National Debt

[steel shinin]

So we have an arguably astute business man as President now. Can he curtail the national debt? Let's start having real conversations here. This **** slinging and dick grabbing isn't very productive.

Let's put aside partisan tactics for this and be reasonable and rational. I usually tune out anytime someone starts in on the "libby" or "conservaterror" or whatever bullshit. There's pros and cons to both ideologies. I certainly have my views from a social standpoint. But outside of that we need both for balance. Each are wholly capable of corrupt and shameful tactics. Have any of you actually taken a long hard look at the deficit. What's really in there? Conservatives always point to entitlement programs and the lack of adjusted or realative tax revenue for profiteering and market spending (or more bluntly a lack of tax breaks for individuals they think can spend money more wisely than the govt) as a deficit culprit and liberals are always focus on regulatory practices, closing loopholes, and tax parity. The thing that the politicians never make clear is that the government debt i.e. the budgeted spending and taxation will continue to fluctuate and can be corrected through a disciplined combination of BOTH of these ideals. HOWEVER......the debt owed by the govt budget is only 30% or so of the deficit. The other 70% is public debt. Foreign debt alone is massive. By itself it is probably more than the debt from the govt budget. That is not something that can be fixed easily AT ALL. Then there's what the Federal Reserve owes that has been borrowed, banking/market debt, insurance debt, and then the debt on bonds which is like duct tape at this point.

Here is a breakdown of the US debt held by foreign nations:

http://ticdata.treasury.gov/Publish/mfh.txt

So what can be done here?

 

[SteelChip]

I doubt there is an easy answer anywhere for that question. Reasoning should be that if Obama could double the debt in just 8 years, then it should be possible to reverse the damage in at least twice that long. The big problem is that it will take some serious austerity measures that most Americans and their representatives will not like one bit.

SS retirement age will have to change. Gov't footprints will have to shrink everywhere so business and energy can be unleashed. What I don't wish to see is the standard answer this Country has always resorted to in times of trouble...WAR.

 

[Steelr4evr]

Start cutting the size of this massive money sucking black hole called the federal government. So many things can be done away with it's not even funny. Pass a permanent balanced budget amendment. Turn the good ole USA into a producer again, increase tax revenue through jobs and production again. Pay off dept . Create a surplus to be set at a certain amount before excesses are returned to Joe tax payer. Set term limits to coincide with actually producing government surplus and management of debt. Fall short and you're not eligible for reelection period. That's for everyone.

 

[Ron Burgundy]

This is going to run on....

Our current problems, actually been a problem for a long while, have their genesis with Keynesian economics from the 1930's. Keynesian economics, named for British economist John Meynard Keynes, in a nutshell recognizes the business cycle's ups and downs and advocates using government spending and taxing policies to minimize the swings. In times of inflation the government should raise taxes and cut spending in order to reduce aggregate demand (demand for all goods and services) as a means of holding prices and wages down and thereby reducing inflation. in times of recession, the government should cut taxes and increase spending in order to increase aggregate demand. This would theoretically result in a deficit but it would be paid off later on the other end when taxes are raised and spending is cut. Sounds good on the surface but the problem is that politics gets in the way and government never really spends less, therefore you have at least mild inflationary pressure and a deficit all the time. Again, the idea is to minimize the swings in the business cycle. This is why in the business cycle prior to the Great Depression the peaks and valleys and length were about equal and since the end of WWII there is a definite upward trend (inflationary) with a lot more peaks than valleys.



Now then, how do we pay this off? A balanced budget amendment sounds nice but then we'd be back to the bigger swings of inflation and recession I mentioned. To pay it off you need to spend less than you are taking it, except that means a lot of actual spending cuts and higher taxes. Raise taxes too much and you slow the economy down and tax revenue goes down because people have less money to spend on goods and services. See the Laffer Curve.



In other words the pie of money gets smaller. Now then, we can print more money to pay off the debt and spend spend spend except that money falls victim to the laws of supply and demand just like everything else. If you increase the supply of money relative to the demand then each dollar is worth less. Not worthless but worth less, i.e. it takes more dollars to buy the same amount of stuff. Now if you go too far and print too much money to hand out to the peoples to keep them happy, you end up with hyperinflation like Venezuela or 1920's Germany where you literally needed a wheelbarrow full of Deutschemarks to buy a loaf of bread.

http://www.salon.com/2000/11/22/weimar/

In October 1923, German currency traded at the astronomical rate of 4.2 billion marks to the U.S. dollar. Gordon points out that “the most exquisite blow job” to be had in Berlin never cost an American tourist more than 30 cents.

A nation needs to generate a certain amount of wealth in order to have a bit left over to pay taxes and run the government. 1920's Germany was a bit hollowed out from WWI and the punitive taxes to pay for reparations led to impoverishment and hyperinflation and the rise of Trump, err, I mean Hitler. /sarcasm

So essentially what we need to do is grow the pie, so to speak, and generate more wealth so that we have a bigger piece of pie left over to pay down the debt. Democrats don't believe in this and Republicans, at the ones in Washington, not the voters, aren't a whole lot better. Libs/Dems eschew Laffer and believe in a static model of taxation where for example if you raise taxes 10% then your tax revenue should increase 10% too. Problem is that it's a dynamic model and raising taxes affects other things including demand. Witness the higher sales tax on cigarettes resulting in less tax revenue as more people smoke less or quit altogether because it's become too expensive.

Why yes, as a matter of fact I do have a degree in economics.

 

[deljzc]

Agree with pretty much everything Ron laid out.

I put some spreadsheets together recently to see what happens to federal revenue, spending, GDP, inflation, unemployment and some other things when Republicans and/or Democrats sort of take over (either fully or symbolically with a strong President). And this is mostly since 1945, since before WWII, our federal government was very small and during WWII we spent like crazy for the War. It's really since 1945 that our federal fiscal policy has remained relatively a point of debate.

First, there is a slight fundamental difference in the parties in ACTUAL historical events. It is not nearly what we are told. Democrats are not greatly different from Republicans when it comes to deficit spending. But there is a difference and after some careful analysis of the numbers this is what actually seems to happen.

In almost every case of a big shift in political shift of the house/senate/president, two things either happen: Republicans cut taxes. Democrats increase spending.

The problem is neither of these things really cut the deficit. When a Republican walks into a government that is deficit spending $500 billion (and we'll use that number since that's today and a nice round number but it can be any time in our history), they normally have promised tax cuts to "boost the economy" and that's fine. It actually works. But it takes time for the money to filter through the economy into the GDP and back into tax revenue for the government. So what you historical see is a DECREASE in government revenue the first year or two after a Republican gets control and the spending remains the same. Now Republicans will tell you they are cutting spending, but what they are really doing is saying "We aren't going to increase it like the Democrats would". They rarely ever get the cat back into the bag and actually reduce the amount of dollars spent by the government. But the tax cuts DO reduce revenue.

So the first year after a Republican decrease tax revenue while the spending stays the same. End result = increased deficit.

Now when Democrats get into office, they have to fulfill all their campaign promises and they increase SPENDING by the government. Normally, tax revenue stays the same (or a slight increase) but it is not nearly this "tax and spend" system as your lead to believe. But historically, democrats DO increase spending. And just like the Republicans, end result = increased deficit.

But here's the kicker. In both systems (tax cuts or increased spending), there is an economic boost to the economy and GDP. It is fact. Both do it. Ron and I can debate until the sun rises about how much or how little, but the fact remains when you ADD money (either by cutting taxes and giving it to the people to spend or just government spending on all sorts of things), the economy will grow.

So in BOTH systems about 2-3 years after they do their tax cuts or increase spending, you see a BUMP in tax revenue. And wouldn't you know it, the deficit starts to fall back to where it was when either party entered office to begin with.

The funny thing is neither would work LONG TERM if we didn't go back and forth between the philosophies of Republican vs. Democrat. You can't keep cutting taxes to nothing. And you can't keep increasing government spending in perpetuum.

Partly why our system works is that we have gone back and forth over the last 50 years.

That said, I am still a staunch Republican because I believe in smaller government. And since both systems work (kinda), you have to pick you poison. Do you want LESS government or MORE government. Because when it comes to the deficit they are both almost the same.

 

[ark steel]

In theory, govt spending or the same amount in tax cuts should produce the same economic results. The problem, IMO, is that govt spending takes longer to get the money into the economy and, more importantly, gets spent for political purposes, not economic.

 

[deljzc]

In theory, govt spending or the same amount in tax cuts should produce the same economic results. The problem, IMO, is that govt spending takes longer to get the money into the economy and, more importantly, gets spent for political purposes, not economic.

Agree 100%.

The problem with both systems (as they are perpetuated by our elected officials), is they both push the envelope of "fiscally responsible" deficit spending and when something happens beyond their control or unexpected it ***** the whole thing up. 911 and the War ****** up our deficit. The financial crisis ****** up our deficit. Those are two drastic events that may/may not have been avoided but happened and the results on the fragile system our government has created has kind of caused havoc (or at least concern) on everything.

The total debt as it is now ($20 trillion) is only manageable because of low interest rates. Any time you improve the economy (and increase revenue for the government), interest rates will go up and borrowing money will become more expensive. Why you see you government yearly expense on our loans is so close to what it was 8 years ago, despite TWICE as much debt, is because the credit card has lowered our interest rate by almost half. George Bush didn't nearly have the leeway to pay for the War on Terror at 5% interest that Obama had to spend us out of the recession/bank bailout at 2% interest.

The real issue is moving forward. We are currently at $500 billion per year in deficit spending. Trump can cut taxes but revenue WILL go down. And it will take time to filter through the GDP and back into increased government revenue. If the Fed raises rates a few times this year, that (now $600 or $700 billion) deficit will be much more expensive to find loans for. And if he CUTS spending, he could be harming the economy (at least short-term).

That is the big crux of the whole issue Trump faces. Can he really cut the pork out of spending enough that won't affect the economy as much as his tax cuts will improve it.

I personally don't think Trump is going to tackle the deficit at all. I think he's a borrow/spend kind of guy, especially when interest rates are low. Trump is a businessman. And he's now in charge of a business (the U.S.) that can borrow money at like 2% interest. For a person of Trump's background, that is GOLD. Now, as a Republican, I will probably love what he spends it on. But I still foresee a lot of borrowing (at least the first 2 years).

 

[SteelChip]

So...In theory, if Trump lowers taxes on business, repatriates a big chunk of offshore capital, lowers govt spending by 20% and gets a private/public partnership for infrastructure updates...can the economy remain staedy without triggering a huge and dramatic inflationary bubble ?

 

[DBS1970]

The solution is well known and simple. The implementation is hard. The answer is to go back to constitutionally limited government and eliminate about 90% of current departments and programs. The problem with trying that is the piglets at the government teat will squeal and the bureaucrats losing their jobs and personal fiefdoms will protest. We grew to a prosperous and powerful nation before the myriad Fed alphabet agencies popped up and we have been in decline ever since.

 

[TDX27]

One of the biggest problems with the debt moving forward is the debt service (interest). Odumbfuck let it get so high, the debt service is now crazy high and will make paying down the down extremely difficult.

 

[Ron Burgundy]

Now Republicans will tell you they are cutting spending, but what they are really doing is saying "We aren't going to increase it like the Democrats would". They rarely ever get the cat back into the bag and actually reduce the amount of dollars spent by the government. But the tax cuts DO reduce revenue.

Agree with most of what you said, although after the Reagan tax cuts and tax reform of the 80's, by 1990 the Federal government was receiving over twice as much tax revenue as they were in 1980 because the economy grew, although most individuals were paying a lower tax rate than they were before. Who pays more taxes, someone without a job or someone with a job?

In theory, govt spending or the same amount in tax cuts should produce the same economic results. The problem, IMO, is that govt spending takes longer to get the money into the economy and, more importantly, gets spent for political purposes, not economic.

John Kerry explains the Democrat position on tax cuts. You people may not spend your extra money where we here at the government think you should.

 

[Coach]

So we have an arguably astute business man as President now. Can he curtail the national debt? Let's start having real conversations here. This **** slinging and dick grabbing isn't very productive.

Let's put aside partisan tactics for this and be reasonable and rational. I usually tune out anytime someone starts in on the "libby" or "conservaterror" or whatever bullshit. There's pros and cons to both ideologies. I certainly have my views from a social standpoint. But outside of that we need both for balance. Each are wholly capable of corrupt and shameful tactics. Have any of you actually taken a long hard look at the deficit. What's really in there? Conservatives always point to entitlement programs and the lack of adjusted or realative tax revenue for profiteering and market spending (or more bluntly a lack of tax breaks for individuals they think can spend money more wisely than the govt) as a deficit culprit and liberals are always focus on regulatory practices, closing loopholes, and tax parity. The thing that the politicians never make clear is that the government debt i.e. the budgeted spending and taxation will continue to fluctuate and can be corrected through a disciplined combination of BOTH of these ideals. HOWEVER......the debt owed by the govt budget is only 30% or so of the deficit. The other 70% is public debt. Foreign debt alone is massive. By itself it is probably more than the debt from the govt budget. That is not something that can be fixed easily AT ALL. Then there's what the Federal Reserve owes that has been borrowed, banking/market debt, insurance debt, and then the debt on bonds which is like duct tape at this point.

Here is a breakdown of the US debt held by foreign nations:

http://ticdata.treasury.gov/Publish/mfh.txt

So what can be done here?

It's going to take a while. Obama broke us financially speaking accumulating more debt than ALL other presidents combined. We owe 3X more than what is printed, and the interest on te debt is a separate problem.

A few suggestions.

1 ) Spend only 97% of the revune in, the other other reveunes goes to pay down the debt. Stop spending more than you take in.

2 ) Put Millions back to work. Working people PAY taxes. I beleive Trtump can help here.

3 ) Raise import and tarrif taxes, to level things out. I beleive Trump can help here.

4 ) Raise taxes for those making more than 100 million a year. GIve these very few a special pass to all USA public buildings. parks, and events...not the best trade off, but its something.

 

[CharlesDavenport]

You can't do anything about it with a **** economy so lets start there, and he already has. It doesn't sound like he's going to be cutting much, but will be growing tax revenues through a stronger economy.

 

[Coach]

Agree 100%.

The problem with both systems (as they are perpetuated by our elected officials), is they both push the envelope of "fiscally responsible" deficit spending and when something happens beyond their control or unexpected it ***** the whole thing up. 911 and the War ****** up our deficit. The financial crisis ****** up our deficit. Those are two drastic events that may/may not have been avoided but happened and the results on the fragile system our government has created has kind of caused havoc (or at least concern) on everything.

The total debt as it is now ($20 trillion) is only manageable because of low interest rates. Any time you improve the economy (and increase revenue for the government), interest rates will go up and borrowing money will become more expensive. Why you see you government yearly expense on our loans is so close to what it was 8 years ago, despite TWICE as much debt, is because the credit card has lowered our interest rate by almost half. George Bush didn't nearly have the leeway to pay for the War on Terror at 5% interest that Obama had to spend us out of the recession/bank bailout at 2% interest.

The real issue is moving forward. We are currently at $500 billion per year in deficit spending. Trump can cut taxes but revenue WILL go down. And it will take time to filter through the GDP and back into increased government revenue. If the Fed raises rates a few times this year, that (now $600 or $700 billion) deficit will be much more expensive to find loans for. And if he CUTS spending, he could be harming the economy (at least short-term).

That is the big crux of the whole issue Trump faces. Can he really cut the pork out of spending enough that won't affect the economy as much as his tax cuts will improve it.

I personally don't think Trump is going to tackle the deficit at all. I think he's a borrow/spend kind of guy, especially when interest rates are low. Trump is a businessman. And he's now in charge of a business (the U.S.) that can borrow money at like 2% interest. For a person of Trump's background, that is GOLD. Now, as a Republican, I will probably love what he spends it on. But I still foresee a lot of borrowing (at least the first 2 years).

Trump quesitons the price of everything, include the cost of air force one jets. He hates wastfull spending. He might surpise a few and spend less than he takes in esepcially if the eccomomy takes off. Without a war, I think he can do it.

 

[deljzc]

Agree with most of what you said, although after the Reagan tax cuts and tax reform of the 80's, by 1990 the Federal government was receiving over twice as much tax revenue as they were in 1980 because the economy grew, although most individuals were paying a lower tax rate than they were before. Who pays more taxes, someone without a job or someone with a job?

It wasn't just the 1980's that federal revenue "doubled". That had happened every decade since 1940.

Federal Revenue:

1940 - $6.55B
1950 - $39.4B
1960 - $92.5B
1970 - $192.8B
1980 - $517.1B
1990 - $1.03T
2000 - $2.03T
2010 - $2.16T

As you can see it was really the 2000's that ****** us over. We were headed okay ($2.567 trillion in 2007) but then the financial crisis happened and substantially lowered federal revenue. Revenue fell -1.7% in 2008, then a whopping -16.6% in 2009.

That's hard for any government to come back from.

We are probably never going to see a doubling of federal revenue over a decade like we did from 1940 to 2000. Trump would have to go from $3.266 trillion up to about $4.2 trillion in 2020 (four years) to make it happen. Hopefully his economic first plan helps a lot.

We will see.

 

[Superman]

what we need is a commission assembled to diagnose and understand what needs to be completed in order to reduce the national debt. of course, this will be done by elected officials, who will then appoint subcommittees to do the work and report back to them. These subcommittees will also employ others to crunch the numbers and apply the theories...

 

[ark steel]

what we need is a commission assembled to diagnose and understand what needs to be completed in order to reduce the national debt. of course, this will be done by elected officials, who will then appoint subcommittees to do the work and report back to them. These subcommittees will also employ others to crunch the numbers and apply the theories...

Then the 1,000 page report will be ignored.

 

[Superman]

Then the 1,000 page report will be ignored.

please, be specific.
there will be at least one 1,000 page report for each gubmint official appointed to the 25-member committee.