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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76397  
Subject: Re: Rip Van Winkle Portfolio Date: 3/23/2004 7:50 AM
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Man do I agree with this statement! These deficits are crazy and absolutely need to be pared down IMHO. I don't hear either one of the presidential candidates really hammering on this issue either.

While these deficits may seem crazy, they still aren't the biggest they have been in relative terms (i.e. relative to GDP). Absolute figures don't have much meaning. I think it is interesting that we *always* seem to be going to hell in a handbasket, and our economy keeps marching forward. You could have always found reasons to back up your pessimism in the past, and you would have always been wrong. The American economy is flexible and incredibly resilient. As long as the economy maintains its flexibility, it should be able to adapt, and we should be okay.

That said, I am still concerned with what our "leaders" are doing. There is plenty of rhetoric coming from both sides about how they want to reduce the flexibility of our economy (although they don't word it like that). They want to raise taxes (except for Bush and some Republicans), increase regulation, and increase protectionism. This will reduce the ability of our economy to absorb the financial mess that the government is creating, and it will make our economy less competitive globally.

Neither the Republicans nor the Democrats are showing anything resembling financial discipline. The current deficits aren't even the big problem. I would expect deficits during a recession and during a war (although Bush is using that as a excuse). However, what really concerns me is the incredibly massive liabilities for Social Security and Medicare that are accumulating. Congress supposedly knows about the difficulty we will face when Baby Boomers begin to retire, so they took the "logical" step of "strengthening" Mediscare, which just means that they added a few trillion in liabilities. That's just great, isn't it?
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