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Will America's debt doom us?

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Re: Will America's debt doom us?

#101

Post by bpt3 »

MuffinFlavored wrote: post #68
wcunning wrote: post #35

Earlier quoted context omitted.

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.

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 anybod…

Social Security funds aren't allowed to be invested in the stock market, and are held in the form of US Treasuries [0]. There was talk of changing that under Bush 44, but his reform plans never gained any serious traction.

[0] https://www.cbpp.org/research/social-security/policy-basics-...

Re: Will America's debt doom us?

#103

Post by eee_honda »

dpc_pw wrote: post #79
istjohn wrote: post #64

Earlier quoted context omitted.

On the other hand, top marginal tax rates are a fraction of what they were at their peak last century. We could double tax revenue at the drop of a hat, paying down our debt and ameliorating toxic wealth inequality simultaneously.

I agree that in principle the inequality is causing instability and , and as much as I detest socialism, I don't see a peaceful way out of where we are not involving the "tax the wealthy... a lot". Some comments: income taxes are the most stupid taxes ever. Rich people don't have incomes, they have capital gains. Increasing income taxes hurts middle-class: the rich wannabe. We need to abolish income tax, and turn it…

>as much as I detest socialism, I don't see a peaceful way out of where we are not involving the "tax the wealthy... a lot"

Socialism != taxing the wealthy a lot.

Maybe part of your "hatred" of socialism comes from a misunderstanding of it? I make the suggestion because the rest of your comment pretty much outlines some of the many major problems with unlimited accumulation and concentration of wealth.

Re: Will America's debt doom us?

#104

Post by wang_li »

opportune wrote: post #88
wang_li wrote: post #76

Earlier quoted context omitted.

You left out the fact that nearly 2/3 of Americans are net tax recipients. Everything that the government does at all levels is paid for by either debt or the highest 40% of earners.

Why is this supposed to be surprising or relevant?

It's a surprise to plenty of people who think that their $70,000/yr income makes them a net tax payer when it actually doesn't. And it's relevant because people will reduce their marginal income, or relocate to more favorable tax jurisdictions, when the tax burden of that income is excessive.

It's also relevant because, at a certain point, the productive portion of the population will fall below that necessary to make payment on the debt at which point the shit hits the fan in a big way.

Re: Will America's debt doom us?

#105

Post by Pfhreak »

MuffinFlavored wrote: post #68
wcunning wrote: post #35

Earlier quoted context omitted.

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.

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 anybod…

From what I understand, social security has more complex effects as well. It enables people to exit the workforce today, opening more senior positions, allowing for more career growth. So while the returns might not be ideal for an individual, it seems to be a case where it's good for the whole.

Re: Will America's debt doom us?

#106

Post by RealityNow »

_edo wrote: post #11

> Because debt-to-GDP is apples-to-nonsense. No it's not. Debt is measured in dollars. GDP is dollars per year. Debt/GDP is $/($/yr)=yr This ratio converts debt, a number it's hard to have intuition for, to years. It tells us how many years of productivity we owe. For those of us who don't manage $30 billion in assets years of productivity probably carries more meaning than big numbers with 12 zeros.

You're being pedantic and ignoring the whole point of the article.

Re: Will America's debt doom us?

#107

Post by kevin_thibedeau »

MuffinFlavored wrote: post #43
maxerickson wrote: post #23

Earlier quoted context omitted.

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.

> 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.)

As opposed to the Republican platform of spending more money while cutting tax revenue?

Re: Will America's debt doom us?

#108

Post by ThrustVectoring »

JackFr wrote: post #41

> But that's misleading. The federal government itself owns more than a quarter of U.S. debt, money the government essentially owes itself. It’s an accounting entry. As an asset and a liability, it effectively cancels out. Well, no. These bonds are held in the Social Security Trust Fund, and while yes in one sense they are both an asset and a liability, they are also funding a future liability (although not all of it…

You cancel them out against the current liabilities. Retiree spending is entirely funded by current production; the only real question is whether it's through taxation or savings (savings is, after all, current production that is sold and not consumed. This is essentially a tax.)

Social Security's funding level is completely irrelevant - what matters is primarily how wealthy society is when current workers retire, and secondarily how much future workers will be willing to save and pay taxes.

Re: Will America's debt doom us?

#109

Post by aswanson »

crusso wrote: post #4

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 afterward everyone will claim that they saw it coming and "the other guy" ignored it.

What are your thoughts on Modern Monetary Theory, that the debt will never be a problem because the US is a currency issuer?

Re: Will America's debt doom us?

#110

Post by blunte »

crusso wrote: post #4

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 afterward everyone will claim that they saw it coming and "the other guy" ignored it.

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.
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