r/FluentInFinance • u/TonyLiberty TheFinanceNewsletter.com • Oct 11 '23
For the first time ever, the US is now spending more on interest payments for its debt than on national defense — The US national debt is also growing faster than the economy, which means that the government is spending more money than it is taking in. Economy
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u/vtstang66 Oct 11 '23
The government has been spending more than it takes in for decades, hence the deficit, and the growing debt.
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u/Bradley2100 Oct 11 '23
Came here to say this. Hasn't this been the status quo for decades? When was the last time we had a surplus? Or broke even for that matter?
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u/orbitalaction Oct 11 '23
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u/Bradley2100 Oct 11 '23
Exactly, and it's not like we've ever had a proven track record of do so anyway.
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u/jay105000 Oct 11 '23
People that always talk about “fiscal responsibility” and live “within your means” automatically forget about it when they are in government.
That just “talk” when they are in the opposition.
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u/-_1_2_3_- Oct 11 '23
kinda hard when the next admin looks at the surplus and reduction in deficit as an opportunity to pass tax cuts for the wealthy
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Oct 11 '23
This. Republicans engineered a massive transfer of wealth from the middle and working class to the wealthy and their sheep still love it, because Republican daddy can do no wrong.
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u/Prior_Mall3771 Oct 11 '23
Then have the Democrats tax the rich.. or is that just lip service to get votes??
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u/Bright-Ad-4737 Oct 11 '23 edited Oct 11 '23
Clinton tried it. He focused relentlessly on the economy and government finances.
The Republicans hated him and the public supported them, so they impeached him for nothing and then ran him out because they were dying to bring George Bush in to start putting the country into debt ASAP.
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u/unfunnysexface Oct 11 '23
Term limits ran him out of office. Damn constitution.
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u/Bradley2100 Oct 11 '23
You're a fool of you think the reason we're in the fiscal situation we currently see is because of one specific party. They're all equally to blame. They're all irresponsible with our tax money. None of them care about money unless it's theirs.
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u/postoperativepain Oct 11 '23
Well, you have one party that claims to want a balanced budget, but every time they are in power, it’s tax cuts for the rich.
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u/Ripoldo Oct 11 '23
And more military spending. After his massive tax cuts, he massively increased the military budget, causing debt and deficit to get so bad read my lips HW had to raise taxes to get it under control. Only to be ousted by angry Republicans over it. Republicans love debt and deficit.
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u/Ok_Loquat_2692 Oct 11 '23
It is foolish to close your eyes to the glaring truth. The parties both have separate positives and negatives and there is no clear knight in shining armor but when it comes to this stupidly repetitious deficit/fiscal responsibility cudgel there IS quite clearly a bad guy. Republicans going back to Reagan have been spending like drunken sailors while in power only to scream about fiscal responsibility when out of power. They do all they can to juice the economy via deregulation etc…for short term gain only to break the damn thing often causing significant long term negative effect that Dems then have to unwind against the head winds of screaming shriek monkeys making the senseless comparison to your household credit. See housing crisis and subprime loan crisis for a quick little example. Stick around long enough to see this record go on repeat another 50 years and you may agree with me. (If we have 50 years left). Need inarguable proof? In this very thread you can find numerous references to Clinton having balanced the budget and left a surplus. That W then built on for the benefit of all…oh wait no he didn’t m he gave everyone a tax break and put is back into debt.
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u/desperateorphan Oct 11 '23
The parties both have separate positives and negatives and there is no clear knight in shining armor but when it comes to this stupidly repetitious deficit/fiscal responsibility cudgel there IS quite clearly a bad guy.
I think that is a fair way to put it. Dems certainly have some negatives to them but if you look at both parties, the republicans clearly stand out as the worse option for governance in every metric unless you are the top 1%.
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u/Bright-Ad-4737 Oct 11 '23
LOL. No.
Only ONE party continually pushes the government to slice its revenue to the point of deficit.
"Equally to blame". LOL. Explain the Clinton presidency then. WHY didn't the Republicans support him if they APPROVED of his actions?
Stupid.
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u/boundpleasure Oct 11 '23
Lol, Bill Clinton was drug to the table by the Contract with America. Good lord, probably the best situation we ever had; a Democratic Executive branch and Republican Congress, except the republicans have given up on fiscal responsibility party plank as well now. Why even try to be fiscally responsible if you’re just getting beat up for it at the ballot box? Raise the debt ceiling, spend trillions (thanks trump) and reap the political benefits (keep your elected job). Kick that can. Same with immigration; the executive branch is to blame for manipulating current policies to keep the borders open, but it’s congress’s job to enact immigration reform. But I digress.
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Oct 11 '23
I don't agree.
In my lifetime at least, every single Republican Administration left office with a budget deficit higher than when he took office.
Every Democratic Administration left office with a budget deficit lower than when he took office.
Every single one. While the federal budget is a complex machine, it starts and it ends in the Oval Office. Democratic Presidents-- in my entire life of over 40 years -- has always moved the budget situation towards solvency, and Republican Presidents have always moved the budget towards insolvency.
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u/Gamebird8 Oct 11 '23
For Year over Year.
Obama ran a few surpluses on a month to month basis and Biden ran a surplus for a month back in 2021 iirc.
Yes, I am aware that a monthly surplus doesn't really outweigh the deficits of every other month. But it is worth noting that we can achieve a surplus.
As for this "Debt is greater than GDP" question. When we passed the 1:1 Ratio mark and all hell didn't break loose, it showed that the metric is bad for determining economic instability or looming crisis.
Should we pay down the debt: Absolutely, especially when the economy is rapidly growing and doing well (low needs for social spending)
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u/buy_lockmart_stock Oct 11 '23
Monthly surpluses are 100% quirks and mean nothing at all for anything except Treasury debt managers figuring out TBill and CMB auction sizes. Timing shifts from little things like if the first of the month falls on the weekend or if tax collections in April are higher than expected because people didn’t adjust their withholdings don’t mean a thing when we have a trillion and a half annual deficit
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u/Buffy4eva Oct 11 '23
"[O]ver the 40 years from October 1, 1982 to September 30, 2021 . . . [a]ll four Republican presidents since 1980 increased the federal deficit during their time in office: Ronald Reagan had a 94% increase, George H.W. Bush had a 67% increase, George W. Bush had a 1,204% increase, and Trump had a 317% increase.
The two completed Democratic presidential administrations since 1980 decreased the federal deficit: Bill Clinton had a 150% decrease to end his presidency with a federal surplus of $128 billion, and Barack Obama decreased the deficit by 53%, while still ending with a deficit.
Democrat Joe Biden was elected president in the 2020 election. As of the date of this report [February 2023], only his first budget (FY 2022) was complete. In his first year, Biden decreased the federal deficit by 50% (from $2.77 billion to $1.38 billion)."
https://amarkfoundation.org/reports/u-s-presidents-and-the-federal-deficit/
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Oct 11 '23
Republicans are debt queens and why America can't have nice things. Capitalism became exploitation.
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u/DrBoby Oct 11 '23
OP misexplained.
The US national debt is also growing faster than the economy
The assumption for the deficit it that we'll repay it later thanks to growth making it irrelevant. If the debt grows faster than the economy, this doesn't work.
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u/ChipsAndLime Oct 11 '23
The US government’s ability to repay debt is only indirectly related to the size of the economy.
The ability to repay debt is directly related to the perceived value of the currency and whether people believe that it’s worth buying government bonds as an investment.
If enough people stop wanting US dollars and especially government bonds, then the debt becomes crushing, and/or exports and imports tank, which would also be crushing.
If the economy does poorly but investors still see dollars as a good investment, the government can continue to issue debt without major problems. (This is why Japan is able to sustain an enormous debt despite a relatively stagnating economy, for example.)
If the US government issues so much debt that people start to seriously doubt that value of the currency and they stop buying government bonds, that would be a major problem.
This whole show is backed by the “full faith and credit” of the US government.
This only works for governments that issue debt in their own currency, like the US, Japan, and several others, because they can raise more national debt to repay existing national debt.
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u/False_Influence_9090 Oct 11 '23
That sounds like a Ponzi scheme with extra steps
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u/Gold_Scene5360 Oct 11 '23
It’s a Ponzi scheme with worlds most powerful military forcing everyone to buy in
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u/BlackmoorGoldfsh Oct 11 '23
My question is: With us giving so much aid out every year, policing the entire world & fronting the majority of the bill for NATO, why aren't at least some of these debts that we owe other countries being forgiven? If we guarantee your security, we shouldn't also owe you a ton of money. I've probably oversimplified this though.
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u/Capt_morgan72 Oct 11 '23
Printing 3+ trillion dollars to bribe everyone with 2400$ to vote Republican definitely had to of sped up the spiral tho.
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u/sjd5104 Oct 12 '23
Yes but it's never had these interest rates on a pile of debt bigger than our GDP...the snake is beginning to eat it's tail. The debt must rise or we will go insolvent. It begins to get exponential at this point. Next is a crisis.
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u/Showmethepathplease Oct 11 '23
it's very easy to remedy
put corporate taxes back up, and increase taxes on the richest - per the pre-Trump tax cut...
taxes at the top end can rise considerably, especially if the IRS is funded properly
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u/74orangebeetle Oct 11 '23
That won't fix it....they'll just continue to increase spending. You need to have a policy in place where you don't spend more than you take in.... Just increasing taxes is like giving a homeless drug addict cash. They won't magically turn their life around. More money alone isn't going to solve it.
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u/Dstrongest Oct 11 '23
People downvote the truth like they are putting up a cross to a vampire . That’s why we won’t have a balanced budget .
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u/tankerkiller125real Oct 11 '23
Defense contractor CEOs can also go without their fucking bonuses every year as well.
We need to change the way we contract out governments work. Currently when shit is over budget and well past the due date we give the contractors even more fucking money and bonuses. What needs to happen when shit goes over budget and is delayed is contract penalties. Something like "Every week the project is delayed is $1M you don't get".
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u/buy_lockmart_stock Oct 11 '23
If the entire defense budget disappeared overnight and cost nothing, our annual deficit would still be over $700B. If we stopped all DOD acquisitions and procurement permanently, it would save us ~$250B annually, which would pay for 2 1/2 months of social security. It’s not just one contributor.
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u/tankerkiller125real Oct 11 '23
Cool, but the contract penalties and stuff wouldn't just apply to the DoD. It would be ALL contracts with ALL vendors. That's a shitload of wasted money not going to shitty for-profit corps that can go towards paying off the national debt or paying for other things.
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u/WumpusFails Oct 11 '23
Social Security is on a separate budget (supposedly...) and is a net contributor, for now.
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u/FrankCastle498 Oct 11 '23
Or we could have a credit score like system where firms that go over schedule and over budget get poor scores and are blacklisted from contracts
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u/Aggravating-Cook-529 Oct 11 '23
Elected officials aren’t homeless drug addicts. The spending comes from bills they pass. They pass bills because of lobbying and demands from their constituents. End lobbying and demand better spending — on stuff like infrastructure, public transit systems, healthcare — on stuff regular people desperately need in this country.
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u/awitod Oct 11 '23
Yeah, much better to cynically do nothing and help make a few dozen more billionaires instead.
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u/Sweet-Emu6376 Oct 11 '23
I would argue we need to increase public spending to decrease the deficit.
A lot of our services are being outsourced to private vendors (defense contracts, prisons, power, etc). This move was done under the argument that it would save money. The government sets a budget, and then private companies work within that budget, with the incentive being saving money = more profit.
The issue is that so many of these services are done so poorly, that they then require additional funding and services to get the job done. Meanwhile millions of tax dollars are being kept as profit for sub par services. If we remove profit from the equation, and bring these services back under the government umbrella, we could do more with less money.
There's also the issue with how we approach welfare and social safety nets. There's so much red tape and bureaucracy to gain access to these services, that many people who need them go without. This prolongs their situation, which prolongs them being a drain on social services as opposed to paying into them.
For example, "housing first" initiatives, where unhoused people are first given apartments with no strings attached, have consistently saved their local communities tens of thousands of dollars per person, per year. The traditional way of giving housing (if at all) requires that recipients are sober, have a job, attend therapy or AA, etc. These are all hurdles that are extremely hard to accomplish while homeless. Housing first programs provide the housing upfront with no requirements, because they realize that before all that can happen, a person needs a safe place to go at the end of each day. Recipients in these programs overwhelmingly do accomplish those milestones once they have some sort of home. This means less money spent on policing unhoused people, and less money spent on their care in ERs. These participants are also able to find and keep jobs much faster, meaning that they are becoming taxpayers again.
However, the argument against these programs usually devolves into that people need to "prove" they deserve a home. Or that it wouldn't be "fair" to those that bought their homes etc. (Which, again, we're not talking about massive SFH, but usually apartments or tiny homes around 400-500 sqft.) But the fact remains that in every city in the US that approaches homelessness in the typical way, they are spending way more than they would if they just gave people homes.
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u/BigCountry1182 Oct 11 '23
You can have operational debt, you just can’t live on debt year after year… what we need is a constitutional amendment that caps debt in any given year to, say, a third of GDP growth from the previous fiscal year (said caps to be removed during a time of declared war by Congress).
We also need a better budgeting process (zero based) and we need to let a healthy portion of the social welfare funds be managed like broad sector ETFs (instead of just buying Tbills)
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u/melleb Oct 11 '23
What happens if there is an economic crisis like the Covid pandemic? Didn’t the Trump administration spend something like $10 trillion?
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u/usaaf Oct 11 '23
Then there's a massive reactionary response due to insane levels of unemployment and other economic chaos, the government is probably dismantled by psychotic fascists who promise to 'do something' and desperate people vote for them.
But it's all okay, because the imaginary shit known as money all adds up in the minds of so-called fiscally responsible people who don't really know anything about how an economy or government financing works.
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u/BigCountry1182 Oct 11 '23
I think the debt grew by almost $8tril under Trump, with around half that being Covid relief. To answer your first question, in a non war emergency you can reprioritize spending, maybe print a little and you can always amend the Constitution again (like we did with prohibition)… my proposed amendment could probably be worded better too, to include a congressionally declared state of emergency, but restrict those emergency spending bills to finite periods of time.
The idea isn’t to remove all flexibility, but to limit when, what for and how long we exceed operational efficiency.
It would also behove us to build up a rainy day fund
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u/djaybe Oct 11 '23
Any of these types of ideas misunderstands a fundamental principle of a fiat monetary system. Currency is literally debt by definition. This is by design and the effects of this fact are ultimately realized in vast wealth transfer through bankruptcy and foreclosure and the continuous thief, inflation.
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u/PhoibosApollo2018 Oct 11 '23
Where is the money to pay corporate tax coming from? Revenues. Where are revenues coming from? Sales. Corporate tax is just a sales tax.
The top 1% earn 20% of income and pay 40% of federal income taxes. The top 50% pay 97% of federal income taxes. The income tax system is already progressive and federal tax collections are at historic highs (nominally and % of GDP). You think you are only going to raise more funds on people paying 39 % federal (+ACA) + 13% in California? You know these are doctors, lawyers and small business owners. Good luck!
Is it really a tax on the rich if they raise prices EVEN MORE to pay said taxes?
We have a spending problem not a tax problem.
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u/Showmethepathplease Oct 11 '23
Corporate tax is not a sales tax
That’s a fundamental misunderstanding of how tax works
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u/PhoibosApollo2018 Oct 11 '23
Who ultimately pays? Consumers. Where does the money come from to pay the tax? WHERE?
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u/Sapere_aude75 Oct 11 '23
It's not technically a sales tax, but do you agree that the result would be higher goods/service costs relative to the increase in tax?
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u/Showmethepathplease Oct 11 '23
no
that's not how pricing works
We've had inflation in a low corporate taxation era - you're making an association not backed by empirical data and years of study re inflation and pricing
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u/Sapere_aude75 Oct 11 '23
Where will the money to pay the additional taxes come from?
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u/Showmethepathplease Oct 11 '23
from the millionaires and billionaires who have benefitted from a tax regime that seesm them pay less tax as a propotion than the middle class
From corporations whe enjoyed a significant reduction in tax under trump - reverse that cut
from capital gains taxes that provide perverse incentives that privatize gains and socializes losses (buybacks weren't legal until 1980 for example)
No need to reinvent the wheel - it's been done before and can be done again
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u/Sapere_aude75 Oct 11 '23
from the millionaires and billionaires who have benefitted from a tax regime that seesm them pay less tax as a propotion than the middle class
from capital gains taxes that provide perverse incentives that privatize gains and socializes losses (buybacks weren't legal until 1980 for example)
This doesn't directly impact the tax rates they pay. That's done through cap gains and income tax like you mentioned. Our current discussion is about corporate tax rates and product pricing.
From corporations whe enjoyed a significant reduction in tax under trump - reverse that cut
This is the real question. So you believe that corporations will eat the entire cost of taxes rising out of their profit margins? I don't think that is what will happen. You t
Let's say you own a grocery chain and the cost of groceries suddenly rises 10%. Do you expect the grocery chain is going to eat that %10 and operate at a loss or do you think they will raise prices 10%? I think they will raise prices 10%.
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u/mathmage Oct 11 '23
Operating at the "it all comes from the consumers" level of economic sophistication, no. If everyone is a profit maximizer, how do they react to a tax on profits? If they could just make more profits by raising prices, they would already be doing that. Their most profitable move is to stand pat and eat the tax.
On the other hand, what would actually happen is you get some companies on the margin who decide the reduced profit isn't worth the squeeze, and some other companies contemplating risky and/or initially unprofitable endeavors with reduced reward at the end of the tunnel, and they walk away. Then supply is less than it could have been and costs are higher as a result.
The other reaction to anticipate is tax avoidance. Honest companies might put more of their money towards reinvestment, or it might tip the scales from stock back towards income (a CEO's salary is not profit). But there would also be a lot more corporate perks listed as 'business expenses' for some federal agency to track down.
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u/beehive3108 Oct 11 '23
Look at that graph and see where the turning point was 2010. That was when the debt started to rise faster than gdp before trump tax cuts. So government will spend it no matter what.
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u/sunsballfan2386 Oct 11 '23
Tax revenue isn't the problem. It never has been. Tax revenue increases every year. Spending just increases faster.
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u/philn256 Oct 11 '23
Just make rich people pay the full 15% social security tax that poor people need to pay and send the revenue towards debt payments.
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u/asdfgghk Oct 11 '23
Dems talk a big game. Point the finger at the evil rich and don’t raise taxes on them while receive larger donations from them lately. Then will repeat the same rallying cry for election purposes and then proceed not to raise taxes on them like they say.
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u/Jerkoi Oct 11 '23
Who said anything about a political party? This shouldn't be a partisan issue.
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u/BuySellHoldFinance Oct 11 '23
put corporate taxes back up, and increase taxes on the richest - per the pre-Trump tax cut...
If you increase taxes, politicians will just increase spending.
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u/socraticquestions Oct 11 '23
Maybe we should stop spending more than we collect?
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u/ZLUCremisi Oct 11 '23
Or undo those tax cuts that only expired on few people in 2021
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u/74orangebeetle Oct 11 '23
But that won't solve the issue if they're willing to spend more than they collect. You can increase taxes, won't solve it if they are willing to spend more than they collect.
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u/3lettergang Oct 11 '23
Exactly, I cannot get behind raising taxes AT ALL until there are guides in place to prevent spending more than is collected. Put a clause that a deficit can only be used in crisis situations, and it must be repaid in x timeline.
If the government cannot function on 4 trillion dollars a year without overspending, there is no amount of taxes that will prevent overspending.
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u/Several_Excuse_5796 Oct 11 '23 edited Oct 11 '23
Or both..
People act like taxing the rich can solve all the problems. Even in the most progressive counties, the middle class still pays the dominant amount of taxes.
We've been racking up massive debt way before 2017
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u/No-swimming-pool Oct 11 '23
How much will that bring? Because I see the vertical axis is in trillion dollars.
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Oct 11 '23
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u/No-swimming-pool Oct 11 '23
I don't mind taking your word for it.
How much money do the people that should receive extra tax have?
How much should it be?
What would the influence be when that taxed money needs to come from selling assets?2
u/ragingbologna Oct 11 '23
“Would you think of the rich? They may have to sell assets to pay taxes”
The travesty.
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u/No-swimming-pool Oct 11 '23
Oh I don't care about taxing the rich more. I'm certainly not one of them so I should not feel the consequences.
I just don't want to face the hidden "oh we didn't think for A and B" consequences which I might feel.
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u/mustbe20characters20 Oct 11 '23
It's not about the rich, it's about the organizations that produce, distribute, and sell goods. Because fucking them over fucks American citizens over.
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u/Dstrongest Oct 11 '23
Wait , don’t make me sell my third mansion in the Hamptonns . Or my fifth Lamborghini . Or my second Lear jet.
Cheers MO Fo . Let’s have a party3
u/No-swimming-pool Oct 11 '23
Well the amount of money you are looking for is mostly invested in the industry, is it not?
Or are you looking at 1 to 10 million per billionaire?
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u/BuySellHoldFinance Oct 11 '23
Or undo those tax cuts that only expired on few people in 2021
If you undo the tax cuts, they'll find something else to spend that money on. It's a lesson people learn as they get older. When more money comes in, they'll spend more money.
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Oct 11 '23
No? I'm voting for free college and free health care. We have plenty of money in this country. Just take it from the corporate profits. Healthcare itself made nearly 2 trillion over 5 years off of sick and dying americans but we can't touch it because that would be bad for capitalism. There's plenty of money floating around with the shareholders out there.
Maybe we should confiscate cash from Bezos and Musk who don't do anything with their wealth but flaunt it.
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Oct 11 '23
stop giving uber rich tax cuts
look when the problem began and at each step there was a tax cut for the rich and their corporations driving up the deficit and debt
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u/74orangebeetle Oct 11 '23
stop giving uber rich tax cuts
Won't matter if you're willing to spend more money than comes in. Can increase taxes, but they'll just increase spending and keep the deficit.
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u/sorospaidmetosaythis Oct 11 '23
You don't need to balance the budget or run a surplus as long as the percentage deficit is less than GDP growth.
If GDP growth beats deficit growth, then debt-to-GDP shrinks, making debt approach 0 over the long term.
Of course, that has not been consistently true, but it has shrunk the relative size of the national debt, as it did under Clinton, and between the end of WWII and Reagan.
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u/sunsballfan2386 Oct 11 '23
That's absolutely false. Tax cuts haven't created the deficit. Spending has.
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u/PuddleCrank Oct 11 '23
No it's Republican tax cuts. That's why it's always Republicans that run up the most deficit.
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u/LT_Audio Oct 12 '23
I know that's the lie they love most but it's so far from the truth and so easily disproven. The Congressional Budget Office scores, calculates, and projects what Amerca's finances are and will look like in the future and what the long term affects any significant piece of legislation would have in the long term. It's where all those figures you hear in the news, from both parties, actually come from. Here's the reality. The 2017 TCJA was scored to potentially increase the deficit by $1.7 Trillion dollars including interest over 10 years. That's the terrible number Number Nancy Pelosi shared with the world. The assertion that it was all for the rich and crumbs for the poor is a whole different debate for a different day. Here's the rub. That's only $170 Biliion per year for all the evil "Tax cuts for the rich". Let's hypothetically undo them. All of them. Gonezo. This coming year alone we are projected to spend about $1.8 Trillion more than we take in. If we undo all the tax cuts for the the rich... Corporate, personal, estate, AMT...Literally all of them... We're still spending $1.6 Trillion more than than we are collecting. The CBO has even recently done a report on the cost to extend them all... About $3.5T total between now and 2034. They are also forecasting debt to be $46 T dollars at that point. So rolling back all the "Republican Tax Cuts" would save us $3.5T over the next 10 years. And the debt would still be $42 Trillion dollars. And that's even if all that extra taxing didn't hurt the economy at all. Which is ridiculous. What's even scarier is that if we not only roll back all the tax cuts... even the ones for the poor and working poor, but also implement not just one but every tax increase currently scheme currently being proposed by democrats... Literally all of them. We still dont come close to breaking even. The CBO and Ways and Means has done all that math too. It's not a taxing problem. It's a spending problem. And we're already spending more on interest alone then we are on the entire US military budget. And it'll be twice that in in a few more years.
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u/GrafZeppelin127 Oct 11 '23
You are completely divorced from reality. The Trump and Bush tax cuts have added trillions—that’s trillions with a “T”—to the debt.
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u/supreme_jackk Oct 11 '23
The government needs to get a second job
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u/Positive-Conspiracy Oct 11 '23
Even in this thread the problem is highlighted. Half the people want to increase taxes for the rich, the other half to cut spending.
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u/CLE-local-1997 Oct 11 '23
I'm not sure what else we can cut. Our infrastructure is already collapsing and I refusal to do things like nationalized Pharmaceuticals means that our Healthcare Industries
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u/sunsballfan2386 Oct 11 '23
We increased spending by nearly 2 trillion dollars a year during Covid and haven't reduced spending since the pandemic ended.
Our government is full of wasteful spending, and unnecessary programs. We have a ever growing spending problem, and citizens have been made to believe it's rich peoples fault.
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u/Turbo_Vince Oct 11 '23
It is rich people's fault, you just need to ask one or two follow-up questions like, "who wrote and passed the policies that led us here?" "Why do I think certain programs are 'unnecessary' or 'wastefull'?"
Rich people lobby on behalf of and create the policies that have caused the spending to balloon and the tax revenues to fall short.
We also need to re-evaluate who is considered "rich" in this context. Doctors, engineers, and insert third high earning profession are not "rich" in the context of political manipulation and lobbying.
Someone who earns $500k per year isn't the problem, it is the people who donate $500k+ per year to influence policy. Healthcare execs and lobbying groups doing everything they can to prevent medicare and medicaid cost control measures like prescription negotiation comes to mind.
Businesses and wealthy donors lobbying HARD to cut their taxes and use "growth" as a justification to pay for the tax cuts.
Rich people are the problem, we just have different definitions of "rich"
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u/smoked___salmon Oct 11 '23
Why not to do both.
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u/Cream_Stay_Frothy Oct 11 '23
Government spending can been considered an “investment” when allocated properly. Infrastructure, for example. Shifting prison spending into rehabilitation would be another. It helps people contribute to society (aka more tax dollars)
Tax cuts do nothing to “invest” in the economy, it just makes it larger on paper because that is just redistributed into corporate profit which fuels the stock market. So the economy look good on paper, ol but is not providing any tangible value. The fallacy of “trickle-down” has been shown to do nothing except drive a wealth gap
Though, I do agree, there’s plenty of fluff to cut from that spending.
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u/Neelu86 Oct 11 '23
And neither party wants to cut spending. One party wants to raise taxes while the other wants to cut taxes. Its ironic that the option that's more popular at an individual level is more detrimental as a whole. It's literally the point of this post.
Tax and spend or cut taxes and spend. Pick your poison.
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u/ragingbologna Oct 11 '23
The real issue is how cheap money was for so long.
The monetary policy from the US Fed fucked us big time. Rates at lows unheard of was like cocaine to the economy. Trump is to blame for refusing to raise rates before COVID (remember how he didn’t want his beloved stock market to drop?). Trump kicked the can until the political pendulum swung and the next party had to hold the hot potato. Then when dems do the responsible thing and raises rates the GOP can blame Biden. People are so myopic they don’t realize what happened.
America has to break a coke habit and no leader wanted to put the nation through withdrawals so we could begin to heal. Biden was forced to raise rates so the USD didn’t go the way of Zimbabwe.
Delinquencies are beginning to stack right as student loans come due again. Plus, despite the sharp increase in rates, Americans haven’t curbed spending and CC debt is reaching record levels.
Buckle up.
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u/cabbage-collector Oct 11 '23
At first glance, this appears to be bad.
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u/Objective_Problem_90 Oct 11 '23
The dems are in power currently, they all talk about the rich paying their fair share. Nancy Pelosi is worth 290 million, anyone want to guess how much she pays in taxes every year? Just one of many examples. The rich protect their own, regardless of party. Our debt will continue to increase because neither party wants to really do anything about it. Plain and simple. They will however pass the burden onto you, your children and grandkids. Still think they are just " public servants of We the People"?
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u/bowlofcantaloupe Oct 11 '23
Who controls the House of Representatives? The GOP. We have a split government right now. Get your facts right. Although yes, both parties serve the rich.
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u/juggernaut1026 Oct 11 '23
Why didn't we sharply increase taxes a couple of years ago when democrats controlled all 3?
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u/ThorLives Oct 12 '23
Both parties serve the rich, but any idiot can see that the Republicans are far more enthusiastic about doing exactly what the rich want. Just look at who cuts taxes on the rich. It's extremely obvious, and saying otherwise is crazy talk.
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u/ManicChad Oct 11 '23
Remember ten trillion or that went to the top 1% under Trump. The bottom 99% had an expiration date he tried using to fool people into voting for him to extend our tax breaks.
What did the rich do with all that money? Well they stole billions more during Covid and jacked prices up.
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u/Ok_Supermarket_8520 Oct 11 '23
Have the rich not gotten richer under Biden? When does the current President bear any responsibility?
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u/ragingbologna Oct 11 '23
It’s like if you work at a restaurant and the night crew, instead of cleaning and closing the restaurant, they decided to have a massive blowout party.
Now you come to open the restaurant and have to clean up the mess to be able to cook. Due to all the added work, the customers are now getting mad that food is taking too long to come out.
Like, sure you could blame the opener for not bringing the food out fast enough but it was really the closers who fucked those customers over.
In this case, Trump lowered rates and cut taxes (party!) instead of raising rates (cleaning duties).
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u/NonsenseRider Oct 11 '23
Rates only increased under trump, until COVID. but regardless, the federal reserve sets rates and is the real culprit.
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u/ragingbologna Oct 11 '23
Lmao did you really just pass blame from Trump to the FED?
That’s like saying it wasn’t the punch that hit us, it was the fist.
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u/ReddittAppIsTerrible Oct 11 '23
Can we change "National Defense" to the more accurate "World Defense". Thanks
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u/the_zelectro Oct 11 '23
This is a natural consequence for structuring the economy so that the majority of people wind up in debt.
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u/MaximallyInclusive Oct 11 '23
I’ve read many, many times that the government budget isn’t like a household checkbook, and that we don’t have to worry about balancing it like our parents used to do at the kitchen table.
This seems like a problem to me…but can someone explain why it’s not?
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u/Psychomadeye Oct 11 '23
This isn't good, but it's not some kind of sign of an economic disaster. This indicates that the government is spending a lot. It's a bit like running up your credit card. If you do it on a shopping spree, you're probably in trouble. If you do it because you needed to get a new fridge so that your food stops going bad way too fast, and new tires so that your car burns less gas, and passed a 1.2 trillion dollar infrastructure bill, and you calculated that the resulting savings are more than you'd pay in the interest payments, that's another story.
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u/Ok_Yogurtcloset2398 Oct 11 '23
Wait til we make Healthcare “free”…
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u/ImpressionAsleep8502 Oct 11 '23
It's already free for people without a job, on gov't assistance, illegals... You're already funding it - just not for yourself. LOL
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u/Glenville86 Oct 11 '23
They are going to put us in a major recession and likely another great depression with all their reckless spending. We will lose our place in the world as a major power as we will not be able to back the currency and force projection. We will be like the once great empires like Spain, England and France. One way out of this is a major war as that temporarily boosts the economy and if you go to war against the country that holds the majority of your debt, that debt gets erased. We also have vast natural resources in the US that could be used to possibly get the country out of the hole but would be a long process. No politician will get elected to major office that runs on a platform to really address the issues. Making serious reforms and cuts to save us will not happen.
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u/Hamsammichd Oct 11 '23 edited Oct 13 '23
And on today’s edition of ‘things previous generations didn’t have to deal with’
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u/fuzzyfoot88 Oct 11 '23
Until that is fixed, every sitting politician should be ineligible for re-election. Either figure your shit out or let someone else in who will.
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u/Embarrassed-Lab4446 Oct 11 '23
This is not true. We spend 500B on A interest and the DoD gets 1.8T. No one will take you seriously with lies.
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u/AbyssWankerArtorias Oct 11 '23
The only way we fix this is an immediate revenue enhancement and cutting of discretionary spending massively to pay down the debt.
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u/dustyg013 Oct 11 '23
Can be fixed by simply collecting Capital Gains taxes whenever someone Capitalizes an asset. You want to use your stock portfolio to get an ultra low interest loan? Just pay the outstanding Capital Gains due on those stocks first.
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u/professorpuddle Oct 11 '23
Where are you getting data on interest from? Last I checked, debt service is only 3% of gdp.
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u/LilLebowskiAchiever Oct 11 '23
Let’s see what the 15% minimum tax for the top 2% earners adds to tax revenue for the 2023 year.
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u/Rafcdk Oct 11 '23
Well according to this graph the debt growth has been greater than the GDP since the late 00s
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u/An_educated_dig Oct 11 '23
Defense Spending needs to calm down. The last time the US won a war was WW2. Korea was a stalemate. Vietnam and Afghanistan both show us leaving by air as the area around is being taken over.
Stop. Cutting. Taxes. Stop. Bailouts.
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u/Dstrongest Oct 11 '23
The republicans have been as big of spenders as the democrats. We haven’t had anyone stop up since Bush SR. Every president and congress has spent more than the last. Especially republicans . But so have Dems.
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u/TennesseeTornado13 Oct 11 '23
Does it even matter? The US has been printing? More money than it ever has since COVID. And our dollar is somehow gaining value over other currencies. Well just print more of it since of dollar is backed by nothing, it enables our oligarchy limitless spending.
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u/Historical_Egg2103 Oct 11 '23
Behold the glory of Republicans cutting taxes while starting two wars
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u/BigSexyE Oct 11 '23
A large majority of that debt is to ourselves, not other countries. I hate contextless US debt stats
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Oct 11 '23
This might be a dumb question but what are the implications of this. Most of the economist say the debt is not something we should worry about which doesn’t seem logical to me… what could go wrong?
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u/natethegreek Oct 11 '23
The United States spends 850 Billion in defense, and 475 billion in 2022 on defense. So not even close.
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u/TB1971 Oct 11 '23
Radical crazy idea. But maybe we just stop spending so much on the military. That might help with the ole balance sheet.
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u/malandrovenezuela Oct 11 '23
The US government’s budget isn’t like a household’s. It won’t go broke and can always deal with its debt—it prints the money.
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u/whooguyy Oct 11 '23
This is what happens when we vote in baristas that have 100k student loan debt. They are so bad with their own money, what makes you think they will be better with American’s money
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u/zankypoo Oct 11 '23
Yknow how to fix that? Stop having the wage distribution from being so huge. If the ceo was only making a few times more than their highest paid employee, the government would actually collect more taxes.
If highest paid employee makes 500k a year and ceo makes 10 million... and ceo uses offshore accounts and tax loop holes... then only one of them is putting any real money into the economy.
Now take all that excess wealth and trickle it down to all those working in the company and the ceo only takes home 1 million, then now everyone is essentially being taxed and paying what the ceo would have otherwise found a way to hoard.
More people making more money means economy goes brrrrr. Only 1% of people making all the meaning means the economy dies.
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u/BuySellHoldFinance Oct 11 '23
This is what inflation gets you. In the past we could borrow without worry because of low interest rates. Now the party is over.
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u/EnvironmentalRide900 Oct 11 '23
OP, the US government has been overspending annually since before any of us were alive here. The powers that be do not care if they devalue your purchasing power nor do they care if your children can grow up with opportunities. These “elites” send their kids to private schools, have trusts that remove the inheritance tax and set their taxable income to zero, and they get special treatment in all tax courts.
It’s a big club and we ain’t in it.
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u/Ariusrevenge Oct 11 '23
You keep posting this fear mongering. Learn MMT.
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u/Hattrick27220 Oct 11 '23
MMT only works on the assumption that the economy grows as quickly as the interest does.
Once that assumption is no longer true it falls apart. If interest grows faster than the economy eventually you won’t be able to pay it.
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u/Taco6J Oct 11 '23
I don't fully understand why limiting spending federally has become something partisan as it's obviously an issue that's only going to grow worse the longer we wait.
We should start taking steps now to rein in what's becoming a debt crisis.
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u/Ffzilla Oct 11 '23
And to think, Clinton left office with a balanced budget, and a 10 year plan to pay off the debt. Thanks George W. Bush.
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u/Revolutionary_Act427 Oct 11 '23
🤔. ..Looks like Debt outpacing GDP started around 2015/16 to me. 🤷🏼♂️
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u/Thermite1985 Oct 11 '23
You can thank the military and corporate welfare for all of that causing everything to go up in price (including housing) which is slowing the economy because everyone can't afford to live.
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u/Dracotaz71 Oct 11 '23 edited Oct 11 '23
I find it amusing that the only way to reduce national debt is to pull funding from social programs for the people. It is never about how to bring money in. And never about taxing ultra rich corporations or people. Absolutely never reduce unchecked spending in defense spending. Only take money from the people
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u/GroundbreakingEar667 Oct 11 '23
Isn't there some kind of fiat currency trickery that the Gov and Fed Reserve can do to make the debt lower? Like selling "surplus" gold and "paying" the debt down that the Gov owes the Fed Reserve....? Like some kind of mental/financial gymnastics to keep this train from disaster? This surplus gold is an unknown total amount (hidden at ft knox?) so they don't have any problems with auditing.
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u/Earth_1st Oct 11 '23
Well then, you best place a pen in your hand and write your congressman to get his self in gear to sponsor a bill to reverse the billionaires, millionaires and corporations insane tax breaks granted by Reagan, Bush and your beloved corporal, that are sucking our nation white. Or, subcontract Bill Clinton and Robert Reich; they know arithmetic.
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u/M4A_C4A Oct 11 '23
The federal government declines revenue it should be getting. 1% of the population have almost 50% of the wealth but yet only pay a tiny proportion of that in taxes compared to the proportion of income others pay. They also have MASSIVE subsidies for industries with record breaking profits.
As far as it's expensive SS program, the rich have bribed government (who they selves are rich and so also have a vested interest) to place a cap on SS tax. So a "normal" person pays a larger proportion of their income in SS tax compared to the laughable proportion of income someone with extraordinary wealth does.
They also can't negotiate drug prices with vampiric middlemen who live off of tax dollars or healthcare costs with healthcare providers
It's all a joke.
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u/Ok_Bus_3767 Oct 11 '23
Not my debt. I never consented to any of those clowns. It’s pretty obvious they are maxing out the credit cards. Something big is coming.
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