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- Newsgroups: sci.econ
- Path: sparky!uunet!caen!zaphod.mps.ohio-state.edu!magnus.acs.ohio-state.edu!cthorne
- From: cthorne@magnus.acs.ohio-state.edu (Charles E Thorne)
- Subject: Re: Free movement of labour/labor
- Message-ID: <1992Sep15.143557.25531@magnus.acs.ohio-state.edu>
- Sender: news@magnus.acs.ohio-state.edu
- Nntp-Posting-Host: bottom.magnus.acs.ohio-state.edu
- Organization: The Ohio State University
- References: <DAVIDM.92Sep13143538@consilium.com> <1992Sep14.160914.12778@magnus.acs.ohio-state.edu> <183509@pyramid.pyramid.com>
- Distribution: usa
- Date: Tue, 15 Sep 1992 14:35:57 GMT
- Lines: 45
-
- In article <183509@pyramid.pyramid.com> pcollac@pyrnova.mis.pyramid.com (Paul Collacchi) writes:
- >In article <1992Sep14.160914.12778@magnus.acs.ohio-state.edu>,
- >cthorne@magnus.acs.ohio-state.edu (Charles E Thorne) writes:
-
- >|> One of the reasons we have such a large deficit is that the government is
- >|> trying to protect the unemployed or unemployeable and we're borrowing money
- >|> (from the Japanese and Europeans) to support this deficit. That will
- >|> eventually end and we'll be in the same position Mexico was in when they
- >|> couldn't repay their debt.
-
- >I'm not sure I see the underlying mechanics behind these assertions.
- >Would you spell them out in a little more detail? Thanks.
-
- In recent years the deficit has approached $400 billion annually almost
- half of which is interest on the national debt. To give an example of
- what contributes to this deficit:
-
- 1. Total health care costs in the U.S. are approx. $700 billion,
- about 40% of which is paid for with government taxation. This is thus
- definitely part of the deficit.
-
- 2. In addition, other payments to people who don't have enough
- income to be self sufficient includes housing, food and other living
- subsidies. This is another major part of the federal budget.
-
- Defense spending (on the other hand) is no larger as a portion of the
- national budget than it was in the 60's (although it could easily be
- reduced).
-
- The only reason the government can spend more money than it collects in
- taxes, is that it sells debt (much of which is purchased in the international
- market, since the interest rate is higher than in other countries).
-
- I've related this to the situation in Mexico, where they defaulted on
- billions of dollars in loans when the oil market collapsed. Presently they
- find it difficult to borrow money since they have a history of not repaying.
-
- Just relate to what would happen in the U.S. if government notes were no
- longer easily sold in the open market--the taxpayers would have to come up
- with $400 billion or so in additional taxes to pay the deficit (or the
- government could cut spending).
-
- Charlie
-
-
-