The Budget CANNOT Be Balanced, Even if the Govenment is Shut Down.

If you watch nothing else today... please watch this short illustration lesson. This is a non-partisan video produced by an accountant, Hal Mason, retired after 27 years with IBM. He looks at the budget, its revenues and expenses, and very simply illustrates the problem. Amazingly, we get all the media talking heads blathering and shouting for hours and never get clarity.

This guy does it in a couple minutes.

Your thread title is slightly misleading, here's why.

The premise that mandatory spending is greater than revenue is flawed. We're in a recession and these programs are more expensive with high unemployment and poverty. This video is entirely about the 2013 budget. There is no reason to think a balanced budget is out of reach within 10 years if the economy is healthy, programs are reformed, and revenue is temporarily increases.

The US should be able to survive and thrive on a 2.5 trillion$ federal and collect 3 trillion revenue during periods of economic growth and peace.

I am optimistic that not only the budget can be balanced, but the debt can be reduced to a manageable level by 2040.

reply to post by PatrickGarrow17


I wish I could even comprehend the dream world you're living in. Have you seen the graphs of the debt? They start well before the crash of 2007/2008.

This has been going on for a long time and there isn't any indication the growth is slowing, let alone going down.

I don't know why you wasted your time typing that garbage. Everyone knows congress is just wasting time trying to figure out how they are going to get rich off this. It's taking a long time because like the video said, everyone is screwed.

reply to post by litterbaux


We don't necessarily need zero debt to be stable. The way I see it the debt will balloon to around 20T in the next four years as the recovery continues, then economic growth will start again as some new industries take hold based on tech breakthroughs.

From there, we need to stay out of wars and make the system of taking care of people better. If individuals took more community responsibility, I believe the mandatory spending programs could be half of what they are now. From that point its a matter of consecutive years at a decent surplus and our debt becomes manageable. I think it's realistic to have a 500 billion surplus by 2020, and if that can hold for 20 years then our debt is down to 10 trillion. In 2040 our national GDP will be at least 30 trillion. Having a debt that is a third of GDP is not a huge issue.

I'm trying to take a practical approach to the problem instead of writing it off as unsolveable.

Did you know we had a similar debt of 100% of the GDP in the late forties/early fifties? That was reduced greatly.

A lot of smart people working on this in America, what has to happen is for everyone to work on it and decide to contribute a little more to society. Optimism doesn't hurt in this case.

Is there some confusion here between "debt" and "deficit?" I think our annual budget deficit could be eliminated by 2040. I mean by that that we won't be going further into the debt hole each year.

But our debt is another matter. I think the best we'll be able to do in the foreseeable future is show that we're slowly reducing the debt. That way other countries will maintain their confidence in our financial situation.

reply to post by charles1952


Yeah, I understand the difference and that's pretty much what I'm saying. I think the deficit can be eliminated by 2020, not 2040. And the debt can be well within a manageable range by 2040.

All predicated on a strong economy, of course. But the direction of the world is tech driven and US has a huge competitive advantage there. At some point there will be a new technology that is similarly revolutionary and profitable as the combustion engine, lightbulb, or internet. And I'd bet on it coming out of America.

Edited my first post I did mistype deficit instead debt there.

reply to post by PatrickGarrow17

Dear PatrickGarrow17,

My mistake, I should have realised that you knew the difference.

I think that in addition to requiring a strong economy, we also have to look at Washington's policies. I don't need to get partisan, but I think the election will dictate a lot of our financial future.

I'm curious though, does the innovation have to come from a reasonably strong economy? An economy that will encourage an investor to throw millions into a project which may or may not work out? It seems that everybody is frightened of investing in any big projects right now.

Anyway, you've got a good handle on it. Thanks for correcting me.

With respect,
Charles1952

the problem here is people are looking at decades of problem, and trying ot solve it in four year chunks.

a bit like planting perennials when we need red woods.

We need to get the spending slowed down, balance the outgoing with the incoming, than the deficit needs to be tackled over the course of years.

The first step is stop the hemorrhaging, and that would require tackling the elephant in the room that no one wants to, defense spending.

reply to post by benrl

Ok, sounds good for a start. Eliminating the entire Department of Defense (except for soldiers in hospitals, etc), might get rid of about 40% of this year's deficit. Where else would you recommend looking after we do that?

Originally posted by charles1952
reply to post by benrl

 

Ok, sounds good for a start. Eliminating the entire Department of Defense (except for soldiers in hospitals, etc), might get rid of about 40% of this year's deficit. Where else would you recommend looking after we do that?

Foreign aid.

Repel bush era tax cuts and making Corporations pay taxes, I could go find the list of the top 20 companies that paid 0 in taxes if youd like?


we can not get out of this with out doing some unpleasantness.

We can not continue spending at the rates we are, and as I said, it would be a long pay down. We would need to shrink the government not grow it any more than it has (end the war of drugs would be one thing, the prison shrinking alone would help everyones budgets)

The alternative would be give our debtors the finger and hope that large war chest will see us through the pursuing upheavals.

We could also do for some infrastructure spending, that could grow the economy enough in the long term, with combined cuts that we would be in a position to tackle the deficit.

Originally posted by PatrickGarrow17
reply to post by litterbaux

 

Optimism doesn't hurt in this case.

edit on 9/24/2012 by PatrickGarrow17 because: (no reason given)

Optimism is great, but don't let it blind you from the reality behind the curtains. Those currently in power (and I mean really in power) can't think like that.

We're all completely neglecting the elephant in the room which is Iran, and our future with oil dependency. And by oil dependency, I mean the mercy of large oil conglomerates to let us transition into a new energy age.

I'm sorry, but we're not going to get out of this debt with a revolutionary new iPod. No technology can revert this historic financial plight.

Consider this reply as the perfect pessimistic counterbalance to your optimistic input. Combine the two extremes and you've got a pretty realistic view of how events could unfold.

reply to post by benrl

Dear benrl,

If I understand you correctly, the solution should be:

1.) Cut the military and foreign aid.
2.) Raise taxes on businesses.
3.) End the war on drugs.
4.) Do another infrastructure stimulus program.


1.) The military and foreign aid combined is 20% of the budget. Medicare, Medicaid, and other health programs are 21%. Social Security is 22%. As we get older, Medicare, Social Security, etc. are going to need more money. That's where the big expenses will be.

2.) As of April this year, the United States has the highest corporate tax rate in the world. Can't go much higher without having businesses decide to headquarter somewhere else. Then we'll get 0 from them. And those that pay the higher taxes will just pass the extra expense to us in the form of higher prices.

3.) I've seen the estimated cost of the war on drugs at $50 billion a year. If that's right, then we're dedicating about five days of spending out of a year on this "war."

4.) Another one? We haven't spent all the money in the last one yet. But, say we do anyway. Where does that money come from? Printing it just cheapens the money we already have, so it's a tax on everybody. Borrowing it means our kids will have to pay it back, it's a tax on them. Are we back to more taxes? Again?

With respect,
Charles1952

Income tax increase for the richest, wealth tax, estate tax, cut military down to to less than 5%.
Problem solved.

reply to post by Summerian

Well, sure, that would work. Or, we could bomb London and steal all the gold in their vaults. Or, make the entire southern portion of Africa the 51st state and steal all the diamonds.

Take everybody's income and posessions and eliminate the miltary, huh? What do you the next year?

That was the whole goal of the ponzi scheme, social security, and the goal of all socialism. America's worst dictator, FDR, the gold stealing four termer, creator of social security.

Eliminate interest payments and federal departments, pay out all social security and medicare and then shut them down. The only logical way.

Or, just print money into oblivion, what Pelosi is thinking.

Originally posted by charles1952
reply to post by Summerian

 

Well, sure, that would work. Or, we could bomb London and steal all the gold in their vaults. Or, make the entire southern portion of Africa the 51st state and steal all the diamonds.

Take everybody's income and posessions and eliminate the miltary, huh? What do you the next year?

What? Is that the republican secret plan?
Don't be surprised if you don't find anything where all that british gold were suppose to be.

And if you don't like it, the cure, come up with another solution.
(And where do you think your "everybody" got their wealth in the first place? Ask me and I'll tell you.)

Originally posted by filosophia
That was the whole goal of the ponzi scheme, social security, and the goal of all socialism. America's worst dictator, FDR, the gold stealing four termer, creator of social security.

Eliminate interest payments and federal departments, pay out all social security and medicare and then shut them down. The only logical way.

Or, just print money into oblivion, what Pelosi is thinking.

Yes- lets have 1984 right now.
The only logical way. Sure, sure. Night-watchman state is just another term for fascism. No thanks.
But you're getting there, fast...
AND! -
Wall street is the great ponzi scheme.
FDR was elected.
And the goal of all socialism is freedom for all (not just the rich) and in the end getting rid of government.

If your whole post was ironic, I apologize.

The Americans need to remember that they can live on debt as much as they want for as long as they are the leading world currency.

But this is going to change in a few years, china or the EU is going to become the new world currency, the moment that happens the value of the dollar will drop sharply, credit will become impossible to find and the problem is going to be much much worse. Another benefit to having the leading world currency is that America can print as much money as it wants without causing inflation. This will change when it loses its world currency and when America does print money the effects will be devastating.

This WILL happen soon, no doubt about it.

China has already begun negotiating with countries to use their currency rather than the dollar and the EU is spending trillions to show investors that it will do whatever it takes to keep the euro safe. While America at the same time is spending and borrowing like crazy.

For those that have faith still, remember.
You have already lost your credit rating and your own government budget forcast has America borrowing more and more for the next 10 years, at least.

What will your credit rating be in 10 years? Think about it.

He doesn't have it right. He's basing it on the idea that it's real debt and real currency, and that the taxes are collected and then used to run the country. When infact none of that at all is true. It's all FAKE. And they simply print endless fake money now a days. It's all basically a bit con game to keep the system going.

more than US$1 million, in 2010
United States 3,104,000

...In addition, wealth is unevenly distributed, with the wealthiest 25% of US households owning 87%[2] of the wealth in the United States, which was $54.2 trillion in 2009.

From wikipedia.

"The Budget CANNOT Be Balanced, Even if the Govenment is Shut Down."
If so it's a psychological problem. Not a math one.