The US Government Interest Expense Was 93% of Military Spending in 2018
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The US Government Interest Expense Was 93% of Military Spending in 2018
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Re: The US Government Interest Expense Was 93% of Military Spending in 2018
#2Moderate tax cuts to spur growth with a modicum of spending restraint will produce a surplus, as we witnessed with Bill Clinton coupled with a Republican congress (when Republicans still had some interest in spending restraint).
The problem, however, is many fold. Bill Clinton largely benefited from a "peace dividend" in that the US was ramping down military spending post-Cold War. We have since reversed course dramatically to support the "War on Terror."
Second, the debt is now so huge, that even if we managed to regularly run a modest surplus it would take many (perhaps hundreds) of years to to reduce the national debt back to manageable levels.
Massive tax hikes would slow the economy, and the chance that any of the tax revenue would actually go to debt reduction is highly dubious based on historic patterns.
So yeah, we need some new solutions, or just wait for the global finance system to collapse for good and pick up the pieces and start fresh (with likely horrific short term consequences for infrastructure, healthcare, etc.)
Re: The US Government Interest Expense Was 93% of Military Spending in 2018
#3Moderate tax cuts to spur growth with a modicum of spending restraint will produce a surplus, as we witnessed with Bill Clinton coupled with a Republican congress (when Republicans still had some interest in spending restraint). The problem, however, is many fold. Bill Clinton largely benefited from a "peace dividend" in that the US was ramping down military spending post-Cold War. We have since reversed course drama…
When the GDP gets up near 5%, the deficit will melt away.
Re: The US Government Interest Expense Was 93% of Military Spending in 2018
#4https://fred.stlouisfed.org/series/FYOIGDA188S
In other words it is at a historic low. Also debt service comes in the form of maturing bonds. It is literally created from nothing and requires no tax revenue.
Re: The US Government Interest Expense Was 93% of Military Spending in 2018
#5Moderate tax cuts to spur growth with a modicum of spending restraint will produce a surplus, as we witnessed with Bill Clinton coupled with a Republican congress (when Republicans still had some interest in spending restraint). The problem, however, is many fold. Bill Clinton largely benefited from a "peace dividend" in that the US was ramping down military spending post-Cold War. We have since reversed course drama…
The dollar value of debt is meaningless without accounting for interest rates. When interest rates rise, the dollar value of debt can be reduced by trading low interest debt for high interest debt.
Re: The US Government Interest Expense Was 93% of Military Spending in 2018
#6Moderate tax cuts to spur growth with a modicum of spending restraint will produce a surplus, as we witnessed with Bill Clinton coupled with a Republican congress (when Republicans still had some interest in spending restraint). The problem, however, is many fold. Bill Clinton largely benefited from a "peace dividend" in that the US was ramping down military spending post-Cold War. We have since reversed course drama…
The dollar value of debt is meaningless without accounting for interest rates. When interest rates rise, the dollar value of debt can be reduced by trading low interest debt for high interest debt.
This sounds like economic witchcraft, can you explain a little further?
Re: The US Government Interest Expense Was 93% of Military Spending in 2018
#7Earlier quoted context omitted.
The dollar value of debt is meaningless without accounting for interest rates. When interest rates rise, the dollar value of debt can be reduced by trading low interest debt for high interest debt.
This sounds like economic witchcraft, can you explain a little further?
A bond paying 2% that matures in 10 years is worth less than a bond paying 4% that matures in 10 years. So you can buy back low interest long term bonds for cheaper.
Re: The US Government Interest Expense Was 93% of Military Spending in 2018
#8Moderate tax cuts to spur growth with a modicum of spending restraint will produce a surplus, as we witnessed with Bill Clinton coupled with a Republican congress (when Republicans still had some interest in spending restraint). The problem, however, is many fold. Bill Clinton largely benefited from a "peace dividend" in that the US was ramping down military spending post-Cold War. We have since reversed course drama…
The debt is at managable levels now. Reducing it is actually not really all that difficult if the political game gets to a point where this is something they want to do.
Once you run a surplus and your bond yields go down while your economy continues to grow you can takle the debt.
We have seen this from other nations who executed such fiscal turn around.
However that requires some amount of political will.
Re: The US Government Interest Expense Was 93% of Military Spending in 2018
#9I don't find any reason to believe this is inherently problematic. The federal funds rate is ~2.5%, and inflation is ~2.0%, so the real interest rate is approximately 0.5%.
America's current debt-to-GDP ratio is not unprecedentedly high by any means. What is slightly concerning is that our debt-to-GDP ratio is increasing even though the economy is relatively strong.
Re: The US Government Interest Expense Was 93% of Military Spending in 2018
#10Earlier quoted context omitted.
This sounds like economic witchcraft, can you explain a little further?
A bond paying 2% that matures in 10 years is worth less than a bond paying 4% that matures in 10 years. So you can buy back low interest long term bonds for cheaper.
So... What happens when you run out of people willing to hand you money until you actually pay them back?
What you describe assumes someone is always willing to take the gamble on will you make good.
That's one hell of an assumption.