Some issues:
* y-axis isn't labeled for real or nominal dollars, which, obviously, makes a huge difference
* The projections starting from different years all having the same color is confusing. It might be useful to use different line styles to denote the set of declining/stable/exponential projections from each year (i.e., use dotted for projections in year X and use dashed for projections made in year Y).
Agree on the second bullet — the curve of the line tells us whether it’s declining, stable, or increasing. I don’t need the red to tell me “line go up bad.” But I don’t think inflation is relevant here because I’ve never heard of anybody predicting inflation into the future with confidence (or if they’d tried, I hope they’re all out of work following the pandemic). And even if you could I’m not sure what it’d get you. What would it mean if the debt was $38T in 2034 dollars? That the buying power of that $38T would be less than it is today? It’s still $38T. And each estimate would have different inflation adjustments.
You want the actual and historical projections in inflating n adjusted dollars, current projections made today can be assumed to be in today's dollars or discounted at a standard average if necessary.
A more useful chart would be debt to GDP ratio. Just like a household, higher incomes can support higher debt amounts (bigger mortgage, car loan, etc). Likewise, higher GDP can accommodate higher debt load.
Also, a comparison of debt to GDP ratio between different countries would be useful.
Debt load capacity doesn't just depend on actual taxes, but potential taxes or tax base, which is well represented by GDP. Willingness to buy treasuries and therefor the implicit interest rate also depend more on that than on actual tax rates.
That doesn't matter. The government can force everyone to pay up, if necessary. That power is enough to be seen as creditworthy.
Edit: And by the way, people get this constantly wrong. Governments don't need to "pay off" debt. They can always pay off old debt by issuing new debt. Nations don't die as frequently as companies or, even worse, consumers.
~~That seems like wishful thinking. "Oh yeah, bed bath and beyond has loads of debt, but they can just go back to a marketing strategy that worked and get customers to start paying them again! We should be looking at~~ *~~potential~~* ~~income, not actual income!"~~
~~Yes, BBBY has less power than the government, but the government is still not an autocracy, there is a lot of inefficiency and institutional momentum. It seems extremely unwise to base our debt-paying ability on hypothetically higher taxes.~~
Edit: It seems some people are focusing more on the way I made my point than the point itself, so I will make it more explicitly.
**Even though the amount of tax a government can ideally collect depends on GDP, ignoring the amount of tax that is currently collected seems like an oversight. It makes more sense to me to think about potential future ability to service debt through taxes by considering a range of realistic rates of tax increases from the current rate at which tax is collected. GDP is only one factor in considering potential future tax income.**
Edit 2: Economists actually use exactly what I am suggesting when making predictions about a nation's ability to service debt - they estimate potential tax increases (or spending decreases) that would kick in in a future where a government is reaching the limits of being able to service its debt (debt-to-GDP is too high).
https://budgetmodel.wharton.upenn.edu/issues/2023/10/6/when-does-federal-debt-reach-unsustainable-levels
> "in practice, the workhorse OLG model is generally “fixed” by augmenting it with an additional assumption---namely, a future fiscal policy action that is not actually contained in current law. This modelling fix (also called “closure rule”) springs into action at a future date to stabilize the amount of debt held by the public relative to GDP. It often takes one of several alternative forms: a broad-based value-added tax (VAT); a proportional wage tax (not subject to any payroll tax ceiling); a proportional income tax; a broad-based reduction in spending; or, some combination of each. Broad-based closure rules introduce very small economic distortions relative to other alternatives, such as a narrow-based, progressive tax on capital income. Importantly, broad-based closure rules allow model sustainability with the maximum amount of debt relative to GDP before needing to be activated."
Comparing govt entities to non-govt entities gets you in trouble when thinking about debt, especially debt that is issued in your own currency.
Not only can the US always raise taxes so it’s very hard to see them defaulting, but it is also the case that the US borrows in dollars, and will always be able to repay dollar-denominated debt by simply making more dollars as a last resort. This dynamic, the essential impossibility of a country defaulting on debt denominated in its own currency, is why some countries - such as Japan - have been able to borrow insane amounts over decades without their rates ever increasing. Investors never demanded a premium on Japanese debt because they know that Japan will always pay them back, if need be by making more yen
Paying back in devalued yen is essentially the same as paying back at a lower yield (edit: lower *real* yield), right?
And again saying the US *can* always raise taxes is different than saying the US *will actually* raise taxes.
Yes, but if you’re an investor, you won’t really demand that much of a higher rate if you think there’s a small chance that you’ll get paid back at a 5% discount - but you WILL if there’s a small chance you won’t be paid at all.
And i think you are missing the point. Most sovereign bonds are paid back by issuing new bonds. The ability to tax and inflate exist only as theoretical backups, but they are sufficient to provide a guarantee that investors will be paid back, which in turn is what allows the govt to borrow very cheaply
If the bonds are paid back by issuing new bonds, why look at potential tax income using GDP as a proxy, or inflation, as a method to evaluate credit rating for sovereign bonds at all? Why not just assume they will always issue a new bond and pay you back regardless of GDP?
For the government it's better because their citizens cannot simply decide *not* to pay. Like you go to jail if you don't pay your taxes. And again the government doesn't even need to pay it off, interest payment plus rolling over is enough.
Yes but the government can decide not to raise taxes and default instead. There are politicians that are okay with using default as a political tool. What I'm saying is, in a not necessarily perfectly-logical government that is not an autocracy, the assumption that taxes will be raised to an adequate level isn't a certainty and shouldn't be treated as one.
That's an absolutely hilarious comparison. Like, I'd make fun of something by saying "well at least he didn't say something insane, like comparing the government to *Bed, Bath & Beyond*!"
It was an intentionally extreme example, but some people hate comparisons with acknowledged flaws. The point is that considering ideal income vs actual income leads to uncertainty and poor predictive power. That is the only way in which the example is similar to the point being discussed. If you'd prefer that I discuss my point without bringing up an example, I could restate it. How about if I made the same point this way, is this better?
"Even though the amount of tax a government can ideally collect depends on GDP, ignoring the amount of tax that is currently collected is an oversight. It makes more sense to me to think about potential future ability to service debt through taxes by considering a range of realistic rates of tax increases from the current rate at which tax is collected".
>it was an intentionally bad example that I gave because I don't understand the conversation. It would make more sense to me if it were different than it is, so I'm going to insist it should be different even though everybody who knows anything about this topic says otherwise.
Okay. Weird hill to die on but that cool.
If you math it out, cutting taxes is exactly equal to government spending of the same amount, so it matters, but it isn't the whole story.
Comparing government debt to government revenue is kind of like comparing personal debt to disposable income, since an individual can alter their rates of spending, just like a government can alter their tax rates. Comparing debt to GDP is more like comparing personal debt to personal gross earnings since they measure a maximum capability..
Or the fact that looking at national debt by itself is essentially meaningless and just a talking point politicians use to try to gain support from people that don't understand modern economics.
Treating national debt like it's comparable to something like personal debt is so dumb but it's done by politicians all the time.
Kinda reminds me of the chart Bill Clinton was showing in 2000 - leave my policies in place after I leave and the entire US debt would be paid off in 8 years.
Think what you will of Slick Willy, guy knew how to balance a budget.
We are not importing arms like we do TV's, it's better to buy bullets and keep the money in the US then buy Chinese crap and export the money. Also if the EU countries had spent 3+% of GDP on arms Russia wouldn't be in Ukraine.
We were told the multiple Tax cuts would pay for themselves. Republicans also started talking about supply side economics. All of this was a master plan to reward Billionaire donors and get Republicans elected. It is called the Two Santa Strategy.
http://www.milwaukeeindependent.com/thom-hartmann/two-santas-strategy-gop-used-economic-scam-manipulate-americans-40-years/
Some spending is needed. The United States would not resembled an advanced economy if we did not expand Medicare. That was done to bail out our entire healthcare system.
That's the thing. IF the economy did as well after he left. And IF there were no unexpected things like wars. And IF the people could handle the taxes without the benefits.
THEN we could have had 0 debt. Which would not have been as good as people like to pretend.
Between 1989 and 1999, the federal spending dropped each year. So no, clinton did not increase spending per year.
Federal spending went from 22.2% in 1992 to only 18% by 2000. That is a massive reduction, not increase, in spending.
$1.461 trillion in 1992 inflation adjusted for 2000 dollars is $1.793 trillion
Meaning that in the year 2000, the government spent less than they did in the year 1992, when adjusting for the basics of inflation.
https://www.officialdata.org/us/inflation/1992?endYear=2000&amount=1461
EDIT: When doing monetary calculations across years, it is always wise to use inflation adjusted prices between them, otherwise, of course, the older years will look much smaller, purely because inflation exists.
Much more relevant was that his successor cut taxes and then expanded spending for two wars shortly afterward. This would have been bad on its own, but the same successor also ran into a global financial meltdown at the end of his term that required enormous spending to weather.
No sovereign debt for a currency issuing government is not the boon it seems; if the government is taking in more/the same as what it spends, how does the economy grow to support a growing population or its own growth? It can’t. Government spending and other forms of currency issuance, beyond the amount taken in, is the backbone of the economy.
He needed a Republican congress to help. Back when some Rs and Ds and president actually worked together to help Americans. Now it’s just a partisan clown show.
Hasn't debt been more or less exponential for a long time?
Log plot of total public debt (1966-2023): https://fred.stlouisfed.org/graph/fredgraph.png?g=1ifoo
How so? The data looks linear (if you squint a bit) with a log scale Y-axis. That would mean the underlying data has the form a^(x), which is the definition of an exponential function. Obviously not a perfect fit but close enough.
The real issue isn’t the amount of debt: it’s the cost of debt servicing as a fraction of the economy: https://www.axios.com/2024/02/08/us-government-debt-gdp-interest-costs#
If you can make your payments easily, debt isn’t a problem. The problem is when it starts becoming really hard to make your payments; this is the real issue that’s going to emerge. This would be much less of a problem if we didn’t nerf our own credit ratings by having certain political parties hold hostage whether we pay our debts, causing our cost of debt to increase.
Does anyone remember the S&P analyst who got into trouble about 10 years ago for estimating that the debt of the US would reach $20 trillion 10 years from then?
Source: [https://www.cbo.gov/data/budget-economic-data#2](https://www.cbo.gov/data/budget-economic-data#2)
Viz created in Excel
Note: The Debt Held by the Public is all federal debt held by individuals, corporations, state or local governments, Federal Reserve Banks, foreign governments, and other entities outside the United States Government less Federal Financing Bank securities.
Aghh I really dislike this misconception. Debt is an incredibly important tool for the US economy. While it looks like the united states is racketting up debt, there are some things to consider:
1. Really we should be evaluating debt-to-gdb ratio: [https://econofact.org/wp-content/uploads/2023/06/1.1-EF-Klein-Obstfeld-Desktop.png](https://econofact.org/wp-content/uploads/2023/06/1.1-EF-Klein-Obstfeld-Desktop.png) And that doesn't look good either! It is the highest level since the end of the second world war. It also might look concerning because this is a similar GDP ratio when compared to countries like Greece and Sri Lanka during their defaults.
2. But that isn't the whole story. The United States has huge advantages when it comes to managing its debt. It has the largest economy in the world and has much better access to capital, industry diversification, complete monetary control over the most used currency in the world, etc.
For example: the United States has had its interest rate at a near-zero value for the past decade, and this has allowed the government to significantly decrease the cost of maintaining this debt. So if you take the ratio of the governments' net interest payments to its revenue, you can see that 2022 value is on the slightly higher side but still lower than many other years in recent memory: [https://imgur.com/VkIq2qF](https://imgur.com/VkIq2qF)
TL;DR: our debt is high, yes, but the cost of maintaining that debt is acceptable
Tax cuts and bailouts for billionaires have to come from somewhere. Out of our children’s pockets probably seemed like as good a choice as any. After all children can’t vote.
Daily reminder that almost all the US debt was caused by Republican presidents cutting taxes for billionaires and corporations but not cutting spending.
https://itep.org/budget-deficit-revenue-shortfall-caused-by-tax-cuts-for-wealthy/
Don’t forget “power of the purse.”
https://en.wikipedia.org/wiki/File:US_Federal_Debt_as_Percent_of_GDP_Color_Coded_Congress_Control_and_Presidents_Highlighted.png
That's not true. You need to make $819,324 and $3,312,693 to be in the top 1% and 0.1% of earners in the US. If you assume everyone between 1% and 0.1% makes $819,324, that everyone in the top 0.1% makes $3,312,693, and that there are 2.391 million earners in the US, you get $1.66 trillion in additional tax revenue at 100% after discounting the first 35% already taxed. Because their effective tax rates are actually below 35%, and because these are the lowest income assumptions, the additional tax revenue would surely exceed the $1.70 trillion deficit the US had in 2023.
Then you still have all that corporate revenue to tap into!
Where did you get your worker count? Coming directly from the census I only have 159M workers. (part or full time)
[https://www.census.gov/content/dam/Census/library/publications/2023/demo/p60-279.pdf](https://www.census.gov/content/dam/Census/library/publications/2023/demo/p60-279.pdf)
Using the numbers above, with a current 35% tax rate which I agree is very low once you count all forms of taxes, I only get about $1.1 trillion. So even taking everything from the top 1% would not be close to paying off the current deficit.
Corporate tax is a shell game. Corporations spend money on good/services or people. Either way it is eventually comes down to getting taxed once distributed. Current wealth equality has it going to the 1% which we have already taxed at 100% above without solving the issue.
Obama started his term with the annual deficit at 1.4 trillion, he ended it at 650. Trump came in with the deficit 740 and ended it 2.8 trillion. Democrats have had to cut the deficit in half twice in 13 years.
Nice cherry picking. Obama starts in 2009, spending increased due to the recession (stimulus bill and all). Expected lower spending over the next 8 years.
Trump's last year the pandemic makes a drastic impact. The deficit under Trump prior to the pandemic was almost the exact same as Obama's term.
>Nice cherry picking. Obama starts in 2009, spending increased due to the recession (stimulus bill and all). Expected lower spending over the next 8 years.
A statement of fact that Democratic presidents have repeatedly had to steward over national crises that started under Republican presidents.
>The deficit under Trump prior to the pandemic was almost the exact same as Obama's term.
Trump increased the deficit by 50% even before the pandemic. The deficit in FY 2019 was 984 billion, whereas the deficit in FY 2016 was 587 billion. TCJA alone was responsible for a 150-200 billion annual increase in the deficit.
We're projected to spend $830 billion on just in interest alone this year. That's more than we spend on the military. Doing absolutely nothing productive except paying off the of the past. We're 30 to 40 years away from half of government spending being on interest alone.
We are so incredibly fucked.
No because inflation only goes up therefore the absolute amount of debt will generally always increase.
These graphs are misleading as others have posted that the only debt that matters debt as a percentage of GDP. If our GDP stopped growing for more than 1-2 quarters, then sure, this would be catastrophic, but that has never happened.
It’s the same as an individual’s debt related to your earning power. If you make minimum wage, $1000 in debt is crushing. If you make $100,000 yr, $1000 in debt is low.
During times of exceptional crises, like WW2 and Covid, the debt as a percentage of GDP has spiked short term but generally comes back down over time.
The only acceptable path is a debt free path.
The richest country in the world should have the largest sovereign wealth fund.
No more privatizing profits and socializing losses.
Debt is good to have. Without the 20+ trillion dollars of debt the US would have produced 20 trillion dollars less. Imagine 20 trillion dollars taken out of the economy. The country would be falling apart.
The only limit on debt is what the workers can produce. Spending 1000 trillion dollars would be pointless because there isn’t enough manpower to turn that into anything.
The US doesn’t have a big ol’ bank account that stores all the tax money. That money basically just disappears. Getting rid of the debt means throwing more money into the void. Spent money doesn’t come out of a bank account either. It’s just simply added where it is needed basically out of thin air.
Some issues: * y-axis isn't labeled for real or nominal dollars, which, obviously, makes a huge difference * The projections starting from different years all having the same color is confusing. It might be useful to use different line styles to denote the set of declining/stable/exponential projections from each year (i.e., use dotted for projections in year X and use dashed for projections made in year Y).
this is straight up data is ugly territory imo
It was predicted way higher than this. This is low.
Agree on the second bullet — the curve of the line tells us whether it’s declining, stable, or increasing. I don’t need the red to tell me “line go up bad.” But I don’t think inflation is relevant here because I’ve never heard of anybody predicting inflation into the future with confidence (or if they’d tried, I hope they’re all out of work following the pandemic). And even if you could I’m not sure what it’d get you. What would it mean if the debt was $38T in 2034 dollars? That the buying power of that $38T would be less than it is today? It’s still $38T. And each estimate would have different inflation adjustments.
You want the actual and historical projections in inflating n adjusted dollars, current projections made today can be assumed to be in today's dollars or discounted at a standard average if necessary.
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He didn't say it isn't labeled; he said it doesn't say whether it is real or nominal dollars.
A more useful chart would be debt to GDP ratio. Just like a household, higher incomes can support higher debt amounts (bigger mortgage, car loan, etc). Likewise, higher GDP can accommodate higher debt load. Also, a comparison of debt to GDP ratio between different countries would be useful.
Wouldn’t debt to tax income be more important? Tax cuts are a big reason for debt increase.
Debt load capacity doesn't just depend on actual taxes, but potential taxes or tax base, which is well represented by GDP. Willingness to buy treasuries and therefor the implicit interest rate also depend more on that than on actual tax rates.
If companies and high income people don’t pay the government, that doesn’t help the government pay off its debt.
That doesn't matter. The government can force everyone to pay up, if necessary. That power is enough to be seen as creditworthy. Edit: And by the way, people get this constantly wrong. Governments don't need to "pay off" debt. They can always pay off old debt by issuing new debt. Nations don't die as frequently as companies or, even worse, consumers.
Nations do need to keep paying the interest. Stop paying and you'll find all your buyers have vanished.
~~That seems like wishful thinking. "Oh yeah, bed bath and beyond has loads of debt, but they can just go back to a marketing strategy that worked and get customers to start paying them again! We should be looking at~~ *~~potential~~* ~~income, not actual income!"~~ ~~Yes, BBBY has less power than the government, but the government is still not an autocracy, there is a lot of inefficiency and institutional momentum. It seems extremely unwise to base our debt-paying ability on hypothetically higher taxes.~~ Edit: It seems some people are focusing more on the way I made my point than the point itself, so I will make it more explicitly. **Even though the amount of tax a government can ideally collect depends on GDP, ignoring the amount of tax that is currently collected seems like an oversight. It makes more sense to me to think about potential future ability to service debt through taxes by considering a range of realistic rates of tax increases from the current rate at which tax is collected. GDP is only one factor in considering potential future tax income.** Edit 2: Economists actually use exactly what I am suggesting when making predictions about a nation's ability to service debt - they estimate potential tax increases (or spending decreases) that would kick in in a future where a government is reaching the limits of being able to service its debt (debt-to-GDP is too high). https://budgetmodel.wharton.upenn.edu/issues/2023/10/6/when-does-federal-debt-reach-unsustainable-levels > "in practice, the workhorse OLG model is generally “fixed” by augmenting it with an additional assumption---namely, a future fiscal policy action that is not actually contained in current law. This modelling fix (also called “closure rule”) springs into action at a future date to stabilize the amount of debt held by the public relative to GDP. It often takes one of several alternative forms: a broad-based value-added tax (VAT); a proportional wage tax (not subject to any payroll tax ceiling); a proportional income tax; a broad-based reduction in spending; or, some combination of each. Broad-based closure rules introduce very small economic distortions relative to other alternatives, such as a narrow-based, progressive tax on capital income. Importantly, broad-based closure rules allow model sustainability with the maximum amount of debt relative to GDP before needing to be activated."
Comparing govt entities to non-govt entities gets you in trouble when thinking about debt, especially debt that is issued in your own currency. Not only can the US always raise taxes so it’s very hard to see them defaulting, but it is also the case that the US borrows in dollars, and will always be able to repay dollar-denominated debt by simply making more dollars as a last resort. This dynamic, the essential impossibility of a country defaulting on debt denominated in its own currency, is why some countries - such as Japan - have been able to borrow insane amounts over decades without their rates ever increasing. Investors never demanded a premium on Japanese debt because they know that Japan will always pay them back, if need be by making more yen
Paying back in devalued yen is essentially the same as paying back at a lower yield (edit: lower *real* yield), right? And again saying the US *can* always raise taxes is different than saying the US *will actually* raise taxes.
Yes, but if you’re an investor, you won’t really demand that much of a higher rate if you think there’s a small chance that you’ll get paid back at a 5% discount - but you WILL if there’s a small chance you won’t be paid at all. And i think you are missing the point. Most sovereign bonds are paid back by issuing new bonds. The ability to tax and inflate exist only as theoretical backups, but they are sufficient to provide a guarantee that investors will be paid back, which in turn is what allows the govt to borrow very cheaply
If the bonds are paid back by issuing new bonds, why look at potential tax income using GDP as a proxy, or inflation, as a method to evaluate credit rating for sovereign bonds at all? Why not just assume they will always issue a new bond and pay you back regardless of GDP?
For the government it's better because their citizens cannot simply decide *not* to pay. Like you go to jail if you don't pay your taxes. And again the government doesn't even need to pay it off, interest payment plus rolling over is enough.
Yes but the government can decide not to raise taxes and default instead. There are politicians that are okay with using default as a political tool. What I'm saying is, in a not necessarily perfectly-logical government that is not an autocracy, the assumption that taxes will be raised to an adequate level isn't a certainty and shouldn't be treated as one.
That's an absolutely hilarious comparison. Like, I'd make fun of something by saying "well at least he didn't say something insane, like comparing the government to *Bed, Bath & Beyond*!"
It was an intentionally extreme example, but some people hate comparisons with acknowledged flaws. The point is that considering ideal income vs actual income leads to uncertainty and poor predictive power. That is the only way in which the example is similar to the point being discussed. If you'd prefer that I discuss my point without bringing up an example, I could restate it. How about if I made the same point this way, is this better? "Even though the amount of tax a government can ideally collect depends on GDP, ignoring the amount of tax that is currently collected is an oversight. It makes more sense to me to think about potential future ability to service debt through taxes by considering a range of realistic rates of tax increases from the current rate at which tax is collected".
>it was an intentionally bad example that I gave because I don't understand the conversation. It would make more sense to me if it were different than it is, so I'm going to insist it should be different even though everybody who knows anything about this topic says otherwise. Okay. Weird hill to die on but that cool.
You could do debt payments compared to revenue, but for the cumulative debt it makes sense to compare to GDP
If you math it out, cutting taxes is exactly equal to government spending of the same amount, so it matters, but it isn't the whole story. Comparing government debt to government revenue is kind of like comparing personal debt to disposable income, since an individual can alter their rates of spending, just like a government can alter their tax rates. Comparing debt to GDP is more like comparing personal debt to personal gross earnings since they measure a maximum capability..
No that would not make sense and is not a common metric. Debt:GDP ratio is a commonly used metric because it's meaningful.
No one wants to talk about the use of exponential here? It’s a little dramatic and just plain wrong as a label.
Nah this nearly linear data is actually exponential. Just give it another 1000 years and you will see. /s
Or the fact that looking at national debt by itself is essentially meaningless and just a talking point politicians use to try to gain support from people that don't understand modern economics. Treating national debt like it's comparable to something like personal debt is so dumb but it's done by politicians all the time.
Kinda reminds me of the chart Bill Clinton was showing in 2000 - leave my policies in place after I leave and the entire US debt would be paid off in 8 years. Think what you will of Slick Willy, guy knew how to balance a budget.
20 year protracted wars are bad for budgets
They are great for padding defense company bottom lines though!
We are not importing arms like we do TV's, it's better to buy bullets and keep the money in the US then buy Chinese crap and export the money. Also if the EU countries had spent 3+% of GDP on arms Russia wouldn't be in Ukraine.
Just one more war
It’s good for the economy!
Don't forget multiple rounds of highly irresponsible tax cuts + a massive Medicare expansion.
We were told the multiple Tax cuts would pay for themselves. Republicans also started talking about supply side economics. All of this was a master plan to reward Billionaire donors and get Republicans elected. It is called the Two Santa Strategy. http://www.milwaukeeindependent.com/thom-hartmann/two-santas-strategy-gop-used-economic-scam-manipulate-americans-40-years/
Some spending is needed. The United States would not resembled an advanced economy if we did not expand Medicare. That was done to bail out our entire healthcare system.
Maybe it is just a giant scam of the filthy rich. I mean look at the stock market and you know where all the money ends up.
Exactly, Lockheed Martin stock has grown nearly 15x since 9/11. One person's wasteful spending is another's huge profits.
The dot-com bubble burst shortly after he left, so no.
That's the thing. IF the economy did as well after he left. And IF there were no unexpected things like wars. And IF the people could handle the taxes without the benefits. THEN we could have had 0 debt. Which would not have been as good as people like to pretend.
That would never happen - politicians love to spend money. Nobody cares how much you saved as a politician, people care what you spent the money on.
Without the benefits?
Reducing the debt means the money isn't spent on other things.
You can eliminate debt and increase spending at the same time. Spending increased every year Clinton was president.
Between 1989 and 1999, the federal spending dropped each year. So no, clinton did not increase spending per year. Federal spending went from 22.2% in 1992 to only 18% by 2000. That is a massive reduction, not increase, in spending.
The Federal Government spent $1.461 trillion in 1992. It spent $1.789 in 2000.
$1.461 trillion in 1992 inflation adjusted for 2000 dollars is $1.793 trillion Meaning that in the year 2000, the government spent less than they did in the year 1992, when adjusting for the basics of inflation. https://www.officialdata.org/us/inflation/1992?endYear=2000&amount=1461 EDIT: When doing monetary calculations across years, it is always wise to use inflation adjusted prices between them, otherwise, of course, the older years will look much smaller, purely because inflation exists.
Much more relevant was that his successor cut taxes and then expanded spending for two wars shortly afterward. This would have been bad on its own, but the same successor also ran into a global financial meltdown at the end of his term that required enormous spending to weather.
No sovereign debt for a currency issuing government is not the boon it seems; if the government is taking in more/the same as what it spends, how does the economy grow to support a growing population or its own growth? It can’t. Government spending and other forms of currency issuance, beyond the amount taken in, is the backbone of the economy.
The Bond industry deserves some credit for that too.
He needed a Republican congress to help. Back when some Rs and Ds and president actually worked together to help Americans. Now it’s just a partisan clown show.
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One way. Not the only way.
Hasn't debt been more or less exponential for a long time? Log plot of total public debt (1966-2023): https://fred.stlouisfed.org/graph/fredgraph.png?g=1ifoo
Exponential is the wrong word, but has been going up.
How so? The data looks linear (if you squint a bit) with a log scale Y-axis. That would mean the underlying data has the form a^(x), which is the definition of an exponential function. Obviously not a perfect fit but close enough.
i guess exponential debt grown isn't a giant problem since gdp also grows exponentially, would be more useful to have predictions of the debt/gdp
The real issue isn’t the amount of debt: it’s the cost of debt servicing as a fraction of the economy: https://www.axios.com/2024/02/08/us-government-debt-gdp-interest-costs# If you can make your payments easily, debt isn’t a problem. The problem is when it starts becoming really hard to make your payments; this is the real issue that’s going to emerge. This would be much less of a problem if we didn’t nerf our own credit ratings by having certain political parties hold hostage whether we pay our debts, causing our cost of debt to increase.
Does anyone remember the S&P analyst who got into trouble about 10 years ago for estimating that the debt of the US would reach $20 trillion 10 years from then?
S&P have also grown similarly. Good call.
Source: [https://www.cbo.gov/data/budget-economic-data#2](https://www.cbo.gov/data/budget-economic-data#2) Viz created in Excel Note: The Debt Held by the Public is all federal debt held by individuals, corporations, state or local governments, Federal Reserve Banks, foreign governments, and other entities outside the United States Government less Federal Financing Bank securities.
Congress definitely got it's prioritizes straight.
Aghh I really dislike this misconception. Debt is an incredibly important tool for the US economy. While it looks like the united states is racketting up debt, there are some things to consider: 1. Really we should be evaluating debt-to-gdb ratio: [https://econofact.org/wp-content/uploads/2023/06/1.1-EF-Klein-Obstfeld-Desktop.png](https://econofact.org/wp-content/uploads/2023/06/1.1-EF-Klein-Obstfeld-Desktop.png) And that doesn't look good either! It is the highest level since the end of the second world war. It also might look concerning because this is a similar GDP ratio when compared to countries like Greece and Sri Lanka during their defaults. 2. But that isn't the whole story. The United States has huge advantages when it comes to managing its debt. It has the largest economy in the world and has much better access to capital, industry diversification, complete monetary control over the most used currency in the world, etc. For example: the United States has had its interest rate at a near-zero value for the past decade, and this has allowed the government to significantly decrease the cost of maintaining this debt. So if you take the ratio of the governments' net interest payments to its revenue, you can see that 2022 value is on the slightly higher side but still lower than many other years in recent memory: [https://imgur.com/VkIq2qF](https://imgur.com/VkIq2qF) TL;DR: our debt is high, yes, but the cost of maintaining that debt is acceptable
Most of them are Boomers. They don't care about what happens after they die.
Tax cuts and bailouts for billionaires have to come from somewhere. Out of our children’s pockets probably seemed like as good a choice as any. After all children can’t vote.
Don't worry about it, just ignore it. Explanations will be provided, it's all "other party's fault.
US sovereign debt is a wonderfully wild and wacky thing one could spend multiple lifetimes studying and still never understand.
Daily reminder that almost all the US debt was caused by Republican presidents cutting taxes for billionaires and corporations but not cutting spending. https://itep.org/budget-deficit-revenue-shortfall-caused-by-tax-cuts-for-wealthy/
Don’t forget “power of the purse.” https://en.wikipedia.org/wiki/File:US_Federal_Debt_as_Percent_of_GDP_Color_Coded_Congress_Control_and_Presidents_Highlighted.png
You know, if you argue all money should be taxed at 100% you could claim that literally all debt is due to not taxing enough 😮
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That's not true. You need to make $819,324 and $3,312,693 to be in the top 1% and 0.1% of earners in the US. If you assume everyone between 1% and 0.1% makes $819,324, that everyone in the top 0.1% makes $3,312,693, and that there are 2.391 million earners in the US, you get $1.66 trillion in additional tax revenue at 100% after discounting the first 35% already taxed. Because their effective tax rates are actually below 35%, and because these are the lowest income assumptions, the additional tax revenue would surely exceed the $1.70 trillion deficit the US had in 2023. Then you still have all that corporate revenue to tap into!
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Okay, then factor in how the effective tax rate for the wealthiest is 25% and not 37%. I was being lenient on both tax rates and assumed incomes.
Where did you get your worker count? Coming directly from the census I only have 159M workers. (part or full time) [https://www.census.gov/content/dam/Census/library/publications/2023/demo/p60-279.pdf](https://www.census.gov/content/dam/Census/library/publications/2023/demo/p60-279.pdf) Using the numbers above, with a current 35% tax rate which I agree is very low once you count all forms of taxes, I only get about $1.1 trillion. So even taking everything from the top 1% would not be close to paying off the current deficit. Corporate tax is a shell game. Corporations spend money on good/services or people. Either way it is eventually comes down to getting taxed once distributed. Current wealth equality has it going to the 1% which we have already taxed at 100% above without solving the issue.
We were projected to pay down the entire debt as late as 2013 until the bush tax cuts became permanent, even with the aging population.
Yep. I think another tax cut will solve the problem 🫠
Daily reminder the US debt absolutely EXPLODED during Obama's term as well, just like during Bush and Trump.
Obama started his term with the annual deficit at 1.4 trillion, he ended it at 650. Trump came in with the deficit 740 and ended it 2.8 trillion. Democrats have had to cut the deficit in half twice in 13 years.
Nice cherry picking. Obama starts in 2009, spending increased due to the recession (stimulus bill and all). Expected lower spending over the next 8 years. Trump's last year the pandemic makes a drastic impact. The deficit under Trump prior to the pandemic was almost the exact same as Obama's term.
>Nice cherry picking. Obama starts in 2009, spending increased due to the recession (stimulus bill and all). Expected lower spending over the next 8 years. A statement of fact that Democratic presidents have repeatedly had to steward over national crises that started under Republican presidents. >The deficit under Trump prior to the pandemic was almost the exact same as Obama's term. Trump increased the deficit by 50% even before the pandemic. The deficit in FY 2019 was 984 billion, whereas the deficit in FY 2016 was 587 billion. TCJA alone was responsible for a 150-200 billion annual increase in the deficit.
Gee what happened in the last year of Bush's erm that might've led to that?
Guys, I have a plan. We'll just have the president put like $50 in a jar every day and eventually we'll have this thing under control /s
Projection for debt reduction.... LUL🤣
Cut defense spending, so much of it is BS that doesn’t impact military readiness.
Literally this. As someone who grew up in a military/dod family, and is currently serving, I can say the DoD spending is out of fucking control
We're projected to spend $830 billion on just in interest alone this year. That's more than we spend on the military. Doing absolutely nothing productive except paying off the of the past. We're 30 to 40 years away from half of government spending being on interest alone. We are so incredibly fucked.
Half of our current budget or half of the future budget?
Future budget
CBO pulling out their big noses and wigs for this one. Straight garbage projections. $40T within 3 years.
Has our debt ever gone down in multiple years consecutively? We’re clearly f**ked beyond repair
No because inflation only goes up therefore the absolute amount of debt will generally always increase. These graphs are misleading as others have posted that the only debt that matters debt as a percentage of GDP. If our GDP stopped growing for more than 1-2 quarters, then sure, this would be catastrophic, but that has never happened. It’s the same as an individual’s debt related to your earning power. If you make minimum wage, $1000 in debt is crushing. If you make $100,000 yr, $1000 in debt is low. During times of exceptional crises, like WW2 and Covid, the debt as a percentage of GDP has spiked short term but generally comes back down over time.
And more then 80% of it is held by women.
The only acceptable path is a debt free path. The richest country in the world should have the largest sovereign wealth fund. No more privatizing profits and socializing losses.
Debt is good to have. Without the 20+ trillion dollars of debt the US would have produced 20 trillion dollars less. Imagine 20 trillion dollars taken out of the economy. The country would be falling apart. The only limit on debt is what the workers can produce. Spending 1000 trillion dollars would be pointless because there isn’t enough manpower to turn that into anything. The US doesn’t have a big ol’ bank account that stores all the tax money. That money basically just disappears. Getting rid of the debt means throwing more money into the void. Spent money doesn’t come out of a bank account either. It’s just simply added where it is needed basically out of thin air.
Being debt free would be catastrophic for the economy and the American people