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<DIV><FONT size=2>Ted,</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>Good post.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>Its not rocket science. If you have debts you need to
curt spending and raise revenue. The more debt you have, the more of your
resources goes to debt service (interest, etc). Money spent for debt
service is money lost; money that can't be spent on anything else.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>Part of the problem is those who benefit by debt
services, e.g. holders of U.S. Treasury notes, etc of various kinds
are among those who contribute to the politicians that, whatever lip service you
give, keep us in debt by not voting for revenue increases. </FONT></DIV>
<DIV><FONT size=2></FONT><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>It a shell game. Distract the voters by birther and
other inflammatory non-economic issues so the public doesn't ask: why don't we
raise revenue, especially from those who can afford it, and especially for those
whose tax breaks like REITs do not benefit anyone except the trustees, and in
fact cost the general public more in the long run by increasing infrastructure
costs.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>w.</FONT></DIV>
<BLOCKQUOTE
style="BORDER-LEFT: #000000 2px solid; PADDING-LEFT: 5px; PADDING-RIGHT: 0px; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="FONT: 10pt arial; BACKGROUND: #e4e4e4; font-color: black"><B>From:</B>
<A title=starbliss@gmail.com href="mailto:starbliss@gmail.com">Ted Moffett</A>
</DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A title=deco@moscow.com
href="mailto:deco@moscow.com">Art Deco</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Cc:</B> <A title=vision2020@moscow.com
href="mailto:vision2020@moscow.com">Vision 2020</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Sunday, May 01, 2011 5:55 PM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: [Vision2020] Debt</DIV>
<DIV><BR></DIV>The arguments and facts as presented in this article regarding
the<BR>primary causes of the federal debt probably won't help Obama
win<BR>re-election, as he is blamed for current economic woes that
are<BR>largely not a result of his administration's policies.<BR><BR>W. Bush
era republican policies, such as maintaining Bush era tax cuts<BR>while waging
expensive wars in Afghanistan and Iraq, and failing to<BR>promote sensible
regulations on Wall Street and banking transactions,<BR>which contributed to
the great recession of 2008, are large<BR>contributors to the debt.<BR><BR>But
current discussions in the media with the influence of the "Tea<BR>Party"
movement imply it's Obama tax and spend "socialism" that are<BR>the main
threat to fiscal responsibility, not maintaining Bush era tax<BR>cuts while at
war and allowing Wall Street and banks to engage in<BR>risky speculation,
adopted with a trust that accumulation of capital<BR>in free markets would
result in raising all boats, as they say.<BR>Democrat Clinton though was
involved in financial deregulation<BR>(repealing Great Depression era banking
regulatory law<BR>Glass-Steagall), as a new Democrat attempting to fuse
capitalism<BR>friendly policies with democratic values: "The Long Demise
of<BR>Glass-Steagall":<BR><A
href="http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html">http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html</A><BR><BR>The
TARP program, bank and auto industry bail outs, the economic<BR>stimulus, and
health care reform, touted as examples of Obama's<BR>creeping socialism, are
blamed for the deficit when these temporary<BR>economic stabilizing efforts to
ward off a full scale depression are<BR>greatly being repaid to the federal
government, and are not a major<BR>contributor to the federal debt, which
might now be even more of a<BR>problem if the economy had sunk into a full
fledged depression.<BR>Obama's health care reform is predicted in the
following critical<BR>analysis to only slightly increase the cost of health
care over a ten<BR>year period, while covering far more people: "Obama
said health care<BR>reform will reduce the cost of health care":<BR><A
href="http://www.politifact.com/truth-o-meter/statements/2009/dec/18/barack-obama/obama-said-health-care-reform-will-reduce-cost-hea/">http://www.politifact.com/truth-o-meter/statements/2009/dec/18/barack-obama/obama-said-health-care-reform-will-reduce-cost-hea/</A><BR><BR>The
economic ideology of the Milton Friedman Chicago school of<BR>economics, which
former Federal Reserve Chairman Greenspan followed,<BR>appeared to guide W.
Bush administration free market fundamentalism,<BR>resulting in the economic
crash of 2008, about which Greenspan said<BR>involved a "flaw in the model
that I perceived is the critical<BR>functioning structure that defines how the
world works." ("Praying for<BR>a revolution in economics: Greenspan's crisis
of faith exposes the<BR>scientific veneer of economics for what it is,
revealing what amounts<BR>to a religion" <A
href="http://www.guardian.co.uk/commentisfree/belief/2009/jul/11/economics-greenspan-neoclassical">http://www.guardian.co.uk/commentisfree/belief/2009/jul/11/economics-greenspan-neoclassical</A><BR>;
"Greenspan Concedes Error on Regulation":<BR><A
href="http://www.nytimes.com/2008/10/24/business/economy/24panel.html?_r=1">http://www.nytimes.com/2008/10/24/business/economy/24panel.html?_r=1</A><BR>).<BR><BR>Andrew
Leonard writing for Salon.com puts it bluntly:<BR><BR>The great crash of the
"Chicago school" of economics<BR><BR><A
href="http://www.salon.com/technology/how_the_world_works/2009/04/28/downfall_of_the_chicago_school">http://www.salon.com/technology/how_the_world_works/2009/04/28/downfall_of_the_chicago_school</A><BR><BR>"I'm
not going to cut it too fine: I think you can very well blame the<BR>Chicago
school for the fiasco of growing income inequality in the U.S.<BR> Nice
triumph for deregulated capitalism, boys! Ronald Reagan listened<BR>closely to
Milton Friedman and the Chicago school godfather's<BR>disciples have been rife
in the Republican administrations that have<BR>dominated the White House ever
since the Californian swept into<BR>Washington and started blaming government
for our problems. Well guess<BR>what? It didn't work so well. The rich got
richer and then screwed
the<BR>pooch."<BR>------------------------------------------<BR>Vision2020
Post: Ted Moffett<BR><BR>On 5/1/11, Art Deco <<A
href="mailto:deco@moscow.com">deco@moscow.com</A>> wrote:<BR>><BR>>
Back to previous page<BR>><BR>><BR>>
--------------------------------------------------------------------------------<BR>><BR>>
Running in the red: How the U.S., on the road to surplus, detoured to<BR>>
massive debt<BR>> By Lori Montgomery, Saturday, April 30, 8:02 PM<BR>>
The nation's unnerving descent into debt began a decade ago with a
choice,<BR>> not a crisis.<BR>><BR>> In January 2001, with the budget
balanced and clear sailing ahead, the<BR>> Congressional Budget Office
forecast ever-larger annual surpluses<BR>> indefinitely. The outlook was so
rosy, the CBO said, that Washington would<BR>> have enough money by the end
of the decade to pay off everything it owed.<BR>><BR>> Voices of caution
were swept aside in the rush to take advantage of the<BR>> apparent bounty.
Political leaders chose to cut taxes, jack up spending and,<BR>> for the
first time in U.S. history, wage two wars solely with borrowed<BR>> funds.
"In the end, the floodgates opened," said former senator Pete<BR>> Domenici
(R-N.M.), who chaired the Senate Budget Committee when the first<BR>>
tax-cut bill hit Capitol Hill in early 2001.<BR>><BR>> Now, instead of
tending a nest egg of more than $2 trillion, the federal<BR>> government
expects to owe more than $10 trillion to outside investors by the<BR>> end
of this year. The national debt is larger, as a percentage of the<BR>>
economy, than at any time in U.S. history except for the period
shortly<BR>> after World War II.<BR>><BR>> Polls show that a large
majority of Americans blame wasteful or unnecessary<BR>> federal programs
for the nation's budget problems. But routine increases in<BR>> defense and
domestic spending account for only about 15 percent of the<BR>> financial
deterioration, according to a new analysis of CBO data.<BR>><BR>> The
biggest culprit, by far, has been an erosion of tax revenue triggered<BR>>
largely by two recessions and multiple rounds of tax cuts. Together,
the<BR>> economy and the tax bills enacted under former president George W.
Bush, and<BR>> to a lesser extent by President Obama, wiped out $6.3
trillion in<BR>> anticipated revenue. That's nearly half of the $12.7
trillion swing from<BR>> projected surpluses to real debt. Federal tax
collections now stand at their<BR>> lowest level as a percentage of the
economy in 60 years.<BR>><BR>> Big-ticket spending initiated by the Bush
administration accounts for 12<BR>> percent of the shift. The Iraq and
Afghanistan wars have added $1.3 trillion<BR>> in new borrowing. A new
prescription drug benefit for Medicare recipients<BR>> contributed another
$272 billion. The Troubled Assets Relief Program bank<BR>> bailout, which
infuriated voters and led to the defeat of several<BR>> legislators in
2010, added just $16 billion - and TARP may eventually cost<BR>> nothing as
financial institutions repay the Treasury.<BR>><BR>> Obama's 2009
economic stimulus, a favorite target of Republicans who blame<BR>>
Democrats for the mounting debt, has added $719 billion - 6 percent of
the<BR>> total shift, according to the new analysis of CBO data by the
nonprofit Pew<BR>> Fiscal Analysis Initiative. All told, Obama-era choices
account for about<BR>> $1.7 trillion in new debt, according to a separate
Washington Post analysis<BR>> of CBO data over the past decade. Bush-era
policies, meanwhile, account for<BR>> more than $7 trillion and are a major
contributor to the trillion-dollar<BR>> annual budget deficits that are
dominating the political debate.<BR>><BR>> As Congress prepares this
week to launch a high-stakes battle over whether<BR>> to raise the legal
limit on borrowing, the analyses offer a clearer view of<BR>> the drivers
of the debt - and of the difficulty of re-balancing the budget<BR>> without
new tax revenue.<BR>><BR>> Most Republicans reject raising taxes as part
of the solution; House Speaker<BR>> John A. Boehner (Ohio) has called it a
"non-starter." But Democrats won't go<BR>> for a proposal based solely on
spending cuts. The"Gang of Six," a bipartisan<BR>> Senate group dedicated
to debt reduction, is expected to unveil a strategy<BR>> as soon as this
week that couples sharp spending cuts with a rewrite of the<BR>> tax code
that would raise additional revenue.<BR>><BR>> (The debt ceiling, set at
$14.3 trillion, covers all federal debt, including<BR>> money the Treasury
owes other federal entities, such as the Social Security<BR>> trust fund.
The CBO data focus on the portion of the debt borrowed from<BR>> outside
investors. The debt is the accumulation of annual deficits; if<BR>> annual
budgets are in surplus, the nation can pay down the debt.)<BR>><BR>> The
annual surpluses that set the nation on this course emerged in the
final<BR>> years of the Clinton administration. In the typical American
household, a<BR>> surplus comes as welcome news. But the White House is not
a typical<BR>> household. When Treasury Secretary Robert Rubin saw the
budget shift into<BR>> the black in 1998, he immediately warned President
Bill Clinton that,<BR>> politically, it was a mixed
blessing.<BR>><BR>> Rubin wanted to use the surplus to start repaying
the debt, which was then<BR>> just more than $3 trillion. The White House
billed it as "saving Social<BR>> Security first," viewing the surplus as an
opportunity to shore up the<BR>> nation's finances before huge numbers of
the baby boom generation began<BR>> claiming federal retirement benefits.
"The problem was a whole other part of<BR>> the political spectrum wanted
to use the surplus for tax cuts," Rubin said<BR>> in an interview. "They
said they wanted to give the people back their money.<BR>> Of course, it
was also the people's debt."<BR>><BR>> What to do with the surplus
became a central issue of the 2000 presidential<BR>> campaign, with Vice
President Al Gore arguing that much of it should be put<BR>> in a "lockbox"
to protect Social Security and Medicare. Bush pushed for a<BR>> broad tax
cut, arguing that taxpayers at all income levels were owed a<BR>> refund.
"Some say that the growing federal surplus means Washington has more<BR>>
money to spend, but they've got it backwards," Bush said as he accepted
the<BR>> GOP nomination in August 2000. "The surplus is not the
government's money.<BR>> The surplus is the people's
money."<BR>><BR>> As soon as he took office, Bush pushed Congress to
make good on his tax<BR>> pledge. Less than a week after his inauguration,
he got a boost from Federal<BR>> Reserve Chairman Alan Greenspan, who
testified before the Senate Budget<BR>> Committee that "tax reduction
appears required" to prevent the federal<BR>> government from accumulating
too much cash. Greenspan feared that large<BR>> surpluses would turn the
government into the nation's largest investor,<BR>> creating distortions in
the markets.<BR>><BR>> A chorus of skeptics warned against spending the
surplus. Some stressed the<BR>> inherent uncertainty of the CBO
projections. Others said a big tax cut would<BR>> unleash pent-up desire in
both parties to pursue expensive priorities<BR>> without the pay-as-you-go
restraints that had helped produce the surplus.<BR>><BR>> Congress
approved a $1.35 trillion tax cut in record time. A second package,<BR>>
worth $350 billion, followed in 2003. Together, they constituted one of
the<BR>> largest tax cuts since World War II, according to the conservative
Tax<BR>> Foundation.<BR>><BR>> Bush's first Treasury secretary, Paul
O'Neill, resigned after the White<BR>> House decided to pursue the 2003
measure. "I believed we needed the money to<BR>> facilitate fundamental tax
reform and begin working on unfunded liabilities<BR>> for Social Security
and Medicare," O'Neill said in an interview. But the<BR>> White House, he
said, was focused on improving economic growth for the<BR>> fourth quarter
of 2004. "They wanted to make sure economic conditions were<BR>> great
going into the president's reelection."<BR>><BR>> Proponents of tax cuts
argue that the legislation merely returned tax<BR>> collections to their
appropriate levels. They note that the CBO's 2001<BR>> forecast assumed
that tax collections would stay above 20 percent of the<BR>> nation's gross
domestic product (defined as the total of all economic<BR>> output) - well
above the historic average of 18 percent of GDP.<BR>><BR>> "It's not
obvious that America was ready to have taxes at a level this high<BR>>
persistently," said Donald Marron, a former CBO director who now heads
the<BR>> nonprofit Tax Policy Center. "Some degree of tax cutting was
inevitable."<BR>><BR>> But some key advocates of the tax cuts now say
such a large reduction was<BR>> probably ill-advised.<BR>><BR>>
"Nobody would have thought that all these things would have happened
after<BR>> you cut taxes," Domenici said. "That you'd have two wars and not
pay for<BR>> them. That you'd have another recession. A huge extravaganza
of<BR>> expenditures" for the military and homeland security after the
Sept. 11,<BR>> 2001, attacks. "You would pause before you did it, if you
knew."<BR>><BR>> Bill Thomas, the former House Ways and Means Committee
chairman who helped<BR>> shepherd the tax cuts through Congress, defended
the 2003 package as "fuel<BR>> for the economy." But he said in an
interview that the 2001 measure was<BR>> larded with "stuff that I was not
all that wild about," including bipartisan<BR>> priorities such as a big
increase in the child tax credit and a break for<BR>> married couples -
provisions Thomas believes did little to promote economic<BR>> growth and
amounted to "throwing money out the window."<BR>><BR>> "I couldn't do
anything about it," said Thomas, a California Republican who<BR>> retired
in 2006. "You're the candy man when you advocate those kinds of tax<BR>>
cuts."<BR>><BR>> In the end, Bush cut taxes and spent more money. Good
times masked the<BR>> impact, as surging tax revenues reduced the size of
year-to-year deficits<BR>> during the first three years of his second term.
But after the economy<BR>> collapsed during Bush's final year in office,
deficits - and therefore the<BR>> debt - began to explode as Obama sought
to revive economic activity with<BR>> more tax cuts and federal
spending.<BR>><BR>> Today, the CBO forecasts are unrelievedly gloomy,
showing huge deficits<BR>> essentially forever. As policymakers grapple
with the legacy of the past<BR>> decade, a demographic wave of senior
citizens is crashing at their doorstep,<BR>> driving up the cost of
Medicare, Medicaid and Social Security.<BR>><BR>> William Hoagland, who
was for years a top budget aide to Domenici and other<BR>> GOP Senate
leaders, said it is simplistic to think today's fiscal problems<BR>> began
just 10 years ago. In 1976, as a young CBO analyst, Hoagland produced<BR>>
a long-term simulation that showed entitlement costs gradually
overwhelming<BR>> the rest of the federal budget.<BR>><BR>> "This
situation really goes back to long before [the Bush administration],<BR>>
which is to say to old dead men that have long left the Congress," he
said.<BR>><BR>> Still, Hoagland said, the abandonment of fiscal
discipline in the wake of<BR>> the surpluses clearly didn't help. "Nobody
pushed for paying for this<BR>> stuff," he said. Not even after "it became
very clear in the middle of 2003<BR>> that the line had turned on us. And
the surpluses as far as the eye could<BR>> see were no longer
there."<BR>><BR>><BR>> © 2011 The Washington Post
Company<BR>><BR>> ________________________________<BR>> Wayne A.
Fox<BR>> 1009 Karen Lane<BR>> PO Box 9421<BR>> Moscow, ID
83843<BR>><BR>> <A
href="mailto:waf@moscow.com">waf@moscow.com</A><BR>> 208
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