Maggie's Farm

"it will require additional taxes and spending cuts".

Everything the left wants requires additional taxes. They always use the bait and switch of offerring spending cuts but they never really happen.

Here is the problem with this prescription: There isn't enough money in private hands to bail out the governments overspending AND higher taxes will inevitably lead to a worse economy. Taxes are like a parasite. They infect the host (the taxpayer) and the greater the infection the sicker the host gets. If taxes are raised too high then this parasitic infection will kill the host.

The correct solution is: 1. Limit or end the ability for the federal government to borrow. 2. Severely cut the federal government, i.e reduce it to 2 or 3 departments and cut manpower by about 80%. 3.Stop the federal government from dabbling in unconstitutional programs (like welfare, farm and energy subsidies, the EPA, etc. 4.Allow the people to keep more of what they earn and stop rewarding those who choose to be unproductive. 5. Remove SS and Medicare from the control of congress and require these programs to be run using standard business and accounting procedures and not as a vehicle to get votes.

We did indeed reduce the deficit in the 90's. This was a result of the combination of a good economy inheirited from Reagan, a ".com" boom and Newt Gingrich fighting to balance the budget. We can have this again EXCEPT now we owe $16 trillion. Do the math. A $16 trillion debt cannot be overcome; Obama has destroyed us we are in a slow collapses and don't fully realize it. No matter who wins we face years of an economic depression.

SS and Medicare should be removed from the control of congress and run using standard accounting procedures. Do not forget that the federal government took billions from SS and today that debt is about $4 trillion. That is more then enough to stabilize SS for 50 years or more. Additionally stop paying people SS who did not contribute. Treat it like a straight annuity where the amount you get from it is dependent on how much you put into it and how much is in the system. This would work as a parimutuel system where the money paid out can never exceed the amount taken in. In a system like this the virtue is it can never go broke.

As for medicare; medicare recipients pay into it. If the system is not taking in enough money then either increase the medicare portion of the payroll tax, reduce insurance coverage, supplement it from the general fund or a combination of all three. It can be fixed and it should have a higher priority then all of the welfare programs where the beneficiaries paid NOTHING for their generous benefits.

End welfare at the federal level. Replace it overnight/cold turkey with workfare run by the states. There is no constitutional validity for the federal government to fund welfare. Workfare would be the only safety net and it would consist of a job opportunity for anyone in need. The job would be minimum wage, no benefits and income would be taxable and require payroll taxes. The incentive would be that if a minimum wage job didn't provide you and your family with enough money then get a better job. It is not the taxpayers responsibility to support you.

"Sure it can" I don't know if your opinion is the result over over confidence or naivete. $16 trillion! Just think about that amount. The Fed is holding down interest rates but sooner or later they will spring back not just to normal but like in the late 70's to record highs. And while we wait for inflation to bring back high interest rates the debt increeases by $1.5 trillion or so a year. How, in your mind, do we overcome that huge debt? We will undoubtedly not be able to pay any of it off. It is a given that we will in fact keep increasing the debt. So how do you even manage to pay the interest on the debt when interest rates go back up? Do the math. Pick an interest rate, lets be conservative and pick 5%; the interest on $16 trillion is $800 billion. If you cannot run the government without borrowing $1.5 trillion every year how can you additionally pay $800 billion just to keep the debt payment current? What if the interest rates go well above 5%? What happens when the natiional debt is $20 trillion? How do you pull out of this terrible spiral? What miracle are you hoping for? I think my statement was absolutely correct that a national debt of $16 trillion cannot be overcome. Our options are not good. We can:
1)Inflate our way out of it. How did that work for the Weimar German government?
2)We can print our way out which is arguably the same think as inflating our way out.
3)We can declare bankruptcy.
4)We can collapse into chaos and hope for the best.
5)We can cut spending to the bone and raise taxes as high as possible.

Which of these choices invokes the confidence you seem to have?

I didn't address the 5% of GDP red herring because, well, it's a red herring.

In theory Spending cuts, moderate tax increases and mild inflation would have worked in 2008 or 2000 or 1985 when the deficit was low but with a deficit of $1.5 trillion a year and no attempt to balance the budget for 4 years it is like being on a heavily loaded truck with no breaks going down a steep hill and thinking you drag one foot and slow it down. We are in a debt spiral and nothing less then really drastic measures will pull us out of it. Sadly even with the most effective measures we cannot avoid an economic collapse. It's like the man who jumped off the Empire State Bldg and was heard to say as he passed the tenth floor "well, so far so good".

Look around you. The signs are everywhere. We are in a depression and it is being propped up by massive borrowing and printing. Will we have QE3? Will it "fix" the problem? Eventually we will have to face the reality. All our government has done is set up more dominos so that when they do finally all fall it will be more dramatic. I'm thinking soon; next month maybe, maybe next Spring. It really all depends on how long we keep borrowing and printing and when some trigger event causes us to lose even that control.

With a Deficit of $1.5 trillion and a debt payment of $800 billion in order to reduce the deficit to zero (and not even pay a cent towards the total debt) we would have to reduce our spending by $2.3 trillion or raise taxes by the same amount. It cannot be done. We cannot pull out of this downeard spiral. To cite the percentage the debt represents compared with the GDP for the next 100 years, or some other red herring ploy, does not change the facts. We cannot recover from this. Any substantial increase in taxes will cripple our economy and we can all agree that cutting $2.3 trillion from the budget is impossible. So we will continue this spiral downward until it crashes. There is no plausable scenario otherwise.

Imagine how much better off we would be if the deficit did not include interest on the debt payment! But in fact the interest we pay today for our debt is held unrealistically low by the Fed. Today we aren't paying the real cost of the debt. But we will and when we do it may well be an additional $800 billion.

If you really believe that in an election year the estimate of the debt is accurate then you probably believe that the unemployment rate is 7.8%. Here is an interesting factoid: In February 2009, Obama submitted his first budget to Congress. It boldly predicted that the federal deficit would decrease dramatically during Obama’s term, dropping from an estimated $1.841 trillion in fiscal 2009 to $557.4 billion in fiscal 2012.

However, in the fiscal 2013 budget that Obama submitted to Congress today, the White House is predicting that the federal deficit for fiscal 2012 will not be $557.4 billion after all. Instead, the White House says, it will be $1.3269 trillion.

That means Obama’s fiscal 2010 budget proposal missed on its fiscal 2012 deficit prediction by $769.5 billion — an error of 138 percent.
In February 2009, Obama submitted his first budget to Congress. It boldly predicted that the federal deficit would decrease dramatically during Obama’s term, dropping from an estimated $1.841 trillion in fiscal 2009 to $557.4 billion in fiscal 2012.

However, in the fiscal 2013 budget that Obama submitted to Congress today, the White House is predicting that the federal deficit for fiscal 2012 will not be $557.4 billion after all. Instead, the White House says, it will be $1.3269 trillion.

That means Obama’s fiscal 2010 budget proposal missed on its fiscal 2012 deficit prediction by $769.5 billion — an error of 138 percent.
In February 2009, Obama submitted his first budget to Congress. It boldly predicted that the federal deficit would decrease dramatically during Obama’s term, dropping from an estimated $1.841 trillion in fiscal 2009 to $557.4 billion in fiscal 2012.

However, in the fiscal 2013 budget that Obama submitted to Congress today, the White House is predicting that the federal deficit for fiscal 2012 will not be $557.4 billion after all. Instead, the White House says, it will be $1.3269 trillion.

That means Obama’s fiscal 2010 budget proposal missed on its fiscal 2012 deficit prediction by $769.5 billion — an error of 138 percent.
"In February 2009, Obama submitted his first budget to Congress. It boldly predicted that the federal deficit would decrease dramatically during Obama’s term, dropping from an estimated $1.841 trillion in fiscal 2009 to $557.4 billion in fiscal 2012.
However, in the fiscal 2013 budget that Obama submitted to Congress today, the White House is predicting that the federal deficit for fiscal 2012 will not be $557.4 billion after all. Instead, the White House says, it will be $1.3269 trillion.
That means Obama’s fiscal 2010 budget proposal missed on its fiscal 2012 deficit prediction by $769.5 billion — an error of 138 percent."

I hope your faith proves to be correct.

It sounds like what you mean by "figure this out" is we will increase taxes. Can we increase taxes enough to reverse this trend and not destroy the economy in the process? I think not and that is the part you are missing. How much do you think you can raise taxes before it starts negatively impacting the economy and would that amount bring the deficit to zero?? Then understand that even if we get the deficit to zero we still have this $16 trillion plus debt to try to pay off AND the interest on it is an enormous drag on our budget. This is exactly the problem we are seeing in Greece, Spain and Italy. We are not immune from a similar result. The only reason the depth of this problem is not more obvious is because of the huge amount of money the government is pumping into the system. We cannot continue this indefinitely and when we stop the house of cards comes crashing down around us. Simple as that.

Return to Clinton era taxes and Clinton era spending and I will agree to it.

In the past we had higher tax rates NOT higher taxes. This is because we had considerably more deductions and exemptions. Higher taxes are a killer to the economy, incentive and willl plunge us into an economicv collapse. On this I disagree, I think we need to reduce taxes even further especially on businesses.

The magnitude of the debt has passed a tipping point. This is NOT post WW-II and massive economic growth is not in our future.

Japan is by all measures in a multi-decade recession and many of their problems mirror our problems. What Japan has going for it is a single culture and a culture that accepts sacrifice and sufferring for the motherland as a given. It was a mistake on your part to cite Japan as proof of your theory.

You forget the tax cut of the 2000's was in response to the recession of 1999 caused by the tax increases in the 90's.

It would indeed be prodent to run surpluses. Given human nature and political nature I don't see this happening any time soon the Radical left is pulling a bait and switch by argueing for taxes to fic the deficit but knowing full well higher taxes will harm the economy and result in lower tax revenues.

You're the one who wanted to return to Clinton level taxes but now suddenly you say we can't return to that???

You are hung up on the % of GDP when it seems to favor your arguement but it is meaningless in this context. If our budget were computed in % of GDP then it might make sense but our budget is computed in dollars so what matters is how many dollars the tax brings in.

So your position is that indeed taxes do kill the economy so as soon as the economy recovers we will raise the taxes?!?!?!?? WHY? If lower taxes mean a stronger economy then lets lower taxes and let the citizens enjoy the benefits of a stronger economy.

You are dead wrong about Japan. Better read up on it before you comment. And again you are using a meaningless measure. If you were broke and had one cent to your name and I gave you a penny your total assets would have doubled but would it mean anything. It is dishonest to search for some standard that will support your preconceived ideas.

The recession of 1999 began in Nov-Dec 1999. But like most recessions we don't realize it until months later so it is general believed to have started in Jan-Mar 2000.

We absolutely could run surpluses again but to do that you must spend less then you take in and our politicians won't do that. Gingrich was a one of a kind and unless you put him back in charge of the budget you won't see surpluses again in our lifetime.

The bottom line is our present course is not sustainable. It was an incredibly stupid mistake for Obama to pursue Keynesian economic policies and I see no evidence they understand that yet. We cannot continue to borrow, print and spend. We cannot afford to depress our economy by increasing taxes. That leaves the one option and that is to seriously cut federal spending and in this case that needs to be at least $1.5 Trillion. No matter what we do a crash is inevitable, it's just a matter of time. Now a crash is not the worst thing, if we had simply allowed the economy to crash in 2008 and cut taxes we would have recovered from the recession by now and this would all be ancient history today. But because the administration choose to go down the Keynesian economic road we are in a much worse place today then we were in 2008. So it will be a bigger crash. So those are the choices; bite the bullet, crash now and take a few years to get out of the recession or keep playing with Keynesian policies and crash in 6 months or a year maybe more and probably be in a full fledged depression for 6-10 years. There is simply no way out that will avoid this process.

So your economic policy would be one of borrowing during bad economic times instead of reducing the size of government and then in good economic times taxing the shit out of the citizens which of course brings bad economic times! Why not reduce the federal government to simply what the constitution requires and allow the people to keep their money?

"Suppose the U.S. had put some of the projected Clinton surplus into a “lock box” instead of using it for tax cuts"

You just don't get it! The tax cuts brought in record tax revenues as the people felt compelled to work harder and make more money since they were able to keep more of what they earned.

You are simply wrong about Japan. First they called it the "lost decade" and now they are calling it the lost 20 years. Japan is in a 20 year economoc downturn where they have borrowed trillions to make up for decreasing tax revenues (sound familiar). Japan's finance minister is holding interest rates to zero (again, sound familiar) in a vain attempt to stave off the inevitable. Japan has a brave facade but they are effectively in a 20 year depression and we face the same thing is we follow the same failed policies.

The only reason you need to define the 1999 recession as a 2002 recession is so you can blame Bush and not the real cause which was the Clinton tax increases (and the dot com bubble of course).

Because a bill is labeled "the deficit reduction bill" does not mean it is actually a deficit reduction bill. The Democrats are expert liars and they knew that the name would be important. What they should have called the bill was "a wild ass tax and spend bill" but that would be way to honest a name for the Democrats.

We cannot tax our way out of this and thise fetish that Democrats have with punishing anti-freedom taxes astounds me. No one should be plunged into poverty by the tax man. If you want a strong economy and a strong country again cut back all federal, state and local spending (and taxes) by 50% and make that permenant. Take away the ability for government to borrow. Place term limits in place to prevent travesties like Harry Reid and Ted Kennedy.

The debt is a far more serious issue then you are aware of. This is not just a case of being "a little more in debt". There is a point you can cross where the debt and the debt service is so great that it becomes impossible to manage. It isn't a clear cut line but at some point you cross an event horizon and become trapped in a downward spiral that you cannot recover from. We may have crossed that line and are doomed to crash. Can we simultaneously pay for all required government programs, pay the debt service and pay down the debt?? I say no and the proof is that we are borrowing $1.5 trillion a year and printing about $1 trillion a year. What we are doing is grabbing at straws and telling the voters we are dog paddling. And yet even as we spiral down there are those who continue to cry "tax, tax, tax and spend, spend, spend.

Actually it was that policy that caused the great depression to last 11 years. It was WW II that ended the depression. Keynesian economics never works for long.

I am a firm believer in setting aside resources in times of plenty but if you think that what the Democrat tax and spend policy is you are delusional.

No! The people who want "free stuff" need big government. The rest of us could get along fine without it.

"Tax receipts in 2000 were $2.0 trillion. Tax receipts in 2004 were $1.9 trillion" More dishonesty on your part. Tax revenues increased every year after 2003 thru 2007 (after democrats took over congress). You like to pick and choose your stats to support your arguement but wouldn't you prefer to be right?

If you truely do not understand what is going on in Japan then that explains so much about your philosophy.

You are correct that the 1999-2000 recession was mild and that is because of Bush tax cuts!!!!

Yes we both agree that Gingrich and congress did a great job on the budget in the mid 90's but it was not (solely) because of tax increases.

Plans that occur "in the out years" is politician talk for give me what I want now and I promise later I will fix it. How do we get out of this mess Obama has created with his Keynesian policies? What investors want to see is lower taxes, the end of Obama care and a rational president who isn't a Marxist.

But make no mistake; we cannot pay off this debt, we cannot service the debt especially when interest rates go back to normal or higher and we cannot afford higher taxes. We have passed a tipping point but the printing presses and borrowing are camoflaging the depth of the problem. Soon enough it will become obvious.

Keynesian economics is a fairytale economic theoryinvented by Keynes who was a committed Marxist. His intent was to prop up Marxism and his theories were rationalizations. Keynesian economic theory does not work in real life it is a prescription to hyperinflation and destroys capitalism.

Higher taxes stifle recovery and force businesses off shore. Lower taxes on the other hand encourage investment and productivity. There is no good reason to mandate punishing taxes that will plunge us into a great depression.

The housing bubble was a direct result of President Clinton's and the Democrat congress policies intended to make it easier for poor people and people with poor credit buy homes; a noble intent. However as anyone with two brain cells could have guessed poor people and people with bad credit cannot or will not keep their payments up, duh! The result was that eventually this house of cards collapsed. The Bush administration attempted numerous times to convince the Democrats to tighten up the rules and prevent this impending disaster but the loony left in congress (Barney Frank, Chris Dood, Ted Kennedy) fought it tooth and nail right up until the system collapsed. A dlassic example of failed government meddling.

When you say "the U.S. has ample resources to deal with their deficits" what you really mean is your radical Marxist socialist view of government hasn't yet grabbed all our money yet and there is more still to plunder. What we need is to stop the bleeding and radically scale back government and reduce taxes and put the people back in control. The government is too big and it is like a parasite infecting the host and draining the life blood from it. The cure is to fire the Marxist in chief and the left wing socialist/communist democrat congressmen and replace them with citizen legislators.

KEYNES was a socialist who disagreed with Marx only in how socialism was implemented. His theories are fundamentally collectivist and anti-democratic. He was very influential but in many/most of his theories he was wrong. I would say that Friedrich Hayek & Ludwig von Mises were more influential in the 20th century at least in that what they espoused is still accepted. However I believe that Milton Friedman has the best handle on economics, capitalism and democracy.

You keep saying “you have to have taxes to have a stable environment”. No you don’t! If the federal government did nothing else but keep an adequate military, fund the federal courts and keep the congress and administration out of the rain we would all be better off. Almost everything else the federal government does wastes money and hurts the economy.

When Alan Greenspan was in the Fed he was saying the problem was Fannie and Freddy making subprime loans. The problem WAS the loans and certainly not demand for mortgage backed securities. You have drunk the cool aid.

The constitution mandates the federal government provide for the national defense. The SS although not constitutional has been in place too long to pull the plug so simply separate it from congresses heavy hand and let it run like any other annuity. Elimiate 90% of federal workers close down most federal departments (agriculture, commerce, education, energy, HHS, DHS, HUD, DOL, DOI, and DOT) and combine the few valid offices from these departments. End welfare!! We spend about $1.2 trillion in all forms of federal welfare in 24 different programs. Eliminate them all and provide a single plan run by the states called workfare where anyone needing assistance can get a 40 hour a week job earning minimum wage.

The U.S. cannot avoid a crash. We have passed a tipping point and now it is just a question of time. Obama, Reid and Pelosi have doomed us to a depression and it will happen. Like all depressions, “this too shall pass”. AFTER we crash then we adopt those policies to create a smaller federal government and give the citizens more freedom and allow them to keep more of what they earn. My position is unchanged.

That should be 2400 different federal welfare programs, not 24.

What did the founding fathers mean when they wrote "provide for the general welfare"?
Here is how the word "welfare" was defined 40 years after it was written in the Constitution:



WEL´FARE, n. [well and fare, a good going; G. wohlfahrt; D. welvaard; Sw. valfart; Dan. velfærd.]
1. Exemption from misfortune, sickness, calamity or evil; the enjoyment of health and the common blessings of life; prosperity; happiness; applied to persons.
2. Exemption from any unusual evil or calamity; the enjoyment of peace and prosperity, or the ordinary blessings of society and civil government; applies to states.

A clear distinction is made with respect to welfare as applied to persons and states. In the Constitution the word "welfare" is used in the context of states and not persons. The "welfare of the United States" is not congruous with the welfare of individuals, people, or citizens.

Clearly the founding fathers did NOT mean to tax the shit out of the productive people to support the lazy people!


We agree on "get a job" I think everyone would prefer to be self sufficient and be able to take care of themselves. I will count that as a win in my column.