Bar Stool Economics

[Sukerkin]

Given that the only two qualified economics professionals on the board are me and tellner (if I recall accurately) and neither of us has set foot here might tell you something about the veracity of what's gone before.

It's been twenty years and more since I graduated and it still annoys me that economics is one of those subjects upon which people think an unqualified opinion is just as valid as a qualified one :grr:. With sociology I can understand it, because that is glorified common sense anyhow but with economics, well, it's a science. We have mathematical models and everything ... okay so they don't match up with what people actually do but that's besides the point .

 

[Shuto]

I think I recall some other years where the Federal government actually did pay for the things it consumed. FDR was way before my time. But I seem to recall it happened during years that I can actually, well, sort of remember.

Mental hic-cup here ... who was it?

Budget surplus .... hmmm... damn, can't remember right now.

Note the almost in my sentence.

 

[Shuto]

But, the drinkers represent the taxpayers, who do indeed pay every year.

True, but they/we don't pay for all the beer that they/we buy. That's why we talk about a Federal budget deficit.

 

[crushing]

Michael,

In a government and media culture where an increase in spending is considered a budget cut because that increase isn't as much of an increase as someone wanted, it would not surprise me to find that the same government and media would see surpluses where the government is spending more than it takes in.

I have some debts I accumulated in previous years (car and house) and I include the interest on those payments when doing my budget. But as we know, Washington has its fuzzy math where increases are cuts and spending more than what is taken in is somehow a surplus.

Unfortunately, we don't know how much of the 90s economic bubble (also called irrational exhuberence), before it burst, was based on the Enrons, Tycos, WorldComs, and other frauds of the time stimulating the economy.

 

[michaeledward]

crushing ....

That you can budget, year over year, those long-term fiscal responsibilities that you have, is one very major thing that separates you from the government. As I understand it, the government does not the equivilent of the 30 year mortgage. All expenses begin anew, each year.

If my understanding is correct, the analogy between personal finance, and governmental finance doesn't work, because of this significant difference.


Also, even amid the irrational exuberance, or because of it, revenues to the federal government were up. That irrational exuberance may have been part of the cause to those increasing government revenues. I can buy that idea. But, if that is true, I don't think the solution to irrational exuberance is less regulation; which seems to be one of the constants of the Republican Party (and a big, faulty, part of the Clinton positions). I think instead, easier to understand regulations, and more carefully audited financials would be a better way of addressing the issue.

(If the accountants can bury the understanding to the point where we are irrationally exuberant, perhaps we need to make the science a bit more peer-reviewable.)


Lastly, Shuto, actually, I did not see the 'almost' in your post. I read right over it, twice. But it is there. It is nice to see the Hat Tip to President Clinton.

 

[Archangel M]

Clinton Budget Myth

Both the Clinton Administration and GOP congressional leaders have been quick to highlight their pivotal roles in ‘balancing the budget.’ While such claims make for political rhetoric, the truth is quite different.
Those who argue that the federal budget is balanced assert, in effect, that ‘if cash in equals cash out, the budget is balanced, and if cash in exceeds cash out, there is a surplus.’ Yet the reality of the federal budget is more complex.
Part of the federal budget’s ‘cash in’ is in the form of payroll deductions for individual contributions to the Social Security trust fund. These funds are intended to be put towards paying current and future Social Security benefits. Presently, receipts from the Social Security payroll tax exceed benefit payments by more that $100 billion. Yet rather than banking the extra funds towards payment of future benefits, the government uses the money to supplement its ‘cash out.’
Monies intended for the Social Security trust fund used to balance the government’s ‘cash out’ are added to the total federal debt. It is for this reason that in FY98, the year in which OMB estimates that the budget surplus will be $39 billion, the total U.S. statutory debt will grow, according to U.S. government estimates, from $5.328 trillion to $5.506 trillion, an increase of $178 billion. By FY2003, the total U.S. debt will be $6.305 trillion.