You seem to be claiming that the stimulus package is permanent spending. It isn't.
Hopefully, the wars aren't permanent spending either, although I'm less hopeful about that.
What Brian and I are both looking at is $3.6T budgets with $2.1T in receipts. That's not accounting for the stimulus package, which was off budget. That's why it was an EMERGENCY spending bill.
My man, Ron Paul, explains it like this:
http://www.lewrockwell.com/paul/paul310.html
[FONT=Times New Roman, Times, serif]
Congress funds the federal government through 13 enormous appropriations bills, but even an annual budget of more than $2 trillion is not enough to satisfy Washington’s appetite for new spending. As a result, a new category of spending bill has emerged, known as the “emergency supplemental” appropriation.
[/FONT][FONT=Times New Roman, Times, serif]
So-called emergency supplemental spending bills, once a rarity, have become the norm over the last ten years in Washington. There’s always some excuse why Congress cannot stick to its budget, so supplemental bills are passed to permit spending extra “off-budget” funds.[/FONT]
The government was borrowing, and spending, money precisely because there was no demand from the private sector. That's the whole idea of the stimulus package. There wasn't much of anything to crowd out.
Completely wrong. There was a credit crunch in the private sector. The borrowing by government only makes that worse, hence the recession is deeper and longer than it should have been.
$50 billion is going to crowd out Social Security spending, which is currently $1 trillion?
How does that math work?
$50 billion can't be made up by raising everyone's taxes by 50%? The US collects more than $2 trillion in taxes annually.
When you keep on borrowing money, your interest payments keep going up.
If you borrow $100 at 5%, your interest payment is $5. If you borrow a 2nd $100 at 5%, your interest payments combine to be $10.
They go up by $50B this year. Another $50B next year. Another $50B next year. In year 3 it's $150B ($50B+$50B+$50B). In year 10, it's $500B. The $500B is what crowds out other spending. And the total interest payments will be at ~$1T.
For FY 2008, the feds took in ~$2.5T and spent ~$3T (the deficit was $455B). Of that $2.5T, $1.1T came from income taxes and another $900B from social security taxes. That's 80% of the income accounted for (the rest is corporate taxes, fees, etc.).
Raise everyone's taxes by 50% and it will make up another $500B in revenue, assuming people don't find loopholes to shelter their income from this huge burden, or give up working altogether. I mean, it's 50% more tax on the lowest income earners, too, who may have real trouble making ends meet.
For FY 2009, AP reports tax receipts are down 18%.
So 50% increase isn't going to make up for the increased mortgage (of our future) payments.
In that same article, AP says:
"Social Security is in danger of running out of money earlier than the government projected just a few month ago. Highway, mass transit and airport projects are at risk because fuel and industry taxes are declining."
If and when there are reasonably safe and better paying investments than T-bills, the government won't need to borrow as much, because the economy will be stronger and tax receipts will be higher, so that problem solves itself.
barfo
Solves itself? LOL.
It's like getting a $100/month pay raise while your credit card company raises your fees by $150/month.
The Govt. sells a $10,000 T-Bill to someone and offers them 3% interest with the $10,000 due at maturity. They don't actually pay the interest, but sell the T-Bills for $9700 or whatever. When the T-Bills come due, govt. sells another one and pays off the old one. Like charging on a new credit card to pay off the old one's balance. They still have to come up with the $300 difference, though. That's where the $500B interest payments (current) and $1T future ones (certain) come from.
So what happens when they need to pay 5% interest to convince someone to buy the current generation of T-Bills? They're selling a $10,000 note for $9500 (not $9700) to roll over the debt. The entire $500B (current) or $1T (certain) debt payments will go up by 67% (from 3% to 5%). When faced with $1.5T in debt payments, and already shelling out money from the treasury to keep SS afloat, where is the money to pay the debt payments going to come from?
The debt is not going to go away, we will have to pay the payments we owe people or default for the first time in our history.
