Tuesday, July 11, 2006

From the White House

North Korea's crap is President Clinton's fault. What? First of all, I didn't know Bill Clinton had been President for the last 6 years. I thought someone else had been the 'decider' during that time. Second, this North Korea isn't exactly a'new' problem for this Administration is it?. Nope, not new, but needs to be addressed during an election year. And, Third, if I recall - Clinton's North Korea policy can be judged neither a failure nor a success because it wasn't continued. But Clinton did have the North Koreans at a table and he did have them talking, and Japan was not considering pre-emptive strikes. We all remember reading about the last Japanese pre-emptive strikes, right?

Next up, the Administration reports that America isn't as deep in the hole as previously suspected. We're only running a $296 Billion deficit. I mean, I'm not a absolute deficit hawk or anything, but I think you loose your mantle of 'fiscal conservative' when you turn a surplus into a deficit. The decider called this good news: "Economic growth fueled by tax relief has sent our tax revenues soaring."

'Cause we're supposed to be that much deeper in the hole. That's like wrecking a $50K Cadillac and saying to your parents: "The mechanic suspected I'd done $7000 worth of damage, but it turned out to be only $5000. I'm not such a bad driver after all. You should be happy!"

I'm inclined to agree with the Distinguished Gentleman, Rep. John Spratt Jr., Democrat of South Carolina:
"The 2006 deficit may be a bit lower, but it represents a $600 billion swing from the surplus projected in 2001. And a deficit of $296 billion is still a large deficit. In nominal terms, its one of the four largest in history,"
True 'nuff.

Luckily, we've seen this before during Reagan and Bush I. Remember folks, the best way out of uncontrollable Republican deficit is to elect Southern Democrats to office and get us back to surplus land!


patsbrother said...

Dude, what would you expect Rep. Jack Spratt, who could eat no fat, to say?

Watch out for his wife though. She could eat no lean. Which mean she must be the Queen of Pork.

Dante said...

Did you read the whole question and answer, Pat or just this sorry attempt by an AP writer at twisting Mr. Snow's words from a non-story into an interesting story?

"QUESTION: When you hear from your allies on Capitol Hill and elsewhere who are in favor of the preemptive doctrine, and they are critical of the administration, they think that the administration is not doing enough in terms of North Korea and Iran, essentially continuing the Clinton administration policy in North Korea, for instance, what’s your response? What do you tell them?

SNOW: This is not the Clinton administration policy.

I understand what the Clinton administration wanted to do. They wanted to talk reason to the government of Pyongyang, and they engaged in bilateral conversations. And Bill Richardson went with flowers and chocolates, and he went with light water nuclear reactors, and he went with promises of heavy oil and a basketball signed by Michael Jordan, and many other inducements for the dear leader to try to agree not to develop nuclear weapons, and it failed.

But there was at least a good faith effort on the part of some very smart people to use that as an approach.

SNOW: We’ve learned from that mistake. One reason not to go bilateral with the North Koreans is what we’re seeing right now, which is that you need to have concerted pressure, especially from those who have very close and ongoing ties with the government of North Korea, so that you can get results.
So this is not a continuation of the Clinton program."

I can play that game, too. According to Tony, "Clinton... wanted to... talk... to... a basketball signed by Michael Jordan."

Tony Snow is very specifically discussing the merits of bilateral talks with North Korea. He's not assigning any blame for the situation in North Korea as a whole or even the situation in North Korea over the past 10 years. He merely mentions that when the Clinton Administration went in for bilateral talks, they were as diplomatic as could be yet they still failed to prevent North Korea from developing nuclear weapons. Furthermore, the White House believes that the source of failure of the bilateral talks is that they need concerted pressure from nations with "very close and ongoing ties with the government of North Korea." Therefore, they are not continuing the Clinton Administration's policy towards North Korea and are seeking help from other countries in talking to North Korea.

"I think you loose your mantle of 'fiscal conservative' when you turn a surplus into a deficit."

I missed the part where Bush ever claimed to be a 'fiscal conservative.' There are a lot of folks in Congress who should be concerned about the spending but Bush has been pretty straightforward with exactly what he is going to propose we spend money on.

And I've said this before but I'll throw it out there again: bah humbug! The deficit is no big deal. I'd rather we spend more than we have today to fuel the American economy. America will cover the interest and then some. We always have.

Assuming the deficit stays at the level it's currently at yearly and assuming a 7% interest rate, if we were going to make a concerted effort to pay off all of our national debt over the course of the next 15 years, it would only require $300 per month per person. That's only 10% of the average person's income. We're better off letting it ride and letting them put that money back into the economy.

Patrick Armstrong said...

My opinion remains unchanged.

The reporter asked a stupid softball question in the first place, as this Administration & the Clinton administration's approaches to North Korea are very different. I haven't heard any Bush Administration critics compare Ol' Dubya to Clinton, and any who would make such a comparison must be so far to the right they served in Hirohito's cabinet.

I mean, who seriously questions this Administration's determination to the doctrine of pre-emption? We need to know their names.

patsbrother said...

Dante, your blaze' approach to a giant Ponzi scheme in the sky is astounding.

And decorum to the side, I'm going to call you a fiscal and mathematical idiot.

You assume (a) we will somehow start to pay off the debt while (b) our deficit levels remain the same. Somehow I'm glad you are not an elected representative.

The only agent with standing to pay off the debt that is in our nation's name is the nation itself. Though possible, under no realistic hypothetical situation would the nation make a concerted effort to pay off the principal of our debt while at the same time borrowing at the same levels as we see today: because our net reduction of debt would be zero, and, due to pesky transaction costs, we would likely be more in the hole than we are today. (Unless there is some way to refinance trillions of dollars at lower interest rates. I'll let you talk to Bank of America on that one.)

For fun, here is your math, which, like crack, is wack.

300 million people x $300/month = $90 billion.

$90 billion x 12 months = $1.08 trillion.

$1.08 trillion x 15 years = $16.20 trillion.

That's a number I hope I never to see in the "Bills" pile.

Instead, how about we, as a nation, prevent that extra $8.2 trillion from dragging us deeper into the hole, balance the budget, and then begin to pay off what we already owe.

Which will have the lovely additional benefit of reducing that portion of our budget we spend each year to pay for interest. In 2006, that number is $211 billion. $211 billion of yours, mine and ours that does squat. (This number seems remarkably low, considering our recently amassed $8 trillion in debt.) Over a 15 year period, an annual $211 billion will cost us more than $3 trillion. Because that's a good use of that money.

Let's use your fuzzy math the other way. Let us assume the deficit gap was closed tomorrow, and that we all went on the 15-year pay-off plan, as you suggest. How much per month would that cost?

$8 trillion/15 years = $534 billion.

$534 billion/12 months = $44.5 billion.

$44.5 billion/300 million people = $148.

Oh, but if you're not making $95k a year, you are part of the 90% of people you make up 35% of the federal income tax. Thus:

$8 trillion/3 = approx. $2.7 trillion.

$2.7 trillion/15 years = $180 billion.

$180 billion/12 months = $15 billion.

$15 billion/270 million(90% of 300m) = $56.

And I'm okay with that.

But what do any of these numbers tell us? Nothing really. Except for the unexecptional principle that to avoid owing more money in the future we should spend more reasonably today and at some point pay off our existing debt.

Your premise, that we should fuel the American economy today (and one assumes, though you do not state it, reap the fiscal benefits tomorrow) discounts the facts (a) economies fluctuate; (b) the deficit is not actually going to hurt us financially; and (c) that Future America is going to be more willing to take resposibility than Present America. Somehow, unless we take the initiative ourselves, the problem will grow larger, or suffer when Future America says either (a) the economy is down, we've got to spur growth through spending, or (b) the economy is booming and we have a surplus, so let's squander it on tax cuts. (Sounds crazy, don't it? Sigh.)

There will always be some reason for politicians to postpone the hard decisions. Instead of encouraging their deferrals, we should be instigating for change.

patsbrother said...

That penultimate paragrah should read, in pertinent part:

"Your premise...ASSUMES (a) economies DON'T fluctuate; (b) the deficit is not actually going to hurt us financially; and (c) that Future America is going to be more willing to take resposibility than Present America."

Sorry about that.

Patrick Armstrong said...

I think Dante has made quite enough sound and intelligent points through this medium to be free of puerile personal insults. Traveling down that road shows true lack of class.

The weakest arguments always reach for the personal insults, and by doing so destroy your own argument's merit before it begins.

That will be quite enough of that.

You will respect the decorum of this website, and find more constructive ways to disagree with folks or you will be invited to find somewhere else to play.

Dante said...

I'm well aware of the realities of our defecit and its repatyment. I was just attempting to put it in a form more relevant to our readers. Most of us don't repay government debts but most of us do have some sort of long term loan for an automobile, house, etc. It was an attempt at giving some perspective to the current defecit situation. It was NOT a proposed method of repaying the national debt (which I though I made quite clear I was against).

"Your premise...ASSUMES (a) economies DON'T fluctuate; (b) the deficit is not actually going to hurt us financially; and (c) that Future America is going to be more willing to take resposibility than Present America."

No, my premise assumes that we can maintain an average. Individual years may be better or worse. Remember, this is long term repayment. The individual years are not nearly as important as the whole range. It's just like investment. You may have some bad years but you make up for them and then some with the good years provided you invest over a long enough term.

"$8 trillion/3 = approx. $2.7 trillion.

$2.7 trillion/15 years = $180 billion.

$180 billion/12 months = $15 billion.

$15 billion/270 million(90% of 300m) = $56."

You are aware that we are paying some sort of interest on these debt we have, right? Whether we are paying through t-bills, savings bonds, etc, we are paying interest. I'm not sure exactly how much. That's why I assumed 7% above. I imagine you'll at least double your numbers if you factor in even a conservative interest rate.

Furthermore, interest is really the crux of the situation. We don't really have to make more as a nation than the amount we're borrowing. We only have to cover the interest. Inflation will take care of marginalizing the principal for us.

"let's squander it on tax cuts."

Yet it's funny how revenues are higher than expectations even after tax cuts. Also funny how that keeps happening historically.

patsbrother said...

For the purposes of eliminating compound interest computations (which I have no clue how to do correctly), I ignored the running interest on the principal on the assumption that the $211 billion we will pay on interest this year (which I did give a shout out to; which is less than 7% interest, though I don't know how we worked that one out; even a number twice that wouldn't be 7% of $8 trillion), which figure would decrease with a gradual paying off of the debt, would be rededicated to paying off the debt/interest. This number would diminish as the amount of funds eventually freed up by a lower principal would grow. I allowed those numbers to cancel each other out. I thought about mentioning that nonobvious point, but I realized what that sentence would look like, and decided not to.

And yes, revenues are higher than expected. 5 1/2 years after the tax cut, revenues are higher than they were expected 5 years after the tax cut. I find that fact unenlightening. However, I do find pertinent that revenues over the past 5 1/2 years have been consistently lower than were expected by analysts before the tax cut. Just because we try to make the best of it, doesn't mean it is the best idea.