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U.S. on Track to Add $19T in New Debt over 10 Years

nytimes.com

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Re: U.S. on Track to Add $19T in New Debt over 10 Years

#31

Post by notch898a »

scottiebarnes wrote: post #18
2OEH8eoCRo0 wrote: post #14

Earlier quoted context omitted.

As long as they can continue making interest payments on the debt then what's the problem? It's all relative.

The problem is the fundamentals. The US will "never default on its debt" because it issues debt in its own currency, which it can control the creation of necessary to service that debt (money printer go brrrr). So nobody is ever concerned about debt; you just say screw it let someone else worry about it, usually future generations. The value has to come from somewhere, and in this case its from the debasement of the…

They defaulted when they stopped honoring gold backing, which was the debt against the legal tender.

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#32

Post by TurkishPoptart »

avalys wrote: post #20

In discussions like this, it's worth reviewing where total government spending in the US actually goes. This is actually not the easiest thing to pin down, but the best analysis I've seen is at https://www.usgovernmentspending.com/year2022_0.html . In summary: 17% to pension programs (e.g. social security) 23% to healthcare 19% to education 12% to defense 7% to welfare 3.6% to police/fire/prisons 4% to transportation…

>19% to education

Where does this go?

In most counties, property taxes fund local schools. Public AND private universities are largely unaffordable without huge loans. Seems like most of this money is being squandered, with maybe a few billion going to decent NSF grants.

Pre primary thru secondary education 152.2 0.0 7.3 789.9 949.4 [+] Tertiary education 481.3 0.0 292.8 49.7 823.7 [+] Education not definable by level 59.0 -112.0 80.6 13.3 40.9 [+] Subsidiary services to education 0.0 0.0 0.0 0.0 0.0 [+] R and D Education 0.0 0.0 0.0 0.0 0.0 [+] Education n.e.c. 0.0 0.0 0.0 0.0 0.0

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#33

Post by SilverBirch »

MuffinFlavored wrote: post #3

I wish I knew the truth on which camp is "right". You've got camp 1 saying "you can go to 300% Gross Federal Debt to GDP without side effects/it's a new paradigm that history can't guide us on/there are no downsides to printed funny money/everything is fine/there's no risk of the US defaulting/spending 7% of tax revenue a year on interest on the debt" and the other camp says it's going to lead to our demise, etc. Wil…

There's a lot of scary numbers, but here's a graph of the US budget deficit as a percentage of GDP[1] according to the CBO. Yes, the US has a deficit most years, and yes both the financial crisis and COVID lead to very large dficits. But between 1992 and 2000 a deficit of 4.5% became a surplus of 2.3%. So it's well within the possible to decrease the deficit by 7% of GDP over a relatively short period of time. If we started that process today we'd be back to the long term average deficit within 8 years - and we're starting from a crazy base because of all the hangovers of COVID.

So whilst it's obviously a policy choice whether that happens, it's definitely well within the possible.

[1]: https://www.cbo.gov/publication/58268

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#34

Post by ars »

sfe22 wrote: post #22
avalys wrote: post #20

In discussions like this, it's worth reviewing where total government spending in the US actually goes. This is actually not the easiest thing to pin down, but the best analysis I've seen is at https://www.usgovernmentspending.com/year2022_0.html . In summary: 17% to pension programs (e.g. social security) 23% to healthcare 19% to education 12% to defense 7% to welfare 3.6% to police/fire/prisons 4% to transportation…

Isn’t this how empires fall?

On an international level the US debt is pretty typical: https://www.imf.org/external/datamapper/CG_DEBT_GDP@GDD/CHN/...

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#35

Post by MuffinFlavored »

SilverBirch wrote: post #33
MuffinFlavored wrote: post #3

I wish I knew the truth on which camp is "right". You've got camp 1 saying "you can go to 300% Gross Federal Debt to GDP without side effects/it's a new paradigm that history can't guide us on/there are no downsides to printed funny money/everything is fine/there's no risk of the US defaulting/spending 7% of tax revenue a year on interest on the debt" and the other camp says it's going to lead to our demise, etc. Wil…

There's a lot of scary numbers, but here's a graph of the US budget deficit as a percentage of GDP[1] according to the CBO. Yes, the US has a deficit most years, and yes both the financial crisis and COVID lead to very large dficits. But between 1992 and 2000 a deficit of 4.5% became a surplus of 2.3%. So it's well within the possible to decrease the deficit by 7% of GDP over a relatively short period of time. If we…

> If we started that process today

But we're not, right? Not only are we not doing that, we're nowhere close to that? We're still on tracking to collect roughly the same in taxation (leaving loopholes open for corporations on purpose) and spending more than ever (growing every year).

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#36

Post by shagie »

MuffinFlavored wrote: post #28
avalys wrote: post #20

In discussions like this, it's worth reviewing where total government spending in the US actually goes. This is actually not the easiest thing to pin down, but the best analysis I've seen is at https://www.usgovernmentspending.com/year2022_0.html . In summary: 17% to pension programs (e.g. social security) 23% to healthcare 19% to education 12% to defense 7% to welfare 3.6% to police/fire/prisons 4% to transportation…

> it's worth reviewing where total government spending in the US actually goes. Is it also worth reviewing 1. are we likely to ever increase incoming tax revenue (which loopholes stand to benefit the country's income the most without hurting it's citizens/economy/the businesses (and its employees who are basically the citizens) inside of it) enough to offset the debt-GDP ratio 2. if we are (or even if we aren't) goin…

> so far in the past like, 15 years, we've shown we're going to keep taxes roughly the same and keep spending roughly the same (continue to grow it year over year)

I would like to bring that into question.

https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act_of_2017

> The CBO estimated that implementing the Act would add an estimated $2.289 trillion to the national debt over ten years, or about $1.891 trillion after taking into account macroeconomic feedback effects, in addition to the $9.8 trillion increase forecast under the current policy baseline and existing $20 trillion national debt.

... And of course the time between 2017 and 2023 has been great for the economy with improved revenue growth offsetting the reduction in taxes.

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#37

Post by gautamcgoel »

legitster wrote: post #27
avalys wrote: post #20

In discussions like this, it's worth reviewing where total government spending in the US actually goes. This is actually not the easiest thing to pin down, but the best analysis I've seen is at https://www.usgovernmentspending.com/year2022_0.html . In summary: 17% to pension programs (e.g. social security) 23% to healthcare 19% to education 12% to defense 7% to welfare 3.6% to police/fire/prisons 4% to transportation…

This is a bit misleading though as it includes state spending as well. For the purpose of federal debt, we really only have three sources of spending that can move the needle: - Health Care 28% - Pensions 24% - Defense 20% Defense seems like an easy cut, but we are not currently in any major conflicts anyway. And our allies might not take to kindly if we start pulling bases from around the world. Pensions are entitle…

I agree that our allies would not be happy if we started closing bases, but I think that is a small price to pay for fiscal responsibility.

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#38

Post by manv1 »

What's interesting is that the US has been issuing a tremendous amount of debt, and the volume of that debt is a lot more than what should be possible under standard economic theories.

Interest rate are still historically low, even after the inflationary bump. And there doesn't really seem to be crowding out; in fact, there's so much money floating around that it doesn't have enough places to go...which is presumably why the US debt is still finding buyers (the debt limit thing notwithstanding).

If the US was under IMF supervision it would have been in violation decades ago.

I don't follow this anymore, but does anyone know if there has been anything written about this bizarre financial era we live in, monetarily speaking?

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#39

Post by dragonwriter »

manv1 wrote: post #38

What's interesting is that the US has been issuing a tremendous amount of debt, and the volume of that debt is a lot more than what should be possible under standard economic theories. Interest rate are still historically low, even after the inflationary bump. And there doesn't really seem to be crowding out; in fact, there's so much money floating around that it doesn't have enough places to go...which is presumably…

> If the US was under IMF supervision it would have been in violation decades ago.

IMF loans aren’t denominated in the recipients own currency, though.

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#40

Post by [deleted] »

manv1 wrote: post #38

What's interesting is that the US has been issuing a tremendous amount of debt, and the volume of that debt is a lot more than what should be possible under standard economic theories. Interest rate are still historically low, even after the inflationary bump. And there doesn't really seem to be crowding out; in fact, there's so much money floating around that it doesn't have enough places to go...which is presumably…

[deleted]
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