How bad are America's finances?

[Marginal Economist]

Obama Ag Secretary Vilsack: Food Stamps Are A "Stimulus"

 

Quote:

---

Obama's Secretary of Agriculture Tom Vilsack: "Well, obviously, it's putting people to work. Which is why we're going to have some interesting things in the course of the forum this morning. Later this morning, we're going have a press conference with Secretary Mavis and Secretary Chu to announce something that's never happened in this country -- something that we think is exciting in terms of job growth. I should point out, when you talk about the SNAP program or the foot stamp program, you have to recognize that it's also an economic stimulus. Every dollar of SNAP benefits generates $1.84 in the economy in terms of economic activity. If people are able to buy a little more in the grocery store, someone has to stock it, package it, shelve it, process it, ship it. All of those are jobs. It's the most direct stimulus you can get in the economy during these tough times."

---

 

You've got to read between the lines.

 

Every dollar of SNAP results in $1.84 in economic activity? Imagine if that same dollar had remained in the earners pocket. It would have resulted int $1.84 in economic activity AND provided food for the family of the guy that worked for it.

 

Additionally, what was the overhead costs of income tax calculation, payment , collection, management, distribution, management, allocation, management, verification, management, accountability, management, acquisition, management, delivery, management, utilization, collections, management, record keeping, management, reporting, management........................................

 

Marginal Economist. For every dollar spent by the end user as SNAP, how many dollars were collected? I know it's not $1 in $1 out as SNAP. More like $1.85 in for $1.00 out then possibly $1.84 in economic activity.

 

I suspect the income/out go efficiency is far from 100%. Though I doubt the IRS could untangle this web of mis-direction and obfuscation.

I don't think the efficiency is horrible. In 2010 they had 3.6B in costs for 64.7B in benefits - SNAP costs

 

You can look at the 1.84 2 ways. If a SNAP recipient was going to buy $150 worht of groceries, and has $120 in food stamps, the buyer can now spend that $120 on additional goods or services. You could also look at a velocity of money angle and say that the money that was taxed would have gone into a savings accoount at a bank and not be lent out, creating no additional economic value.

 

The question is would the $1 that was not taxed been spent in a way that would have created more than economic activity than the money put into SNAP.

[FiredMotorCompany]

I don't think the efficiency is horrible. In 2010 they had 3.6B in costs for 64.7B in benefits - SNAP costs (See note A below)

 

You can look at the 1.84 2 ways. If a SNAP recipient was going to buy $150 worht of groceries, and has $120 in food stamps, the buyer can now spend that $120 on additional goods or services. You could also look at a velocity of money angle and say that the money that was taxed would have gone into a savings accoount at a bank and not be lent out, creating no additional economic value.

 

The question is would the $1 that was not taxed been spent in a way that would have created more than economic activity than the money put into SNAP. (See note B below)

 

Note "A": Right off the top....

 

$3.6B in costs X 1.84 = $6.624B of economic activity. And no politicians had their sticky fingers on it or tons of regulatory paperwork involved.

 

Get the government OUT OF THEIR POCKETS and see the 1.84 factor in economic activity with the money from the pockets of the people who EARNED it!!!!!

 

Cut out the "meddle" man!

 

 

Note "B": Your words: "The question is would the $1 that was not taxed been spent in a way that would have created more than economic activity than the money put into SNAP."

 

My comment: The $1 WAS taxed, but should be a lower rate if SNAP was not funded or funded at a lower rate. I.E., the question is the $1 taxed income as it relates to the $1 of SNAP benefits from tax revenues AFTER passing through the gut of the Federal PIG, whose excrement is passed with the efficiency as you stated above, every penny of such "expense" is stealing 1.84 factor of economic activity.

Edited August 17, 2011 by FiredMotorCompany

[Marginal Economist]

Note "A": Right off the top....

 

$3.6B in costs X 1.84 = $6.624B of economic activity. And no politicians had their sticky fingers on it or tons of regulatory paperwork involved.

 

Get the government OUT OF THEIR POCKETS and see the 1.84 factor in economic activity with the money from the pockets of the people who EARNED it!!!!!

 

Cut out the "meddle" man!

 

 

Note "B": Your words: "The question is would the $1 that was not taxed been spent in a way that would have created more than economic activity than the money put into SNAP."

 

My comment: The $1 WAS taxed, but should be a lower rate if SNAP was not funded or funded at a lower rate. I.E., the question is the $1 taxed income as it relates to the $1 of SNAP benefits from tax revenues AFTER passing through the gut of the Federal PIG, whose excrement is passed with the efficiency as you stated above, every penny of such "expense" is stealing 1.84 factor of economic activity.

How do you know that the $1 that was not taxed has a factor of 1.84? It could be lower, it could be higher. I don't have time to research that right now. I'd guess we'd need to look at the savings rates for an incremental dollar of income for those who pay taxes and what the velocity of money is for general purchases. It could me much higher than 1.84. Remember when they were proposing that every automotive job created 5-10 supporting jobs?

 

I'm not advocating food stamps, farm co-ops, or subsidies. But the 94-95% efficiency on the SNAP program is not bad. Add in another 0.5% for tax collection from the IRS and it would still be more efficient than most charities.

[FiredMotorCompany]

How do you know that the $1 that was not taxed has a factor of 1.84? It could be lower, it could be higher. I don't have time to research that right now. I'd guess we'd need to look at the savings rates for an incremental dollar of income for those who pay taxes and what the velocity of money is for general purchases. It could me much higher than 1.84. Remember when they were proposing that every automotive job created 5-10 supporting jobs?

 

I'm not advocating food stamps, farm co-ops, or subsidies. But the 94-95% efficiency on the SNAP program is not bad. Add in another 0.5% for tax collection from the IRS and it would still be more efficient than most charities.

 

Last comment on this.

 

My point is 100% effective economic activity if it is never extracted by the government in the first place. Any other government intrusion skims off the top and that steals from the economy on the front then justifies itself with "promises" of 1.84 factors of effect. Really? As if the earners dollar suddenly is transmogrified into something greater than $1 because it passed form the earners hands through the government then out to someone totally disassociated from the earner for them to spend but NOW it's "SUPER CHARGED".

 

Just senseless, to me. Fantasy.

[Marginal Economist]

Last comment on this.

 

My point is 100% effective economic activity if it is never extracted by the government in the first place. Any other government intrusion skims off the top and that steals from the economy on the front then justifies itself with "promises" of 1.84 factors of effect. Really? As if the earners dollar suddenly is transmogrified into something greater than $1 because it passed form the earners hands through the government then out to someone totally disassociated from the earner for them to spend but NOW it's "SUPER CHARGED".

 

Just senseless, to me. Fantasy.

 

The velocity of money is a real concept. Wiki Link

 

If, for example, in a very small economy, a farmer and a mechanic, with just $50 between them, buy goods and services from each other in just three transactions over the course of a year

 

Farmer spends $50 on tractor repair from mechanic.

Mechanic buys $40 of corn from farmer.

Mechanic spends $10 on barn cats from farmer

then $100 changed hands in course of a year, even though there is only $50 in this little economy. That $100 level is possible because each dollar was spent an average of twice a year, which is to say that the velocity was 2 / yr.

 

Once again, your question should be whether it is right to take the money from one person (the tax payer) to give to someone else and what is the difference between the velocities.

[FiredMotorCompany]

The velocity of money is a real concept. Wiki Link

 

 

 

Once again, your question should be whether it is right to take the money from one person (the tax payer) to give to someone else and what is the difference between the velocities.

 

Yanked me back into it. thought I was done...

 

YOU:Once again, your question should be whether it is right to take the money from one person (the tax payer) to give to someone else and what is the difference between the velocities.

 

ME: The answer to that question is it is NOT "right" to take the money from one person (the tax payer) to give it to another, regardless of the velocity. And the governments place should be, if it has a place in it at all, would be to disentangle the economy from massively convoluted regulation, used to "manipulate" the economy for political reasons, and let the market work. Micro-management and it's unintended consequences are far too intertwined to effectively work without hindering the intended beneficiaries.

 

Sign-off

[Marginal Economist]

Yanked me back into it. thought I was done...

 

YOU:Once again, your question should be whether it is right to take the money from one person (the tax payer) to give to someone else and what is the difference between the velocities.

 

ME: The answer to that question is it is NOT "right" to take the money from one person (the tax payer) to give it to another, regardless of the velocity. And the governments place should be, if it has a place in it at all, would be to disentangle the economy from massively convoluted regulation, used to "manipulate" the economy for political reasons, and let the market work. Micro-management and it's unintended consequences are far too intertwined to effectively work without hindering the intended beneficiaries.

 

Sign-off

Fair enough. Laissez faire works for a lot of people.

[Marginal Economist]

Yet, we have to do to it without creating an industry that would be pushed into factory farming and reducing wages and benefits. i like the idea of Co-ops and have been a part of them of an on for years. They've worked pretty well out west in some areas for things like electricity and other services.

 

What your advocating has been down in recent years with Fair Trade Co-ops for coffee and Chocolate, but theirs always the question with those, of who's really controlling the operation and how much pull does the farm have versus the processor (co-op manager).

 

I buy fair trade coffee, will have to look at the labels for my dark chocloate fix.

 

The individual vs the manager is going to be an issue everywhere (see autoworker vs IUAW in every thread on this board.)

[FiredMotorCompany]

But it doesn't work entirely or with regard for anything other than market activity. The need for regulation is apparent to all but those in denial. Can the balance between the general welfare of the people and the need to allow for market growth work together in harmony?

 

Most laissez faire economists would be doubtful, but unchecked the market isn't a good thing.

 

poe-tay-toe

 

po-tah-toe

 

ta-may-toe

 

to-mah-toe

 

I don't have faith in government in managing the complexities of this country's economy, despite meddling attempts to tweak it with regulations that beget regulations that are massaged to undo unintended consequences which leads to politically motivated changes to be used as "behavior modification" that are later modified as new administrations are pushed to appease power brokers and/or less frequently, the constituents. Laissez faire is not perfect. Neither is the system we have, but considering the power others have over us because we advocate this third party interference, I'll take the simpler method. K.I.S.S.

[Aces]

poe-tay-toe

 

po-tah-toe

 

ta-may-toe

 

to-mah-toe

 

I don't have faith in government in managing the complexities of this country's economy, despite meddling attempts to tweak it with regulations that beget regulations that are massaged to undo unintended consequences which leads to politically motivated changes to be used as "behavior modification" that are later modified as new administrations are pushed to appease power brokers and/or less frequently, the constituents. Laissez faire is not perfect. Neither is the system we have, but considering the power others have over us because we advocate this third party interference, I'll take the simpler method. K.I.S.S.

 

 

So back to the days of the robber barons?

 

http://en.wikipedia.org/wiki/Robber_baron_(industrialist)

 

Under that system you would be a serf or indentured worker....fit only to work long hours and die young.

[FiredMotorCompany]

So back to the days of the robber barons?

 

http://en.wikipedia...._(industrialist)

 

Under that system you would be a serf or indentured worker....fit only to work long hours and die young.

 

Indirectly, not much difference. Just a new boss. Same as the old boss.

[FiredMotorCompany]

and yet you disagree with me that the Constitution was created to increase the power of the Federal Government? Why the very issue your discussing is the primary reason the Constitution and not the Articles of Confederation exist today.

 

Strange.

 

The constitution was created to protect the rights of the individual. the federal government does NOT give rights. WE give it the power to do those LIMITED duties necessary to enable the individual and the states to interact.

 

Were I alone in the universe, I would need no laws regarding interaction with others. By definition.

 

Since I am not alone, as you are not, as well, the constitution establishes "government" to intercede only to the extent it benefits us in enabling our interactions while limiting abuse or harm.

 

I'm not going to write a treatise, that's been done before, but in general, these are substantially my views.

 

Increase the power of the Federal government? IMHO, that's the antithesis of the constitution.

[FiredMotorCompany]

The constitution was created to protect the rights of the individual. the federal government does NOT give rights. WE give it the power to do those LIMITED duties necessary to enable the individual and the states to interact.

 

Were I alone in the universe, I would need no laws regarding interaction with others. By definition.

 

Since I am not alone, as you are not, as well, the constitution establishes "government" to intercede only to the extent it benefits us in enabling our interactions while limiting abuse or harm.

 

I'm not going to write a treatise, that's been done before, but in general, these are substantially my views.

 

Increase the power of the Federal government? IMHO, that's the antithesis of the constitution.

 

Well, HERE'S your constitution at work...

 

‘Bite Me’ Benefits From Obama Stimulus Funds

 

Are going to defend government working like this? And you think it's better to let THEM spend my money!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! HA!

[FiredMotorCompany]

Its terribly funny for me, a lefty and thus a Federalist by political choice to be arguing that the Constitution gave more power to the Federal government against Fired who seems to be more libertarian and thus should be in the Anti-federalist camp.

 

But it is what is...

 

I guess the cubby holes don't fit me.

[FiredMotorCompany]

I didn't even realize how similar my personally accrued opinions correlated to Milton Friedman's.

 

Great minds think alike.

 

 

http://www.youtube.com/watch?v=YmqoCHR14n8

Edited August 19, 2011 by FiredMotorCompany

[Aces]

I didn't even realize how similar my personally accrued opinions correlated to Milton Friedman's.

 

Great minds think alike.

 

 

So Friedman is your new hero?

 

Then you should watch this documentary.

 

It is his policies in action.

 

But you probably wont watch it...closed minds only like what agrees with them.

 

 

 

http://www.youtube.com/watch?v=eHrEH5G90wo

[FiredMotorCompany]

Warren Buffett’s Taxing the Rich Won't Solve Deficit, Says Tax Foundation

 

Quote:

---

Taxing millionaires and billionaires more – a position advocated by billionaire Warren Buffett and President Barack Obama – won’t make much of a dent in the national debt or the record federal budget deficits, a new study finds. “Even taking every last penny from every individual making more than $10 million per year would only reduce the nation's deficit by 12 percent and the debt by 2 percent,” the non-partisan Tax Foundation’s David Logan writes.

 

“There's simply not enough wealth in the community of the rich to erase this country's problems by waving some magic tax wand,” said Logan.

 

Buffett, in an August 15 op-ed in the New York Times said it was time to stop “coddling” the wealthy and called on Congress to raise taxes on those making $1 million or more.

 

“But for those making more than $1 million -- there were 236,883 such households in 2009 -- I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more -- there were 8,274 in 2009 -- I would suggest an additional increase in rate,” Buffett wrote.

 

“My friends and I have been coddled long enough by a billionaire-friendly Congress,” wrote Buffett.

 

However, according to the Tax Foundation study written by Logan, even taxing the nation’s millionaires at 50 percent – even eliminating loopholes and deductions – would only reduce the deficit by 8 percent and the national debt by 1 percent.

 

“[T]aking half of the yearly income from every person making between one and ten million dollars would only decrease the nation's debt by 1%,” the report said.

---

End Quote.

 

 

 

[FiredMotorCompany]

Fired,

That's an interesting point, but I didn't see where in the article that Warren said it was the solution to the deficit or the debt. And a ten to 12 point reduction in our deficit would be a good thing.

 

Shouldn't all angles be on the table not just cuts?

 

Offered as counter-point that Buffet suggests the rich should pay more.

 

Put simply, who stops them? Him?

[TANGO4224]

Its a counter-point but within reason we need to look at all angles and come up with something.

 

I'm coming to the opinion that a second dip is a reality and not just a potential problem. Germany's growth has been limited since it took measures like ours and so has Britain's. With countries like Ireland, France, Italy and Greece all starting to do the same i expect our growth to shudder to a halt.

 

Austerity measures overseas means bad news for our exports and with a weak dollar exports are important to maintain growth. Add in oil prices dropping and you could see the end of the Texas Miracle too.

 

Poor Rick Perry. If Oil drops his unemployment rate jumps and the 25 million dollar shortfall Texas has could be even bigger for 2012-20013. He could lose the nomination just when it looked like he was a shoe-in.

 

Rick Perry will not be the repub. nomination. The repub. nomination will go to Mitt Romney. Perry is too far to the right. Mitt can go to the middle and take the independents from Obama and the far right ie tea party hates Obama so much that they will vote for him just to eliminate Obama.

[FiredMotorCompany]

Warren Buffett's Taxing the Rich Won't Solve Deficit, Says Tax Foundation

 

Quote:

---

Taxing millionaires and billionaires more – a position advocated by billionaire Warren Buffett and President Barack Obama – won't make much of a dent in the national debt or the record federal budget deficits, a new study finds. "Even taking every last penny from every individual making more than $10 million per year would only reduce the nation's deficit by 12 percent and the debt by 2 percent," the non-partisan Tax Foundation's David Logan writes.

 

"There's simply not enough wealth in the community of the rich to erase this country's problems by waving some magic tax wand," said Logan.

 

Buffett, in an August 15 op-ed in the New York Times said it was time to stop "coddling" the wealthy and called on Congress to raise taxes on those making $1 million or more.

 

"But for those making more than $1 million -- there were 236,883 such households in 2009 -- I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more -- there were 8,274 in 2009 -- I would suggest an additional increase in rate," Buffett wrote.

 

"My friends and I have been coddled long enough by a billionaire-friendly Congress," wrote Buffett.

 

However, according to the Tax Foundation study written by Logan, even taxing the nation's millionaires at 50 percent – even eliminating loopholes and deductions – would only reduce the deficit by 8 percent and the national debt by 1 percent.

 

"[T]aking half of the yearly income from every person making between one and ten million dollars would only decrease the nation's debt by 1%," the report said.

---

End Quote.

 

 

 

 

Since that article was posted, another, more intriguing article has appeared.

 

No wonder Warren Buffett thinks he should be taxed more. He still owes for 2002!

 

Warren Buffett, hypocrite

[FiredMotorCompany]

Interesting read, but i have a question? Just a small one mind you.

 

How does this happen then?

 

 

 

 

 

So options end up saving the company money or at least can save them big dollars as tax deductions.

 

Fair Tax.

 

The contortions and manipulations and needle-threading involved with the current pile of spaghetti tax codes is so onerous and convoluted that the IRS cannot faithfully give certifiably accurate advice and interpretations.

 

Imagine a simple tax code, equally applied, clearly defined, limited exclusions and exemptions, and logically formulated.

Then imagine a federal budget based on spending equal to or less than revenue.

 

 

 

 

 

 

 

 

 

Then the Easter Bunny hops by and poops on it.

 

 

 

.

Edited August 30, 2011 by FiredMotorCompany

[FiredMotorCompany]

And the hooker with the gold heart and no disease becomes a millionaires wife too?

 

I don't agree with the flat part of the so-called Fair Tax but removing all these stupid loopholes would be nice

 

Shirley MacLaine (Sweet Charity, 1969) and not Julia Roberts (Pretty Woman, 1990) right?

[Empire]

3

[Trimdingman]

The rich are the ones who make the economy. It is the government that is destroying it. Taxing the rich more will drive them out of the country, and kill the golden geese. This is just a smoke screen so that people will blame the rich instead of the government. Half of the people don't pay any tax. The rest pay too much. Government spending is the problem. Government is too big by over 1000%. The whole house of cards is collapsing. Make sure that the blame goes to the ones who made it happen.

[FiredMotorCompany]