Economy

[Azred]

You mixed two different posts of mine talking about different scenarios. In the first one, I was noting that my wife and I could pay all our bills and maintain our current list of expenditures if we both had to work full time for minimum wage; not an ideal situation, to be certain, but is is possible. In the second post I was noting that if you are bound and determined to give out huge sums of money to stimulate the economy that you give it to regular people (who are most likely to spend it and thus circulate the money) instead of banks and large businesses (who are likely to hoard the money, report increases to their bottom line, pay out small dividends to investors (many of whom are not regular people) and not circulate the money).

The other point, of course, is that we can get to the information necessary to examine the problem--the budget deficits--and actually come up with workable solutions rather than bickering back and forth while locked in ideological stalemate.

[Gabrielles blades]

yes, two posts, but same problem.

If people dont make enough money to stimulate the economy they wont, handing them 10k$ would be a short term boost to the economy because once the money runs out your right back in the cant afford to buy things mode since income almost equals expenditures on necessities.

[Azred]

Exactly. This is why increasing one's job skills is a vital necessity--you aren't supposed to be able to make a living on minimum wage. Why be satisfied with the bare minimum? Community colleges exist in most places and the tuition, especially if you are "in region", is inexpensive--DCCCD in Dallas County costs about $250 for a course; most such colleges will be about that same price. People who want to improve their situation can take a couple of computer classes and then get a better job...but they have to want to get into a better position for themselves, no one can make them do it.

There is one other factor to consider, as well--most Americans save very little money. Part of this is because they aren't making enough but the other reason is that they don't budget their money and take the time to save. The old rule of thumb is to have 6 months of expenses saved; these days I would try to save up for a year, if you can.

There are two fundamental problem that continue to plauge the economy and they aren't going to go away any time soon: Democrats and Republicans. Get rid of those two problems and things might actually start improving.

[robertthebard]

Here's the problem, as I see it, and Gabrielles Blades touched on it; yes, a family can exist on two minimum wage jobs, and a part time job for one or the other on the side will provide for savings, until one or the other of the wage earners has an accident, either at work, or on the way to or from anywhere. I had a nice long post here, but I'm afraid I fell victim to my disability, and completely lost my train of thought, and started rambling. Nice thing about posting on a forum when that happens, I can say to myself "Self, what are you talking about?" and delete it. Wish I could do that in conversation when it happens, and it happens a lot.

[Azred]

Originally Posted by robertthebard Here's the problem, as I see it, and Gabrielles Blades touched on it; yes, a family can exist on two minimum wage jobs, and a part time job for one or the other on the side will provide for savings, until one or the other of the wage earners has an accident, either at work, or on the way to or from anywhere.

I could die on the way home from work this afternoon, too...or a rogue meteor could hit Texas...or any other scenario we can imagine. That doesn't invalidate the fact that it is still possible for people to make ends meet on minimum wage if they stick to a budget. Note that I encourage increasing marketable skills if you find yourself making minimum wage--it isn't meant to be a livable situation or a long-term solution. However, I did not want to move the discussion to minimum wage, even though that is a facet of a discussion of the economy in general.

I am going to look more at that Federal budget file I downloaded yesterday and see what I suggest cutting to improve the bottom line.

edit/addition
Some interesting things in the numbers. It appears that the Federal Government has 2011 receipts at 2,174 and 2021 receipts at 4,923--this is linear growth of 12.645% per year or geometric growth of 8.517% per year, both of which seem unrealistic given the current circumstances. The only way these numbers are accurate are, of course, tax increases during that time (or rollbacks of tax cuts, which is essentially the same thing). During that same time, outlays go from 3,819 in 2011 to 5,697 in 2021--geometric growth of 4.918% or geometric growth of 4.0806% per year, which isn't cutting spending but it isn't dramatically increasing, either. Nevertheless, the receipt numbers seem highly improbable--no one would reasonably agree to what are essentially tax increases to the tune of 8.517% each year (each year you would pay 8.517% more tax than you did in the previous year).

To be equitable, and note that I am looking at all the numbers, I see on Table S-6 (p. 180) that, in inflation-adjusted dollars, the 2011 receipts from individuals comes to 1,306 while in 2021 this number is 1,865--linear growth of 4.28% or geometric growth of 3.65%, which is pretty mild no matter how you look at it.

Table S-8--Mandatory and Receipt Proposals--has a lot of stuff in it; it is taking a while to sort through all this. This also applies to S-11--Funding Levels for Appropriated ("Discretionary") Programs by Agency. I am looking for cuts in both of these tables, though; I will let you know what I find.

The truly fascinating numbers are on Table S-13--Economic Assumptions. The actual GDP change they have listed for 2009 is -2.6, then 2.7 in 2010, 2.7 in 2011, 3.6 in 2012, then 4.4, 4.3, 3.8, 3.3, 2.9, 2.6, 2.5, 2.5, and finally 2.5 for 2021. Who thinks the GDP will grow by 2.7% this year? I don't and the last economics talk I heard on TV/radio didn't think this would happen, either. Sure, things will probably start picking up more quickly in 2012 but I really think everyone is waiting for 2013--the results of the Presidential election will be the true determining factor what happens that year.

[Gabrielles blades]

I have a bachelors degree (well 3 bachelors degrees actually), and the company i work for couldnt give a flying fart about it and so im making just 10$ an hour, which is the exact same amount as the other non collegiate workers are making.

all my degree means is that i get more work and/or different work than my fellow employees.

Lets see, expenses breakdown for me at above minimum wage of 10$ plus my girlfriend who is also making about 10$ an hour.
Mortgage/taxes 767
car Insurance 120
gasoline 200
utilities 250
car maintenance averaged 50
food/cleaning supplies 250-350
cell phone/internet/tv 200
medical expenses averaged 50
credit card debt 50
student loans 160
HoA averaged 17
So total is around 2200$ a month in expenses; can cut 200 out if we want to be bored to death.
Total earnings after taxes is around 2400 (we dont get 40/week, usualy 35 ish)
So we have a net of about 200$ a month to spend on frivolous things; i generally save my half while girlfriend buys knitting supplies and other random stuff.

So yes, we get by, and were not really struggling to make ends meet. At the same time were not buying much beyond our basic needs and so because of families just like us in similar situations the economy is anemic. Its actually rather surprising how closely our numbers match the bottom 90% info listed - earnings 29k, cc debt 2k is pretty close.

[Azred]

As I said, individual results may vary so there is no point in comparing personal examples. I, myself, have 2 bachelor's and I don't use either on of them in my job; in fact, I haven't used either of them directly since I taught at the university nearly 15 years ago. I know of only one person with whom I graduated who is still using his university degree in a directly-applicable field.

We will probably never get out of the "bottom 90%" category, either. Well, I suppose it is theoretically possible if my wife lands a decent PT job after graduation and I get a couple of raises; we are content for now, though.

[John D Harris]

Economics is simple Money In must Excede or be equal too Money out no Exceptions.

If you find yourself making less money then before, cut expenses or suffer the consquences. Hale's bells my wife and I have had to do that in the last three years because of the recession. I own a bussiness and am making less then $400 wk working 50-60hrs aweek. We got cut out the wants and pay for the needs, we understand the differences between the two.

The government has forgotten the only rule, and we are all going to suffer the consequences, we should have suffered them three years ago and not done the TARP bailouts. EATEN our Peas Then, the longer we wait the worse it's going to be. Good luck to everbody WTSHTF, and it will sooner or later, but make no mistake it will hit the fan and none of us are going to smell like roses.

[Azred]

Okay...here we go.

Current outlays for the 2012 year come to $3,729 billion. I made the following cuts:
TSA--$3 billion
ending Operation Iraqi Freedom--$10.442 billion
ending Operation Enduring Freedom--$107.143 billion (we have no reason to be wasting more lives and money in places that don't want us)
USAID--$8.7 billion (why give military aid to other nations?)
Race to the Top--$0.9 billion (more like "race to the bottom")
Excellent Instructional Teams--$3.25 billion (if you can't teach, more money won't help you)
Natl Nuclear Safety Admin--$4 billion
Home Energy Retrofit Rebate--$1.8 billion
Health Resource & Svcs Admin--$1 billion
CMS--$1 billion
Admin on Aging--$2.2 billion
TSA--xxx edit: apparently I cut them twice
DEA--$1 billion
Office of Justice Programs--$1 billion
GHI--$9.8 billion (the health of other nations is not our concern)
Intl Organizations & Peacekeeping--$3.54 billion (again, this is not our job)
Economic Support Fund--$6 billion (helping other nations is not our concern)
Intl Narcotics and Law Enforcement--$1.5 billion (patrol our nation, not others)
Foreign Military Financing--$5.55 billion
Developing Assistance--$2.92 billion (if we did it by ourselves then they can)
Admin of Foreign Affairs--$1.5 billion
IRS--xxx edit: it was pointed out to me that most of the IRS budget goes towards tracking down and collecting people and organizations dodging taxes, so I put this back in.
GSE stock purchase program--$7.66 billion
TARP--$13.23 billion
tax expenditure outlays--$1 billion
EPA operations budget--$1 billion (again, I was being nice)
freeze Social Security at 2011 level--$33 billion
Corporation for Community Service--$1.26 billion
Grand Total--$233.395 billion

This reduces the outlays to 3729-230.395 = $3,498.605 billion. Now...if all government agencies will cut their spending by an additional 15% across the board, this drops outlays to (3498.605)(.85) = $2,971.8168 billion, so round this to $2,972.

Receipts are listed for 2012 as $2,609 billion.
Put the Social Security deduction on paychecks back to 6.2% and remove the deduction limit completely -- $185 billion (my best estimate)
Raise individual and corporate taxes by 7.5%--$110.4 billion (if people can take a small squeeze then so can corporations)
Total receipts comes to 2609+185+110.4 = $2,904 billion (rounded)

Receipts - Outlays = 2904 - 2972 = $68 billion deficit. edit: edited to account for my corrections.

Well...that's awfully close to "balanced". If government spending were reduced only another 2% beyond what I have listed here then the defecit goes away completely.

Notice that I incorporated a lot of spending cuts coupled with very modest tax increases--a fair compromise. Recall that I calculated that a small increase in personal taxes isn't as bad as you might initially think.

Now...if I can essentially balance the budget--and do it fairly easily, I might add--then certainly our politicians can do it.

edit: a few minor corrections but I still think it is a workable solution. My next project is to go through and cut out programs that, according to the Constitution, the government has no business doing in the first place. I suspect that the numbers will be surprising.

[John D Harris]

Several years ago Canada was in about the same situation we find ourselves in they did 6 to 1 Spending cuts to revenues increases they are on a much better footing then we are.

As for any of this Corporate jet crap, it is in there because of the Obama stimuls package not a single Republican voted for that so to try and blame the Republicans for anything to due with, depreciation is just false and based on a lie. That rest 100% on the Democrats shoulders.