Fred said:
'5% growth in a $10 Trillion economy is $500 Billion'
'Worth 450 billion$'
The numbers you provided right there kinda support the theory.
However its of course a little less rosy, since that growth figure will be taxed at a percentage, so its essentially choped in half or a third (kinda hard to estimate really since we have to compute all taxes income, sales, etc and we don't know the demographics), but its also more like 7-8% growth that we are seeing.
But I agree, its the increased SPENDING, not the tax cut that is causing the brunt of the deficit. But then again, we are using SS surplus money to pay that off, so in a sense its fine.
I'm not sure if it supports the theory because of the fact that this growth is not 100% pegged to pay for the tax cuts. If all of the excess growth was going toward paying for the tax cuts, then it would take the next 4 years to do so. But that simply is not the case. As I noted earlier, and you agree, it is also our explosive growth in spending which is putting us in a hole.
Now don't get me wrong. I've stated since the beginning that $1.6 Trillion in tax cuts (the original 2001 package, pared down to $1.3 Trillion), and the subsequent $350 Billion in 2002, and $450 Billion this year, were simply too much, given our known expenditures within the coming decade, and unknown expenditures. We didn't know about the $200 Billion for Iraq. We didn't know about the $400 Billion for a prescription drug benefit. We didn't know about the enormous costs to fund Homeland Security, which is still woefully underfunded, especially in terms of protecting our water ports and land terminals and border security.
Economic Growth simply will not pay for these expenditures and tax cuts. Our debt is going to have to be financed by foreignors, which in today's political-economic climate is increasingly strenuous, and my generation is going to have to pay it down in the coming decades, along with the generations behind me.
Something has to give. And when looking at what is available to the american public to cut, the Tax plans seem to be the most amenable to that give. Roughly 30% of our projected 10 year deficit is accountable to the Bush Tax Cuts. It's not the whole shebang, but it's certainly a good portion. As you quoted, 5% growth in one year would pay for this year's tax cut, if we spent all of that growth on the cuts. But you know as well as I do that that simply won't happen. And even if it did, there'd still be $1.7 Trillion left to pay off.
As an example of what you're talking about is what I'm doing in my household. We accumulated roughly $20K in school loans (bf went to columbia, I went to yale. uggh too expensive for what you get) and $40K in credit card debt (we had to move out of our homes 3 years ago even though we weren't financially ready to do so, after coming out. nasty situation. both from deeply christian families. very bad). In the past 3 years, I've budgeted us to the penny. In 3 years, we have slightly increased our spending, but almost every bit of growth in salary that we've had, and there has been a lot, we've put onto debt repayment such that by August next year, all of our debt is gone. We could easily finance more debt and live a "higher" lifestyle than we currently enjoy, but then, it would take far longer to pay it off, and we'd still be paying a lot of interest down the road.
As you can tell, I'm a deficit hawk. There are some forms of debt that I can understand. But there are other forms of debt that I simply do not agree with. And the tax cuts, well, how they were implemented, is what I don't agree with, especially because of the depth and the scope with which they were implemented, knowing that our economy could not possibly grow fast enough to pay for them, given our known expenditures. I knew this 2 years ago when they were first implemented, and it's especially true today given all of the explosive growth in spending and more tax cuts down the line.
As for the SS surplus. I've never really liked the idea of a 'surplus' with SS. SS funds come from a general pool of money. There isn't a 'fund' per se for SS that is set aside, and many people don't know that. So really, it's erroneous to say there is a 'surplus' of sorts. It just doesn't exist.
