11 ms·

Like the housing bubble, our debt hasn't been a problem and it's not going to be a problem right up until it is a problem. It will be a black swan event and af

• throwaway66920 7y ago
  This is a strange opinion to me because there’s many, many people see it coming so it wouldn’t be especially incorrect for people to say this
• MuffinFlavored 7y ago
  In the mean time, are us Americans ever going to get a president that focuses on paying down the debt? How much would taxes have to go up (because spending can't go down, right?) for citizens to contribute their fair share of paying down the debt?
  • deleted 7y ago
    [deleted]
  • maxerickson 7y ago
    There were budget surpluses from 1998 through 2001. One thing you aren't accounting for is tax receipts going up because the economy grows. It's usually the case that spending goes up at the same time, but it doesn't have to go up.
    • MuffinFlavored 7y ago
      > It's usually the case that spending goes up at the same time, but it doesn't have to go up. I just know I read a lot of headlines about how government programs are underfunded. I feel like the base of a lot of Democratic candidate campaigns is about wanting to spend more money for people who need it (impoverished people, etc.)
      • kevin_thibedeau 7y ago
        As opposed to the Republican platform of spending more money while cutting tax revenue?
        • MuffinFlavored 7y ago
          What do Republicans advertise they are going to spend money on? I'm only familiar with Democrats calling for free health care, free college, universal basic income, etc.
          • mgkimsal 7y ago
            free military
          • bgilroy26 7y ago
            Border security, policing, military spending https://www.ft.com/content/9ce05a54-c424-11e9-a8e9-296ca66511c9 https://www.ft.com/content/9ce05a54-c424-11e9-a8e9-296ca6651...
          • smolder 7y ago
            War and enriching military contractors, creating the TSA, subsidies to businesses that don't need them, etc. https://i.ytimg.com/vi/FiW5I95R5xg/hqdefault.jpg https://i.ytimg.com/vi/FiW5I95R5xg/hqdefault.jpg
            • alfromspace 7y ago
              Say what you want about him, but Trump did run an anti-war and anti-military spending campaign. The budgets he's approved are a huge betrayal to his base. There's spending on border security and the wall that's not really happening, but that's chump change compared to entitlements and broader military spending. So it seems like we have the choice of voting for left-wing politicians who run on increasing spending on new forms of entitlements, and spending will increase precipitously - or voting for right-wing politicians who run on not spending like the neocons do, then just do it anyway, and spending will increase precipitously.
    • spectrum1234 7y ago
      But growing entitlement spending then was not an issue.
    • zosterops 7y ago
      > here were budget surpluses from 1998 through 2001. ... by borrowing from the social security trust fund.
  • lbotos 7y ago
    https://econproph.com/2011/07/14/private-debt-vs-government-debt/ https://econproph.com/2011/07/14/private-debt-vs-government-... Government debt is different than private debt.
  • decoyworker 7y ago
    Bill Clinton accomplished that but at some cost. My father still laments the cancellation of the superconducting supercollider that he had the pleasure to work on.
    • wcunning 7y ago
      Clinton ran a current account surplus, but overall debt grew because Medicare and Social Security were still losing money at the time. Not to mention that it wasn't all Clinton, some of it was the opposition Congress.
      • MuffinFlavored 7y ago
        This is a dumb unrelated question on my end but are the returns of Social Security very bad? If you put 6.2% (12.4% total with employer contribution) of your income away into index funds that grew at 7% per year, at $100k/yr gross salary ($12.4k/yr) from ages 25 - 65 (40 years), you would end up with $2.6m (in today's dollars). $2.6m converted into dividend funds with a 3% yield would be $6.6k/mo. I don't know anybody getting $6.6k/mo from Social Security...
        • pedasmith 7y ago
          Essentially, all your numbers are subtly wrong and all of their wrongness is making the final number look much larger. You have to adjust for inflation, including 'weird' inflation. You have to account to suddenly becoming disabled after 20 years. Including the employer contribution is arguably misleading. Social security is security: no matter how I get screwed, I'm only poor when I'm old, not poverty stricken and dead.
          • MuffinFlavored 7y ago
            I think you might be right. Could you please rerun them with inflation accounted for just to make sure I didn't miss anything?
        • Cd00d 7y ago
  • pjc50 7y ago
    But why would you do that? That forgoes growth and investment now in exchange for .. what exactly?
    • AnimalMuppet 7y ago
      Future freedom of action. Being in debt can constrain your future options. If nothing else, it can reduce peoples' willingness to lend to you later when you need them to.
      • addicted 7y ago
        People sitting around doing nothing constrains your actions. In a country which prints dollars, and borrows dollars, future debt cannot constrain action. The fear here is whether people will stop lending you dollars, but as we can see in the US we are nowhere close to that situation. (Europe/Germany, which is pathologically committed to not having debts has it even worse/better...people are paying them to take their money).
  • commandlinefan 7y ago
    I’m super libertarian and even I would like to see somebody raise taxes and cut spending to cut the deficit… although it would be a battle to get them to lower taxes again once the debt was paid off.
    • Pigo 7y ago
      Working for certain branches of the government has made me extremely cynical towards taxes. Just like most non-profit's main goal should be to put themselves out of business, many government programs should have methods of scaling back when objectives are met. I've seen buildings full of people that accomplish nothing but asking for more money.
    • thebooktocome 7y ago
      In recent memory, there's been no trouble getting the American government to lower taxes. Of course, they've borrowed heavily to accomplish this...
  • Pigo 7y ago
    Since most candidates are running on a platform of promising more free things, it doesn't seem likely.
    • inscionent 7y ago
      Forget the candidates, what about our current president. He seems plenty happy spending away. Billions in Agriculture subsides to prop up his trade war, just as a start.
      • MuffinFlavored 7y ago
        > He seems plenty happy spending away I have more faith in modern politics that one man can veto an entire cabinet of elected officials on what to spend. Whether or not one man can influence them or ask them to keep spending, I have no doubts. But... how many elected lifetime professional politicians sign off on budgets + spending? I am going to guess it is more than "one man".
      • zosterops 7y ago
        While I don't think that subsidies and trade wars are good things. The tariffs collected a lot more than was spent on those agriculture subsidies.
        • DFHippie 7y ago
          You are aware that the money collected by the tariffs was extracted from American pockets, right, not Chinese? So you are describing a tax and transfer program: Americans who buy Chinese goods are taxed to compensate Americans who are losing income due to the trade war with China.
          • zosterops 7y ago
            In the case when prices are increased to cover the tariffs, yes. However, right now the Chinese manufacturers are eating the costs.
      • 7y ago
  • hylaride 7y ago
    In theory, the debt could also be "monetized", meaning converting it to cash via the fed. That should also lead to inflation, but that may be politically easier than raising taxes.
  • JackFr 7y ago
    > for citizens to contribute their fair share of paying down the debt What does "fair share" mean?
  • seanmcdirmid 7y ago
    Spending is bound to go up because of population growth and inflation. It would be more appropriate to look at spending and taxation as a portion of GDP (which also goes up with population and inflation). Spending: https://tradingeconomics.com/united-states/government-spending-to-gdp https://tradingeconomics.com/united-states/government-spendi... It has been going down since the Great Recession (44% in 2009 vs. 38% in 2016). Taxation: https://fred.stlouisfed.org/series/FYFRGDA188S https://fred.stlouisfed.org/series/FYFRGDA188S Taxation was going up a bit relative to GDP towards the end of Obama’s term (which is why the deficit was shrinking), but taxation is now going down (hence the deficit is rising again under Trump).
  • nikofeyn 7y ago
    > How much would taxes have to go up (because spending can't go down, right?) for citizens to contribute their fair share of paying down the debt? this seems like a weird statement. what is "fair share"? i am a middle class person with a job with fantastic benefits, yet i easily pay over 30% in taxes (probably closer to 40% if one really counts all the "hidden" taxes) and still have to put up with shit infrastructure, terrible public transportation, expensive non-public transportation, expensive insurance, etc. at what point is it considered that i and others are paying our "fair share"?
    • GcVmvNhBsU 7y ago
      A fair share (to me) includes progressive tax rates on estates, capital gains, and wealth. Thomas Piketty’s Capital in the Twenty-First Century is a good resource. https://www.hup.harvard.edu/catalog.php?isbn=9780674430006 https://www.hup.harvard.edu/catalog.php?isbn=9780674430006
      • onlyrealcuzzo 7y ago
        Also progressive corporate taxes might be enough to stop monopolies.
  • ur-whale 7y ago
    > because spending can't go down, right? Why not? Or was that tongue-in-cheek?
  • logfromblammo 7y ago
    Banish "fair share" from your vocabulary when speaking of taxation. That is a guaranteed way to derail a productive conversation, by shifting it into arguing about what is fair, rather than what would solve the problem. If we are intent on fairness, the generations that incurred the debts should be the ones forced to pay them off. So for the sake of argument, let's divide the populace by birth year, and institute a tax called the Debt Retirement Tax (DRT). I took the historic debt from 1791, and divided it into 40 buckets. For each subsequent year, I charged each bucket 2% over inflation, dumped each bucket into the bucket to its left (except the leftmost), and divided the increase in debt, after interest, evenly across all 40 buckets. In years when the debt shrank, the reduction was divided evenly across all buckets with a debt balance. This was to simulate the relative contributions to paying off and incurring more debt for working persons for each age 25-64, and all people 65 years or older. I presumed that age brackets younger than 24 have too little political power to significantly affect national debt. Scrolling down to 2018, the age 65+ bucket is now responsible for over 59% of the extant debt. Looking at the numbers over the years, and the clusters of zeroes in particular, whenever the debt is reduced, it is always the younger workers paying off the older people's debts. The eldest have never paid off their share of debt. At the 1835 minimum, the algorithm I used puts 100% of the responsibility for that last bit of debt on the age 65+ bucket. But instead of paying it off, they used their political power to charge up more debt, based on the willingness of the younger folks to work harder pay it off. For the DRT, you could pay an income tax based on how much debt is in your age cohort's bucket, and if your year's bucket gets emptied, then you don't pay DRT the next year unless the debt goes up, and the interest charged on the other buckets doesn't cover your cohort's 1/40th share of it. The DRT can also include an inheritance tax component, so if you die with more debt in your age bucket, the state takes more out of your estate. What is happening now is like identity theft. Elders are running up credit debt for their own benefit when their grandchildren's names are the ones on the accounts. What could possibly be "fair", when that situation is never addressed?
    • noobermin 7y ago
      What you're proposing goes against normal sensible morality, but the context is true.
  • davinic 7y ago
    The answer can be zero. We also own the printing presses. This could act as a general tax on the economy without a tax rate hike.
• jnordwick 7y ago
  Why would it possibly be a "black swan" event? All the numbers are public and we see it coming from miles away. Black swan event refer to something that isn't easily predicable because of their rarity. The government makes debt payments and calculations constanty. It's not like people just want up one morning and everything changes. That's not how markets work. The people who pay these "everything will turn in a dine when people really understand" narratives are usually people who the markets are telling them they are wrong and cannot accept it.
• aswanson 7y ago
  What are your thoughts on Modern Monetary Theory, that the debt will never be a problem because the US is a currency issuer?
• blunte 7y ago
  As with the climate, the old people in US power don't care about stuff that extends beyond their own lifetimes. The current policies and regulations (or lack of) are evidence of that.
• fc_barnes 7y ago
  So you basically didn't read the article, or it passed right over your head if you did...
  • crusso 7y ago
    Could you rephrase that in a way that isn't so insulting that it makes me just want to ignore you?
• m10i 7y ago
  I don't trade at all, but I am curious if there are any prominent indices/securities whose values are tied to the U.S. debt/GDP/etc. ?