From: garrett@Ingres.COM (QUOTE OF THE YEAR)
Subject: Re: Tax vs. Spend
Summary: Rationalizations 
News-Software: VAX/VMS VNEWS 1.4-b1  
Keywords: Spooky
Organization: ASK Computer Systems, Ingres Product Division
Distribution: usa
Date: 16 Sep 92 04:26:23 GMT

In article <1992Sep15.220418.4549@midway.uchicago.edu>, wag5@midway.uchicago.edu          writes...
> 
>	I noticed that there is a lot of hostility to the
>massive debt incurred by the Federal Government. I think one
>anti-Reaganite said $4 trillion.

There is alot to this post that defies logic, but lets start with this.
Whether it was a "anti-Reaganite" or a "pro-Reaganite" who said it, the 
number still stands as true.

  Then, while the Repubs call
>the Dems tax-and-spend, the Dems call the Repubs borrow-and-spend.
>I thought it would be worthwhile to look into what is going
>on and maybe shed some light on the two systems.
>	In a previous post I explored the nature of the adverse
>effects of taxation, well, some of them.  Overburdensome taxation
>would have the long-run effects of depreciation of the value
>of the taxed currency, i.e., inflation.

Even I know that this isn't the only cause of inflation.

[deleted lots of stuff about inflation]  

>	When one takes out a loan, as the government did, the
>borrower agrees to pay an opportunity cost to the lender, commonly
>called interest.  This interest is roughly equated with the amount

[deleted lots of stuff about borrowing]

>As it is doing that, the business employs people and provides services
>which are in demand by the people.  Thus, we reap the advantages
>of trade, etc., and everyone is happy.  The currency even begins
>to increase in value, since now more things can be bought with it.

You are forgetting one VERY important thing. The government isn't a
business in the traditional sense. The government consumes much more
than it puts out. Also, by running a debt every year, as has been done
by Reagan and Bush (as well as many others), The interest begins to
consume a very large portion of the budget. Therefore, the amount of
services provided by the government decrease while the borrowing
increases. I don't know how to say this any clearer: "This is a 
formula for disaster!"

>The economy experiences inflation, it has trouble competing with
>foreign markets, etc.

You speak as if taxation will inevitably lead to inflation. Do you 
have any numbers to back this up?

>When a government borrows, it illustrates the amount of currency
>and the value of that currency over time which the government has
>taken.  In essence, the $4 trillion is an ugly pimple showing through
>the veneer of Congressional politics.  That $4 trillion would have
>come from the tax payers money and would not be now so obvious.

I can't believe that you are missing the most simple and obvious
affect of borrowing. When you tax and spend (not that I'm for taxes 
by any means) you spend the money you have. When you borrow and spend
you not only pay for the money you borrowed, but also the interest on
it which could (and usually does) end up costing much more than the original
debt. Most people, when they take out a morgage to buy their first 
house, end up paying many times more than the original cost of the
house before they are done paying off the morgage. By borrowing the 
money we are going to be paying many times the amount we are ever 
going to get out of the money we originally borrowed. You seem to 
have rapped yourself up so far in complicated economic theory
that you are missing the bottom line.

>	Reagan executed a master stroke then

Your political theories are blinding you to reality.

, which illsutrated the
>effects of spending.  Democrats would love to cover and hide the
>efects of depriving an economy.  The fact is, the money lost to
>taxation equals the money lost to borrowing, but in taxation who
>bothers to calculate the opportunity cost? 

This is only true of the original amount borrowed. The amount we 
will have to pay in the end is MUCH more.

 Just think, if we had taxed instead of
>borrowing, we could blame the current state of the economy
>on the weather rather than the government.
>
This doesn't make sense, but then neither does the rest of the post.

>				J. Wagner
> 
-Garrett
Newsgroups: alt.politics.clinton,alt.rush-limbaugh