If Bush is considered 'What is Republican'...

[The Templar]

Originally posted by Ned
Kid, not only did revenues grow, but so did revenues as a percentage of GDP. This forced the budget into surplus. Just as it went into surplus, the wheels came off.

Still waiting for you to serve up some causality with that correlation ...

[Harry Tuttle]

*Harry comes back from the war...*

What the hell are you guys talking about now?

[Q Classic]

i remember reading somewhere about a bunch of failed states in africa which had such huge deficits and debts...

[Q Classic]

incidentally, i don't recall any of them ever having a surplus...

[Imran Siddiqui]

Well if they had huge deficits and debts, then no, they wouldn't have a surplus .

[Kidlicious]

Originally posted by Q Cubed
i remember reading somewhere about a bunch of failed states in africa which had such huge deficits and debts...

Failure results in deficits. Deficits don't always result in failure even when they are considerable. The US deficit is no real danger. If interest rates go up we should pay it off or do something about the interest rates. It's completely managable.

[Q Classic]

i point that out because i'm not sure i buy this claim by ned:

Kid, not only did revenues grow, but so did revenues as a percentage of GDP. This forced the budget into surplus. Just as it went into surplus, the wheels came off.

yes, it's true that it happend, but it also could very well be coincidence. where is the causal link?

of course, rules in the nedaverse might operate differently...

[The Templar]

Originally posted by Q Cubed


i point that out because i'm not sure i buy this claim by ned:

Kid, not only did revenues grow, but so did revenues as a percentage of GDP. This forced the budget into surplus. Just as it went into surplus, the wheels came off.

yes, it's true that it happend, but it also could very well be coincidence. where is the causal link?

of course, rules in the nedaverse might operate differently...

That's two of us that want to see some causation.

[Kidlicious]

Ned,

The thing is that taxes don't cause recessions unless total disposable income decreases as a result.

[Ned]

Originally posted by The Templar


Still waiting for you to serve up some causality with that correlation ...

I just noted the timing of events. The wheels came off when we went into a surplus due to a large spike in tax revenues as a percentage of GDP. Saying the wheels came off because of x or y in the private economy is little better than saying he wheels came off because the wheels came off.

[Ned]

Originally posted by Kidicious
Ned,

The thing is that taxes don't cause recessions unless total disposable income decreases as a result.

Kid, I don't have DI figures for 1999-2001 period. But the point remains that prior to 1999 the budget deficit was stimulating the economy. Thereafter, the surplus dampened it.

We also know that Greenspan hiked interest rates at the same time.

The combined effects began to cause the stock market to go done. That added to the dampening effect.

And the rest is history.

However, Kid, it clear to me that part of the problem we had was the surplus. We might have been able to sustain a surplus IF Greenspan had not at the same time hiked interest rate. This was a double-whammy of sucking money out of the private sector.

[Ned]

Again, the reason I am pointing this out here is that even though the Republicans have "historically" been in favor of balanced budgets, they were wrong. Guys like Kennedy showed us that cutting taxes and stimulating the economy through deficits is the way to go (so long as the deficit does not exceed the growth for an indefinite period, as that will only lead to a financial collapse).

There used to be a saying that the Democrats were better for the economy. The reason for this had a lot to do with deficits.

Now that the Dems are calling for balanced budgets, it appears that there has been an historic shift in the parties on this issue. I think the Repubs now have the better position.

[Imran Siddiqui]

So when are we supposed to pay it back? Or are we never supposed to pay our debt back? So one day we can have crippling interest rates which will destroy our economy (forget about a soft landing)?

[Ned]

Originally posted by Imran Siddiqui
So when are we supposed to pay it back? Or are we never supposed to pay our debt back? So one day we can have crippling interest rates which will destroy our economy (forget about a soft landing)?

Never is the right answer.

You can still run a deficit, but so long as it less than the GDP growth, the level of debt to GDP will shrink.

Why should we allow inflation to get out of control again? Carter taught America a lesson we will never forget. Without inflation, interest rates should stay low.

[Imran Siddiqui]

Never is the right answer.

Oh lord... if you were running the economy, I'd flee the country. As interest rate increases to such a point that the country goes under, you'd still want a higher deficit!

as el freako said:

If nothing is done, and Bush's tax cuts are made permanent (as seems likely) then the US will face budget deficits of 10% to 15% of GDP 15 to 20 years time.

I doubt we'll grow at 15% anytime soon.