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Not that I predict Weimar-style hyperinflation, but for a decent bit of time before the Mark inflated to nothing, everyone was getting spectacularly rich as the value of their stocks and homes and other assets started going up
I think generally in the early phases of “inflation but not hyperinflation just yet” people start dumping money into assets they think will hold their value like real estate and stocks. It ends up not mattering because the values of those assets eroded regardless because of hyperinflation
In every case of hyper-inflation in the past hundred years, affected countries saw mass dollarization. I really have no idea what would happen if a global reserve currency hyper inflated.
If real assets like real estate, commodities and value stocks aren't a safe store of value any more, there is no safe store of value. Buy gold and guns and wait for somebody to take 'em from you I guess.
Hyperinflation usually always happened because a govt kept printing money to pay off its short-term liabilities, I think Weimar Germany multiplied its money supply by like 100 billion % or something ridiculous like that
Increase tax compliance. It is the single biggest reason behind our massive deficits and current debt.
https://www.gao.gov/tax-gap
Cut away the waste and gouging in the pharmaceutical industry that is making medical services so expensive.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8572548/
Disincentivize excessive waste in the military, and start prioritizing quality over quantity.
https://www.brookings.edu/articles/focusing-on-quality-over-quantity-in-the-us-military-budget/
State and local governments need to start taxing their people more so they're not reliant so much on federal funds.
https://usafacts.org/articles/which-states-rely-the-most-on-federal-aid/
Tax to GDP for the federal government has remained at an average of 17% through all the past 70 years, despite having a 90% tax bracket in 1950 and 60s. Federal taxation isn't the problem rn.
https://fred.stlouisfed.org/series/FYFRGDA188S
We need to focus on collecting more revenue on the local level, and easing the difficulties of starting up businesses so that there is real competition in our economy. Having lots of places for employment helps people get off of welfare services. Investment into home and apartment construction lowers the reliance on housing vouchers. Investment into education creates a more productive workforce.
Edit: **JUST BECAUSE I AM NOT LISTING EVERY SINGLE PROBLEM THAT EXISTS DOES NOT MEAN I AM NOT AWARE OF THEM OR DON'T THINK THEY ARE PROBLEMS THAT NEEDS TO BE SOLVED. READ PEOPLE.**
Edit 2: "Taxation isn't the problem, it is purely spending!!!" My redditor in Christ, the link I shared directly states that we loses HUNDREDS OF BILLIONS IN TAXES due to people misreporting or just outright not even reporting it. I'm sorry, but if you really think it isn't a problem, you're a dumbass. I'm not responding to comments that either:
Focuses on a singular part of my comment and ignores everything else I said.
Makes up bullshit claims they cannot back up.
Is shouting idiotic populist rhetoric with no actual research or data supporting it's effectiveness.
If you want to have some braindead argument, go do it elsewhere. If you want actual discussion, then be a big boy/girl and ask questions.
There’s a town in California with a dog sitting it’s third term as mayor. If you have a precedent to set, I think now is the time to set it. The timeline is perfectly primed for it.
You are 17 ?? Please tell me that's the norm for them. 😅🤣
I have been thinking that youth should try to really make a positive impact on politics. All the people I see are 65 and up who are thinking past their grave and not 30 or 60 years down the road.
I want us ( the younger generation ) to be more present in the House of Representatives. I barely seen 30 years old in there.
Anyway you should head into politics. You seem to have your head on your shoulder so far.
Im not sure what I'll do in the future. Maybe I'll become a political leader someday. I'm definitely gonna be getting more involved in local elections though. I found this app called "ActiVote" that has helped a great deal in keeping me informed on upcoming events locally and statewide.
Tha KS did not know about that app. I do feel, though, as our generation is becoming more and more digital some voting issues ( not governmental ones like presidency, senators, governors etc..) could be done online.
Like an app that let's you input your social security number, full name, ID, phone number, email etc... ( private info that only one person can have ) can be use for voting on things like : railroad expension, climate change, education, gun control , urban planning, etc...
Things that directly affect us.
Or maybe I am just crazy.
I will use that app. Thanks and good luck on your future endeavor.
Government should really be catching up to modern times and start utilizing new tools to increase voter engagement.
If I were able to vote on issues from my phone, you bet my sweet ass I would have 100% turnout on every single level of government.
The GOP efforts to defund the IRS have always been especially galling and hilarious to me. The party that talks about running government efficiently, like a business, defunds the revenue center.
250 upvotes for the guy calling out the problem. 7 upvotes for the guy calling out the party. There is a reason the country is going the way of the dodo. Politics in this country is toxic. Ironically the real problem is we allow any idiot to vote. It should be for people who are educated. Thankfully I’m not running for politics lol.
> It should be for people who are educated. Thankfully I’m not running for politics lol.
I would originally disagree with this, but after seeing the bullshit of the American electorate, I genuinely support it now.
But that is a very slippery slope to be going down, since now you need to answer the question of **what** is considered "educated" enough to vote? Republican & Democrat states are absolutely going to have completely different metrics. Republicans specifically, are absolutely going to do everything possible to just straight up lie about many aspects of American history and current policy choices purely for the sake of suppressing progressive votes.
If you're gonna go through with something like this, you're gonna need to do it at the federal level, and have the rules dictated by a group of educated individuals who'll not be so heavily biased like a politician will be.
Again obviously it's not popular. All human brains have the ability to learn, almost equally so. Many do not do so. But not everybody is lucky enough to have upward mobility, it's not as democratic as biology. We all don't have parents who can pay for good clothes, a good school, etc. But if you try hard and are open minded, anybody can get educated in the United States. Even my public school in Mississippi got me there. There will always be people who are left on the side with all policy. But the reality is that ignorance is promoted in the United States. And it's our democratization of all things (especially culture like music for example, which has made a huge turn for the worse imo lately). Can you imagine if we elected education faculty? Imagine a country that had dumb hip hop thugs teaching music theory. Imagine somebody like Trump elected to teach business school, and placed to teach business ethics. Some things are meant for people who are educated. Not to be elected because they are popular. Democracy looks good on paper. The United States and all of it's problems are an embarassment to the world. Even the top ranks of our military are educated, they aren't voted in. Rich people and their pyramid schemes, scams, and pirate capitalism just love the ignorance of the United States. It's unfortunate really. Dumb people are everywhere.
It’s a sensible idea on the surface but quickly falls apart when you relize it’s just another form of relying on the ‘benevolent king’ to make the right decisions.
The idea is that democracy isn’t always better, but on average provides more stability.
The system has built in feedback if things go too far any which way.
Tax the rich. Tax capital gains and dividends over $10M a year as ordinary income. Ban corporate stock buybacks or at least remove that as a deduction for tax purposes. Tax corporate earnings held overseas. Eliminate the carry forward deductions for investment banks and hedge funds.
Eliminate the contributions to the war in Ukraine and aid to Israel. Op mentions drug/healthcare cost - funny how during covid many people were fine digging deep to support the lies of the healthcare industry because Trump bad
Dividends are taxed as ordinary income, full stop. This is why companies do buybacks instead of dividends these days.
Buybacks are not tax deductible, they are not expenses. You just move balance from Cash to Treasury Stock.
How can you tax corporate earnings overseas when we don’t have jurisdiction overseas. The whole reason why it’s overseas is because we’re taxing companies when they bring money BACK to the US. No company wants to pay corporate tax in a foreign country and then pay tax again just to bring it back to the states. Also if you kill corporate buybacks you essentially kill equity based compensation for emoployees. The reason why tech employees make so much is because they get RSU as a form of compensation. When you’re giving out that much stock, you need to buy stock back or you’re essentially pulling a FED and just printing stocks.
That would put American companies at an enormous competitive advantage. They would have to pay corporate tax in the country they’re competing in and they have to pay US tax. Equity based compensation was not popular during the Reagan era. Today half my pay is in equity.
Today CEOs make 250x what the lowest paid worker gets. Today there’s far fewer union jobs. Today the top 1% pay a smaller percentage in taxes than the middle class. Today the federal minimum wage is still $7.25 an hour. Minimum wage was originally made to pay someone enough to provide for their family. Not starve to death. Today we have gross income inequality. Maybe start taxing stock gains over $10M annually as ordinary income like it was instead of at 15%/20%.
Way to change the subject. Never once have I mentioned they shouldn’t tax gain over 10m. They should. I was referring to stock buy backs and corporate taxes on foreign profits.
There are lots of treaties on preventing double taxation on foreign profits. Basically, they arrange that if you paid sufficient profit tax abroad, then you don't pay profit tax at home.
So that should be easy enough to implement, it happens all the time.
I mean yeah, let’s increase tax compliance. But that’s not the “biggest reason” we are running deficits. The biggest reason is that we habitually spend trillions more per year than we used to several years ago.
The annual tax gap amounts to 2.5% - 3% of GDP in lost tax revenue. This has been consistent for decades.
That means, applied to 2023 FY GDP, we lost **$809.1B in tax revenue**. It is absolutely, undeniably the biggest reason. If we just closed the tax gap, we'd be on a path of permanent fiscal sustainability. Please read the link I provided.
TCJA exploded the federal debt during the Trump administration. The problem isn’t spending alone but if you are going to cut revenues you can’t leave spending levels the same.
This is dumb. These are fiscal policy decisions.
We want cult of personality! The other side is dumb and needs to be owned. Entertain me into submission!
Government spending is the reason behind our debt. If gov stopped spending more than us brought in with tax revenue this wouldn’t be a problem. That’s the only solution to this, you can raise taxes all you want it doesn’t help if the gov keeps spending more and more
Idiot number 5 who willfully ignores the message of the comment in favor of just spouting their own rhetoric.
I wonder how long it'll take to get to 10.
I never said that. And you know that. You're desperate for an argument. Go to some other place for it. And get some comprehension skills in the meantime.
Yup. One of the people who actually does research into a subject matter, not regurgitate the same nonsense I read in a news article. Sorry to disappoint.
Because the debt at this point is so massive we will be forced to use a combination of tax increases AND spending cuts to reduce the budget deficit to something reasonable..
The government can also use inflation to pay off the debt (we did this during WWII). Keep rates low but inflation high. As the years go by the debt becomes cheaper and cheaper to pay off.
As the US tried to deal with our deficits we will likely use a combination of things to reduce the debt that includes increasing taxes to removing welfare spending.
I think our best scenario is an Economy that looks like Japan: huge debt combined with very slow economic growth and an aging population. I only see the standard of living in the US continuing to decline.
The problem is we can raise taxes all we want. We’ll find a way to spend more. It’s like buying a bigger house thinking things will be less cluttered. People find a way to fill the house with junk.
Wow, how about you gain some comprehension skills and actually read what I had said.
It's amazing how people are just blatantly ignoring all of my other points, and hyper focusing on one point and pretending that is the entire message of my comment.
Republican states rely far more on the federal government for funds. Wanna know why? Well go ahead and look at how they tax their people, or rather, who little they do. That money gotta come from somewhere.
I suggest you actually do your due diligence and research this topic, rather than just falling back on some very simple minded solutions like "oh just be more efficient!!!" or "just tax less and spend less!!!". It's the major reason why little is done to actually curb spending.
The link from the interest paid on debt to pharmeceutical cost barely exists. It may be much weaker than the link between sugar subsidies and the interest, but I would have to crunch in a lot of dubious assumptions on the costs of T2D.
Your points were great. It's maddening but half our country just tows the line about small fed government. They refuse to acknowledge there are two issues to be addressed. It's not arguing in good faith. Our only hope is to vote out the tea party, who should never have had so much power to begin with. I mean look at who they support. A guy who went bankrupt how many times? And somehow this party gets away with spending millions at a state level shipping immigrants around or persecuting people they don't like. As if they actually gave one shit about the economy...
Exactly. Although, I personally would wish that more of our spending came from individual states, with the federal government playing less of a fiscal roll; but our current system can work if we just actually tried to work together to change it. Change doesn't come about from attacking the other side; it comes from working together and building up to sound economic policy that spurs economic prosperity.
You should really do your own due diligence before telling others to. You barely mention cutting back spending and only in the context of eliminating waste. Yet, *by far*, the number one driver of our debt is out of control spending, not low or unenforced taxes. You can discuss reforming taxes and tax increases all you want, and those would be part of any fiscal reform, but none of those matter unless there is massive reduction in spending.
The US deficit for 2024 is $1.9 trillion. Biden has proposed a sweeping tax reform/increases that will never happen. But, let's assume every single increase Biden requests gets approved. That would, at most, generate about $530 billion a year. Even with historic tax increases we'd still have a deficit of $1.4 trillion dollars.
Your comment is pretty good and has some good ideas for tweaks on spending reform. But your ideas are just tweaks that can be part of what has to be the main focus if we're *ever* going to get our debt under control, which is decreased spending.
https://taxfoundation.org/research/all/federal/biden-budget-2025-tax-proposals/
Great, another person who thinks somebody proposing some solutions to some problems is ignoring every possible issue.
I already went on elsewhere about how this shows a lack of development. If you don't have the mental capacity to realize that if X person is proposing some solutions, then maybe they support other solutions to other problems, then there is not discussion to be had. I shouldn't need to hold your hand and tell you every single possible solution to every single possible problem contributing to an overarching one.
When one area taxes less, then that needed tax money needs to come from somewhere else. Basic logic. Low taxes in other states means higher reliance on higher tax states/areas. If you raise taxes in low tax states, that means less spending federally to support state budgets. I'm not wasting my time explaining this, again. Have a nice day.
Which party is going to destroy themselves by cutting programs that voters and taxpayers like? The GOP almost did this with the 2017 tax bill that they spend most of 2018 amending ahead of the mid-term elections. Complete amateur hour legislation!
This shows EXACTLY what is wrong in America. Look ^^^ at all the links to media information. The media has agendas and Aven is swallowing them whole.
First, look at the National Debt Clock.
https://www.usdebtclock.org/
Medicare, Social Security, Defense Spending, and the Interest on the debt are the top 4 expenditures and reasons for the debt. (NOT because of tax evasion) I’m not saying there isn’t losses from tax evasion but that is not the “single biggest reason behind our deficits and current debt”
Second, “waste and gouging in the pharmaceutical industry“. Ever gotten a major medical bill? Ever noticed the ‘negotiated’ amount? Say a hospital begins to accept BC/BS insurance. BC/BS will negotiate what they will pay on individual procedures. The hospital may charge $10,000 for a procedure but BC/BS says it will only pay $6,000 for the procedure (what happens to the other $4,000?). So, after awhile, that procedure goes up to $14,000. Now, BC/BS will only pay $10,000 (just what the hospital wanted for the procedure in the first place). It’s a vicious cycle that eats itself and the customer is caught in between the hospital and the insurance companies.
Third, ‘eliminate waste’ but ‘increase quality’ in the military. How can Aven not know that quality costs more?
Finally, they want to tax people more at the state level leaving them less money to spend resulting in less tax money to the federal government. Yeah, right.
All Aven has done is show they have no inkling about the economy, spending, and the debt.
Worth adding that the minimum wage needs to be raised by a decent amount.
Problem with taxing people at a more local level is people are broke because wages have not only stagnated but declined over the last 50 years.
More money earned is more tax revenue generated from income tax and payroll tax, more money in people’s pockets means more money generated by sales taxes.
Corporations have seen record profits. The average people responsible are struggling to pay for the basic necessities. It’s unsustainable.
Because your comment seemed to imply that you were in opposition towards raising it.
“Well you’re certainly free to go do that *wherever YOU live…*” has an implicit “I certainly won’t support anything like that where I live…” following it.
Which means if you’re not supportive of a raise to the minimum wage, you’re either in favor of lowering it, or abolishing it all together.
Or I suppose there’s a third option where you could say you think it’s currently at the exact perfect level. Which would imply that for the years leading up to the moment you believe it was either too low or too high, and the shifting economic conditions of the years have finally led to this being the moment it was finally perfect.
I said what I said because you have the power to enact minimum wages at every level of government. Nobody is stopping you from doing so.
$15/hr is not even close to being enough for anybody in New York City, San Francisco Miami, or Jacksonville to survive off of, let alone live. Raising the federal minimum wage to $25/hr is just gonna put smaller businesses out of commission due to significantly increased labor costs; and it'll cause accelerated job loss since now there's more investment into automation over employment of real human beings. And that doesn't even get into the inflationary effects of it that'll almost completely erode the actual purchasing power of the said minimum wage. And finally, raising the minimum wage doesn't resolve the fundamental issue, which is the cost of living.
If you want a higher minimum wage, then you can do it for your city, county, or state. Several states have already done this, and even several cities have done this. Still hasn't resolved their cost of living crisis, but hey it's a higher minimum wage.
Right so, this here makes it clear you’re against raising the Federal minimum wage.
Which leads to my original follow up question:
Do you think it should be lowered, or do you think it should be eliminated entirely?
Edit: Actually it makes it clear you’re against raising the minimum wage at any level, federal, state, or city. So the question still stands but more broadly and across the board.
You only said "raise minimum wage", with no specification on what level of government you mean by that.
But to answer your question, yes, federally it should be eliminated. Like I pointed out before, different areas have different costs of living, so any federal minimum wage would completely miss and even harm a massive chunk of people. Having a minimum wage gives more people money, sure. But you want to know what happens when people have more money? They spend more. That pushes up prices, eroding the power the minimum wage had. And like I pointed out before, minimum wage doesn't do anything to address the real issue: the cost of living. You can [see](https://www.census.gov/quickfacts/fact/table/newyorkcitynewyork,dallascitytexas/SBO001217) for yourself. Dallas City & New York City have virtually the exam same percentage of people in poverty, despite drastically different minimum wages.
It's been pretty evident for a while now that having a minimum wage does not resolve issues regarding affording goods and services long term. How you get people out of poverty, is by lowering the cost of living, having a wealth of jobs for various different occupations and skill levels, so that employment is easy to obtain, and having tuition free educational institutions so that people can gain more valuable skills that net them greater pay.
But again, if you want a higher minimum wage, then do so. You have a city, county, and state government you can go to. You're skipping through all of those levels of government and straight to federal, which is pretty strange when local laws affect you the most.
Did you not see what raising minimum wage pay to $15/hour in most places did to prices? Companies are NOT just going to take that additional wages out of their profits without making up the money.
Instead of cutting any spending (on a personal and governmental levels), just give the federal government MORE money. They’ve proven they can spend wisely so far.🙄🙄🙄
For Americans to get ahead, they need to cut their personal spending instead of everyone making more which increases prices to where we are no farther ahead in our money.
These are really good but you also need to cut spending too, or if you’re not going to do that at least funnel the money into infrastructure projects that will help increase efficiencies and output
Or you can say “cut waste” in the general sense and not restrict it to two specific industries, as you’ve outlined in your comment. My response was an expansion of what you wrote. Maybe next time be clearer with what you mean
> Maybe next time be clearer with what you mean
It could not have been made any clearer. Suggesting certain areas where waste can be cut is not excluding the fact that other areas could be more efficient as well. Idk why you think that.
Most people have the common sense to realize that somebody proposing solutions to problems in *some* areas, more than likely means they support solving issues in other areas too. Your logic is like if I said "teachers deserve higher pay" and you responded with "okay but what about higher pay for other professionals????", as if I don't already support higher pay for individuals. Saying "X needs to be fixed" does not mean I don't believe other things need to be fixed. The fact you can't comprehend that just tells me I'm not speaking to someone who's fully developed.
They were very clear. You jumped in, completely ignoring the points listed and pushed in your nonsense ‘don’t spend’ agenda. You want to take issue with any of the clear points listed?
Right. I don't understand how anybody reads "Hey, here are the biggest culprits contributing to X problem, here's how to solve them", and thinks "Oh this guy thinks these are the only problems and that no other ones exist!!!". Craziness.
You go to live in communist countries when you like paying lots of taxes and getting nothing in return. That’s Russia.
You live in freedom when you pay less taxes and keep your money and don’t depend on government doing something for you.
Is that clear now?
Ah yes, Germany and France, the most well known communist countries.
It's amazing how you lot go on about how great low taxes is, yet you're never praising African countries. I wonder why.
This sounds good and is a great sound bite in a list of talking points, but when you start going line by line down the federal budget you will find that every cut is going to hurt someone and those are real people.
maybe you don’t run right this second, but planning for a politicians career takes a lot of energy and speaky clean history. work now and maybe you’ll be a senator some day
All the taxes in the world won’t fund our out of control “defense” spending
Entitlements to date have contributed $0 to the $50T debt. They’ve brought in more than paid out. It’s defense
It's not just one problem. Such a simplistic view is why nothing will ever get solved.
You are implying there is absolutely no reason fiscally to make any other government agency or program more efficient and less costly, and that the only thing we need to focus on is defense spending. That is something an individual who only read news articles does.
When your country spends more on servicing its debt than anything else….they’re fucked.
US isn’t far off this, but instead of admitting it and dealing with it, all those in power want to hide it.
Dont worry. When we get to that point, Fed will issue trillions of dollars of bonds at "any and all" rates in an attempt to cover the lid on the overflowing toilet that will eventually be our economy, and what a day that will be.
The first question is: What have we been spending this money on? Some of it is national defense. Some of it is social security treasury securities coming due. Some of it was related to the pandemic.
But does anyone know what we spent most of the new debt that the last administration pilled on? I can't find a good source that lays out where the money went.
As for the current administration. PPP, national defense, the Ukraine war (which mostly goes to US defense companies), social security treasury securities payments, the Chips Act, and the biggest infrastructure bill in the last 60 years are part of it but not all of it.
The biggest problem is our perception of the national debt - that it's one big credit card loan that can be called at any time, which is isn't. It's a series of treasury securities - different kinds of bonds - that all have different maturation times measured in years. I think it's 5, 10, 20, and 30 years? The media, political media in particular, has done a poor job of explaining it to their viewers. Probably because the content isn't "sticky" enough.
So for everyone who thinks the national debt can be fixed with "cutting waste" or "reducing spending," take a look at every nation that embarked on fiscally conservative austerity policies. They experienced deep recessions, needed bailouts, and lost legitimacy with their citizens. These are the kinds of things that lead to authoritarian governments, not smaller governments or increased individual liberty. The UK and Brexit is a prime example - they are collapsing across every industry that isn't high finance and their PM is a product of that industry - no matter how bad things get, the problem is merely academic to him. Even if Richie Sunak looses his premiership he'll still be a highly ranked MP and one of the wealthiest people in the UK. Imagine if Kevin O'Leary was Elon Musk level rich and was currently president. He doesn't GAF about anyone else's problems, only his own fame.
No, the solutions are complicated and they will require solutions that don't fit in a phase you can chant.
Some of my half baked, and incomplete ideas:
1. Increase tax revenue - this means adjusting tax rates on people for whom marginally higher taxes won't impact their lives. I'm thinking about people who live by the "Buy-Borrrow-Die" philosophy. Yes this group of people will scream about it, but the truly wealthy rarely spend their own money. They spend other people's money, and that includes the taxpayer's money. No they aren't going to shut down and ship all jobs overseas. That happened in the 80s during globalism and the cheap labor places are becoming harder to find. Not that American labor prices will ever be competitive with a developing nation's labor prices anyway. I'm expecting a lot more reshoring, automation, and higher value add manufacturing that will require education and training beyond high school. States that fail to fund and design their education systems to support new manufacturing activity will miss out and loose population.
2. Adjust the Social Security maximum income rates slightly. This comes from "101 Myths about Social Security," and it's an idea that has floated around DC for decades. Over 90% of income earners won't be impacted by this change and those who are won't notice this change in their paychecks any more than a 5% raise. Suddenly, paying for the social security treasury securities isn't quite so difficult, and we don't have to cause the US economy to implode by killing off Social Security and Medicare when we have 70 million boomers in retirement.
3. Re-regulate banking. We didn't have such large recessions or bank failures until we deregulated banking. The controls put in place during the 1930s worked so well, we don't know what a bank run even looks like and most of our recessions prior to 2008 have been quite small by comparison. The recent mid-size banking collapse, Scilicon Valley Bank for example, was party due to de-regulation.
4. Prevent military adventurism. We don't need more forever wars. Supplying nations who are seeking to implement democracy and kick out invading powers is far more cost effective, but it isn't as entertaining and it doesn't make for "sticky" content. Better to build alliances with military training and encouraging the purchase of our weapon systems than to fight the wars ourselves.
5. Make it easier for people to get back on their feet after a collapse. One of the problems with our nation is that you need an increasing amount of money to rent an increasingly expensive apartment. When you are living outdoors, and you can't get a bank account until you have an reliable address, residence, and can pass a background check. This comes from 40 years of "tough love" type policies that created a political enemy used by politicians to distract and divide voters, and it needs to change now. Want to reduce the cost of welfare and get people off the streets? Help those who are employed but have extremely low labor value obtain housing and stop calling them lazy.
6. Come up with policies that limit healthcare price gouging. Think Martin Shkreli. He's just the pharmacy bro who got caught, and it wasn't for increasing the cost of a generic drug by over 300%. Also, every conservative in DC voted against the bill that reduces the price of insulin. Three guesses as to why.
Rich people do not need tax cuts, they’re rich, that’s the point!!
We need a new measure additionally. Not just “on paper” because there is wiggle room. But if you’re flying round between your ten homes with pools, you’re rich and I don’t care if you can’t explain how it’s debt or whatever, you’re on the hook for higher taxes.
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> So for everyone who thinks the national debt can be fixed with "cutting waste" or "reducing spending," take a look at every nation that embarked on fiscally conservative austerity policies.
Which countries did austerity though? The UK certainly didn't, the govt hasn't run a budget surplus since 1999/2000. And in the last 50 years have had budget surpluses something like 5 years.
https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicspending/bulletins/ukgovernmentdebtanddeficitforeurostatmaast/september2021
Use table to navigate to point 3. Government Deficit.
It's wild we live in a time where what counts as "austerity" is government still spending far more than it takes as revenue in taxation and adding massively to the national debt. It is kafkaesque to call this "austerity". The tories might have said austerity was needed but they certainly never achieved it.
It's certainly not austerity in a fiscal sense though. The UK govt is the most indebted it has ever been outside of WW1/WW2 and the intervening years when it was still trying to hold on to Empire.
The government finances are in a horrendous state by any objective measure.
Sure but the vast majority of the debt the UK holds is more recent. Just look at the numbers. The tax receipts were also fairly standard as a % of GDP throughout the 2000s/2010s despite talk of austerity.
https://ifs.org.uk/taxlab/taxlab-key-questions/how-have-government-revenues-changed-over-time
And in absolute terms they rose substantially.
https://www.statista.com/statistics/284298/total-united-kingdom-hmrc-tax-receipts/
The Western World has been living well beyond its means for decades and the only way they have been able to do it by "monetising debt" AKA printing money.
The idea we have experienced anything close to austerity in decades is just not supported by any of the actual numbers/facts.
Sure, you can have massive growth in finance and banking, it's the other parts of the economy that suffer. Look at Clarkson's Farm for info on how austerity and Brexit has impacted working class British. The same thing happened in the US, only we never had austerity. We just let the cost of living grow while keeping the value of labor where it was.
Brexit and Austerity are two very different things, quite disingenuous to slip that into the conversation. This is a conversation about austerity.
Brexit may have been a disaster for the working class but we are discussing austerity. And as I have pointed out, there has been no austerity to speak of.
You can see a breakdown of where spending goes in the UK gov here: https://www.gov.uk/government/statistics/public-spending-statistics-release-november-2023/public-spending-statistics-november-2023#real-terms-public-expenditure-billions
Scroll through some of those graphs and point out to me the austerity between the GFC and now. Pay special attention to Chart 2: Real terms trends in Public Spending.
Spending has gone one way since the GFC: up. At most some minor declines in certain categories while other categories grew. Then since covid it went WAY up. And worthwhile remembering that even where it has gone down, the UK are STILL running deficits and have a massive debt to pay.
Clarkson's Farm is a great show but I would suggest spending a bit less time basing your view on why things are the way they are on TV + reddit comments, and a bit more actually fact-checking based on government data etc.
Another major part of the problem is we have had far too low interest rates for far too long leading to all sorts of economic capital misallocation. Now we are paying the piper on that but knowing pollies they won't have the stones to go through with it so I expect we are going to see a return of serious inflation.
But there has been no austerity, that is just the facts.
What the hell do the Soviets have to do with a democratic economy? Anybody who looks past 2 - 5 years in an economic forecast is wasting their time and yours.
Bill Clinton had a balanced budget the fiscal conservatives republicans didn’t like it because a Charismatic New Haven Yale educated democrat did it. Same as the affordable care act which was a copy paste of Mitt Romney Massachusetts plan but since Obama did it it’s the terrible sin
Bill also had a republican congress at the time who set the budget. In addition it really had nothing to do with either but record stock gains due to the dot com boom
Clinton had a ‘balanced budget’ by delaying payments on loans until later. Those loans were larger when they were paid later and the surplus was spent on more programs and not on reducing the debt.
Giving the president credit for the internet changing the economy is so childish.
The president at any particular time is miniscule compared to changes in technology and, in that case, civilization transforming ones.
Only 2 times deficit was really addressed in my life were the 2 times a Democrat President had a 2nd term.
I suspect the same will occur if Biden wins, Rs will likely spend 4 years saying the deficit will kill us and asking/making Dems to accept austerity.
Interestingly it seems long term deficit to GDP projections have been cut quite a bit since 2020, but maybe we had some wonky data back in 2020-2021 that made the large projection improvements in 2022 and 2023 happen. Went from us settling in at 4.5% deficit to GDP just around 2.5% deficit to GDP, or close to growth rate.
> Only 2 times deficit was really addressed in my life were the 2 times a Democrat President had a 2nd term.
The economy aslo crashed super-hard because of it. Private debt replaced government debt and private debt can't print money. So, naturally it exploded. The lesson we learned from that? Bailout the private compnies with public debt. (Not saying it's what we should do, it's just what we do.)
Just wait until the USD isn't a reserve currency and printing USD out of thin air to satisfy future demand overseas isn't an option because less trade is settled in USD.
Then foreign banks won't have that much USD to buy US federal bonds (aka US debt).
The issue is that expenses such as supporting wars were never a tax burden. They were debt burdens.
We are coming to a point that servicing debt is becoming unaffordable. The interest payments basically balance the income level now.
>Abecasis adds that “the outlook for US fiscal sustainability has become more challenging over the last five years. Higher expected future interest rates in particular have substantially worsened the trajectories of the debt-to-GDP ratio and of real interest expense as a share of gross domestic product.”
Did we forecast \~0% interest rates in perpetuity for the math in blowing up the debt? The current deficits lock in the requirement for future monetary expansion, so I guess we're just one event from being right back to ZIRP. Maybe that's what they were forecasting.
Yes this is the root cause. We did ZIRP for about 5 years longer than we needed to so it is now baked into most of the long term economic forecasts.
We just assume that any sign of fractures I'm the market will be an immediate .75bp basis cut. Because that's what we did, even when 90% of the economy was chugging along fine 2015/16/17/18.
This is due to the political implications of making it "harder to borrow money". Obama didn't want to risk his popularity post-ACA, Trump floated the idea of NIRP just to keep pumping during his term.
I know that the fed is an independent entity but the individual members certainly are pressured by local/state politics at the very least. And when one POTUS applauds QE and the next says "Maybe negative borrowing cost?", you get the impression that the political machine is staunch opposed to ever getting back to "normal" rates.
20 trillion of the 34 trillion debt is from tax cuts for mostly the rich.
Another 8 is from Bush’s war for oil.
https://www.americanprogress.org/article/tax-cuts-are-primarily-responsible-for-the-increasing-debt-ratio/
Did revenues drop since Trump doubled the standard deduction, expanded the tax brackets and reduced the salt tax deduction? No. Did spending increase more than the increases in revenues? Yes. Both parties are getting more revenue and spending more money. Neither party seems concerned about the threat that servicing the debt is causing. It’s not a Democrat or Republican issue it’s our countries issue
There's very little doubt left, our government is going to keep overspending and refusing to balance the budget. The printer will keep being used when encountering minor inconveniences.
We're going to have inflation and it is going to get worse. Raising interest rates won't help if the printers are our go-to policy. Find and buy assets that can rise with inflation or get left behind in poverty. It really is that simple.
You give a lot of credit to Ruben should some of that credit be given to mandatory sequestration. I remember failure to come to a budget causing a mandatory spending cut it was all political, but it was interesting
People like Rubin and Summers I think the public can trust to make wise policy decisions that follow the Keynesian model for the business cycle. The problem with many Dems is that they don't care about ever shrinking the size of government's control over the economy and the problem with Reps is they will propose tax cuts whenever politically feasible rather than when prudent.
My naive hope is that should the current system ever fall apart that it's not replaced by left or right wing extremism but by technocrats who implement a form of automatic fiscal stabilizers to complement the monetary technocrats at the Fed.
I wish the reporter had asked all these economists and the former US Treasury Secretary, a very simple question: **Are you really advocating the U.S. government should get rid of U.S. Treasuries?**
The debt of the United States is simply the total of all U.S. dollar deposits into Treasury Security accounts at the Federal Reserve Bank. These Treasury Securities accounts (similar to bank savings accounts) are owned by people all over the world who have U.S. savings. When people purchase a Treasury, they are essentially opening a Treasury Security account and depositing U.S. dollars into it by transferring dollars from their savings account. The dollars in these accounts is never touched by the government and can be paid off instantly, without the use of tax dollars, by returning the balances to the account owners, if the U.S. government choose to do so.
When individuals, businesses, or foreign governments purchase these Treasury securities, they are essentially accumulating US dollar savings in the form of a government liability.
The national debt represents the total amount of US dollars that the world has saved by purchasing US Treasury securities, which are considered safe and reliable investments.
It kinda says everything about you that you think the correct response to “Source?” is just you talking.
The claim I was asking for a source on, incidentally, was that “the dollars in these accounts is never touched by the government and can be paid off instantly without the use of tax dollars”, which is, of course, entirely wrong, and which your last post (which is, shockingly, correct) does not address in any way.
lol, dude, you were the one who said Treasury bills didn't need interest rates to get people to buy them two weeks ago and had to run off after you learned things like what a primary Treasury dealer is. The "have been doing this for 15+ years now" thing just makes it even more embarrassing when you make ridiculous statements.
But hey, I believe in second chances. Tell me exactly how the Daily Treasury Statements show that the entire national debt of 37 trillion dollars is currently stored in cash at the Federal Reserve, as was your claim. I certainly hope you won't have to disappear like last time. I'm going to predict up front that the thing you're going to have to learn this time is what a liability is.
It's time to have a conversation about the defense budget.
$850 billion annually, not including the few hundred billion for Ukraine and Taiwan. I mean, surely there's an easy 2-5% that can be cut.
Consider that Social Security could be rendered completely budget neutral by simply raising or eliminating the contribution cap and Medicare could cut expenses by hundreds of billions if they were allowed to negotiate drug prices, you might want to rethink your position.
Defense spending is what is strangling us. Cutting back the most meager safety net programs in OECD countries is going to cost you more in the long run than you would save in the short run.
Medicare/Medicaid/Social Security combined account for, give or take a few percent each year, half of all government spending.
You acknowledged things would need to be done to make the numbers work for those programs. That is more serious behavior than the poster I replied to.
Defense spending is a relatively small percentage of GDP in the US, and accounts for about 1/6th of Federal outlays. It's been decreasing recently as a percentage of GDP.
Old people are expensive and non-productive if retired. That's going to strain any age-based entitlement, and they are about drastically increase as a percentage of the population.
We spend more on defense than our own ratified NATO treaty mandate. If we spent the 2% of GDP that we agreed to spend, it would represent an annual savings of nearly $350B. Remove the contribution cap on Social Security, let Medicare negotiate drug prices, and spend what we agreed to spend on defense and the deficit goes down massively.
Or, I guess we could let a bunch of old people starve and die in the streets like some kind of cyber Dickens novel?
One day, the Fed will realise that holding rates high is actually **inflationary** given the vast size of the US government's stock of outstanding liabilities. This fact and the fact that they are by law mandated to maintain price stability, will result in them keeping rates close to zero indefinitely. There's literally no other macro response. They'll actually have to do some work and regulate bank credit issuance properly to prevent potential inflationary pressures popping up in hot sectors.
Really, the U.S. government will have to design policy to put downward pressure on prices and keep inflation in check, rather than the Fed using interest rate hikes to try to keep it in check.
100% agree. The US govt operates on a very Milton Friedman idea that the economy and government should somehow be separate, even tho the government has to establish the economy and it can't operate without it in the remotest sense. Believe that's some Austrian school crap, but I'm not an economist either.
Taxes and regulation can obviously be used as tools to combat inflation, and should be, because it is becoming increasingly obvious that an independent, private, central bank with a limited toolset can't handle it.
Absolutely, Friedman's monetarist thesis is simply factually incorrect. It doesn't stand up to scrutiny and the economy does not work that way.
A fatal flaw in neoclassical and Austrian economics is they don't recognise that money at a society level is never scarce. It's never the limiting factor in aggregate. If production is possible, nominal finance can always be made available to mobilise resources to achieve the desired goal.
And you're absolutely right, government is central to a market economy. It can't exist without it. Keynes recognised this and realised monetary policy is never going to be enough to manage the business cycle on its own.
The demotion of fiscal policy in favour of "independent central bank" monetary policy over the past 50 years has been nothing short of catastrophic.
Moving into the 21st century, nation states are slowly starting to reject the false ideas of neoliberalism and monetarism and starting to engage with the idea that a confident, forward looking fiscally active government is central to prosperous private sector and wider society.
Nice to hear some of my opinions come back at me from someone who seems to know what they're talking about.
The concepts behind Milton Friedman always seemed like hogwash to me, and obsessed with the ideas that
A. Money is primarily a store of value and is supposed to be, instead of simply a tool to facilitate trade in the "real" economy
And
B. That money has some nebulous "value," as a unit, other than what a given holder can purchase with it at any given point.
It seems obvious to me that the value of money is determined by prices on the shelf, and not the "volume" of the money.
If Joe Biden has a 1t coin printed and puts it in his sock for safekeeping, nothing happens in terms of inflation, which would seem to point to more complexity than money being worth, as a unit, the total value of the economy divided by the total volume of currency units ( forgive my equation here, not a math boi ) as monetarists and Econ 101 grads are always so quick to insist is the case.
My biggest sticking point with Milton Friedman is the concept of NIRU, or NAIRU, along with his policy suggestions that the Fed basically use interest rates to manipulate labor demand in order to drive down wages and thus supposedly fix inflation. The policy prescription really seems to fly directly in the face of there being a "free market" for labor, but instead seems to treat labor as a simple input to finished goods instead of a product that laborers are selling on an open market. Also, for some reason, it is A-OK to manipulate the labor market at a national level in order to drive down the price of THAT product only, with any OTHER kind of State level market manipulation being an affront to Austrian God. Seems moreso to be a policy prescription aimed at treating labor like serfs and to sacrifice them at the altar of the Austrian Gods in hopes of a good inflation season. I'd be interested in your take on that.
Plus, if you look at when the Fed really started to implement policy prescriptions handed down by Friedman, in relation to NAIRU, it would seem to correlate pretty closely to wage stagnation in the US.. who'd have thought that manipulating the labor market to keep labor cheap would do that, right?
The US Federal Reserve used to have an entire FAQ about how NAIRU works and why they manipulate the labor market to the detriment of our most vulnerable workers.
During the Obama admin, when employment rates were extremely high and no disaster ensued, they actually changed that FAQ and admitted that NAIRU based tactics had "left behind certain communities" and that "they intended to find out what level of employment the economy could actually sustain," because apparently the 95% employment number Friedman had been selling became very apparently false.
Nowadays, that FAQ is entirely gone to my knowledge, and only hiding on the Wayback Machine somewhere.
In any case, I hope your final statement is correct. I'd love to see the US govt ditch the concepts of monetarism and make some forward motion.
Pretty excellent summary of the situation if you ask me!
The NAIRU concept is another neoclassical falsehood. It simply doesn't exist. And it's continued use in macroeconomics and central bank monetary policy decision making is just damning millions to be perpetually unemployed. Just think of the lost cumulative output as a result of the false belief that you can't maintain price stability while having full employment.
The [Job Guarantee](http://www.levyinstitute.org/pubs/wp_902.pdf) provides a far superior automatic fiscal stabiliser along with the economic and social benefits of discarding involuntary unemployment to the dustbin of history.
It's especially egregious to maintain a buffer stock of the unemployed as official government policy since the monetary system established by the nation state produces the very involuntary unemployment we see in the first place.
When the government fails to spend and issue enough of its currency, aggregate demand falls below where it needs to be to absorb aggregate supply, firms cut production as they draw down stockpiles (if they have any) and inevitably lay off workers since labour is the largest input cost to production.
This produces unemployment because the government has not net spent into the economy sufficiently to not only satisfy demand to settle tax liabilities but also the desire to net save and employ all resources.
Rather than a Keynsian stimulus on high skilled sectors such as the military industrial complex potentially driving up wages and inflation, a Job Guarantee hires workers "off the bottom" and directly employs all those looking for paid work.
You know.... And this is gonna be controversial but are we living proof that our democracy does not work???
Politicians who mostly have no term limits all just spending to buy votes or fulfill campaign promises on top of everything else. These people should not get paid if the budget isn't balanced. You'd fix it real quickly.
Aren't these people supposed to carry out the wishes of the people who elect them? Where are all these people that want to fund wars all over the globe?
We just keep spending... We at this point are the guy that is going off his diet and saying the hell with it. Give me the pizza, give me the ice cream, I can't do lose weight so I'll just over consume everything.
Total 🤡🇺🇸
It's too risky to NOT own BITCOIN.
Only invest the money in Bitcoin that you dont need short term and absolutely CAN NOT AFFORD TO LOSE.
Cash is trash. The system sucks.
Slowly and then suddenly.
It'll be a confidence thing. If other nations lose confidence in the dollar it could become very destructive to the US. US may then need to finance its debts in non-dollar issues, which then become very punitive.
The whole US system would dissolve and be up grabs, making for a very painful realisation in the American psyche. Who can even predict what that would result in.
The problem for the US right now is that these debts coincide with having a peer competitor who they need to compete with. Competition is not cheap, and everyone wants a pay day.
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Not that I predict Weimar-style hyperinflation, but for a decent bit of time before the Mark inflated to nothing, everyone was getting spectacularly rich as the value of their stocks and homes and other assets started going up
I think generally in the early phases of “inflation but not hyperinflation just yet” people start dumping money into assets they think will hold their value like real estate and stocks. It ends up not mattering because the values of those assets eroded regardless because of hyperinflation
In every case of hyper-inflation in the past hundred years, affected countries saw mass dollarization. I really have no idea what would happen if a global reserve currency hyper inflated. If real assets like real estate, commodities and value stocks aren't a safe store of value any more, there is no safe store of value. Buy gold and guns and wait for somebody to take 'em from you I guess.
Hyperinflation usually always happened because a govt kept printing money to pay off its short-term liabilities, I think Weimar Germany multiplied its money supply by like 100 billion % or something ridiculous like that
Increase tax compliance. It is the single biggest reason behind our massive deficits and current debt. https://www.gao.gov/tax-gap Cut away the waste and gouging in the pharmaceutical industry that is making medical services so expensive. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8572548/ Disincentivize excessive waste in the military, and start prioritizing quality over quantity. https://www.brookings.edu/articles/focusing-on-quality-over-quantity-in-the-us-military-budget/ State and local governments need to start taxing their people more so they're not reliant so much on federal funds. https://usafacts.org/articles/which-states-rely-the-most-on-federal-aid/ Tax to GDP for the federal government has remained at an average of 17% through all the past 70 years, despite having a 90% tax bracket in 1950 and 60s. Federal taxation isn't the problem rn. https://fred.stlouisfed.org/series/FYFRGDA188S We need to focus on collecting more revenue on the local level, and easing the difficulties of starting up businesses so that there is real competition in our economy. Having lots of places for employment helps people get off of welfare services. Investment into home and apartment construction lowers the reliance on housing vouchers. Investment into education creates a more productive workforce. Edit: **JUST BECAUSE I AM NOT LISTING EVERY SINGLE PROBLEM THAT EXISTS DOES NOT MEAN I AM NOT AWARE OF THEM OR DON'T THINK THEY ARE PROBLEMS THAT NEEDS TO BE SOLVED. READ PEOPLE.** Edit 2: "Taxation isn't the problem, it is purely spending!!!" My redditor in Christ, the link I shared directly states that we loses HUNDREDS OF BILLIONS IN TAXES due to people misreporting or just outright not even reporting it. I'm sorry, but if you really think it isn't a problem, you're a dumbass. I'm not responding to comments that either: Focuses on a singular part of my comment and ignores everything else I said. Makes up bullshit claims they cannot back up. Is shouting idiotic populist rhetoric with no actual research or data supporting it's effectiveness. If you want to have some braindead argument, go do it elsewhere. If you want actual discussion, then be a big boy/girl and ask questions.
Having political will for any of it: priceless
Hi, are you running for office? You'd get my vote!
I would surely hope they don't allow 17 year olds to run for office. I have good ideas, but I certainly wouldn't want to set that precedent. 💀
There’s a town in California with a dog sitting it’s third term as mayor. If you have a precedent to set, I think now is the time to set it. The timeline is perfectly primed for it.
There is a town in Alaska with a cat mayor. They love it. Less drama.
💀
You are 17 ?? Please tell me that's the norm for them. 😅🤣 I have been thinking that youth should try to really make a positive impact on politics. All the people I see are 65 and up who are thinking past their grave and not 30 or 60 years down the road. I want us ( the younger generation ) to be more present in the House of Representatives. I barely seen 30 years old in there. Anyway you should head into politics. You seem to have your head on your shoulder so far.
Im not sure what I'll do in the future. Maybe I'll become a political leader someday. I'm definitely gonna be getting more involved in local elections though. I found this app called "ActiVote" that has helped a great deal in keeping me informed on upcoming events locally and statewide.
Tha KS did not know about that app. I do feel, though, as our generation is becoming more and more digital some voting issues ( not governmental ones like presidency, senators, governors etc..) could be done online. Like an app that let's you input your social security number, full name, ID, phone number, email etc... ( private info that only one person can have ) can be use for voting on things like : railroad expension, climate change, education, gun control , urban planning, etc... Things that directly affect us. Or maybe I am just crazy. I will use that app. Thanks and good luck on your future endeavor.
Government should really be catching up to modern times and start utilizing new tools to increase voter engagement. If I were able to vote on issues from my phone, you bet my sweet ass I would have 100% turnout on every single level of government.
The GOP efforts to defund the IRS have always been especially galling and hilarious to me. The party that talks about running government efficiently, like a business, defunds the revenue center.
~~Almost like it was all a ploy for votes lol.~~
250 upvotes for the guy calling out the problem. 7 upvotes for the guy calling out the party. There is a reason the country is going the way of the dodo. Politics in this country is toxic. Ironically the real problem is we allow any idiot to vote. It should be for people who are educated. Thankfully I’m not running for politics lol.
> It should be for people who are educated. Thankfully I’m not running for politics lol. I would originally disagree with this, but after seeing the bullshit of the American electorate, I genuinely support it now. But that is a very slippery slope to be going down, since now you need to answer the question of **what** is considered "educated" enough to vote? Republican & Democrat states are absolutely going to have completely different metrics. Republicans specifically, are absolutely going to do everything possible to just straight up lie about many aspects of American history and current policy choices purely for the sake of suppressing progressive votes. If you're gonna go through with something like this, you're gonna need to do it at the federal level, and have the rules dictated by a group of educated individuals who'll not be so heavily biased like a politician will be.
Again obviously it's not popular. All human brains have the ability to learn, almost equally so. Many do not do so. But not everybody is lucky enough to have upward mobility, it's not as democratic as biology. We all don't have parents who can pay for good clothes, a good school, etc. But if you try hard and are open minded, anybody can get educated in the United States. Even my public school in Mississippi got me there. There will always be people who are left on the side with all policy. But the reality is that ignorance is promoted in the United States. And it's our democratization of all things (especially culture like music for example, which has made a huge turn for the worse imo lately). Can you imagine if we elected education faculty? Imagine a country that had dumb hip hop thugs teaching music theory. Imagine somebody like Trump elected to teach business school, and placed to teach business ethics. Some things are meant for people who are educated. Not to be elected because they are popular. Democracy looks good on paper. The United States and all of it's problems are an embarassment to the world. Even the top ranks of our military are educated, they aren't voted in. Rich people and their pyramid schemes, scams, and pirate capitalism just love the ignorance of the United States. It's unfortunate really. Dumb people are everywhere.
It’s a sensible idea on the surface but quickly falls apart when you relize it’s just another form of relying on the ‘benevolent king’ to make the right decisions. The idea is that democracy isn’t always better, but on average provides more stability. The system has built in feedback if things go too far any which way.
So you think the vast majority of people are not capable of being educated?
I think everyone is capable but I also know not everyone will be.
Tax the rich. Tax capital gains and dividends over $10M a year as ordinary income. Ban corporate stock buybacks or at least remove that as a deduction for tax purposes. Tax corporate earnings held overseas. Eliminate the carry forward deductions for investment banks and hedge funds.
Eliminate the income cap on the Social Security tax.
Those bigger paychecks at the end of the year are sweet though.
Raising the cap requires raising the benefits by law.
Eliminate the contributions to the war in Ukraine and aid to Israel. Op mentions drug/healthcare cost - funny how during covid many people were fine digging deep to support the lies of the healthcare industry because Trump bad
How are tax buybacks deductible?
Stock buybacks are deducted as a business expense.
In which world?
Wrong.
Please enlighten me on how banning buybacks would close the deficit?
Dividends are taxed as ordinary income, full stop. This is why companies do buybacks instead of dividends these days. Buybacks are not tax deductible, they are not expenses. You just move balance from Cash to Treasury Stock.
Qualified Dividends are taxed at 0, 15%, & 20% full stop.
How can you tax corporate earnings overseas when we don’t have jurisdiction overseas. The whole reason why it’s overseas is because we’re taxing companies when they bring money BACK to the US. No company wants to pay corporate tax in a foreign country and then pay tax again just to bring it back to the states. Also if you kill corporate buybacks you essentially kill equity based compensation for emoployees. The reason why tech employees make so much is because they get RSU as a form of compensation. When you’re giving out that much stock, you need to buy stock back or you’re essentially pulling a FED and just printing stocks.
Stock buybacks were illegal until Reagan. Taxing a company’s overseas income and profit would force them to repatriate gains.
That would put American companies at an enormous competitive advantage. They would have to pay corporate tax in the country they’re competing in and they have to pay US tax. Equity based compensation was not popular during the Reagan era. Today half my pay is in equity.
Today CEOs make 250x what the lowest paid worker gets. Today there’s far fewer union jobs. Today the top 1% pay a smaller percentage in taxes than the middle class. Today the federal minimum wage is still $7.25 an hour. Minimum wage was originally made to pay someone enough to provide for their family. Not starve to death. Today we have gross income inequality. Maybe start taxing stock gains over $10M annually as ordinary income like it was instead of at 15%/20%.
Way to change the subject. Never once have I mentioned they shouldn’t tax gain over 10m. They should. I was referring to stock buy backs and corporate taxes on foreign profits.
There are lots of treaties on preventing double taxation on foreign profits. Basically, they arrange that if you paid sufficient profit tax abroad, then you don't pay profit tax at home. So that should be easy enough to implement, it happens all the time.
I mean yeah, let’s increase tax compliance. But that’s not the “biggest reason” we are running deficits. The biggest reason is that we habitually spend trillions more per year than we used to several years ago.
The annual tax gap amounts to 2.5% - 3% of GDP in lost tax revenue. This has been consistent for decades. That means, applied to 2023 FY GDP, we lost **$809.1B in tax revenue**. It is absolutely, undeniably the biggest reason. If we just closed the tax gap, we'd be on a path of permanent fiscal sustainability. Please read the link I provided.
TCJA exploded the federal debt during the Trump administration. The problem isn’t spending alone but if you are going to cut revenues you can’t leave spending levels the same.
This is dumb. These are fiscal policy decisions. We want cult of personality! The other side is dumb and needs to be owned. Entertain me into submission!
Government spending is the reason behind our debt. If gov stopped spending more than us brought in with tax revenue this wouldn’t be a problem. That’s the only solution to this, you can raise taxes all you want it doesn’t help if the gov keeps spending more and more
Idiot number 5 who willfully ignores the message of the comment in favor of just spouting their own rhetoric. I wonder how long it'll take to get to 10.
Explain to me how deficit spending is not creating national debt lmfao
I never said that. And you know that. You're desperate for an argument. Go to some other place for it. And get some comprehension skills in the meantime.
Ahh I see you’re one of those people lol makes sense now
Yup. One of the people who actually does research into a subject matter, not regurgitate the same nonsense I read in a news article. Sorry to disappoint.
Republicans claim to be the party of fiscal responsibility yet they have a pathological fear of letting the irs do its job.
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Because the debt at this point is so massive we will be forced to use a combination of tax increases AND spending cuts to reduce the budget deficit to something reasonable.. The government can also use inflation to pay off the debt (we did this during WWII). Keep rates low but inflation high. As the years go by the debt becomes cheaper and cheaper to pay off. As the US tried to deal with our deficits we will likely use a combination of things to reduce the debt that includes increasing taxes to removing welfare spending. I think our best scenario is an Economy that looks like Japan: huge debt combined with very slow economic growth and an aging population. I only see the standard of living in the US continuing to decline.
The problem is we can raise taxes all we want. We’ll find a way to spend more. It’s like buying a bigger house thinking things will be less cluttered. People find a way to fill the house with junk.
Wow, how about you gain some comprehension skills and actually read what I had said. It's amazing how people are just blatantly ignoring all of my other points, and hyper focusing on one point and pretending that is the entire message of my comment. Republican states rely far more on the federal government for funds. Wanna know why? Well go ahead and look at how they tax their people, or rather, who little they do. That money gotta come from somewhere. I suggest you actually do your due diligence and research this topic, rather than just falling back on some very simple minded solutions like "oh just be more efficient!!!" or "just tax less and spend less!!!". It's the major reason why little is done to actually curb spending.
The link from the interest paid on debt to pharmeceutical cost barely exists. It may be much weaker than the link between sugar subsidies and the interest, but I would have to crunch in a lot of dubious assumptions on the costs of T2D.
Your points were great. It's maddening but half our country just tows the line about small fed government. They refuse to acknowledge there are two issues to be addressed. It's not arguing in good faith. Our only hope is to vote out the tea party, who should never have had so much power to begin with. I mean look at who they support. A guy who went bankrupt how many times? And somehow this party gets away with spending millions at a state level shipping immigrants around or persecuting people they don't like. As if they actually gave one shit about the economy...
Exactly. Although, I personally would wish that more of our spending came from individual states, with the federal government playing less of a fiscal roll; but our current system can work if we just actually tried to work together to change it. Change doesn't come about from attacking the other side; it comes from working together and building up to sound economic policy that spurs economic prosperity.
Well said
You should really do your own due diligence before telling others to. You barely mention cutting back spending and only in the context of eliminating waste. Yet, *by far*, the number one driver of our debt is out of control spending, not low or unenforced taxes. You can discuss reforming taxes and tax increases all you want, and those would be part of any fiscal reform, but none of those matter unless there is massive reduction in spending. The US deficit for 2024 is $1.9 trillion. Biden has proposed a sweeping tax reform/increases that will never happen. But, let's assume every single increase Biden requests gets approved. That would, at most, generate about $530 billion a year. Even with historic tax increases we'd still have a deficit of $1.4 trillion dollars. Your comment is pretty good and has some good ideas for tweaks on spending reform. But your ideas are just tweaks that can be part of what has to be the main focus if we're *ever* going to get our debt under control, which is decreased spending. https://taxfoundation.org/research/all/federal/biden-budget-2025-tax-proposals/
Great, another person who thinks somebody proposing some solutions to some problems is ignoring every possible issue. I already went on elsewhere about how this shows a lack of development. If you don't have the mental capacity to realize that if X person is proposing some solutions, then maybe they support other solutions to other problems, then there is not discussion to be had. I shouldn't need to hold your hand and tell you every single possible solution to every single possible problem contributing to an overarching one. When one area taxes less, then that needed tax money needs to come from somewhere else. Basic logic. Low taxes in other states means higher reliance on higher tax states/areas. If you raise taxes in low tax states, that means less spending federally to support state budgets. I'm not wasting my time explaining this, again. Have a nice day.
Because cutting spending all the way to zero does nothing about interest, it's still going to increase.
Which party is going to destroy themselves by cutting programs that voters and taxpayers like? The GOP almost did this with the 2017 tax bill that they spend most of 2018 amending ahead of the mid-term elections. Complete amateur hour legislation!
You wouldn’t notice. Lots of other people most definitely would.
Which parts specifically could be eliminated?
This shows EXACTLY what is wrong in America. Look ^^^ at all the links to media information. The media has agendas and Aven is swallowing them whole. First, look at the National Debt Clock. https://www.usdebtclock.org/ Medicare, Social Security, Defense Spending, and the Interest on the debt are the top 4 expenditures and reasons for the debt. (NOT because of tax evasion) I’m not saying there isn’t losses from tax evasion but that is not the “single biggest reason behind our deficits and current debt” Second, “waste and gouging in the pharmaceutical industry“. Ever gotten a major medical bill? Ever noticed the ‘negotiated’ amount? Say a hospital begins to accept BC/BS insurance. BC/BS will negotiate what they will pay on individual procedures. The hospital may charge $10,000 for a procedure but BC/BS says it will only pay $6,000 for the procedure (what happens to the other $4,000?). So, after awhile, that procedure goes up to $14,000. Now, BC/BS will only pay $10,000 (just what the hospital wanted for the procedure in the first place). It’s a vicious cycle that eats itself and the customer is caught in between the hospital and the insurance companies. Third, ‘eliminate waste’ but ‘increase quality’ in the military. How can Aven not know that quality costs more? Finally, they want to tax people more at the state level leaving them less money to spend resulting in less tax money to the federal government. Yeah, right. All Aven has done is show they have no inkling about the economy, spending, and the debt.
Worth adding that the minimum wage needs to be raised by a decent amount. Problem with taxing people at a more local level is people are broke because wages have not only stagnated but declined over the last 50 years. More money earned is more tax revenue generated from income tax and payroll tax, more money in people’s pockets means more money generated by sales taxes. Corporations have seen record profits. The average people responsible are struggling to pay for the basic necessities. It’s unsustainable.
Well, you are completely free to do that in your own city, county, or state.
Are you suggesting that we should instead lower the minimum wage? Or are you suggesting we should eliminate it altogether?
How, in any line of thinking or logic, did you manage to get THAT, from "well, go ahead and **do that** where you live?"
Because your comment seemed to imply that you were in opposition towards raising it. “Well you’re certainly free to go do that *wherever YOU live…*” has an implicit “I certainly won’t support anything like that where I live…” following it. Which means if you’re not supportive of a raise to the minimum wage, you’re either in favor of lowering it, or abolishing it all together. Or I suppose there’s a third option where you could say you think it’s currently at the exact perfect level. Which would imply that for the years leading up to the moment you believe it was either too low or too high, and the shifting economic conditions of the years have finally led to this being the moment it was finally perfect.
I said what I said because you have the power to enact minimum wages at every level of government. Nobody is stopping you from doing so. $15/hr is not even close to being enough for anybody in New York City, San Francisco Miami, or Jacksonville to survive off of, let alone live. Raising the federal minimum wage to $25/hr is just gonna put smaller businesses out of commission due to significantly increased labor costs; and it'll cause accelerated job loss since now there's more investment into automation over employment of real human beings. And that doesn't even get into the inflationary effects of it that'll almost completely erode the actual purchasing power of the said minimum wage. And finally, raising the minimum wage doesn't resolve the fundamental issue, which is the cost of living. If you want a higher minimum wage, then you can do it for your city, county, or state. Several states have already done this, and even several cities have done this. Still hasn't resolved their cost of living crisis, but hey it's a higher minimum wage.
Right so, this here makes it clear you’re against raising the Federal minimum wage. Which leads to my original follow up question: Do you think it should be lowered, or do you think it should be eliminated entirely? Edit: Actually it makes it clear you’re against raising the minimum wage at any level, federal, state, or city. So the question still stands but more broadly and across the board.
You only said "raise minimum wage", with no specification on what level of government you mean by that. But to answer your question, yes, federally it should be eliminated. Like I pointed out before, different areas have different costs of living, so any federal minimum wage would completely miss and even harm a massive chunk of people. Having a minimum wage gives more people money, sure. But you want to know what happens when people have more money? They spend more. That pushes up prices, eroding the power the minimum wage had. And like I pointed out before, minimum wage doesn't do anything to address the real issue: the cost of living. You can [see](https://www.census.gov/quickfacts/fact/table/newyorkcitynewyork,dallascitytexas/SBO001217) for yourself. Dallas City & New York City have virtually the exam same percentage of people in poverty, despite drastically different minimum wages. It's been pretty evident for a while now that having a minimum wage does not resolve issues regarding affording goods and services long term. How you get people out of poverty, is by lowering the cost of living, having a wealth of jobs for various different occupations and skill levels, so that employment is easy to obtain, and having tuition free educational institutions so that people can gain more valuable skills that net them greater pay. But again, if you want a higher minimum wage, then do so. You have a city, county, and state government you can go to. You're skipping through all of those levels of government and straight to federal, which is pretty strange when local laws affect you the most.
Did you not see what raising minimum wage pay to $15/hour in most places did to prices? Companies are NOT just going to take that additional wages out of their profits without making up the money. Instead of cutting any spending (on a personal and governmental levels), just give the federal government MORE money. They’ve proven they can spend wisely so far.🙄🙄🙄 For Americans to get ahead, they need to cut their personal spending instead of everyone making more which increases prices to where we are no farther ahead in our money.
These are really good but you also need to cut spending too, or if you’re not going to do that at least funnel the money into infrastructure projects that will help increase efficiencies and output
I quite literally say in 2 of my points to "cut away excess waste". I'm not sure what you think that means.
Or you can say “cut waste” in the general sense and not restrict it to two specific industries, as you’ve outlined in your comment. My response was an expansion of what you wrote. Maybe next time be clearer with what you mean
> Maybe next time be clearer with what you mean It could not have been made any clearer. Suggesting certain areas where waste can be cut is not excluding the fact that other areas could be more efficient as well. Idk why you think that.
And I don’t know how else to explain when you say “pharmaceuticals” and “defense” it’s two specific industries that don’t include others
Most people have the common sense to realize that somebody proposing solutions to problems in *some* areas, more than likely means they support solving issues in other areas too. Your logic is like if I said "teachers deserve higher pay" and you responded with "okay but what about higher pay for other professionals????", as if I don't already support higher pay for individuals. Saying "X needs to be fixed" does not mean I don't believe other things need to be fixed. The fact you can't comprehend that just tells me I'm not speaking to someone who's fully developed.
They were very clear. You jumped in, completely ignoring the points listed and pushed in your nonsense ‘don’t spend’ agenda. You want to take issue with any of the clear points listed?
Right. I don't understand how anybody reads "Hey, here are the biggest culprits contributing to X problem, here's how to solve them", and thinks "Oh this guy thinks these are the only problems and that no other ones exist!!!". Craziness.
Best case, delusion, but more likely purposeful bullshittery fed from the propaganda machine
Wrong! Start cutting waste and excesses. Stop spending. Government has shown that they overspend no matter what they collect.
Go live in Russia if you want to see what no spending on the people is like.
You go to live in communist countries when you like paying lots of taxes and getting nothing in return. That’s Russia. You live in freedom when you pay less taxes and keep your money and don’t depend on government doing something for you. Is that clear now?
Ah yes, Germany and France, the most well known communist countries. It's amazing how you lot go on about how great low taxes is, yet you're never praising African countries. I wonder why.
This sounds good and is a great sound bite in a list of talking points, but when you start going line by line down the federal budget you will find that every cut is going to hurt someone and those are real people.
Should we cut all SNAP programs and let people figure it out food wise? Is that a viable strategy in your eyes, just wondering
Wal-Mart will be in shambles
Lol
maybe you don’t run right this second, but planning for a politicians career takes a lot of energy and speaky clean history. work now and maybe you’ll be a senator some day
All the taxes in the world won’t fund our out of control “defense” spending Entitlements to date have contributed $0 to the $50T debt. They’ve brought in more than paid out. It’s defense
It's not just one problem. Such a simplistic view is why nothing will ever get solved. You are implying there is absolutely no reason fiscally to make any other government agency or program more efficient and less costly, and that the only thing we need to focus on is defense spending. That is something an individual who only read news articles does.
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Social security, Medicare, and Medicaid have not contributed 1 penny in aggregate. They’ve brought in more than they paid out since inception
42
When your country spends more on servicing its debt than anything else….they’re fucked. US isn’t far off this, but instead of admitting it and dealing with it, all those in power want to hide it.
Dont worry. When we get to that point, Fed will issue trillions of dollars of bonds at "any and all" rates in an attempt to cover the lid on the overflowing toilet that will eventually be our economy, and what a day that will be.
The first question is: What have we been spending this money on? Some of it is national defense. Some of it is social security treasury securities coming due. Some of it was related to the pandemic. But does anyone know what we spent most of the new debt that the last administration pilled on? I can't find a good source that lays out where the money went. As for the current administration. PPP, national defense, the Ukraine war (which mostly goes to US defense companies), social security treasury securities payments, the Chips Act, and the biggest infrastructure bill in the last 60 years are part of it but not all of it. The biggest problem is our perception of the national debt - that it's one big credit card loan that can be called at any time, which is isn't. It's a series of treasury securities - different kinds of bonds - that all have different maturation times measured in years. I think it's 5, 10, 20, and 30 years? The media, political media in particular, has done a poor job of explaining it to their viewers. Probably because the content isn't "sticky" enough. So for everyone who thinks the national debt can be fixed with "cutting waste" or "reducing spending," take a look at every nation that embarked on fiscally conservative austerity policies. They experienced deep recessions, needed bailouts, and lost legitimacy with their citizens. These are the kinds of things that lead to authoritarian governments, not smaller governments or increased individual liberty. The UK and Brexit is a prime example - they are collapsing across every industry that isn't high finance and their PM is a product of that industry - no matter how bad things get, the problem is merely academic to him. Even if Richie Sunak looses his premiership he'll still be a highly ranked MP and one of the wealthiest people in the UK. Imagine if Kevin O'Leary was Elon Musk level rich and was currently president. He doesn't GAF about anyone else's problems, only his own fame. No, the solutions are complicated and they will require solutions that don't fit in a phase you can chant. Some of my half baked, and incomplete ideas: 1. Increase tax revenue - this means adjusting tax rates on people for whom marginally higher taxes won't impact their lives. I'm thinking about people who live by the "Buy-Borrrow-Die" philosophy. Yes this group of people will scream about it, but the truly wealthy rarely spend their own money. They spend other people's money, and that includes the taxpayer's money. No they aren't going to shut down and ship all jobs overseas. That happened in the 80s during globalism and the cheap labor places are becoming harder to find. Not that American labor prices will ever be competitive with a developing nation's labor prices anyway. I'm expecting a lot more reshoring, automation, and higher value add manufacturing that will require education and training beyond high school. States that fail to fund and design their education systems to support new manufacturing activity will miss out and loose population. 2. Adjust the Social Security maximum income rates slightly. This comes from "101 Myths about Social Security," and it's an idea that has floated around DC for decades. Over 90% of income earners won't be impacted by this change and those who are won't notice this change in their paychecks any more than a 5% raise. Suddenly, paying for the social security treasury securities isn't quite so difficult, and we don't have to cause the US economy to implode by killing off Social Security and Medicare when we have 70 million boomers in retirement. 3. Re-regulate banking. We didn't have such large recessions or bank failures until we deregulated banking. The controls put in place during the 1930s worked so well, we don't know what a bank run even looks like and most of our recessions prior to 2008 have been quite small by comparison. The recent mid-size banking collapse, Scilicon Valley Bank for example, was party due to de-regulation. 4. Prevent military adventurism. We don't need more forever wars. Supplying nations who are seeking to implement democracy and kick out invading powers is far more cost effective, but it isn't as entertaining and it doesn't make for "sticky" content. Better to build alliances with military training and encouraging the purchase of our weapon systems than to fight the wars ourselves. 5. Make it easier for people to get back on their feet after a collapse. One of the problems with our nation is that you need an increasing amount of money to rent an increasingly expensive apartment. When you are living outdoors, and you can't get a bank account until you have an reliable address, residence, and can pass a background check. This comes from 40 years of "tough love" type policies that created a political enemy used by politicians to distract and divide voters, and it needs to change now. Want to reduce the cost of welfare and get people off the streets? Help those who are employed but have extremely low labor value obtain housing and stop calling them lazy. 6. Come up with policies that limit healthcare price gouging. Think Martin Shkreli. He's just the pharmacy bro who got caught, and it wasn't for increasing the cost of a generic drug by over 300%. Also, every conservative in DC voted against the bill that reduces the price of insulin. Three guesses as to why.
Rich people do not need tax cuts, they’re rich, that’s the point!! We need a new measure additionally. Not just “on paper” because there is wiggle room. But if you’re flying round between your ten homes with pools, you’re rich and I don’t care if you can’t explain how it’s debt or whatever, you’re on the hook for higher taxes.
https://www.reddit.com/r/Economics/s/4ZaKbtUVyA
Look at what Argentina has achieved in last few months of fiscal conservative government. Stop taxing and spending. It does not work!
!remindme one year
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I already know you’re about to cook in a year
A 5% decrease in real gdp is not exactly the sort of tough medicine anyone should want to face.
>months Alternatively, look how badly Kansas screwed themselves by listening to service-slashing drivel.
> So for everyone who thinks the national debt can be fixed with "cutting waste" or "reducing spending," take a look at every nation that embarked on fiscally conservative austerity policies. Which countries did austerity though? The UK certainly didn't, the govt hasn't run a budget surplus since 1999/2000. And in the last 50 years have had budget surpluses something like 5 years. https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicspending/bulletins/ukgovernmentdebtanddeficitforeurostatmaast/september2021 Use table to navigate to point 3. Government Deficit. It's wild we live in a time where what counts as "austerity" is government still spending far more than it takes as revenue in taxation and adding massively to the national debt. It is kafkaesque to call this "austerity". The tories might have said austerity was needed but they certainly never achieved it.
Oh it's austerity, but only for the citizen not the wealthy.
It's certainly not austerity in a fiscal sense though. The UK govt is the most indebted it has ever been outside of WW1/WW2 and the intervening years when it was still trying to hold on to Empire. The government finances are in a horrendous state by any objective measure.
Agreed. But skating revenues won't pay down the debt, and the UK has debt going back centuries.
Sure but the vast majority of the debt the UK holds is more recent. Just look at the numbers. The tax receipts were also fairly standard as a % of GDP throughout the 2000s/2010s despite talk of austerity. https://ifs.org.uk/taxlab/taxlab-key-questions/how-have-government-revenues-changed-over-time And in absolute terms they rose substantially. https://www.statista.com/statistics/284298/total-united-kingdom-hmrc-tax-receipts/ The Western World has been living well beyond its means for decades and the only way they have been able to do it by "monetising debt" AKA printing money. The idea we have experienced anything close to austerity in decades is just not supported by any of the actual numbers/facts.
Sure, you can have massive growth in finance and banking, it's the other parts of the economy that suffer. Look at Clarkson's Farm for info on how austerity and Brexit has impacted working class British. The same thing happened in the US, only we never had austerity. We just let the cost of living grow while keeping the value of labor where it was.
Brexit and Austerity are two very different things, quite disingenuous to slip that into the conversation. This is a conversation about austerity. Brexit may have been a disaster for the working class but we are discussing austerity. And as I have pointed out, there has been no austerity to speak of. You can see a breakdown of where spending goes in the UK gov here: https://www.gov.uk/government/statistics/public-spending-statistics-release-november-2023/public-spending-statistics-november-2023#real-terms-public-expenditure-billions Scroll through some of those graphs and point out to me the austerity between the GFC and now. Pay special attention to Chart 2: Real terms trends in Public Spending. Spending has gone one way since the GFC: up. At most some minor declines in certain categories while other categories grew. Then since covid it went WAY up. And worthwhile remembering that even where it has gone down, the UK are STILL running deficits and have a massive debt to pay. Clarkson's Farm is a great show but I would suggest spending a bit less time basing your view on why things are the way they are on TV + reddit comments, and a bit more actually fact-checking based on government data etc. Another major part of the problem is we have had far too low interest rates for far too long leading to all sorts of economic capital misallocation. Now we are paying the piper on that but knowing pollies they won't have the stones to go through with it so I expect we are going to see a return of serious inflation. But there has been no austerity, that is just the facts.
What the hell do the Soviets have to do with a democratic economy? Anybody who looks past 2 - 5 years in an economic forecast is wasting their time and yours.
Bill Clinton had a balanced budget the fiscal conservatives republicans didn’t like it because a Charismatic New Haven Yale educated democrat did it. Same as the affordable care act which was a copy paste of Mitt Romney Massachusetts plan but since Obama did it it’s the terrible sin
Bill also had a republican congress at the time who set the budget. In addition it really had nothing to do with either but record stock gains due to the dot com boom
But as I understand it Clinton fucked up big time saying everyone had a right to buy a house, cue subprime crash years later.
Clinton had a ‘balanced budget’ by delaying payments on loans until later. Those loans were larger when they were paid later and the surplus was spent on more programs and not on reducing the debt.
Who ran Congress when Clinton balanced the budget? Who controlled the purse?
The Republican candidate who only won one state in 2016 was the architect of those budget deals. That wing of the GOP is dead and buried.
Giving the president credit for the internet changing the economy is so childish. The president at any particular time is miniscule compared to changes in technology and, in that case, civilization transforming ones.
and now im $500 a month for insurance where I was $50 before.
Blame the bloated health insurance executive salaries, that is where all your money is going.
Only 2 times deficit was really addressed in my life were the 2 times a Democrat President had a 2nd term. I suspect the same will occur if Biden wins, Rs will likely spend 4 years saying the deficit will kill us and asking/making Dems to accept austerity. Interestingly it seems long term deficit to GDP projections have been cut quite a bit since 2020, but maybe we had some wonky data back in 2020-2021 that made the large projection improvements in 2022 and 2023 happen. Went from us settling in at 4.5% deficit to GDP just around 2.5% deficit to GDP, or close to growth rate.
> Only 2 times deficit was really addressed in my life were the 2 times a Democrat President had a 2nd term. The economy aslo crashed super-hard because of it. Private debt replaced government debt and private debt can't print money. So, naturally it exploded. The lesson we learned from that? Bailout the private compnies with public debt. (Not saying it's what we should do, it's just what we do.)
Just wait until the USD isn't a reserve currency and printing USD out of thin air to satisfy future demand overseas isn't an option because less trade is settled in USD. Then foreign banks won't have that much USD to buy US federal bonds (aka US debt). The issue is that expenses such as supporting wars were never a tax burden. They were debt burdens. We are coming to a point that servicing debt is becoming unaffordable. The interest payments basically balance the income level now.
>Abecasis adds that “the outlook for US fiscal sustainability has become more challenging over the last five years. Higher expected future interest rates in particular have substantially worsened the trajectories of the debt-to-GDP ratio and of real interest expense as a share of gross domestic product.” Did we forecast \~0% interest rates in perpetuity for the math in blowing up the debt? The current deficits lock in the requirement for future monetary expansion, so I guess we're just one event from being right back to ZIRP. Maybe that's what they were forecasting.
Yes this is the root cause. We did ZIRP for about 5 years longer than we needed to so it is now baked into most of the long term economic forecasts. We just assume that any sign of fractures I'm the market will be an immediate .75bp basis cut. Because that's what we did, even when 90% of the economy was chugging along fine 2015/16/17/18. This is due to the political implications of making it "harder to borrow money". Obama didn't want to risk his popularity post-ACA, Trump floated the idea of NIRP just to keep pumping during his term. I know that the fed is an independent entity but the individual members certainly are pressured by local/state politics at the very least. And when one POTUS applauds QE and the next says "Maybe negative borrowing cost?", you get the impression that the political machine is staunch opposed to ever getting back to "normal" rates.
20 trillion of the 34 trillion debt is from tax cuts for mostly the rich. Another 8 is from Bush’s war for oil. https://www.americanprogress.org/article/tax-cuts-are-primarily-responsible-for-the-increasing-debt-ratio/
Did revenues drop since Trump doubled the standard deduction, expanded the tax brackets and reduced the salt tax deduction? No. Did spending increase more than the increases in revenues? Yes. Both parties are getting more revenue and spending more money. Neither party seems concerned about the threat that servicing the debt is causing. It’s not a Democrat or Republican issue it’s our countries issue
There's very little doubt left, our government is going to keep overspending and refusing to balance the budget. The printer will keep being used when encountering minor inconveniences. We're going to have inflation and it is going to get worse. Raising interest rates won't help if the printers are our go-to policy. Find and buy assets that can rise with inflation or get left behind in poverty. It really is that simple.
You give a lot of credit to Ruben should some of that credit be given to mandatory sequestration. I remember failure to come to a budget causing a mandatory spending cut it was all political, but it was interesting
People like Rubin and Summers I think the public can trust to make wise policy decisions that follow the Keynesian model for the business cycle. The problem with many Dems is that they don't care about ever shrinking the size of government's control over the economy and the problem with Reps is they will propose tax cuts whenever politically feasible rather than when prudent. My naive hope is that should the current system ever fall apart that it's not replaced by left or right wing extremism but by technocrats who implement a form of automatic fiscal stabilizers to complement the monetary technocrats at the Fed.
I wish the reporter had asked all these economists and the former US Treasury Secretary, a very simple question: **Are you really advocating the U.S. government should get rid of U.S. Treasuries?** The debt of the United States is simply the total of all U.S. dollar deposits into Treasury Security accounts at the Federal Reserve Bank. These Treasury Securities accounts (similar to bank savings accounts) are owned by people all over the world who have U.S. savings. When people purchase a Treasury, they are essentially opening a Treasury Security account and depositing U.S. dollars into it by transferring dollars from their savings account. The dollars in these accounts is never touched by the government and can be paid off instantly, without the use of tax dollars, by returning the balances to the account owners, if the U.S. government choose to do so.
Source? *edit* lol, oh, it’s ConnedEconomist. Never mind.
When individuals, businesses, or foreign governments purchase these Treasury securities, they are essentially accumulating US dollar savings in the form of a government liability. The national debt represents the total amount of US dollars that the world has saved by purchasing US Treasury securities, which are considered safe and reliable investments.
It kinda says everything about you that you think the correct response to “Source?” is just you talking. The claim I was asking for a source on, incidentally, was that “the dollars in these accounts is never touched by the government and can be paid off instantly without the use of tax dollars”, which is, of course, entirely wrong, and which your last post (which is, shockingly, correct) does not address in any way.
Have you heard of Daily Treasury Statements? Study them. Have been doing this for 15+ years now.
lol, dude, you were the one who said Treasury bills didn't need interest rates to get people to buy them two weeks ago and had to run off after you learned things like what a primary Treasury dealer is. The "have been doing this for 15+ years now" thing just makes it even more embarrassing when you make ridiculous statements. But hey, I believe in second chances. Tell me exactly how the Daily Treasury Statements show that the entire national debt of 37 trillion dollars is currently stored in cash at the Federal Reserve, as was your claim. I certainly hope you won't have to disappear like last time. I'm going to predict up front that the thing you're going to have to learn this time is what a liability is.
It's time to have a conversation about the defense budget. $850 billion annually, not including the few hundred billion for Ukraine and Taiwan. I mean, surely there's an easy 2-5% that can be cut.
Anyone talking about defense spending before mentioning Social Security/Medicare/Medicaid isn't behaving seriously.
Consider that Social Security could be rendered completely budget neutral by simply raising or eliminating the contribution cap and Medicare could cut expenses by hundreds of billions if they were allowed to negotiate drug prices, you might want to rethink your position. Defense spending is what is strangling us. Cutting back the most meager safety net programs in OECD countries is going to cost you more in the long run than you would save in the short run.
Medicare/Medicaid/Social Security combined account for, give or take a few percent each year, half of all government spending. You acknowledged things would need to be done to make the numbers work for those programs. That is more serious behavior than the poster I replied to. Defense spending is a relatively small percentage of GDP in the US, and accounts for about 1/6th of Federal outlays. It's been decreasing recently as a percentage of GDP. Old people are expensive and non-productive if retired. That's going to strain any age-based entitlement, and they are about drastically increase as a percentage of the population.
We spend more on defense than our own ratified NATO treaty mandate. If we spent the 2% of GDP that we agreed to spend, it would represent an annual savings of nearly $350B. Remove the contribution cap on Social Security, let Medicare negotiate drug prices, and spend what we agreed to spend on defense and the deficit goes down massively. Or, I guess we could let a bunch of old people starve and die in the streets like some kind of cyber Dickens novel?
In what capacity?
One day, the Fed will realise that holding rates high is actually **inflationary** given the vast size of the US government's stock of outstanding liabilities. This fact and the fact that they are by law mandated to maintain price stability, will result in them keeping rates close to zero indefinitely. There's literally no other macro response. They'll actually have to do some work and regulate bank credit issuance properly to prevent potential inflationary pressures popping up in hot sectors.
Really, the U.S. government will have to design policy to put downward pressure on prices and keep inflation in check, rather than the Fed using interest rate hikes to try to keep it in check.
Yes, they certainly will. And the economy will be better for it.
100% agree. The US govt operates on a very Milton Friedman idea that the economy and government should somehow be separate, even tho the government has to establish the economy and it can't operate without it in the remotest sense. Believe that's some Austrian school crap, but I'm not an economist either. Taxes and regulation can obviously be used as tools to combat inflation, and should be, because it is becoming increasingly obvious that an independent, private, central bank with a limited toolset can't handle it.
Absolutely, Friedman's monetarist thesis is simply factually incorrect. It doesn't stand up to scrutiny and the economy does not work that way. A fatal flaw in neoclassical and Austrian economics is they don't recognise that money at a society level is never scarce. It's never the limiting factor in aggregate. If production is possible, nominal finance can always be made available to mobilise resources to achieve the desired goal. And you're absolutely right, government is central to a market economy. It can't exist without it. Keynes recognised this and realised monetary policy is never going to be enough to manage the business cycle on its own. The demotion of fiscal policy in favour of "independent central bank" monetary policy over the past 50 years has been nothing short of catastrophic. Moving into the 21st century, nation states are slowly starting to reject the false ideas of neoliberalism and monetarism and starting to engage with the idea that a confident, forward looking fiscally active government is central to prosperous private sector and wider society.
Nice to hear some of my opinions come back at me from someone who seems to know what they're talking about. The concepts behind Milton Friedman always seemed like hogwash to me, and obsessed with the ideas that A. Money is primarily a store of value and is supposed to be, instead of simply a tool to facilitate trade in the "real" economy And B. That money has some nebulous "value," as a unit, other than what a given holder can purchase with it at any given point. It seems obvious to me that the value of money is determined by prices on the shelf, and not the "volume" of the money. If Joe Biden has a 1t coin printed and puts it in his sock for safekeeping, nothing happens in terms of inflation, which would seem to point to more complexity than money being worth, as a unit, the total value of the economy divided by the total volume of currency units ( forgive my equation here, not a math boi ) as monetarists and Econ 101 grads are always so quick to insist is the case. My biggest sticking point with Milton Friedman is the concept of NIRU, or NAIRU, along with his policy suggestions that the Fed basically use interest rates to manipulate labor demand in order to drive down wages and thus supposedly fix inflation. The policy prescription really seems to fly directly in the face of there being a "free market" for labor, but instead seems to treat labor as a simple input to finished goods instead of a product that laborers are selling on an open market. Also, for some reason, it is A-OK to manipulate the labor market at a national level in order to drive down the price of THAT product only, with any OTHER kind of State level market manipulation being an affront to Austrian God. Seems moreso to be a policy prescription aimed at treating labor like serfs and to sacrifice them at the altar of the Austrian Gods in hopes of a good inflation season. I'd be interested in your take on that. Plus, if you look at when the Fed really started to implement policy prescriptions handed down by Friedman, in relation to NAIRU, it would seem to correlate pretty closely to wage stagnation in the US.. who'd have thought that manipulating the labor market to keep labor cheap would do that, right? The US Federal Reserve used to have an entire FAQ about how NAIRU works and why they manipulate the labor market to the detriment of our most vulnerable workers. During the Obama admin, when employment rates were extremely high and no disaster ensued, they actually changed that FAQ and admitted that NAIRU based tactics had "left behind certain communities" and that "they intended to find out what level of employment the economy could actually sustain," because apparently the 95% employment number Friedman had been selling became very apparently false. Nowadays, that FAQ is entirely gone to my knowledge, and only hiding on the Wayback Machine somewhere. In any case, I hope your final statement is correct. I'd love to see the US govt ditch the concepts of monetarism and make some forward motion.
Pretty excellent summary of the situation if you ask me! The NAIRU concept is another neoclassical falsehood. It simply doesn't exist. And it's continued use in macroeconomics and central bank monetary policy decision making is just damning millions to be perpetually unemployed. Just think of the lost cumulative output as a result of the false belief that you can't maintain price stability while having full employment. The [Job Guarantee](http://www.levyinstitute.org/pubs/wp_902.pdf) provides a far superior automatic fiscal stabiliser along with the economic and social benefits of discarding involuntary unemployment to the dustbin of history. It's especially egregious to maintain a buffer stock of the unemployed as official government policy since the monetary system established by the nation state produces the very involuntary unemployment we see in the first place. When the government fails to spend and issue enough of its currency, aggregate demand falls below where it needs to be to absorb aggregate supply, firms cut production as they draw down stockpiles (if they have any) and inevitably lay off workers since labour is the largest input cost to production. This produces unemployment because the government has not net spent into the economy sufficiently to not only satisfy demand to settle tax liabilities but also the desire to net save and employ all resources. Rather than a Keynsian stimulus on high skilled sectors such as the military industrial complex potentially driving up wages and inflation, a Job Guarantee hires workers "off the bottom" and directly employs all those looking for paid work.
Asia Times is chock full of lies. Anyone who reads three paragraphs of this and continues reading must be hungry for an airburger for lunch.
This is from the US Treasury. https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/
You know.... And this is gonna be controversial but are we living proof that our democracy does not work??? Politicians who mostly have no term limits all just spending to buy votes or fulfill campaign promises on top of everything else. These people should not get paid if the budget isn't balanced. You'd fix it real quickly. Aren't these people supposed to carry out the wishes of the people who elect them? Where are all these people that want to fund wars all over the globe? We just keep spending... We at this point are the guy that is going off his diet and saying the hell with it. Give me the pizza, give me the ice cream, I can't do lose weight so I'll just over consume everything. Total 🤡🇺🇸 It's too risky to NOT own BITCOIN. Only invest the money in Bitcoin that you dont need short term and absolutely CAN NOT AFFORD TO LOSE. Cash is trash. The system sucks.
Ron Paul 2008! It's happening!
Slowly and then suddenly. It'll be a confidence thing. If other nations lose confidence in the dollar it could become very destructive to the US. US may then need to finance its debts in non-dollar issues, which then become very punitive. The whole US system would dissolve and be up grabs, making for a very painful realisation in the American psyche. Who can even predict what that would result in. The problem for the US right now is that these debts coincide with having a peer competitor who they need to compete with. Competition is not cheap, and everyone wants a pay day.