Tax cuts and Budget surplus - the Australian way

[Kidlicious]

Originally posted by Shi Huangdi
Money that the government sits on doesn't do anything. Money that is invested grows the economy, and widens the tax base over the long run.

[chequita guevara]

Let's try an allegory.

You have a farm. You're doing really well, and you pay off all your debts. You still have extra coming in. You could decide to buy more land or put some away in case of a drought. If you buy more land, when the drought comes, you have more empty land. It doesn't help. If you put some away, you may have less land, but when the drought comes, you'll survive.

[Kidlicious]

Originally posted by Oerdin
Incrasing spending while cutting taxes and running up debt is bad policy that's why people should care.

It's not bad policy unless it ended badly. Since it didn't it was good policy. That's the way that works.

[Kidlicious]

Originally posted by chegitz guevara
Let's try an allegory.

You have a farm. You're doing really well, and you pay off all your debts. You still have extra coming in. You could decide to buy more land or put some away in case of a drought. If you buy more land, when the drought comes, you have more empty land. It doesn't help. If you put some away, you may have less land, but when the drought comes, you'll survive.

Public financing doesn't work like that. Money not in the economy isn't money at all really. The govt prints the money. Holding on to it is just like never printing it at all.

[chequita guevara]

They could buy things with it, like foreign bonds, stocks, gold reserves, etc. The idea is put money away for a rainy day, when they need it. If you only invest for the good times, you'll be screwed when the bad times come. And bad times always come.

[Dinner]

Originally posted by Shi Huangdi
Money that the government sits on doesn't do anything. Money that is invested grows the economy, and widens the tax base over the long run.

Alaska seems to be doing well with the perminent fund plus they invest it in stocks and bonds so it isn't exactly doing nothing. The money has helped develope infastructure in the state, fund public services, helped diversify the economy for when the oil eventually runs out, and it's provided a nice rebat check each year to the people of Alaska.

[Kidlicious]

Originally posted by chegitz guevara
They could buy things with it, like foreign bonds, stocks, gold reserves, etc. The idea is put money away for a rainy day, when they need it. If you only invest for the good times, you'll be screwed when the bad times come. And bad times always come.

Govts don't need to buy assets. They produce their own, called govt bonds.

[Dracon II]

Howard is putting quite a large sum of the surplus away for safe keeping... but it's basically a big superannuation fund for public servants. The opposition want to turn it into a fund for future investment in infrastructure.

[Skanky Burns]

With the amount of money invested in it, particularly if the sale of Telstra goes through, there will be more than enough money by 2020 to fund the retirement of the baby boomers and infrastructure. It is likely to overshoot the target amount by 10s of billions of dollars.