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Fatmouse's Random Thoughts
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Where am I? This feels funny.

This is all your fault Matt. I had merrily kept my blinders on so far, only looking at the proposed budget areas that are in my little realm of interest. But you had to post the whole budget and I couldn't resist giving it a review.

I'm still trying to figure out a few areas. Looks like they have changed the way they calculate interest payments and costs. The numbers, even the historical ones, don't match with my previous charts. Not surprisingly, the change appears to make the deficit and interest costs much lower than they were before. Hopefully there is a simple explanation. I'll keep checking.

On a positive note, according to the White House, our GDP grew at a 6.6% rate last year. That's higher than other government statements and would represent a very robust economy. Let's hope that we can continue and hit their targets of 5%+ GDP growth through the projected future.

Unfortunately, even with the robust GDP growth rate, payments on interest (using the old numbers until I can figure out the changes) continues to rise. For 2004, interest on the existing debt chewed up the equivalent of 36% of discretionary government spending. That is projected to rise to 56% of discretionary spending by 2009. Right now, interest on the debt also consumes the equivalent of 40% of all income tax receipts. Can anyone guess where I'm going with this? Yes, deficit spending is useful at times. But paying this much in interest due to over spending is just ridiculous. Want to cut your tax rate? Here's an idea; if we pay down the debt we cut our interest payments and can cut our taxes. Put in generic terms, if you are in a household with four people you are responsible for $5,000 in payments just to interest on the existing debt. Want to cut $5,000 out of your taxes? There's one way to do it.

Back to GDP growth. Yup. 2004 was a pretty good year, regardless of which government agency is producing the growth rate figures. Unfortunately, increased government spending has been a major component of GDP growth over the last few years. About a third of the GDP growth is due to the rapid growth in government spending. And, as we see from the interest payment paragraph, that is merely borrowing money from future generations.

I really wish that either Kerry had won with the Republican Congress or that Bush had won and Congress went to Democrats. With no checks in government, spending is just out of control. With mixed government in the 1990s we had -2% to 3% discretionary spending growth. With single party control of government, our discretionary spending has grown 13%, 12%, 8% and 8% over the last four years. Raise your hand if you are falling for the projection that discretionary spending will decline by 2% next year. That would be laughable if it didn't involve such serious money.

Who is for big government? During Clinton's terms, non-military federal government employment went down by 23%. Since then, we have grown non-military government employment by more than 10%, with projections for more growth. Note: I voted against Clinton every opportunity I had.

Now for another link. Note that the White House is projecting 5%+ growth rates for as far as they are willing to forecast. Yet, with Social Security, they say the growth rate will be 1.9% during those years. SS reform might be the way to go, but if we use White House projects for growth rates, the break-even date on SS goes out to around 2040 and the trust fund is not extinguished until around 2080 or later. Just fodder for the water cooler.

I'm confused about something. Bush has admitted to struggling with an alcohol problem. In fact, for many of us it shows his human side and his personal strength in overcoming something that many are not able to beat. He has successfully used this as a tool and a lesson to others not to do what he has done. But when it comes to drugs, his philosophy is to not admit to anything because he doesn't want anyone to do what he has done. He gets to have it both ways. Now that's a masterful politician. Kudos.

OK. I know what you're thinking. This guy actually went through the federal budget! He needs to get a life, exercise more, get some friends, or something. Know what? You're right. For good or bad though, this helps with my job. But I still need to get a life.

Regards

Fatmouse
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Re: Fatmouse's Random Thoughts [Fatmouse] [ In reply to ]
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But how do you stop deficit spending without A) cutting spending, which everyone is loathe to do or B) raising taxes which doesn't rate much higher on the excitement scale for politicians?

Getting rid of special interest "pork" spending will save some, but I doubt it would give us break even spending. Then that isn't even good enough. We have to run a surplus! Which is something Clinton was able to do, but I think that was more due to the "stock market bubble" than anything that he did.
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Re: Fatmouse's Random Thoughts [Tyrius] [ In reply to ]
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Just wondering why you think we have to run a surplus? Isn't that just the government confiscating more than it needs to from the citizens? Why shouldn't the people who earn the money get the chance to spend or invest it as they choose? Isn't overtaxing in many ways as bad as overspending?
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Re: Fatmouse's Random Thoughts [tri_bri2] [ In reply to ]
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I was talking in terms of actually paying down the debt. In order to do that we'd have to take in more than we spend on all of the other programs including the interest payments on the debt. The principle payments have to come from somewhere.
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Re: Fatmouse's Random Thoughts [Fatmouse] [ In reply to ]
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On point one....I think.

I'll leave the actual "numbers to you", but personally basing Government future expenditures on future GDP growth is a little to close to me basing my budget on the fact "I think" I'm gonna get a raise. Just poor planning.

I think I'm also with you on the "Some deficit spending is good" but the levels we are looking at are out of control...IMO.

On point two...I think.

I REALLY wish the house/senate and white house were split. IMO a gridlocked government is an effecient one, unfortunately. My philosophy is that the governement has been doing more damage than good for years. The less it does the less damage it can do. Unfortunately as in many states my vote doesn't count for much.

On point three...

"the break-even date on SS goes out to around 2040"

I don't care what the break even point is. We can always lower or increase benefits, mess with projected GDP, death rates etc etc to change the date. The point is that the SS system is a pay in pass out system. This does not allow for any type of "Wealth building" via the miracles of compounding interest. No mater what the "break even date" is it will always be inferior to a real retirement plan.

And...

"Bush has admitted to struggling with an alcohol problem...."

Politics aside I think this points out the disparity between what society thinks about drug use vs alcohol use. Alcoholics "need help" and are pitied by society. Unless you're some sort of "star" if you're a drug addict you're just a drug addict. I think this mentality also plays into the reason that drugs are not legal and alcohol is.

~Matt
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Re: Fatmouse's Random Thoughts [Tyrius] [ In reply to ]
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Since debt service is part of the budget, there is no need to run a surplus in order to pay down the national debt. In other words, if the government were to live within its means (more or less) then eventually, all long term debt would be paid off. Just thik of it as if you never made another purchase on credit again--without spending any more money on principal and interest combined than you currently are, eventually you would be debt free. I see no real advantage in the government paying down debt faster than scheduled, since the government pays the lowest interest rate around.
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Re: Fatmouse's Random Thoughts [tri_bri2] [ In reply to ]
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We're saying the same thing as long as the debt principle payments aren't made with the issuance of new debt.

Basically, if a plan is put together to service the national debt and that is within the budget then the "surplus" that I was talking about would be a budget line item and not a "surplus"

Also, if I only paid the minimum payments on my credit cards I'd be paying off that debt for probably close to decades.
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