US deficit continues to rise

[Louigi]

Too much government spending and tax receipts down according to article.

"The US Government budget deficit expanded in May, driven by a continued rise in spending and a decline in corporate profits that has strained government revenue." "The main factor was weaker government tax revenues"

But I thought Obama was supposed to lower the deficit and higher tax rates would mean mare tax receipts?

Why is it that every time a new tax is instituted or raised, the deficit eventually goes up?

 

[Raising Heel]

Is any segment of government spending pegged directly to tax revenues? In other words, when there's a decrease in tax revenue the spending must decrease as well? I don't know, but my guess is that train keeps chugging along regardless. Corporate tax revenue, on the other hand, seems to be extremely volatile due to economic conditions. A quick online search indicates that corporate tax revenue was $370 billion in 2007 but only $138 billion in 2009 (in current dollars) after the recession hit.

Let's be honest, though. Corporations have grown increasingly adept at tax avoidance. Another online search shows that corporate tax receipts haven't kept pace with the overall growth of the U.S. economy. Inflation-adjusted gross domestic product has risen 153% since 1980, while inflation-adjusted corporate tax receipts were only 115% higher, according to the Bureau of Economic Analysis. Plus, the share of corporate profits in tax havens has reportedly increased tenfold since the 1980s (PDF). Nothing illegal about it, just smart business strategy, but tax avoidance is a contributing factor in the growth of the deficit.

 

[Louigi]

Agreed. Although the US has one of the highest corporate tax rates in the world. It seems no one in power understands the simple economic theory of the law of diminishing returns. High tax rates = less activity or avoidance of activity = less tax receipts. To blame corporations for tax avoidance is not the core problem. They are doing what they are supposed to do.

 

[HeelFan58]

With our high corporate tax rate , corporations are parking money overseas. We continue to head in the wrong direction. One big problem with gov't is if a department has money left in their budget they must blow it so the budget doesn't get cut for next year. The better strategy would be to reward for staying under budget. JMO

 

[HeelFan58]

JFK

 

[Raising Heel]

One big problem with gov't is if a department has money left in their budget they must blow it so the budget doesn't get cut for next year. The better strategy would be to reward for staying under budget. JMO

Not just government. I've seen this happen everywhere from neighborhood HOAs to Fortune 500 companies. Everybody wants an end to the largesse, just not theirs.

 

[UNC71-00]

Not just government. I've seen this happen everywhere from neighborhood HOAs to Fortune 500 companies. Everybody wants an end to the largesse, just not theirs.

Bing-fuggin-O.

Everyone hates pork barrel congressional spending, unless it is for their own district.

 

[Louigi]

Not just government. I've seen this happen everywhere from neighborhood HOAs to Fortune 500 companies. Everybody wants an end to the largesse, just not theirs.

Which is exactly why the constitution outlawed the individual income tax. The founders knew that all bureaucracies both government and non government grow like cancer when they have unlimited unchecked spending and taxation.

 

[strummingram]

We have a monetary system that is based, backed and perpetuated by D-E-B-T. Monetized debt is all our society has known for over 100 years now.

 

[Louigi]

We have a monetary system that is based, backed and perpetuated by D-E-B-T. Monetized debt is all our society has known for over 100 years now.

agreed.

Although, the US is still the strongest and most stable country economically, etc., which allows the US currency to still be the most reliable in the world.

I know you and others want our currency backed by gold again, which I disagree. I don't disagree to change the backing, I disagree with using gold.

IMHO, it would be better to back currency with a basket of commodities (which would include gold, oil, grain, tin, copper, silver, coal, pork, etc.), plus economic output.

As far as debt goes, we have too much. But we don't want a government with no debt either. We wold have lost WWII without debt. IMHO, it should be a percentage of GDP. So, only when the economy grows, could the debt increase. If the economy shrinks, then shit has to get cut.

 

[strummingram]

agreed.

Although, the US is still the strongest and most stable country economically, etc., which allows the US currency to still be the most reliable in the world.

I know you and others want our currency backed by gold again, which I disagree. I don't disagree to change the backing, I disagree with using gold.

IMHO, it would be better to back currency with a basket of commodities (which would include gold, oil, grain, tin, copper, silver, coal, pork, etc.), plus economic output.

As far as debt goes, we have too much. But we don't want a government with no debt either. We wold have lost WWII without debt. IMHO, it should be a percentage of GDP. So, only when the economy grows, could the debt increase. If the economy shrinks, then shit has to get cut.

It doesn't have to be Gold. Just not debt.

 

[Louigi]

It doesn't have to be Gold. Just not debt.

I could agree with that.

 

[Raising Heel]

We wold have lost WWII without debt.

Can you expand on this? I'm not an economist and while I like history, I'm not a very good student of it.

 

[Louigi]

Can you expand on this? I'm not an economist and while I like history, I'm not a very good student of it.

We sold a bunch of war bonds to pay for the war. That is government debt. Without that (and many other sacrifices) we would not have been able to build our military up to win the war.

 

[Louigi]

 

[Raising Heel]

Ah, gotcha. Thanks.