Sunspots 667

Things I have recently spotted that may be of interest to someone else:

Christianity: Weekend Fisher has a good meditation on competition, from a Christian perspective, posted during Lent, and, as she notes, between the Winter Olympics and March Madness.


Education: National Public Radio reports that Dolly Parton has spearheaded a long effort, which, so far, has resulted in 100 million books being made available to children.

Finance: (and politics) An article in Bloomberg examines what US companies are doing with their tax savings. Not very much is going to employees. About twice as much is going to stockholders as to investment in upgrades, research, and such.

Food: Relevant reports on the fanciest McDonald's in the US.

Health: National Public Radio says that North Americans put their backs at risk because of their postures when bending over.

(and/or politics) Gizmodo, and other outlets, report on a study that says there are fewer gun injuries while the National Rifle Association convention is being held, presumably because the attendees aren't using their guns during that time.

History: Gizmodo reports that a 131-year-old message in a bottle has been found.

Humor: (and politics) National Public Radio reports on the annual Gridiron Dinner, giving many of the jokes, by President Trump and others.


Politics: A Pew Research poll shows that white evangelicals want more gun control, too.

Scientific American on how the Trump administration is letting public lands be exploited, and wilderness destroyed.

Science: According to The Atlantic, over half of the genes of common fruit flies have analogs in humans.

Gizmodo reports that termites have been placed in the same group of insects as cockroaches.

Christianity Today (!) reports that many environmental scientists are experiencing sadness and depression, because of the accelerating damage to the environment, caused by humans.

Thanks for looking!

Image source (public domain)

Debt versus Deficit

This post is not meant to take sides, but to inform. There's plenty of blame to go around, of course. That blame includes you and me, when we expect government to do things that benefit us that it can't currently pay for, or when we wrongly evade paying taxes.

There are certainly complications, such as different ways of counting what is in the budget, and the following is simplified, but is as close to the facts as I can get.

A Deficit is created when more is spent, during a fiscal year, than comes in during that year. The US Government has often run a deficit. A deficit adds to the public debt. A deficit could also be a budget deficit, meaning that there is a plan to spend more money than projected income, during a future fiscal year.

The public debt is the total amount that we owe -- funds that that we have borrowed. The current debt is somewhere over 16 trillion dollars, according to this source, which claims to be produced by a conservative (whatever that means!). That figure "doesn’t include state and local debt, and it doesn’t include the so-called unfunded liabilities of entitlement programs like Social Security and Medicare."

So we owe, thus, at least $16,000,000,000,000, (sixteen trillion dollars) which is the sum of all the previous deficits, and the current one. The US Census Bureau says that there are about 314 million of us, which means that each of us has a share of the current debt of approximately $51,000. The US has had a federal debt, sometimes rather small, for most of our existence as a nation, except for around 1835.

Who do we owe this money to? If you listen to politicians, from both sides, you'd think we owed it all to the Chinese. Not so. According to this Wikipedia article on the United States public debt, we owe about 2.25 trillion to the Chinese and Japanese, combined. Of that, we owe a little more to the Chinese, but not much more than we owe Japanese entities. The majority of the debt is owed to people or institutions in the US. The total owed to foreign entities is about 5.3 trillion dollars.

Who spends the money? Congress must approve most expenditures. There are exceptions, but mostly, it's Congress. The Executive Branch, which the President is responsible for, then spends the money. A President is required to submit a budget to Congress, but Congress usually makes lots of changes. Presidents seldom get their own way in budgetary matters, at least not entirely. (Presidents can veto spending bills adopted by Congress.) Overspending, thus, must be agreed upon by Congress and the President.

How can we stop running deficits? We could cut spending, we could increase revenue, from taxes, fees, and other sources, or we could do both. Most experts seem to agree that we need to do both. Both Presidential candidates seem to agree. Governor Romney, for example, says that he wants to close some tax loopholes, which should increase revenue, and wants to eliminate funding for the Corporation for Public Broadcasting, and, presumably, for other things, which would cut spending.

It is difficult for Congress and the President to cut spending, for several reasons. Cutting spending usually hurts someone, and groups whose special interests are threatened complain, usually loudly, to Congress. There are things that most of us agree that we need, such as air traffic controllers, federal courts, and at least some military. These take money. It is difficult to raise taxes, because nobody wants to pay more.

Not only the President and Congress, but external forces also cut revenue. The current recession, which, we hope, we are coming out of, is an example. It caused large decreases in government income -- as people lost their jobs, and as businesses had less income, they paid less in taxes. External forces, such as the attacks of September 11, 2001, also may lead to unforeseen increased spending.

Occasionally, Congress and the President are able to agree on plans to produce a budget surplus. That is, there is a plan to spend less than will be taken in, during a fiscal year. Unfortunately, that doesn't happen very often. Under President Clinton, there was a surplus of about 250 billion dollars in Fiscal 2000. Budget surpluses could be applied to the federal debt, but they could also be used to cut taxes, or to justify spending that wasn't originally planned.

What is the fiscal cliff? The Congress, with one house currently controlled by Democrats, and one by Republicans, hasn't agreed on very much lately. But they did agree, in the recent past, to pass legislation that would cut federal spending, including for the military, seriously, and would also allow tax rates to go up significantly, unless some solution for the federal deficit was agreed upon by Congress in a future session. That latter agreement has not occurred. Unless Congress agrees on some such plan, or repeals the legislation requiring them to, there will be serious consequences, such as job loss, perhaps downgrading of the credit rating of the US, insufficient national defense. That event, which may happen within the next few months, is known as the fiscal cliff.

Some final notes. 1) Although both Mr. Romney and Mr. Obama have indicated that they want to do something about the deficit, either of them would have to work with Congress in order to do that.
2) Both candidates usually speak of their plans, but their plans are over a longer period than their Presidency. Mr. Obama has, at most, about 4 years left, and Mr. Romney, at most, about 8. Their plans are usually for 10 or more years.
3) In my opinion, neither candidate, and most of Congress, has really explained all this to the U.S. citizenry. It's too easy to just let things go along, as we get deeper and deeper into debt.
4) Presidents cannot veto particular items in a bill. Presidents of both parties have requested a line item veto, but the Supreme Court has said that that would be unconstitutional.* Congress may, for example, combine expenses for 10 different things, nine of which the President agrees with, but one which the President considers to be fiscally irresponsible, into a single bill. But the entire bill must be signed, or vetoed.
5) There are looming problems with the infrastructure of the US, which are going to require lots of money to fix. My own state of South Carolina, depending on who is assessing, has some of the worst roads in the country. Many sewer and water systems, bridges, school buildings, harbors, dams, etc., are in serious need of repair, and most or all of the funds will have to come from the federal government, or state or local governments, or a combination thereof.
6) A significant portion of the federal budget must be spent on interest on the debt that we owe, each year, until the debt is paid.
7) I haven't touched on the financial pressure brought on by an aging population, or the rising healthcare expenses.

Thanks for reading!

*I originally said that Congress had not authorized the line item veto, but that is incorrect. I have corrected this on the original publication date.

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On November 10, 2012, I'm linking to a previous post, "Taxes create jobs!" which discusses the relationship between jobs and taxes.

On November 12, 2012, I'm linking to a post by Ken Schenck, which argues that, although it is possible that government assistance to the poor may harm people, there is Biblical evidence that indicates that, at least some of the time, it's a good thing for governments to do.

Taxes create jobs!

"Taxes kill jobs" - Speaker of the House John Boehner, at least once a day for the last few weeks. (At least it seems like it.)

That statement is an oversimplification, at best, and tends to be deceptive.

Why is it an oversimplification? How are Speaker Boehner and his staff paid? By the tooth fairy? No. By taxes.* And, of course, they have jobs, supported by US taxpayers.

The Speaker is partly right. Consider a hypothetical state or city where all income, business or personal, was completely taxed, all of it went to the government. Businesses would have little motivation to establish themselves in such an area, and, thus, there would be few or no jobs available. People looking for work wouldn't live there, if they could help it. Even the job of tax collector would be non-existent, because there would be too little tax money coming in to pay for such people. So, in that case, taxes would kill jobs.

However, consider the opposite situation, a state or city where there were no taxes. With no income, government would be unable to provide infrastructure, police and fire protection, a justice system, schools and hospitals, or regulatory apparatus, and, again, there would be few businesses, or people, who would want to locate in such a place. So no taxes would also kill jobs. A situation where there are tax revenues sufficient for the government to do its job would make job creation possible, rather than preventing job creation. So the Speaker is only partly right, and seriously wrong.

The Federal Aviation Administration has recently had to furlough about 70,000 workers, mostly construction workers, because Congress can't agree on funding the agency.

The ideal, then, must be somewhere between 100% and zero taxation. What rate is ideal? That's certainly a matter for legitimate debate, but to say that taxes kill jobs is not stating the full truth. Taxes can help create jobs.

There's another reason why taxes don't kill, but can create jobs. Private businesses do not generally engage in research into new areas of science. For example, most of the initial development of the laser, both theoretical and initial construction and assembly, was done by scientists in academic, or military laboratories, funded by taxes. Without the laser, CDs, DVDs, computer hard disks, and many other devices that we now take for granted, all of them requiring the employment of skilled labor to produce and repair, and all of them providing employment for salespeople, would not be possible. Although some fundamental research and development is carried out in industry labs, much of it is not, and it is usually the most radical research that is carried out in academic labs, and the most radical research often makes whole new categories of employment possible. Countries, or local areas, that develop these new categories will probably become more competitive. They will be adding new jobs. Much of our present position as the world's largest economy has been possible because of research and development done in the past, much of it funded by tax money.

The Internet, exploration of the solar system, large telescopes and similar devices, high-energy physics, and the human genome project, to name a few rather spectacular items, were developed largely with money from governments, that is, from tax money. At least the first of these has led to a great many jobs, and the others have or probably will also do so. To be sure, there have been major research endeavors funded privately, such as PARC, the Carnegie Laboratories, and Bell labs.

The United States didn't become an economic powerhouse by lowering taxes. It became so, at least partly, because of costly efforts, governmental or private, to carry out and implement scientific research.

Thanks for reading. Pay your taxes.

*I have been reminded that governments can get revenue in other ways than through taxes, such as through usage fees (like sewage fees, or license fees). But I'm describing them all as taxes, as the politicians in Washington generally do.

On August 1, 2011, I'm adding the following:
There are frequent assertions as to the effect of tax policy on job creation, by politicians of various persuasions. I saw part of a debate on this matter between Senators Durbin and McCain on this issue yesterday, on the Senate floor. My take is that there are too many variables. So many, in fact, that it's impossible to know for sure, for example, whether the so-called Bush tax cuts helped to create jobs, or didn't. Connection of tax policy to jobs has never been done as a controlled experiment, with a single independent variable (tax rate, or some other tweaking of tax regulations), accompanying the measurement of the dependent variable (number of jobs). It is impossible to perform such an experiment, with only one variable. Variables include fluctuations in world markets, changes in the number of people seeking employment, the prices of raw materials that we depend on (such as oil), tariffs on our goods, the values of other currencies and ours, and other variables. So politicians pretty much draw whatever conclusion they want from the data.

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On December 20, 2011, I came across a posting by Politifact, a non-partisan entity, that discusses the matter of taxes and small businesses. It's a complicated subject, as they point out, but increasing taxes on the wealthiest persons would have much less impact on small businesses than Speaker Boehner has said.

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November 10, 2012: I should have known about the Wikipedia article on the Laffer curve, which repeats much of what I said above, more authoritatively, and also says, that an analysis by the non-partisan Congressional Budget Office studied the probable effects of cutting taxes: [In the] paper's most generous estimated growth scenario, only 28% of the projected lost revenue from the lower tax rate would be recouped over a 10-year period after a 10% across-the-board reduction in all individual income tax rates. In other words, deficits would increase by nearly the same amount as the tax cut in the first five years, with limited feedback revenue thereafter.

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June 22, 2016: Republican Presidential candidate Donald Trump, not known for always anchoring his pronouncements in facts, has claimed that the US has the highest individual tax rate in the world. Politifact has researched that claim thoroughly, and determined that it is false. They do say that the US has a high, perhaps the highest, corporate tax rate in the world.