US National Debt / Deficit - How does it end?

[Viking]

post removed (explanation below).

[True Federalist (진정한 연방 주의자)]

Our national debt is not out of control.  As a percent of GDP it is no where near the all time high right after World War II.  And now that we've come out of the Great Recession, it is project to stay fairly stable for the next decade.  We do have a long term imbalance in our old age programs, but that's easily fixable once the time that problems start affecting things get closer than they are now.  While any fix would be less painful if done sooner, we should be able to resolve it before it becomes a crisis.

[Mehmentum]

My understanding that the deficit has actually been shrinking rapidly mainly due to economic growth.  As long as the economy keeps growing, taxes don't go down too much, and spending doesn't go up too much (the last two of which are almost inevitable considering how deadlocked congress is) our budget should be fine.

The only way we default in the near term is if Congress fails to raise the debt ceiling.

[t_host1]

Our national debt is not out of control.  As a percent of GDP it is no where near the all time high right after World War II.  And now that we've come out of the Great Recession, it is project to stay fairly stable for the next decade.  We do have a long term imbalance in our old age programs, but that's easily fixable once the time that problems start affecting things get closer than they are now.  While any fix would be less painful if done sooner, we should be able to resolve it before it becomes a crisis.

Optimism is a good thing.
Reality; Re: US National Debt / Deficit – What’s that?

[King]

The national debt being a problem is nothing more than a political tactic meant to fool rubes with a big scary number. Only the party out of power ever feigns interest in caring about the debt.

Debt can grow infinitely provided the GDP grows with it.

[Clarko95 📚💰📈]

Debt can grow infinitely provided the GDP grows with it.

True, but it doesn't hurt to balance the budget every now and then. And debt interest payments take up hundreds of billions of dollars that could otherwise be spent on other things, like education, infrastructure, healthcare, R&D, etc.

[Mehmentum]

Debt can grow infinitely provided the GDP grows with it.

True, but it doesn't hurt to balance the budget every now and then. And debt interest payments take up hundreds of billions of dollars that could otherwise be spent on other things, like education, infrastructure, healthcare, R&D, etc.

That's my viewpoint.

Sometimes its necessary to go deep in debt (say during a war, or in response to a recession).  Outside of those situations, however, its better to keep the budget more or less balanced..

[bedstuy]

Debt can grow infinitely provided the GDP grows with it.

True, but it doesn't hurt to balance the budget every now and then. And debt interest payments take up hundreds of billions of dollars that could otherwise be spent on other things, like education, infrastructure, healthcare, R&D, etc.

That's my viewpoint.

Sometimes its necessary to go deep in debt (say during a war, or in response to a recession).  Outside of those situations, however, its better to keep the budget more or less balanced..

That's just an oversimplification. 

Think about it this way:  Let's say your annual tax revenue for FY 2000 is $100.  You've budgeted $100 and you're wondering whether to spend more and go into a deficit.  If you spend an extra $1, it costs 5 cents in interest and it increases future revenue by $5, is that a bad financial decision?  Of course not. 

You can't just lump spending into one category.  Just like you can't lump paying your mortgage with paying for bottle service at the club.  Spending can be an investment.  The better point is that the government should spend more wisely.  Maybe cut down on social security fraud, war, corporate giveaways, spend more on bridges, highways, buses and subways. 

The problem is that the perceived "smart" guys tend to be the economic power elite.  For them, spending is going to be a net loss because they pay more of the taxes and they'll be dead before a good percentage of the benefits of today's spending accrue.  So, they just want the government to take no thought for the morrow and let them live in luxury while America crumbles around them.

[Deus Naturae]

The officially reported debt figures are meaningless IMO. The "national debt" only refers the owed to the amount owed to creditors, but in reality the US government owes money to many other people for many different reasons: welfare and subsidy recipients, SS and Medicare beneficiaries, retired Federal employees, etc. A far better measure of the US fiscal situation is the "fiscal gap" devised by Laurence Kotlikoff of Boston University, which measures ALL projected future obligations against projected future tax revenues based on CBO forecasts. IIRC his most recent calculation came out to $222 trillion. Future tax revenues and obligations can be hard to predict so that figure may be off by a few trillion but the point is that the officially reported national debt isn't reflective of the magnitude of the situation whatsoever.

[Foucaulf]

A lot of the argument over the US debt comes down to one thing - the US government is legally bound to fund Social Security payments and Medicare/Medicaid, and official projectons are that costs for those three will balloon by the 2020s. If you're an optimist, you would say that health care costs will flatline due to present reforms and SSA will remain solvent due to tax rises across the board. If you're a pessimist, you think like Kotlikoff and think all of the increases will be passed on to the future labour force, which includes the entire Millennial generation.

Do I think it's a crisis? Probably not. Theories about "collapse" are kinda dumb, though; most of our vital services aren't on the federal government's asset sheets, and the U.S. hasn't seen inflation even with all the QE pumping. And, if spending cuts fall disproportionately on the poor, most Atlas users will not feel it very much.

[King]

The officially reported debt figures are meaningless IMO. The "national debt" only refers the owed to the amount owed to creditors, but in reality the US government owes money to many other people for many different reasons: welfare and subsidy recipients, SS and Medicare beneficiaries, retired Federal employees, etc. A far better measure of the US fiscal situation is the "fiscal gap" devised by Laurence Kotlikoff of Harvard University, which measures ALL projected future obligations against projected future tax revenues based on CBO forecasts. IIRC his most recent calculation came out to $222 trillion. Future tax revenues and obligations can be hard to predict so that figure may be off by a few trillion but the point is that the officially reported national debt isn't reflective of the magnitude of the situation whatsoever.

Reading libertarian estimations of the debt, inflation, etc., etc. are always a good exercise for the eye rolling muscles.

[Deus Naturae]

The officially reported debt figures are meaningless IMO. The "national debt" only refers the owed to the amount owed to creditors, but in reality the US government owes money to many other people for many different reasons: welfare and subsidy recipients, SS and Medicare beneficiaries, retired Federal employees, etc. A far better measure of the US fiscal situation is the "fiscal gap" devised by Laurence Kotlikoff of Harvard University, which measures ALL projected future obligations against projected future tax revenues based on CBO forecasts. IIRC his most recent calculation came out to $222 trillion. Future tax revenues and obligations can be hard to predict so that figure may be off by a few trillion but the point is that the officially reported national debt isn't reflective of the magnitude of the situation whatsoever.

Reading libertarian estimations of the debt, inflation, etc., etc. are always a good exercise for the eye rolling muscles.

The estimate is from Kotlikoff, not me.

[True Federalist (진정한 연방 주의자)]

A lot of the argument over the US debt comes down to one thing - the US government is legally bound to fund Social Security payments and Medicare/Medicaid, and official projections are that costs for those three will balloon by the 2020s.

Not quite true.  If the Social Security trust fund ever runs out, then the law calls for payouts to be automatically cut to match payroll tax revenues.  It would be a political and economic disaster of the first magnitude if it happened, but there are no legal difficulties.  Indeed, legally, the GOP could eliminate Social Security, have the Treasury pocket the existing trust fund and get the Federal government entirely out of the old age and survivors insurance business.  Politically, it would be impossible, but legally the Federal Government has no obligation to keep paying out money from Social Security to anyone.

[King]

The officially reported debt figures are meaningless IMO. The "national debt" only refers the owed to the amount owed to creditors, but in reality the US government owes money to many other people for many different reasons: welfare and subsidy recipients, SS and Medicare beneficiaries, retired Federal employees, etc. A far better measure of the US fiscal situation is the "fiscal gap" devised by Laurence Kotlikoff of Harvard University, which measures ALL projected future obligations against projected future tax revenues based on CBO forecasts. IIRC his most recent calculation came out to $222 trillion. Future tax revenues and obligations can be hard to predict so that figure may be off by a few trillion but the point is that the officially reported national debt isn't reflective of the magnitude of the situation whatsoever.

Reading libertarian estimations of the debt, inflation, etc., etc. are always a good exercise for the eye rolling muscles.

The estimate is from Kotlikoff, not me.

Yea, a classic anarchocapitalist sage economist.

[Deus Naturae]

The officially reported debt figures are meaningless IMO. The "national debt" only refers the owed to the amount owed to creditors, but in reality the US government owes money to many other people for many different reasons: welfare and subsidy recipients, SS and Medicare beneficiaries, retired Federal employees, etc. A far better measure of the US fiscal situation is the "fiscal gap" devised by Laurence Kotlikoff of Harvard University, which measures ALL projected future obligations against projected future tax revenues based on CBO forecasts. IIRC his most recent calculation came out to $222 trillion. Future tax revenues and obligations can be hard to predict so that figure may be off by a few trillion but the point is that the officially reported national debt isn't reflective of the magnitude of the situation whatsoever.

Reading libertarian estimations of the debt, inflation, etc., etc. are always a good exercise for the eye rolling muscles.

The estimate is from Kotlikoff, not me.

Yea, a classic anarchocapitalist sage economist.

Um, what? You may be confusing him with somebody else...

http://en.wikipedia.org/wiki/Laurence_Kotlikoff

[King]

Yes, I know who he is.

[Deus Naturae]

Yes, I know who he is.

Then why are you under the impression that he's an anarcho-capitalist or even a libertarian?

Also, do you have any actual objections to his fiscal gap measure other than ad hominems which aren't even accurate?

[Foucaulf]

Not quite true.  If the Social Security trust fund ever runs out, then the law calls for payouts to be automatically cut to match payroll tax revenues.  It would be a political and economic disaster of the first magnitude if it happened, but there are no legal difficulties. 

That's fine; a better phrase, then, would be "committed." It's hard to see the federal state's credibility not be damaged if the clock was run out like that.

[King]

No, no, you're the libertarian. He's the fearmongerer economist who sells you bait hook, line, and sinker.

Giant debt crisis predictions where we add up all the "outstanding commitments" are useless bits of information and dishonest in principle, attempting to sell a phony crisis to rubes.  We're not $222 trillion in the hole, there's too many extraneous factors that will happen between now and the year 2100 to claim we have to do anything. Kotlikoff and his kind have been claiming debt crisis since before you were born in hopes of getting noticed. Don't buy into that crap.

There is no debt problem.

[AggregateDemand]

The national debt is something we've created for our own pleasure and amusement, like skipping two weeks of work and going on an impulse buying binge with the credit card. Our debt is born from intellectual laziness and a debauched fascination with moralistic political economics.

The debt is not real. The political brinksmanship and malevolence of the fractured American electorate is real. The gilded asset class will not let the battling factions bankrupt the country. Where the electorate focus their malevolence is something to ponder with much trepidation. I'd like to think that we will simply grow tired of self-destruction and return to the bygone eras of economic productivity and progress, but the average person is still blissfully unaware of how large a role he plays in the formation of the problem.

[t_host1]

The officially reported debt figures are meaningless IMO. The "national debt" only refers the owed to the amount owed to creditors, but in reality the US government owes money to many other people for many different reasons: welfare and subsidy recipients, SS and Medicare beneficiaries, retired Federal employees, etc. A far better measure of the US fiscal situation is the "fiscal gap" devised by Laurence Kotlikoff of Boston University, which measures ALL projected future obligations against projected future tax revenues based on CBO forecasts. IIRC his most recent calculation came out to $222 trillion. Future tax revenues and obligations can be hard to predict so that figure may be off by a few trillion but the point is that the officially reported national debt isn't reflective of the magnitude of the situation whatsoever.

OWES, please explain, why's that; city, state and fed bureaucrats have already been paid once, why the infinite roll?    Snap’rs, why again? dervish, is not American made.

[Associate Justice PiT]

     Sometime in the 2030s when the whites defeat the reds in the Second American Revolution and President Daniel Jones, chairman of the American Tea Party, outlaws deficit spending (except on the military, to defend us from muslims and commies), the deficit should rapidly vanish.

[ag]

The original post in this topic had been posted in another forum some 5 months previously. While I have now way of judging if the present poster was the author of that post, this is, at best, an example of (self?)-plagiarism. Topic locked, original post removed.