Deficit

Mortgage Interest Deduction A Good Idea?

Posted By CameronDaniels Last updated June 13th, 2012 7 Comments

It has been mentioned here and elsewhere that the mortgage interest deduction in the tax code is a roundabout way of subsidizing banks. If interest rates are determined by supply and demand then the demand for interest rates is only dependent on what a taxpayer’s “effective interest expense is”. A new study suggests that most of the benefits fall into the hands of lenders.

Filed Under: Economics, Personal Finance, Politics, Real Estate, Taxes Tagged With: budget deficit, charitable contributions, charitable deductions, charity, Deficit, Fannie Mae, federal deficit, FHA, Freddie Mac, government subsidy, homeownership, mortgage, mortgage interest, tax deductions, tax incidence

For Debt Ceiling Lessons… Turn to Robert Bork?

Posted By PK Last updated July 26th, 2011 Leave a Comment

“In the past, raising the debt ceiling was routine. Since the 1950s, Congress has always passed it, and every President has signed it. President Reagan did it 18 times. George W. Bush did it 7 times.” – President Barack Obama, July 26, 2011.

In the United States, Congress controls the purse strings. Congress sets the amount of spending that the United States will embark upon, setting the maximum amount with a number called the Debt Ceiling. The Debt Ceiling is a relatively modern concept – before there was an aggregate debt limit, Congress would authorize borrowing one bill at a time. In 1939 and 1941 the Public Debt Acts changed us to the system we have today – where maximum borrowing is authorized in the debt ceiling (and consolidated under the Treasury Department) while bills which spend money are voted on separately.

Filed Under: Politics Tagged With: Barack Obama, Debt Ceiling, Deficit, Robert Bork, social security, Timothy Geithner, united states

Uncle Sam’s Real Time Debts

Posted By PK Last updated August 22nd, 2009 Leave a Comment

First for some good news: the United States still has a debt rating of AAA, according to Moody’s. However, it’s probably in the country’s best interest to keep an eye on increasing deficits before they get too large. That’s what the site I’m linking you today helps you do – keep an eye on the real time US deficit, and some of the unfunded liabilities on the books. I present: the U.S. Debt Clock.

Filed Under: Debt, Politics Tagged With: Debt, debt per capita, Deficit, interest, medicare, social security, unfunded liabilities

How to Pay Off Debt… Stealthily

Posted By PK Last updated June 26th, 2009 Leave a Comment

There are three ways for a government to pay for debt: issue new debt, collect taxes, and cause inflation. Inflation is a ‘hidden tax’ on a populace- it decreases the value of future money, and allows governments to pay off their current debt with devalued money. The United States dollar, as the world’s reserve currency, gives the United States a unique temptation (opportunity?) to pay off their debts in a currency it can print. What exactly is inflation, though? And if you believe inflation is on the way, how do you set yourself up to counteract it?

Filed Under: Economics Tagged With: bonds, Debt, Deficit, federal reserve, Friedman, inflation, laffer, money supply, tax

Milton Friedman’s Permanent Income Hypothesis

Posted By CameronDaniels Last updated June 24th, 2009 4 Comments

One of Milton Friedman’s most influential and revolutionary theories was his challenge to the traditional Keynesian consumption function, which includes simple after-tax income as a variable in the consumption. Friedman countered, however, that those who consume today take future taxes, price increases, salary increases, and other factors into account. This is summarized in his Permanent Income Hypothesis. More specifically, this counters that people consume based off of their overall estimation of future income as well as opposed to only the current after-tax income.