Dean:

That made you feel good? That was the stupidest article I've read all week.

the government is taking advantage of the same refinancing boom that you are.

That's supposed to make me feel good? Fact is you can refi all you want: all you're doing is committing to pay more and more and more on future interest payments; furthermore, you are just postponing the time when you can finally be debt-free.

In the end, you run the very real risk of eating cat food off crackers in your old age.

This guy has his head up his arse.

It costs about the same to repay the interest and principal of a $700,000 loan at 8 percent over 30 years as it does to pay back an $850,000 loan at 6 percent over the same time period.

Yeah, well except you're still pissing money down a rathole for interest payments.

What the fuck ..? All that does is run the balance up on the credit card and saddle our kids with the final bill.

Stupid stupid stupid!

If this is what the Bush fiscal policy amounts to then he ought to be run out of office in 2004 for sure.

Not Dean! Jerry. Sorry.

Agreed, Ara. (well, not the part about dissing Jerry; that's between you two! [g])

But yes, this is just a financial shell game. No matter how you refinance it, you really aren't getting the actual debt down any, and for that we need surpluses.

Of course, the politically unpopular solution is to cut spending. God forbid THAT should ever happen! Heh.

Jerry:

Please understand I'm not dissing you. It's the author of the article at Slate that has his head up his arse.

Casey:

You can cut spending or you can increase revenue. Preferably both.

What the hell are these people thinking??

It's true that getting a break on interest doesn't mean it's a great idea to go out and spend the money you're no longer paying in interest, but it does make the situation less dire than I originally thought.

I'll be interested to read the next installment of this column.

Ara,

We GOPers tried that "passing the burden on to the kids" thing for decades vis a vis government debt and it got us precisely zero...thus the Best-selling book distributed by the V,RWC (and only to V,RWC members) "How I Learned to Stop Worrying and Love the Debt".

Essentially, all we need is 12 years of surplus to pay down the debt to fiscal insignificance (we'll probably always carry a couple trillion in debt at any given time); this will happen (unless we do something stupid like elect a Democrat - who would spend even more, and wouldn't even give us any tax cuts).

Mark:

Honestly? Don't get me started. It's not funny.

Sorry.

Ara,

Oh, its enormously funny - me being ok with deficits and liberals, who never met a non-defense spending increase they didn't want to tack an extra 10% on to playing at being deficit hawks. There's a word for it - hypocrit. Not to cast aspersions on you, of course; I don't know what you thought of deficits when they were being wracked up by liberals. As for me, I've never cared too much about them - how much money gets spent is unimportant compared to how it gets spent in my view.

This probably, I admit, stems from my rather cavalier attitude about money...its after all only money and we always make more of it; there is an endless supply of money, it really does grow on trees (provided, of course, we don't get a high tax/high spend liberal Democrat in charge).

Tell me, should you go into debt to pay your groceries just because interest rates are low, or do you go into debt to purchase a fixed asset such as a house at a lower total cost?

The person who wrote that article is an idiot who obviously does not understand the difference between capital and operating expenditures.

Opining that the current administration's tax policy won't create the benefits it claims to isn't bashing, Dean. It's policy debate. Take some aspirin.

Oh, we could make a terrific start just by cutting, John.

If you go back and check your history, cutting back on non-essential non-military spending is a very good option.

Some of my suggestions:
shoot everyone in the TSA and disband it.
lose the Fatherland Front (er) the Homeland Security office.
lose price supports for the farm industry.
bring the troops back from Japan, South Korea, and Europe. Well, it may be a tad too quick yet for the Far East, considering North Korea, but it's a thought.
... I thought I had more, but I'm way too fried right now to think straight. Too much programming.

The article is not idiotic, and you guys need to read it again.

The deficit amounts to about 4.2% of the gross national product. Imagine if you yourself were in debt with 4.2% of your total net worth. I doubt many of us would be unable to handle that--in fact, I wish I had that little debt.

A little-known aspect of the short-term Clinton-era surpluses was that the Clintonistas were as surprised as everyone else about them. Clinton and the Republican Congress did do some moderate cutting of spending (mostly from the military), raised taxes a bit (but not a huge amount), did some moderate other "reinventing government" work which mostly amounted to privatizing a number of government programs, and, they moved the servicing of the debt to short-term debt issues long-term.

Everybody was surprised the deficit went down as far as it did. No one expected it. In 1996, during his re-election campaign, Clinton was talking about maybe having the deficit eliminated within 7 to 10 years, with many of his critics smirking at his predictions.

When the dot-com boom combined with interest savings gave us huge deficit reduction, he was of course quick to take credit for it, while congressional Republicans tried to take it. I'd say they both did it.

In any case, the current amount of debt we're carrying is really not huge in comparison to our actual wealth as a nation. I also note that Republicans spent 40 years or more complaining about deficits, and almost never got any traction on the issue. That Democrats are now grabbing it as theirs is interesting. But since they refuse to say what they'll do to get spending under control, I cannot take them seriously as a party.

For the moment.

Dean:

It's idiotic.

Dean,

The deficits is really irrelevant, if we didn’t have a debt that is a full 60% (soon to be 70%) of GDP then I wouldn't think all that much about it. The debt is the issue. The fact is that interest rates are low is just masking the problem, the thing that really gets me riled up about this moronic Republican - Democrat pissing contests is that the partisans ware deluded in thinking that either side is going to stop spending. The party in power will not stop spending ever, that is how you stay in power. By believing that there is any difference in the two parties other then the constituencies they pander to, your simply part of the problem.

The amount of debt we are carrying is a problem interest on the debt is the third biggest line item and as soon as the economy get rolling that figure will go higher with the intrust rates. You say you have a hard time taking the Democrats seriously? Fair enough, then you should absolutely beside yourself when you consider that the Republicans have the stones to call themselves the party of smaller government. But know you "believe them" you think that are somehow different the Democrats that that have a plan.

Dean its comments like this that suggest to me your simply nakedly partisan. The Republicans don’t have a plan to reduce the deficit or the debt, they are merely hoping that another boom will come along a fortuitous time. They simply don't have a clue. While you all bash the Democrats, with some justification saying things like they never saw a non-defense spending increase they didn’t like you give a pass to an administration that has just set a spending record. That's an example of cognitive dissonance that is so profound its difficult to address.

Your belief in this administration after it proves time after time that it doesn't have a plan either and is incapable of any solution that doesn't include a tax cut or a military deployment is breathtaking. People ask me if I think Gore would have been better, you know what I don’t know, it's difficult to see how he could have been much worse, but for god sake the Republicans had an opportunity to nominate John McCain who would have been so much better then George W. Bush it's not even fair to compared the two, and they not only voted for W but now are defending every singel moronic move that the guy is making in spite of a truck load of evidence to suggest that, at best, the guy is mediocre.

Why? I cannot fathom one good reason. Here was a guy (McCain)who actually fought in a war, who has had 5 times the experience in government and made him self a success with out having to rely on a family name and a pre built administration yet the Republicans chose Bush.

But the Debt is out of control and unless GW gets lucky in a way that Clinton could only hope for the next president, in 04 or 08, Republican or Democrat, is going to have a huge mess to clean up. I'm convinced that there best way to run the government is electing a congress of one party and a president of the other. Government runs best when there is conflict.

The deficit amounts to about 4.2% of the gross national product. Imagine if you yourself were in debt with 4.2% of your total net worth. I doubt many of us would be unable to handle that--in fact, I wish I had that little debt.

Oooops! Big mistake here. You are confusing debt and deficit.

Deficit and debt are not the same thing. The US does not have a debt that's just 4.2% of its net worth. It simply *adds* to its existing debt at the rate of 4.2% a year.

Rick, Dean:

The problem with blaming it all on spending is that Congressmen are only doing what their constituents want them to do.

When my Congressman "brings home the bacon," you're just wasting your breath if you think you can call it "pork."

The solution?

The line-item veto? The last time we tried that the SCOTUS ruled it unconstitutional.

A balanced budget amendment? Fat chance.

I'm open to any reasonable possibility.

Ultimately, I think we just have to hold our Congressmen accountable for the kind of economic policy they embrace. We have to be vigilant and not stand for voodoo economics.

The American people understand that you can't indefinitely continue to pile up debt upon debt.

I thought we had settled that issue back in 92 with the Perot campaign. Ha! I should have learned my lesson after 1980 and Reagan's campaign against a national debt that stretched "as far as the eye can see."

Ara,

I've entirely surrendered on the controlling spending front; there's no political traction in it...we could, of course, wait for it to get so bad that it crushes us, but getting into a decade-long depression just to prove a point is rather silly.

Better, in the long run, to exectute a low-tax, light regulatory economic plan in order to grow the economy faster than the government grows - we did this in the 90's, and we can do it again. Remember, for the two years we ran a surplus government spending increased a great deal in both years.

We cannot account for everything - no one expected Greenspan to raise interest rates in 1999 provoking a liquidity crisis in the market (Greenspan has got to get out of the Keynsian mindset that full employment means inflation is inevitible), nor could any of us have foreseen the WTC attacks...but if we look at the last 20 years we see that we've been in recession for about 12 months - 1/20th of the time. Not too bad - and it shows that with some proper planning and good economic policies, we can grow for decades non-stop...and if we keep growing then the debt as a percentage of GDP goes down, even if the actual dollar amount goes up.

Keep in mind that the debt is three times what GDP was 20 years ago - but the economy three and a half times larger than it was back then. If we build up four trillion dollars in additional debt in creating a 20 trillion dollar GDP then what was a debt of 60% of GDP is now a debt of 50% of GDP...the debt burden will have gone down even as the amount of debt goes up. You can repeat this endlessly - as long as the economy keeps growing.

Of course, the side effect of, say, twenty years of consecutive growth would be revenues growing at a very fast rate....we can, as the late 90's proved, actually grow the economy so fast that even Ted Kennedy can't figure out ways to spend the money. Do that, and you can actually have a situation where the total dollar amount of debt is shrinking.

The most important thing to remember is that anyone who says that taxes should be raised to cover the annual deficit is a lunatic...if you raise taxes you'll get less economic growth and thus less revenues and this will, in turn, mean that your "deficit reduction" didn't do a damn thing. You'd be shooting yourself in the foot - and only to give Democratic Presidential candidates and issue; massively pointless exercise.

Mark:

if you raise taxes you'll get less economic growth and thus less revenues and this will, in turn, mean that your "deficit reduction" didn't do a damn thing.

Not sure the evidence proves your contention. Go back to the Reagan tax increses of the mid 80's and the Clinton tax increases of the early 90's. Both were followed by addtional growth in Federal tax revenues.

I too, wanted to see McCain win the nomination and really don't care much for W "idiotic" domestic plays. To understand why McCain didn't win the nomination, you only have to look at his attack on big tobacco. You go after tobacco, you lose the southeast vote. You lose the southeast vote, you lose the nomination. It's that simple, and it's that sad. Also, big business knew they had a candidate that by the time he reached the White House, would be bought and paid for. Now, I don't think "Shrub" is a bad man, but it will show more and more that, like his father, he is in WAAAAAAY over his head. That's just my take.

btw...my early prediction: Kerry's gonna win...
it all.

Tim the Soldier

Ara,

And if you take Reagan's tax cuts of 1982 and look at what happened in the next four years you'll see a massive increase in revenues...meanwhile, after Bush the Elder signed off on the tax increases in 1991 the deficit soared; revenue growth was also anemic after Clinton's tax increases - its hard for a Democrat to remember, but it was Bill Clinton who projected $200 billion deficits until 2002 back in 1995 - and also said the budget could not be balanced in less than 12 years - and who also said the only way to bring it to balance in 15 years was a tax increase.

The sorta-tax increases of 1986 under Reagan were done during boom times - and thus their effect was muted; Bush the Elder's were done during slack times, and thus their baleful effects were magnified; Clinton's were done in so/so economic times and thus had only a so/so effect. Trust me on this one - if you think that raising taxes will have a long-term effect of lowering deficits you're on crack. You have to think of it like this - government gets its revenues from you and me; when they take more of what you and I have, then you and I have that much less - and this means you and I buy that much less - and this, in turn, means there is less economic activity for the goverment to tax. Think about it.

The fact that the deficit is only 4.2% of GNP is both a cause for concern and encouragement. First, we need to concern ourselves that there is no more fiscal discipline in Washington, D.C. today. Republicans should concern themselves since they are supposed to be the party of good fiscal policy and Bush is turning out to be the biggest spender in history.

To be perfectly fair, we must also remember that a big part of the deficit is due to the
downturn in our economy. Since the federal government relies heavily on income taxes to fund government, revenues from income taxes lag when the economy is in recession. Conversely, income tax revenues soar when the economy expands. That is one major, unavoidable problem with the Income Tax. The amplitudes of volatility you see in tax collections throughout economic cycles make it sometimes difficult to plan budgets.

I am rather sanguine having President Bush managing this problem since he is taking a plan right out President Reagan’s playbook. Although another part of the deficit is due to the Income Tax cut passed by congress and signed by the President, the tax cut will stimulate an economic recovery that will replenish the government’s coffers. This is exactly what Reagan did in 1981.

Reagan inherited a recession. His answer was to significantly cut marginal tax rates. This led to the longest period of continuous economic expansion America ever saw in peacetime. Clinton owes much of the fecund economy he inherited to the expansion begun under President Reagan. Only a very brief recession for three months stopped it. Do not expect Clinton to give Reagan credit any time soon.

One thing that Mr. Daniel Gross forgets to mention is the economic recover benefiting Clinton. Remember, Reagan inherited an economy in recession in 1981. He cut taxes in ’81 amid much criticism from the Democrats and the media.

The economy responded about eleven months later beginning the longest period of peacetime economic expansion up to that time. This continued almost unabated throughout Clinton’s Presidency.