Minnesota Communities go on Spending Spree Funded by Stimulus Bonds
by Tom StewardVice President Joe Biden met with state and local government officials from across the country last year to provide guidance on spending federal stimulus funds. Biden implored local leaders to focus on only essential infrastructure needs that will put people back to work and to avoid frivolous projects: “No swimming pools! No tennis courts! No golf courses! No Frisbee parks!”
Since then, dozens of Minnesota cities and counties have taken advantage of a little known stimulus bond program, borrowing $684 million for projects that include municipal swimming pools, a multi-million dollar golf course renovation and a new mega-community center, a Freedom Foundation of Minnesota analysis shows.
The Build America Bonds program offers a substantial subsidy by the federal government to help cover interest payments and entice local governments to borrow money, making it the fastest growing portion of the municipal bond market.
While most of the 65 bonding projects across Minnesota appear to be public improvement projects for roads and basic infrastructure, concerns have been expressed that Build America Bonds could encourage borrowing for unessential government projects, as well.
The City of Plainview approved borrowing $1.5 million through Build America Bonds for renovations to its municipal swimming pool. The City of Coon Rapids leveraged Build America Bonds for a $4.23 million facelift to the city-owned Bunker Hills golf course. Despite a budget crunch, St. Paul Mayor Chris Coleman pitched using Build America Bonds to help fund $24 million in projects. The construction work includes installing a new $7.2 million swimming pool with a “lazy river”at Como Park, renovations to the Highland Park swimming pool, and building a 36,000 square foot community center.
Questions have also been raised about financial strings attached to the program that have reduced federal payments to an undetermined number of communities in other states. The U.S. Treasury recently announced it will reduce Build America Bond subsidies by any amount issuers owe the government.
Some financial analysts warn that unanticipated subsidy reductions could have serious repercussions for local governments with tight budgets. The federal government garnished $617,000 from the City of Austin, Texas over back payroll taxes. The State of Florida has stopped issuing the bonds because of concerns over the so-called offsets. The precise number of affected local government units remains unclear at this point.
State financial officials are aware of the concerns being raised in other parts of the country about Build America Bonds rebates being withheld, but do not believe any Minnesota communities have been affected to date.
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90 Comments
Infrastructure and industry is not sports complexes or leisure parks.
For the past generation, states have been caught in the mindset that building anything to do with sports will draw people who will spend money. It doesn't work.
Well what d' ya know…..Christmas in July for everyone but the tax payers.
Our current administration is educating the next generation of officials in the finer art of deficit spending. These officials are see the easy money being offered through the Building America Bonds, but I have to wonder where the strings attached to the money lead to?
As Americans we need to learn how solve our problems ourselves and not look the Federal Government to solve them for us.
What?
Ya mean no check from the government?
How will anyone ever live?
/sarc off
That's a lot of curious 'borrowing' going on – for projects that don't generate new wealth. Let's make sure that they have to pay it back, rather than getting a 'pass' during the predicted upcoming second 'dip' of the recession.
Once built, all you'll hear is how they can't afford to run it and they'll have their hand out again for more money.
Yeap..as Glenn says so well…… "…..mo please."
I know this would be really difficult for certain people that are living inside our borders because they have the belief that all their needs should be provided to them regardless if they have earned it. What am I thinking, the govt has been doing such a great job of running SS, Medicare, etc….. why wouldn't they be able to do a good job in telling us when and where we can eat, when and where we can live, when and where can work, when and where we are allowed travel, etc…..
We all know they only have their wait I mean our best interest in mind when they decide to pass new laws.
/sarc off
Try it today; go tell your boss "I am running a deficit in my finances and therefore will need to raise the amount of my salary."
Really, give it a try.
That's what they do to us.
If you localities don't have the money to build it yourself, maybe….JUUUUUUUUST maybe…ya shouldn't build it????
Or is that to Racist/Homophobic/Knee-jerk/Whatever else we are being called???
Just heard that the Minneapolis mayor is going to spend a million bucks to get advice from Chicago on how to deal with gun violence.
Welcome to Minnesota. Land of 10,000 orange
constructionObama campaign signs.it would be interesting to konw who all these projects have been named after,doubt if there is a Republican amongst any of them
This is priceless. Now, it isn't just people that can not, nor ever will be able to pay their mortgages (thanks to the FM twins). It's entire counties and municipalities! I wonder what the story is in Plainview really… I mean did the voters turn down a bond vote to improve the pool? Did the city's credit rating making "normal" financing cost prohibitive? Did the city manager determine that the work was not affordable in the budget? Whatever, the citizens of Plainview are getting a new pool courtesy of my sweat. Every single citizen in that town should be ashamed that they are now collectively plugged into the federal teet.
Consolation is they probably have to use union labor and the pool will never hold water again.
Raking, shoveling, and pouring cement DO NOT expand an economy. If the funds are spent of projects that do not increase demand for goods and services, it is wasted, the money down the rat hole.
In technical terms it's known as "a dead end" economy…
Or Obamanomics….
Minnesota to you…YOU GRINCH !
Sorry I couldn't help myself.
But they need their stuff! It’s fun to spend other peoples money, on stuff-n-things…cause the mayor will get their names on these important projects like, “Simon La Greed Swim Center!”
Boy! …we’re racing towards oblivion!
I golfed Bunker about a week ago, and the improvements they are working on will do nothing to increase revenues. It was already a popular course, with nothing wrong with it.
But hey, temporary make-work jobs were created.
On a related note, I'm applying for funds to have my driveway blacktopped so I too can stimulate the economy.
When the sow lies down all the pigs run for a tit.
Look everyone……FREE MONEY!!!!!!! They would have been better off to just flush it down the toilet. There is NO oversight whatsoever. Can you imagine what would happen if the rest of us handled our family budgets like this?
Yeah – Ba-humbug!
Sorry I couldn't help myself with that either. : )
Free money has become quite the rage
Now we can build useless things on a grander gauge
No streets, fire engines, or bus
We will spend it all on us
And build it all while paying union wage
“I’m not aware of any offsets in Minnesota, but that doesn’t mean there haven’t been any.”
Wow, we're supposed to believe they and the feds are being fiscally responsible, simply because they say (vaguely) so? That time is OVER. THROW THE BUMS OUT!!
a poet on big sites i see
as i surf and drink my coffee
a laugh i just spat
while up i stood from where i sat
to run to the toilet and pee
I work in this industry and can tell you it is worse than you can possibly imagine in your worst nightmares.
Mortgage bankers and investment bankers are not underwriting any commercial real estate project bonds that are not tax-exempt and insured. There is no capital investment going on. The industry died as they have created the ultimate in destruction – they have discriminated to the point where they can no longer make any loans that are no Obama-approved, Crime, Inc. bonds. I provide due diligence consulting services for commercial real estate development financing programs throughout North America. There aren't many of us that do this work – market feasibility studies, financial feasibility studies, business plans, capital funding plans, placement memorandums and other documents needed for undertaking a capital funding raise or having a construction mortgage loan underwritten. Since the Democrats took over Congress in 2007 my business has dropped more than 90%.
There are no private players out there. I get calls every day from people who are upset – they have project opportunities, but there are absolutely no lenders and no capital players in the market. Commercial income-producing properties make up more than $10,000,000,000,000 ($10 trillion) of our economy's asset base and this industry has completely folded. Only government-controlled, government-owned, government-financed projects and development are now being done because everyone is so scared they dare not put money in the private market.
You know, guessing which shell the pea is under has never been much of a winner, except for whoever is running the game.
From now on, "We The People" will demand an accounting of how our Tax Dollars are spent. We will focus on the Tax Code like a laser beam! Big Government will be dismantled piece by piece. Never again will we trust our Govt!
What are you complaining about?
Obama said "we turned the corner"… the only problem, when we did, there was a portal to the Obama Economic Twilight Zone.. A "dead end" with little space to turn around…
If you want to see the future after this administration then read at least chapter 3 of this book from 1948, the parallels are striking to say the least. It's on FDR and his administration. Simply Amazing.
http://www.boomfox.com/forum/showthread.php?tid=4...
What's in the water in Minnesota? Maybe the dead voters for franken?
Yeah, I agree, but we also have to stop a certain political movement from saying "It's OK if I don't pay taxes this year becuase that will drive my salary up next year."
Two things:
The city's credit rating affects the cost to borrow whether they go with BABs or regular old municipal bonds. So, that doesn't matter.
The citizens were plugged to the Fed teet the moment they issued bonds that offered a tax exemption. But, i agree, BABs are worse because the Feds can selectively withhold the subsidy of interest, where it would take an act of congress to get rid of the tax-exemption on regular old munis.
I'll do it for 100k
But none of these golf courses or swimming pools could have been canceled to actually, you know, fund the latest extension of unemployment insurance…
"Construction" projects are one of the biggest gimmicks in government for paying back cronies and labor unions. They don't give a damn if the project adds value or has purpose. They just want to cycle the spoils (our tax dollars) back to the pockets of the people that got them elected.
Mornin Cowboy,
sigh……..will folks NEVER learn there's no such thing as a free lunch? Why would these people DO this. Have they all be asleep for 18 months….or is it one of those "we're for reducing debt….TILL WE GET FREE MONEY TO SPEND….deals.
I really can't believe these voters would do this. After nearly two years trying to educate them about what's WRONG WITH FREE GOV'T MONEY.
The article does not make clear to me anyway, whether actual voters got to help decide or whether city councils did it all. Either way….what a mess!
Hey off topic, if you can find an appropriate thread would you skool me some more on this drilling ban? Yesterday I asked a simple question:
If Obama lost his drilling ban suit
If Obama lost his drilling ban appeal
Why are we not drilling?
Someone answered that oil companies aren't drillin in the Gulf cause they're movin to more drill friendly climes. I know this may be true for foreign companies, but Tex, is Exxon, Chevron really thinking of floating those rigs out of the Gulf and drillin somewhere else? Could that be possible?
You know I always appreciate your take on all matters oil, but this just sounds crazy to me. They have permission to drill backed by two court decisions yet they're not….or are they and we just ain't hearin it in MSM?
I do believe Al Franken is the US senator for this state. Yep, no fiscal responsibility.
Hell, I'd do it for nothing, but the last time I had a word with Rt, his bodyguard patted his fanney pack and gave me the 'look'.
FREE money? I may agree this country doesn't owe anybody a job. With any luck, the labor force will go down as people leave it and realize maybe they should have gone to school and joined the competition.
Where I differ is what a government should do when the national mentality is so bad that those with money radically reduce spending and, instead, contribute to economic decline by saving too much. IOW, Other folks loose their jobs because I think I might be losing my own. We were at NEGATIVE -6.4% GDP in the first quarter of 2009. If ever there were confirmation that the Stimulus of Januaury 2009 was needed, sorry, this was it.
A broad attempt to vilify FDR during a Sarah Palin campaign would be the left's dream come true. Please, please, please.
Bring it.
I was hoping for a Republican party with some sence about how much government is needed. I come here and loose faith every day.
Good point. I should not complain. I'm still breathing.
And yet, things still got worse after the Stimulus was passed. All it has done was give money to unions and other support groups of the party, and it still hasnt moved unemployment below 9%, and they claimed the bill would keep unemployment below 8% when passed.
Sorry Coggyboy, you just bought into one of the biggest lies from the administration. If you dont believe me, then look up the unemployment rate from before it was passed to now and tell me how well it is working.
Has it ever crossed your mind that the "mentality is so bad" BECAUSE of what the Government is doing? Nah, that would NEVER cross your mind, since the Gubment is NEVER wrong – unless a Republican is President – why then the Gubment is ALWAYS wrong (even though the current Dim Pres did the EXACT same thing x10 the Republican Pres did…..but he's correct in doing that….).
???????????????????
It certainly expands the economy for the ruling class. They are the ultimate proponents of trickle-down economics… They take your money and then give you back a trickle and you are supposed to be grateful.
If I got a windfall in my earlier years I would pay down my debt, running my life this way at 67 years young I have been debt free for twelve years, I am not rich but comfortable, why cant governments have the same ethics and morals that was taught to me by Family, Friends and Teachers, it is so much easier to live the way I do. I must add that the Military also helped a great deal, I learned to live with less than $70.00 a month, after taxes and an allotment sent to my Mother and Siblings.
Did you say you work in this industry? I don't have the positive high-fives you do, so this may take more than one post and a few more logins than you probably had to deal with.
I'll start with the end. Your business doesn't suck because of Obama. Commercial real estate is in the dumpster because of over building, just like the residential side. Why don't you tell us how "feasible" all the construction was based upon revenue estimates and cap rates that didn't pan out after you walked away from the table. What estimates did you provide, rainmaker, that were long of the mark just so that you could…make it rain?
You acuse Obama of crime? How about the more than 10,000 people working in Florida's mortgage market who will no longer get that chance because Financial Reform means their criminal record will forestall their getting a broker's license?
I'll look for the "Cliff Notes"…But thanks…
Not a single one. In fact, my firm has never missed a forecast in 21 years and has never been a party in a lawsuit. We don't stretch it; we demand payment in advance and then do the work. We don't do government work and we don't compromise.
The mortgage market can thank Mr. Obama and Mr. Dodd and Mr. Frank for their failures. When regulatory policy says you will make specious loans and you use taxpayer money to sustain moral hazards then you get what we see.
I don't make economic policy (yet), but you can bet it won't be a corrupt, criminal policy and upon that you can rely. Unlike people who you commonly associate with, I'm not willing to go along to get along – even when I'm starving to death.
We can only hope your loss of faith will result in your loss of participation by which all parties may benefit.
Thankfully, we'll be able to rely upon the JounOlist conspiracy to make sure that only the truth comes out…
You really know NOTHING about real Business do you Cog??? Maybe you should get with Rain and actually LEARN something, rather than relying on "gubment" releases (who are written and release by people who've NEVER ran or been in PRIVATE business – only Gubment "Business") and posters at HuffingPuffing and DailyCommie.
RE: Municipal Bonds
"Mortgage bankers and investment bankers are not underwriting any commercial real estate project bonds that are not tax-exempt and insured."
The article was about bonds in MN. Build America Bonds, which aren't tax-exempt. Only about 10% of all muni's are insured. Things may be different in your world.
RE: "Obama-approved, Crime, Inc. bonds"
You are a fool. Build America Bonds and the tax-exempt bonds they are **replacing** both receive a subsidy from the federal government. The difference is that only investors who can claim the exempt income on tax-exempt bonds will usually buy them. By offering a higher taxable return, BABs compete with corporate bonds on an international stage. This way, the broader demand for them lowers the ending cost of capital for the municipal issuers.
My point was the lack of capital and the fact that you are demonstrating that government continues to soak up all available capital sustains the point. Government spending doesn't create economic activity – it only creates more inefficiencies and reduces capital the private-sector economy would otherwise make better use of as the impacts of Rational Choice Theory are always lost when government intervenes in the economy. This isn't a philosophical debate, this is simple mathematics that are being played out.
"This isn't a philosophical debate, this is simple mathematics that are being played out."
You lost him there, he won't understand that. OR just start calling us name soon.
Sorry, but you are wrong. It is not mathematically, logically or philosophically possible for this to work. Government intervention always creates a lesser impact because the costs of government cannot be avoided in the transaction and government is constrained from observing the dictates of Rational Choice Theory.
If your failed idea was workable, then the largest economy in the world today would be that of the USSR (as government controlled all spending) and today we would see the per capita income of workers in North Korea as being the highest in the world (they are in the bottom 10% of all countries). No, can't be made to work because it has never worked.
The problem with liberal-progressivism is that you have to believe the laws of mathematics and the impact of Rational Choice Theory are only optional when it comes to their so-called policies. Like gravity, Rational Choice Theory and the laws of mathematics always apply. That's why every liberal "policy" always fails to deliver on its promise of anything other than the corruption and criminality of availing the liberal-progressive the opportunity to play God with people's lives and property at their sole risk and expense and for the enjoyment and profit of the liberal-progressive co-conspirators. Sorry, it's the math stupid.
Bully for you IF you "never missed a forecast in 21 years". I have personally seen the private revenue forecasts for real estate occupancy, toll roads and dirt deals. Too often, its whatever raises the money for the investment banker.
Dodd and Frank are conveinient scapegoats for what was going on in the markets long before the agencies started buying sub-prime in 2006. People you associate with tried to gloss this one over immediately before the 2008 election, when nobody had the time do their homework. SINCE then, the liar and NINJA loans, Lehman, Goldman, Bear, AIG and the complete orgy of systemically risky products Phil Graham invited back in 2000 have been paraded in our faces. We're still getting denial and how "criminal" the new rules are going to be. You've got a lot of balls.
In other words, you found out that, once again, you didn't have the facts and you aren't likely to get them so it's a convenient time for a distraction to change the subject. You could have demonstrated your maturity and intellectual superiority by being gracious and conceding the fact that you were wrong, but you didn't. You could have gone further and even apologized and yet you chose to be ever worse.
I"m going to follow you on this board. I'm going to make it my business to destroy you each time I catch you spinning it. Every time you post here you are going to give me the opportunity to demonstrate the fallacies of liberalism and the corruption and criminality of the policies of the liberal-progressive movement. This will happen in a public forum and for all to see. You are not going to be given the privilege to be a seagull poster and I am going to make sure that each representation you make is fully born out with factual documentation to back it or expose you as a fraud, a liar or a fool.
For that you have my gratitude and I am looking forward to having the opportunity to better serve the other members of this board by destroying your opportunity to be considered as anything other than what you really are. Won't that be nice?
So you admit you don't know what you are talking about, but you're still talking about it, and trying to place the blame on Phil Graham???
And isn't it YOUR Libs that are denying the Criminality of the new rules, while the Conservatives HERE are pointing out all the FLAWS???
Did I strike a nerve?
The private corporate market was sitting on 1.7 trillion in cash, alone, as capital at the end of Q2. Capital that will be reinvested once the non-financial players who really drive this economy restore their faith that changes, positive or negative, will settled down.
Rational Choice Theory would have put us in a depression before the end of 2009. It doesn't matter that government can't find its way out of a paper bag with spending. If the private market is in seizure and whistling down in GDP, you stimulate the economy to bring it back near its potential.
Yep. I'm now the only person on this board following you. Every post you make that is regulated by the Intense Debate software is going to give me a corresponding notice and I am going to be jumping down your throat on even the most minute of falsehoods. I am going to enjoy this because you will do all the work and you will give me all the opportunity to make you look like who you really are. They don't call me the liberal bane for the fun of it and I am REALLY looking forward to making your life an absolute mess on every public board. You'll have to delist and go back to hanging out at HuffPo within a very short period of time. When you re-register I will still find you. People like you only learn that fire burns by repeatedly having your hands catch on fire. I'll be handing you the matches and you'll do the hard part.
Be seein' ya…
That's alright. I'm following him now. Everywhere he goes I am going to be there to hammer him until he does what all liberal-progressive do when confronted with reality – RUN.
LOL…do you even know those terms you are talking about?
The private market CAN'T do anything BECAUSE of Government spending, and spending and spending. They aren't hiring because of the upcoming health care tax and others that will come down the line from this Democrat White House. They see nothing in the future BUT higher taxes and costs BECAUSE of the Government spending.
Again, you keep posting and showing that you have absolutely no knowledge of how actual, real business works (you know, the ones that actually EMPLOY people that PAY the taxes that the gubment is spending, and over-spending…).
I'm sorry, you once again have the habit of posting things that demonstrate a lack of understanding about fundamental economic issues and principles, but since this is a teachable moment about liberal-progressive "economic policies" I am glad to oblige you.
Liberal-progressive are criminals and part of a conspiracy, the object of which is to steal money under the color of authority and at our sole risk and expense. This is the core economic goal of their tenure in power and I will provide the proof here of this fact beyond which there cannot be any reasonable dispute.
The problem with the so-called "government stimulus" theory is that all government spending has to have a source. In our economic society, government is structured endogenously – this means it can only get the money it spends from us. This money is either in the form of stolen funds (what they call taxation when government steals it) or loans, but in both cases the source of the funding is the private-sector economy (us). So, let's follow the "logic" of the liberal-progressive policy and see if it is sustainable based upon its premise. The government "says" it is going to stimulate the economy. To stimulate the economy, the government has to have money to make the so-called "investments" so it either collects taxes from us or borrows money from us. In the private-sector, jobs and output are sustained by money – so when you take money from the private-sector, there is less money to sustain output and jobs, so output goes down and unemployment goes up. So before government can ever make its "stimulus" the first thing it does is create more unemployment and reduces output. Now government has the money, but it has to pay its own way first, so the efficiency of the spending is automatically less than that of the private-sector because the private-sector has no government oversight costs to pay when making an investment. Furthermore, government is precluded from following the dictates of Rational Choice Theory (which would preclude government from making this move to begin with due to the increased costs of government oversight being an inefficiency that is not sustainable in logic or mathematics), so the inefficiencies are magnified.
If this were not true, then government spending would create jobs in the private-sector economy at a cost that would be less than that of the private-sector. To date, the cost of creating a private-sector job under the Stimulus Bill is unknown, but has already exceeded $224,000 per job (based upon expenditures through March of this year) while the cost of creating a job in the private-sector averages $65,000. Obviously government spending cannot be efficient when rated with objective mathematical metrics.
This means it has to serve some other purpose and that purpose is to increase the amount of money that goes to the liberal-progressives who are part of government and/or are fed by government such as the poster above.
Sorry, but you have nothing to point to historically or otherwise because; liberal-progressivism isn't a sustainable economic platform, it is a corrupt criminal conspiracy that acts to steal money and avoid accountability and this is the actual outcome.
Frankly, I think you're both a little frothy. Are you really that burried in the conviction the financial crisis was the creation of Dodd and Frank?
"YOUR Libs"
Check my profile….RINO. And, please, check my facts. This is Breitbart, after all.
Hahahhahaha – Is that the same as McCain saying he's a Conservative?? BoBo is a Moderate?
Ya know, when you have to "claim" your something – that usually (actually ALWAYS) means you're not. Because I don't have to claim I'm anything other than what I am – all you have to do is check my posting history.
It's ok HPL, it's long and boring. I just thought others might be interested in the parallels of the past and the present.
You have to learn how to spell before you can act like an elitist Coggy.
I don't know dude; you certainly use a lot of big words. A simpleton like myself is having a hard time making sense of this. I think you're making a case for no taxes whatsoever; is that it? I'm not sure we can pull that one off. I also think you're making a case for supply-side economics, as opposed to classical Keynesian methods (the whole freshwater/saltwater thing). If that's the case, then I don't think that's something which can be proven, especially beyond "reasonable dispute". A case can be made for fiscal stimulus by the government as a way to temper the severity of an economic recession; when the private sector isn't spending/hiring, major infrastructure projects can certainly help stem the financial tides (whether they do it more efficiently than the private sector isn't the issue, if the private sector isn't doing it at all). I believe government (everything, really) should operate as efficiently as possible, saving resources when in an economic expansion phase, and deploying those resources during economic contractions. That the government isn't efficient is an issue that goes beyond left and right. We had a Democratic administration that closed with significant surpluses, followed by a Republican administration that closed with a significant deficit.
And you suggest that government money for stimulus all comes by way of confiscation from the private sector; I think the government will occasionally borrow a dollar here and there. You can ask the Chinese about that.
Looking forward to being skewered, pilloried, and stalked (if I'm worthy).
I'm glad you brought this up. This offers the opportunity to extend a teachable moment. We'll use you as an example. You're business needs to spend $10,000 on a new machine operator. It doesn't follow that the government would take the $10,000 your business was going to spend on expanding employment and then hand it back to you and call it a stimulus as nothing was created – right? What actually happens is quite different. The government is going to give you a stimulus. It takes your $10,000 and keeps $2,500 to pay for its supervision of this stimulus, so now you have $7,500 to spend on new payroll, so it isn't a stimulus, is it? No, it is an actual loss because the cost of government always conspires to drive up the cost of the benefit and employment actually went down. This is why stimulus is never efficient – it is not mathematically possible for it to be so due to simple mathematics. But the tale is even worse than that. Government only acts to protect its own interest, so government will never give you what you need, only that which it no longer wants and this is government following the dictates of Rational Choice Theory as these dictates apply to government only – and not as these dictates would apply to us (an important difference, so read it again if you are confused). The outcome then becomes something completely different: you need to spend $10,000 on more labor, but government steps in and takes the $10,000 and keeps $2,500 and sends you a tax credit that says if you spend $10,000 then you can take $2,500 off your tax bill. You still don't have the $10,000 and you can't hire the person so the unemployment rate remains constant.
Now let us address the issue of taxation in general and in ways you cannot reasonably deny. Whether you are a person, a household, a business, a charity or a unit of government (local, state or federal), there are only three (3) ways you can obtain money. Do you know what they are? Let's look at them.
First, you can get a gift – like a birthday card with a tenner in it from grandma. Well, I think we both know we cannot reasonably expect to pay for the costs of government by relying upon gifts, can we? Okay, strike the first method. That leaves us with two choices.
The second way you get money is the way government gets it – stealing. Stealing (taxation) is a limited activity. You can only steal so much money (or tax so much economic output) before people find a way to end it (or dodge paying taxes or the economy shuts down). Taxation is a LIMITED resource – if it wasn't then there would be no deficits and we wouldn't have $13 trillion in national debt, right? We would have paid for it all, right? This means you can't depend upon taxation to pay for government because politicians will always spend more money than they receive in revenues and this continues until the country is bankrupted, so strike the second method.
This leaves us with earning it; you earn money by work or by investing and the more you invest the less you have to work as a general rule. We know we cannot depend upon government to work for its money; after all, the government is the only business on the planet that has a 100% failure rate – it has managed to run every monopoly into bankruptcy (NASA, AMTRAK, Post Office, Social Security, etc. – they are all bankrupt and all were run by government), so we know this will not work.
That leaves investing. When you undertake equity investing, it is an unlimited activity because equity investing does not cause inflation – in fact it reduces inflationary pressures. Furthermore, the cash flows from equity investments consistently outpace inflation by a very large measure, so this means that, in the fullness of time, the cash flows of investment-income resulting from equity investing would outpace fiscal outlays, pay off our national debt and end the practice of government borrowing money altogether. That's the exact outcome we seek and as you can see from this simple explanation it is the only method that will solve the problems we face. All of the others have been tried and every single one of them has always (as in 100% of the time) led to a failure of the country because there is no way to restrain fiscal spending in a democracy, so every democracy spends itself to death because they have all used taxation to fund the costs of government.
Remember, you are trying to address a (relatively) unlimited activity (that being fiscal spending) with a limited resource (that being taxation) and even your common sense knows that using a limited resource to pay for an unlimited activity only has one outcome; failure.
Kinda makes Michelle Bachman not look so good, either. And I like her.
Thank you for ordaning us, rainmaker.
You can tell me the government is inefficient at spending until you're blue in the face.
The biggest problem I have with your post is that government borrowing does not cost jobs. The private market isn't competing for capital because they aren't investing. So, I don't get your "competition" claim as it applies to today. If there were crowding-out and it cost more for corps to borrow, you might have had a point.
Wealthy-Republican "economic policy"
If government borrowing costs jobs, as you say, then what do tax cuts do when debt continually closes the deficits they leave behind? Please provide facts, fellas, and the research that supports the common VooDoo, trickle down, answer. You and your kids will be paying on that debt as much as debt from anything else, and the sooner you hold your candidates responsible for leadership in spending, the sooner you'll get more votes.
Here's a source on debt/GDP over time. This chart shows that the blank check policies of Reagen and Bush II weren't so great.
http://zfacts.com/p/318.html
I'm grateful for the opportunity to continue to demonstrate who you really are and report the full nature of your purpose.
The point is self-evident on government spending. If government spending was efficient, it would create as much output and employment as does investment in the private-sector. This is not possible due to the laws of mathematics and whether you admit to them or not, the laws of mathematics apply to liberal-progressives. This is one of the biggest reasons why liberal-progressives fail as a movement and always have to resort to tyranny to sustain power – the outcomes are always (as in 100% of the time a failure). Under the Western system of accounting, assets are created by expanding liabilities or expanding equities (and this you can see by looking at what is called a "balance sheet" financial statement). Money (currency) is an asset and it may be created using the liability-expansion method or the equity-expansion method. We use the liability-expansion method and this means that no money can exist in our economy that is not owed to the banking industry. This means there is a finite supply of capital and if government takes capital from the same banking system that the private-sector uses to fund the development of new business, then there is less money available for that purpose. This is the exact reason there is no credit available today in the market; the government has sucked up all the available money to lend, so lenders have insufficient loan pools available to provide loans to other borrowers. There is no other way this can work and that's why liberal-progressive economic policies fail; they never take into consideration where the money comes from or what it takes to create money because their only goal is to steal the money (under color of authority) to sustain their fellow conspirators.
It is not possible for taxation to pay off the debts run up by liberal-progressives – the issue is that liberal-progressives always spend more money than the treasury receives and this continues until the economy is bankrupted. This is the actual history of democracies and the adjustment of tax rates only serves to prolong the matter. Your argument is specious on that count (a "do you walk to work or carry your lunch" distraction), but it is all you have to use in an attempt to distract people from this fundamental fact that your so-called policies are not policies as they are neither self-sustaining or self-regulating – just more corruptio.
In reference to your last paragraph, I seem to recall that liberal-progressives said the Bush tax cuts would result in record deficits, yet when the tax receipts came in at levels they never dreamed of they were curiously quiet, yet spent more money anyway. Your solution is always the same corrupt liberal-progressive approach that only creates more problems for the rest of us to clean up; that being the spending of even more money that is borrowed from the economy that other people will be paying off after you are long gone from the scene.
My point is that what you offer is neither policy nor even mathematically workable and now you know why. Thank you for the opportunity to once again demonstrate the nature of the liberal-progressive criminal conspiracy. Please, let us continue the discussion.
GeorgiaOnMyMind,____We're at +3-4% GDP. Since we're going to blame Obama for the downside, i guess that makes it "Hail to the Chief!"____
Check my chart on the other thread. We've got one party that would over-spend and another that would under-tax. Even in this age where more sane people than ever are clamoring to take the US budget back to the kitchen table, we've got both parties doing the same old thing. You get all whipped up at the RINO's when many of the ones who left, did so over fiscal policy.
They're both wrong with respect to long term policy, but Bush never had anywhere close to -7% GDP and he didn't walk into an economy whose tax revenue just fell by 1 trillion dollars. The situation isn't anywhere close to the "EXACT same thing".
You still haven't explained how rational it would be for an economy to collapse when its hanging by the skin of its teeth. Total collapse is actually quite a rational outcome. I'm just glad your theory is wrong and the economic mayhem caused by the banks didn't ruin us.
I specially gotsk problums wit big werds
I wonder what the excuse will be when another bridge collapses……
lol..Sorry to hear that coggy.
You'll be alright though, public schools and all. 
Bush's fault.
"I'm grateful for the opportunity to continue to demonstrate who you really are and report the full nature of your purpose.
The point is self-evident on government spending. If government spending was efficient, it would create as much output and employment as does investment in the private-sector. " STOP RIGHT THERE.
I haven't even read the rest of your tomb because after repeated attempts to get you to listen, its clear there will be no success. You don't even appear to accept a difference of opinion.
Winston Churchill once said "A fanatic is one who can't change his mind and won't change the subject".
There are no differences of opinion on the laws of mathematics. Of course you know this, so you are seeking to end the debate because you are now being shown to be who you really are. Unlike liberal-progressives, people who live in the real world generally agree that the laws of mathematics aren't optional and that the impacts of Rational Choice Theory and the organization of markets aren't something that is a debate. It is what it is.
But you run along and hide under a rock now that you have run out of gas. That didn't even take one day. Better luck next time.
This is why the whole world is holding it's breath to see if Obama and Pelosi will bankrupt the USA and take everyone with them.
The last crises was not the big one and the next crises is right around the corner.
Maj. Gen.Jerry R Curry (Ret.) Speaks Out On The Obama Eligibility Issue
http://www.youtube.com/watch?v=fO8n4Pij158
GDP means nothing when unemployment still keeps going up. It wont be too long before GDP goes back down to, but the stimulus still didnt solve the main problem that caused the crash to begin with.
Will you explain this then, how does a bill that was passed claim to keep unemployment under 8% fail and it has stayed above 9+% for well over a year and still call it a success?
It's like giving a credit card to a 12 year old.
How long until we no longer consider SEIU to be a union, but instead, a party?
Excuse me – I mean, a Party?
We can joke all we want about how these losers will be voted out in the next election, and we can pretend amongst ourselves that it might matter or not if they are, but the sad truth is that they've already done tremendous damage to our society, and they've set us far, far back into the "progressive" swamp.
They've already looted all the money that was available to loot. Once that was gone, they marched us to an ATM machine, made us give them our card and passcode, and took out loans in all of our names that we couldn't afford to pay back in fifty years. They gave all of that money to their friends and helpers, of course, so we can't even chase them down and get it back. It's gone for good, it's spent on new cars for SEIU members, vacation homes up north for teamsters, houses for the lazy, kickbacks for the political set . . . But we're still the Account Debtors for the entire amount, and the monthly payment is going to be staggering.
On top of that, they've killed a medical system that worked quite well for most of us, but quite badly for the lazy and unambitious, because the lazy and unambitious deserve to have everything that you and I have. It's only fair, right?
Even as the medical system gives out its last gasps, he's opening the borders to let in millions of jobless, assetless people who, although they are for the most part good, lawful, bent-on-improving-their-lives sorts, will be on public assistance programs for years as they go through the initially-poor stages endemic to illegal clothes-on-your-back immigration, and he's coincidentally just now stripped us bare of any money we might have had to put INTO those public assistance programs.
We're already screwed. If you have a job right now, you might as well go buy the tee-shirt that says "Kulak", 'cuz that's what we are.
I'm not sure we are actually discussing the same subject. The government already has money (yes, I know, it's our money, unless they just start printing more of it, but bear with me here). Assuming an economy is in a recession (let's say a deep one), that typically means GDP is declining, and many contributors to GDP aren't, for some reason or another, doing as much of what they usually do (producing widgets, solving problems, flipping burgers, whatever). That creates pressure on employment, which is probably one of the most significant negative effects of a recession. And let's just assume that being unemployed makes one unhappy, as well as unable to buy as many things as one would if one was employed and happy. In this scenario, simple and flawed though it may be, what can be done to ameliorate the situation?
Well, successful business can continue to produce their goods and services apace, despite the lack of demand for said goods and services, or even increase production. That doesn't seem too likely, as I don't think they'll be successful businesses for long.
People can borrow money (assuming they can) to continue to buy those goods and services. This doesn't seem likely or wise.
cont'd…
(cont'd)
Some agent with significant enough resources to effect a meaningful adjustment in economic conditions can try to do, well, something. Could be the Central Bank, the Treasury, but I'll lump them all together and use the term "Government". What tools does the Government have at its disposal?
Government can lower taxes, which could be stimulative, since having more dollars in one's pockets usually results in those dollars being spent. So, lower what taxes, and on whom? Income or capital gains taxes? If I'm George Soros (being funny here), some could argue that having more money in my pocket would just mean more in my pocket; I can pretty much already get the things I want with the money I have. So, that might not work too well, both in my (G. Soros') case, and for other people in my (quite fortunate) situation. Cutting taxes also increases the deficit in the near term (at least), which can also be problematic, but if the goal is to kickstart the economy now, that may be a tradeoff worth considering. Or, the government could consider cutting some other tax, say payroll taxes, and maybe just temporarily. That could work, as more "regular" workers have more in their take-home pay.
Or, the government can provide money (again, I know it's our money) to the states with the idea that they will use it for large infrastructure-type projects, some of which are undoubtedly going to be less efficiently performed than the private sector would have. What happens is the government creates a demand where there was none which is filled by providers of goods and services, who provide those goods in services in exchange for money. These providers pay their workers, rather than lay them off, and maybe even hire more workers. These workers take this "pay", and use it to "buy" things. The things they buy are produced by yet other workers, who in turn get paid.
I'm being a bit flippant here, but my point is that in a recession, government intervention can help to stimulate demand, and I contend that that type of stimulus should work faster than cutting taxes on the wealthy (and yes $250,000 per year is wealthy in my book; call me a Bolshevik). If your contention is that government can provide nothing of value and shouldn't exist, then make that argument instead; it's less disingenuous.
Excellent points and I commend you for challenging that which is not clear or seems contrary to logic, reason or even doctrine. Yet in here we see the opportunity for still more avenues for learning what can and cannot be contrived for our solace.
The first thing to realize is what in fact causes recessions. People focus on the symptoms and fail to recognize the simple truths and these truths provide us with all the clues that are necessary to resolve our challenges.
Our economic society is sustained by investment and not by consumption. Consumption is always the least favorable outcome of economic exchanges because consumption creates no sustainable economic activity beyond the exchange. Once you realize this you can realize that the economy only acts in a cyclical manner due to the corruptions of government intervention and the lack of self-regulating and self-sustaining market organizations and institutions. Where these exist, economic societies can only grow because there are no outside corruptions (biases) being introduced that prevent the economy from growing in a linear fashion. When this is prevented from taking place, then investment can be interrupted. When enough investment is interrupted from taking place, the current levels of output and employment are no longer sustainable.
This is complicated by the fact that, in the structure of our economy, government cannot bring "new money" to the table and that is what we really want. Look at it in a slightly different light and the realization will be crystal clear. As things are currently structured, all government spending has to start with the government taking its money from us – even when it prints money it is still taking money from us as the outcome (mathematically) is always the same. There is no tooth fairy money when it comes to government, so all government spending comes with the "sting" attached of hurting you more than it can help you. This is why government spending for welfare and food stamps and all that never creates a true stimulus; it always comes with the price of creating more victims because the money came from us and when it comes from us we end up with more people without jobs as a result (who the government must help). This is why the government health insurance scheme will end up never covering everyone, but dramatically increasing deficits. In the end, the math only works one way and only one way. But that math also carries a seed of hope within it.
What you want is for government spending to actually be stimulative in nature. For that to happen, government has to be structured as an exogenous (outside) player to the economy so that the money it brings to the table is "new money" in the exact same way as it would be if the Queen of England stopped by once a year and gave the federal government a check to cover all federal spending and then demanded nothing in return. In that case, government spending would be a true stimulus as there is nothing "owed" to the source of the revenue. This got me to thinking…
The ideal solution for this problem would be for us to have a white knight; someone who would step in and do us this favor so that all government spending would be a true stimulus. Then it wouldn't matter if the stated goals of the government spending were achieved or not, as the money spent would all be to the good for the economy instead of being made in spite of the economy (this is how Rational Choice Theory can actually work for our benefit instead of in our spite). In other words, if the government appropriated a billion bucks to pay for school lunches and not all kids got school lunches we could say the program failed from a policy standpoint, but from an economic standpoint it would be great as all the money would be a true stimulus. In our current construct we get the exact opposite outcome and there is $13 trillion in national debt that fully sustains this conclusion (if your supposition were true there would be no national debt and that is where you should start your quest for understanding).
Back to the analogy of the white knight…
My solution was to combine structural solutions to address two issues with the same effort that results in what economists are coming to call the "Goldilocks Solution". The Goldilocks Solution has been (for centuries) the idea that we can't make government an investor in the economy, because: (i) government would distort the markets; and/or (ii) government would corrupt the companies in which it was an investor; and/or (iii) government would corrupt the companies in which it was not an investor; and/or (iv) the companies would defraud the government. Government investing in the private-sector is the ultimate desired outcome because of the theory of investment-income financing of government policy (it is unlimited and taxation is limited and it would therefore completely replace taxation). This would be the Fantasy Island solution because equity investing is an unlimited activity that would outpace fiscal spending due to the spread of earnings in excess of the rate of inflation. The problem was nobody had a solution.
Continued…
Continued…
The solution was to create a market structure where the capital market exchange (a new kind of stock exchange) could not crash, could not be distorted, the companies could not defraud the public, the government couldn't corrupt the markets, etc. This solution is called "INSTICERT" and is part of Lovellian economics (google it).
Here comes the white knight now…
My solution was that since nobody would be our white knight, we would create our own by having the same federal government that had run up all these debts be our white knight and enter this new market and make investments (under strictly controlled settings) in these companies using newly-minted currency for this purpose. The resulting investment-income streams would pay for all the government you wanted (as this is an unlimited activity) and would all be a stimulus to both the demand schedule for capital investment (as the system comes with a capital matching requirement) and the demand schedule for employment, thus systemically eliminating the opportunity for a recession to ever occur again. Like lighting a fire underwater, the conditions precedent cannot be satisfied as the wood is always wet and the match is wet so there is no spark.
All of this is to say that government spending only makes the problem worse and that recessions are caused by excessive government reductions of incomes, so the reduction of tax rates increase revenues while restoring revenues to the private-sector economy at the same time. This cannot be obviated as the laws of mathematics only work one way and the government cannot avoid the impacts of Rational Choice any more than you can. By restoring income to the private-sector, investment can immediately increase.
The question becomes one of what will do the most good. Obviously, the one that creates the highest stimulus for the demand schedule for capital investment would be the most desirous as capital investment is the engine that creates jobs and not consumption, so income taxes on ordinary income will, by definition, only have a limited ability to increase capital investment demand (rises in income will be spent on consumption and investment while increases in capital gains will be spent mostly on more investments and only a small amount of consumption – relatively speaking).
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