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Thread: The “Penny Plan” to Trim Government Spending

  1. #16
    The Walking Red
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    Paying off 100% of that debt would be catastrophic. A country with our economic power should always have some level of debt. It is economically stimulative.

    The two metrics that matter to me is what is a reasonable % of our annual government spending goes toward iinterest and what is a reasonable level of debt as a percentage of GDP.

  2. #17
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    Quote Originally Posted by FLA4NEB View Post
    If you only are counting the past 3 years...yes but in total it is about 15 Trillion and growing very very fast.

    (if President Obama is re-elected and continues on his planned trajectory of spending it is estimated to be over 22 Trillion by 2017 when he would leave office. That is if interest rates don't go up.)
    I had forgotten that Obama had added 5 trillion to the already large national debt. Thanks for pointing that out. I f your numbers are true, what you say is frightening. I have enough trouble figuring out where the next loaf of bread is coming from.

  3. #18
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    Quote Originally Posted by nems View Post
    Paying off 100% of that debt would be catastrophic. A country with our economic power should always have some level of debt. It is economically stimulative.

    The two metrics that matter to me is what is a reasonable % of our annual government spending goes toward iinterest and what is a reasonable level of debt as a percentage of GDP.
    Agreed.

    I read an economist last year that stated that it has been established that when a country approaches a debt to GDP of 70% job creation in the private sector starts to slow down. At 80% real job growth just about shuts down and at 90% sustainable economic growth grinds to a halt.

    Depending on what measure you look at the US is at about 80 to 100% debt to GDP.

    I can't remember who this economist was but even the people on the other side from her sort of agreed with her statement and backing.
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  4. #19
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    Quote Originally Posted by Bamsker View Post
    I had forgotten that Obama had added 5 trillion to the already large national debt. Thanks for pointing that out. I f your numbers are true, what you say is frightening. I have enough trouble figuring out where the next loaf of bread is coming from.
    I have been buying the same brand of bread from the same store for over 3 years now. 3 Years ago it was $1.29, yesterday it was $2.99...milk cost a lot more than gas...

    The money has been printed, the bonds are floating, what happens to the value of that money when the bonds need to be lifted by higher interest rates to keep floating.
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  5. #20
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    I read this interesting article about some recent Bernanke comments/concerns. Basically, the kick the can approach Washington has been doing is going to come to a head at the end of this year/beginning of next year. We're to a point where cutting too much at one time would crush GDP. And raising taxes at the same time would compound the impact of the cuts removing hundreds of billions from the economy. As Bernanke calls it, a "fiscal cliff".

    I really think the only way to get the country out of it's mess is one, Washington has the fortitude to do it and 2, have some measure of both cuts and small tax increases. Perhaps freezing spending at some past years rate at the same time of a phased in expiring of the Bush tax cuts so that the impacts of both would be gradual instead a fiscal shock. Maybe the penny plan one fiscal year then phased in ending of Bush tax cuts, then penny plan, etc. The deficit has to be brought under control and only a compromise will get the country there. Unfortunately Nothing will get done in Washington until it's too late.
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  6. #21
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    Which candidate for President has a history of working with the other party to pass difficult legislation?

  7. #22
    Quote Originally Posted by McKinneyTXHusker View Post
    Quote Originally Posted by Huskerwirejay View Post
    What cuts will be made to reduce federal spending by approximately 30% in order for the penny plan to work?

    Specifically, where are the spending cuts going to come from?
    Jay, my major was in engineering, not math - but I'm still having trouble understanding your claim - that to "reduce federal spending (excluding interest payments) 1 percent a year for five years", which is what the Penny Plan advocates, that we must "reduce federal spending by approximately 30%?" Interesting math indeed!
    I certainly am not a math major. You engineering studied most likely included plenty of math work.

    I have read that for every $1 in revenue, the federal government spend about $1.3. If we reduce the spending by 1.3 cents (1%) a year of 5 years, that would come to about 6.5 cents. That would put spending in 5 years at $1.23 for every $1 of 2012 revenue. To get balanced, revenue would need to grow by 23%.

    I am skeptic of a plan that is based on growing revenue more that reducing spending by a 4:1 ratio.

    I thought we needed to cut spending not increase revenue.

  8. #23
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    Quote Originally Posted by FLA4NEB View Post
    I have been buying the same brand of bread from the same store for over 3 years now. 3 Years ago it was $1.29, yesterday it was $2.99...milk cost a lot more than gas...
    and the population is growing too, demand is increasing, the resources are getting fewer....need I go on? There's many variables involved. we ain't gonna see 99 cents loaves anymore.

  9. #24
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    Quote Originally Posted by Huskers57 View Post
    and the population is growing too, demand is increasing, the resources are getting fewer....need I go on? There's many variables involved. we ain't gonna see 99 cents loaves anymore.
    Bought a loaf yesterday and it was 3.19. That is a .20 jump in about 2 weeks. The inflation we are seeing isn't from demand But from our exploding money supply.
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  10. #25

    The “Penny Plan” to Trim Government Spending

    Wow. I just bought one for 1.19. Where do you shop, Dean and Delucca's?

  11. #26
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    Quote Originally Posted by FLA4NEB View Post
    Bought a loaf yesterday and it was 3.19. That is a .20 jump in about 2 weeks. The inflation we are seeing isn't from demand But from our exploding money supply.
    i agree inflation plays a role in it but you can't deny the points that I made above also plays a role in the pricing.

  12. #27
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    Quote Originally Posted by Huskerwirejay View Post
    I certainly am not a math major. You engineering studied most likely included plenty of math work.

    I have read that for every $1 in revenue, the federal government spend about $1.3. If we reduce the spending by 1.3 cents (1%) a year of 5 years, that would come to about 6.5 cents. That would put spending in 5 years at $1.23 for every $1 of 2012 revenue. To get balanced, revenue would need to grow by 23%.

    I am skeptic of a plan that is based on growing revenue more that reducing spending by a 4:1 ratio.

    I thought we needed to cut spending not increase revenue.
    We can (and have repeatedly here) debate the cut spending vs. increase revenue debate. That's a different issue. I'm just correcting your specious question about how we should cut spending by 30% to implement "The Penny Plan" which calls for spending to be cut 1% per year. The answer to that silly question is pretty simple. To implement "The Penny Plan" we don't need to cut spending 30% as you falsely claimed. Is "The Penny Plan" a good one? Again, that's debatable, just don't try to ridiculously spin it by asking people who claim to support it how they would propose to cut spending by 30% to implement it. Simple math, Jay - grade school math, no engineering or math degree needed.

  13. #28

    The “Penny Plan” to Trim Government Spending

    Thanks for your suggestion. I want to be open-minded not one of those people that were criticized in the pew study.

    Also thank you for acknowledging that the penny plan may not be a good one. To me it seems like the numbers don't add up. If we only reduce spending by 1% a year over five years, then our spending will be not 130% revenue but 123% of revenue. That assumes to be flat revenue over the next five years.

    Of course revenue will not necessarily be flat. it can increase or decrease based on the economy.

    If the budget can be balanced in five years under the penny plan, it would appear to me that we need 4% or more revenue growth each year the next five years.

    Given the outlook that many Republicans have for the economy expecting tax revenue to grow at 4% year over the next five years seems quite optimistic. Do you believe the average American's taxable income will increase by 4% each year for the next five years?

    If revenue cannot grow organically – through growth of our economy – that quickly, then the revenue increase must come from higher taxes or new taxes for some part of the population.

    To me any plan to balance the budget that is accomplished with 80% increased revenue and 20% reduce spending doesn't seem to be a plan consistent with the idea that we don't have a revenue problem we have a spending problem.

    By asking the obviously over-the-top question of how are you can reduce spending by 30% in a plan that only calls for a 1% reduction in spending, most people can understand that there are is some other detail to the plan that just doesn't add up.

    I hope by now that you have come to realize this fact regarding the penny plan. I suspect many other people have figured it out long before now.

    Since as a pew study pointed out many GOP supporters are very open-minded, I'm sure they're able to understand the mathematical shortcomings the result in the penny plan just not adding up.

    Of course I could be wrong about this. I would invite anyone to point out why the penny plan is not advocating for four dollars of increased revenue for every one dollar of spending cuts in its efforts to balance the budget in five years.

    Personally I think we need to go far deeper with spending cuts and look at tax increases or increase revenue far less as we find a solution.

  14. #29
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    Quote Originally Posted by Huskerwirejay View Post
    By asking the obviously over-the-top question of how are you can reduce spending by 30% in a plan that only calls for a 1% reduction in spending, most people can understand that there are is some other detail to the plan that just doesn't add up.

    I hope by now that you have come to realize this fact regarding the penny plan. I suspect many other people have figured it out long before now.
    Ah, see Jay, there you go. What you REALLY meant was that you don't think the Penny Plan is a good one. But instead, in typical HWJ style, you ask what you yourself admit was an "obviously over-the top question" which simply didn't add up at all, as I pointed out. If you'd have simply said that you think the Penny Plan is flawed at the beginning of the thread and said why you thought so, we could have had an intelligent debate about it. But as we've all come to know, that simply isn't your style. Hopefully you've learned something here - but color me skeptical.

  15. #30
    Quote Originally Posted by Huskerwirejay View Post
    By asking the obviously over-the-top question of how are you can reduce spending by 30% in a plan that only calls for a 1% reduction in spending, most people can understand that there are is some other detail to the plan that just doesn't add up.
    One solution to this problem, which seems to crop up repeatedly, would be to stop asking "obviously over-the-top questions" and instead just say what you mean.
    "The distinctive mark of the Christian, today more than ever, must be love for the poor, the weak, the suffering." Pope John Paul II






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