Spending into poverty

[Bottomfeeder 244]

Sorry for posting part of the article, but we all know there are major budget problems that must be fixed if this country is to remain viable. If congress would stop spending things might improve. The questions near the bottom of the article need to be addressed by every American.

Demographic Reality and the Entitlement State

by Ron Paul

The Government Accountability Office, or GAO, is an investigative arm of Congress charged with the thankless task of accounting for the money received and spent by the federal government. As you might imagine, people who spend all day examining the nitty-gritty realities of federal spending and deficits might not share the voters' enthusiasm for grand campaign promises.

David Walker, Comptroller General at GAO, has been on a speaking tour of the U.S recently – and he pulls no punches when explaining just how precarious our nation's entitlement system really is.

He explains that Social Security and Medicare are headed for a train wreck because of demographic trends and rising health care costs. The number of younger taxpayers for each older retiree will continue to decline. The demand for "free" prescription drugs under Medicare will explode. If present trends continue, by 2040 the entire federal budget will be consumed by Social Security and Medicare. The only options for balancing the budget would be cutting total federal spending by about 60%, or doubling federal taxes.

Furthermore, Walker asserts, we cannot grow our way out of this problem. Faster economic growth can only delay the inevitable hard choices. To close the long-term entitlement gap, the U.S. economy would have to grow by double digits every year for the next 75 years.

http://www.lewrockwell.com/paul/paul351.html

[otterinbham 0]

Yes, thank you for that Bottomfeeder. That being said, why are you such an ardent Democrat, the party most responsible for feeding and nurturing this beast?

I have made no secret of my revulsion for the freespending habits of the current Republican regime in Washington. I have predicted their trouncing at the polls for the past six months. Why? Because the current Republican congress has strayed so far from Republican ideals, especially with the wholly unnecessary, hideously expensive Prescription Act.

However, I am confident that a new Republican leadership will emerge and wrest control from the current bunch of feckless sleazes who squandered a historic opportunity to right the ship of government. At the same time, Democrats see absolutely nothing in the budget that requires fixing. To them, jacking up the tax rate is the solution, even though it is axiomatic that higher tax rates retard economic growth.

[Bottomfeeder 244]

That being said, why are you such an ardent Democrat, the party most responsible for feeding and nurturing this beast?

Because they spend most of it here, and not over there (pick a country, like say Iraq). And, they are less likely to fund the coprorate tax breaks, especially after they are profiting off of the misery of their own, us. I vote Dem because our money should stay here, but I do have a conservtive stance on illegal immigration and the balanced budget. Futhermore, no bids contracts to Haliburton will cease. Haliburton is a good stock to short in the next few years as they are brought to court. Most of the other fly-by-night outfits will probably go bankrupt due to high legal fees. It's going to be said few years for corporate America, and I love it.

[otterinbham 0]

That being said, why are you such an ardent Democrat, the party most responsible for feeding and nurturing this beast?

Because they spend most of it here, and not over there (pick a country, like say Iraq). And, they are less likely to fund the coprorate tax breaks, especially after they are profiting off of the misery of their own, us. I vote Dem because our money should stay here, but I do have a conservtive stance on illegal immigration and the balanced budget. Futhermore, no bids contracts to Haliburton will cease. Haliburton is a good stock to short in the next few years as they are brought to court. Most of the other fly-by-night outfits will probably go bankrupt due to high legal fees. It's going to be said few years for corporate America, and I love it.

Actually, your assumptions are incorrect, Bottomfeeder. The lower the tax burden for corporations, the more they spend on capital investments. Production capacity. Hiring of workers. Return for shareholders. During the 70s heyday of taxation on corporations and 70% capital gains taxes, American economic growth was virtually nil. Today, with lower taxation levels, we look at an average growth twce that of Europe and unemployment half their rate. Why? Because they can't shake their socialist economic model. As a result, over the past twenty years, the United States created more jobs than Europe and Japan combined.

As far as the Democrats spending it mostly here, the real answer is that they spend it ineffectively. Terrible waste characterized Democrratic social policy.

[TexasTiger 13,017]

That being said, why are you such an ardent Democrat, the party most responsible for feeding and nurturing this beast?

Because they spend most of it here, and not over there (pick a country, like say Iraq). And, they are less likely to fund the coprorate tax breaks, especially after they are profiting off of the misery of their own, us. I vote Dem because our money should stay here, but I do have a conservtive stance on illegal immigration and the balanced budget. Futhermore, no bids contracts to Haliburton will cease. Haliburton is a good stock to short in the next few years as they are brought to court. Most of the other fly-by-night outfits will probably go bankrupt due to high legal fees. It's going to be said few years for corporate America, and I love it.

Actually, your assumptions are incorrect, Bottomfeeder. The lower the tax burden for corporations, the more they spend on capital investments. Production capacity. Hiring of workers. Return for shareholders. During the 70s heyday of taxation on corporations and 70% capital gains taxes, American economic growth was virtually nil. Today, with lower taxation levels, we look at an average growth twce that of Europe and unemployment half their rate. Why? Because they can't shake their socialist economic model. As a result, over the past twenty years, the United States created more jobs than Europe and Japan combined.

As far as the Democrats spending it mostly here, the real answer is that they spend it ineffectively. Terrible waste characterized Democrratic social policy.

And yet, the stock market does better under Dems. Why is that?

[otterinbham 0]

That being said, why are you such an ardent Democrat, the party most responsible for feeding and nurturing this beast?

Because they spend most of it here, and not over there (pick a country, like say Iraq). And, they are less likely to fund the coprorate tax breaks, especially after they are profiting off of the misery of their own, us. I vote Dem because our money should stay here, but I do have a conservtive stance on illegal immigration and the balanced budget. Futhermore, no bids contracts to Haliburton will cease. Haliburton is a good stock to short in the next few years as they are brought to court. Most of the other fly-by-night outfits will probably go bankrupt due to high legal fees. It's going to be said few years for corporate America, and I love it.

Actually, your assumptions are incorrect, Bottomfeeder. The lower the tax burden for corporations, the more they spend on capital investments. Production capacity. Hiring of workers. Return for shareholders. During the 70s heyday of taxation on corporations and 70% capital gains taxes, American economic growth was virtually nil. Today, with lower taxation levels, we look at an average growth twce that of Europe and unemployment half their rate. Why? Because they can't shake their socialist economic model. As a result, over the past twenty years, the United States created more jobs than Europe and Japan combined.

As far as the Democrats spending it mostly here, the real answer is that they spend it ineffectively. Terrible waste characterized Democrratic social policy.

And yet, the stock market does better under Dems. Why is that?

Who says? Economists such as Milton Friedman makes an excellent case that Democratic fiscal policy wreaked havoc with the market during the Great Depression. In fact, from the Fed's tightening of credit (which was not a Democratic issue, nor Republican, chiefly because the Fed is independent) immediately after the Stock Market Crash, to the exponential increase in personal taxation rates to the wholesale regulation of all aspects of the economy, the stock market would not equal its pre-crash high until the Eisenhower Administration. In fact, during the 13 years of the Roosevelt Administration, the Dow Jones only increased a paltry 60%. During the Truman administration's 7.5 years? Roughly 75%.

During the eight years of the Eisenhower Administration? 283%

From the beginnng of the Kennedy Administration to the End of the Johnson Administration? A 58% increase.

The Nixon administration was an utter disaster, driven by his faith in price controls. Remember that he was a Republican who declared himself a "Keynsian," hardly a free-market Republican. In fact, from an economic point of view Nixon was almost as liberal as Roosevelt. Add the spiraling cost of oil, and the untethering of the Dollar from the gold standard (which was actually Nixon's one smart move) and it was rough times for the economy. But, even so, the stock market managed to squeeze out a 3% increase.

Carter? A 10% DROP. I really can't add to that.

Reagan / Bush? The combination of tighter fiscal policy (Another move by the Fed), deregulation, lowering the tax rate, and slowing spending growth. Perhaps a great deal of this increase was artificial, due in large part to pent-up demand after decades of stifling regulation and taxation levels. A 360% increase.

3600-10,500 -- Clinton is an interesting case. To be fair, during the Clinton years, the stock market climbed 290%. Was this because of Clintonian fiscal policy? I would say no, chiefly because the real gains were only made after the Republicans took Congress and began blocking any wholesale reforms, essentially turning Clinton into a fiscal conservative despite himself. However, to his credit, Clinton took part in some notable reforms (Welfare as the key example) that boosted the economy. However, the Internet boom would have juiced the economy, no matter who sat in the Oval Office. However, I would have to give Clinton an overall pass because he shook off his hubris and chose not to wreck the hard-won progress of the Reagan Bush administration. Plus he kept Alan Greenspan in place, which is worthy of praise right there.

Bush. The jury is still out. To be fair to Bush, he inherited a stock market bubble that had already popped. Further due to a tax cut and some fancy footwork by the Fed a far more severe economic downturn was averted. That being said, his failure to rein in government spending will prove a boat anchor on the economy.

So, I think the overall question is not which party is better for the economy, but rather what economic philosophy is better for the economy. Keynsian economics have proven to be an absolute disaster wherever they have been implemented. Therefore, the party that subscribes to Keynsian thought is the party that should be prevented from holding the economic levers of the country.

[Bottomfeeder 244]

That being said, why are you such an ardent Democrat, the party most responsible for feeding and nurturing this beast?

Because they spend most of it here, and not over there (pick a country, like say Iraq). And, they are less likely to fund the coprorate tax breaks, especially after they are profiting off of the misery of their own, us. I vote Dem because our money should stay here, but I do have a conservtive stance on illegal immigration and the balanced budget. Futhermore, no bids contracts to Haliburton will cease. Haliburton is a good stock to short in the next few years as they are brought to court. Most of the other fly-by-night outfits will probably go bankrupt due to high legal fees. It's going to be said few years for corporate America, and I love it.

Actually, your assumptions are incorrect, Bottomfeeder. The lower the tax burden for corporations, the more they spend on capital investments. Production capacity. Hiring of workers. Return for shareholders. During the 70s heyday of taxation on corporations and 70% capital gains taxes, American economic growth was virtually nil. Today, with lower taxation levels, we look at an average growth twce that of Europe and unemployment half their rate. Why? Because they can't shake their socialist economic model. As a result, over the past twenty years, the United States created more jobs than Europe and Japan combined.

As far as the Democrats spending it mostly here, the real answer is that they spend it ineffectively. Terrible waste characterized Democrratic social policy.

Sounds good to me.

[TexasTiger 13,017]

That being said, why are you such an ardent Democrat, the party most responsible for feeding and nurturing this beast?

Because they spend most of it here, and not over there (pick a country, like say Iraq). And, they are less likely to fund the coprorate tax breaks, especially after they are profiting off of the misery of their own, us. I vote Dem because our money should stay here, but I do have a conservtive stance on illegal immigration and the balanced budget. Futhermore, no bids contracts to Haliburton will cease. Haliburton is a good stock to short in the next few years as they are brought to court. Most of the other fly-by-night outfits will probably go bankrupt due to high legal fees. It's going to be said few years for corporate America, and I love it.

Actually, your assumptions are incorrect, Bottomfeeder. The lower the tax burden for corporations, the more they spend on capital investments. Production capacity. Hiring of workers. Return for shareholders. During the 70s heyday of taxation on corporations and 70% capital gains taxes, American economic growth was virtually nil. Today, with lower taxation levels, we look at an average growth twce that of Europe and unemployment half their rate. Why? Because they can't shake their socialist economic model. As a result, over the past twenty years, the United States created more jobs than Europe and Japan combined.

As far as the Democrats spending it mostly here, the real answer is that they spend it ineffectively. Terrible waste characterized Democrratic social policy.

And yet, the stock market does better under Dems. Why is that?

Who says? Economists such as Milton Friedman makes an excellent case that Democratic fiscal policy wreaked havoc with the market during the Great Depression. In fact, from the Fed's tightening of credit (which was not a Democratic issue, nor Republican, chiefly because the Fed is independent) immediately after the Stock Market Crash, to the exponential increase in personal taxation rates to the wholesale regulation of all aspects of the economy, the stock market would not equal its pre-crash high until the Eisenhower Administration. In fact, during the 13 years of the Roosevelt Administration, the Dow Jones only increased a paltry 60%. During the Truman administration's 7.5 years? Roughly 75%.

During the eight years of the Eisenhower Administration? 283%

From the beginnng of the Kennedy Administration to the End of the Johnson Administration? A 58% increase.

The Nixon administration was an utter disaster, driven by his faith in price controls. Remember that he was a Republican who declared himself a "Keynsian," hardly a free-market Republican. In fact, from an economic point of view Nixon was almost as liberal as Roosevelt. Add the spiraling cost of oil, and the untethering of the Dollar from the gold standard (which was actually Nixon's one smart move) and it was rough times for the economy. But, even so, the stock market managed to squeeze out a 3% increase.

Carter? A 10% DROP. I really can't add to that.

Reagan / Bush? The combination of tighter fiscal policy (Another move by the Fed), deregulation, lowering the tax rate, and slowing spending growth. Perhaps a great deal of this increase was artificial, due in large part to pent-up demand after decades of stifling regulation and taxation levels. A 360% increase.

3600-10,500 -- Clinton is an interesting case. To be fair, during the Clinton years, the stock market climbed 290%. Was this because of Clintonian fiscal policy? I would say no, chiefly because the real gains were only made after the Republicans took Congress and began blocking any wholesale reforms, essentially turning Clinton into a fiscal conservative despite himself. However, to his credit, Clinton took part in some notable reforms (Welfare as the key example) that boosted the economy. However, the Internet boom would have juiced the economy, no matter who sat in the Oval Office. However, I would have to give Clinton an overall pass because he shook off his hubris and chose not to wreck the hard-won progress of the Reagan Bush administration. Plus he kept Alan Greenspan in place, which is worthy of praise right there.

Bush. The jury is still out. To be fair to Bush, he inherited a stock market bubble that had already popped. Further due to a tax cut and some fancy footwork by the Fed a far more severe economic downturn was averted. That being said, his failure to rein in government spending will prove a boat anchor on the economy.

So, I think the overall question is not which party is better for the economy, but rather what economic philosophy is better for the economy. Keynsian economics have proven to be an absolute disaster wherever they have been implemented. Therefore, the party that subscribes to Keynsian thought is the party that should be prevented from holding the economic levers of the country.

Interesting that you start with the "damage" done by FDR, and ignore the "damage" done by Hoover.

I'm not sure where you get your numbers, but here are sources which find different conclusions:

http://finance.yahoo.com/columnist/article/futureinvest/3022

http://money.cnn.com/2004/01/21/markets/election_demsvreps/

[otterinbham 0]

That being said, why are you such an ardent Democrat, the party most responsible for feeding and nurturing this beast?

Because they spend most of it here, and not over there (pick a country, like say Iraq). And, they are less likely to fund the coprorate tax breaks, especially after they are profiting off of the misery of their own, us. I vote Dem because our money should stay here, but I do have a conservtive stance on illegal immigration and the balanced budget. Futhermore, no bids contracts to Haliburton will cease. Haliburton is a good stock to short in the next few years as they are brought to court. Most of the other fly-by-night outfits will probably go bankrupt due to high legal fees. It's going to be said few years for corporate America, and I love it.

Actually, your assumptions are incorrect, Bottomfeeder. The lower the tax burden for corporations, the more they spend on capital investments. Production capacity. Hiring of workers. Return for shareholders. During the 70s heyday of taxation on corporations and 70% capital gains taxes, American economic growth was virtually nil. Today, with lower taxation levels, we look at an average growth twce that of Europe and unemployment half their rate. Why? Because they can't shake their socialist economic model. As a result, over the past twenty years, the United States created more jobs than Europe and Japan combined.

As far as the Democrats spending it mostly here, the real answer is that they spend it ineffectively. Terrible waste characterized Democrratic social policy.

And yet, the stock market does better under Dems. Why is that?

Who says? Economists such as Milton Friedman makes an excellent case that Democratic fiscal policy wreaked havoc with the market during the Great Depression. In fact, from the Fed's tightening of credit (which was not a Democratic issue, nor Republican, chiefly because the Fed is independent) immediately after the Stock Market Crash, to the exponential increase in personal taxation rates to the wholesale regulation of all aspects of the economy, the stock market would not equal its pre-crash high until the Eisenhower Administration. In fact, during the 13 years of the Roosevelt Administration, the Dow Jones only increased a paltry 60%. During the Truman administration's 7.5 years? Roughly 75%.

During the eight years of the Eisenhower Administration? 283%

From the beginnng of the Kennedy Administration to the End of the Johnson Administration? A 58% increase.

The Nixon administration was an utter disaster, driven by his faith in price controls. Remember that he was a Republican who declared himself a "Keynsian," hardly a free-market Republican. In fact, from an economic point of view Nixon was almost as liberal as Roosevelt. Add the spiraling cost of oil, and the untethering of the Dollar from the gold standard (which was actually Nixon's one smart move) and it was rough times for the economy. But, even so, the stock market managed to squeeze out a 3% increase.

Carter? A 10% DROP. I really can't add to that.

Reagan / Bush? The combination of tighter fiscal policy (Another move by the Fed), deregulation, lowering the tax rate, and slowing spending growth. Perhaps a great deal of this increase was artificial, due in large part to pent-up demand after decades of stifling regulation and taxation levels. A 360% increase.

3600-10,500 -- Clinton is an interesting case. To be fair, during the Clinton years, the stock market climbed 290%. Was this because of Clintonian fiscal policy? I would say no, chiefly because the real gains were only made after the Republicans took Congress and began blocking any wholesale reforms, essentially turning Clinton into a fiscal conservative despite himself. However, to his credit, Clinton took part in some notable reforms (Welfare as the key example) that boosted the economy. However, the Internet boom would have juiced the economy, no matter who sat in the Oval Office. However, I would have to give Clinton an overall pass because he shook off his hubris and chose not to wreck the hard-won progress of the Reagan Bush administration. Plus he kept Alan Greenspan in place, which is worthy of praise right there.

Bush. The jury is still out. To be fair to Bush, he inherited a stock market bubble that had already popped. Further due to a tax cut and some fancy footwork by the Fed a far more severe economic downturn was averted. That being said, his failure to rein in government spending will prove a boat anchor on the economy.

So, I think the overall question is not which party is better for the economy, but rather what economic philosophy is better for the economy. Keynsian economics have proven to be an absolute disaster wherever they have been implemented. Therefore, the party that subscribes to Keynsian thought is the party that should be prevented from holding the economic levers of the country.

Interesting that you start with the "damage" done by FDR, and ignore the "damage" done by Hoover.

I'm not sure where you get your numbers, but here are sources which find different conclusions:

http://finance.yahoo.com/columnist/article/futureinvest/3022

http://money.cnn.com/2004/01/21/markets/election_demsvreps/

I start with Roosevelt because he is really the first modern day Democratic president. And I think it's very fair to start with Roosevelt, chiefly because his was the first presidency to incorporate Keynsian thinking in his economic policy. Plus, when you actually examine the economic record of Roosevelt, the popular myth that he led us out of the Great Depression is bunk. In actuality, the unemployment rate in 1938 was almost as bad as 1933, five years after he took the oath of office. That means the true saviors of the American economy were Hitler, Mussolini, and Tojo. Because the American economy really didn't recover until World War II. Sad that's what it took.

Now I will not spare Hoover. Under his administration, the disastrous Hawley Smoot Tariff act took effect, which effectively destroyed international trade, and particularly crippled American agriculture. For example, a bushel of wheat that sold in 1920 for $1 sold for less than 25 cents in 1934, thanks in large part to protectionist measures begun under the Hoover administration.

My numbers are raw statistics from the Dow Jones web site that nicely tracks the historical averages. It's always best to go to the original source, don't you think?

[TexasTiger 13,017]

It's always best to go to the original source, don't you think?

Got a link to the data you used?

The first one I linked to measured annualized return, which is what matters most to the average investor.

[otterinbham 0]

It's always best to go to the original source, don't you think?

Got a link to the data you used?

The first one I linked to measured annualized return, which is what matters most to the average investor.

http://www.djindexes.com/mdsidx/index.cfm?event=showAverages

Here you go. Knock yourself out. But don't take my word for it, or some hack from CNN. Read Milton Friedman, somebody who really knows what he's talking about.

[TexasTiger 13,017]

But don't take my word for it...

Don't worry about that... Or your calculations...

But you did leave the NASDAQ out all together.

[AUman43 5]

If the republican philosophy is so correct, then WHY have 12 years of Republican rule and the alleged "love affair"' with corporations and accompanying tax breaks NOT translated into a wealth of good paying jobs and a history breaking vibrant economy? Truth is, most of the jobs the republicans "crow about creating" is minimum wage jobs that people cannot live on. Hey, kudos to them?! The majority of Americans currently make under $33,000 per year. We have become a consuming nation and we consume more than we produce. I'm tired of hearing about this bulls--T of corporations reinvesting in capital improvements and jobs when the truth is....they pay their stockholders record breaking dividends and THEY bank it. Period! Before someone jumps me on the so called "improving economy under Bush" remember those 12 years of Republican control and why is it that it just suddenly got better? Answer, the election and PR BS. Greed, corruption and opulent wealth has corrupted the Republican party and led them away from their ideals, which don't work anymore either. Moreover, it's time we brought back some of American jobs back . One puzzling thing about our nation is you will find older Americans are predominately democrats while the younger, more affluent Americans are mostly Republican. Most of these younger Americans don't know crap about a hard life nor do they know beans about hard work and sacrifice. Time for another tact!

[Tigermike 3,053]

If the republican philosophy is so correct, then WHY have 12 years of Republican rule and the alleged "love affair"' with corporations and accompanying tax breaks NOT translated into a wealth of good paying jobs and a history breaking vibrant economy? Truth is, most of the jobs the republicans "crow about creating" is minimum wage jobs that people cannot live on. Hey, kudos to them?! The majority of Americans currently make under $33,000 per year. We have become a consuming nation and we consume more than we produce. I'm tired of hearing about this bulls--T of corporations reinvesting in capital improvements and jobs when the truth is....they pay their stockholders record breaking dividends and THEY bank it. Period! Before someone jumps me on the so called "improving economy under Bush" remember those 12 years of Republican control and why is it that it just suddenly got better? Answer, the election and PR BS. Greed, corruption and opulent wealth has corrupted the Republican party and led them away from their ideals, which don't work anymore either. Moreover, it's time we brought back some of American jobs back . One puzzling thing about our nation is you will find older Americans are predominately democrats while the younger, more affluent Americans are mostly Republican. Most of these younger Americans don't know crap about a hard life nor do they know beans about hard work and sacrifice. Time for another tact!

Shug, are your eyes brown?

CPI:

-0.5% in Oct 2006

Unemployment Rate:

4.4% in Oct 2006

Payroll Employment:

+92,000(p) in Oct 2006

Average Hourly Earnings:

+$0.06(p) in Oct 2006

PPI:

-1.6%(p) in Oct 2006

ECI:

+1.0% in 3rd Qtr of 2006

Productivity:

unchanged in 3rd Qtr of 2006

U.S. Import Price Index:

-2.0% in Oct 2006

http://www.bls.gov/