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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

#51

Post by Taikonerd »

potato3732842 wrote: post #45
whimsicalism wrote: post #42

Earlier quoted context omitted.

gen Xers would fight it tooth and nail, you underestimate. even many in my Gen Z cohort would be pissed, although i would be celebrating

>gen Xers would fight it tooth and nail, you underestimate. I think that's filter bubble speaking. People who aren't ideologically in favor of entitlements would likely be mildly for or against. People who are ideologically against entitlements would consider it a good thing.

I feel like even people who don't care much about ideology care a great deal about how much they, personally, are going to be paid.

Especially if they amount they're going to be paid is going from $LOTS to zero.

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

#52

Post by akamaka »

whimsicalism wrote: post #31
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 d…

If you compare government budget as share of GDP, you can see that is hasn’t “exploded”, outside of crisis periods. Current spending rate is elevated about 25% over the 1990s period of restraint, but quite close to the 1980s.

https://fred.stlouisfed.org/series/FYONGDA188S

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

#53

Post by rayiner »

stvltvs wrote: post #43
rayiner wrote: post #27

Earlier quoted context omitted.

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

Why choose that metric rather than income, corporate, capital gains, etc. tax rates? Seems like it could obfuscate who bears the burden of those taxes.

Because we are talking about the federal debt, not distributional issues.

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

#54

Post by whimsicalism »

akamaka wrote: post #52
whimsicalism wrote: post #31

Earlier quoted context omitted.

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 d…

If you compare government budget as share of GDP, you can see that is hasn’t “exploded”, outside of crisis periods. Current spending rate is elevated about 25% over the 1990s period of restraint, but quite close to the 1980s. https://fred.stlouisfed.org/series/FYONGDA188S

You keep switching between flows and stocks and what you want your numerator and denominator to be, why wouldn't I just look at real spending and real debt numbers - ie. the number we ultimately have to pay interest on?

GDP % is only relevant if we are politically able to raise taxes.

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

#55

Post by akamaka »

pants2 wrote: post #50
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.

If we're going off of a "share of budget" metric then the fastest way to reduce debt share is to increase spending in other areas!

I was mistaken to say “share of budget”, because the chart I linked to is actually share of GDP, which hopefully isn’t affected by the problem you pointed out.

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

#56

Post by akamaka »

whimsicalism wrote: post #54
akamaka wrote: post #52

Earlier quoted context omitted.

If you compare government budget as share of GDP, you can see that is hasn’t “exploded”, outside of crisis periods. Current spending rate is elevated about 25% over the 1990s period of restraint, but quite close to the 1980s. https://fred.stlouisfed.org/series/FYONGDA188S

You keep switching between flows and stocks and what you want your numerator and denominator to be, why wouldn't I just look at real spending and real debt numbers - ie. the number we ultimately have to pay interest on? GDP % is only relevant if we are politically able to raise taxes.

Both of the charts I posted have GDP as the denominator (although I incorrectly said the first was “share of budget”).

I think it’s very important to use GDP as a denominator, because otherwise you’ll be stuck crying wolf, saying “debt always keeps going up” even during the good times.

There are a lot of people who simply don’t believe that the government budget needs a trim right now, because people have been continuously saying there was a debt crisis even when the financial situation was relatively favorable.

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

#57

Post by salawat »

setr wrote: post #18
salawat wrote: post #13

Earlier quoted context omitted.

In other words: Ponzi scheme, rather than any sustainable retirement mechanism.

It’s a tax. You could describe any beneficiaries of a tax in the same manner; we’re paying taxes to at least partially cover group X - homeless, scientists, military, retirees, veterans, etc. There’s no debt being paid; money is simply taken from Peter, and money is simply given to Paul. It’s not a retirement program, it’s retirement subsidization.

I don't think I'm willing to grant you Social Security as a proper "tax" or "subsidy" unless you're going to pitch me that Social Security is really, in essence, an incentive program for unrestrained natalism to keep population above replacement with all the Manifest Destiny/imperialistic implications and aspirations that come with it, and further, a commitment by the people who started it to never under any circumstances inform descendants of it's true nature.

If you are willing to concede the above, I'll reclassify it as a proper "subsidy" insomuch as it was a law that was passed, and it is a clear act by the government to incentivize activity "X". At which point my discussion will quickly turn to "Holy shit, why are we still trying to empire build in the year of our Lord 2025? Shouldn't we have changed this by now?"

If not... Still seeing it as a Ponzi. A fundamentally degenerate and unstable financial model, intended only to benefit the people who have been in it the longest solely for the purpose of self-enrichment. Well branded, mind; who doesn't want Social Security? But a Ponzi in essence nevertheless.

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

#58

Post by techgnosis »

The healthcare portions of the debt seem unsolvable but I don't know why we think Social Security is that complicated to fix.

1. Define very clearly what SS is. We need to be clear that it's an agreement between the working class and the retired class that says "if you are too old to work and you can't afford to live, we will take care of you"

2. Get rid of the SS tax cap. You don't pay any SS tax above 180k ish, which seems silly. Get rid of the cap and let every earned dollar participate in the program. It doesn't feel like that hard of a sell.

3. You don't get SS payments if you already have enough income. See #1, the agreement. We are agreeing to take care of you if you need it. Many, many retired persons do not need their SS income. Even if you paid SS tax your entire life, see #1. It is not an agreement that you will receive the money you put in later in your life.

Those aren't popular ideas but they are simple and easy to understand for everyone.

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

#59

Post by Acrobatic_Road »

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.

At current trajectory, interest costs will exceed 50% of all tax revenue within 30 years. See footnote 5:

https://media4.manhattan-institute.org/wp-content/uploads/a-...

The author took the CBO's budget projections and adjusted them for "false sunsets", i.e. the tax cuts that were supposed to expire before they were extended, and the fake spending cuts written into the law that will never happen, i.e. the FRA.

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

#60

Post by Acrobatic_Road »

Taikonerd wrote: post #25

I got interested enough in the national debt to do some research: is there a single-issue NGO that's working on the national debt? With a platform that you could imagine a Democrat or a Republican supporting? I found the Concord Coalition [0], and their sister organization Concord Action [1]. I haven't done enough research to endorse them, but I'm just saying: they exist and this is their issue. [0]: https://concordc…

There's the Peterson Foundation and the CFRB.
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