From: gary@colossus.cgd.ucar.edu (Gary Strand)
Subject: Re: Fiscal Responsibility
Organization: Climate and Global Dynamics Division/NCAR, Boulder, CO
Date: Fri, 4 Sep 1992 17:22:59 GMT

gg> Gene Gross
gs> Gary Strand

gg> How about cutting all programs, on and off budget, by 40 percent and
gg> increasing the income tax to 50 percent!?

gs> Uhh, let's try something that's part of planet Earth first, OK? Is the ob-
gs> ject getting rid of the debt, or wiping out the economy (and a goodly chunk
gs> of the global economy as well)?

gg> Considering that currently it takes all of the taxpayers money from tax-
gg> payers west of the Mississippi just to cover the interest payments on the
gg> national debt right now, how is it that things aren't that bad!?

  Things *are* bad; I've never said otherwise. I simply believe your "cure"
  to be worse than the "disease"?

gg> The only way to keep it from ending in collapse is to take drastic
gg> measures now.

  Your idea is a little too drastic for my tastes, and I don't see how it will
  solve the debt problem. It very well could make it much worse. For one thing,
  you'll be dumping millions of now-unemployed people into a weak economy, and
  you'll be wiping out a lot of capital (via the 50% income tax) that will be
  needed to create jobs for those people. In essence, you'll strangle the cap-
  ital markets when they're needed most, and you'll have 10%-15% unemployment
  on top of that. Sounds like the ingredients for massive civil disorder to 
  me.

gg> When the amount of On Budget debt reaches $12 trillion (a very conservative
gg> estimate of the amount owed by 2000), there will simply not be enough money
gg> coming in to the national treasury to pay even the interest payments and
gg> pay for all the wonderful government services we have come to depend upon.

  The federal government owns $100s of billions in property. It can help re-
  duce the debt by selling it, as well as privatizing "public" services. A
  number of other countries whose debt problems were *worse* than ours is now
  have been able to get rid of a large part of it by these methods. I suggest
  trying these sorts of measures before we go destroying the economy with your
  ideas.

gg> So, Gary, tell me it isn't that bad.

  In global historical terms, it really isn't. There are several metrics one
  can use that show that other countries have managed to work their way out of
  debts proportionately worse than the US' is, without causing a revolution.

gg> Actually, slashing spending by 40 percent and increasing everyone's income
gg> taxes to 50 percent won't help all that much.

  Why don't you figure out what will happen when you do this, ie, how many 
  people will become unemployed, and what will happen to income tax revenue
  after year 1? Also, add in the secondary effects on the world economy.

gg> So, prepare for some serious hyperinflation by the turn of the century
gg> (less than 8 short years from now).  That is not merely a prediction, it
gg> is inevitable.

  I'm leery of determinism. Given the lack of political will to deal with the
  debt problem, I'd agree that the odds are quite good that we're looking at
  some sort of financial disaster on the part of the US government. On the
  other hand, it doesn't *have* to be that way. There are a few people who do
  see the problem in its proper light, but it's the American people who need
  some massive education to force our "representatives" to Do The Right Thing.


--
Gary Strand                      Opinions stated herein are mine alone and are
strandwg@ncar.ucar.edu            not representative of NCAR, UCAR, or the NSF
Xref: sparky talk.politics.misc:42795 alt.politics.elections:11933 talk.politics.theory:3933