How would you balance the US budget?

[Whoha]

Originally posted by LordShiva


QFT

Smoot-Hawley FTW!

The time travelling tariff

[snoopy369]

Originally posted by Jon Miller


Not with my huge tax cut for over 50% of americans.

JM

You realize that one of the biggest deductions most people get is the mortgage deduction, right? Most of these people won't be in the 'huge tax cut' group...

[Jon Miller]

Originally posted by snoopy369


You realize that one of the biggest deductions most people get is the mortgage deduction, right? Most of these people won't be in the 'huge tax cut' group...

Most people make under 40k a year. As they will now pay no taxes, they will have a huge tax cut.

Now maybe most people don't own their own home. In that case, yeah, msot people who own their own home might not be getting a huge tax cut.

JM

[Aeson]

Originally posted by GePap
Not everyone can be a millionaire when they die. Hell, if everyone was, then a million wouldn't mean ****, would it?.

Where did I say "everyone" would, or even could? I simply said that we should encourage investment over personal debt. Obviously people will still spend money either way.

But it is equally obvious that as a nation we have too much personal debt for the good of the economy. Encouraging people to change to a more sustainable level of spending is a good thing, sorry.

So why is it that every single modern industrialized state has implemented a social welfare system? You would think that at least one system would have had the forethought and courage to know this, since you say it as if it were so self-evident.

Why is it that by "encourage investing" you think I am saying eliminate government welfare/healthcare?

You're argument is absurd. It assumes that everyone will behave the same. I want to encourage people to get off government coffers. That does not mean everyone will get off government coffers, or that there could be no situations where it's needed. Your "dichotomy" is completely ridiculous. We can encourage investment and still have (and have need for) social welfare systems.

Just hopefully in this case we can actually afford them, rather than putting ourselves and our descendants in a massive hole.

Except that people's income comes in the way of pieces of paper whose entire value is based on the trust given to the government that has given its word to honor that piece of paper. Which means that even if you worked your entire life, if everyone loses faith in the government who issued you those pieces of paper, you now have nothing.

So by decreasing government debt you think that the government is viewed as more risky?

Would our economy be as big if everyone had saved frugally to plan for their future?

Everyone isn't going to save frugally. That's obvious. But our economy would be in better shape if the government wasn't taxing it to support people who could support themselves by their own more efficient personal economics. Tax and spend is inefficient (at least for real world governments) in situations where the free market can deal with the issue on it's own, which is what we'd be encouraging.

It seems to me that investements (as opposed to savings) are such a good return because we can count on people not being frugal and instead spending as much as possible to increase their standard of living now, as opposed to holding off.

You seem to think that investment drains the economy of money or something. The simple fact is that invested money doesn't evaporate. It increases economic activity in it's own right.

Investement in what? For my investments to make money, they need to be in corporations making profits, and corporate profits come from consumer spending.

Like I said, your argument hinges on assumption that no one will spend, and that investment leads to money going inactive.

The reality is that people will behave in different fashions. There are obviously those who for whatever reason are oblivious to their financial position and will spend more than they can afford. That's not going to change much at all with a change in taxes.

The reality is also that when someone invests money, they are buying something. (Whether that is some form of contract which gives them a claim on the investment's future value, or actual physical holding of commodities.) That money goes to someone else who then can spend it themselves. That is economic activity in and of itself, leading to further economic activity as well. You seem to think that investing means sequestering money supply in an inactive state, which is simply not the case.

Also, when an investment matures, pays a dividend, or is sold, the return is spendable by the investor. Investments can even be used as collateral for credit. It's ludicrous to assume that by encouraging investing that it will lead to an end to spending.

[Jon Miller]

People have such a high level of personal debt partly because of how bad the economy is. It is the high ammount of debt which is allowed which has allowed them to survive without complaining (included with them is me).

Jon Miller

[snoopy369]

Originally posted by Jon Miller


Most people make under 40k a year. As they will now pay no taxes, they will have a huge tax cut.

Now maybe most people don't own their own home. In that case, yeah, msot people who own their own home might not be getting a huge tax cut.

JM

Nearly everyone who's not a small farmer who owns their own home makes at least 40k a year. I couldn't imagine raising a family of ONE child not to mention 2.3 on $40k a year.

Hence why this would be a significant drain on mortgage holders...

[Patroklos]

No, our economy is where it is in large part because of personal debt. Our abissmal savings rate predates the current economic slowdown by a good bit.

[GePap]

Like I said, your argument hinges on assumption that no one will spend, and that investment leads to money going inactive.

Actually, no. My arguement is based on the idea that the value of investements are completely liquid and based in large part on market opinions. You could have been investing for decades, and then the market takes a touble just when you were counting on it, and well, puff. Too bad I guess....

The reality is that people will behave in different fashions. There are obviously those who for whatever reason are oblivious to their financial position and will spend more than they can afford. That's not going to change much at all with a change in taxes.

The reality is also that when someone invests money, they are buying something. (Whether that is some form of contract which gives them a claim on the investment's future value, or actual physical holding of commodities.) That money goes to someone else who then can spend it themselves. That is economic activity in and of itself, leading to further economic activity as well. You seem to think that investing means sequestering money supply in an inactive state, which is simply not the case.

Yes, investing is economic activity itself, aninherently speculative act You are betting, whether rightly or wrongly, that X group will be able to turn a profit with your dollar, and thus give you back some amount of gain.

The reason we have things like Social Security is exactly because we want some level of certainty in being able to be sustained, regardless of whether your speculation (no matter how prudent or learned it was) worked out or not.

Also, when an investment matures, pays a dividend, or is sold, the return is spendable by the investor. Investments can even be used as collateral for credit. It's ludicrous to assume that by encouraging investing that it will lead to an end to spending.

1. Assuming what you invested on did not go belly-up and actually produced dividends.
2. I thought debt was a problem in your mindset?
3. An individual who bought shares did not use it to buy some consumer item, did he?

[Jon Miller]

Originally posted by snoopy369



Nearly everyone who's not a small farmer who owns their own home makes at least 40k a year. I couldn't imagine raising a family of ONE child not to mention 2.3 on $40k a year.

Hence why this would be a significant drain on mortgage holders...

Most families have two breadwinners. Additionally, a lot of people have two jobs currently (see recent threads on the subject).

JM

[Jon Miller]

Originally posted by Patroklos
No, our economy is where it is in large part because of personal debt. Our abissmal savings rate predates the current economic slowdown by a good bit.

For most people, their fortunes have been heading down hill for ~30 years. When did the low savings rate start? 90s?

JM

[Patroklos]

For most people, their fortunes have been heading down hill for ~30 years. When did the low savings rate start? 90s?

Either way, I speak truth

[DirtyMartini]

Originally posted by Jon Miller


Not with my huge tax cut for over 50% of americans.

JM

The people who depend most on the mortgage interest tax deduction are the (upper) middle class. It's the only tax break they get, which is another reason many took out borderline-affordable loans in order to maximize that tax break.

You take someone making 100ish k who bought a house in California in 2005. They're pretty much walking the tightrope and 100% dependent on that tax deduction to make it. Not that they planned wisely, but you'd change the rules on them midstream.

[Zkribbler]

Originally posted by Jon Miller


For most people, their fortunes have been heading down hill for ~30 years. When did the low savings rate start? 90s?

JM

It was during Reagan's administration.

[Aeson]

Originally posted by GePap
You could have been investing for decades, and then the market takes a touble just when you were counting on it, and well, puff. Too bad I guess....

The inherent risk of ending up financially reliant on social programs by investing it is less than in the case of willingly spending yourself into debt.

Yes, investing is economic activity itself, aninherently speculative act You are betting, whether rightly or wrongly, that X group will be able to turn a profit with your dollar, and thus give you back some amount of gain.

At least you have a chance of it paying out. But feel free to piss your money away on interest payments if the speculative investment scares you.

The reason we have things like Social Security is exactly because we want some level of certainty in being able to be sustained, regardless of whether your speculation (no matter how prudent or learned it was) worked out or not.

And nothing would change about that.

1. Assuming what you invested on did not go belly-up and actually produced dividends.

I qualified my statement as to the "return". If there is no return on investment, then obviously it can't be spent. Even if the money is "lost" in regards to you though, someone gets it. It doesn't just disappear.

2. I thought debt was a problem in your mindset?

Debt is not necessarily a problem, though all else equal it's better to collect interest than pay it. The level of debt where people are defaulting on their loans, or walking away from mortgages, is a bad thing. The level of debt where people have to stop spending altogether just to make interest payments is a bad thing. We are well past the point where further personal debt is a good thing, by a wide margin.

3. An individual who bought shares did not use it to buy some consumer item, did he?

The person he bought it from might have. Or may have invested it themselves. Ad infinum. But in the end the money will be used to purchase goods or services, it doesn't just disappear. Unless you're investing in some granny burying the money in tin cans in her back yard. In which case I suggest you find something else to invest in. (Like maybe a shovel to go get your money back.)

[DanS]

Originally posted by Jon Miller
Most people make under 40k a year. As they will now pay no taxes, they will have a huge tax cut.

Fundamentally, it is wrong for people to pay no taxes. They would have no investment in making sure their tax dollars are spent correctly, and therefore would have no investment in voting in their own interests. It's a big step to bread and circuses.