Title: VIDEO: No help for huricane victims unless Debt Ceiling is Raised - Paul Ryan (R) Source:
LIVE SATELLITE NEWS URL Source:https://www.youtube.com/watch?v=ZfjWIpnfjgQ Published:Sep 6, 2017 Author:Paul Ryan (R) Post Date:2017-09-06 17:51:26 by Hondo68 Keywords:None Views:3259 Comments:15
Poster Comment:
The worst argument for raising the debt ceiling, ever! He completely ignores State, Local, charities, and private, rescue and aid efforts.
He completely ignores State, Local, charities, and private, rescue and aid efforts.
He doesn't run any of those. He does control the House and its basic spending bill for FEMA and SBA. And he has to deal soon with the debt ceiling, one way or the other. He wants to raise it, Liberty Caucus members want to leave it but cut spending sharply. Chances are, they'll raise the debt limit and provide disaster relief after the Senate triples the price with add-on pork spending of all kinds.
The initial Sandy relief bill was around $8-$9 billion. This one for TX/LA is $7.5B or so. This pays for FEMA efforts and a smallish ($500M) SBA loan package.
The real pork will get larded on in the full reconstruction bill.
For Sandy, it was over $100 billion. I expect the same for TX/LA and for whichever states get hit by this oncoming hurricane.
It's the big reconstruction bill that will be the porkfest in the Senate.
Sure. But now follow the money. The government creates $100 in new assets (by borrowing the money, thereby creating $100 billion in new securities in the form of bonds). People spend $100 billion to buy the bonds, so the government gets its $100 billion. It maybe has to pay $2.5 billion per year in interest, maybe less. If the interest rate about matches inflation then it's a wash. If the inflation rate exceeds the interest rate then the debt becomes a good deal for the government.
Now then, the holder has an asset he can sell, and traders can buy and sell them many times, generating new money on every trade, and capital gains taxes, and transaction fees for the broker-dealers.
Meanwhile, the government takes that $100 million and pays it to contractors, who probably make a 15% profit and end up paying a third of that back in taxes, so $5 million comes back to the treasury in taxes.
The contractors spend the money creating profits down the line. $85 million of it gets spent as salary and for equipment and supplies, and salary and purchases are all income to somebody else, taxed somewhere between 20% and 39.6%. So AT LEAST $20 million MORE comes back to the treasury on the taxes of the first line of expenditure of that $100 million, from its recipients and their expenditures.
Those employees and provisioners then spend the money, etc.
In the US, the current velocity of money is approxmately 1.46 times on an annualized basis.
So, if we assume that the money is spent at that rate, that means that $100 million is taxed 1.46 times, each time at the average federal, state and local tax rate as it is income to somebody. If the average tax rate is 25%, that means that the $100 million distributed is the equivalent of $146 million, taxed at 25%. The treasury recaptures $36.5 million of this expenditure.
Which means that in less than three years the treasury has completely recouped that spent money, and every year after that it makes money on this money creation, as it continues to circle about the economy.
This does not take into consideration the capital gains taxes on the trading of the treasury bills, or the taxation on the interest on US treasuries.
So $100 billion is borrowed and lent out, at a cost of perhaps $2.5 billion per year in interest. The $100 billion generates $36.5 billion per year in taxes (assuming that the velocity of money remains at 1.46x.
In the third year, the government has made money by borrowing it. Its return on investment is positive.
Note that this is true of money spent on food stamps, on education, on gay pride parades - doesn't matter. When the government spends money, that money comes back to the government in taxes.
When the government creates new securities by borrowing, it generates income for itself.
If you wanted to completely untax the economy, you could, and just CREATE money to pay the government's expenses.
Of course, if you did that, the money would inflate, probably pretty badly. Truth is, there is only so much money that can be put to work providing goods and services at any given time - people only need so much food, so much housing, so much entertainment. You can increase the economy - by giving money to the poor (a guaranteed income will pay for itself in short order, just as Social Security increased the size of the American economy.
Social Security generates $1.5 trillion in economic output every year. It costs the federal government about $910 billion per year. Right there we see the effect of velocity on the economy. Social Security generates a NET INCREASE in the US economy of over $600 billion per year. In other words, the actual cost of Social Security in one year to the economy is only a third of the outlays...and taxation takes back 80% of that.
This is why wooden-headed analysis of the "cost" of government programs is so dishonest.
Social Security massively INCREASES the gross national wealth of the United States. Do away with it less than a trillion in expenses, and you'll cause a half-trillion dollar bigger crater than you saved.
Social Security makes independent economic agents out of people who otherwise would be in homeless shelters or spare bedrooms spending nothing.
Welfare does that too.
When we say that it "costs us billions", that is not really true. With taxation and economic expansion, it pretty much costs us nothing.
The ISSUE is not economic. That's fake. The ISSUE is ideological, psychological. And too many conservatives don't know that, so they put themselves in the same position as Mr. White has placed himself regarding that nurse. They think statically, they don't think dynamically, they don't understand the concept of velocity and multi-level taxation, they don't understand underlying asset growth. They don't understand that when people become too poor, they cease to be economic multipliers - they cease to spend money, which then generates more money, and instead just directly consume resources, on a subsistence level. This seems "right" to the ignorant, but it results in a North Korean style economy as opposed to an American one.
The Soviet Union did not fail because they looked after their workers. Germany and Japan look after their workers, and in the US we look after the better off workers. The USSR failed because they overstretched themselves military, invaded a country that cost them too much flesh and bones, and the people saw no hope for themselves, and nothing but corruption and hardship forever. But even then there was no revolution.
What happened, specifically, was that the hard core conservative elements, the militarists, used military power to take over the nation from Gorbachev, and the nation as a whole refused to obey the military. The soldiers themselves would not obey orders to kill the people, and the generals found themeslves in uniforms, with nobody willing to execute their orders. Gorbachev was brought back in, blinking like an owl, but the people who had just defied the military command structure were now themselves in command of loyal troops and people - the Yeltsins and the Putins of the world, and they had no intention of simply giving back power to a broken system they didn't run. So everything changed in a fortnight.
The USSR defaulted on its internal debts, everything was rewritten, and the wealth and power of the nation was redistributed by the elite officials with intelligence power.
And that was that. House of cards came down. This was not a currency crisis. It was not a debt crisis. It was a hard power crisis in which old men wanted something they could not define...something...conservative (within the context of their system). They relied upon their legal authority, their uniform and ribbons and prestige. And found that nobody would follow them.
And that was that.
Bottom line: all that pork doesn't really hurt the economy at all. Probably helps it. What it hurts is public virtue and trust in government. Once that was broken, even Soviet generals could not keep command of their own people. THAT's what we want to avoid. We're not going to be going bankrupt.
If you wanted to completely untax the economy, you could, and just CREATE money to pay the government's expenses.
Of course, if you did that, the money would inflate, probably pretty badly.
But that is what we do. Look at the consumer price index.
It is a system of welfare for the rich. In particular, Wall Street via the Fed.
Should the government really be considered the ultimate insurance company? I would say no. In the modern era, we have gone increasingly in that direction and I don't think it has worked well for the economy.
Social Security makes independent economic agents out of people who otherwise would be in homeless shelters or spare bedrooms spending nothing.
Why not just print money and subsidize everyone then?
You already know why. Look at the ongoing problems with 0bamaCare and multiply it many times.
