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The cost to the US to service its debt in 2015 was $220 billion, its GDP in the same year was 16 trillion. I have a hard time believing that what accounts for

by badsock 11y ago

The cost to the US to service its debt in 2015 was $220 billion, its GDP in the same year was 16 trillion. I have a hard time believing that what accounts for only 1.3% of the productive output of the US is the number one determanent of its economic well-being, especially when 65% of that money goes right back into the US economy (i.e. interest on domestic debt). Perhaps more than basic financial math is required to understand the economy?

lintiness 11y ago
with interest rates at zero, it's pretty easy to see why debt service doesn't currently amount to much. how great do obama's deficits look if he's dealing with the same interest rates as reagan, bush, clinton, bush jr? the difference is trillions.
- dragonwriter 11y ago
  Why would you evaluate policy outcomes by what they would be in different conditions than the ones that they actually exist in? Certainly, the current cost of borrowing ought to be a factor in making fiscal policy decisions. I mean, would any business make decisions about financing based on what the costs would be in of those decisions in past decades rather than what the costs are reasonably expected to be in the conditions that actually exist?
cylinder 11y ago
Why compare that actual cost to GDP? Compare it to federal tax revenue. It's about 8% of federal tax revenue. There is not a lot of room for the federal government to increase revenue as total taxes (incl state and local, sales, payroll, property, etc) are not low by any means in the US
- dragonwriter 11y ago
  > Why compare that actual cost to GDP? Compare it to federal tax revenue. Because we are talking about determinants of the health of the economy, not determinants of the health of government finance. > There is not a lot of room for the federal government to increase revenue as total taxes (incl state and local, sales, payroll, property, etc) are not low by any means in the US That's not particularly true; the US is pretty close to the bottom of total tax revenue to GDP ratio among OECD countries; there is plenty of room to increase tax revenue. http://www.oecd.org/ctp/tax-policy/revenue-statistics-ratio-change-latest-years.htm http://www.oecd.org/ctp/tax-policy/revenue-statistics-ratio-...

by badsock 11y ago

lintiness 11y ago

with interest rates at zero, it's pretty easy to see why debt service doesn't currently amount to much. how great do obama's deficits look if he's dealing with the same interest rates as reagan, bush, clinton, bush jr? the difference is trillions.

dragonwriter 11y ago
Why would you evaluate policy outcomes by what they would be in different conditions than the ones that they actually exist in? Certainly, the current cost of borrowing ought to be a factor in making fiscal policy decisions. I mean, would any business make decisions about financing based on what the costs would be in of those decisions in past decades rather than what the costs are reasonably expected to be in the conditions that actually exist?

cylinder 11y ago

Why compare that actual cost to GDP? Compare it to federal tax revenue. It's about 8% of federal tax revenue. There is not a lot of room for the federal government to increase revenue as total taxes (incl state and local, sales, payroll, property, etc) are not low by any means in the US

dragonwriter 11y ago
> Why compare that actual cost to GDP? Compare it to federal tax revenue. Because we are talking about determinants of the health of the economy, not determinants of the health of government finance. > There is not a lot of room for the federal government to increase revenue as total taxes (incl state and local, sales, payroll, property, etc) are not low by any means in the US That's not particularly true; the US is pretty close to the bottom of total tax revenue to GDP ratio among OECD countries; there is plenty of room to increase tax revenue. http://www.oecd.org/ctp/tax-policy/revenue-statistics-ratio-change-latest-years.htm http://www.oecd.org/ctp/tax-policy/revenue-statistics-ratio-...