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Deficit Spending

 
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Joined: 17 Nov 2009
Posts: 65
Location: Southern Oregon

PostPosted: Wed Dec 09, 2009 8:46 pm
Post subject: Deficit Spending
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Time for some new fisticuffs.......

We're all aware that the US government's outlay on everything from economic bailouts to healthcare reform to alternative energy to our various wars is far above tax receipts.

In his Free to Choose book of a generation ago, Milton Freeman pointed out that deficit spending is actually akin to tax-funded spending--either one moves private activity aside and allows public activity to take its place.

An over-taxed society lacks the capital for private growth. A deficit spending society devalues its currency, and thereby also removes "value" (i.e.- purchasing power) from the pockets of its citizens.

Which do we want? No funding for the items above, funding via taxes, or "funding" via an erosion in our currency's value?

Please keep in mind that whomever amongst us owns assets such as real estate, gold, oil, coffee beans...and other non-currency dependent items can actually benefit from inflation.
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Dudde
The Monster at the end of this Post


Joined: 26 Nov 2008
Posts: 921
Location: Oklahoma!

PostPosted: Thu Dec 10, 2009 9:45 am
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I wish the US would find a way to weed out all the whining - we should've started years ago and had a temporary tax hike - as little as 1% would've helped out enormously.

Instead we cut taxes, spend frivolously and throw the dollar out =D

/siderant
Sorry, I discuss economics daily...

Quote:
Which do we want? No funding for the items above, funding via taxes, or "funding" via an erosion in our currency's value?


I don't see any problem with generating revenue through taxing above a certain tax bracket - obviously we don't want to tax those currently on unemployment or struggling to piece ends together, they're also getting public funding, which kind of negates the point to taxing.

however, I see nothing wrong with taxing people like me - I have slight problems paying the bills, but mainly my own fault, and if they took an extra 2-4% of my check for the next 6 months, it wouldn't affect me in the slightest (of course I don't WANT them too, but nobody will starve, freeze, or lose their house)
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Jade
Seven of Jade


Joined: 05 Nov 2006
Posts: 1000
Location: Santa Barbara, CA

PostPosted: Thu Dec 10, 2009 11:36 am
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I always hear people say "lower taxes are better for the economy", but I find myself unable to understand what that means. Compare the US to several of the more socialist countries, like Canada, the UK, Australia, etc... Throw in Sweden for an extreme example.

Does the US have a bigger GDP than those countries? Sure. I'm sure it's bigger on a per-capita basis too. Does that owe itself in some way to the lower taxes? Well, the lower corporate taxes certainly encourage big businesses, which are probably the main contributor to that large GDP. And yes, these businesses mean jobs for people, which means growth, blah blah blah blah. In general terms, these things are true.

But what does it mean in real terms for the people actually living in this country? Is unemployment lower? No. Would a person from a dirt-poor family have an easier time working their way up to become successful? HELL no. (For those Americans who are unaware of this fact, while taxes on higher income earners are definitely higher in Canada, as a ridiculously low-income earner on my graduate student stipend, I pay considerably MORE taxes in the US. Not to mention that navigating my way through the Canadian tax return took me a fraction of the time) Is the average income higher? Possibly, but there is a far bigger divide between rich and poor in the US than in any of these other countries - if you eliminated the top 2% of income earners from each country, I'm not sure the US would have the higher average. It probably doesn't have the highest median.

What about quality of life? Sweden is rated as highest in the world, and they also have pretty much the highest taxes. Health care? Americans like to think they have the "best" health care in the world, but actual studies that look at factors such as infant mortality, mortality from heart disease and other things, life expectancy, etc. etc. would disagree.

Not to mention that the American attitude toward Economics - taxes are bad, regulation is bad, free market is always better, let's grow grow grow grow!!! - led the entire world into this massive recession. I should think people might start questioning these mantras that they've believed in.

Are higher taxes "unbeneficial" for big businesses? Sure. But those big businesses are mostly getting filthy rich, and a couple % more tax isn't going to put them under.

Are higher taxes bad for the quality of life for the average citizen in the country? And I say AVERAGE. If you're earning 100 grand or more per year, I honestly don't think you'll notice a couple % more going to the government. Seriously. Get over it. Even if you're earning 50 000, you'll live. Especially if, like in Canada or Australia, those taxes were paying for your health care and your universities and schools, so that your expenditure on your family was *dramatically* lower.

But no, the rich people in the US don't want to lose their money, and they have a louder voice than everyone else, so they tell everyone that it will be bad for the economy, and that small businesses will go under, and disaster will fall..... Yeah, well, I've lived in countries with WAY higher taxes, and it just ain't true.

I guess I've gone off topic from the original question a little.... But not totally. I would say deficit spending is doing more damage than raising taxes. In general, though, do I think they're wrong to try and spend their way out of the recession? Well, only history 20 years from now might truly be able to give an answer to that...

Jade

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Dudde
The Monster at the end of this Post


Joined: 26 Nov 2008
Posts: 921
Location: Oklahoma!

PostPosted: Thu Dec 10, 2009 1:09 pm
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While it joys my heart to hear someone use facts and relate other instances to ours to prove it, because that rocks! I have to ask that you leave a little leeway in there for me to exclude myself from 'Americans' - it's sad, but I don't like associating with an entire society I'm embarrassed of and yell at daily =D

Although, without raising taxes, deficit spending CAN help greatly, as it puts your country into debt but allows you a little room to fix what's wrong on the inside. A couple of tweaks can make tremendous changes to the rate of growth, and that huge growth is what helps pay that deficit back quickly. Too bad we're not like the rich german guys who go together to sign a petition to let them pay more taxes =\
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Jade
Seven of Jade


Joined: 05 Nov 2006
Posts: 1000
Location: Santa Barbara, CA

PostPosted: Sat Dec 12, 2009 12:06 am
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woah, thanks for posting that... Coolest rich dudes ever!

Jade

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