I found this article very interesting when browsing another forum. What should we do to eliminate the deficit? Here is what the person wrote since copy-pasting it would be considered plagiarism.

 

 

 

But no one does that anymore... :roll:

 

Should we raise taxes or cut healthcare programs? How do we bring it down?

 

 

 

Here is the poster's comments:

 

 

 

Well, it seems our government is lying to us yet again (is anyone really surprized?). We've been told that the federal government is running a $318 billion deficit. What's really happening is that the government is cooking the books. Basically, the government doesn't do it's accounting the same way that it requires everyone else to do their accounting. If the government was anyone else, they'd be in jail. USA Today's cover story today is on this. Turns out, the real deficit, if the government did it's accounting like everyone else, is a staggering $3.5 Trillion. And this isn't the largest we've had either.

 

 

 

Back in 2004 it was $11 Trillion, equal to our entire GDP. Remember those "surpluses" under Clinton. The 2000 surplus was actually a $12.7 trillion dollar deficit.

 

 

 

To me, this shows why the "raise taxes to reduce the deficit" won't work. With a deficit this size, you'll never be able to raise taxes enough to cover this cost. We need to cut spending NOW, and the most important things to be cut cost-wise are social security and medicare. Read the article, those are what are costing us billions. Arguments of whether the government should be doing those services in the first place aside, we simply can't do them because we have no money to do them.

 

 

 

 

The federal government keeps two sets of books.

 

The set the government promotes to the public has a healthier bottom line: a $318 billion deficit in 2005.

 

 

 

The set the government doesn't talk about is the audited financial statement produced by the government's accountants following standard accounting rules. It reports a more ominous financial picture: a $760 billion deficit for 2005. If Social Security and Medicare were included ÃÆââââ¬Å¡Ã¬Ã¢ââ¬Ã

I bet we could cut billions a year by removing the top-heavy-ness from government-run organizations. Including education. (Don't get me wrong, though, education as a whole needs more funding.)

Ah yes... I've heard much talk about this on TV. All I can really say is that it scares me.

Ah yes... I've heard much talk about this on TV. All I can really say is that it scares me.

 

 

 

It seems as though you get scared a lot (or at least do those smilies...). Why are you so scared about the deficit?

Ah yes... I've heard much talk about this on TV. All I can really say is that it scares me.

 

 

 

It seems as though you get scared a lot (or at least do those smilies...). Why are you so scared about the deficit?

 

 

 

Even though it seems as though raising taxes wouldn't do much to solve the problem, I worry that they'll raise taxes anyway... In which case, I wouldn't be sure about my family's financial situation.

Ah yes... I've heard much talk about this on TV. All I can really say is that it scares me.

 

 

 

It seems as though you get scared a lot (or at least do those smilies...). Why are you so scared about the deficit?

 

 

 

If you're not even a little bit scared, you don't know the full brevity of the situation.

 

 

 

Let me reiterate. We have at least a $9 trillion defeciet. That's not just goint to go away. Each and every american citizen is going to have to pay, most likely through the nose.

 

 

 

Like I said, if you're not scared, you should be.

Ah yes... I've heard much talk about this on TV. All I can really say is that it scares me.

 

 

 

It seems as though you get scared a lot (or at least do those smilies...). Why are you so scared about the deficit?

 

 

 

If you're not even a little bit scared, you don't know the full brevity of the situation.

 

 

 

Let me reiterate. We have at least a $9 trillion defeciet. That's not just goint to go away. Each and every american citizen is going to have to pay, most likely through the nose.

 

 

 

Like I said, if you're not scared, you should be.

 

 

 

$9 tril ($9,000,000,000,000) is quite a lot of money, probably even more than I'll earn in a few years :mrgreen:

 

BUT Belgium, a nation with a little over 10 million inhabitants, has a debt of ÃÆââââ¬Ã¡Ãâì250,000,000,000 or $300 bill. If you calculate the per capita debt, we're nothing different:

 

Belgium: $300,000,000,000 / 10,000,000=$30,000 per capita

 

USA: $9 tril / 300 mill inhabitants = $30,000 per capita.

 

 

 

This means every inhabitant of both the US and Belgium ought to pay this amount to completely lift its deficits, which is never gonna happen, a country always has better purposes for money than to get rid of their debts. But right now, Belgium and the US need to spend a certain percentage of their taxes to paying (at least) the interests on this pile of money. Perhaps decrease the military spendings with 20% will do in the US :wink: :wink: (just kidding Piano or am I?)

 

Yes, Belgium's dificit is quite big for a country as small as that, but it is there for a reason; the institutions we borrowed money from had to be pretty sure that they got their money back, otherwise they'd never lend us anything. Same for the US. I just hope the tax system will be heavier for the upper classes, just the way it is in Belgium and acuatlly most of Europe. Then no grave problems should occur for any of the Americans.

Ask Jesus-boy in the White House how to solve our deficit problems. God can save us...Right?

Ask Jesus-boy in the White House how to solve our deficit problems. God can save us...Right?

 

Ouch :mrgreen:

 

 

 

Naa, Piano has started an interesting topic, let's not do this religion thing all over again.

Lol, thanks Oy. Actually, if we spent less money on welfare, we could lower the bureaucratic system and save lots of money!! I don't think cutting back on the military is going to help much. We spend 5% of our money on the military anyway...

 

 

 

But I have a question, Oy: By saying the rich should pay through the nose, you are eliminating or at least hampering your main source of income. If you let them keep earning money, the more you earn even with lower taxes.

 

 

 

It's Reaganomics in a nutshell. What do you think?

I'm kind of interested in where all of these numbers come from, people seem to throw them around pretty freely.

Lol, thanks Oy. Actually, if we spent less money on welfare, we could lower the bureaucratic system and save lots of money!! I don't think cutting back on the military is going to help much. We spend 5% of our money on the military anyway...

 

 

 

But I have a question, Oy: By saying the rich should pay through the nose, you are eliminating or at least hampering your main source of income. If you let them keep earning money, the more you earn even with lower taxes.

 

 

 

It's Reaganomics in a nutshell. What do you think?

 

 

 

What I think about Reagan's policy concerning taxes? That his words are opium for the people so that they are too blurred to see what's actually happening. I know that it sounds fantastic, but it really doesn't work that way, otherwise you people wouldn't have such a deficit, would you?

 

The marginal surplus the rich get because they don't have to pay as many taxes as here in Europe is a source of more investments, on which they have to pay taxes, true. But these taxes aren't (nearly) as much as when they didn't have that surplus and just had to pay more tax.

 

a simple example:

 

100 people total population

 

10% is rather rich, i.e. an annual wage of $50,000 before taxes

 

70% is average, i.e. annual wage of $15,000 before taxes

 

20% is poor, i.e. avg wage of $8,000 before taxes

 

 

 

Let's assume the 10% rich ppl are the only ones that can invest in new projects. Mr. Rich represents the 10% rich people, and thus has a $50,000 annual wage. Mr. Normal is the normal guy, representing 70% of the ppl with $15,000 a year, and Mr. Bum is the poor sod, with $8,000 a year and he represents the poorest 20%.

 

Now there's a flat tax of 35%, so every working person has to pay 35% taxes per year. That's a total of:

 

0.1*$50,000*0.35+0.7*$15,000*0.35+0.2*$8,000*0.35=$5,985 taxes per person average, out of a total average income of $17,100.

 

If Mr. Rich pays his taxes, he'll still have a net income of $50,000*0.65=$32,500.

 

He'll invest most of this, into perhaps a swimming pool, a beautiful garden or simply in the US economy, by buying shares. Let's assume he has to pay 20% VAT (vallue added tax, I hope Americans call it the same?) on every penny he invests.

 

He's saving a third of his net income a year, and spends the rest. So 2/3rd is invested, on which he has to pay 20% VAT = 2/3*32,500*0.2=$4,333. Add this bit that every rich person pays to the heap of taxes and we get:

 

$5,985 per capita + $4,333 per Mr. Rich there is (=10% of the pop.) = 1,00*$5,985+$4,333*0.1=a grand average total of $6,418 taxes per capita, rich or poor. It is now higher because of the investments the rich people did, like Reagan's economists predicted.

 

 

 

Now, imagine Mr. Rich had to pay more regular taxes on his income than the poor and average earners. Say, 40% instead of 35%.

 

same normal tax calculation, but the 10% rich ppl have to pay 40% instead of 35%:

 

0.1*$50,000*0.40+0.7*$15,000*0.35+0.2*$8,000*0.35=$6,235 taxes per person average, out of a total average income of $17,100 (=0.1*50,000+0.7*15,000+0.2*8,000).

 

Now, Mr. Rich still invests 2/3rd of the remaining salary he has and still saves 1/3rd. What remains= 0.6*50,000=$30,000 (which is, of course, less than the $32,500 with 35% flat tax). $20,000 gets invested, so the 20% taxes on them now 'only' are 0.2*20,000=$4,000.

 

Add the $4,000 that 10% of the people contribute to the state to the average tax of $6,235 and we get a total of: 0.1*$4,000+$6,235=$6,635 average taxes per capita. That means taxes per capita have increased with $6,635-$6,418= $217 per capita, per year. Since only the rich people made the difference here, you can fully understand that the 10% they represent are responsible for $2,170 ($217/0.1) extra taxes per year.

 

 

 

This way, the richer people lose, but everyone else wins. The total tax income rises with no less than 217/6635=3,3% (which is a LOT), only by raising Mr. Rich's tax with 5%.

 

 

 

I used rather accurate tax ratings, so I hope that you now see that Reagan wasn't right.

 

The matter is of course far more complicated, but the 3,3% rise in total tax income will not dramatically drop when you're 100% correct. It's most likely something like 1%, but that still is very much.

 

Things I didn't calculate: the savings of Mr. Rich, the intrests, investments of average people,...

 

 

 

 

And I'm sure that every Mr. Rich with a bit of common sense and sympathy for the poorer will pay that little more to solve any budgetary problem, after all, they will still be a lot richer.

 

My uncle in the US now is chief engineer in Molex (http://www.molex.com) and he earns more than the tenfold my mother earns, and she's a GP (that's a doctor, but in English ;)).

 

He too says that taxes are ridiculously low for the rich, he'd be glad to pay more taxes to get a better education system. Of course he doesn't really want to pay a lot for the unemployed people, but he does care about the general education his kids get, even though they go to private schools. The public education in the US is pretty horrible, especially compared to some of the western European and Japanese education and please don't try to say that it's not true. The universities however, are amongst the most promient universities in the world, but they also are incredilbly expensive.

 

How much does an average university year cost? About $50,000 if you mind costs for living and housing?And subscribing only is like $30,000 in a good uni? In Belgium the government pays a large percentage of that; that's where our taxes go to. University subscriptions cost about $500... The only true costs here are housing and food. Housing is about 200-300ÃÆââââ¬Ã¡Ãâì per month, a friend of mine in Philly paid $600 a month, and it wasn't even that expensive. Food is about the same price.

 

 

 

Belgian taxes may be a lot higher, perhaps even 15-20% higher, I still am more comfortable with the idea that when I have to go to hospital, my parents don't have to work another year. Or the uni stuff; lots cheaper.

I'm kind of interested in where all of these numbers come from, people seem to throw them around pretty freely.

 

 

 

Calculating the GDP or GNP is incredibly complex, there are many methods for it, and you would most likely not understand them, unless you've studied them. Calculating taxes is far easier though, there are rather many different kinds of taxes, but that's as complex as it gets.

 

I'm afraid I have no idea how calculating the amount of debt or the deficits work, but I can imagine it's not an easy sum either.

 

I just happen to know the Belgian numbers, because, well, I study applied economics.

I'm kind of interested in where all of these numbers come from, people seem to throw them around pretty freely.

 

 

 

Same here. According to GSW, the USA has at least a $9 Trillion deficit? I really want to find out how you know that exactly...

 

 

 

Interesting topic, but the USA's...or the World's economic problems can't be that easily discussed. I'm taking a few economics courses this year, so I don't have much to say on the whole issue atm, but it doesn't take a genius to say that by simply saying "cut [insert program here] spending" doesn't work. :?

Ask Jesus-boy in the White House how to solve our deficit problems.

 

 

 

Hardly a good idea. Bush's pork barrel spending is just making the deficit worse. Cutting taxes while raising spending is accelerating the deficit faster than ever.

 

 

 

Anyways, there won't be any way soon that we'll be able to lower the deficit. But we can slow it down.

The thing I'm worried about is this: Under the Bush Administration, military spending has increased from 4 percent to nearly 8 percent. Due to the neglect of our national debt, it is rising at a rate of nearly $315 million dollars a day. Is this continues, the United States' economy will suffer a severe depression by 2008.

 

 

 

Why am I worried? Because everything I just said, I made up. Can you really refute me? Sure, you might be able to point me to a news or government resource that states the national debt, or what exactly our military spending is, but that hardly makes it true. Do you really have any hard evidence, or just the numbers you're being given by the "experts"? Numbers lie, I wouldn't get too caught up in them.

I'm kind of interested in where all of these numbers come from, people seem to throw them around pretty freely.

 

 

 

Same here. According to GSW, the USA has at least a $9 Trillion deficit? I really want to find out how you know that exactly...

 

 

 

For crying out loud! Can't you people bother to read what others have posted? I just answered it.

 

According to my course 'introduction to economics', deficits are calculated in some way like this:

 

 

 

B = Deficit = R*(B-1) + (r-g)*G - T

 

with:

 

R= real interest rate.

 

B-1= Debt of last year.

 

r = Interest Rate

 

g= growth rate

 

G= Government Spending

 

T = Tax Revenue.

 

 

 

 

Now, if after many years, G is still bigger than T, the deficit keeps growing. Easy as that.

I'm kind of interested in where all of these numbers come from, people seem to throw them around pretty freely.

 

 

 

Same here. According to GSW, the USA has at least a $9 Trillion deficit? I really want to find out how you know that exactly...

 

 

 

For crying out loud! Can't you people bother to read what others have posted? I just answered it.

 

According to my course 'introduction to economics', deficits are calculated in some way like this:

 

 

 

B = Deficit = R*(B-1) + (r-g)*G - T

 

with:

 

R= real interest rate.

 

B-1= Debt of last year.

 

r = Interest Rate

 

g= growth rate

 

G= Government Spending

 

T = Tax Revenue.

 

 

 

 

Now, if after many years, G is still bigger than T, the deficit keeps growing. Easy as that.

 

 

 

Can't you be bothered to read what I post? I'd like to see you do that equation, with the correct information of course.

I'm not even going to answer such a dumb question.

 

How does a doctor know a patient has cancer? Why do engineers know how much weight they can put on a certain point? Why do archaelogists search here, and not there?

 

And finally: how do economists know how big the deficit is?

 

 

 

Information about such things is calculated; there are a number of agencies that do nothing but calculate the total tax income, the total governmental spendings etc. They get the information they need from governmental institutions as well, of course. They can't spy on them to know how much the government spends on the thousands of things it does. Some numbers are estimations, when there's a large chance of estimating it right, most numbers are simply calculations.

 

Is it that hard to understand?

I'm not even going to answer such a dumb question.

 

How does a doctor know a patient has cancer? Why do engineers know how much weight they can put on a certain point? Why do archaelogists search here, and not there?

 

And finally: how do economists know how big the deficit is?

 

 

 

Information about such things is calculated; there are a number of agencies that do nothing but calculate the total tax income, the total governmental spendings etc. They get the information they need from governmental institutions as well, of course. They can't spy on them to know how much the government spends on the thousands of things it does. Some numbers are estimations, when there's a large chance of estimating it right, most numbers are simply calculations.

 

Is it that hard to understand?

 

 

 

It is hard for me to understand why you are ignoring the point I'm trying to make and turning it into something else, Mr. School. All I'm trying to say is not to put faith in the numbers that we are given.

 

 

 

 

I'm afraid I have no idea how calculating the amount of debt or the deficits work, but I can imagine it's not an easy sum either.

 

I just happen to know the Belgian numbers, because, well, I study applied economics.

 

 

 

 

 

 

B = Deficit = R*(B-1) + (r-g)*G - T

 

with:

 

R= real interest rate.

 

B-1= Debt of last year.

 

r = Interest Rate

 

g= growth rate

 

G= Government Spending

 

T = Tax Revenue.

 

 

 

 

Now, if after many years, G is still bigger than T, the deficit keeps growing. Easy as that.

 

 

 

Uh. Yeah.

My god, you're one of the most irritating people I've ever met on the forum.

 

1/ it is easy as that: if G>T than B will continue to rise

 

2/ calculating G and T is hard, but it's something that's done by institutions, so I can't know how it works either.

 

3/ you need to read everything, not just the parts you think you can show off with. Besides, if your brain doesn't allow you to think a little further than being cynical, you have nothing to search in this thread.

 

As the matter of fact, not on these fora. You're not contributing anything here.

I did bring something to this post, talking about how numbers can be used for any means. You then quoted me, telling me that I need to learn how to read. So, I responded, pointing out that I was arguing a different point, and that you blatantly contradicted yourself in two consecutive posts.

 

 

 

I'm not trying to flame you, but please try to keep your mind open to other people's ideas, and please try to keep your arguments a little more civil. I don't like being called irritating and a moron when I'm only trying to make clear my point.

Ask Jesus-boy in the White House how to solve our deficit problems. God can save us...Right?

 

 

 

Wow, you're soo coool :roll:

 

Show some respect. That was really low of you.

 

 

 

 

 

As for this topic, can anyone give me a shortened summary if this has been answered already:

 

 

 

How is this going to directly, or I guess indirectly effect me? I'm turning 18 next year, so I'll have to start worrying a bit more about taxes and things like that, and to be honest, I'm too lazy to read through all of these posts to find my answer #-o . Sorry

I can play your blame-game as well Auberean.

 

It is hard for me to understand why you are ignoring the point I'm trying to make and turning it into something else, Mr. School.

 

Thanks for insulting me.

 

I'm not trying to flame you

 

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All I'm trying to say is not to put faith in the numbers that we are given.

 

So what you're trying to say is: don't believe the government? That's great. Then we can just as well give up our entire system. The government not disagreeing with the numbers is enough information to know that they're correct.

 

I don't say you have to believe everything the government says, on the contrary, but numbers about the deficit aren't something you can lie about. If a government does, sooner or later the truth will be known and that government will lose all of their credibility. So they won't lie, or not a lot.

 

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I did bring something to this post, talking about how numbers can be used for any means. You then quoted me, telling me that I need to learn how to read.

 

No I didn't:

 

3/ you need to read everything

 

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I'm afraid I have no idea how calculating the amount of debt or the deficits work, but I can imagine it's not an easy sum either.

 

Now, if after many years, G is still bigger than T, the deficit keeps growing. Easy as that.

 

So, I responded, pointing out that I was arguing a different point, and that you blatantly contradicted yourself in two consecutive posts.

 

I did not. Read what I said and you'll find your answer. But if you're not interested in scrolling up:

 

it's very difficult to correctly calculate the governmental expenses, G, as well as T, the total taxes. But there are many different, independent institutions who do that. If you would read some kind of economical magazine, you would find ample of these calculations.

 

BUT once you can more or less agree on a certain G and T; the deficit calculation is easy.

 

 

 

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As for this topic, can anyone give me a shortened summary if this has been answered already:

 

How is this going to directly, or I guess indirectly effect me? I'm turning 18 next year, so I'll have to start worrying a bit more about taxes and things like that, and to be honest, I'm too lazy to read through all of these posts to find my answer #-o . Sorry

 

 

 

Well, it of course depends on what your government plans on doing about it.

 

Belgium used to have a way too high debt as well, about 30 years ago. The government solved the problem by adopting a budgetary policy; which is simply another word for spending a lot less and using the available money to repay these debts. It's not good for the progress of a nation; the GDP will most likely stay stable or perhaps lower a bit even, but that's the price of debts...

 

Another option is a tax raise, which is more likely in the US, I think. But don't expect this tax raise to be obvious; that would be bad publicity. It'll probably involve a whole new concept so that you barely notice it, yet oyu do lose more money.

 

 

 

I don't think it's a drama though, the entire western world is facing a very difficult future because of the countless problems to come. Not only is there the generation problem; too many people become too old, but also the problems with the overpopulation in general, nature disasters, the rise of new nations such as China, etc. They all need to be dealt with, and I'm sure they will be, in an appropriate way.

 

 

 

And now I'm going to stop wasting my time. No one reads the larger part of what I say anyway.

Ask Jesus-boy in the White House how to solve our deficit problems. God can save us...Right?

 

 

 

Wow, you're soo coool :roll:

 

Show some respect. That was really low of you.

 

 

 

 

 

As for this topic, can anyone give me a shortened summary if this has been answered already:

 

 

 

How is this going to directly, or I guess indirectly effect me? I'm turning 18 next year, so I'll have to start worrying a bit more about taxes and things like that, and to be honest, I'm too lazy to read through all of these posts to find my answer #-o . Sorry

 

 

 

Show respect to whom? The man who's going to make the majority of my life miserable because I'll be too busy trying to play catch-up to do anything else? Yea, right. Screw George Bush right in his big, floppy monkey ears.

 

 

 

How does it effect you? As you grow older, you're going to find yourself paying all your money to the government so they can WASTE IT ON NOTHING.

 

 

 

Here's a good way to cut spending!

 

 

 

1. Pull out of Iraq. Admit defeat. We will *never* win there. Ever. We've trained police and military, now we leave. Also, we're spending a butt-load of money just to rebuild crap after we BLEW IT UP WITH A FEW $80,000 BOMBS, loaded up on a $5.2 MILLION DOLLAR JET.

 

 

 

2. Stop pampering government workers? They're workers just like the rest of us, yet for some reason, they do less - only for more money. Not only are they highly over-paid (and getting raises? WHY?), but they drive around in gas-guzzling, over-priced, government funded SUV's. Oh, and don't forget the Congressional Vacation I'm *SURE* we are paying for ourselves. I want a vacation if I'm going to be paying for it. The list goes on, but I think those examples will make the point.

 

 

 

3. Stop completely moronic spending in general. There are so many examples of this, I have no idea where to start. When an ordinary person see's spending like this, they think "What?! WHY?!", but when a government worker see's these things, they see them as necessary and would like more. They're spoiled little brats that have ZERO CONCEPT of money. They're like my 16 year old sister, really.

 

 

 

I'm tired, so at the moment that's all that came to mind, but I have no doubt there are a billion other things we could do. #3 just generalized pretty much everything...

 

 

 

But instead of cutting obviously wasted spending, we instead cut education, health care, etc...You know...Stuff that already sucks and we need MORE of. Lame.