Should the National Debt be abolished?

[phk]

Should the National Debt be abolished?

[tik 🪀✨]

what do you mean by abolished? pretend it doesn't exist? pay it off?

[True Democrat]

I voted No, because I took the nature of the question to be whether the United States should immediately erase its debt (essentially declare bankruptcy).

However, if you mean that it should eventually be abolished by paying it off, the answer is yes.

[bullmoose88]

Unless you mean pay it off, because doing anything else would seriously undermine the meaning of the words "full faith and credit of the United States."

[John Dibble]

Unless you mean pay it off, because doing anything else would seriously undermine the meaning of the words "full faith and credit of the United States."

[opebo]

While it is true that a good deal of the 'national debt' exists because of 'spending', like the Iraq war, which was simply a mechanism of dumping cash from the public treasury into the hands of Republican supporters, the underlying reason for it is simply an unwillingness to tax the ruling class.

Thus, it certainly does make sense to 'take' this money from them now, and one way to do it would be to simply not bother to pay the 'debt' back (it is nearly all held by the wealthy, like all assets).  However, as some of the market-worshipers above have pointed out, this would upset the market-god, which doesn't like sudden moves.  No, the way to do it is simply to 1) raise taxes on the rich to some reasonable level, say 70%, 2) engage in large-scale Keynesian income redistribution, and thus 3)  pay the 'debt' back with inflated dollars during the future boom. 

The rich won't notice that the dollars are inflated, as in a proper Keynesian redistributionist environment, economic growth is so high the owners are making large profits.  (Interestingly, however, we saw them kill this goose that laid the golden egg once before, purely out of spite).

[○∙◄☻¥tπ[╪AV┼cVê└]

Got a $9.25 trillion check?

[MODU]

No.  Much like an individual should carry some level of debt, so should the country.  It allows us to maintain a solid credit rating, while providing us a negotiation tool with other countries.  In addition, we should not have a "balanced budget amendment" which (as most of the ones proposed under that name) requires the Congress to increase taxes when tax revenues coming into the government fail to meet expenses.  A perfect example is right now... it is likely that tax revenues for 2007 will be lower than 2006 due to the drop in the housing market and land values.  However, Congress wants to keep increasing their budget.  How do you "balance" it?  Cut Congressional programs?  HA!  Simpletons... you raise taxes on people who are already beginning to feel a financial pinch as it is.  At least, that's what these amendments will do.  Now some are clever and allow Congress to vote on waiving the balanced budget requirement during lean years, but then what's the point of the amendment if you can wave a magic wand and ignore it? 

Ok, sorry, I'll get off my soapbox.

[Ban my account ffs!]

No.  Much like an individual should carry some level of debt, so should the country.  It allows us to maintain a solid credit rating, while providing us a negotiation tool with other countries.  In addition, we should not have a "balanced budget amendment" which (as most of the ones proposed under that name) requires the Congress to increase taxes when tax revenues coming into the government fail to meet expenses.  A perfect example is right now... it is likely that tax revenues for 2007 will be lower than 2006 due to the drop in the housing market and land values.  However, Congress wants to keep increasing their budget.  How do you "balance" it?  Cut Congressional programs?  HA!  Simpletons... you raise taxes on people who are already beginning to feel a financial pinch as it is.  At least, that's what these amendments will do.  Now some are clever and allow Congress to vote on waiving the balanced budget requirement during lean years, but then what's the point of the amendment if you can wave a magic wand and ignore it? 

Ok, sorry, I'll get off my soapbox.

So what you're saying is that I should be able to carry debt to the amount of several times my worth and continue to grow that debt each year by spending exorbitant amounts of money "straightening out" some stranger's family that I don't like?

Is it a better idea to cut aid programs to those that need it, especially during bad economic times?  I mean, God forbid the rich, who have lots of extra money, having to pay more during a recession in order for those that lose their jobs or are disabled can keep living.

[StateBoiler]

No.  Much like an individual should carry some level of debt, so should the country.  It allows us to maintain a solid credit rating, while providing us a negotiation tool with other countries.  In addition, we should not have a "balanced budget amendment" which (as most of the ones proposed under that name) requires the Congress to increase taxes when tax revenues coming into the government fail to meet expenses. 

It is quite simple, if tax money coming in goes down, you decrease expense. If you require extra money (like to pay for an extended military deployment), you increase taxes. Neither the Democrats nor the Republicans though have the balls to do that cause they got castrated long ago.

This comment though is the bulls*** that makes me pound my fist in a table and think that we need to start a generation war in this country. The youngish people do not understand how screwed the seniors and older people are making us if things continue like they are doing. Take this "tax rebate" they are giving back to us. It's not a rebate, it's just adding $150 billion to the national debt. Who pays that, not the seniors, when the s*** hits the fan, they'll be dead. It will be me and anyone near my age. Not only will we have to pay the $150 billion back, we will have to pay the interest.

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I want to make this perfectly clear to anyone over the age of 40, I am not paying your debt.

[MODU]

So what you're saying is that I should be able to carry debt to the amount of several times my worth and continue to grow that debt each year by spending exorbitant amounts of money "straightening out" some stranger's family that I don't like?

No, I didn't imply in any way that the debt should not be reduced.  I said that it should be abolished, since we need to carry some debt for practical purposes.

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Again, it's not what I implied or said.  The reason why a balanced budget amendment would kill us economically is because Congress would never cut their spending in order to "balance" the budget, meaning they will come after all tax payers (or practice economic discrimination and financially abuse a small segment of our society unfairly) to meet their needs.  In reality, federal deficit spending should increase during recessions, as the government can afford to put more cash into the system to make up the shortfall.  During peak years, their spending should all but stop increasing, in essence being "repaid" for their investments earlier.  However, Congress lacks the capacity to do that.

Take this "tax rebate" they are giving back to us. It's not a rebate, it's just adding $150 billion to the national debt. Who pays that, not the seniors, when the s*** hits the fan, they'll be dead. It will be me and anyone near my age. Not only will we have to pay the $150 billion back, we will have to pay the interest.

As I've said before, the "stimulus" package went about offsetting the losses due to the cooling housing market the wrong way.  The $150B should have been set aside to refinance mortgages of people who were placed into subprime loans when the lender knew the person was a high risk for defaulting.  It would be more than enough resolve the problems of the small percentage of home owners facing foreclosure while stabilizing the markets.  In addition, unlike Killary's plan to "freeze" rates (which would hurt those who are invested in the debt), the refinancing sees a return on investment by those who hold stocks or funds of the lenders in question.  It is the closest to a win-win-win solution for everyone, since the government would actually see a return on their investment through this practice, unlike a stimulus check that won't even cover the interest on those who are actually in financial trouble.

[StateBoiler]

As I've said before, the "stimulus" package went about offsetting the losses due to the cooling housing market the wrong way.  The $150B should have been set aside to refinance mortgages of people who were placed into subprime loans when the lender knew the person was a high risk for defaulting.  It would be more than enough resolve the problems of the small percentage of home owners facing foreclosure while stabilizing the markets.  In addition, unlike Killary's plan to "freeze" rates (which would hurt those who are invested in the debt), the refinancing sees a return on investment by those who hold stocks or funds of the lenders in question.  It is the closest to a win-win-win solution for everyone, since the government would actually see a return on their investment through this practice, unlike a stimulus check that won't even cover the interest on those who are actually in financial trouble.

First, your package would have never happened cause the Bush administration does not want to be seen as bailing out people that bought beyond their means. (which is a good thing in my opinion)

Second, freezing rates is immaterial, as the people on the investing end of that debt are going to lose out anyway. There's a lot more pain in this left to be had, so people in trouble now are just going to walk away from their houses just like corporations walk away from pension plans or layoff workers. It's a business decision. This is one reason I think Paulson declared a couple days ago all foreclosures are being put on a moratorium for a month. It stops people from walking away from a bad deal they made.

Third, if the $150 billion went to homeowners way underwater, my generation and I are still paying back the $150 billion plus interest. So in 25 years, the year 2033, if we assume a blanket interest rate of 5% interest per year, that $150 billion comes out to $507.9 billion that I am expected to pay back with my taxes. My generation is probably going to see our taxes probably triple just to cover all the excess of politicians yesterday and today, which is currently running at $9.2 trillion, and if we don't pay that back through higher taxes (our country's main revenue source by far), then the United States of America declares bankruptcy, and imagine all the turmoil that happens then. (With globalization as it is now, it's not like we're going to see the big wage increases which means that $507.9 billion would be only $150 billion in 2033 in real terms either.)

[MODU]

First, your package would have never happened cause the Bush administration does not want to be seen as bailing out people that bought beyond their means. (which is a good thing in my opinion)

This method does not reduce the value of the persons home or debt.  What it does is restructures the mortgage to take it off of the ARM and establishes a fixed rate loan, which is more managable for high-risk borrowers.

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Under my recommendation, there will still be foreclosures (since some people simply cannot afford the home they bought, regardless of adjustable or fixed rates).

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Yet, unlike just giving people a $500 check which will be spent once, and the effect of that limited cash will only be felt about two or three transactions further down the road, stablizing the housing market will result in higher tax revenue, so the government would see an actual return on its investment within just a few years, including interest.  (Of course, this assumes that the government doesn't jack up spending on other projects because they see the increased tax revenues coming in.)  This is why I think Congress needs to have more corporate accounting standards placed upon itself, so they can track what is a profitable investment and what is not.

[Ban my account ffs!]

Economic discrimination?

Well then, MODU, shall we pay everybody the same wage? 

It's quite simple.  If you're rich, you pay lots of taxes.  If you're not, you pay fewer taxes.

Unfortunately, in most states, the middle and lower classes are actually paying a higher portion of their income in taxes once all the tax bills are figured out.  Or is it only discrimination when it affects the rich?

[MODU]

Economic discrimination?

Well then, MODU, shall we pay everybody the same wage? 

It's quite simple.  If you're rich, you pay lots of taxes.  If you're not, you pay fewer taxes.

Unfortunately, in most states, the middle and lower classes are actually paying a higher portion of their income in taxes once all the tax bills are figured out.  Or is it only discrimination when it affects the rich?

No, I believe everyone above the poverty line should pay the same tax rate.  If someone making $300K has to pay 20%, then someone making $30K should pay 20%.  Eliminate 95% of the needless deductions, multi-tiered tax rates and the abuse by "the rich" (which actually include the middle class) will not be necessary.  And that will resolve your concern about the lower and middle classes paying a higher portion of their income in taxes. 

[Beet]

The national debt as a percentage of GDP is not out of the ordinary.

[Inverted Things]

MODU is mostly right. It makes sense to run deficits occasionally, particularly in times of war (real war, like WWII; not fake war like we have now) and in times of recession.

The big issue is not that the government spends beyond its means. The big issue is that the government's accounting would make Enron's former execs blush. Our official debt of ~$10 trillion isn't too bad, as Beet points out. However, there's a lot of debt that the government sweeps under the rug.

Kotlikoff and Burns have argued that the Social Security, Medicare and Medicaid shortfalls are $51 trillion in 2005 dollars. That's a lot. And it's bad accounting to not include this in the debt; it IS debt until we change the laws or declare bankruptcy. K & B have further argued that our credit rating will plummet soon once our investors realize how bad our problem is (i.e. when the baby boomers retire en masse and the strain on the above programs becomes apparent).

And score another point for MODU: Warren Buffet has said that his secretary pays a higher tax rate than he does. That is a problem with the system, and it's facts like this that make a person warm up to the flat tax idea.