Where is the US economy headed?

@spendius,

If the bible has one thing correct I would say that it is the love of money!

It is not the only thing that it has correct because there are many other things it has correct as well!

Now for the sad part of my understanding!

It may have vary well been the best that we knew at the time!

When I say this I am in no means trying to poke fun at us but I do think that we are the most intellectual animal {Fifth Ape} on the face of the earth and that is the reason we are able to philosophy about these things as we are able too!

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@reasoning logic,

reasoning logic wrote:

Are you sure? Lobbyist or taxes? Do you think that it could have any thing to do with our "hopefully" fading military industrial complex?

I don't know exactly where you are going with that thought, RL.
But. As a lad (born May 31st - just a reminder - 1946) I swear I remember Ike et al arguing for the interstate highway system as being important for national defense. We needed that to defend against the Russians.
In truth, of course, the auto industry, the oil industry, the motel industry and the real estate developers building suburbia (amongst others, I guess) jumped on board.
In retrospect, the urban planners should have reserved space for light rail etc, for when the automotive grid lock (will) hit. I don't think we are actually there yet. Wait until bridges start to fall down on the highways.

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@realjohnboy,

You share some very good points indeed!

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@realjohnboy,

I hope you aren't actually arguing that the interstate highway system was a bad idea? I think most people would think it was an extremely good idea, and in my opinion it has been one of the few things the federal government has ever spent money on that has been worthwhile.

Ike had seen firsthand the problems of moving men and materials during World War II, and so I think part of his justification for building the interstate highway system as a defense policy was very genuine and justified.

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@okie,

okie, A good infrastructure is necessary for any growing economy. Without it commerce will come to a standstill. It's not only about "defense." You need to study Economics 101.

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@cicerone imposter,

imposter, is that the best you can do with your comments starting out today? Get a life, ci.

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@okie,

Glad to see you didn't address the issue of infrastructure okie.

Infrastructure is very important for commerce and government provides infrastructure.

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@parados,

parados wrote:

Glad to see you didn't address the issue of infrastructure okie.

Infrastructure is very important for commerce and government provides infrastructure.

I see you did not address how many tens of billions the people of this country pay to government each year in fuel taxes, parados. Thats a "b" in the word "billion," and there are one thousand millions in one billion. I wonder if all of that money has been spent directly on actual roads and highways? Or has much of it been spent upon bureaucracy? That would be nice to know, wouldn't it?

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@okie,

Please see my post from 5/29 above where I brought up the issues of fuel taxes and highways. Would you be willing to do some research beyond telling us that a trillion is a thousand billion. It will only take an hour or two of your time. Maybe three.

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@parados,

parados wrote:

Glad to see you didn't address the issue of infrastructure okie.

Infrastructure is very important for commerce and government provides infrastructure.

True enough, but there are qualifications. Government provides virtually all design and construction for roads & bridges, and most of the funds for urban mass transit, but almost nothing for gas & petroleum pipelines, high voltage electric power transmission lines or our vast and for freight, highly efficient, rail network. In short it's a mixed bag.

Mass transit and urban "light" rail systems are a favorite of Democrats and usually offer large Federal subsidies (usually about 15% - much more in Washington DC) for their design and construction. During the Clinton boom in the 1990s I headed the Infrastructure Design & Construction Group in one of our large E/C companies and we designed mass rail transit systems for Miami, Baltimore, Seattle, Honolulu, Los Angeles and an extension of an existing one in San Francisco - and were a major subcontractor for the MARTA system in Atlanta. The systems for Seattle and Honolulu were designed (at great cost) but never built because the local voters rejected the continuing subsidies through taxes that would be required to finance their operation - in addition to the cost of paying off the bonds for their constrction. Some urban mass transit systems are economically successful, but very few experience ridership even close to the projections made when they were built, and all require continuing subsidies much greater than were forecast. I suspect this is the reason why there are few takers for the Obama Administration's High Speed rail proposals.

It is an interesting issue in that well-designed urban rail systems do provide many indirect benefits to cities that are realized only slowly over time as urban land utilization adapts to the transportation corridors. However, a large number of them never realize their promise. European cities have much more mass transit than we, but they have this problem too.

The Obama stimulus package included huge grants to states to finance infrastructure projects (about 40% of the total authorization). This is something my company tracks carefully because we do a lot of work for the highway, port and environmental departments of a number of states. We found that with falling state revenues from sales, property and income taxes, the Federal money didn't create any detectable new projects. Instead it merely delayed the day of reconing for the overstuffed state bureaucracies. & budgets. Now, with tax collections still low and no more Federal grants, the projects have all stopped, but the bureaucracies and idle bureaucrats who populate them remain.

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@georgeob1,

In San Jose, the redevelopment department has lost funding, and I believe they are "closing their doors."

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@realjohnboy,

realjohnboy wrote:

Please see my post from 5/29 above where I brought up the issues of fuel taxes and highways. Would you be willing to do some research beyond telling us that a trillion is a thousand billion. It will only take an hour or two of your time. Maybe three.

First point, I pointed out threre are a thousand millions in a billion, not that thre are a thousand billion in a trillion, which is tue as well. some people do not realize there is a thousand million in a billion, so I believe that is a pertinent point to be made, to point out that we are talking about a monumental amount of money that is being collected from fuel tax across the country, some of it by the states and some of it by the federal government.

Second point, a quick search indicates that we are consuming approximately 140 billion gallons of fuel per year, and if you do the math, I think that will generate more than 50 billion dollars in fuel taxes.

Now, that causes me to ask a simple question. Maybe it does not matter to you, but do I see or do you see enough evidence that that kind of money is going into building and repair of highways and roads around the country? I suppose it is possible, but I for one would like to see proof of that. I would like to see some politicians that delve into that and report back that we are getting our moneys worth. To summarize, count me a skeptic..

Third point, you challenge me to do the research. Sorry, rjb, but it is not my job to prove our tax money is being spent responsibly. That is the responsibility of our politicians and bureaucrats, and I do not think they are delivering what they owe us in that regard. Also part of the third point is the fact that I think we need a more responsible press to do more investigative reporting, and this subject would be a very good one to investigate in more detail. One of the questions I would like to have answered is - is the tax money being spent on hghways or is some or much of it instead being spent on boondoggle mass transit projects? If anyone has any good links that give us this info, let us know.

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From the latest UN-report World Economic Situation and Prospects 2011

Quote:

Th e United States economy expanded by 2.9 per cent in 2010, mainly driven by domestic
demand, while weaker net exports had a dampening ef ect on growth. Personal consumption increased by 1.7 per cent, while strong corporate balance sheets helped investment
in equipment and software increase by more than 15 per cent. Government expenditure
rose by only 1.0 per cent owing to the weak i scal positions at the state and local levels.
Headline inl ation was stable until the recent spike in energy and food prices, while core
inl ation remains low. Labour market slack has kept wage growth in check, while i rms
increased productivity and reduced costs. h e Fed has kept the federal fund rate at an
historical low. In November 2010, the Fed started the second round of quantitative easing,
targeting the purchase of $600 billion of longer-term Treasury securities by June 2011. h e
Fed may start to raise its policy rate in early 2012. Government expenditure is expected to
be cut in the outlook period. In April 2011, the credit-rating company Standard & Poor’s
downgraded its outlook on United States sovereign debt, underscoring the urgency for
policymakers to set up a credible framework to address its public debt. GDP growth for
2011 and 2012 is projected at 2.6 per cent and 2.8 per cent, respectively, accompanied by
a fall in the unemployment rate to 8.2 per cent in 2012. h e potential risks for the United
States include sustained elevated commodity and oil prices, a further worsening of its
public i nances and continued weakness in the housing market and i nancial sector

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@Walter Hinteler,

Interesting as well this chapter

Quote:

Weakening dollar
Th e dollar has continued its downward trend against other major currencies (i gure 2).
Despite lingering risks associated with sovereign debt levels in some European economies,
the euro appreciated against the dollar in the i rst quarter of 2011, buttressed by the expectation of faster monetary tightening in the euro area. h is trend is expected to continue
until late 2011, when the United States Federal Reserve (Fed) may raise interest rates. h e
dollar/euro exchange rate is assumed to be 1.38 in 2011 and 1.28 in 2012. h e yen has
l uctuated around a high of about 82 yen/dollar since late 2010, but the earthquake in
March 2011 triggered extraordinary exchange rate volatility until joint intervention by the
i nance ministers of the Group of Seven (G7) mitigated the situation.

(Same source as above)

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@Walter Hinteler,

Good info, Walter. I may have to start shifting some of my bond funds into equity during this year. Price will plummet while interest rates go up!

I was waiting for this kind of info, because my personal portfolio is heavy on bond funds, and my timing on shifting my investments have been pretty good.

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Obamanomics Rolling Eyes

Consumer Confidence drops, food prices to soar, teens get smart

'Double-Dip' in Housing Prices Even Worse Than Expected

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More Obamanomics

Double-dip in homeprices, manufacturing slowdown point to sluggish US economy

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@okie,

Okie. The point that I was really attempting to make was that the 18.4 cents per gallon federal fuel tax is not going to be sufficient to fund the necessary repairs to the interstate and similar other highway maintenance and construction needs.
Part of the reason, I argued, is the recession causing people to drive less. Part is the young people moving into urban areas and the big one is the movement towards cars that are more fuel efficient are don't use gasoline.
I see numbers being tossed around about gas consumption dropping around 5% annually lately. The percents are not attached to raw data, though.
A lot of the articles I found were either quite dated (2008-2009) are came from sources that I was suspicious of.
I did find the number of gallons of gasoline being used was totally in line with your number of 140Bn. My little calculator comes up with $26Bn in federal fuel tax revenues.
An article from the Society of Civil Engineers claimed that recent declines is fuel consumption - and I read this line several times - could result in an ANNUAL shortfall of funds needed for repairs from $105Bn in 2007 to $135Bn in 2017. That number, compared to the $26Bn in revenues from the gas tax is at the crux of my case.
I found an interesting article written by David Lawyer. It doesn't give much background on him. He poo poos the idea that the highways gets subsidized. If fact, he says that in the mid-1990's Congress raided the trust fund, sending about 25% of the revenues to reducing the national debt.
I found that, according to one source, 20% of the fuel tax ($5Bn) does get spent on non-highway related projects. You probably shouldn't read it if you have high blood pressure: bike lanes, hiking trails etc, etc. Fully half of the $5Bn goes to mass transit.

To summarize, Okie, I have no problem with the need for infrastructure, although I think it was accompanied by some unintended consequences such as sprawl, urban blight and pollution.
A point I was attempting to make is that the 18.4 cents is not going to fund our highway system. We can either raise it dramatically or use general revenue funds. Doing nothing is not an option as bridges start to fall down.
One leftover note: At some point the American Trucking Assn favored getting into greater use of mass transit. They estimated they lost almost $9Bn a year in fuel costs and lost productivity due to highway gridlock.
Again, sorry for not sourcing. Some of the numbers are probably old and/or wrong.

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The US economy is being flushed down the toilet by Obama and his administration.

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@H2O MAN,

Didn't You mean, "His disciples?

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Where is the US economy headed?

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