mwdegutis Loc: Illinois

Can’t “balance our checkbook” and we don’t have a spending problem? Riiiiight.

(CNSNews.com) – Inflation-adjusted federal tax revenues hit a record $739.5 billion for the first quarter of fiscal year 2015, but the federal government still ran a $176.7 billion deficit during that time, according to the Monthly Treasury Statement.

Each month, the Treasury publishes the government’s “total receipts,” including all revenue from individual income taxes, corporate income taxes, social insurance and retirement taxes (including Social Security and Medicare taxes), unemployment insurance taxes, excise taxes, estate and gift taxes, customs duties, and “miscellaneous receipts.”

In constant 2014 dollars, the $739.5 billion that the federal government collected in October, November and December of 2014, which is the first quarter is fiscal 2015, was $65.8billion more than the $673.7 billion it collected in the first quarter of fiscal 2014.

In fiscal year 1998, which is the first data available on the Treasury website, the government collected $568.5 billion in the first quarter of 1998 in inflation-adjusted revenue. This means that since then, revenues have increased by 30.1 percent.

Although the federal government brought in a record of approximately $739.5 billion in revenue in the first quarter of fiscal 2015, according to the Treasury, it also spent approximately $916.1 billion, leaving a deficit of approximately $176.7 billion.

weneedrubio

"Austerity" ain't what you thought is it?

MarvinSussman

Q1: For taxpayers, is our “national debt” really a burden that must be repaid?
A1: No. For taxpayers, it is not a real debt. It’s a “Debt In Name Only”. It’s a “DINO”

THE DINO IS NOT NOW AND NEVER WILL BE A BURDEN FOR TAXPAYERS. It is rather the buyers of newly-issued bonds who, in a virtual rollover, pay for redemption of mature bonds and for the interest expense. Auction revenue equals the deficit and exceeds it by about the annual debt interest expense. When an Asian exporter buys a US bond, her dollars are deposited into her individual Treasury bond account at the Fed. At the bond’s maturity, her principal is returned to her by the Treasury, not by Congress, not by the taxpayer.

New treasury issues recapture all net Treasury payments so that they do not add to the money supply. As no physical resources are consumed, there is no inflationary effect. For those reasons, CBO budget economists prefer to deal with the “primary” budget, which excludes the annual debt interest expense.

THE DINO WILL NEVER BE REPAID AND SHOULD NEVER BE REPAID. Only a budget surplus can reduce the DINO. Since Truman, every President has left office with an increased DINO and no annual budget surplus is now in sight. To supply enough risk-free US bonds used for trade collateral, insurance, pensions, bank reserves, etc., the DINO MUST GROW with the economy! Our world needs the DINO!!

Q2: Could ‘’bond vigilantes’’ go out on a strike against US treasuries?
A2: Yes, when they can get risk-free returns from the Wall Street casino or from GM bonds, Illinois bonds, or Detroit bonds. Safety is not everything. Safety is the ONLY thing! That’s why the whole world relies on US bonds.

In every auction, more bonds are demanded than are available. Auction winners get the safest, most liquid US dollar instruments; the losers are stuck with bank risk. If it were ever necessary, the Fed could increase the demand for bonds and reduce the DINO by buying treasuries in the open market with cost-free keystrokes, collecting the proceeds, and returning the required 94% of its profit to the Treasury.

Q3. Could savers prefer another nation’s bonds?
A3. Yes, indeed! SAVERS WILL ALWAYS WANT THE SAFEST BONDS. To beat the competition, we need the world’s highest productivity based upon the world best infrastructure. And if another nation’s infrastructure and productivity become better than ours, its bonds could become safer than ours and we could then lose our bond-buyers. But that could happen only if US v**ers let their DINO concerns stop the repair of falling bridges, failing schools, creaking railroads, etc. Money can be printed, but infrastructure has to be built with real resources over time, which has no substitute. We have 60,000 bridges in critical need of repair. There are over 50,000 dams that have to be removed or fixed. The entire power grid has to be renewed and put safely underground. Our entire school system must be redesigned and rebuilt. We are slipping into obsolescence. Worry about that!

The US bond will be only as good as the US dollar and the US dollar will be worth wh**ever it can buy. If exporters want to sell us their goods, they will have to accept our dollars. If they stop selling us goods, unemployed American will get full-time jobs and start looking for cars and homes. But exporters will never stop selling us goods and trading their US dollars for the safest bond available. Wise spending will keep the US bond on top.

Q4: Are not deficits and debt bad for the economy?
A4: Every federal dollar spent and not retrieved by the IRS is saved by the private sector. Yes, Deficits = Savings! The Treasury has a “National debt” and the private sector has a “National asset”. The bad “Debt Clock” is also the good “Asset Clock”. Since, with our trade deficit, we export money, deficit spending is our economy’s SOLE source of savings! In fact, if large budget deficits don’t replace our vanishing cash, deflation will freeze our economy solid. Who would spend a dollar today if it would buy more tomorrow?

While a bank holding too many bad loans can certainly hold too many maturing CDs, our non-lending Treasury cannot hold too many maturing bonds unless its deficit spending causes harmful inflation. And that happens ONLY in a war or emergency requiring rationing. It NEVER happens during a recession. During prosperity, banks are ALWAYS the main cause of inflation, creating over $6 of credit for every $1 of deficit spending. To curb inflation, regulate the banks before stopping work on infrastructure projects!

Our economy is suffering from acute anemia. Our (DINO + total bank deposits) / GDP ratio is less than half of China’s figure. Our M2 (money supply) / GDP ratio is half of Switzerland’s ratio and one fourth of Hong Kong’s ratio. To become and stay prosperous, we need to DOUBLE the DINO / GDP ratio to return it to the World War II level that was followed by 35 years of prosperity without harmful inflation.

Wealth ine******y worsens the anemia. Most of our paltry money supply circulates among the rich who bribe Congress for estate laws to endow wealth used to bribe Congress for laws that enrich the rich. Wealth is power and inherited wealth is inherited power: aristocracy, always the enemy of meritocracy!

Q5: Won’t we need higher income tax rates to pay for infrastructure?
A5: Congress NEVER asks the Treasury if it has enough money. The only rational reason to increase taxes or to reduce deficit spending is the onset of harmful inflation. Until then, Congress can hire the resources left idle by industry to repair, rebuild, and renew our much-needed infrastructure. Every day, you fill your sink with water AND also prevent it from overflowing. Why can’t Congress fill our economy with money by building infrastructure AND also prevent harmful inflation? China manages to build 24/7 without harmful inflation. Why can’t we do that?

Q6: How much should Congress spend and tax?
A6: Ideally, Congress should spend almost enough to cause harmful inflation and should tax only enough to prevent harmful inflation. Congress’ fiscal goal should be the onset of harmful inflation.

Instead, bribed by Wall Street, Congress spends as little as possible, impoverishing most of us by restricting deficits / savings and taxes as little as possible, enriching the rich. Just as quacks k**led George Washington by bleeding his “bad blood”, Congress is destroying our younger generations by reducing (possibly to zero!) our annual budget deficits / private sector savings increase / consumer demand. Wall Street’s austerity budgets create and nurse a huge army of unemployed labor to suppress the wages and working conditions of the shrinking middle class.

Q7: “I have to balance my budget. Why doesn’t Congress balance its budget?”
A7: If you could legally print money in your attic, why would you balance your budget? You would only need to balance your desires against your family’s well-being. Congress only needs to balance full employment against harmful inflation. Why is something so simple so hard to see?


Q8: How should one v**e?
A8: Never v**e for a deficit hawk. V**e only for someone who worries about the millions of unemployed and underemployed drawing benefits instead of building needed infrastructure for their grandchildren.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

The above essay was inspired by works by:
Frank N Newman, former Deputy Secretary of the US Treasury, author of: ‘’Freedom from National Debt’ (Two Harbors Press);
Francis X Cavanaugh, US Treasury economist for over 30 years, author of: ’’The T***h about the National Debt: Five Myths and One Reality’’ (Harvard Business School Press);
Warren Mosler, economist, author of: ‘’Seven Deadly Frauds of Economic Policy’’ (Oxfod University Press);
Mark Blyth, Brown Univ. Prof. of International Political Economy, author of “Austerity”, (Oxford University. Press)
Dr. Stephanie Kelton, Chair of the UMKC Economics Department, blogging at NewEconomicPerspectives.org.

© 2014 Marvin Sussman All Right Reserved. Permission granted only to copy entirely.

lpnmajor Loc: Arkansas

There's no surprise here. The billions spent "training and equipping" foreign armies, isn't in the budget. The millions spent "fighting Ebola", isn't in the budget. So the budget WOULD have been balanced, if the Gov. could avoid spending money NOT in the budget.

The problem has always been, no one asks how much money is available, BEFORE deciding to give money to some other Nation. The only time politicians ask any questions like, "Can we afford this?" is during e******n years - and anytime someone wants to spend money on - Americans.

mwdegutis Loc: Illinois

If I understand you correctly, if this money would have been in the budget, our government would have "officially" spent even more making our "official" deficit even larger.