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Thread: How the U.S., on the road to surplus, detoured to massive debt

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    How the U.S., on the road to surplus, detoured to massive debt

    [B]Running in the red: How the U.S., on the road to surplus, detoured to massive debt[/B]

    By Lori Montgomery, Published: April 30

    The nation’s [URL="http://www.washingtonpost.com/wp-dyn/content/article/2010/04/23/AR2010042302222.html"]unnerving descent into debt[/URL] began a decade ago with a choice, not a crisis.

    In January 2001, with the budget balanced and clear sailing ahead, the Congressional Budget Office forecast ever-larger annual surpluses indefinitely. The outlook was so rosy, the CBO said, that Washington would have enough money by the end of the decade to pay off everything it owed.

    [URL="http://www.washingtonpost.com/wp-srv/politics/special/clinton/stories/president012099.htm"]Voices of caution[/URL] were swept aside in the rush to take advantage of the apparent bounty. Political leaders chose to cut taxes, jack up spending and, for the first time in U.S. history, [URL="http://www.washingtonpost.com/wp-dyn/content/article/2007/05/07/AR2007050701582.html"]wage two wars solely with borrowed funds[/URL]. “In the end, the floodgates opened,” said former senator Pete Domenici (R-N.M.), who chaired the [URL="http://www.whorunsgov.com/people/Congress/Senate_Committees/Budget"]Senate Budget Committee[/URL] when the first tax-cut bill hit Capitol Hill in early 2001.

    Now, instead of tending a nest egg of more than $2 trillion, the federal government expects to owe more than $10 trillion to outside investors by the end of this year. The national debt is larger, as a percentage of the economy, than at any time in U.S. history except for the period shortly after World War II.

    [URL="http://www.washingtonpost.com/blogs/behind-the-numbers/post/more-deficit-concern-less-hope-about-solving-problem-washingtion-post-pew-center-poll-finds/2011/04/26/AFneWgsE_blog.html"]Polls[/URL] show that a large majority of Americans blame wasteful or unnecessary federal programs for the nation’s budget problems. But routine increases in defense and domestic spending account for only about 15 percent of the financial deterioration, according to a new analysis of CBO data.

    The biggest culprit, by far, has been an erosion of tax revenue triggered largely by two recessions and multiple rounds of tax cuts. Together, the economy and the tax bills enacted under former president George W. Bush, and to a lesser extent by President Obama, wiped out $6.3 trillion in anticipated revenue. That’s nearly half of the $12.7 trillion swing from projected surpluses to real debt. Federal tax collections now stand at their lowest level as a percentage of the economy in 60 years.

    Big-ticket spending initiated by the Bush administration accounts for 12 percent of the shift. The [URL="http://www.washingtonpost.com/world/april-is-deadliest-month-for-us-troops-in-iraq-since-2009/2011/04/30/AFsWO8LF_story.html"]Iraq[/URL] and [URL="http://www.washingtonpost.com/world/images-from-afghanistan--april-2011/2011/04/04/AFvWJMQD_gallery.html"]Afghanistan[/URL] wars have added $1.3 trillion in new borrowing. A new prescription drug benefit for Medicare recipients contributed another $272 billion. The Troubled Assets Relief Program bank bailout, which infuriated voters and led to the defeat of several legislators in 2010, added just $16 billion — and TARP may eventually cost nothing as financial institutions repay the Treasury.

    Obama’s 2009 economic stimulus, a favorite target of Republicans who blame Democrats for the mounting debt, has added $719 billion — 6 percent of the total shift, according to the new analysis of CBO data by the nonprofit Pew Fiscal Analysis Initiative. All told, Obama-era choices account for about $1.7 trillion in new debt, according to a separate Washington Post analysis of CBO data over the past decade. Bush-era policies, meanwhile, account for more than $7 trillion and are a major contributor to the trillion-dollar annual budget deficits that are dominating the political debate.

    As Congress prepares this week to launch a high-stakes battle over whether [URL="http://www.washingtonpost.com/politics/debt-ceiling-more-democrats-threaten-to-vote-against-raising-borrowing-limit/2011/04/28/AF5KvY8E_story.html"]to raise the legal limit on borrowing[/URL], the analyses offer a clearer view of the drivers of the debt — and of the difficulty of re-balancing the budget without new tax revenue.

    Most Republicans reject raising taxes as part of the solution; [URL="http://www.whorunsgov.com/Profiles/John_A._Boehner"]House Speaker John A. Boehner (Ohio)[/URL] has called it a “non-starter.” But Democrats won’t go for a proposal based solely on spending cuts. The [URL="http://www.washingtonpost.com/business/economy/gang-of-6-senators-launch-public-campaign-to-support-deficit-reduction/2011/03/07/ABEtpzO_story.html"]“Gang of Six[/URL],” a bipartisan Senate group dedicated to debt reduction, is expected to unveil a strategy as soon as this week that couples sharp spending cuts with a rewrite of the tax code that would raise additional revenue.

    (The debt ceiling, set at $14.3 trillion, covers all federal debt, including money the Treasury owes other federal entities, such as the Social Security trust fund. The CBO data focus on the portion of the debt borrowed from outside investors. The debt is the accumulation of annual deficits; if annual budgets are in surplus, the nation can pay down the debt.)

    The annual surpluses that set the nation on this course emerged in the final years of the Clinton administration. In the typical American household, a surplus comes as welcome news. But the White House is not a typical household. When Treasury Secretary Robert Rubin saw the budget shift into the black in 1998, he immediately warned President Bill Clinton that, politically, it was a mixed blessing.

    Rubin wanted to use the surplus to start repaying the debt, which was then just more than $3 trillion. The White House billed it as “saving Social Security first,” viewing the surplus as an opportunity to shore up the nation’s finances before huge numbers of the baby boom generation began claiming federal retirement benefits. “The problem was a whole other part of the political spectrum wanted to use the surplus for tax cuts,” Rubin said in an interview. “They said they wanted to give the people back their money. Of course, it was also the people’s debt.”

    What to do with the surplus became a central issue of the 2000 presidential campaign, with Vice President Al Gore arguing that much of it should be put in a “lockbox” to protect Social Security and Medicare. Bush pushed for a broad tax cut, arguing that taxpayers at all income levels were owed a refund. “Some say that the growing federal surplus means Washington has more money to spend, but they’ve got it backwards,” Bush said as he accepted the GOP nomination in August 2000. “The surplus is not the government’s money. The surplus is the people’s money.”

    As soon as he took office, Bush pushed Congress to make good on his tax pledge. Less than a week after his inauguration, he got a boost from Federal Reserve Chairman Alan Greenspan, who testified before the Senate Budget Committee that “tax reduction appears required” to prevent the federal government from accumulating too much cash. Greenspan feared that large surpluses would turn the government into the nation’s largest investor, creating distortions in the markets.

    A chorus of skeptics warned against spending the surplus. Some stressed the inherent uncertainty of the CBO projections. Others said a big tax cut would unleash pent-up desire in both parties to pursue expensive priorities without the pay-as-you-go restraints that had helped produce the surplus.

    Congress approved a $1.35 trillion tax cut in record time. A second package, worth $350 billion, followed in 2003. Together, they constituted one of the largest tax cuts since World War II, according to the conservative Tax Foundation.

    [URL="http://www.washingtonpost.com/business/oneill-calls-foes-of-raising-debt-ceiling-terrorists/2011/04/27/AFpIWhyE_video.html"]Bush’s first Treasury secretary, Paul O’Neill[/URL], resigned after the White House decided to pursue the 2003 measure. “I believed we needed the money to facilitate fundamental tax reform and begin working on unfunded liabilities for Social Security and Medicare,” O’Neill said in an interview. But the White House, he said, was focused on improving economic growth for the fourth quarter of 2004. “They wanted to make sure economic conditions were great going into the president’s reelection.”

    Proponents of tax cuts argue that the legislation merely returned tax collections to their appropriate levels. They note that the CBO’s 2001 forecast assumed that tax collections would stay above 20 percent of the nation’s gross domestic product (defined as the total of all economic output) — well above the historic average of 18 percent of GDP.

    “It’s not obvious that America was ready to have taxes at a level this high persistently,” said Donald Marron, a former CBO director who now heads the nonprofit Tax Policy Center. “Some degree of tax cutting was inevitable.”

    But some key advocates of the tax cuts now say such a large reduction was probably ill-advised.

    “Nobody would have thought that all these things would have happened after you cut taxes,” Domenici said. “That you’d have two wars and not pay for them. That you’d have another recession. A huge extravaganza of expenditures” for the military and homeland security after the Sept. 11, 2001, attacks. “You would pause before you did it, if you knew.”

    Bill Thomas, the former [URL="http://www.whorunsgov.com/people/Congress/House_Committees/Ways_and_Means"]House Ways and Means Committee[/URL] chairman who helped shepherd the tax cuts through Congress, defended the 2003 package as “fuel for the economy.” But he said in an interview that the 2001 measure was larded with “stuff that I was not all that wild about,” including bipartisan priorities such as a big increase in the child tax credit and a break for married couples — provisions Thomas believes did little to promote economic growth and amounted to “throwing money out the window.”

    “I couldn’t do anything about it,” said Thomas, a California Republican who retired in 2006. “You’re the candy man when you advocate those kinds of tax cuts.”

    In the end, Bush cut taxes and spent more money. Good times masked the impact, as surging tax revenues reduced the size of year-to-year deficits during the first three years of his second term. But after the economy collapsed during Bush’s final year in office, deficits — and therefore the debt — began to explode as Obama sought to revive economic activity with more tax cuts and federal spending.

    Today, the CBO forecasts are unrelievedly gloomy, showing huge deficits essentially forever. As policymakers grapple with the legacy of the past decade, a demographic wave of senior citizens is crashing at their doorstep, driving up the cost of Medicare, Medicaid and Social Security.

    William Hoagland, who was for years a top budget aide to Domenici and other GOP Senate leaders, said it is simplistic to think today’s fiscal problems began just 10 years ago. In 1976, as a young CBO analyst, Hoagland produced a long-term simulation that showed entitlement costs gradually overwhelming the rest of the federal budget.

    “This situation really goes back to long before [the Bush administration], which is to say to old dead men that have long left the Congress,” he said.

    Still, Hoagland said, the abandonment of fiscal discipline in the wake of the surpluses clearly didn’t help. “Nobody pushed for paying for this stuff,” he said. Not even after “it became very clear in the middle of 2003 that the line had turned on us. And the surpluses as far as the eye could see were no longer there.”

  2. #2
    ....and still they want more unpaid for tax cuts for the rich.....

  3. #3
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    Don't expect any comments from the supply-siders. This runs 180 counter to the bogus theory that chronic tax cuts stimulate the economy. Not to mention the ridiculous combination of tax cuts and massive military expenditures.... it's too simple. No one will buy it. :rolleyes:

  4. #4
    [IMG]http://www.spielbauer.com/images/Jekyll_Book.jpg[/IMG]

    Read this, your view on debt and our economic system will drastically change.

  5. #5
    [QUOTE=long island leprechaun;4018170]Don't expect any comments from the supply-siders. This runs 180 counter to the bogus theory that chronic tax cuts stimulate the economy. Not to mention the ridiculous combination of tax cuts and massive military expenditures.... it's too simple. No one will buy it. :rolleyes:[/QUOTE]

    I don't think anyine disagrees. BUSH spent like a drunk sailor and it hasn't stopped since. The recession and a current taxation in these "back to normal" level of economic activity can not save us under the current level of spending and if we taxed the rich at 90 percent, it wouldn't even make a dent.

    Too many live off too few......

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    [QUOTE=southparkcpa;4018193]I don't think anyine disagrees. BUSH spent like a drunk sailor and it hasn't stopped since. The recession and a current taxation in these "back to normal" level of economic activity can not save us under the current level of spending and if we taxed the rich at 90 percent, it wouldn't even make a dent.

    Too many live off too few......[/QUOTE]

    My single greatest disappointment with Obama has been his continuation of the war effort. His one highest priority as President was to end these absolutely wasteful conflicts. He has done the opposite and I damn him for it. Disgraceful.

  7. #7
    What happened to ALL that dot com $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$?
    POOF! Good bye to the Bill Clinton phony economy PROJECTED is the key word! BTW, bush did spend like a donkey.

  8. #8
    [QUOTE=long island leprechaun;4018195]My single greatest disappointment with Obama has been his continuation of the war effort. His one highest priority as President was to end these absolutely wasteful conflicts. He has done the opposite and I damn him for it. Disgraceful.[/QUOTE]

    OBAMA spends too much no doubt but WE, as a country, have lost our sense of self responsibility.

    The "Largess" of this government, it's entitlement spending, growth of all government employees in tow, ease of which americans can get money for free is so far out of control, it almost can't be stopped.

    The Post office is a perfect example. It loses billions and if private, would be cut to 2 days a week. Why don't we cut it???? We don't want to upset the employees.

  9. #9
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    [QUOTE=southparkcpa;4018220]OBAMA spends too much no doubt but WE, as a country, have lost our sense of self responsibility.

    The "Largess" of this government, it's entitlement spending, growth of all government employees in tow, ease of which americans can get money for free is so far out of control, it almost can't be stopped.

    The Post office is a perfect example. It loses billions and if private, would be cut to 2 days a week. Why don't we cut it???? We don't want to upset the employees.[/QUOTE]

    You're kidding, right? The USPS doesn't rely on tax dollars. See last line...
    It also cut over 100,000 jobs. That's pretty aggressive by any account...

    [B]Postal Service Ends 2010 with $8.5 Billion Loss[/B]

    [B]Record Efficiency Levels and Work Hour Reductions Cannot Offset Falling
    Volumes — Fundamental Changes Needed[/B]

    [B]WASHINGTON[/B] — The U.S. Postal Service today reported its 2010 financial results, showing a net loss of $8.5 billion for the fiscal year ended Sept. 30.
    Excluding charges to income primarily resulting from changes to interest rates that impact the organization’s workers’ compensation liability, the net loss was $6 billion.
    The recent recession, continuing economic pressures and migration of mail to electronic media had a significant adverse impact on mail volumes and operating revenues. Despite rigorous initiatives that eliminated 75 million work hours and drove productivity to record highs in 2010, the losses mounted.
    “Over the last two years, the Postal Service realized more than $9 billion in cost savings, primarily by eliminating about 105,000 full-time equivalent positions — more than any other organization, anywhere,” said Chief Financial Officer Joe Corbett. “We will continue our relentless efforts to innovate and improve efficiency. However, the need for changes to legislation, regulations and labor contracts has never been more obvious.”
    Details of Fiscal Year 2010 results include:
    [LIST][*]Operating revenue of $67.1 billion in 2010 declined $1 billion from 2009, primarily due to lower volume;[*]Operating expenses for 2010 of approximately $70 billion (excluding a $5.5 billion expense for pre-funding Retiree Health Benefits), down from approximately $70.4 billion in 2009 (excluding a $1.4 billion expense for RHB);[*]Net loss of $8.5 billion in 2010, $4.7 billion above the 2009 level, mostly as a result of the revenue decline, additional expenses in 2010 associated with RHB pre-funding and workers’ compensation – but offset by cost savings associated with the work hour reduction; and[*]Total mail volume of 170.6 billion pieces, compared to 176.7 billion pieces in 2009, a decline of 3.5 percent.[/LIST]First-Class Mail volume continues to decline, with year-over-year declines of 6.6 percent in 2010, 8.6 percent in 2009, and 4.8 percent in 2008. This trend is particularly disturbing as First-Class Mail, the most profitable product, generates more than half of total revenue. Volume for Standard Mail showed improvement during the year, reflecting some signs of economic recovery in late 2010, but, in total, was flat in 2010, compared to 2009.
    In its report on the financial statements contained in the Postal Service’s 2010 report, independent auditor Ernst & Young is expected to issue an unqualified audit opinion that will emphasize that questions remain about the ability of the Postal Service to generate sufficient
    liquidity to make all of its future payments, including the $5.5 billion RHB pre-funding payment due on the last day of fiscal year 2011.
    In 2010, the Postal Service complied with Section 404 of the Sarbanes-Oxley Act (SOX) as mandated by the Postal Accountability and Enhancement Act of 2006. This was one of the largest successful SOX implementations on record and the first within the federal government.
    Copies of the 2010 financial results will be available Nov. 15 on the Annual Reports page of the Postal Service website, usps.com, at: [I][URL]http://www.usps.com/financials/ar/welcome.htm#10k[/URL][/I].
    [B]The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.[/B]

  10. #10
    [QUOTE=long island leprechaun;4018170]Don't expect any comments from the supply-siders. This runs 180 counter to the bogus theory that chronic tax cuts stimulate the economy. Not to mention the ridiculous combination of tax cuts and massive military expenditures.... it's too simple. No one will buy it. :rolleyes:[/QUOTE]

    Everyone forgets that we were attacked under Clinton had the Intel on who did it and didn't respond. The next attack on the WTC put our economy into a deep recession and also put us on a clear war footing. A trillion dollars later in wars and another national entitlement program with no cuts anywhere else and we clearly have a deficit problem.

    The Bush tax cuts did help the economy. Obama extended them in large measure because he knew raising taxes during a weak recovery would likely not get us more revenue and might put us back in recession. That and the stimulus yes stimulus from more deficit spending by both tax cuts and the extension of unemployment benifits is what Obama wanted to ensure the economic recovery continued. Remember he even sent Bill Clinton out to sell Supply side to the press.

    The reality is local, State and the Federal government are going bust for many of the same reasons. We are living longer and our commitment to pensions and health care are simply unsustainable. Add in the instability in the world and our need for a continued and vigorous national defense and it's clear we need to completely reform our Social contract in order to keep debt from overwhelming our future.

    Our tax code is a joke. It needs to be reformed. Everyone knows taxes are going to go up and benefits are going to be cut.

    The last real tax deal was done under the first President Bush, it cost him a 2nd term. Obama isn’t going to do it until the next election cycle. Hopefully a divided government and a new Congress will make a reasonable deal.

  11. #11
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    [QUOTE=Winstonbiggs;4018629]Everyone forgets that we were attacked under Clinton had the Intel on who did it and didn't respond. The next attack on the WTC put our economy into a deep recession and also put us on a clear war footing. A trillion dollars later in wars and another national entitlement program with no cuts anywhere else and we clearly have a deficit problem.

    The Bush tax cuts did help the economy. Obama extended them in large measure because he knew raising taxes during a weak recovery would likely not get us more revenue and might put us back in recession. That and the stimulus yes stimulus from more deficit spending by both tax cuts and the extension of unemployment benifits is what Obama wanted to ensure the economic recovery continued. Remember he even sent Bill Clinton out to sell Supply side to the press.

    The reality is local, State and the Federal government are going bust for many of the same reasons. We are living longer and our commitment to pensions and health care are simply unsustainable. Add in the instability in the world and our need for a continued and vigorous national defense and it's clear we need to completely reform our Social contract in order to keep debt from overwhelming our future.

    Our tax code is a joke. It needs to be reformed. Everyone knows taxes are going to go up and benefits are going to be cut.

    The last real tax deal was done under the first President Bush, it cost him a 2nd term. Obama isn’t going to do it until the next election cycle. Hopefully a divided government and a new Congress will make a reasonable deal.[/QUOTE]

    I think where we depart is that you seem to argue for reducing taxes as a key to economic recovery while in a massive deficit, although it has been shown repeatedly that tax cuts, coupled with a war economy, have actually been the most sigificant factor in generating those enormous deficits. The key to a healthy economy begins with a balanced budget, which cannot be achieved by continuing lack of revenue generation and expenditures on war. We're right where we were at the beginning of the Eisenhower era (Clinton as well). And we need an Eisenhower approach to the problem... avoid pre-emptive war and raise sufficient taxes to pay down the debt, as well as curtailing wasteful programs such as defense, agriculture, tightening Medicare and Medicaid, and reducing eligibility for Social Security. Watch what happens if Obama finds an exit strategy from Afghanistan and raises marginal income tax rates. As the war machine ramps down in all phases and federal revenues increase, the economy will boom.

  12. #12
    [QUOTE=long island leprechaun;4018689]I think where we depart is that you seem to argue for reducing taxes as a key to economic recovery while in a massive deficit, although it has been shown repeatedly that tax cuts, coupled with a war economy, have actually been the most sigificant factor in generating those enormous deficits. The key to a healthy economy begins with a balanced budget, which cannot be achieved by continuing lack of revenue generation and expenditures on war. We're right where we were at the beginning of the Eisenhower era (Clinton as well). And we need an Eisenhower approach to the problem... avoid pre-emptive war and raise sufficient taxes to pay down the debt, as well as curtailing wasteful programs such as defense, agriculture, tightening Medicare and Medicaid, and reducing eligibility for Social Security. Watch what happens if Obama finds an exit strategy from Afghanistan and raises marginal income tax rates. As the war machine ramps down in all phases and federal revenues increase, the economy will boom.[/QUOTE]

    We can't even begin to have a balanced budget unless we have a national consensus on what the nation needs our federal government to actually be involved with and we can start to put a number on that.

    I had to laugh at Obama's response to Banner's willingness to cut subsidies to oil companies. He congratulated him and suggested we use the savings to invest in alternate energy.

    Have your property taxes, State income taxes and sales taxes gone up in the last decade? Mine have and my State is in much worse economic position today then 10 years ago when property taxes, income taxes and sales taxes were lower.
    Last edited by Winstonbiggs; 05-02-2011 at 11:39 AM.

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    [QUOTE=Winstonbiggs;4018752]We can't even begin to have a balanced budget unless we have a national consensus on what the nation needs our federal government to actually be involved with and we can start to put a number on that.

    I had to laugh at Obama's response to Banner's willingness to cut subsidies to oil companies. He congratulated him and suggested we use the savings to invest in alternate energy.

    Have your property taxes, State income taxes and sales taxes gone up in the last decade? Mine have and my State is in much worse economic position today then 10 years ago when property taxes, income taxes and sales taxes were lower.[/QUOTE]

    C'mon, Winston, you know that property tax revenues have tanked over the last few years, even if states have increased the tax rate. I have not been aware of an increase in NY State taxes. In fact, my returns have increased in the last few years. Localities and states have been brutalized in terms of revenue with the job losses, valuation of housing going through the floor, foreclosures, etc. So you're making confounding variables here and arriving at a false correlation. Governments are hurting because of a lack of revenue, which they cannot make up by simply increasing a marginal tax rate due to the massive economic downturn. In this environment, supply-side thinking fails.

  14. #14
    [QUOTE=long island leprechaun;4018894]C'mon, Winston, you know that property tax revenues have tanked over the last few years, even if states have increased the tax rate. I have not been aware of an increase in NY State taxes. In fact, my returns have increased in the last few years. Localities and states have been brutalized in terms of revenue with the job losses, valuation of housing going through the floor, foreclosures, etc. So you're making confounding variables here and arriving at a false correlation. Governments are hurting because of a lack of revenue, which they cannot make up by simply increasing a marginal tax rate due to the massive economic downturn. In this environment, supply-side thinking fails.[/QUOTE]

    I live in CT. My property tax has gone up, my income tax rates have been increased, user fees have gone up. Of course total tax revenue is in decline with less people employed and unable to pay their property taxes because they are in default. What does that have to do with your premise? What does that have to do with pensions and medical benifits taking up a bigger and bigger percentage of the States budget?

    Governments are hurting because they have given away the store based on a premise that our economy is going to grow regardless of the burden they put on the people through bad tax policy, bloated entitlement programs, an out of control military budget and regulations that rarely prove to creat a safert environment or create best practices but often create barriers to new entrants into markets.
    Last edited by Winstonbiggs; 05-02-2011 at 01:18 PM.

  15. #15
    [QUOTE=long island leprechaun;4018248]You're kidding, right? The USPS doesn't rely on tax dollars. See last line...
    It also cut over 100,000 jobs. That's pretty aggressive by any account...

    [B]Postal Service Ends 2010 with $8.5 Billion Loss[/B]

    [B]Record Efficiency Levels and Work Hour Reductions Cannot Offset Falling
    Volumes — Fundamental Changes Needed[/B]

    [B]WASHINGTON[/B] — The U.S. Postal Service today reported its 2010 financial results, showing a net loss of $8.5 billion for the fiscal year ended Sept. 30.
    Excluding charges to income primarily resulting from changes to interest rates that impact the organization’s workers’ compensation liability, the net loss was $6 billion.
    The recent recession, continuing economic pressures and migration of mail to electronic media had a significant adverse impact on mail volumes and operating revenues. Despite rigorous initiatives that eliminated 75 million work hours and drove productivity to record highs in 2010, the losses mounted.
    “Over the last two years, the Postal Service realized more than $9 billion in cost savings, primarily by eliminating about 105,000 full-time equivalent positions — more than any other organization, anywhere,” said Chief Financial Officer Joe Corbett. “We will continue our relentless efforts to innovate and improve efficiency. However, the need for changes to legislation, regulations and labor contracts has never been more obvious.”
    Details of Fiscal Year 2010 results include:
    [LIST][*]Operating revenue of $67.1 billion in 2010 declined $1 billion from 2009, primarily due to lower volume;[*]Operating expenses for 2010 of approximately $70 billion (excluding a $5.5 billion expense for pre-funding Retiree Health Benefits), down from approximately $70.4 billion in 2009 (excluding a $1.4 billion expense for RHB);[*]Net loss of $8.5 billion in 2010, $4.7 billion above the 2009 level, mostly as a result of the revenue decline, additional expenses in 2010 associated with RHB pre-funding and workers’ compensation – but offset by cost savings associated with the work hour reduction; and[*]Total mail volume of 170.6 billion pieces, compared to 176.7 billion pieces in 2009, a decline of 3.5 percent.[/LIST]First-Class Mail volume continues to decline, with year-over-year declines of 6.6 percent in 2010, 8.6 percent in 2009, and 4.8 percent in 2008. This trend is particularly disturbing as First-Class Mail, the most profitable product, generates more than half of total revenue. Volume for Standard Mail showed improvement during the year, reflecting some signs of economic recovery in late 2010, but, in total, was flat in 2010, compared to 2009.
    In its report on the financial statements contained in the Postal Service’s 2010 report, independent auditor Ernst & Young is expected to issue an unqualified audit opinion that will emphasize that questions remain about the ability of the Postal Service to generate sufficient
    liquidity to make all of its future payments, including the $5.5 billion RHB pre-funding payment due on the last day of fiscal year 2011.
    In 2010, the Postal Service complied with Section 404 of the Sarbanes-Oxley Act (SOX) as mandated by the Postal Accountability and Enhancement Act of 2006. This was one of the largest successful SOX implementations on record and the first within the federal government.
    Copies of the 2010 financial results will be available Nov. 15 on the Annual Reports page of the Postal Service website, usps.com, at: [I][URL]http://www.usps.com/financials/ar/welcome.htm#10k[/URL][/I].
    [B]The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.[/B][/QUOTE]

    Not sure we even disagree much....my simple point is that the PO continues to lose billions and the reality is, something need be done to stem the losses and while they pay lip service to it, a private enterprise would have folded 100,000 seems like a lot, but as I ask around, I haven't met NOT ONE person or business who seems to think we need mail everyday. Heck, they act like cutting out Saturday is a life threatening move.

    I say mail on M,W,F...that's it. But if you say it's OK to lose billions, well then it must be. The circulars and junk mail MUST be delivered come rain or shine.

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    [QUOTE=southparkcpa;4018935]Not sure we even disagree much....my simple point is that the PO continues to lose billions and the reality is, something need be done to stem the losses and while they pay lip service to it, a private enterprise would have folded 100,000 seems like a lot, but as I ask around, I haven't met NOT ONE person or business who seems to think we need mail everyday. Heck, they act like cutting out Saturday is a life threatening move.

    I say mail on M,W,F...that's it. But if you say it's OK to lose billions, well then it must be. The circulars and junk mail MUST be delivered come rain or shine.[/QUOTE]

    The Post Office is operating precisely like any major corporate entity. And it is a major corporate entity given the size of its budget of operating revenue. No major corporation would go out of business due to a 6.6% loss. Now, over time, the PO is going to have to make some hard decision, because we are indeed in a paradigm shift re how our culture handles communication, including the issue of Saturday delivery. It also appears that the PO is asking that legislation be passed to free it of some of the regulations that impose business/operating practices that are no longer sensible. You want to simply blame the PO. The problem appears to be more complex.

  17. #17
    Hall Of Fame
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    [QUOTE=long island leprechaun;4018195]My single greatest disappointment with Obama has been his continuation of the war effort. His one highest priority as President was to end these absolutely wasteful conflicts. He has done the opposite and I damn him for it. Disgraceful.[/QUOTE]

    agree - war budget should have been greatly reduced and military streamlined to eliminate dropping bombs in the sand

    if this was done his spending would have been offset.

  18. #18
    [QUOTE=long island leprechaun;4019020]The Post Office is operating precisely like any major corporate entity. And it is a major corporate entity given the size of its budget of operating revenue. No major corporation would go out of business due to a 6.6% loss. Now, over time, the PO is going to have to make some hard decision, because we are indeed in a paradigm shift re how our culture handles communication, including the issue of Saturday delivery. It also appears that the PO is asking that legislation be passed to free it of some of the regulations that impose business/operating practices that are no longer sensible. You want to simply blame the PO. The problem appears to be more complex.[/QUOTE]

    Fair enough......... but everything I hear is to only eliminate Saturday and they act like that is a HUGE sacrifice.

    Interestingly I was listening to a financial show and the speaker was addressing some of your thoughts on the defense budget. Aligning our current DOD with the same logic we had during the cold war. Asking questions like...

    1) Why do we have 3 bases in japan?

    2) Why do we have more than 3 bases in all of Europe?

  19. #19
    [QUOTE=long island leprechaun;4018170]Don't expect any comments from the supply-siders. This runs 180 counter to the bogus theory that chronic tax cuts stimulate the economy. Not to mention the ridiculous combination of tax cuts and massive military expenditures.... it's too simple. No one will buy it. :rolleyes:[/QUOTE]

    Entitlements use 40% of taxes collected. The Federal Govt is there to protect the country from enemies foreign and Domestic. THAT IS ALL! PERIOD!
    Read and Understand the Constitution!

  20. #20
    All Pro
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    [QUOTE=MnJetFan;4019130]Entitlements use 40% of taxes collected. The Federal Govt is there to protect the country from enemies foreign and Domestic. THAT IS ALL! PERIOD!
    Read and Understand the Constitution![/QUOTE]

    What is your definition of an entitlement vs. a benefit? Social Security? Medicare? Medicaid? Public Assistance? Subsidies to farmers? Otherwise, the statement says nothing at all.

    Second of all, you should stop reading the Classic Comics version of the Constitution. Here are the main enumerated powers of Congress:

    [B]Section 8 - Powers of Congress[/B]
    The Congress shall have Power To lay and collect Taxes, Duties, [URL="http://www.jetsinsider.com/forums/glossary.html#IMPOST"]Imposts[/URL] and [URL="http://www.jetsinsider.com/forums/glossary.html#EXCISE"]Excises[/URL], to pay the Debts and provide for the common Defence and general [URL="http://www.jetsinsider.com/forums/glossary.html#WELFARE"]Welfare[/URL] of the United States; but all Duties, [URL="http://www.jetsinsider.com/forums/glossary.html#IMPOST"]Imposts[/URL] and [URL="http://www.jetsinsider.com/forums/glossary.html#EXCISE"]Excises[/URL] shall be uniform throughout the United States;
    To borrow money on the credit of the United States;
    To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
    To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;
    To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
    To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
    To establish Post Offices and [URL="http://www.jetsinsider.com/forums/glossary.html#POSTROAD"]Post Roads[/URL];
    To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
    To constitute Tribunals inferior to the supreme Court;
    To define and punish Piracies and Felonies committed on the high Seas, and Offenses against the Law of Nations;
    To declare War, grant [URL="http://www.jetsinsider.com/forums/glossary.html#MARQUE"]Letters of Marque[/URL] and [URL="http://www.jetsinsider.com/forums/glossary.html#REPRISAL"]Reprisal[/URL], and make Rules concerning Captures on Land and Water;
    To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;
    To provide and maintain a Navy;
    To make Rules for the Government and Regulation of the land and naval Forces;
    To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;
    To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;
    To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; And
    To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

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