Comments on: We Have a Spending Problem, Not a Revenue Problem http://healthblog.ncpa.org/we-have-a-spending-problem-not-a-revenue-problem/ Health Care Policy and Reform Insights | NCPA Fri, 25 May 2012 16:47:21 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Don Levit http://healthblog.ncpa.org/we-have-a-spending-problem-not-a-revenue-problem/comment-page-1/#comment-69721 Don Levit Fri, 16 Jul 2010 17:28:59 +0000 http://www.john-goodman-blog.com/?p=11801#comment-69721 We have a spending problem, not a revenue problem is absolutely correct. We also have a problem at how we view entitlement spending. It is about as absurd as going to a neurosurgeon and he says "Don't worry. You have no problem . It is a no-brainer." According to the Joint Economic Committee, in Aug. 2001, this was stated about the entitlement portion of the total debt (the intragovernmental debt) "Economists consider net debt as the proper measure of federal debt. Increasing (or decreasing) net debt represents a withdrawal of money from (or a release of money to)financial markets and may affect the broader economy. Public issued Treasuries represent legally binding committments with other parties that cannot be abrogated. In contrast, The U.S. government is both the creditor and the debtor for Treasuries held in intragovernmental accounts. President Bill Clinton explained this point in his Fiscal Year 2000 Budget: "These balances in intragovernmental accounts are available ... but only in a bookkeeping sense." Thus, an increase (or a decrease) of Treasuries in these accounmts is merely a bookkeeping entry that does not affect financial markets or the broader economy. Placing Treasuries in an intragovernmental account is similar to lending money to yourself. You may increase your loan balance infinitely or pay it off entirely, but neither action can change the amount of money in your pocket. Henceforth, federal debt refers to net debt unless otherwise indicated." So, entitlement obligations, like Social Security and Medicare are not considered debt by ecinomists. Rather, the full faith and credit backing these promises is nothing other than bookkeeping entries! And really, we need not be concerned about paying off the loan balance for Social Security and Medicare. The effect would be the same as increasing the loan indefinitely: We still have the same amount of money in our pockets. Wow, that seems to be a no-brainer - just keep making eternal loans, and don't worry about any paybacks! Don Levit We have a spending problem, not a revenue problem is absolutely correct.
We also have a problem at how we view entitlement spending. It is about as absurd as going to a neurosurgeon and he says “Don’t worry. You have no problem . It is a no-brainer.”
According to the Joint Economic Committee, in Aug. 2001, this was stated about the entitlement portion of the total debt (the intragovernmental debt)
“Economists consider net debt as the proper measure of federal debt. Increasing (or decreasing) net debt represents a withdrawal of money from (or a release of money to)financial markets and may affect the broader economy. Public issued Treasuries represent legally binding committments with other parties that cannot be abrogated. In contrast, The U.S. government is both the creditor and the debtor for Treasuries held in intragovernmental accounts. President Bill Clinton explained this point in his Fiscal Year 2000 Budget: “These balances in intragovernmental accounts are available … but only in a bookkeeping sense.”
Thus, an increase (or a decrease) of Treasuries in these accounmts is merely a bookkeeping entry that does not affect financial markets or the broader economy. Placing Treasuries in an intragovernmental account is similar to lending money to yourself. You may increase your loan balance infinitely or pay it off entirely, but neither action can change the amount of money in your pocket. Henceforth, federal debt refers to net debt unless otherwise indicated.”
So, entitlement obligations, like Social Security and Medicare are not considered debt by ecinomists.
Rather, the full faith and credit backing these promises is nothing other than bookkeeping entries!
And really, we need not be concerned about paying off the loan balance for Social Security and Medicare. The effect would be the same as increasing the loan indefinitely: We still have the same amount of money in our pockets.
Wow, that seems to be a no-brainer – just keep making eternal loans, and don’t worry about any paybacks!

Don Levit

]]> By: Kevin Morrill http://healthblog.ncpa.org/we-have-a-spending-problem-not-a-revenue-problem/comment-page-1/#comment-69691 Kevin Morrill Fri, 16 Jul 2010 06:47:32 +0000 http://www.john-goodman-blog.com/?p=11801#comment-69691 These numbers aren't event the worst. We have $100 trillion in debt if you factor in unfunded mandates. The President and Congressional Budget Office would be in jail if they were running a corporation. We need to get the government--both federal and states--out of the retirement, healthcare and education industries. These are not human rights. These numbers aren’t event the worst. We have $100 trillion in debt if you factor in unfunded mandates. The President and Congressional Budget Office would be in jail if they were running a corporation.

We need to get the government–both federal and states–out of the retirement, healthcare and education industries. These are not human rights.

]]> By: Tom H. http://healthblog.ncpa.org/we-have-a-spending-problem-not-a-revenue-problem/comment-page-1/#comment-69627 Tom H. Thu, 15 Jul 2010 16:22:41 +0000 http://www.john-goodman-blog.com/?p=11801#comment-69627 The question is: Are we going to default? The question is: Are we going to default?

]]> By: Greg http://healthblog.ncpa.org/we-have-a-spending-problem-not-a-revenue-problem/comment-page-1/#comment-69623 Greg Thu, 15 Jul 2010 15:03:53 +0000 http://www.john-goodman-blog.com/?p=11801#comment-69623 The article also explains, interestingly, that the Bush tax cuts have had only a minor impact on the overall amount of accumulating debt. The article also explains, interestingly, that the Bush tax cuts have had only a minor impact on the overall amount of accumulating debt.

]]> By: Joe S. http://healthblog.ncpa.org/we-have-a-spending-problem-not-a-revenue-problem/comment-page-1/#comment-69622 Joe S. Thu, 15 Jul 2010 15:02:16 +0000 http://www.john-goodman-blog.com/?p=11801#comment-69622 And this is why we need a VAT tax? NOT This is why we need spending cuts. And this is why we need a VAT tax? NOT This is why we need spending cuts.

]]> By: Ken http://healthblog.ncpa.org/we-have-a-spending-problem-not-a-revenue-problem/comment-page-1/#comment-69617 Ken Thu, 15 Jul 2010 14:40:57 +0000 http://www.john-goodman-blog.com/?p=11801#comment-69617 Clearly, we have a spending problem, not a revenue problem. Clearly, we have a spending problem, not a revenue problem.

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