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I'm just curious where people think the money should come from? It's not like poor and lower income people save a lot of money so if we cut programs or raise t

I'm just curious where people think the money should come from? It's not like poor and lower income people save a lot of money so if we cut programs or raise taxes on them it will come straight out of the GDP making the cuts pointless. I would also think anything that "forced" them to "get a job" would push them into low paying service jobs which would increase labor supply without increasing demand much only lowering prices again causing GDP to go down. not sure if I'm thinking about this correctly?

jfengel 4y ago
Thus far, people seem generally content to loan it to the US government. At this moment they're charging a fair bit because of inflation, but as recently as last year they were charging practically nothing. Even today, long term rates are around 4%. Last year they were closer to 2%. That means they think that the US will continue to pay the interest on its loans. And they'll be getting that money from taxes. They're not anticipating a rise in tax rates. They're expecting the US GDP to grow, and much of GDP is taxable. Last year, GDP grew around 9%. In the long term, GDP growth, US government bonds, and inflation are all right around 2%. Those facts are related. It is, in effect, like any business loan. They borrow money to expand its development, and increase revenue faster than the interest rate on the loan. When the loan expires, they get a new one. Unlike a person, a company or country never retires, and they can revolve that debt indefinitely. This "growth forever" theory is starting to come under fire from economists, but we don't seem to be running out just yet. It's a Malthusian prediction: it has to run out one of these days, but predicting when turns out to be fraught.