The National Debt... is it a long term problem?

[WarGamer]

Right now, servicing the National debt costs the US a full 9.0% of the entire US budget.

To put that into perspective, the military costs 12% of the US budget.

Social Security makes up 19% of the US budget.




There have to be some great solutions.

Deposit 31 fancy Trillion Dollar Platinum coins in the Treasury?

And then pass a balanced budget law requiring taxes and fees are adjusted to produce the ZERO bottom line annually?

If you start from scratch, reform the tax laws for greater fairness and proportionality it can be done.

31T in debt is 250k for each and every taxpayer.

There's nothing wrong with spending more money, in fact I'm a big fan.

But ya gotta make your numbers add up to ZERO at the end of the year.

Living in the country that has allowed you to be mega rich isn't free... time to pay up.

After all... in ancient Rome, id the gov't ran out of money they'd just "disappear" the wealthy folks and take their $$.

[ProfessorGAC]

1. Problem Is...

...one side thinks balancing a budget never includes increasing revenues.
Spending cuts are the one & only solution to everything.
At least it's consistent with their "tax cuts are the answer to everything" approach.
It's stupid, but consistent.

[WarGamer]

2. If we can start from "break even"...

It'd be much easier.

Requiring a simple balanced budget each year.

Even have the tax brackets be flexible... maybe one year the top rate would be 40.0% but the next year it'd be 41.5%

[ProfessorGAC]

6. I'm Ok With That

But it is, alas, a pipe dream unless dems have supermajorities in both houses & the WH.
Besides, while the debt is a huge number, it's still only a little over 20% of US aggregated wealth. I think it's treated as a boogeyman with more angst created than is warranted.

[dawg]

3. A balanced budget is not what we should aim for.

It would be contractionary for the economy, especially in times of recession, when it would require spending cuts (or tax increases) that would only serve to make the recession deeper.

Some debt is good and helps to make everyone's lives better.

The ideal, over the long term, is to run small enough deficits to keep the debt from growing as a percentage of the overall economy.

[WarGamer]

4. But to spend a trillion dollars a year to serive the debt...

It's taking money from things like National Healthcare...

True, some people like Federal Bonds... but that's no excuse for $1T a year in costs.

[dawg]

7. If we can borrow at 4%, and grow the economy at 5%, we are better off.

You're looking at the cost of servicing the national debt as being wasted money, but you aren't considering the value being created each year by the things that were financed by that debt.

If I borrow money to buy a carwash, and I make $10,000 a year from the carwash, it's okay if I have to pay $8,000 in interest each year on the loan I used to make the investment. I'm still coming out ahead.

[WarGamer]

9. I think you're missing my point.

If we need XXXX amount of money for the fiscal year 2029 Budget, you adjust the taxation/fees numbers to make it work.

You can still make all the investments we need... but they're paid for.

Revenue should define spending.

Don't have enough money? Raise revenue.

Even the GOP agrees with that... except they believe in the fairy tale that by allowing rich people to stuff MORE cash in their pillow cases, they will magically spend MORE money in the community.

It's common knowledge that the wealthy just take the money out of public circulation by stacking it up in stocks, etf's or mutual funds.

The guy on the street corner selling tacos isn't gaining by how many billions of dollars Jonny Tightwad owns in TSLA, AMZN and AAPL stock.

[dawg]

10. Under your scenario, the investments are paid for inefficiently and the economy suffers.

This is one of those issues where the common sense answer isn't the correct one.

Let's say you make up the difference by taxing me. So you didn't need to do any borrowing and there will be no interest to pay.

However, I'm a compulsive beanie baby collector. I buy millions of beanie babies each year and I personally keep the beanie baby factory operating.

Had you borrowed the money instead of taxing me more, I'd have continued my beanie baby spree. But now, I have to cut back. The beanie baby factory closes and the economy shrinks. The factory workers must spend less now as well. The economy shrinks some more.

The beanie baby workers file for unemployment. You weren't expecting that, so your budget is out of balance again. You must either cut spending or tax someone else. It becomes a vicious cycle.

[WarGamer]

11. I hear ya...

But you might not pay ANY more.

But Jonny Tightwad will.

Jonny can only eat so many tacos. So when Jonny gets a 100 million dollars in tax cuts from Trump, he continues eating maybe 2-3 taco plates a week...

But give 1000 families an extra $100 a week and they eat 500 taco plates.

Invested money, by the wealthy is inefficient money

[dawg]

13. Better to tax the wealthy than the middle class, for sure, but ...

taxing anyone reduces aggregate demand and lowers the overall output of the economy. Of course, we do have to tax people some. But also using some debt at the margins allows us to tax less than we would otherwise have to. And that allows the economy to produce more goods and services than a balanced budget would allow.

Not using some debt at the federal level would lower all of our standards of living. (And I think, quite substantially.)

It would be one of those things like Brexit, that "made sense" to most people, but had economists freaking out.

[stumpysbear]

5. John Oliver did an interesting segment about the debt a year or two ago

Worth watching.

[WarGamer]

8. entertaining but not how an Econ professor would see it.

[unblock]

12. A balance budget is a reasonable target, but a horrible rule.

Generally, government should run deficits in emergency situations such as war and recession to stimulate the economy and keep goods and services moving.

Then run a balanced budget and possibly a surplus during boom times to pay for the emergencies and to help pay for investments and justice and fairness and so on.

A rigid rule ties government's hands

[dawg]

15. A balanced budget requirement could turn recessions into depressions.

Deficit spending during economic contractions is one of the main tools we have for pulling the economy back into shape. It also allows us to spend the additional money needed to help families struggling with lost jobs and income.

Running surpluses in good times and deficits in bad times is good countercyclical policy. On the balance though, most years should be deficits. The target you want to hit is to maintain the national debt at a fixed and manageable percentage of the overall economy. That's the way to maximize output and standards of living.

[unblock]

18. That's it exactly.

No simple rule is going to be the best economic policy in all circumstances.

[WarGamer]

20. I'm cool with that...

Make exceptions to the balanced budget rules in the case of economic down times... and repay the piggy bank when we're ripping.

If the wealthy are making 20-30% annual returns on their portfolios... they can pay more, too.

[The Magistrate]

14. It Does Not Seem To Be, Sir

I base this on decades of hearing dire warnings that 'crushing Federal debt' soon would wreak calamity. It has inclined me to view such predictions in the manner I do predictions of Jesus' return in Glory. Both are matters of faith, by now enmeshed in a complex theological net to obfuscate the hard to avoid conclusion the prophecies have proved false.

[dawg]

16. Conservatives scaremonger the debt in order to push for cuts to social programs.

When there's a Republican President who wants to cut rich people's taxes, all those worries subside.

[The Magistrate]

17. Exactly, Sir

Anyone who does not call for collecting more taxes to reduce the nation's debt is interested not in reducing that debt, but in immiserating persons with little or no property.

[WarGamer]

19. Caring about th enational debt is patriotic and smart...

The problem is... when people sprinkle "trickle down" lies and "tax cuts generate revenue" lies.

If a millionaire sees a windfall, he remodels the mansion and buys 6 new LED TV's from Best Buy.

Take his windfall and divide that by 100 families and they'll buy 30 TV's.

Giving extra money to the wealthy is the LEAST EFFICIENT way to spread money around.



But anyways...

Be responsible. Pay your bills. Revenue shapes budgets... tax the rich to make the bottom line 0.

[WarGamer]

21. Democrats should scaremonger the debt... to illustrate how the wealthy are cheating.

"The US is 31 trillion dollars in debt because GOP politicians are in bed with billionaires and refuse to tax them fairly."

"That's $250k for each and every school teacher, auto mechanic and police officer in the country.

Why should hard working folks be on the line for the bills the wealthy should be paying?"

End of commercial.