The National Debt Is Coming Due, Just Like We Told You


#21

You say that they did nothing yet they always passed far more reasonable budgets (with or without the White House) when they controlled the House of Representatives, this includes the 6 years under Obama where Obama simply refused to compromise and NO BUDGET WAS EVER PASSED.

That does not sound anything at all like “nothing”, that sounds like trying to prop up ridiculous economic ideas and claims by attempting to discredit all others by equating them with the most irresponsible economic ideas ever implemented in U.S. History.


#22

There are two solutions for the nation debt.

#! Get spending under control.

#2 Grow the economy.

Trump has done what he could get #2 going, but the first one is politically impossible. Both parties are guilty, and I don’t have a solution for it.


#23

More importantly and less obviously, high levels of national debt exert a downward pressure on long-term economic growth. In a 2012 paper, economists Carmen Reinhart and Kenneth Rogoff define a “debt overhang” as a situation in which the debt-to-GDP ratio exceeds 90 percent for five or more consecutve years. After looking at 26 debt overhangs in 22 advanced economies since 1800, they conclude that “on average, debt levels above 90 percent are associated with growth that is 1.2 percent lower than in other periods (2.3 percent versus 3.5 percent).” These overhangs last a long time—in their sample, the average lasted 23 years—creating a cumulative loss in economic growth that’s “nearly a quarter below that predicted by the trend in lower-debt periods.”

Isn’t the important part missing? I mean, sure, they’ve determined there is a correlation, does anyone say why?

I mean, how do high payments on debt cause a problem? I mean it’s not like historically people have paid higher taxes as a result. To the contrary, high-interest payments are earned as incomes by people who hold government bonds. Thus, high interest payments end up being an injection of money into the economy. If you believe in supply-side theory you should believe that high interest payments on the debt are a good thing, after all, bonds are really just government savings accounts and people that save significant amounts are overwhelmingly in the top 10%. Thus high rates of interest are earned as high rates of return.

You act as if interest payments are deleted once paid.

So tell me, how does high interest payments drag on the economy?

So what? Since the inception of Medicaid til 2008 interest payments exceeded Medicaid spending.

Now, look at the annual rate or change in Medicaid costs vs the over 65 population indexed to 1980.

If interest rates do rise above Medicaid costs, perhaps Medicaid spending is being held to low?


#24

You must realize that every dollar you cut in spending several dollars of wages vanishes, right?

I mean look at the GM plant layoffs as an example. Every dollar no earned by each employee is projected to cost the local economy $6 dollars. Now, I’m not going to cite anything because it really doesn’t matter how much, $2 - $6, whatever, the point is, when you cut spending you reduce incomes by more because each dollar gets spent more than one time.

What you’re really proposing is austerity. Imposing misery on people in order to make numbers look better, but without really accomplishing anything.


#25

The question is, have you correctly identified the problem? :thinking::stuck_out_tongue_winking_eye:


#26

Yes, the “ticking time bomb” syndrome. It’s been going on almost as long as we’ve had a Federal Government…

Some excerpts from the past…

Sept 26, 1940, New York Times: Deficit Financing is Hit by Hanes: ” . . . unless an end is put to deficit financing, to profligate spending and to indifference as to the nature and extent of governmental borrowing, the nation will surely take the road to dictatorship, Robert M. Hanes, president of the American Bankers Association asserted today. He said, “insolvency is the time-bomb which can eventually destroy the American system . . . the Federal debt . . . threatens the solvency of the entire economy.”

Feb 11, 1960, New York Times: Mueller Assails Rise in Spending: The enormous cost of various Federal programs is a time bomb, threatening the country’s fiscal future, Secretary of Commerce, Frederick H. Mueller warned here today “. . . the accrued liability is a ticking time bomb. Some day someone will have to pay.”

Oct 4, 1983 Evening Independent – The United States and the developed world face a “ticking time bomb” because of the huge foreign debt involving loans to Third World nations

Oct 26, 1983, David Ibata: “ . . . home-building officials called for a commission to propose ways to trim the $200 billion federal deficit. The deficit is a ‘ticking time bomb‘ that probably will explode in the third quarter of 1984,’ said Fred Napolitano, former president of the National Association of Home Builders.

Feb 21, 1984, James Warren: “‘We now hear from them (the Reagan administration) that deficits don’t cause high interest rates and inflation,’ AFL-CIO President Lane Kirkland said. ‘If that’s the case, we’ve suddenly discovered the horn of plenty and should stop worrying and keep borrowing and spending. But I don’t believe it. It’s a time bomb ticking away.”

January 12, 1985, Lexington Herald-Leader (KY):The federal deficit is “a ticking time bomb, and it’s about to blow up,” U.S. Sen. Mitch McConnell, a Louisville Republican, said yesterday.

Feb 17, 1985, Los Angeles Times: We labeled the deficit a `ticking time bomb‘ that threatens to permanently undermine the strength and vitality of the American economy.”

Jan 5, 1987, Richmond Times – Dispatch – Richmond, VA: 100TH CONGRESS FACING U.S. DEFICIT ‘TIME BOMB‘

November 28, 1987, The Dallas Morning News: THE TICKING TIME BOMB OF LONG-TERM HEALTH CARE COSTS A fiscal time bomb is slowly ticking that, if not defused, could explode into a financial crisis within the next few years for the federal government and our nation’s elderly. The ticking bomb is the growing cost of long-term care.

October 23, 1989, FORTUNE Magazine: A TIME BOMB FOR U.S. TAXPAYERS The government guarantees millions of mortgages, bonds, deposits, and student loans. These liabilities, now twice the national debt, are growing fast.

May 1, 1992, The Pantagraph – Bloomington, Illinois: I have seen where politicians in Washington have expressed little or no concern about this ticking time bomb they have helped to create, that being the enormous federal budget deficit, approaching $4 trillion and growing now at an annual rate of $400 billion per year.

October 28, 1992: Ross Perot: “Our great nation is sitting right on top of a ticking time bomb. We have a national debt of $4 trillion. Seventy-five percent of this debt is due and payable in the next five years. This is a bomb that’s set to go off and devastate our economy and destroy thousands of jobs.

Dec 3, 1995, Kansas City Star: Deficit is sapping America’s strength. Concerned citizens. . . regard the national debt as a ticking time bomb poised to explode with devastating consequences at some future date.

April 14, 2003: Porter Stansberry, for the Daily Reckoning: The baby boomers are heading into retirement with no savings and no productive companies to support them in old age. Generation debt is a ticking time bomb…with about ten years left on the clock.

October 1, 2004, Bradenton Herald: A NATION AT RISK: TWIN DEFICIT A TICKING TIME BOMB: Lawmakers approved Bush’s request without cutting federal spending by a penny, thereby fattening the country’s projected record deficit of $422 billion by another $145 billion next year.

May 31, 2005, Providence Journal, Defusing the Medicare time bomb, Some lawmakers see the Medicare drug benefit for what it is: a ticking time bomb, set to wreak havoc on the budget and shoot future tax rates sky-high.

April 5, 2006, NewsMax.com, “We have to worry about the deficit . . . when we combine it with the trade deficit we have a real ticking time bomb in our economy,” said Mrs. Clinton.

Dec 3, 2007, USA Today: US debt: $30,000 per American. WASHINGTON (AP): Like a ticking time bomb, the national debt is an explosion waiting to happen.

*September 24, 2010, Email from the Reason Alert: ” . . . the time bomb that’s ticking under the federal budget like a Guy Fawkes’ powder keg.”

*July 7, 2011, Washington Post, Lori Montgomery: ” . . . defuse the biggest budgetary time bombs that are set to explode as the cost of health care rises and the nation’s population ages.

And on and on and on. You get the idea. That time bomb has been on the verge of explosion at least since 1940. Even today, the media, the politicians and sensationalist economists refer to the debt as a ticking time bomb. Please look at the following graph and see if you can find any relationship between deficit spending vs inflation and/or interest rates.


#27

AMEN. Something I can agree with!!

We should definitely do a lot more work on making MS reactors viable. They are green, and if I understand correctly, they can use spent fuel from current reactors and reduce net waste. Of course there are some issues with that, but if an MS reactor is built close to a current reactor or near a place where spent fuel is stored, then current spent fuel can be reduced,


#28

I think they know it’s not a problem, but both parties use the issue against each other when it’s politically convenient.

It’s always the “leaving the debt to our CHILDREN!” mantra…

Driven by fear.


#29

Growth is measured in spending. Cut spending cut growth.


#30

Wrong!

Only socialists and statists and believe that is true. Most government activity takes funds from the private sector and spends them on state projects. If more funds were left in the private sector, there would be more resources spent on economic development and less spent on bloat, waste and corruption. The private sector drives the economy forward, not the government.

Unfortunately, government has little incentive to do things well. The only checks upon government excess, failures and inefficiencies are periodic elections, the courts and the news media. As the courts and the new media come under the control of socialists and statists, those checks become weakened and perhaps even irrelevant.

If you want to see examples of government run totally amuck, you need only look the Soviet Union, Venezuela, Cuba and Nicaragua. They promise the world and deliver very little except social unrest and poverty.


#31

Wrong.

When the government spends it does not prevent the private sector from obtaining all the money it needs. I agree that it is possible for the government to compete for real resources (labor and raw materials), but you’d have to offer me an significant example of where the private sector wants to do business it cannot because the government is consuming resources needed and that in turn is preventing significant growth on the private side.

Ok, but what do any of those examples have to do with the US government?

I mean, I could say, “if you want to see examples of humans run amuck” and then just point to some bad things that humans do as if what one does all must do.

Sure governments can make mistakes, but all government’s aren’t guilty by association.

Oh, and no one I know supports Soviet or Venezuelan style socialism, most of all me.


#32

Does that mean, then, that your style of socialism will be any better?


#33

Define “socialisim”.


#34

Since we’re answering questions with questions, let’s try this:

Is “your style of socialism” (DEFINED HOWEVER YOU WISH . . . AND, PLEASE, DEFINE IT . . . IT BEING YOUR STYLE OF SOCIALISM) any better than other styles?


#35

That’s just it. I don’t support “socialism”. However, I’m aware that people define socialism differently, hence the use of the term “style”, I was accommodating the folks here who might accuse me of supporting socilist policies.

I don’t consider what I support socialism at all. But you might.

socialism noun
so·​cial·​ism | \ˈsō-shə-ˌli-zəm
Definition of socialism
1 : any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods
2a : a system of society or group living in which there is no private property
b : a system or condition of society in which the means of production are owned and controlled by the state
3 : a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done

I don’t support that.


#36

We’re making those payments on the debt with more debt. If the debt continues to rise, and the payments relative to GDP continue to rise, it starts going exponential. Isn’t that what happened in Zimbabwe?

Besides, currently most countries hold and continue to buy US treasuries. How long will it be before they realize the dollar isn’t a good deal? Didn’t the IMF endorse the Chinese yuan as a reserve currency a few months ago?

And there’s a rumor that China continues to buy all the gold they can so they can back the yuan with gold. That would make it infinitely more desirable than the dollar, so all countries would start selling their US treasuries in competition with all the new treasuries the FED must sell to continue to finance our exponentially growing debt.

Yes. Recovering from historical reckless irresponsible spending will be painful.

But let’s consider the extreme reverse case. If deficit spending is a good thing, then why restrain it at all? We could have the government just give everyone $100K/year and no one would need to work. We could buy all our goods from other countries with printed money, though there might be a problem with services.

The truck drivers wouldn’t need to work so no one would deliver the goods to the stores. The store clerks wouldn’t be there to ring up sales. No one would man the hospitals.


#37

I hope this isn’t where we’re headed.


#38

Oh, but you do because the many of the “all stars” in the Democratic Party are socialists. Bernie Sanders makes no bones about what he is, and most of the big names take a lot socialist positions. The question for you is when have they gone too far, which would cause you leave the party or push back?

My interpretation of your position was that the economy would fall apart if government spending were to be cut or frozen. I don’t share that point of view. The national debt is bad because the Federal Government is spending too much. That is just the simple truth.

If we raised taxes to cover the debt, (1) the tax raise would generate less revenue than expected because the economy would suffer a slow down from the removal in income from system and (2) Congress would see more money coming in and simply spend more.

It has lots to do with it. You would be surprised how easy it is to ruin an economy and how little time it would take. Venezuela used to be one of the strongest economies in South America with its oil riches and large middle class. Once they elected Hugo Chavez, it didn’t take long for economy to go down the tubes. One day the peasants were jumping around like jack asses for joy since Chavez was going to give them everything for nothing. A few years later, they couldn’t by toilet paper.


#39

For fiscal 2018, the deficit was $779 billion. It’s running at $984 billion for 2019. The gross debt increased by $1.25 trillion in fiscal 2018. Yeah, that sure sounds like a far more reasonable budget. Don’t you think that doing “something” entails a smaller deficit than the previous year? Or do you really think “something” is the achievement of passing a budget?

2016: $587billion
2015: $435 billion

Trump and the Republicans are no more serious about reducing the deficit and debt than Democrats. The Republican establishment maligns those Republicans who actually are.

Fascinating.

You realize that every dollar you steal and give to someone else you cut spending in several dollars of wages, right?


#40

Is growth even something we need or care about?

You mean inflate the economy :wink: At least outside of technological improvements and innovation.