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Solution to US debt crisis is severe austerity triggered by a fiscal calamity

fortune.com

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Re: Solution to US debt crisis is severe austerity triggered by a fiscal calamity

#31

Post by whimsicalism »

akamaka wrote: post #11

Rather than reading this opinion piece, you can learn more about the “debt crisis” by just studying this chart which shows what percentage of the federal budget goes toward paying off the debt: https://fred.stlouisfed.org/series/FYOIGDA188S The situation is similar to what it was in the late 1980s, and it can mostly likely be managed with the same level of spending restraints we saw in response to that.

Share of budget is actually a terrible way to look at this because the budget itself has exploded, and that ratio hides most of the real modern risk.

Interest costs in the 80s spiked because high rates were applied to a much smaller debt base. Today we have the opposite problem: rates that are high compared to the 2010s are now rolling onto a massively larger stock of debt. We’ve only just started to refinance that debt at the new levels, so the full impact hasn’t even shown up yet. We are still seeing significant inflation (meaning rates still have upwards room to grow), beginning signs of an economic pullback, are beginning to see signs of a Fed unwilling to raise rates sufficiently due to the impact on the fiscal environ, etc.

Re: Solution to US debt crisis is severe austerity triggered by a fiscal calamity

#32

Post by ratelimitsteve »

lets do austerity for the wealthy first. we give them money hand over fist, in fact we've never met a problem we didn't try to solve by giving the rich more money. we currently fund R&D for three private space programs, from which we buy the technologies we paid the development costs for. Lets get down to 0 publicly-funded privately-owned space programs before we start picking which grandmothers we need to starve out

Re: Solution to US debt crisis is severe austerity triggered by a fiscal calamity

#33

Post by whimsicalism »

nobodyandproud wrote: post #23
phil21 wrote: post #5

Earlier quoted context omitted.

Because social security tax is simply a tax like any other, and social security is a pay as you go means tested entitlement program like any other. Current workers pay for current retirees. There is no account anywhere with your name on it earmarked for your retirement. It was enacted with lawmakers well knowing this - it was simply marketed in such a way to make it politically possible to enact and keep around long-…

I understand the perspective and I don't disagree with it, but the problem that spawned social security doesn't go away. It takes a crushing amount of time and money to take care of your aging parents, unless we go down a very dark route, and many elderly are abandoned and it becomes a societal mess. Some approaches I was mulling over: 1. The easiest way is to dilute SS without pushing the years down even further is…

The American elderly are in 2025 the richest generation to have ever existed in human history. Elder poverty can be solved with a comparably much smaller transfer scheme than what we have crafted.

Re: Solution to US debt crisis is severe austerity triggered by a fiscal calamity

#34

Post by potato3732842 »

PopAlongKid wrote: post #26
rayiner wrote: post #8

Earlier quoted context omitted.

The tax level is about as high as it ever has been: https://fred.stlouisfed.org/series/FYFRGDA188S

Are you equating receipts with tax level? Tax is a rate applied to an income or wealth amount. Note that GDP includes government spending, which is not subject to tax but is based in part on debt. https://www.pgpf.org/article/six-charts-that-show-how-low-co...

If you are in favor of more taxes nominal vs effective rates is not a can of worms you want to open. Effective tax rate was lower in the past even if the nominal was higher. SALT was amounted to basically nothing back then whereas they are far more now.

Re: Solution to US debt crisis is severe austerity triggered by a fiscal calamity

#35

Post by whimsicalism »

slillibri wrote: post #12
simonsarris wrote: post #3

> How severe? A sustainable U.S. debt trajectory would entail elimination of nearly all defense spending or almost all non-defense discretionary outlays, he estimated. Reminder that infrastructure is ~3% of the budget, the military is ~13%. Almost all of the rest are benefits, either health or money, for old people or various poverty reduction schemes. Or debt. Social Security was made when there were ~130:1 worker:r…

Reminder that social security is funded entirely by a separate tax and not debt, so unless you are planning to cut benefits but continue the tax it would do nothing to reduce the deficit or debt.

Yes that is what is being proposed.

Re: Solution to US debt crisis is severe austerity triggered by a fiscal calamity

#36

Post by charlescearl »

The evisceration of the pension system in the united states has created a class of those nearing retirement who will live in poverty. https://www.ncoa.org/article/addressing-the-nations-retireme...

The result of “fiscal restraint” amounts to acceptance of premature death for millions. Likely acceptable to a country that has accepted excess COVID deaths and support for genocides in West Asia, East & Central Africa, and South America. I only hope that boomers turn to anarchist resistance and disruption.

Re: Solution to US debt crisis is severe austerity triggered by a fiscal calamity

#37

Post by whimsicalism »

jmclnx wrote: post #7

No, solution is to go back to a tax structure we and in the 1950s, were the very rich and corporations paid real taxes. Starting with Reagan, taxes cuts corporations and the rich has been the main driver of the debt. And I will add to that, falling wages for the middle and lower classes based upon inflation.

real wages have been going up and the inflationary period saw a very high rate of increase in real wages particularly for low wage workers.

Re: Solution to US debt crisis is severe austerity triggered by a fiscal calamity

#38

Post by whimsicalism »

charlescearl wrote: post #36

The evisceration of the pension system in the united states has created a class of those nearing retirement who will live in poverty. https://www.ncoa.org/article/addressing-the-nations-retireme... The result of “fiscal restraint” amounts to acceptance of premature death for millions. Likely acceptable to a country that has accepted excess COVID deaths and support for genocides in West Asia, East & Central Africa, an…

this is not at all a causal result. the elderly in America are the richest generational cohort to have ever existed in human history, meanwhile young families are struggling to afford a home to raise their children in.

Re: Solution to US debt crisis is severe austerity triggered by a fiscal calamity

#39

Post by [deleted] »

rayiner wrote: post #27
PopAlongKid wrote: post #26

Earlier quoted context omitted.

Are you equating receipts with tax level? Tax is a rate applied to an income or wealth amount. Note that GDP includes government spending, which is not subject to tax but is based in part on debt. https://www.pgpf.org/article/six-charts-that-show-how-low-co...

No. The chart shows "Federal Receipts as Percent of Gross Domestic Product "

[deleted]

Re: Solution to US debt crisis is severe austerity triggered by a fiscal calamity

#40

Post by whimsicalism »

simonsarris wrote: post #3

> How severe? A sustainable U.S. debt trajectory would entail elimination of nearly all defense spending or almost all non-defense discretionary outlays, he estimated. Reminder that infrastructure is ~3% of the budget, the military is ~13%. Almost all of the rest are benefits, either health or money, for old people or various poverty reduction schemes. Or debt. Social Security was made when there were ~130:1 worker:r…

we also yeet a ton of money on low efficacy medicare/medicaid where large scale experimental trials and lotteries show limited impact on health outcomes at all.
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