Want to set off a federal debt bomb? Keep letting our kids pay the IOUs

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With Tax Day just behind us, we are especially sensitive to how much we pay in state and federal income taxes. It simply is human nature to resist paying taxes. And the question inevitably comes up: Why do we pay so much?

Do Americans pay too much for government services or too little? There's a metric for comparison that offers some needed perspective.  FILE/ASSOCIATED PRESS
FILE/ASSOCIATED PRESS
Do Americans pay too much for government services or too little? There's a metric for comparison that offers some needed perspective.

The answer lies in what we Americans expect our federal, state and local governments to provide. Listed below are only some of the services that citizens believe our governments should provide with our tax dollars:

• police, firemen, and other emergency responders to ensure the safety of ourselves and our property;

• an outstanding public education system for our children;

• excellent highways and roads to support commerce and personal travel;

• medical research to combat disease to enhance the quality of life, and extend its length;

• a robust, professional military to protect us from threats beyond our shores;

• financially stable Social Security and Medicare programs to provide security for older citizens;

• monitoring and inspection of the food supply, water and air quality, pharmaceuticals, airlines, automobiles, trains, utilities, etc. to ensure safety;

• reasonable assistance for the less fortunate, providing food, shelter, and medical care;

• an elected government that is responsive to the needs and desires of citizens, that operates openly and fairly, and acts as responsible stewards of our tax dollars.

DO WE PAY TOO much for these government services? Too little? Should we reduce their cost and quality?

The Organization for Economic Cooperation and Development provides an important metric for comparison. With the exceptions of nonmembers China, Russia and India, the OECD consists of the 34 countries that are America’s major trading partners. The OECD annually determines the taxes member countries collect as percentage of their gross domestic products.

In 2011, the United States federal, state and local governments collected 24 percent of GDP in taxes. How does that compare to the other OECD countries?

Sweden, Denmark, Norway, Italy, France and three others tax the most, more than 40 percent of GDP. Fortunately for U.S. taxpayers, we are not among those eight countries.

WE’RE ALSO NOT in the same category as the United Kingdom, Germany, Canada or New Zealand. They are among the 16 OECD countries that tax between 30 and 40 percent of GDP.

The United States is among the ten countries who tax between 20 and 30 percent of GDP. South Korea, Turkey, Slovakia and four others tax more than the U.S.

And the U.S. position? We are 32nd of the 34 OECD countries. Only Chile (21 percent) and Mexico (20 percent) tax less.

Perhaps the most important message in these numbers is that we are not heavily burdened by taxes when compared to other economically comparable countries. In fact, we tax far less than Germany, the United Kingdom or Japan.

But the services we demand are expensive. How do we provide them with lower GDP taxation than comparable countries? Is it because our government is so efficient that we can deliver better services with a smaller fraction of GDP? No. There is another answer.

We can do it because we borrow. Because we thoughtlessly, and endlessly, borrow.

Washington politicians are afraid to propose achievable plans to halt our borrowing binge because that would require compromise and unpopular choices. Frozen in partisan positions not to reduce government services or not increase taxes, too many citizens believe we can have it all.

In this political standoff, what is the fiscal endgame?

Let our kids pay the IOUs.

CONGRATULATIONS TO my generation of Americans who may not be around when the federal debt bomb explodes. Condolences those younger than age 50 or so who will have to live with, and clean up, the financial wreckage.

(The writer is a retired U.S. Navy officer. He lives and writes in Savannah.)

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Rhetor
1020
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Rhetor 04/27/14 - 07:56 am
0
7
hmm

Has anyone noticed how few of the columns in various conservative news outlets are written by actual economists? I've seen columns along these lines by ministers, historians, and, now, military leaders. That's because, economically speaking, the point that Mr. Conant makes is invalid. Very few economists would make that point. The United States is a sovereign nation with a sovereign currency. We can't run out of money. Our biggest concern right now is unemployment, not debt. The debt panic is largely a political invention. I'm not saying that the debt isn't a big issue, because it is, but that it is not our biggest issue. Not by a long shot. For further information, I refer the AC's readers to any macroeconomics textbook.
Mr. Conant does make a valid point that our government does, contrary to the Tea Party folks, provide many valuable services that we can't do without. He is also correct that the USA has a relatively low tax burden. Thanks for making those points, Mr. Conant, and thanks for your service to our country.

gaflyboy
5035
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gaflyboy 04/27/14 - 08:07 am
7
0
You're right Rhetor.

"We can't run out of money". We can continue to print as much as we want, as long as we can afford the paper and ink!

The point is that unless we get things under control, you can have a wad of "money" in your pocket that will be worthless.

ymnbde
10016
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ymnbde 04/27/14 - 10:27 am
3
0
hmmm... we can't run out of money?

well, inflation can make a dollar worth much less, and technically you still have money... so i guess it can never be 0
but we simply don't get our money's worth on public education
most of that money supports a bureaucracy and a union
and the kids pay for that, with a substandard education
how much we pay isn't as important as the quality of service we get
and public education is not high quality
private schools do a much better job

Darby
26878
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Darby 04/27/14 - 12:31 pm
2
0
So, the answer is....

emulate the socialist nations and tax the bejesus out of the folks? Never mind that historically we have done much more with much less.

Let's consider that the answer may lie in curbing the appetite of government, not putting the taxpayer on reduced rations.

The ideal governing body, local, state or national looks at the money available and asks, "What is the most efficient use of our resources?"

They DON'T start to scurry around looking for something to tax that may have been overlooked in the past.

Or, at least, they shouldn't!

Gage Creed
17856
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Gage Creed 04/27/14 - 03:04 pm
3
0
"we can't run out of money"

"we can't run out of money" = My account can't be overdrawn... I still have more checks! (palm to forehead)

Makes you wonder if some can reconcile their own bank statement....

Rhetor
1020
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Rhetor 04/27/14 - 04:01 pm
0
3
did anyone actually read?

1. Did any of you good people actually look at an economics textbook? Clearly not.
2. Conservative pundits have been warning of Weimar-level inflation since Obama took office. The sky is falling! The dollar will be worthless! It turns out that, just as economic theory predicts, deflation is currently a bigger threat than inflation. As long as the country is underperforming (in a liquidity trap, to be exact), the inflation risk is just about nil. You could have made a fortune in the markets just by betting against the conservative pundits.
3. The government isn't a household, Gage. Creating money out of thin air is a crime for a private individual, but it is a constitutional obligation of Congress.

Gage Creed
17856
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Gage Creed 04/27/14 - 04:24 pm
2
1
Rhetor... have you ever heard

Rhetor... have you ever heard of Greece?

Gage Creed
17856
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Gage Creed 04/27/14 - 04:28 pm
3
1
Inflation is nil? Have you

Inflation is nil? Have you purchased groceries or fuel lately?

burninater
9680
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burninater 04/27/14 - 05:28 pm
1
2
"Inflation is nil? Have you

"Inflation is nil? Have you purchased groceries or fuel lately?"

For the last year, food is up 1.7%. Gas is DOWN 4.7%.

Overall, consumer prices are up 1.5% over the last year.

http://www.bls.gov/cpi/cpid1403.pdf

If you look at Table 24 in the report linked above, you will find something that may astonish you.

Inflation over the past five years is lower than at any time since 1965, and comparable to any of the lowest non-Depression era rates since tracking started in 1913.

So tell me -- who is telling you that inflation is out of control, even though it's false, and what do they have to gain by spreading this falsehood?

Darby
26878
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Darby 04/27/14 - 06:05 pm
2
0
"Conservative pundits have been warning

of Weimar-level inflation since Obama took office."

.
No, in reality, they have not. However, if we keep spending money we print rather than create, inflation WILL be the final outcome.

Like the way you guys love to set up straw-men just so you can knock them down.

I guess you have to do that when the facts aren't with you.

burninater
9680
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burninater 04/27/14 - 06:26 pm
1
3
"Like the way you guys love

"Like the way you guys love to set up straw-men just so you can knock them down."

You've got to be joking.

This is just from the first two pages of Bing search results for "Obama Weimar inflation". Note the completely obscure Conservative pundits like Glenn Beck and Infowars.

http://vdare.com/articles/obamas-weimar-republic-solution-to-the-meltdow...

http://www.theblaze.com/stories/2012/11/14/glenn-beck-lays-out-the-start...

http://yidwithlid.blogspot.com/2009/01/barack-obamas-weimar-republic.html

http://www.webofdebt.com/articles/hyperinflation.php

http://www.infowars.com/weimar-inflation-in-america/

http://theeconomiccollapseblog.com/archives/tag/weimar-republic

http://www.freerepublic.com/focus/f-news/2988077/posts

http://ampgoldportfolio.com/tag/weimar-republic/

I guess you were right in one way -- you DID set up a strawman when the facts were against you ...

Gage Creed
17856
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Gage Creed 04/27/14 - 06:44 pm
3
1
Burn... do you actually

Burn... do you actually believe the numbers you just posted?

Is your grocery bill only 1.7% more that it was last year? Mine is more like in the 10% range more.

Fuel has gone up 10% in the last month......

Speel edit

edcushman
7930
Points
edcushman 04/27/14 - 06:44 pm
3
0
"Mine is more like in the 10%
Unpublished

"Mine is more like in the 10% range more.'
GC, 10% is very low for groceries.

burninater
9680
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burninater 04/27/14 - 06:44 pm
2
1
Yes Gage, I have more respect

Yes Gage, I have more respect for analysis of large-scale data than one person's personally subjective view of short-term price fluctuations.

Local factors and marketplaces can distort price data, as can individual consumption choices. Making determinations about the national effects of federal monetary policy by simply looking at one person's perception of what they've spent is, in my opinion, scientifically and fundamentally unsound.

Gage Creed
17856
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Gage Creed 04/27/14 - 06:49 pm
1
0
Burn.. if you refuse to face

Burn.. if you refuse to face reality... then there is no need for discussion

I have posted links that dispute what the CPI (I'm from the government and I'm here to help.) Hell, I even used left leaning organizations.

burninater
9680
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burninater 04/27/14 - 06:52 pm
1
0
Gage, both the articles you

Gage, both the articles you posted directly contradict your claim.

In the first, the following:

"Food prices rose 0.4% in February, the most since September 2011, the Bureau of Labor Statistics said Tuesday."

You are claiming an inflation rate 25 times greater than the article you link -- and the rate that is 1/25th of your claim is the HIGHEST rate in two-and-a-half years.

Your second article, meanwhile, demonstrates that price increases for gasoline are the consequence of MARKET factors -- not inflation.

This is EXACTLY why I trust empirical data and analysis over subjective experience -- our personal experience of things doesn't always have enough information to accurately characterize their real causes.

Gage Creed
17856
Points
Gage Creed 04/27/14 - 06:54 pm
1
1
Ed... I'm shooting from the

Ed... I'm shooting from the hip (somewhat) but most everyone I know is talking about the increase in the price of food and fuel and how our illustrious leadership has decided to remove these items from the CPI.

Isn't it somewhat disingenuous to manipulate the stats to make them say what you want? (palm to forehead.. what was I thinking..... everything is fine...remain calm... BOLOGNA)

Gage Creed
17856
Points
Gage Creed 04/27/14 - 06:58 pm
1
1
Burn... even you should under

Burn... even you should under stand math... 0.4 x 12 months = ?

You are throwing in with the politicans... tell me... are you paying the same or less for food than you did a yeat ago?

Are you paying the same or less for fuel than you did a year ago?

burninater
9680
Points
burninater 04/27/14 - 06:58 pm
1
1
"I'm from the government and

"I'm from the government and I'm here to help."
------
That quote always cracks me up -- it is a perfect example of the ability to deny the real in favor of the ideal.

The kicker to that one? The guy who said it spent 16 years being "from the government".

What, was he trying to hurt us the whole time? Is that how you reconcile the real and the ideal?

burninater
9680
Points
burninater 04/27/14 - 07:02 pm
1
0
"Burn... even you should

"Burn... even you should under stand math... 0.4 x 12 months = ?"

You are assuming a constant rate. It is not. The net rate over the past year has been 1.7% -- according to the exact same source you got the 0.4% rate from.

"You are throwing in with the politicans... tell me... are you paying the same or less for food than you did a yeat ago?"

Food prices are about the same for me.

"Are you paying the same or less for fuel than you did a year ago?"

Gas is up a bit, but all economic data suggest the rise is primarily due to market forces.

gaflyboy
5035
Points
gaflyboy 04/27/14 - 07:07 pm
2
1
Two points

1 - Our dollar used to be backed by gold. After Nixon, it's backed by "the full faith and credit" of the United States. Frankly, faith is waning worldwide and our credit is stretched dangerously thin.

2 - Combine even a 1.7% inflation rate (let's see where that ends up at the end of the year) with the fact that middle class income has dropped $3000 (on a national basis) in the last year; it doesn't bode well for most of us.

burninater
9680
Points
burninater 04/27/14 - 07:10 pm
1
0
" ... our illustrious

" ... our illustrious leadership has decided to remove these items from the CPI."
-----
The data I linked, and that you used as well, includes food and fuel.

The CPI also includes that data. They report it both with, and without. Whoever told you it is simply excluded was not telling you the truth. Here is a link to the data as it really is reported, and that clearly gives a CPI value including food and fuel.

http://www.bls.gov/news.release/cpi.nr0.htm

Some economists use the non food-and-fuel CPI to see longer-term trends, as food and fuel prices are far more volatile than most other consumer goods, but the statement that the gov't simply excludes that data is purely false.

Gage Creed
17856
Points
Gage Creed 04/27/14 - 07:19 pm
1
1
Maybe you can let me in on

Maybe you can let me in on some shopping secrets then... I'm seeing the cost per unit of the staples I buy have gone up >5% in the last year. And some staples we buy are in the 10% range

In the last month fuel in SC jumped about 10% more than last year at this time... 2013 $3.24 2014 Yesterday in NA, SC $3.55

http://charlotte.cbslocal.com/2014/04/09/sc-gas-prices-jump-17-cents-in-...

But hey... the CPI says I'm wrong so it must be true? Similar to those unemployment numbers right?

Edit: the link did not paste on the first try

Gage Creed
17856
Points
Gage Creed 04/27/14 - 07:13 pm
1
1
Burn.. what numbers does Jim

Burn.. what numbers does Jim Carney use when he reports to the press?

burninater
9680
Points
burninater 04/27/14 - 07:19 pm
1
1
"Combine even a 1.7%

"Combine even a 1.7% inflation rate (let's see where that ends up at the end of the year) with the fact that middle class income has dropped $3000 (on a national basis) in the last year; it doesn't bode well for most of us."
----
Very true, and the key there is dropping incomes. Economists say moderate inflation is necessary for the fluidity of capital required by modern capitalism -- but the model generally includes wage gains that track inflationary rates. Worker leverage has been virtually nonexistent under globalism, and with the exception of strong worker's rights nations like Australia and Germany, most wage earners are seeing less and less of the gains from productivity increase.

Suddenly, the idea of the accumulation crisis is looking less and less outlandish.

burninater
9680
Points
burninater 04/27/14 - 07:25 pm
1
0
"Burn.. what numbers does Jim

"Burn.. what numbers does Jim Carney use when he reports to the press?"
-----
I honestly couldn't tell you. I'm a primary source kind of guy -- I don't have the patience to watch the press games, or wait for somebody else to tell me what I should think is real.

The BLS numbers are available at a click of the button. I'm going to form my understanding of real trends by considering the raw data, rather than waiting for it to get filtered through the various agendas of the media and political elites on both sides of the spectrum.

Gage Creed
17856
Points
Gage Creed 04/27/14 - 07:28 pm
1
1
Well... I'm looking at this

Well... I'm looking at this from a street level view and you seem to be at the 90 mile view...

I see what is on those gas station billboards and it is not 1% more than last year.

I also know what the unit cost is of most of the food items I buy and I can tell you those are also up more than 1.7%

I guess we will just have to disagree... you cite government stats and I cite what my checkbook sees...

burninater
9680
Points
burninater 04/27/14 - 07:33 pm
1
1
"But hey... the CPI says I'm

"But hey... the CPI says I'm wrong so it must be true?"
-------
Not necessarily, and I tried to address that --

Prices in local markets do not fluctuate in lockstep with one another. One individual's subjective experience of prices does not reflect inflation in the nation as a whole. To take one individual's subjective experience and say it fully characterizes the consequences of fiscal policy on a national level is simply not a rigorous way of looking at reality. It's analogous to me saying the way the water is dripping in my bathroom sink demonstrates the effects of the water conservation policies for my entire district.

If you want an empirical measure of how national fiscal policy is affecting economic behavior, you've got to look bigger than just your own shopping experiences.

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