BK>BK>>BK>>BK>> When the deficit hits zero the debt
starts retiring. The
BK>BK>>BK>>BK>> latest budget figures I got from the
Bush administration
BK>BK>>BK>>BK>> say it went into surplus during
Clinton's last few
BK>BK>>BK>>BK>> years.

BK>BK>>BK>> JB> Yet the debt went up.  You can't explain
it.  Also a

BK>BK>>BK>> Nope. Some kinda govt accounting. The debt was
even expected
BK>BK>>BK>> to be paid off within a relatively few years, can't recall
BK>BK>>BK>> how many, maybe 15.

BK>BK>> JB> You're delusional.  Of course one could argue that if we
BK>BK>> JB> finance the debt on 15 year government notes and we make
BK>BK>> JB> the payments we could retire the debt in 15 years.  The

BK>BK>> Which is how it happens.

BK> JB> Except not all government debt can be financed through 15
BK> JB> year notes. That is the point.

BK> I believe the govt stopped doing 30 year notes some years back.
BK> No matter anyway, the time frame may change, but the principle
BK> remains.

No, the principle keeps rising because liabilities are increasing.


BK>BK>> JB> problem with that fallacy is that during those 15 years,
BK>BK>> JB> the government would rack up more debt.

BK>BK>> Not if the defict was truly below zero. Or rather the balance
BK>BK>> was above zero, a surplus.

BK> JB> Deficit and debt are completely separate things.  This is
BK> JB> what you keep missing.  I can be in debt and have plenty of
BK> JB> money to pay my debts (i.e. debt servicing), then I can
BK> JB> still rack up more debt, also service that debt and still
BK> JB> obtain positive cashflow.  And yet the debt would rise.

BK> If you are wracking up debt, you are either experiencing
BK> negative cash flow, spending more than you take in, or you are
BK> stashing away the income from the sale of the debt instruments
BK> somewhere. If the govt is doing that, please let me know.

Ok, I will say this one more time for you very simply.  Either get it or 
go back and take economics 101.

Budget = Cashflow

Liabilities = Debt

If you can't understand this then there is no reason to discuss this 
further.


BK> JB> Simple debt management.  People do it all of the time when
BK> JB> the refinance their homes.

BK> Which is not how the feds run up the debt. They don't refinance
BK> the federal property, of if they do please give me a cite on
BK> that.

Ohh boy.  You take things literally.  They refinance debt.  It is done 
by issuing new bonds.  It is done all of the time.   


BK>BK>> However, I never believed the deficit would stay at zero anyway.
BK>BK>> I am just reporting what the budget figures, and the press,
BK>BK>> reported. I am the one who posted some economist's statement
BK>BK>> that balanced budgets are always followed by recessions. Even if
BK>BK>> they tried to keep it balanced, they would have a recession that
BK>BK>> would ruin their plans. Plus borrowing is the normal way of
BK>BK>> financing capital improvements. It's very difficult to run
BK>BK>> construction projects out of current accounts.

BK>BK>> So I did not believe a balanced budget was a practical reality
BK>BK>> in the long run, but I do see they had one, more or less, for a
BK>BK>> short time.

BK> JB> Balancing the budget is the easy part, just spend less.

BK> Which is also the route to a failed system when you cut back too
BK> much.

Not at all.


BK> Notice, pretty much all the improved economy under Reagan and
BK> Bush II, and job growth, can be related to govt spending. As
BK> spending goes up, so does the economy.

It helps but the government does not generate stimulus.  In fact 
government spending coupled with higher taxes actually works to stall 
the economy.  


BK> JB> Bringing down the debt is much harder because of ongoing
BK> JB> liabilities (i.e. expenses) along coupled with debt
BK> JB> servicing and racking up new debt.

BK> Since debt service is part of the budget, and all the rest is
BK> figured in, that's not really that much of a problem.

Not all debt is serviced in a given year.  Much debt may not have a debt 
service in a given year.  The key is to stop the bleeding.  Cutting 
spending and liabilities is the only way to manage this.  


BK>BK>> I don't believe we would reach zero debt, but I did believe they
BK>BK>> could reduce the debt significantly.

BK> JB> Not until the democrats have no say in this.  Not going to
BK> JB> happen.  They are drunk with money power.

BK> Uh... take another look... Even hard core right wing think tanks
BK> were talking about the republicans spending like drunken
BK> sailors. And Clinton really did reduce the size of government.
BK> Bush and Reagan increased it.

The Clinton did not reduce the size of government.  Another lie from the 
left.  The democrats in congress expanded it further with the TSA 
becoming government workers.  I agree the republicans and dems were in 
bed together on prescription drugs and such.


BK>BK>>BK>> JB> deficit hitting zero or going positive is current
BK>BK>>BK>> JB> account balance cashflow and doesn't mean
debt is being
BK>BK>>BK>> JB> retired.

BK>BK>>BK>> Yeah, it does. See below.

BK>BK>>BK>> JB> You can have cash in your pocket and
chose not to pay
BK>BK>>BK>> JB> off debt.

BK>BK>>BK>> The federal budget includes debt service. So, when the
BK>BK>>BK>> deficit disappears, the debt service pays off
the debt. When
BK>BK>>BK>> the bonds mature, and are due they get paid. If
the longest
BK>BK>>BK>> term is 15 years, then after 15 years they would
all be paid
BK>BK>>BK>> off.

BK> JB> It includes debt servcing on the current year, nothing
BK> JB> more.  I can easily push off debt liability to out years
BK> JB> and still have a positive budget.  The Clinton did just
BK> JB> this, yet you refuse to admit it.

BK> Show it and I will. BTW, that is exactly what Bush did. His tax
BK> cuts aren't even all in effect yet.

If he didn't do it then explain how he had a budget surplus and the debt 
went up ?  You can't.


BK>BK>> JB> Right.  See above.  I already predicted this nonsense.

BK>BK>> It's not nonsense, it's common sense, *IF* they maintain the
BK>BK>> balanced budget.

BK> JB> And don't incur more long term delayed liabilities and
BK> JB> debt.  This is where Social Security bankrupts the country.

BK> Ah... no. Social security has it's own tax base. And it would

Social Security is still a government liability.  There is no trust 
fund.  Deal with it.  The trust fund is full of IOUs, which are out year 
liabilities.


BK> only take shifting 2% of the GDP to social security, from the
BK> 30% typically in total tax portion, to make social security
BK> solvent as far as the Bush administration forsees.

Another 2% of the GDP is another $250B to start.  You libs sure like 
killing the economy and bloating government.



BK> JB>  We are getting the money now and spending it, while the
BK> JB>  liabilities pile up.  At some point they will need to be
BK> JB>  paid, along with the debt interest and current year
BK> JB>  liabilities.  This is the triple play that bankrupts us in
BK> JB>  the 2020s unless we continue to grow the economy and

BK> Which "grow the economy" requires bringing industry back to the
BK> US, and low unemployment and higher wages.

I see.  You plan to have the government order manufacturing back to the 
US ?  And you presume that manufacturing jobs are great well paying jobs 
that grow this country ?  The big benefactors are the unions.    


BK> JB>  reduce long term liabilities via private accounts.

BK> Ah, that way lies disaster. Private accounts are unstable and
BK> unreliable. Retirement is one thing you have to have reliable.

This is funny.  That would explain all of the worthless 401k plans lying 
around.  It also explain all of the public retirement plans that are not 
invested in government securities.


BK> The whole drive for private accounts is due to the fact that a
BK> shift to private accounts would shift billions, perhaps
BK> trillians, into the equity markets. When the money comes out, it
BK> will pull it down just as fast. You cannot move those currently

Yes, everyone retires the same year and pulls out all 100%.  I see.  
You've been listened to the idiots on the left.  In 2030 stuff all of 
your money in your mattress when the crash occurs.  The reality is that 
most folks will pull 4-5% out a year and they may likely be earning that 
much.  I'll leave you to the math.  

That money being invested is put to use in the capital markets, which 
drives further expansion.  The banks and companies don't hide the money 
in vaults.


BK> near retirement into the market, they would not have enough time
BK> to gain anything. Which means trillions in liabilities being
BK> paid out of tax revenue, which would have to continue, all the
BK> while the young workers must pay into private accounts. I don't
BK> see that working.

Again you have it backwards.  That money coming out of retirement 
investments will be taxed, since 401Ks and IRAs are tax free 
investments.  So what you will have is money flowing out, being taxed 
and lining the government coffers for you liberals to spend.  

If I am going too fast on any of this, I'll type slower for you.


BK>BK>>BK>> OTOH, there is one possible explanation that
hadn't occured
BK>BK>>BK>> to me before. Social security surpluses are invested in
BK>BK>>BK>> T-Bills, by law. So, no matter how low the
deficit gets, the
BK>BK>>BK>> Federal govt will still have to issue T-Bills, which
BK>BK>>BK>> contribute to the debt. Now the income from those T-Bills
BK>BK>>BK>> could be used to pay off other T-Bills, which
would be a net
BK>BK>>BK>> zero difference. However, during the transition
I expect the
BK>BK>>BK>> total debt might continue to increase even if only because
BK>BK>>BK>> no one has delt with a continuning balanced budget before.
BK>BK>>BK>> And it turns out, not now either. So no one knew
what to do
BK>BK>>BK>> or how to do it.

BK>BK>> JB> No, you didn't know.  You're getting warmer.  Remember that
BK>BK>> JB> debt equals unpaid liabilities.  I can have positive
BK>BK>> JB> cashflow but still increase my debt.  So can the government.

BK>BK>> Not when debt service is calculated into the budget. If you are
BK>BK>> increasing your debt you do not have positive cash flow, though
BK>BK>> it may look that way if you see it as different accounts.

BK> JB> Current year debt servicing only.  I'll keep saying this
BK> JB> till you get it.  And we can chose only to service the debt
BK> JB> and not retire any of the noninterest portion.  It's all in

BK> We could, but that's not how it's done. And with T-bill maturing
BK> in 15 years, it's up to the investors, not the govt, whether the
BK> debt gets paid off.

Really ?  You do know that some notes are callable and the government 
pays the interest by issuing new bonds, right ?  Ponder this awhile.  


BK> JB> how we choose to finance it.  I could balance the budget
BK> JB> for the next 5 years just by bringing back the long bond,
BK> JB> yet debt will go up.

BK> What would you do with the money from the long bond? If you use
BK> it for current account payments, that's not a balanced budget.

Sure it is.  Say to yourself "budget = cashflow" 



BK>BK>> And I see another downturn, good possibility of a recession, on
BK>BK>> the horizon. Just talking to a heating contractor yesterday, he
BK>BK>> says his new construction work is down about 60%. The papers
BK>BK>> report new construction down, while permit issues are up.
BK>BK>> Incomes down. Etc. That new construction figure lags the fed
BK>BK>> funds rate by quite a bit, so it's an indicator that things are
BK>BK>> not going well. Unless the Fed opens the spigot, and fairly
BK>BK>> soon, things could get a lot worse.

BK> JB> Construction will be down due to excess inventory.

BK> Excess inventory means what there is isn't selling/renting.

Hence the word "excess".  


BK> JB> Remodeling is on the upswing.  Wages are up.  What spigot

BK> Where do you show wages up? Give a soure I can check.

http://www.bls.gov/cps/cpsaat37.pdf

or 

http://data.bls.gov/cgi-bin/surveymost?ci  

and run your own reports.


BK> JB> do you want the Fed to open ?  The liquidity spigot is too
BK> JB> wide open right now.  There is more money out there than
BK> JB> folks know how to spend.

BK> I believe you are about a year behind. And what money is out
BK> there that people don't know how to spend is debt money.
BK> Borrowed money.

You don't have a clue.  Some may be and personally I'd just as soon 
borrow your money and invest it than use my own but you don't understand 
this concept.  Have you looked at corporate profits recently ?  That is 
not debt income.  That is income after taxes.  


BK> JB> Any more and we will see serious
BK> JB> inflation.

BK> Inflation may be unavoidable. Stagflation may be our future
BK> under Bushonomics.

The Dems will try to cause it with tax hikes.  Count on it.


BK> JB> Any recession that comes will be solely due to
BK> JB> tax policy by the Dems.  Count on it.

BK> Tax policy seldom, if ever, causes recession. It will be
BK> interest rates.

And what causes the interest rates to rise ?


BK> JB> The Dems are wanting
BK> JB> to kill the stock market, yet it is what is lining the
BK> JB> government coffers right now.

BK> The stock market was comatose under Bush for 5 years. During the
BK> 80s the stock market went up and up, while corporate cash flow
BK> was down and corporate profits were down. All that time poverty
BK> grew. The stock market is a poor indicator of prosperity. It
BK> can, however, be a good indicator of problems.

I see.  So no wealth is in the stock market.  You keep it under your 
mattress.


BK> JB> Not unlike a Democrat to
BK> JB> kill the goose laying the golden eggs.

BK> Funny that you are citing tax revenue as a basis for judging the
BK> success of the market.

BK> Cut govt spending and watch the economy stumble. Watch the
BK> market stumble. Only Bush won't do it. He hasn't for 6 1/2
BK> years, he won't now. As long as republicans get their share.

Consumer and business spending make up far more of the economy than 
government spending.  Let's do some quick math for you.  

The total GDP is around $12T .  The government steals just over $2T for 
itself.  Of that $2T around $350-400B is used to service debt.  Another 
$1.1-1.2T is used for social programs.  What is left is discretionary 
spending.  That equates to $400B or so.  That is less than 4% of the 
GDP.  This was all of the top of my head and I can figure this our more 
easily than your DNC spoonfed mentality.


Jeff

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