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Current Topic: Economics

Legacy of Deficits Will Constrain Bush's Successor
Topic: Economics 10:12 am EST, Feb 12, 2008


George W. Bush took office in 2001 with budget surpluses projected to stretch years into the future. But it's almost certain that when he returns to Texas next year, the president will leave behind a trail of deficits and debt that will sharply constrain his successor.

I keep returning to a thought that I think I'll have to spend some more time thinking about at some point. It occurs to me that the fundamental legacy of the entire Bush presidency -- which includes, of course, not simply Bush, but all the cronies and advisors and appointees -- is the near total obliteration of people's trust in government.

Plenty of people simply hate Bush, but I believe on a deeper level, many people have learned to believe, to steal a phrase, that their issue is with the game, not the player. The culmination of so many failures, failures of government, over the past 7 years strongly undermines the faith people have that government is capable of solving their problems.

And I begin to believe also that this was the point. That the architects of this administration had an overarching goal of systematically rendering foolish the very notion of the federal government itself.

In other words, all the bumbling and incompetence, the unchecked spending, the outright mendaciousness, the straining of our military resources to the brink, the engagement in failed diplomacy, the trashing of the economy and the erosion of civil liberties, was designed to paint a vivid picture of the inability of government to effectively manage the affairs of it's people.

Even saying all this pushes the limits of my own conspiracy theory skepticism... I'm not really that guy for the most part. Of course, this is nothing more than a vague impression, not a researched position, and certainly not supported by specific evidence. Still, while correlation doesn't necessary equal causation, it may still be worth investigating. I just can't help being struck by how all the terrible shit that's happened over the past 7 years points in this same direction.

Legacy of Deficits Will Constrain Bush's Successor

The black box economy - The Boston Globe
Topic: Economics 7:05 am EST, Jan 29, 2008

Behind the recent bad news lurks a much deeper concern: The world economy is now being driven by a vast, secretive web of investments that might be out of anyone's control.

Ugh, depressing.

The black box economy - The Boston Globe

RE: Rising Above The Gathering Storm
Topic: Economics 10:28 am EDT, Oct 24, 2005

Decius wrote:
You want to lead the world in creating new innovations. The problem isn't that the economics of turning innovations into products aren't working out and so people aren't doing the innovation or they aren't doing it here. The problem is on the demand side and not the supply side.

I'd amend the above to say "The problem isn't only that..." Just my feeling. There's a problem on the supply side in the sense that many engineers are locked down in ways that prevent or discourage them from contributing.

You mention the options thing, and I agree with that. Another biggie for me is that I think the invention agreements I signed with my employer minimize my incentive to create new innovations. The possibility that they will fall under one of the provisions of that document and be summarily claimed by the employer makes me want to avoid interesting projects and conversations. That both reduces my value as an innovator and reduces my capacity to grow and expand my knowledge and my network.

Ultimately, that means I'm a cog and not a cog-designer, and it damages the competitiveness of the country.

RE: Rising Above The Gathering Storm

Bush says national sales tax worth considering - Aug. 11, 2004
Topic: Economics 4:12 pm EDT, Aug 12, 2004

] Opponents say such a system would not be in the best
] interests of the poor and the middle class who would pay
] the same tax rate as the wealthy even though they have
] less disposable income.

I saw this meme floating around last week but I ignored it because I felt it was unlikely to materialize. The President saying "thats interesting" doesn't, in my mind, make it any more realistic that this will happen, but everybody is talking about it, so its worth some commentary.

People, in general, seem to be responding to it very thoughtlessly. "Yeah, get rid of the IRS!" is about as mindless a response as those on the other side who are always screaming bloody murder over "low" corporate taxes without having a basic understanding of how accounting works.

What really bothers me about this proposal is that it seems to be defended with gross generalizations rather then hard data.

Sure, elmininating the income tax code will save some money, but how much exactly? There is a lot more to corporate accounting then income taxes. Its not like the accounting industry goes away. Most of those guys are collecting data for the benefit of investors, not the IRS. Nor is it like the government won't need a revenue organization. We know exactly how much it costs other countries to manage national sales taxes versus their income taxes. Why don't the proponents have this data?

Another assertion is that rich people will pay more taxes because they spend more money. Thats asinine! Any wealthy person who spends a proportionate amount of his income versus someone in the middle class is a fool who will not be wealthy for long!! Where is the data about the change in middle income tax burden? Most western countries have federal sales taxes. The information is available. The fact that advocates of this plan haven't collected it makes me very suspicious.

What this will do is make it really easy to save money for retirement. You no longer need tools like IRAs and 401ks. You can save as much as you want and spend it however you want. There is real freedom in that. Freedom for a Social Security system that is absolutely doomed. Of course, there are middle steps that can be taken toward that, such as raising the bar on Roth IRAs.

The other thing that it will do is make it basically impossible to raise taxes outside of a war context. Today small tax increases can be made in particular areas where political opposition to a tax increase is related to support for the item being funded. Under this system there will be only one tax, and so you've got to get everyone's permission in order to fund any new program. If a new program isn't unanimously loved its not going to run. Period.

Look at Tennessee. They are a sales tax state. Most states with a sales tax have a supplimental source of income, like tourism. Tennessee doesn't. Tennessee has huge revenue problems. They can't raise taxes. They can't afford proper schools. They'd can't afford their medicare program. They've nearly declared bankrupcy recently. They closed all the public parks in the state two years ago.

Thats how we're talking about running the federal government. Sure, its a great way to control government spending, but the results are less then pretty.

Bush says national sales tax worth considering - Aug. 11, 2004

The generation storm begins to brew...
Topic: Economics 1:38 pm EDT, May 30, 2004

] Alarmed by his company's escalating health insurance
] costs and a frightening scarcity of remedies, Ford Motor
] Co. Chief Executive William C. Ford Jr. declared in
] December that the nation needs an entirely new health
] care system.
] Then he tapped Ford's vice chairman to craft a proposal
] to develop one.

[ There's a few interesting tidbits in this article, but the excerpt above truly struck me. This is Ford motor company devoting resources to crafting a new health care system for the country. If the politicians can't do it, industry will, I guess.

On a related issue, the president's much ballyhooed prescription drug card isn't being adopted very widely, as seniors are either confused by them or unwilling to risk having to pay more than they do now by getting the drugs from canada. If those cards flop, it's going to be a fairly major liability for Bush over the next few months. -k]

The generation storm begins to brew...

Let Us Pray
Topic: Economics 11:06 am EDT, May  2, 2004

Tom Friedman corroborates the latest Stratfor Weekly analysis.

The most striking thing about being in Asia today is hearing how much more important China's growth engine has become for companies all across the region -- and well beyond it.

To some degree the world is getting hooked on China. The more hooked we become, the less the world can tolerate any sort of prolonged instability there. If the China bubble bursts, it will be the mother of all burst bubbles.

If a client owes you $1,000, that's his problem. If a client owes you $1 million, that's your problem. China's stability is our problem.

[ Indeed, Robert Wright makes this point in Nonzero... as we become more interconnected, our fates become tied, and our incentive to find non-zero-sum solutions is increased because their benefit is our benefit. Any impulse to screw the other guy is curbed somewhat by the knowledge that we'd be screwing ourselves.

edit : I memed another relevant Wright article from 9/02 in the NYT, here :

He mentions China in his analysis of the Bush foreign policy/national security plan relaeased about that time.

To jump topic a bit, I'm gonna re-recommend that book... as a long time cynic, but global optimist, this book has been massively reassuring, and very compelling. I generally think individuals are often stupid or selfish, but that humans, in total, tend to act in positive ways over enough time. I feel that this book has started explaining why i've had that impression for so many years... get a copy if you're into such things... -k]

Let Us Pray

Bush's Secret Tax on Democrats - How the Alternative Minimum Tax has become a Republican weapon. By Daniel Gross
Topic: Economics 3:42 pm EDT, Apr 14, 2004

] The Alternative Minimum Tax is becoming a miserable
] annual tradition for a growing group of prosperous
] taxpayers.

[ The title of the article is pretty sensational, and the conclusion it makes, that inaction on AMT is politcally motivated, is questionable, so I'll happily dismiss those points.

That being said, the actual information about the AMT and it's questionable, and increasing, application to the middle class is pretty interesting... I want to know more. I'm certainly not affected (I don't have shit to write off), but may be someday.

I wonder if anyone here on Memestreams has had experience w/ the AMT or has some knowledge to drop on us? -k]

Bush's Secret Tax on Democrats - How the Alternative Minimum Tax has become a Republican weapon. By Daniel Gross

The unemployment statistics the government doesn't want you to see...
Topic: Economics 2:37 pm EST, Mar 31, 2004

] The number of unemployed workers (currently 8.2 million)
] and the national unemployment rate of 5.6% in February
] 2004 do not adequately convey the true labor slack in the
] economy for several reasons. One major understatement is
] that the unemployment rate does not reflect the uniquely
] large 1.2% decline in labor force participation that has
] occurred since the current recession began in early 2001.
] This decline represents a stark contrast to the past
] three business cycles, when labor force participation
] actually grew by an average of 0.4% of the working-age
] population over similar lengths of time. Consequently,
] there is what can be called a "missing labor force" of
] 2,808,000 workers who might otherwise be in the actual
] labor force but have either dropped out entirely or
] failed to enter the labor market because of the lack of
] jobs. If the unemployment rate in February 2004 took into
] account this missing labor force, the unemployment rate
] would have been 7.4%, or 1.8% greater than the official
] rate of 5.6% (see chart below).

Here is someone publishing unemployment statistics which include the data about the contraction of the total labor force.

The unemployment statistics the government doesn't want you to see...

Mr. Greenspan's Warning
Topic: Economics 11:42 pm EST, Feb 27, 2004

] Under questioning, he acknowledged that Congress was
] unlikely to solve the deficit problem solely by cutting
] spending and would inevitably have to raise some taxes to
] keep deficits manageable. We took his testimony to mean
] that long-term deficit reduction is more important than
] permanent tax cuts. The White House, alas, is taking the
] opposite approach. It wants the tax cuts locked in before
] it provides any serious plan for how to restrain future
] deficits.

[ The White House exercises some seriously selective hearing. All the time. -k]

Mr. Greenspan's Warning

Greenspan warns against U.S. budget deficits - Feb. 25, 2004
Topic: Economics 11:12 am EST, Feb 25, 2004

] He proposed some solutions that would reduce future
] payments to retirees, including changing the ages at
] which retirement benefits are paid and changing the
] inflation measure used to index the payments.
] The government should pay the obligations it's already
] made, he said, adding that any cuts in future retirees'
] benefits should be decided as soon as possible so those
] people can plan ahead.
] ...
] While acknowledging that recent tax cuts had helped
] worsen the budget picture, Greenspan said he favored
] cutting spending rather than raising taxes, suggesting
] tax hikes could hurt the economy.

[ What should we cut? What's left? We're facing a deficit of over $500 billion, not including a few hundred billion for Iraq, etc. so where's that money gonna come from, if not taxes? -k]

Greenspan warns against U.S. budget deficits - Feb. 25, 2004

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