The Biden Economy

[donquixote99]

Liabilities and assets makes no sense when it comes to the government. The government should hold relatively limited notable assets, in itself, other than operating plant--buildings and computers and satellites and such--and national defense assets, to include weapons systems and facilities. The one real asset, the thing to weigh against the debt, is the entire productive capacity of the country, which the government taps to pay ongoing expenses and service the debt. The debt was created on behalf of all and for the benefit of all, and we all collectively owe it. The debt, basically, is secured by our ability and willingness, with our economy and through our government, to continue to provide money to service it.

[finnbow]

Originally Posted by donquixote99

Liabilities and assets makes no sense when it comes to the government. The government should hold relatively limited notable assets, in itself, other than operating plant--buildings and computers and satellites and such--and national defense assets, to include weapons systems and facilities. The one real asset, the thing to weigh against the debt, is the entire productive capacity of the country, which the government taps to pay ongoing expenses and service the debt. The debt was created on behalf of all and for the benefit of all, and we all collectively owe it. The debt, basically, is secured by our ability and willingness, with our economy and through our government, to continue to provide money to service it.

Indeed. Hence all of the comparisons of the economics of running a household with that of a sovereign nation with a $25 trillion economy and the world reserve currency are just plain silly, though sometimes useful for dumbed-down illustrative purposes when dealing with certain economic illiterates on this forum.😜

[nailer]

Originally Posted by whell

I recall a college history professor who, when the subject of US debt came up in class, observed that any entity's financial solvency is a function of assets outweighing liabilities. He suggested that when this logic was applied to the US government, the value of assets would far exceed liabilities.

This was in the late 1970's, when liabilities were already exceeding assets. At least he wasn't an Economics professor.

The national debt is "backed by the full faith and credit of the federal government". In economic terms this would be intangible assets as opposed to tangible assets like a nuclear carrier. Then again, what a carrier battle group can do is one of those intangible assets. Your history teacher was right and seems you may not have been paying close enough attention in the economics lecture hall.

[whell]

Originally Posted by Oerets

Liabilities exceeding assets.....

The answer for some is pay as you go. Yet they want others to pay, choosing to keep their wealth. Not wanting to pay for others less fortunate then them.

Much like the long term care issue and the answer some choose to protect assets. Appears everyone is in agreement that receiving care should not cause financial ruin. That just because you have assets are treated differently then those who don't. Taking steps to protect assets by setting up trusts or other legal means. Forcing the rest of the country to pay your way.

The argument that the "rich don't pay their fair share", or as you put it "forcing the rest of the country to pay your own way" really gets tiresome after a while. Beyond that, it's simply another way for advocates of higher gov't spending to shift the focus of the argument: the left doesn't want to argue about whether or not the government spends too much, so they create a bogeyman out of higher-income folks and accuse them of not "paying their fair share". Besides, my reference to "assets" was limited in the post above to those assets that are held by the US Gov't.

So, let's shift the discussion back to where it belongs.

1) There's no argument from anyone anywhere that the US Federal Tax system is a progressive system.

2) The "rich" know that the tax system is progressive. The "rich" who are elected to congress (if they're not rich when they get to DC they'll be rich before they leave), and the "rich" who pay the lobbyists to spread money all over Washington", designed the damn system. Most of the folks who had a hand in legislating the tax system are folks that you voted for. Yeah, I probably voted for some of them too. So don't blame the "rich" if you don't like the current tax system. Blame the person in the mirror.

2) Joe Biden: “A firefighter and a teacher shouldn’t pay a higher tax rate than a billionaire pays. That’s not right. My budget contains a Billionaire Minimum Income Tax to make sure billionaires pay their fair share.” This is a "false statement" as reported by Politifact. If I were writing for Politifact, I would have given that statement the "pants on fire" rating, since Biden knows full well that his words are specifically designed to mislead people.

3) Biden knows damn well that there's a difference between marginal and effective tax rates. He also knows that "closing the loopholes in the tax code" really means changing the regs on itemized deductions that the "rich", including Biden, have taken advantage of in the past. A politician is unlikely to vote against their own self-interest, so the deductions are probably safe for the foreseeable future.

4) Finally, the marginal tax rates are irrelevant to the argument when talking about the share of federal taxes that individuals pay. Effective tax rates are the relevant metric. Biden knows that too. A teacher with a $70,000 taxable income (income from all sources) pays around 16% effective tax rate. A person with $600,000 (from all sources) has an effective tax rate in excess of 30%.

Bottom line: we have a progressive tax system. Higher-income earners are already paying higher effective tax rates.

So, what do you want the target effective tax rate of someone with $600,000 of income to be? Is 30% not enough?

Originally Posted by Oerets

The argument now of the national debt. Increasing revinue is the steps forward needed with increased oversight of where the money goes. There is not a lot of cutting left without serious pain and loss of our way of life.

Not true. Federal revenue increases every year. If we simply froze spending at current levels we'd be able to decrease our debt liabilities every year. Hell, if we focused the cost cutting on weeding out inefficiencies, graft, and malfeasance we'd probably save billions every year.

[whell]

Originally Posted by nailer

The national debt is "backed by the full faith and credit of the federal government". In economic terms these would be intangible assets as opposed to tangible assets like a nuclear carrier. Then again, what a carrier battle group can do is one of those intangible assets. Your history teacher was right and seems you may not have been paying close enough attention in the economics lecture hall.

The federal balance sheet is published each year. You can find copies on the US treasury website that go back to 1975. It's really not that hard to find, but just to speed things up, here you go: https://www.fiscal.treasury.gov/repo...nancial-report. These reports account for tangible and intangible assets. So, if you missed that detail, maybe you weren't paying attention.

Back in 1975, the debt outstanding was over $394 billion (adjusted). Assets were $354 billion. You can already see when looking at the Liabilities and Equities" section of the report that 1975 debt increased by $57.9 billion over 1974. The easy answer to that is like we do every year, spending outpaced revenue.

[finnbow]

Originally Posted by whell

The federal balance sheet is published each year. You can find copies on the US treasury website that go back to 1975. It's really not that hard to find, but just to speed things up, here you go: https://www.fiscal.treasury.gov/repo...nancial-report. These reports account for tangible and intangible assets. So, if you missed that detail, maybe you weren't paying attention.

Back in 1975, the debt outstanding was over $394 billion (adjusted). Assets were $354 billion. You can already see when looking at the Liabilities and Equities" section of the report that 1975 debt increased by $57.9 billion over 1974. The easy answer to that is like we do every year, spending outpaced revenue.

The valuation of assets is highly suspect. The value of 620 million acres of federal lands, offshore mineral rights and the electromagnetic spectrum alone greatly exceed this number. Add to that the improvements (and other assets) upon this land and the intellectual property rights of DOD, DOE, NIH and others and this number becomes even more unrealistic.

This illustrates how using conventional economic analysis often fails when talking about the federal government.

[Chicks]

For comedic relief: Billboard in Bakersfield, CA. Gotta love it, right Whell?

[Dondilion]

Originally Posted by donquixote99

Liabilities and assets makes no sense when it comes to the government. The government should hold relatively limited notable assets, in itself, other than operating plant--buildings and computers and satellites and such--and national defense assets, to include weapons systems and facilities. The one real asset, the thing to weigh against the debt, is the entire productive capacity of the country, which the government taps to pay ongoing expenses and service the debt. The debt was created on behalf of all and for the benefit of all, and we all collectively owe it. The debt, basically, is secured by our ability and willingness, with our economy and through our government, to continue to provide money to service it.

I am sensing that you are comfortable with this ballooning debt.
Note I use the word sensing.

[whell]

Originally Posted by finnbow

The valuation of assets is highly suspect. The value of 620 million acres of federal lands, offshore mineral rights and the electromagnetic spectrum alone greatly exceed this number. Add to that the improvements (and other assets) upon this land and the intellectual property rights of DOD, DOE, NIH and others and this number becomes even more unrealistic.

This illustrates how using conventional economic analysis often fails when talking about the federal government.

Of course the gov't financial data is suspect. Getting away with paying interest only on debt that goes back decades is suspect. There's a recurring annual entry with a figure of billions of dollars that supposedly represents disagreements between agencies regarding funds disbursed versus funds spent. No CPA would certify a financial statement like this.

But, it's all we have to work with since the US gov't doesn't think it needs to be terribly transparent about the comings and goings of money from the Treasury.

One thing, however, is not in dispute: both the debt and the revenue numbers go up every single year.

[whell]

Originally Posted by Chicks

For comedic relief: Billboard in Bakersfield, CA. Gotta love it, right Whell?

That's hilarious. I love how that photo of Schiff makes it almost look like he's sporting a halo. Priceless!