Originally Posted by Cheshire_cat

The reality is that we are not paying for it, like someone said we are going in debt because of it, but taxes have gone down since Bush took office thats a fact.

So where are we getting the money to spend on the food and gasoline this soldiers of ours consume everyday? Where did they get the money to have ammunitions?

Originally Posted by jabo

So where are we getting the money to spend on the food and gasoline this soldiers of ours consume everyday? Where did they get the money to have ammunitions?

China

Originally Posted by cbwm

China

enlighten me

Deficit spending entails borrowing money since we are spending more than we are taking in from taxes. The government issues bonds which are essentially U.S. government backed securities which pay a fixed rate of interest. Essentially, someone gives the U.S. government money, and the government issues you a piece of paper (I.O.U.?) in return.

U.S. Bonds are liquid and generally considered one of the safest investments there is, due to the traditional stability of the U.S.. Most balanced portfolios, including pension funds, 401ks, etc, have some portion of their assets in U.S. bonds. For the government to be able to borrow money, someone has to be buying these bonds. Currently, China is one of the larger purchasers of U.S. Bonds, making China one of our top financiers.

As a side note, when the U.S. dollar falls against foreign currencies, like China's, it creates a sort of forgiveness of debt situation since the money we repay China with is less valuable to them than the money they gave us. I don't know the exact amount of devaluation of our debt, but I'm fairly confident it exceeds 30%. China is so p*ssed off about it, they have been threatening the "Nuclear" option, where they convert all their U.S. government backed securities into gold, which would cause havoc in the U.S. markets. Unfortunately for them, they hold so much of our paper, they would only be able to liquidate about 25% of it before the remainder of it would become essentially worthless to them, so the threats are fairly hollow, unless they are willing to to take the largest financial bath in history.

Another benefit of the debt/devaluation of the dollar is that it makes it more difficult for countries like China and Europe to be competitive in U.S. markets. As the value of their currency goes up, so does their cost of production, while at the same time our cost of labor and production is falling(from the perspective of the world market). At the end of the day, it becomes harder to make a profit on yo-yos made in China vs yo-yos made in the U.S., so jobs get created in the U.S. and jobs get lost in China.

The downside, of course, is the interest on the debt, which must one day be repaid. So long as we continue to deficit spend, the interest payment alone becomes a hungry monster which needs to be fed, and that feeding is done at the expense of the U.S. taxpayer. In a perfect world, we would cut government spending to create a budget surplus and lower taxes to fuel the economy and increase tax income. Unfortunately, we are at war which is very costly making it difficult to cut spending, and the Democrats are coming to office which will mean both higher taxes and even more spending on domestic programs.

at least you guy see where your taxes goes...in my country in asia...i think the taxes i paid had went to someones pocket...hahah

Remember everyone, wasting money on a trumped up war or a missle defense system where all test are with homing devices stuck on the missle are good, spending money on helping people is bad.

Two things, cbwm: First, by law only ten percent of money borrowed can be borrowed from outside the U.S. Second, the last Democrat we had in the Executive branch had a budget surplus when he left office. Knowing those two facts, care to revise your argument?

tim

Sure. The money is borrowed from many sources, including China. I haven't seen the charts to see who holds the largest portion of U.S. debt (at 9 trillion dollars, even a 1% share would be enormous), but I feel fairly confident that China is one of the larger holder of U.S. debt. I'll look it up when I have a bit more free time.

The last Democrat we had in office sat on an wealth "bubble" called the dot com bubble. With a Nasdaq at 5000 today, I'm sure Bush could generate a budget surplus as well. Unfortunately, just like the bubble was not of Bubba's creation, it's burst was not of Dubya's doing either. In fact, Dubya inherited the Nasdaq in the 1200s.

Its hard to fathom exactly how much wealth evaporated in the dot com crash, but when the Nasdaq crashed, so did the tax dollars it generated. Throw in the destruction of the twin towers, the displacement of some of the largest U.S. financial centers, the cost of the cleanup, the near death of the U.S. airline industry, and you can see how we might run at a deficit, even without a war.

It was deficit spending that paid for the bailout of the airlines; most of what was spent lined the pockets of their CEOs. They should have just been left to crash, if you'll pardon the pun. There would have been buyouts and restructuring, but the industry as a whole would have been just fine. What's that called? Oh, yeah, the free market.

And the majority of the U.S. tax burden falls on the middle class, not corporations. Please, oh please try and prove me wrong on that point. If tax revenues went down when the NASDAQ crashed I'll eat my shirt. More likely borrowing went up for more bailouts.

tim

Bailouts mean jobs and prevention of prolonged non-productivity for lack of availability of air travel. I don't know whether CEOs pocketed the bailout money, but I find it unlikely. Do you have some proof of this? I'm not for bailouts, by the way, but if the power or water companies were going under, I'd be for the bailout, if only to prevent our nation from becoming like much of the 3rd world.

Regarding taxes, I never said corporations pay the lions share of taxes. I said wealth evaporated in the dot com bust and that meant loss of revenue. When business is good, people have jobs, get paid, companies make money. This generates taxes on many levels. When business is bad, people loose jobs and don't make money. Either way, bad business means less tax revenues, and a market index falling from 5000 to 1200 is bad business.


Here is a chart to show who pays taxes. Only slightly more than 5% of our nations households make more than $150k per year, so if we are going to say the top 5% is the middle class, , then yes, they pay 57% of the taxes.

I'll have to agree with you that the true middle class (75-150k/yr or 5th-25th percentile) pay way too much in taxes by carrying 28% of the tax burden. I'd be alright with taking 8% from those folk and passing it along to the over 250k per year crowd.

I couldn't find the 2000-2003 revenue numbers to get you to eat your shirt, though if revenues didn't drop, we have only Bush and Bailouts to thank. Regarding what corporations pay, a corporation, like an individual has to make money to pay taxes on income. California corps are taxed at more than 47% of their income, after which the income is taxed again as it is distributed to share holders. I don't know what percentage of publicly traded corporations make money as opposed to loosing it, but there are unquestionably some very profitable corporations on the Nasdaq. For the purposes of this discussion, you might as well treat corporations as individuals.

Originally Posted by wchua24

at least you guy see where your taxes goes...in my country in asia...i think the taxes i paid had went to someones pocket...hahah

Well not all... Knowing where (most) of the tax is going should be one of the things that the government make the citizens aware of. They may not tell you directly on where people's money goes, you should see the results. Like building highways, yada yada and all of that crap. The thing is, I think that not all are spent wisely.

Originally Posted by serandfae

If tax revenues went down when the NASDAQ crashed I'll eat my shirt. More likely borrowing went up for more bailouts.

Its official, I'm frustrated. I cant seem to find the tax numbers I need. Maybe I have a real desire to see Tim eat his shirt (Youtube video will suffice). Maybe I'm bored. More than likely, I'm just obsessed with the issue because it affected me so personally.

I did find some interesting quotes from this wiki article that are relevant.

The Dot-com bubble crash wiped out $5 trillion in market value of technology companies from March 2000 to October 2002. ... laid-off technology experts, such as computer programmers, found a glutted job market. In the U.S., International outsourcing and the recently allowed increase of skilled visa "guest workers" (e.g., those participating in the U.S. H-1B visa program) exacerbated the situation. University degree programs for computer-related careers saw a noticeable drop in new students. Anecdotes of unemployed programmers going back to school to become accountants or lawyers were common.

Some believe the crash of the dot-com bubble contributed to the housing bubble in the U.S. Yale economist Robert Shiller said in 2005, “Once stocks fell, real estate became the primary outlet for the speculative frenzy that the stock market had unleashed. Where else could plungers apply their newly acquired trading talents? The materialistic display of the big house also has become a salve to bruised egos of disappointed stock investors. These days, the only thing that comes close to real estate as a national obsession is poker.”

Massive layoffs, $5 trillion dollars of evaporated wealth, 50% Nasdaq tech companies went under. It was the cause of the early 2000s recession. Now I don't know about you, but I would expect tax revenues to go down during a recession. If I could only find those !@!!@# !@#%@ numbers.