Cartoon of the Day
CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Wednesday, June 27, 2012
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
Previous Posts
- Real Estate Recovery Watch
- Markets In Everything: Bone Marrow, Finally
- N. Dakota Leads the Country in Q1 Income Growth
- Markets in Everything: Digital Hitchhiking App
- Tuesday Night Links
- No Peak Oil in Sight: We've Got an Unprecedented U...
- Markets in Everything: Solar Coke Bottle Lights
- Some Positive Signs in Today's New Home Sales Repo...
- The Arithmetic of Shale Gas: Consumer Surplus from...
- Law Grads Face Brutal Job Market
45 Comments:
I FELL FOR IT...... I'm so burried in student loans its almost comical.
"Everyone should go to college"
________________________
There are more than 2,000 University of California retirees, each of whom draws an annual pension in excess of $100,000
http://www.wral.com/business/story/11222572/
I turned down student aid because it came with the requirement to accept student loans as part of the package. Instead I worked full time and went to school almnost full time. Took a couple extra years but I graduated debt free with money in the bank.
OMG. Hydra and I have something in common (although I stupidly went to school full time as well). I ended up with something like $15K in loans and paid that off two years after I graduated.
Of course, I majored in Economics and Finance, not underwater basket weaving or gender, race, creed and general bitching.
ROFL!
Ideology Bubbles, anyone? /sarc
And every gasoline tank should have mandated, subsidized ethanol in it!
The problem with that is the post-college bifurcation that will be created if college is put out of financial reach of the many.
What it will do is make things worse off for the many that would not have any chance to afford college while the few would be unaffected by the increase. For the former, that would mean more precarious employment, lower quality of work, and no real means to escape it.
This isn't some Third World hellhole where education is only for the few and misery is for the many.
Don't forget The Misandry Bubble.
"Women are just as capable as men..... but are also oppressed my men......
POP!!!".
In reality, neither is true.
All Americans should have better opportunities for college and homeownership.
Unfortunately, government squanders too much money:
U.S. Federal Budgets Deficits by Year
•FY 2012 - $1.170 trillion (estimate).
•FY 2011 - $1.299 trillion.
•FY 2010 - $1.293 trillion.
•FY 2009 - $1.413 trillion.
•FY 2008 - $458 billion.
•FY 2007 - $161 billion.
•FY 2006 - $248 billion.
•FY 2005 - $318 billion.
•FY 2004 - $413 billion.
•FY 2003 - $378 billion.
•FY 2002 - $158 billion.
•FY 2001 - $128 billion surplus.
•FY 2000 - $236 billion surplus.
•FY 1999 - $126 billion surplus.
•FY 1998 - $69 billion surplus.
•FY 1997 - $22 billion.
•FY 1996 - $107 billion.
•FY 1995 - $164 billion.
sethstorm: "The problem with that is the post-college bifurcation that will be created if college is put out of financial reach of the many."
Oh, please! College is not going to be "out of financial reach" for the many. If a person attends a public college, and works either parttime or fulltime, college is easily affordable. Many kids want an easy path to education - having someone else pay for it.
If a person rally wants an education - if he is willing to sacrifice immediate gratification to get it - he will make it happen.
Jet-
Doesn't even have to be a public college. I read somewhere that students who go to private schools pay less out-of-pocket expenses (on average) than public school students simply because of grants the colleges hand out.
peak trader,
Those "surpluses" from 1998 to 2001 could be called surpulses if one ignores the increase in T-Bills in the social security trust fund. If one counts both U.S. debt held by the public and the T-Bills held by government trust funds, there was no surplus in those years.
As many others have done so, I have long argued that the T-bills held in trust funds were meaningless. But the point I'm making is that Democrats cannot have it oth ways. If they insist that the trust funds represent real assets, then there were no surpluses during the Clinton years. If they insist Clinton and the Republican Congress did have surpluses, then the trust funds must be meaningless. Of course, Democrats consistently ignore logic, so my argument will fall on deaf ears.
Jon Murphy: "I read somewhere that students who go to private schools pay less out-of-pocket expenses (on average) than public school students simply because of grants the colleges hand out."
That's possible, but I'm skeptical. Many students in live in their parents' homes and attend public junior colleges before completing a four year degree at large public universities. My guess is that the statistics on public vs private costs do not include such students in their surveys.
I'd also guess that a far higher percentage of public vs private students commute from parents' homes in order to cut their out-of-pocket costs.
"This isn't some Third World hellhole where education is only for the few and misery is for the many."
Logical fallacy.
Not everyone needs or wants college. College tuition will decrease in price once the Federal government stops subsidizing it. Administration costs are increasing tuition costs and that will stop when funding disappears.
Sethstrom-
Are you an educator by chance who is talking their position?
Cheers!
College is not going to be "out of financial reach" for the many. If a person attends a public college, and works either parttime or fulltime, college is easily affordable. Many kids want an easy path to education - having someone else pay for it.
You make the incorrect presumption that college will remain affordable to those with drudgery work.
If anything, the whole funding mess could be solved by reinstating the write-off and then switching to a post-paid-for-all(US Citizens) model.
Not everyone needs or wants college.
You're arguing that not everyone needs or wants freedom. Or ability to travel the world without the label of "unskilled".
College tuition will decrease in price once the Federal government stops subsidizing it. Administration costs are increasing tuition costs and that will stop when funding disappears.
Those prices won't decrease at all, but the quality will sure drop like a rock.
Oh, and I'm not an educator in the least. I'm not one for a profession that gets attacked by jealous people thinking I should be paid less.
sethstrom,
You make the incorrect presumption that college will remain affordable to those with drudgery work.
You make the incorrect assumption that government subsidies actually increase the quality of a product and keep the price of that product low. Empirical evidence disproving this fallacy has been shown over and over, yet dumbasses like you continue to believe it.
sethstorm: "You make the incorrect presumption that college will remain affordable to those with drudgery work."
I have no idea what you mean with your writing.
Work is work. Some people like their jobs and others do not. Except for a tiny few who are totally disabled, Americans are capable of working and saving for goods and services they want. Higher education is not exception. A person may have to work for three years to save enough for one year of community college education. But that doesn't mean such education is "unaffordable".
"You make the incorrect presumption that college will remain affordable to those with drudgery work."
And then who will do that work? Sethstorm, you should heed the advice of Judge Smails.
"And then who will do that work? Sethstorm, you should heed the advice of Judge Smails"...
LMAO!
A round of applause for 'ditch diggers'...
Good call paul...
Jet:
"Those "surpluses" from 1998 to 2001 could be called surpulses if one ignores the increase in T-Bills in the social security trust fund. If one counts both U.S. debt held by the public and the T-Bills held by government trust funds, there was no surplus in those years."
It's even worse than that. The IOUs in the SS trust fund aren't marketable like actual T-bills as we normally think of them, but are only redeemable by the treasury.
"You're arguing that not everyone needs or wants freedom. Or ability to travel the world without the label of "unskilled"."
LOL
And you are the poster child for that group of people.
"I have no idea what you mean with your writing."
Sethstorm doesn't either.
Paul, you may be on to something here. Perhaps the way to reduce unemployment in this country is to stop the incessant clamor for higher education. Judge Smails was right: There is a much higher demand for ditch diggers than for nuclear physicists.
Jet Beagle says: "Those "surpluses" from 1998 to 2001 could be called surpulses if one ignores the increase in T-Bills in the social security trust fund."
Are you saying the government acquired free T-Bills to balance the budget?
Or was it increase tax revenues from the huge economic boom, in 1995-00, along with reduced spending, e.g. the "peace dividend."
Peak:
"Are you saying the government acquired free T-Bills to balance the budget?"
I think you know exactly what he means, being that you're a high powered economist, and all that.
"Or was it increase tax revenues from the huge economic boom, in 1995-00, along with reduced spending, e.g. the "peace dividend.""
What are you trying to pull? as you must know, there was no "peace dividend" and no decrease in government spending between those years. In fact the only year from 1990 to 2010 with a decrease in spending was 1993, by $14 billion. Hardly a bragging point.
Much of the additional "revenue" is from accounting gimmicks involving the SS trust fund - as you well know.
Those "special bills" held by the SS trust fund have no actual value, as they are not marketable, and are only claims on future taxpayer money from the general fund. Some of which is needed starting right now, by the way.
EVERY YEAR the total national debt has increased, so talk of surpluses is a joke - and you should know better being the highly educated economist you are.
Ron, I guess, you also believe there was no real economic growth, since the U.S. workforce just runs around in circles, with "circular thought," at best, and, of course, the Soviet Union pretended to lose the Cold War.
"Ron, I guess, you also believe there was no real economic growth, since the U.S. workforce just runs around in circles, with "circular thought," at best, and, of course, the Soviet Union pretended to lose the Cold War."
You can find for yourself the numbers to support what I wrote in my last comment. Your cryptic reference to what I might or might not believe isn't really a response.
While discretionary spending did decrease from 1990 to 1997, entitlement spending and interest spending more than offset it so that total spending only decreased by pocket change in 1993, and total debt increased each year between 1990 and 2010.
I'm not sure how you can spin that into a good thing by using the words "surplus", or "peace dividend".
Ron H:
While discretionary spending did decrease from 1990 to 1997, entitlement spending and interest spending more than offset it so that total spending only decreased by pocket change in 1993, and total debt increased each year between 1990 and 2010. .
There is also the fact that "discretionary spending" includes almost all spending on those things named in the Constitution that the government is authorized to do, while the other - presumably mandatory - spending consists primarily of spending on things the Constitution does not allow the government to spend on.
Ron, whether you believe there were budget deficits or surpluses doesn't matter.
What's important is revenues increased faster than expenditures to strengthen the government's fiscal position, while the country was producing beyond potential output.
warrl:
"There is also the fact that "discretionary spending" includes almost all spending on those things named in the Constitution that the government is authorized to do, while the other - presumably mandatory - spending consists primarily of spending on things the Constitution does not allow the government to spend on."
You are absolutely correct. Odd, that.
Peak:
"What's important is revenues increased faster than expenditures to strengthen the government's fiscal position... "
That's not a difficult illusion to create with imaginative accounting.
The fact that total debt increased every year tells you that actual revenue didn't increase faster than actual expenditures.
When you borrow from your retirement fund and call it "income", you are in trouble.
"...while the country was producing beyond potential output."
That is a truly ridiculous concept.
"I'm working harder than it's possible for me to work."
What you are describing is a bubble inflating.
Ron H and Peak,
This may be one of the very few times I disagree with Ron. I say may because I'm not exactly certain I got his argument right.
As I see it:
1. the special purpose T-Bills in the social security trust fund are meaningless, and do not truly represent government debt;
2. in a couple of years in the late 1990s, and I think through Y2000, total government tax revenues did exceed total federal government expenditures. That's only because social security tax revenues far exceeded social security expenditures;
3. even though government reports show that total federal debt grew every year, I believe federal debt held by the public - the only federal debt which has meaning - actually declined slightly in those late 1990s years.
So, IMO, the federal government did very briefly balalnce its budget - but only if you agree that the special purpose T-Bills held by the trust funds are meaningless.
Where I disagree with just about every fool Democrat I know is in thelast part of that last sentence. They want to argue that social security has assets and that Clinton and Gingrich and Armey balanced the budget.
U.S. federal debt at end of fiscal year
(trillions of dollars)
A - Year
B - debt held by public
C - intergovernmental debt
D - total federal debt
A______B______C______D
1997___3.79___1.62___5.41
1998___3.73___1.79___5.53
1999___3.64___2.02___5.66
2000___3.41___2.27___5.67
2001___3.34___2.47___5.81
2002___3.55___2.68___6.23
Source: www.trasurydirect.gov
As I noted earlier, IMO the only meaningful debt is Col B, debt held by the public.
the special purpose T-Bills in the social security trust fund are meaningless, and do not truly represent government debt
If something doesn't fit your fixed idea, ignore it... much like how CPI share of medical is about 7% while GDP share of medical is about 16%.
Argument from fallacy: if an argument for some conclusion is fallacious, then the conclusion is not credible.
Bias blind spot — the tendency not to compensate for one's own cognitive biases.
Confirmation bias — the tendency to search for or interpret information in a way that confirms one's preconceptions.
etc...
I have no idea what you mean with your writing.
My point is that the proverbial ditch digging job - that usually pays for college - won't be enough to pay for college.
bart: "My point is that the proverbial ditch digging job - that usually pays for college - won't be enough to pay for college."
It's all about choices, bart. If a person really wants a college education, he can save enough money to pay for one. It may take 7 or 8 years to save the money. But it can be done. There are many affordable colleges providing education in marketable skills all across the U.S.
FYI, many companies which have low-skilled workers provide tuition assistance. McDonald's provides $5,200 a year for full time workers and $2,000 a year for parttimers. UPS has an Earn and Learn program which pays full tuition at many schools. Most HCA hospitals provide tuition assistance to all employees, even low-skilled orderlies.
My point, bart, is that opportunities for education exist for people who truly want them. Those who complain that education is not affordable are really just making excuses for their laziness.
That was sethstorms's comment Jet, not mine!
Mine was this one, coming on your very *special* and wrong assertion
the special purpose T-Bills in the social security trust fund are meaningless, and do not truly represent government debt
If something doesn't fit your fixed idea, ignore it... much like how CPI share of medical is about 7% while GDP share of medical is about 16%.
Argument from fallacy: if an argument for some conclusion is fallacious, then the conclusion is not credible.
Bias blind spot — the tendency not to compensate for one's own cognitive biases.
Confirmation bias — the tendency to search for or interpret information in a way that confirms one's preconceptions.
etc...
Oh, pardon me, bart. Although I usually disagree with sethstorm, I sometimes find his comments to be worthy of a response. I should have realized this couldn't have been your comment.
I sometimes find his comments to be worthy of a response.
Yes, I know... and you're not forgiven.
You gave up and relented (aka, you know beyond any question that I'm right and have nothing factual or substantive in response, especially on CPI "lies") some time ago.
Please continue, we are amused.
As I said:
Confirmation bias — the tendency to search for or interpret information in a way that confirms one's preconceptions.
etc...
Jet:
Thanks for the chart. I think I can use it to explain my understanding of the issue.
First, you are correct to say that the budget was essentially balanced in 1999 as total income nearly equaled total expenditures, so total debt only increased by a small amount.
While it's true that intergovernmental debt is meaningless in the sense that it is only accounting entries in a ledger, it does represent real government debt.
If I saved $100/mo by making an entry in a ledger and balancing it with a corresponding IOU without ever actually moving any funds and then claimed at some point that I had a savings balance of $5000 you would say I was playing tricks on myself, but this is exactly what the SS trust fund of $2.4 trillion is; entries in a ledger.
While it is meaningless in the sense of real assets, it is real debt in the sense that real taxpayer money (or borrowed money) will have to be spent to cover SS benifits paid from that trust fund.
For that reason I like to use total government debt rather than debt held by the public.
In my example of a $5000 savings account, I could claim the $100/mo I didn't actually deposit as additional income. I might even be able to claim a surplus.
To the best of my understanding this is exactly the kind of sleight-of-hand going on when a budget surplus is claimed for the 1990s.
You will notice your chart shows debt held by the public decreasing while intergovernmental debt is increasing. This is, in my opinion, merely accounting magic, while the real story is that total debt increased, meaning that total revenue didn't exceed total expenditures.
What do you think?
Jet:
"the special purpose T-Bills in the social security trust fund are meaningless, and do not truly represent government debt"
While the IOUs don't represent marketable debt like real T-Bills that can be bought and sold, they do represent amounts that will have to be spent to cover SS benefit payments, so in that sense, I would consider them real debt.
At some point the government will have to take money out of its left pocket and put it in its right pocket to cover the $2.4 Trillion we have been told is in there.
Notice that the Social security Administration refers to this $2.4 Trillion Trust Fund and uses it in all it''s calculations as if it were real money.
Jet:
I like this this explanation.
By the way, I too would be upset if you confused me with sethstorm. :)
Total Federal debt, since 1900 - with annual change rate
Ron H:"While it's true that intergovernmental debt is meaningless in the sense that it is only accounting entries in a ledger, it does represent real government debt."
Sorry I didn't respond sooner.
I disagree on this point. Intergovernmental debt is essentially the same as me taking money from my wife's purse and leaving her an IOU. My wife and I have joint ownership of all our assets, so an IOU to her is the same as an IOU to myself.
With respect to social security, I do not believe the special purpose T-Bills to be a legal obligation. Congress can, at any time, reduce social security benefits to exactly the level of social security expenditures. there is no need to ever "redeem" the special purpose T-Bills. In fact, that's exactly what I would prefer the federal government to do right now. If Congress did so, both social security and medicare would be funded forever at existing tax rates.
As I see it, the special purpose T-Bills have no meaning and no purpose other than to mislead voters.
Ron H,
I also disagree with Craig Stener's explanation. Artificially separating the Social Security Trust Fund - and calling its T-Bills assets - is a fraud. That perspective just allows the liberal media to postpone - in the minds of the voters - the day of recloning for Social Security and medicare. The day of reckoning is right now. The sooner we explode the myth of Social Security/Medicare assets, the better of we'll be.
Post a Comment
<< Home