Reply from Congressman Emanuel Cleaver concerning OrphanWorksActof 2008

[Leo Mauler]

--- On Thu, 8/14/08, Matthew Copple <mcopple at kcopensource.org> wrote:

> On 8/13/08 10:56 PM, "Jim Herrmann"
> <kclug at itdepends.com> wrote:
> 
> > What has busted the budget is an illegal 
> > war entered into using known lies by an 
> > administration that should be tried in 
> > the Hague for war crimes and crimes against 
> > humanity.  Eliminate the war spending,
> > which is borrowed from China, and you 
> > eliminate about half of the deficit. 
> > Eliminate another 20% of a military budget 
> > that is larger than all the rest of the 
> > world combined, and we have a balanced 
> > budget.  Unfortunately, the next president, 
> > Obama, has been doing a bunch of sabre 
> > rattling about Afghanistan.  That won't be
> > cheap.  So, I don't hold out much hope for 
> > that 20% reduction I'm talking about, but 
> > at least he'll get us out of Iraq soon.
> 
> Naturally, Medicare and Social Security 
> wouldn't have anything to do with the deficit,
> right? Why make hard decisions when you can
> sit comfortably in the armchair and blame 
> everything on a nasty little war?

Actually military spending, mostly thanks to the "nasty little war" currently accounts for 48% of the budget, whereas Social Security and Medicare *combined* only account for about 34%.

Military spending will have to come down more than 25% to make Social Security and Medicare the bigger threat to the deficit and the national debt.

http://www.lewrockwell.com/sardi/sardi62.html
 
> > Plus, Jon, the economics you are espousing 
> > is supply side, aka trickle down, aka voodoo 
> > economics.  That's been proven, twice now, 
> > that it doesn't work.  Raising the taxes on 
> > the people who have more money than anyone 
> > needs does not hurt the macro economy.  
> > Cutting taxes on the wealthy just let's them 
> > be richer.  It doesn't generate more GDP.  
> > Putting more of the rich people's money in 
> > the hands of the poor and middle class
> > generate GDP, and thus jobs.

> I would laugh if it weren't apparent you weren't
> serious. Cutting taxes doesn't generate GDP? Huh?
> 
> GNP (Gross NATIONAL product) is the dollar value 
> of all goods and services purchased in the 
> national economy.

Yes, all purchases made *in the national economy*.

Thats the important part.

> It includes buying cereal, buying cars, and 
> interest payments. Whether a wealthy person buys 
> a BMW, or invests the money in a mutual fund, he 
> or she is contributing to GNP.

And thats where your reasoning falls down, because investments by the wealthy **aren't necessarily within the national economy of the U.S.A.**  As you yourself have shown with your point that wealthy people sometimes purchase *German* cars (BMWs).

> The only way he or she does not contribute to 
> GDP is if he or she buries the money in the
> backyard.

Or in a foreign investment fund, or when s/he buys a foreign import, such as the foreign-made supercars (such as a BMW) or the foreign-made yachts or the foreign-made personal jets.

> A dollar is a dollar, no matter who spends it, 
> as long as it gets spent somewhere.

If it converts into another currency to be invested outside the U.S., outside the U.S. national economy, it increases GDP, just not U.S. GDP.

> For example, if a wealthy person puts his money
> in a savings account, that money is immediately 
> loaned out by the banking institution.
> That loan generates interest -- and hence, 
> contributes to GNP.

Yes, it contributes to the GDP of the country *in which the bank resides*.  If that bank is a German bank, the loans go to Germans, not U.S. citizens, improving the GDP of Germany.

> It is just ignorant to believe that just because 
> someone has more money than you do, they must 
> not be contributing to the economy.

Actually it is *naive* to think that rich U.S. citizens invest *all* their money in U.S.-based products, banks and funds.  Their investments go where they will produce more money, and if that investment is in Germany, or in China, or in Japan, the money goes outside the U.S.A. 

Whereas it isn't ignorant to think that lower income folks spend *all* their money on the local economy, both their purchases and their investments.  Even the imported products they purchase are purchased through a U.S.-based business (frequently Wal-Mart).

Hand a rich person an extra $1,000 and that money frequently leaves the U.S.A. (and thus does not generate any *U.S.* GDP) to (for example) go to Europe where the Euro is trading higher than the dollar.  Hand a poor person $1,000 and they'll spend it all right here in the U.S.A., increasing *U.S.* GDP.

> Heck, even dying contributes to the GNP 
> (someone has to pay for the funeral).

Possibly true, though poor people have no choice other than to be buried in the U.S.A., whereas wealthy people can, for example, have their ashes scattered in the Amazon rainforest.  Meaning, quite simply, that in death, as in life, poor people are more likely than rich people to use their money to increase U.S. GDP.