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Government to borrow nearly $1 trillion this year 84 percent jump from last year
- cryptoz 9y agoThis is exclusively the failure of right-wing politics and corporation-first, profit-first thinking. The US could operate its full budget without a deficit if it just taxed corporations at a reasonable rate and didn't accept bribes/strong lobbyist behaviour to change laws and create loopholes. Yes, the Trump administration is at fault for the recent jump - but they are merely adding to a problem going back decades. Apple should pay a lot more tax to the US than it does. So should Google, so should Exxon, etc. So should all the rich people in the USA. Time and time again, right-wing people will argue that the corporations and the billionaires will flee the USA if we keep their taxes the same, or increase them some. But that's just not true. In fact, the corporations will flock to the USA and so will the billionaires if you raise taxes on them. How do I know this? Because it's the only logical thing. Corporations like stability because it makes their profits predictable and lets them control the mood in the room (innovation, regulation, etc). Low taxes for the rich mean chaos - an extremely large, underpaid, underfed, underrepresented bottom class will not be good for the rich in the long run. High taxes for the rich mean a well-sustained middle class, with money to spend on products made by the corporations. It is also a safer place, with less homelessness, less violence, less hatred. Raise the taxes on the rich. Stop the false narratives perpetrated by the hate-driven, xenophobic, spiteful right-wing media. Raise taxes on the rich and our society will be so much better for it - especially the rich. What I really don't understand is why these (my) opinions are considered left-wing. Shouldn't basic fiscal conservatism be a right-wing/conservative idea? It should be but it isn't! Right-wing, conservative politics has always been nonsense - constantly ignoring science and logic in order to make policies based around short-term greed. I'm about as "left-wing" as they come, but all of my opinions match with what I would have expected right-wing policies to be about. But as it turns out, saving money, working to have a strong economy with a middle class that spends money, letting states make decisions themselves, etc, are all not right-wing policies at all! They are left-wing policies in the real world. So where is conservatism? The thing the world needs most is a real conservative party in the US and Canada, one that does not hate immigrants, one that loves to clean up the environment (because it's going to save money to do that now instead of later), one that respects states rights. Then the US elections could mean something again. But until then, it's not left vs right, it's just logic vs. stupid.
- jlj 9y agoSome of the reasons I avoided voting major party the last 3 presidential election cycles. There are other options.
- jjoonathan 9y agoGame theory is like gravity and the law: it still applies even if you ignore it.
- arca_vorago 9y agoAmerica is a veritable history of black Swan events, which game theory as tight currently tends to not account for...
- knieveltech 9y agoTell that to the Whigs.
- jlj 9y agoIgnore what? Consciously choosing a non zero-sum option? That there is a spectrum of ideas, that everything is not black and white? Ignoring that choosing the major parties gets you to the same end result? Aside from snark what is the substance of your comment?
- jjoonathan 9y agoI'm talking about vote splitting and you know it. If you want to effect change, aim to nudge the platform building process. Lobbying, media attention, campaign involvement, there are many ways to have an effect that's perpendicular to the axis between R and D. Voting third party is dead last among them in that you can expect it to have predictable negative efficacy.
- pktgen 9y agoRegarding the federal budget and debt, I suggest you read into modern monetary theory (MMT). > How do I know this? Because it's the only logical thing. Corporations like stability because it makes their profits predictable and lets them control the mood in the room (innovation, regulation, etc). Low taxes for the rich mean chaos - an extremely large, underpaid, underfed, underrepresented bottom class will not be good for the rich in the long run. High taxes for the rich mean a well-sustained middle class, with money to spend on products made by the corporations. It is also a safer place, with less homelessness, less violence, less hatred. Agreed. The US has enough economic leverage to ignore the silly threats of "we're going to move our business out of the US if you do [something]" or "the rich will move away if you do [something]." Fine, go ahead and stop operating in one of the largest developed markets in the world. Sounds like a very wise business move (not).
- seba_dos1 9y agoUS government, in case you're like me and start with reading the comments before checking out the article.
- GunlogAlm 9y agoThanks. My first question was "Government? Which government?"
- lifeformed 9y agoAt this point I just assume any news article is based on the US by default, unless stated otherwise.
- ghostly_s 9y agoBoth the city of Chicago and state of Illinois have their own well-publicized debt problems, so I certainly assumed it was regarding one of those considering the source.
- thisacctforreal 9y agoIt does say chicagotribune.com.
- jimrandomh 9y agoThe word "borrow" is not entirely accurate. Exactly what happens when the US federal government has a deficit is complicated, but it's closer to issuing new money than it is to taking out a loan.
- devereaux 9y agocoinmarketcap says: Market Cap: $398,126,739,977 so about 0.4 trillions for all crypto - everything and the kitchensync included. This article says that this year alone, the government is borrowing 1 trillion. I wonder if people who say crypto is a bubble are factoring in seignorage, especially in this order of magnitude.
- tehlike 9y ago:) how much of that money is used for transacting/buying/selling goods - that is why it is a bubble.
- Theodores 9y agoSo if there are 50 million people with anything from $10 to 0.4 trillion in crypto, I reckon that it is on average at the lower end of that scale, the ponzi schemes, freely printed 'Tethers' and 'valuation' boosting that figure up into some absurd number. Plus you always have the guy who mined his first bitcoins on a 386DX 66MHz machine with a maths co-processor and Hercules graphics card, however, he saved his bitcoins onto a 3" Sony drive that is not compatible with modern day 3 1/2" drives. The main market has had a bit of a tough time, the crypto side show is nothing. However it is a bubble. The bigger bubble in the economy is because of the quantitative easing that has gone on since 2008, this money has caused bubbles of its own, e.g. the crypto lark is a by-product of sorts. Where else do you put your money when banks are no more useful than hiding hard currency under the mattress? Meanwhile a large part of the world does not have access to printing presses and cannot just print money, as per the USA. These places have to buy dollars before they can buy oil. Yet these other places seem to balance their books. For instance, the Russians, despite the childish sanctions from America are managing to balance the books and not live in deficit. As for China, no deficit problem there despite the boom in development. The elephant in the room is the military spending and adventures. It would be cheaper for the USA to trade with the world on fair terms rather than have to borrow lots of money to have bases and battleships everywhere.
- rokhayakebe 9y agoGeniune question: Instead of printing new money, would it be a good idea for the government to launch a cryptocurrency and raise the money that way? This would be a gov backed coin. Thoughts.
- knieveltech 9y agoBeyond providing employment for a few folks involved in implementation and systems maintenance, in what way does launching a government-backed cryptocurrency benefit over the existing state-backed currency?
- ohiovr 9y agoProbably not because it puts into question the value of the existing monitary base.
- Zigurd 9y agoA digital cross of gold? No thanks.
- devereaux 9y agoFun thought: they could lock it in value 1 to 1 to the USD, while not making it convertible. They could even call it "tether". It would be almost indistinguishable from the recent situation - except tether is a private company, and the govt does not like competition.
- ohiovr 9y agoIntentionally slashing revenue for political gain has consequences.
- hkmurakami 9y agoMore relevant would probably be the net increase in the cost to service the debt?
- Gustomaximus 9y agoA good measure is Debt to GDP to allow for economic growth etc. https://tradingeconomics.com/united-states/government-debt-to-gdp https://tradingeconomics.com/united-states/government-debt-t... A common rule of thumb is 120% means debt is in serious trouble. Here is a comparison of the G20: https://tradingeconomics.com/country-list/government-debt-to-gdp?continent=g20 https://tradingeconomics.com/country-list/government-debt-to...
- dandare 9y agoFunny thing I learned recently - the US federal budget deficit has little to do with how much the government borrows: federal institutions can borrow money on their own, that is why for instance the US government debt can grow faster this year even if the deficit is lower than the previous year.
- Zigurd 9y agoI thought we would get stagflation after 2008. Then I thought Janet Yellen was going to actually unwind qe without inflation or high interest rates. And now a goofball pseudo president could screw it all up.
- ramzyo 9y agoPrevious discussion: https://news.ycombinator.com/item?id=16300892 https://news.ycombinator.com/item?id=16300892
- jhiska 9y agoSo much for the lie that Trump would "end big gov". More like end having a sustainable budget.
- adventured 9y agoThe US hasn't had a sustainable budget since 2002. The Obama years added ~$10 trillion in debt in eight years. How was that sustainable exactly? For the last decade, the CBO has been forecasting blown out budget deficits starting about now, because of entitlement costs. There's no scenario where the budget deficit doesn't explode, unless you cut entitlements, dramatically raise taxes, or both. Have a look: https://www.cbo.gov/sites/default/files/cbofiles/images/pubs-images/51xxx/51384-Figure1-LandingPage.png https://www.cbo.gov/sites/default/files/cbofiles/images/pubs...
- melling 9y agoIt looks like most of that was during the Great Recession. Does anyone have any details? We spent $1 trillion in Iraq and another trillion in Afghanistan, but that should have shown up earlier?
- valuearb 9y agoOur deficit was $1.4 trillion Obama’s last year in office. https://www.thebalance.com/us-deficit-by-year-3306306 https://www.thebalance.com/us-deficit-by-year-3306306 Both parties are spending our children’s future.
- fencepost 9y agoI'm assuming you meant first year in office, also the last Bush budget (as fiscal 2017 was the last Obama budget and the coming one will be the first Trump budget). As for 2016, I am confused by the numbers on that table - the addition to the debt seems to have several hundred billion in unexplained increase that doesn't appear to be referenced anywhere that I saw.
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- bedhead 9y agoWe live beyond our means, have unsustainable quality of life. Gonna catch up one day.
- adventured 9y agoFortunately we don't have an unsustainable quality of life. It's pretty simple mathematically. Not so simple politically. You slash $250 billion off the US military. You slash $100 billion in local+state+federal spending off of all the activities related to the war on drugs. You very lightly cut entitlements. You raise taxes on the top 10% by quite a bit. You raise taxes on the next quarter by a modest amount. Your budget is now close to break-even. You haven't impacted the standard of living of ~95% of Americans at all. Quite the opposite, you just dramatically boosted the long-term prospects of the quality of life for the average American. Hundreds of billions in wasted revenue can now flow into highly productive use over time, whether healthcare or transportation/infrastructure (or just not running up debt interest by exceeding the budget). Just by not running up that debt interest, you'll save trillions of dollars over time. If you really wanted to dramatically boost the US standard of living, you'd squeeze the healthcare cost monster to death. The monetary benefit of that system overwhelmingly flows to the top quarter of Americans, who are already doing extraordinarily well. We have a ton of room to work with in that area, that could improve our situation by hundreds of billions of dollars per year. It's not even necessary to get creative, all we have to do is begin copying any number of several highly function systems from around the world. Cutting the military etc. will harm the economy you might say? Except that's obviously wrong. It'll further unleash the economy, releasing that money to far superior productive, compounding use. Most US military spending is for soldiers, who are contributing very little to the US economy as is versus their peers, their labor is low productivity and low innovation. They make nothing, they're nearly strictly consumption engines. No other prosperous developed economies have the need to spend on such things at such a high rate, neither does the US. It merely requires that the US accept that it's not the world police and doesn't need to be.
- d--b 9y agoDefinitely agree with all that. Yet this is all quite unpopular. I can't help thinking that all economic woes are self inflicted because of bad culture.
- geggam 9y agoThe question I have is if the govt is truly printing our currency who is the govt borrowing money from. If the govt was truly making more money then it would simply balance the books by making enough money. When you start talking about the Federal reserve as a non govt entity people call you crazy. Yet I have not heard why the govt borrows money from the govt.
- wavefunction 9y agoThe GOP offers tax cuts to the wealthy, inducing a higher debt-load for the US. The wealthy turn around and buy US government bonds. The rest of us pay the wealthy bond interest and pay taxes against the debt accrued by offering tax cuts to the wealthy so they could buy US bonds.
- t3soro 9y agoThe government borrows by selling treasury bonds, then the Fed buys them and keeps them on their books, and the Treasury gets US currency in exchange. The Fed can also buy other assets besides T-bills and use them to back new issuance of US currency notes. You can read the federal reserve act at Frb.gov
- jganetsk 9y agoYou are absolutely right, and you have discovered Modern Money Theory. https://www.youtube.com/watch?v=tEiNLmg2tYA https://www.youtube.com/watch?v=tEiNLmg2tYA
- tbronchain 9y agoIt still amazes me how governments manage to keep borrowing money while being in constant growing deficit. Is there such thing as a real trust in the future possibility of paying the debt back? Or is it a hope of taking as much money as possible while there are inflation opportunities? - then generating more and more inflation. The first option is interesting, the second one quite scary and I can't help thinking Ponzi. Anyone with a better understanding of economics could help seeing a little bit better through this?
- MarkMc 9y agoThe US government has a long history of repaying it's debts. I'd say that can continue indefinitely, so long as the debt-to-GDP ratio remains manageable.
- im3w1l 9y agoUSG have a long history of servicing it's debts by taking on more debt. Not that there is anything unusual with that pattern.
- Feniks 9y agoThe US never pays back, they re finance the debts. Ad infinitum. I mean does anyone think that at this point the US could STOP the deficit? Let alone turn it into a surplus and start buying back debt? US is too big to fail and rich people have to put their money somewhere. At least with US Treasury bonds you get a small but reliable return. So the train keeps going.
- fencepost 9y agoIt happened under Clinton, admittedly with the advantage of a roaring economy. I won't rule out completely out, though from today's viewpoint it certainly doesn't look promising.
- Feniks 9y agoWell my country DOES try to balance the budget because otherwise the interest rates on the bonds we put out has to increase. But the US is special, it is virtually exempt from the normal laws of economics due to its superpower status.
- jaequery 9y agoWhat will come first guys, the San Andreas fault letting go or the American stock market bubble? Both been steadily developing for quite some time now.
- Gustomaximus 9y agoI've can't understand why this isn't more of a concern; - The rate of increase is taking this debt rapidly to somewhere unsustainable. - With the fractured politics this becomes so much more dangerous/likely to be an issue. - Interest rates are pushing up adding to the servicing costs, currently about 500 billion/yr and probably likely to become the single largest payment line on the federal budget. - Pension funds are going to be increasingly liquidating treasuries as boomers retire and they hit their own funding issues. - Countries like China are selling off holdings. - The debt is going to be an increasing drag on the economy to grow or safely inflate out of it. - I cant see the political parties reducing military or social security costs of any significance to reduce the growing pressure. The only positives seem; - The amazing strength and scope of the US economy. - Trump once proposed a one-time wealth levy/tax to pay this down, so if this happened it would be a game changer. So I do believe the US is capable of sorting this out if the political will/intelligence was there. But I dont see this mood and feel people like to kick the can down the road these days. Time will tell.
- indubitable 9y agoI think it's a perspective problem. Since this issue is more complex, I'll use a simpler one - nuclear weapons. There has not been major unrestrained warfare directly between modern nations in what's approaching a century. Very few people alive today have lived through this sort of warfare. So it becomes a unicorn. Yet we still have things like nuclear weapons. And people see these as a relic of times past. Why would you want these sort of weapons when this sort of warfare no longer exists? And so naturally we have an increasing push to try to get rid of nuclear weapons, a stark reminder of a 'less enlightened times.' Of course the reality is that this era of peace we've created has largely been enabled by nuclear weapons. Mutually assured destruction is indeed MAD but it has been the one thing, in the entire history of our species, that has managed to prevent this sort of conflict. Without nuclear weapons nations like the US, China, and Russia would certainly have long since came to 'hot war' in the process of determining who's ideology will be the world ideology. And that certainly would have drawn in the rest of the world, one way or the other: to wit, World War 3. And so too today in economics, most people have lived during an era when the US has been more than capable of 'printing' (not how many is made - another complex topic) vast sums of money while suffering no real economic consequence, as well as being involved a system where we are only able to pay off old debts by taking on new debts - with no expectation of this ever really changing. If a private organization was behaving as we do, it would be considered a Ponzi Scheme. The reasons for this economic immunity are complex -- the fact our currency is indirectly backed by oil is a major player. But the point is is that people don't see any nuance here. We've always been able to behave this way (from the perspective of most people), so why would anything suddenly change? Probably a similar scenario to what happens at the end of any other meaningfully long era.
- mythrwy 9y agohttp://www.businessinsider.com/the-costs-of-us-wars-have-lingered-for-more-than-100-years-2013-3 http://www.businessinsider.com/the-costs-of-us-wars-have-lin... The US is (or was as of 2013) still making payments to children of Civil War veterans. Granted it's only 2 of them and less than a grand a year apiece but still.