipedream to roll them back, but that would be great too. There are plenty of entitlements across the board – I say we should start eliminating the ones that aren’t commonly held by every American first, once they’re gone and public workers are on equal footing then we can examine broader entitlements like Social Security if it in fact is still necessary.

“If we could agree on that much, that would be a good starting point.” – JMK

Do you agree with my proposed expansion of your methodology? I agree with the basic premise, I just think there are more options available when we go to use the scalpel.

GZ, there is the national Debt, which is a specific number and the debt ratio or debt as a percentage of GDP. The debt ratio (national debt to GDP) is, as noted, a very flawed comparison as the Brazil/American debt comparison shows.

Brazil's debt at 50% of GDP is crippling, because much of it is owed to private lenders like CitiGroup and Chase via the IMF and World Bank. Many developping nations call this "American imperialism" because our banks take so much profit at their expense and as part of their payback, we often negotiate various "favorable natural resource deals" and flood those places with "American" businesses like McDonalds and Starbucks.

So, any direct comparison between nations using that national debt to GDP ratio is going to be inherantly flawed.

Still, I'd gladly accept someone saying, "the debt ratio," (or any such term), instead of "the national debt decreased. The national debt IS a specific number, and not that comparative ratio. It is more than a little confusing to use the two interchangably.

As far as revenues go, there really seems to be no way to increase revenues by increasing tax rates....except tax rates on the lowest income earners (as they are the ones least able to afford to defer income).

That's why across the board tax rate hikes result in lower revenues defer more of their income to avoid that higher tax bite. The deferment by all those higher income earners offsets any gains made by increasing the tax bite on all those lower wage earners who can't afford to defer income.

Other than that, spending cuts are another way (maybe the very best way) to reduce deficit spending.

Since we've already spent the "Cold War Defense Dividend" (actually we spent it TWICE, once during Bush Sr's tenure and again in Clinton's first term...the Clinton administration gutted the Military and Intelligence budgets in order to offset the negative impact of that disastrous first term tax hike.

After January of 1995 Clinton DID indeed sign onto major tax cuts!

He cut the Estate Taxes, by allowing an additional $900,000 exemption from the estate tax for family farms and small businesses that continued in business after the inheritance.

And more importantly AND more massively, he signed onto the Gingrich Capital Gains Tax Cut which provided a 50% capital gains exclusion for those who held a Capital Gain for over a year. It was a huge boon to homeowners.

Raising the Social Security retirement age is NOT a punitive measure. And I would certainly support "pension buy-outs," like the ones that GM just gave - estimating life-expectancies, projected pay-outs, etc and offering something like a $400,000 lump sum buy-out instead of yearly pension costs of $60K/year in perpetuity.

The SS retirment age was initially set at a reasonable age 65, when the average male life expectancy was something like 66 years. Since life expectancy has since risen to 73, it stands to reason that the retirement age should keep pace.

Your assertion that private sector workers are somehow less well compensated than public employees is absurd.

It's quite the reverse.

I have a Realtors license in both NY & NJ and passed the Series 7 exam for stock trading. And while both those fields work long hours (not as long as the often 90+ hour weeks I've put in over the last couple years) they are compensated at a far higher rate.

My wife, an accountant puts in extreme hours at the end of every quarter, but then has a few weeks in between of a lull and she's compensated at a very high level...and when she's sent to training the company rightfully picks up the airfare and hotel charges, etc., as one would probably expect.

The private sector has always paid better than the public sector, though with diminished "job security."

Before I got on the FDNY, I made more in three good nights repossessing cars then I did even three years agao as a South Bronx fireman. Back in 2004, I made about $82K counting night differential, Holiday Pay and about 240 hours of OT.

I made more than that back in 1983 with no overtime and pretty much three good nights a week.

I made more than the Fire Dept paid me building decks during my first few years on the FDNY.

Of course there was no "job security" in either of those endeavors.

New York's current Mayor is a businessman and I expect him to run the City more like a business. He's already cut a number of fire companies and is said to be considering cutting 25 more, while changing some of the existing ones to Haz-Tech Engines to deal with the increasing Hazmat responses. He's also looking at down-sizing the Police Department as well.

All of that is GREAT and will work, only so long as the next person to hold that office, holds that line.

“GZ, there is the national Debt, which is a specific number and the debt ratio or debt as a percentage of GDP. The debt ratio (national debt to GDP) is, as noted, a very flawed comparison as the Brazil/American debt comparison shows.” – JMK

If it’s such a flawed measure then why does the CBO use it in their documents? What is your superior method of comparison?

“Brazil's debt at 50% of GDP is crippling, because much of it is owed to private lenders like CitiGroup and Chase via the IMF and World Bank. Many developping nations call this "American imperialism" because our banks take so much profit at their expense and as part of their payback, we often negotiate various "favorable natural resource deals" and flood those places with "American" businesses like McDonalds and Starbucks.
So, any direct comparison between nations using that national debt to GDP ratio is going to be inherantly flawed.” – JMK

Again what is your preferred means of comparison? I’ve already stated that there are other factors involved, it’s not a simple thing, however using the ratio for comparison provides a better perspective than viewing the debt alone.

However keep in mind that comparisons between nations isn’t really the main usage, the main usage is to compare the debt year over year within one nation. What’s your argument against that, and again what is you superior methodology? Remember the CBO uses both measures (raw debt, and debt as a ratio of GDP) to provide a full measured comparison. It’s really not in contention (other than with you) that this is the preferred method of viewing the debt year over year.

You never did directly address any of my points about how the debt will always increase year over year along with GDP (which consistently increases year over year, it does not fluctuate as you stated). Since debt will always increase to some extent year over year as the economy grows and inflation occurs, how do you suggest that we accurately separate growth in the debt that occurs naturally as a function of the growing economy (as evidenced by increased GDP) from growth (or reduction) in the debt that results from other factors?

The correct answer is to view the debt as a ratio of GDP, this isn’t completely precise and noone pretends it is, but it is the best benchmark to show a trend. If you have another one please explain exactly what it is.

“After January of 1995 Clinton DID indeed sign onto major tax cuts!” – JMK

Yes but again it’s all about where and how you cut. Before you said “Anyone who values debt reduction MUST acknowledge across the board tax rate cuts,” I took issue with that statement, not with the idea of tax cuts in general. It seemed to me (and please correct me if I’m wrong) that you were making the argument that debt reduction can’t occur unless we agree to all of GWB’s tax cuts. The Clinton tax cuts were not the same as GWB’s.

“Your assertion that private sector workers are somehow less well compensated than public employees is absurd.” – JMK

That’s not my assertion. I’m well aware that high performers are better compensated in the public sector. I’m speaking about the general masses not the high performers. The general masses make a wage that’s either equivalent or in many cases less than a public worker – because public workers have guaranteed pay raises.

Public workers also receive pension benefits which is long gone in the private sector. As I said before I have a friend that’s a state trooper, he retires in five years after 25 years service, with a full pension, and he’s in his 40’s. You want to push Social Security up to age 73 even though it’s a pittance compared to this guy’s pension. This guy has roughly 30 years to go until he would hit the Social Security retirement age, why should the taxpayer pay for his retirement and not his own?

How about postal workers? They have a boring job, they’ll never be rich, however they’re almost guaranteed never to be fired. They again have guaranteed raises and a pension, as well as retirement healh benefits.

What about the MTA? They have a thoughtless job, they provide horrible service, yet they’ve got guaranteed raises and pension benefits when they turn 55, and their contribution? 2% of their pretax salary.

It goes on and on, I never claimed that exceptional people would do better in the public sector – quite the opposite is true. It’s a haven for non-performers. I realizethere are areas that require performance such as fire fighters and police, but even those areas are full of fat, like the “police” in charge of the towing in Manhattan, or your typical local cop that’s the cliché donut lover.

“The private sector has always paid better than the public sector, though with diminished "job security." –JMK

That’s right and a big part of that lost security is a lack of guaranteed retirement benefits such as pension and health coverage. The public sector does pay better to non-performers however. You get these career civil servants or public workers who either refuse to help, can’t help, drag their feet, do the bare minimum etc. You see them in all facets of public jobs. Those people would not be rewarded with guaranteed raises in the private sector, they’d likely be let go. Not in the public sector, it’s a great place for someone who doesn’t have high aspirations, and really doesn’t want to do any work. Over time they make far more than they should with benefits to boot after they’re gone. Collectively they are a huge drain on the system and one of the worst abuses of entitlements that there is.

I also forgot to mention another friend of mine – another cop. He bought his house through some type of special mortgage program only offered to cops. I forget if it was through the PBA or not. He’s told me on several occasions that he never could have bought the house without the program. Oh yeah he’d been a cop for less than a year when he bought the place, so it’s not even like it’a perk for years of good service.
I’m happy for him as he’s my friend but I have to ask why he gets that perk and the rest of us don’t?
There are plenty of other things like that and I’m sure many more that I’m not aware of. If he had perks through a private sector job that’s great – free market at work, but not the public sector. If it’s paid for by tax dollars then every taxpayer should get the same benefit. Period.

The GDP fluctuates quarter to quarter GZ.

A recession is two striaght quarters of ngative GDP growth. WWhile I don't recall the last year we wound up with negative GDP growth, we've had a number of periods with three quarters of negative GDP growth.

A better comparative ratio?

My point was there is no real accurate comparative ratio. Looking at Brazil's national debt (50% of GDP) compared to America's (66% of GDP) gives a misleading view, given that Brazil's debt is so expensive to maintain. Natioanl debt as a percentage of GDP is often a flawed comparison, despite it being the "best available."

I don't like using the National Debt (which is a specific number) and the debt as a percentage of GDP interchangably because they really aren't the same thing.

The statement, "The national debt decreased between 1998 and 2000," is not true, while the statment, "Between 1998 and 2000 the national debt as a percentage of GDP decreased," is accurate, but those are really two different entities.

I didn't not intend to imply that ONLY G W Bush's tax cuts were needed to cut the deficit. Generally all across the board rate cuts will do that.

Tax cuts directed at low income earners generally won't do that, as those people tend not to defer much of their incomes anyway, so its unlikely we'd see them defer any less.

Generally tax hikes result in lower revenues because those with higher incomes can afford to defer more of their income and do that in response to that incentive...an incentive toward saving/deferring income.

"I have a friend that’s a state trooper, he retires in five years after 25 years service, with a full pension, and he’s in his 40’s. You want to push Social Security up to age 73 even though it’s a pittance compared to this guy’s pension. This guy has roughly 30 years to go until he would hit the Social Security retirement age, why should the taxpayer pay for his retirement and not his own?" (GZ)


I support that pension system becuase (1) most of those workers pay into it and (2) those 20 and 25 year pensions are generally for emergency workers (cops, etc,) who are not efective on those jobs beyond that stage.

Just as with Social Security, any privatization (which I fully support) would have to guarantee those at or approaching retirement age the right to accept the benefits they were promised (no age limit was promised....that has ALWAYS been fluid), I'd go the same way with those pensions.

All new hires would have to accept that positon sans the pension. It's a factor in employment in that NYC has seen the numbers of both police and firefighter candidates decline as salaries have lagged behind surrounding areas.

Me, I could've taken this job and worked repossessing cars or building decks on the side, the initial draw for me was the fun (going to fires) and it's probably why I ended up in the Morrisania section of the South Bronx.

But would I have taken it if the medical benefits (that was big too, since I didn't have them from the other endeavors), etc., weren't there?

I don't know.

Everything's balanced out between risk/reward, what you give up for what you get.

I made more money and had a different kind of fun back then, but I decided I had to get out of the repossesing because it came with a lot of bad connections and too much potential for trouble.

Your points demonstrate why government is a poor provider of goods and services.

Police and Fire don't really provide a "service," at least not any that people would vie for.

NYC's Fire Department keeps its insurance rates low and its bond ratings higher, but aside from that it makes no money for the city.

The NYPD is a huge money-maker - tickets, towing cars, etc bring in some big bucks. So much so that when the cops write fewer tickets, the city feels it.

Still, I think emergency service workers are a different breed than sanitation, teachers, MTA empoyees, etc because of the nature of those jobs.

You get some bad apples (like all jobs) but mostly gung-ho people who are motivated to do those jobs.

They aren't motivated to do the drudgery - the building and hydrant inspections, etc, but they're motivated to go to fires and get bad guys, etc.

I saw that when I Lifeguarded summers as a kid....the Parkies were upfront about doing as little as possible - "making the job last all day," while the Lifeguards hoped for a chance to go into the water...it's a different mindset, probably because the parameters of the tasks are different.

There's a lot more upside to doing an emergency task, as opposed to a mundane one.

In NYC they have some special mortgage porgrams for cops to get them to move into some "improving" (but not yet improved nabes), I don't know how that works elsewhere.

“The GDP fluctuates quarter to quarter GZ.” – JMK
You’re right, I should have been more clear, I’m talking year to year. There certainly is movement within the year but if you check the year end figures it’s consistently rising. Part of the quarterly movement is due to timing in the accounting cycle, part is due to seasonal business cycles. That’s generally why the yearly cycle always shows a positive change.

“A better comparative ratio?
My point was there is no real accurate comparative ratio. Looking at Brazil's national debt (50% of GDP) compared to America's (66% of GDP) gives a misleading view, given that Brazil's debt is so expensive to maintain. Natioanl debt as a percentage of GDP is often a flawed comparison, despite it being the "best available." – JMK

As mentioned it’s less accurate when comparing two different entities, it’s more accurate when comparing the same entity over different periods. Generally speaking not much is going to change in the way the US finances it’s debt over 5 or even 10 years. Probably not much of a material nature over longer periods either. Because over the long term we’ve had a strong economy. So when you see movement in the debt as a percentage of GDP it is a good measure of what’s really happening. That’s why the CBO includes it in it’s reporting, that’s why the concept even exists.
It’s understood that it doesn’t tell the whole story, neither does the raw debt amount either for that matter.

“The statement, "The national debt decreased between 1998 and 2000," is not true, while the statment, "Between 1998 and 2000 the national debt as a percentage of GDP decreased," is accurate, but those are really two different entities.” – JMK

There’s no doubt that that’s literally true, I never said otherwise – however it’s misleading to say that the debt increased between 1998 and 2000 because that statement doesn’t account for the growth of the economy. You never did answer this question:
“Since debt will always increase to some extent year over year as the economy grows and inflation occurs, how do you suggest that we accurately separate growth in the debt that occurs naturally as a function of the growing economy (as evidenced by increased GDP) from growth (or reduction) in the debt that results from other factors?”

Since you are unhappy with viewing as a percentage of GDP because it’s in your opinion inaccurate, and since it’s clear that merely comparing the raw debt amounts absent any qualifiers is just as inaccurate, then how do you expect an analyst to draw any conclusions, or make any recommendations?

“I don't like using the National Debt (which is a specific number) and the debt as a percentage of GDP interchangably because they really aren't the same thing.” – JMK

Neither do I. I haven’t. However viewing the debt as a percentage of GDP is the standard when examining the trend year over year.

“I didn't not intend to imply that ONLY G W Bush's tax cuts were needed to cut the deficit.” – JMK
Fair enough, that’s how it seemed to me at the time. Along the same lines I didn’t intend to imply that Clinton never made any cuts of his own either.

“I support that pension system becuase (1) most of those workers pay into it and (2) those 20 and 25 year pensions are generally for emergency workers (cops, etc,) who are not efective on those jobs beyond that stage.” – JMK

They pay into it at a bare minimum that is often a pre-tax deduction. Often times the base salaries are already raised to compensate for the withdrawal as well. The rest ( the majority of it) is funded by the taxpayer. If it’s going to be an equal playing field then let them make pre-tax 401k deductions like everyone else.
You can make the argument that a lot of workers are less effective past a certain age. In the private sector you aren’t rewarded with early retirement, instead you have to work. If you can’t perform, you will be let go – without the benefits of a pension. If those emergency workers are no longer effective and need to be reassigned to a different area then that’s what should be done. Let them ride a desk, work as a dispatcher, sweep the floors, become a mechanic, work as a cook, transfer to a civil service job, etc. etc. Don’t ask me to pay their living expenses when they are fully capable of working the same as anyone else their age.

“Just as with Social Security, any privatization (which I fully support) would have to guarantee those at or approaching retirement age the right to accept the benefits they were promised (no age limit was promised....that has ALWAYS been fluid), I'd go the same way with those pensions.” – JMK

As I said before we discuss any limitations on Social Security (which is effectively the government pension program for the masses) we should eliminate the pension programs that benefit only government workers. And as much as I’d prefer to eliminate everything regardless of what was promised, I realize that grandfathering benefits would be the only way it would happen.

“The NYPD is a huge money-maker - tickets, towing cars, etc bring in some big bucks. So much so that when the cops write fewer tickets, the city feels it.” – JMK

But the other side of that coin is the bloated salary/benefits/pension budget to pay for all the extra cops writing tickets, pulling over drivers for no real reason other than to meet a quota, etc. I realize we need emergency services, but as mentioned there is so much dead weight in those areas that should be cut. Any money they bring in is offset by their cost.

“Still, I think emergency service workers are a different breed than sanitation, teachers, MTA empoyees, etc because of the nature of those jobs.” – JMK

I do too – but as mentioned there are different stratas within those departments as well, some useful, others useless.

“In NYC they have some special mortgage porgrams for cops to get them to move into some "improving" (but not yet improved nabes), I don't know how that works elsewhere.” – JMK

Well my buddy’s mortgage program allowed him to buy a house in an affluent middle class predominantly white suburb. Lakefront, white picket fence, etc. Regardless those mortgage programs should exist for all not just cops.

It's our first Spam since Baz has been gone :)

“There certainly is movement within the year but if you check the year end figures it’s consistently rising. Part of the quarterly movement is due to timing in the accounting cycle, part is due to seasonal business cycles. That’s generally why the yearly cycle always shows a positive change.” (GZ)


I can’t remember the last full year that GDP declined over a full year. Between the second quarter of 2000 and the third quarter of 2001, we had four of six quarters with negative GDP growth. I believe the years 1929, 1930 and 1931 all had negative GDP growth for those years and I’ll have to look up 1978 – 1980...it would be amazing if none of those years had overall negative GDP growth for the full year.

Tax policy can definitely be a factor in GDP growth or decline, as higher Cap Gains and income tax rates incentivize savings (deferring income) and draw money away from investing, in the process. It’s the decline in investment that causes the eventual decline in GDP.




“...however it’s misleading to say that the debt increased between 1998 and 2000 because that statement doesn’t account for the growth of the economy. You never did answer this question:” (GZ)


Yes, in comparing say, 1964’s debt level, to today’s, that ratio is a good tool. My major problem with using the debt ratio or debt level interchangeably (I believe you did that a few times and PE did it in his initial posts above) with the term “the national debt,” is that they’re two distinct concepts – one (the national debt itself) is a specific number, while the other (the debt ratio or level) is a comparative ratio – the national debt itself (that number) did increase between 1998 and 2000 and until we actually see reductions in that actual number (the national debt), we can’t seriously claim we’ve embarked on real “debt reduction.”

It’s like the concept that as we age, a year becomes a smaller and smaller percentage of our lives. While it’s true that a year is a much smaller percentage of a fifty year old’s life than a ten year old’s, the year itself has not shrunk in size – it’s still the same 365 days. It's the same with the debt, the debt level or ratio can become a smaller percentage of the GDP with merely strong GDP growth, the debt itself remains a constant absent direct debt payoff.

Growing the economy (and it’s been growing very strongly the past four years and as a result the deficit has been reduced by more than half over that period) will reduce the debt ratio or level, but it won’t reduce the national debt itself, unless the deficit (deficit spending) is eliminated and the surplus is applied to the debt and not to other ongoing expenses.




“I didn't intend to imply that ONLY G W Bush's tax cuts were needed to cut the deficit.” – JMK


“Fair enough, that’s how it seemed to me at the time. Along the same lines I didn’t intend to imply that Clinton never made any cuts of his own either.” (GZ)


Well, to be completely fair, Bill Clinton didn’t cut any taxes until after Gingrich & Co took control of Congress in 1995. In fact his first two years were marred by a disastrous tax increase that was covered by dipping into a second “Peace Dividend.”

Also, because his tax hikes were across the board, revenues didn’t fall as sharply as they would’ve had he targeted those hikes to the upper 25% of income earners.

Higher income earners can afford to defer more of their income to avoid the tax bite, but lower wage earners can’t, so they’re hit with a tax increase that reduces their standard of living, as they tend to use all their income to live (rent, car payments, insurance, etc).




“...They pay into it at a bare minimum that is often a pre-tax deduction. Often times the base salaries are already raised to compensate for the withdrawal as well. The rest (the majority of it) is funded by the taxpayer. If it’s going to be an equal playing field then let them make pre-tax 401k deductions like everyone else.

You can make the argument that a lot of workers are less effective past a certain age. In the private sector you aren’t rewarded with early retirement, instead you have to work. If you can’t perform, you will be let go – without the benefits of a pension. If those emergency workers are no longer effective and need to be reassigned to a different area then that’s what should be done. Let them ride a desk, work as a dispatcher, sweep the floors, become a mechanic, work as a cook, transfer to a civil service job, etc. etc. Don’t ask me to pay their living expenses when they are fully capable of working the same as anyone else their age.” (GZ)


Yes, but bottom-line they pay into those pensions in the way the City negotiated with them to, that can be re-negotiated at any time. Even so, twice, the City has dipped into that huge pension fund. The first time it helped bail the city out when it faced bankruptcy in 1975, when the feds rightly refused to bail them out without some outside control.

For better or worse, those things like pensions, unlimited non-line of duty sick leave, etc. are part of a negotiated compensation package.

Like I said, I’m all for ANY of this to be put “on the bargaining table” during negotiations, with the City - the employer) being able to “buy out” the workforce for a negotiated price, as GM and Ford recently did.

In many ways, the Police and Fire departments work on the same principle our tax system does – the higher one goes in rank, the easier it is to get a disability pension. So it’s rare that Chiefs (who now earn between $150K and $175K per year) don’t get out on what is commonly called “3 Qs” (3/4s of their salaries tax free for life. In fact, the physicians who work at the medical offices of those jobs ($125K/year or so for about three days a week...or 3 days one week, two days the next – 7 am – 2 pm) get “3 Qs” as well, as a perk for doing that duty.

I’ve known many seriously injured firefighters who were either denied such pensions for legitimate disabilities, while a Chief “tripped over a hose line,” or “fell from an office chair” and was walked through the process. The physicians don’t even have to go through the process the Chiefs do!

The thinking goes, there are far more firefighters than Chiefs, so while it won’t cost that much to “reward” those Chiefs for years of study, and those physicians for toiling in the medical office, too many firefighters getting those pensions could break the bank.

Same with the tax system – there’s just more money to be had from lower income workers, because (1) there are more of them and (2) they can’t afford to defer much of their income to avoid those tax hikes.

Ultimately its easier to collect an extra $1,000/year from 100 million lower income workers, than an extra $10,000/year from 10 million workers.




“As I said before we discuss any limitations on Social Security (which is effectively the government pension program for the masses) we should eliminate the pension programs that benefit only government workers. And as much as I’d prefer to eliminate everything regardless of what was promised, I realize that grandfathering benefits would be the only way it would happen.” (GZ)


The difference is that there’s really no debate over whether privatization would provide better benefits to those who contribute all of their lives to that system – ALL evidence seems to suggest that it would, while there is little or no evidence to suggest that it wouldn’t.

In fact, Galveston, TX dropped out of the SS system when it was still an option and in the late 1990s the Galveston retirees were getting about three times what social security retirees got.

As I said, no plan was devised that would force those approaching retirement age (50 or older) into privatized accounts, nor did any such plan reduce benefits for any current retirees, as those things would be unfair, of course the Bush plan (A) was not much of a privatization and (B) did NOT propose cutting existing benefits nor force aging workers into those privatized accounts.

Adjusting the age limit ISN’T punitive, as it would merely increase it to what it was proportionally back when it began – like comparing/linking the debt to GDP, social security should be compared/linked to life expectancy.

Both the NYPD & FDNY have 401K AND 457 programs and I would also probably support some sort of “buy out” for the City on pensions.

To date, the City has never sought to even negotiate things away like having a member’s overtime count toward retirement! There are guys in the Marine Unit who’ve doubled their base salaries with OT!

For a businessman, Bloomberg hasn’t always conducted city business “more like a real business.”

On the subject of institutionalization, I believe that many people who cannot take care of themselves and have no support family system, especially lower functioning mentally disabled and many of the severely emotionally disturbed and mentally ill probably should be institutionalized in one form or another – even if its in community based group homes. Many unsupervised emotionally disturbed and mentally ill people can be dangers to the community when they fail to take their medications and those people need supervision.

If mildly mentally handicapped people can be kept at home, with family, that's most likely a better option in most cases.




“I realize we need emergency services, but as mentioned there is so much dead weight in those areas that should be cut. Any money they bring in is offset by their cost.” (GZ)


I’ve already agreed with that and I believe I pointed out that only ONE Chief of Dept (John T O’Hagan) had the guts to say, “I could do this job with 5,000 men!” (Less than half the number of men on the job at that time) And he said that during the “war years” - the mid-seventies, when over a dozen firefighters were being killed each year and many busy companies did over 10,000 runs/year.

On a side note, the reason why the FD in FDNY comes first, as opposed to the NY in NYPD, or the LA in LAFD, etc is that the Fire Department existed before the City of New York was chartered. In fact, the FDNY is one of the last existing remnants of the Union Army – the FDNY formed a Civil War Unit called the Fire Zouvres. In the second half of the 19th Century, firehouses served as political clubs during the Tamanny Hall days. Engine 15’s quarters in lower Manhattan was Boss tweed’s HQ’s back in the day.

That said, it’s not a given that the city HAS to provide all the services it does now. It should come down to a basic cost/benefit analysis and the people need all the facts.

Would private haulers be more cost effective than city sanitation?

That’s made difficult to assess, because we don’t readily know what we’re paying per household for city sanitation. My brother lives out in Sparta and pays about $40/month for a private hauler, although, he also pays more for snow removal. Same with the Fire Dept., just because privatized companies haven’t worked so far, doesn’t mean they can’t

I’d also say the same about education. There’s no way it should cost NYC over $15,000/year per student, when, in the same area, Catholic schools can provide an ostensibly superior education for about a third of that! It doesn’t make any sense at all.




“Well my buddy’s mortgage program allowed him to buy a house in an affluent middle class predominantly white suburb. Lakefront, white picket fence, etc. Regardless those mortgage programs should exist for all not just cops.” (GZ)


I’ve never heard of that program, but that’s not surprising, since I really don’t know any NY State Troopers, or Jersey Cops either – they each probably have their own programs.

I’ve bought a few properties and the City’s mortgage program (lower mortgages to create incentives for cops, firefighters, teachers, etc. to live in certain “undesirable” neighborhoods), never appealed to me. You can’t buy properties to rent them out (you have to live their for at least five years) and I’d worry about a return on that investment down the road.

“I can’t remember the last full year that GDP declined over a full year. Between the second quarter of 2000 and the third quarter of 2001, we had four of six quarters with negative GDP growth. I believe the years 1929, 1930 and 1931 all had negative GDP growth for those years and I’ll have to look up 1978 – 1980...it would be amazing if none of those years had overall negative GDP growth for the full year.” – JMK

I went back to 1929. There are only 7 instances where GDP decreased year over year: 1930, 1931, 1932, 1933, 1938, 1946, and 1949. Most of those drops were tiny with the exception of the first three reductions at the start of the Great Depression – which qualifies as an unusual event.

Viewed from a quarterly perspective I went back as far as 1947 Q1. There were 12 instances where GDP dropped quarter to quarter. Those quarters were: 1949 Q1, 1949 Q2, 1949 Q4, 1953 Q3, 1953 Q4, 1954 Q1, 1957 Q4, 1958 Q1, 1960 Q2, 1960 Q4, 1982 Q1, and 1990 Q4.

As I mentioned earlier overall GDP has risen consistently year over year, the only exception are unnatural or catastrophic events in the economy. Perhaps I wasn’t clear on that. The Great Depression is one such event. Generally speaking you will always see an increase, there are always anomalies to be sure, but it’s generally an upward trend.
My figures come straight from the US Dept of Commerce.
As you can see tax policy has little effect on the overall upward movement of the economy.

“Yes, in comparing say, 1964’s debt level, to today’s, that ratio is a good tool. My major problem with using the debt ratio or debt level interchangeably (I believe you did that a few times and PE did it in his initial posts above) with the term “the national debt,” is that they’re two distinct concepts – one (the national debt itself) is a specific number, while the other (the debt ratio or level) is a comparative ratio – the national debt itself (that number) did increase between 1998 and 2000 and until we actually see reductions in that actual number (the national debt), we can’t seriously claim we’ve embarked on real “debt reduction.” – JMK

I can’t speak for PE but I never used them interchangeably. Perhaps my wording wasn’t clear, but I’ve always understood the difference. As I said I suspect your biggest problem with viewing the debt as a ratio of GDP s that you don’t believe it’s accurate enough over a short time span. You’ve pretty much agreed to that above with your reference to 1964. All I can say is that it’s an accepted measure and it’s good enough for the CBO and most economists. It’s obviously not perfect but as I said it’s the best tool there is to take a snapshot of the economy. And since the percentage does reduce during the latter Clinton years coupled with reduced deficits and finally actual surpluses it does indicate that something is happening to the “real” level of debt in the economy.

“It’s like the concept that as we age, a year becomes a smaller and smaller percentage of our lives. While it’s true that a year is a much smaller percentage of a fifty year old’s life than a ten year old’s, the year itself has not shrunk in size – it’s still the same 365 days. It's the same with the debt, the debt level or ratio can become a smaller percentage of the GDP with merely strong GDP growth, the debt itself remains a constant absent direct debt payoff.” – JMK

I understand what you’re trying to say but this is a flawed analogy. A year is a fixed constant while the debt is not, it’s a variable. Debt does not remain a constant, the national debt is an amalgamation of all debt currently held in the nation. That means some debts are paid off in every given year, some are bought out, new debt is also incurred as well. As GDP rises there will be additional debt incurred proportionately to fund the growth. This debt will also be more as the dollar inflates. The end result is that debt is an ever changing variable that as I said trends ever upwards year over year along with GDP. A year does not grow bigger as you age, but the debt does increase as GDP rises.

“Yes, but bottom-line they pay into those pensions in the way the City negotiated with them to, that can be re-negotiated at any time. Even so, twice, the City has dipped into that huge pension fund. The first time it helped bail the city out when it faced bankruptcy in 1975, when the feds rightly refused to bail them out without some outside control.” – JMK

I understand that, that’s part of the problem, the fact that government negotiated them that way. I’m not really concerned with how we got to the point were we have such a ridiculous system of entitlements for government workers, I just want it torn down. I’m pretty sure you agree in principle.

“So it’s rare that Chiefs (who now earn between $150K and $175K per year) don’t get out on what is commonly called “3 Qs” (3/4s of their salaries tax free for life. In fact, the physicians who work at the medical offices of those jobs ($125K/year or so for about three days a week...or 3 days one week, two days the next – 7 am – 2 pm) get “3 Qs” as well, as a perk for doing that duty.” – JMK

Great example. It’s criminal, and that’s the problem with public agency’s there’s no accountability. No bottomline to meet. In essence the shareholders are the taxpayers, but we really have no voice in the way shareholders do in a corporation.

“The difference is that there’s really no debate over whether privatization would provide better benefits to those who contribute all of their lives to that system – ALL evidence seems to suggest that it would, while there is little or no evidence to suggest that it wouldn’t.” – JMK

It’s quite possible that’s true. The two problems I have with it are those who receive benefits that didn’t pay in, such as those wit physical handicaps, or emotional development issues. People who the current system supports through SS. The other problem is that if it were privatized it would have to be guaranteed in such a way as to protect people from losing their retirement savings. It’s easy to say that if you choose to go one way and your investments tank then you’re out of luck, not so easy to deal with folks in reality who reach their twilight years and have no effective source of income. Even from just a practical standpoint you wind up paying for them if they become institutionalized. That’s not even going into things from a humane perspective.

“I’d also say the same about education. There’s no way it should cost NYC over $15,000/year per student, when, in the same area, Catholic schools can provide an ostensibly superior education for about a third of that! It doesn’t make any sense at all.” – One reason is probably less fat overhead. When you have career administrators making 6 figure salaries, yet kids don’t have books there’s a problem. It’s the consistent problem of civic jobs – they never have to be accountable for their budget. I realize that none of this is easy and none of it can be done overnight even if the decision was made to change things. However the first step IMO should be to level the playing field in terms of benefits. Then perhaps you could incentivise the system by rewarding budget managers for hitting their targets and achieving results – the way it’s done in business.

“I can’t speak for PE but I never used them interchangeably. Perhaps my wording wasn’t clear, but I’ve always understood the difference.” (GZ)


Then we should agree that “the debt” refers to “the national debt” (a specific number) not a debt level or ratio. After that agreement, it’s then clear that the phrase “The debt decreased between 1998 and 2000,” is wrong, while the phrase, “The ratio of the debt to GDP decreased between 1998 and 2000” is accurate.

The latter was NOT how that was stated. I took issue with the fact that the first phrase is stated wrongly.




“As you can see tax policy has little effect on the overall upward movement of the economy.” (GZ)


I think you mean, “...on the upward movement of the GDP,” as it can have a whole range of effects on the economy.

Tax policy is vital to investment. When taxes, especially on investors (Cap Gains) and higher income earners (who invest more) are raised, there is less money available for start-ups which require investment capital.

It’s true that tax hikes on lower income earners would raise revenues, although it’s a cruel cure for budget ills. The tax hike the current Dem Congress is considering would raise taxes some $400 Billion over five years. It would raise taxes on 115 million Americans an average of about $1800/year in 2011 and almost $4,000/year on small businesses.

The decreased number of Americans paying the income tax would all pay more in income taxes and 5 million low income Americans would be returned to the income tax rolls. Now while I agree, in principle, that everyone should pay something (almost no one should be exempt from the income tax), I still see it as a horrific plan, but it may well raise revenues precisely because they’re targeting lower income Americans – there’s more of them and they generally can’t afford to defer much of their income.

So, while tax policy, declining revenues and less investment capital being available won’t reduce GDP, they can impact both wealth creation and who gets what share of the wealth produced. Hey! In a very real sense, not only does tax policy have an impact on the economy, it has a direct impact on every individual’s chances for upward mobility.




“I understand what you’re trying to say but this is a flawed analogy. A year is a fixed constant while the debt is not, it’s a variable. Debt does not remain a constant, the national debt is an amalgamation of all debt currently held in the nation. That means some debts are paid off in every given year, some are bought out, new debt is also incurred as well. As GDP rises there will be additional debt incurred proportionately to fund the growth. (GZ)


The reason the analogy is fairly accurate is that reducing the ratio of debt to GDP does not reduce the debt at all, and wouldn’t reduce the debt over even an infinite amount of time. So while GDP growth can reduce the debt level or ratio as a percentage of GDP, just as time reduces the ratio of a single year as a percentage of one’s life, only eliminating deficit spending and applying any surplus to debt servicing will actually reduce the debt.

It seems as though you’re claiming that reducing the debt level or ration (via either increasing the GDP or decreasing the deficit) amounts to “debt reduction.” If that that’s so, we disagree, because reducing the debt level does NOT amount to ANY debt reduction at all, so long as the debt merely increases at a slower rate than the GDP increases. As I’ve shown, under certain conditions, the debt can grow significantly and the debt level would still fall, relative to GDP.

The national debt is not the same as the debt level or ratio (percentage of GDP) and debt reduction can only be achieved by actually reducing the amount of the national debt (via the elimination of deficit spending and applying any surplus to retiring the debt). That’s why the statement, “The national debt decreased between 1998 and 2000,” isn’t true. The debt level decreased, but the national debt itself, grew.




“I understand that, that’s part of the problem, the fact that government negotiated them that way. I’m not really concerned with how we got to the point were we have such a ridiculous system of entitlements for government workers, I just want it torn down. I’m pretty sure you agree in principle.” (GZ)


IN NYC, the problem is that the Municipal Unions have tremendous clout. Politicians (ALL politicians...even Bloomberg) vie for their support – not just votes, but the huge number of volunteers they can turn out and the way Unions can tug at people’s heart strings. When a very slow Queens firehouse was closed by Koch near the end of his tenure, a deadly fire down the street from that firehouse occurred less than a week after the closure and the “response delay” was blamed for the deaths.

In reality, there is negligible survival time for people caught in bed by a fire caused by their smoking in bed. That may be sad, but it’s also true, but that didn’t dampen the public outrage over that closing. Now Spitzer’s facing the same thing over some proposed cuts to the State healthcare system, which is bloated by some hospital administrators who make upwards of $500,000/year. You can hear all those commercials casting Spitzer as a heartless bureaucrat about to toss little old ladies onto the street, ads created by those who desperately want to keep the current badly broken system in place, one that’s “breaking the bank,” by among other things giving free health care to illegal aliens.

Kathleen Quinn recently pushed a “Lobbying reform” Bill through the City Council that would limit all lobbyists EXCEPT Municipal Unions!

It appears as though it would take an economic calamity for NYC & NYS to change their ways.