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I think this has less to do with the constant debt ceiling hostage negotiations, since that has been going on for decades. I think this has more to do with the

I think this has less to do with the constant debt ceiling hostage negotiations, since that has been going on for decades. I think this has more to do with the US spending itself into debt in an unsustainable way. Up to $32T now. The interest carrying cost of that debt is soon going to surpass the entire defence budget. With no end in sight. It doesn't take an expert to see that's not fiscally responsible. While nobody seriously thinks the US will default anytime in the near future, they're obviously going to have to keep rates low and have the Fed buy bonds with "printed" money, inflating their way out of it. There's no free lunch. Future economic prospects for the US have never been so grim in living memory, and that's not some doomsday fear-mongering, that's just basic economic theory and math. It's well known that high debt levels weigh on future economic growth. At the end of the day it has to be paid, either by raising prices of everything (inflation) or raising taxes. Both are incredibly destructive to the economy. https://realinvestmentadvice.com/deficits-debt-and-why-32-trillion-matters/ https://realinvestmentadvice.com/deficits-debt-and-why-32-tr...

gmerc 3y ago
It’s not solvable. Because even if you make great progress; someone like a criminal president comes along and spends it all on favors. True story.
- Perceval 3y ago
  The President does not have power of the purse. The House proposes a budget. The President can't spend beyond what Congress approves, and can't really decline to spend anything that Congress has approved (i.e. "impoundment").
  - gmerc 3y ago
    That’s where theory and practice diverge Right right because the Republican party ever even once denied Trump what he wanted before 6/01
- koolba 3y ago
  > Because even if you make great progress; someone like a criminal president comes along and spends it all on favors. That’s always a possibility, but as we’ve seen with the recent attempt to spend $500B to pay off student loans, the SCOTUS does a decent job of stopping the truly egregious.
SideburnsOfDoom 3y ago
> I think this has more to do with the US spending itself into debt in an unsustainable way. Government debt and household debt don't work the same way. This a common fallacy that serves political ends, but they are not directly comparable.
- slashdev 3y ago
  > Government debt and household debt don't work the same way In what way? Enlighten us. Are you a MMT proponent? That's a bullshit theory that's fallen on its face pretty spectacularly since 2021. The debt has to be paid, either with inflation or taxes or both. Household debt also has to be paid with income (households don't have the moeny printing option, but that's not a get-out-of-jail free card either.) The US has been spending $1 to get $0.20 of GDP growth. That's not only unsustainable by any measure, it's also just lighting money on fire. The most egregious venture-backed sell-a-dollar-for-50-cents startups don't have a track record that bad. > This a common fallacy that serves political ends I don't care for what you're implying. Careful not to assume too much about me, you'll be wrong.
  - harimau777 3y ago
    I'm not sure we're far enough out to really say for sure if MMT has been disproven by the events since 2021. The global pandemic, supply chain issues, and the war in Ukraine all muddy the water. The previous administration also squandered a lot of debt on tax breaks for the ultra wealthy. Even with all that, it's looking like we may actually manage to pull off a relatively soft landing. With all of that, I think it will be some time before we can accurately analyze what these events mean for economic policy.
    - koolba 3y ago
      > The previous administration also squandered a lot of debt on tax breaks for the ultra wealthy. That's a nice sound bite but it's not true as the majority of the tax breaks went to the middle class: https://thehill.com/opinion/finance/584190-irs-data-prove-trump-tax-cuts-benefited-middle-working-class-americans-most/ https://thehill.com/opinion/finance/584190-irs-data-prove-tr... https://www.washingtonpost.com/politics/2018/11/14/does-trump-tax-cut-give-percent-benefits-top-one-percent/ https://www.washingtonpost.com/politics/2018/11/14/does-trum... https://www.cnn.com/2019/02/26/politics/fact-check-sanders-town-hall-tax-cuts/index.html https://www.cnn.com/2019/02/26/politics/fact-check-sanders-t... Even if the majority of the tax cuts went to the wealthy, there's nothing inherently wrong with the people who are paying the most taxes getting the most out of a tax cut. The other end of the income spectrum makes that immediately apparent. Would you expect every tax cut to directly pay money who don't pay any taxes at all? Can we never lower taxes on people making more than some arbitrary income? Or do you mean that after some arbitrary income amount, it's never okay to ever get a tax cut?
havetocharge 3y ago
> Future economic prospects for the US have never been so grim in living memory Everything is cyclical, and no one truly expected the US to rise indefinitely. Perhaps we're past the peak now.
- lotsofpulp 3y ago
  I do not see the need for the US to rise indefinitely. It just needs to stay the best option.
  - havetocharge 3y ago
    The best option.. for what? To live in? To invest in? To look at? Besides, isn't it incredibly personal? What's the best option for someone, might be a poor option for someone else.
    - lotsofpulp 3y ago
      The best option to invest in and do business in. If you want to make a deal, and are interested in consistent rule of law, and enforceability of the contracts and juridical outcomes, then you have an interest in doing it in the US. This is in the context of the USD maintaining its relative value.

gmerc 3y ago

It’s not solvable. Because even if you make great progress; someone like a criminal president comes along and spends it all on favors. True story.

Perceval 3y ago
The President does not have power of the purse. The House proposes a budget. The President can't spend beyond what Congress approves, and can't really decline to spend anything that Congress has approved (i.e. "impoundment").
- gmerc 3y ago
  That’s where theory and practice diverge Right right because the Republican party ever even once denied Trump what he wanted before 6/01
koolba 3y ago
> Because even if you make great progress; someone like a criminal president comes along and spends it all on favors. That’s always a possibility, but as we’ve seen with the recent attempt to spend $500B to pay off student loans, the SCOTUS does a decent job of stopping the truly egregious.

SideburnsOfDoom 3y ago

> I think this has more to do with the US spending itself into debt in an unsustainable way. Government debt and household debt don't work the same way. This a common fallacy that serves political ends, but they are not directly comparable.

slashdev 3y ago
> Government debt and household debt don't work the same way In what way? Enlighten us. Are you a MMT proponent? That's a bullshit theory that's fallen on its face pretty spectacularly since 2021. The debt has to be paid, either with inflation or taxes or both. Household debt also has to be paid with income (households don't have the moeny printing option, but that's not a get-out-of-jail free card either.) The US has been spending $1 to get $0.20 of GDP growth. That's not only unsustainable by any measure, it's also just lighting money on fire. The most egregious venture-backed sell-a-dollar-for-50-cents startups don't have a track record that bad. > This a common fallacy that serves political ends I don't care for what you're implying. Careful not to assume too much about me, you'll be wrong.
- harimau777 3y ago
  I'm not sure we're far enough out to really say for sure if MMT has been disproven by the events since 2021. The global pandemic, supply chain issues, and the war in Ukraine all muddy the water. The previous administration also squandered a lot of debt on tax breaks for the ultra wealthy. Even with all that, it's looking like we may actually manage to pull off a relatively soft landing. With all of that, I think it will be some time before we can accurately analyze what these events mean for economic policy.
  - koolba 3y ago
    > The previous administration also squandered a lot of debt on tax breaks for the ultra wealthy. That's a nice sound bite but it's not true as the majority of the tax breaks went to the middle class: https://thehill.com/opinion/finance/584190-irs-data-prove-trump-tax-cuts-benefited-middle-working-class-americans-most/ https://thehill.com/opinion/finance/584190-irs-data-prove-tr... https://www.washingtonpost.com/politics/2018/11/14/does-trump-tax-cut-give-percent-benefits-top-one-percent/ https://www.washingtonpost.com/politics/2018/11/14/does-trum... https://www.cnn.com/2019/02/26/politics/fact-check-sanders-town-hall-tax-cuts/index.html https://www.cnn.com/2019/02/26/politics/fact-check-sanders-t... Even if the majority of the tax cuts went to the wealthy, there's nothing inherently wrong with the people who are paying the most taxes getting the most out of a tax cut. The other end of the income spectrum makes that immediately apparent. Would you expect every tax cut to directly pay money who don't pay any taxes at all? Can we never lower taxes on people making more than some arbitrary income? Or do you mean that after some arbitrary income amount, it's never okay to ever get a tax cut?

havetocharge 3y ago

> Future economic prospects for the US have never been so grim in living memory Everything is cyclical, and no one truly expected the US to rise indefinitely. Perhaps we're past the peak now.

lotsofpulp 3y ago
I do not see the need for the US to rise indefinitely. It just needs to stay the best option.
- havetocharge 3y ago
  The best option.. for what? To live in? To invest in? To look at? Besides, isn't it incredibly personal? What's the best option for someone, might be a poor option for someone else.
  - lotsofpulp 3y ago
    The best option to invest in and do business in. If you want to make a deal, and are interested in consistent rule of law, and enforceability of the contracts and juridical outcomes, then you have an interest in doing it in the US. This is in the context of the USD maintaining its relative value.