America Faces a Debt Nightmare(economist.com)
economist.com
America Faces a Debt Nightmare
https://www.economist.com/finance-and-economics/2023/05/03/america-faces-a-debt-nightmare
181 comments
https://archive.ph/oCvhG
> “There’s going to be a generation of voters that can’t get anything they want, because all the money has been spoken for.”
Interesting to hear an expert take from someone with decades of experience show some empathy to what likely will be GenZ or Gen Alpha. I've been saying for a long time now that govt debt is a very problematic tool because it allows today's leaders to create obligations for folks who didn't vote for them (likely couldnt vote at all). Even in perfect intentions it's not consensual to burden future generations with debts they had no voice in choosing.
Interesting to hear an expert take from someone with decades of experience show some empathy to what likely will be GenZ or Gen Alpha. I've been saying for a long time now that govt debt is a very problematic tool because it allows today's leaders to create obligations for folks who didn't vote for them (likely couldnt vote at all). Even in perfect intentions it's not consensual to burden future generations with debts they had no voice in choosing.
I'm still waiting to see the results of the massive infrastructure package that was passed in 2008. We've had a few more rounds of such spending, supposedly because of outdated infrastructure. You have to wonder how many more times they are going to get away with that trick.
Whenever they pass massive spending, its clear they are not talking to American people. They are talking to the corporations that are going to benefit.
Whenever they pass massive spending, its clear they are not talking to American people. They are talking to the corporations that are going to benefit.
This heavily decayed rusty bridge support [1] is under the Chicago Metra Union Pacific Track UP-N line that has 34,000 passengers riding across this bridge on 70 scheduled trains at 50-70 mph each weekday.
While it is admittedly just a single example, everyone else's experiences seem equally as anecdotal.
[1] - https://www.reddit.com/r/TIHI/comments/u4inmp/thanks_i_hate_...
While it is admittedly just a single example, everyone else's experiences seem equally as anecdotal.
[1] - https://www.reddit.com/r/TIHI/comments/u4inmp/thanks_i_hate_...
This. Some of my clients are in the transportation industry and they were scratching their heads on where that money went.
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> it allows today's leaders to create obligations for folks who didn't vote for them
It's not practically possible for a person of any age to have voted to prevent the massive spending and subsequent debt created by it.
Unpopular opinion: after politicians reach the level that you recognize their name, they're all the same.
It's not practically possible for a person of any age to have voted to prevent the massive spending and subsequent debt created by it.
Unpopular opinion: after politicians reach the level that you recognize their name, they're all the same.
Depends how far you are willing to stretch your definition of "the same".
I think the opinion that all politicians are the same is:
1. Impractical, if the underlying assumptions were true: in a democracy you got the right to vote people out who misbehave. If you are blind to the differences between those people, you are effectively letting those who are a little bit worse than the others stay. And so the spiral moves downwards and you will at some point in your life wake up and ask how it came to this.
2. Purely Self-protective: taking part in politics and being involved and observant comes at an (emotional) cost. Pretending there is no difference is an easy way of not having to get involved while still having a thinly vailed excuse to continue complaining.
3. Untrue: Each body of government will always have a few crazy corrupt politicians and some that are extremely principled (and a mixture of those things in between). Our task is to punish those who are crazy corrupt by not voting for them, where we can, while we are still allowed to vote.
4. Popularistic: Many unpolitical people share that opinion, it is not an "unpopular" opinion, it is the opinion of that drunkard you meet at the pub. If you ask them to name you politicians that are currently in positions they can't name any. If you tell tell them the name of politician A who got fined for corruption and politician B who has a Life-Long track record of doing a thing they stood for in their twenties they can't tell you the difference
5. Self-Defeating: You don't have to inform yourself, because everything is "the same" anyways. This has the downside that all it needs to get your vote is to look or feel not the same, because whether they act different is something you obviously cannot tell. It is a bit like if you ask a person who thinks "all computers are the same" to buy one for you and they select one because it had "a nice color", except that this actually has a huge impact on people's lives and maybe even the survival of the human race.
I think the opinion that all politicians are the same is:
1. Impractical, if the underlying assumptions were true: in a democracy you got the right to vote people out who misbehave. If you are blind to the differences between those people, you are effectively letting those who are a little bit worse than the others stay. And so the spiral moves downwards and you will at some point in your life wake up and ask how it came to this.
2. Purely Self-protective: taking part in politics and being involved and observant comes at an (emotional) cost. Pretending there is no difference is an easy way of not having to get involved while still having a thinly vailed excuse to continue complaining.
3. Untrue: Each body of government will always have a few crazy corrupt politicians and some that are extremely principled (and a mixture of those things in between). Our task is to punish those who are crazy corrupt by not voting for them, where we can, while we are still allowed to vote.
4. Popularistic: Many unpolitical people share that opinion, it is not an "unpopular" opinion, it is the opinion of that drunkard you meet at the pub. If you ask them to name you politicians that are currently in positions they can't name any. If you tell tell them the name of politician A who got fined for corruption and politician B who has a Life-Long track record of doing a thing they stood for in their twenties they can't tell you the difference
5. Self-Defeating: You don't have to inform yourself, because everything is "the same" anyways. This has the downside that all it needs to get your vote is to look or feel not the same, because whether they act different is something you obviously cannot tell. It is a bit like if you ask a person who thinks "all computers are the same" to buy one for you and they select one because it had "a nice color", except that this actually has a huge impact on people's lives and maybe even the survival of the human race.
> if the underlying assumptions were true: in a democracy you got the right to vote people out who misbehave. If you are blind to the differences between those people, you are effectively letting those who are a little bit worse than the others stay. And so the spiral moves downwards and you will at some point in your life wake up and ask how it came to this.
Bingo. In my opinion, this is where we're at right now. Your choice as a voter is between bad and bad in part because the voting population has been stirred up to believe that the difference between the candidates is much bigger than it actually is.
I think your other points are reasonable, but you seem to be trying to shame anyone that refuses to pick a team instead of considering that maybe both teams stink.
Bingo. In my opinion, this is where we're at right now. Your choice as a voter is between bad and bad in part because the voting population has been stirred up to believe that the difference between the candidates is much bigger than it actually is.
I think your other points are reasonable, but you seem to be trying to shame anyone that refuses to pick a team instead of considering that maybe both teams stink.
> I think your other points are reasonable, but you seem to be trying to shame anyone that refuses to pick a team instead of considering that maybe both teams stink.
I am not from the US or UK and in my country any given election features more than two viable options, so I am not sure what you're talking about here. But I admit I don't envy US-americans with their choice between center-right and far-right politics on the national stage.
What I said is more about individual political actors than about the parties they organize in. Of course it is also important to hold collective misbehaviour accountable, but in my eyes individual actions (both good and bad ones) deserve more attention.
I am not from the US or UK and in my country any given election features more than two viable options, so I am not sure what you're talking about here. But I admit I don't envy US-americans with their choice between center-right and far-right politics on the national stage.
What I said is more about individual political actors than about the parties they organize in. Of course it is also important to hold collective misbehaviour accountable, but in my eyes individual actions (both good and bad ones) deserve more attention.
I think that opinion is unpopular for the same reason that flat Eartherism is unpopular.
It's no coincidence that the US is perennially split down the middle, 50/50 red/blue, swinging back and forth between the two. The whole idea is to keep the country divided and to motivate you to vote. You need to pick a team and stay on it.
With all the "we can't let <the other team> ruin the country" rhetoric, you would think the swings back and forth would be like a wrecking ball. But no, for the most part, nothing meaningful changes. Each team gets their small window of power and starts airdropping money on their doners...ahem voters. Rinse, repeat.
What else can these politicians do? If they actually tried to reform something, they might goof it and it'll cost them their career. Gotta play it safe. After all, the status quo is that everyone already thinks they're all a bunch of corrupt boobs anyway, so nothing to lose really. Just go on CNN or Fox and talk shit about the other team; tell everyone that the other team is a bunch of corrupt boobs. That's money in the bank.
Let's say they actually pull one out of their butt and get some meaningful reform accomplished: well now there's one less thing they can scream about to rally you up to vote for the team the next time. So best to stick to the script.
They all look the same to me.
With all the "we can't let <the other team> ruin the country" rhetoric, you would think the swings back and forth would be like a wrecking ball. But no, for the most part, nothing meaningful changes. Each team gets their small window of power and starts airdropping money on their doners...ahem voters. Rinse, repeat.
What else can these politicians do? If they actually tried to reform something, they might goof it and it'll cost them their career. Gotta play it safe. After all, the status quo is that everyone already thinks they're all a bunch of corrupt boobs anyway, so nothing to lose really. Just go on CNN or Fox and talk shit about the other team; tell everyone that the other team is a bunch of corrupt boobs. That's money in the bank.
Let's say they actually pull one out of their butt and get some meaningful reform accomplished: well now there's one less thing they can scream about to rally you up to vote for the team the next time. So best to stick to the script.
They all look the same to me.
> It's no coincidence that the US is perennially split down the middle
That's true, but its not a conspiracy either. Supermajority is unstable because the faction of the supermajority party closest to the main opposition gains power to draw policy closer to its preference by joining the opposition, so the split between the main parties has a strong force driving toward rough parity.
> The whole idea is to keep the country divided and to motivate you to vote.
It’s literally not, demotivated voters on the other side (or, in extreme cases, tricking them into failing to vote) is a strategy central to, and incentivized by, the electoral system.
> With all the "we can't let <the other team> ruin the country" rhetoric, you would think the swings back and forth would be like a wrecking ball.
They usually aren’t because our system is designed with lots of veto points, and the “swings” usually don’t swing all of them.
That's true, but its not a conspiracy either. Supermajority is unstable because the faction of the supermajority party closest to the main opposition gains power to draw policy closer to its preference by joining the opposition, so the split between the main parties has a strong force driving toward rough parity.
> The whole idea is to keep the country divided and to motivate you to vote.
It’s literally not, demotivated voters on the other side (or, in extreme cases, tricking them into failing to vote) is a strategy central to, and incentivized by, the electoral system.
> With all the "we can't let <the other team> ruin the country" rhetoric, you would think the swings back and forth would be like a wrecking ball.
They usually aren’t because our system is designed with lots of veto points, and the “swings” usually don’t swing all of them.
> That's true, but its not a conspiracy either
I'm not saying it's a conspiracy. Everyone is just acting in their own self interest.
> Supermajority is unstable
It hasn't always been a 50/50 split. It's a relatively new phenomenon.
> demotivated voters on the other side (or, in extreme cases, tricking them into failing to vote) is a strategy central to, and incentivized by, the electoral system.
Both can be true. They want to get more votes. They want their opponent to get less votes. They use whatever tricks they have up their sleeve to accomplish both goals. I agree redistricting and other dirty games are big part of that process. But I don't think it's controversial to say that another big part of the game plan is to sow division. Have you ever witnessed any organization that is more publicly derogatory towards their collegues than congress? It's a complete shit show.
> They usually aren’t because our system is designed with lots of veto points
That's true, and in my opinion this makes a vote for policitian X even less important, despite all of the "the future of our country is at stake" talk we hear every single election.
I'm not saying it's a conspiracy. Everyone is just acting in their own self interest.
> Supermajority is unstable
It hasn't always been a 50/50 split. It's a relatively new phenomenon.
> demotivated voters on the other side (or, in extreme cases, tricking them into failing to vote) is a strategy central to, and incentivized by, the electoral system.
Both can be true. They want to get more votes. They want their opponent to get less votes. They use whatever tricks they have up their sleeve to accomplish both goals. I agree redistricting and other dirty games are big part of that process. But I don't think it's controversial to say that another big part of the game plan is to sow division. Have you ever witnessed any organization that is more publicly derogatory towards their collegues than congress? It's a complete shit show.
> They usually aren’t because our system is designed with lots of veto points
That's true, and in my opinion this makes a vote for policitian X even less important, despite all of the "the future of our country is at stake" talk we hear every single election.
> Even in perfect intentions it's not consensual to burden future generations with debts they had no voice in choosing.
Lysander Spooner's classic "No Treason: The Constitution of No Authority" is the application of that criticism to the whole state.
Lysander Spooner's classic "No Treason: The Constitution of No Authority" is the application of that criticism to the whole state.
That's honestly not too far from the definition of odious debt.
The minimum voting age is as ridiculous as a maximum voting age. The system exists to deliver what older voters want.
At the risk of offending a neo-Marxist, children have underdeveloped brains and lack life experience or wisdom. They are not equivalent to adults and the minimum voting age is not arbitrary.
Unfortunately, young adults, not unlike children, don't seem to have much awareness about the issue of this unsustainable ballooning debt, and as a group, are happier to demand more entitlements (such as UBI) than to call for austerity to get it under control. It's the opposite of what you want, unless your plan is to milk the country dry and leave it to die. Older voters are actually more likely to favor lowering spending, though of course they wouldn't vote against their own interests (e.g. cutting social security benefits).
Unfortunately, young adults, not unlike children, don't seem to have much awareness about the issue of this unsustainable ballooning debt, and as a group, are happier to demand more entitlements (such as UBI) than to call for austerity to get it under control. It's the opposite of what you want, unless your plan is to milk the country dry and leave it to die. Older voters are actually more likely to favor lowering spending, though of course they wouldn't vote against their own interests (e.g. cutting social security benefits).
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If you do austerity you get Europe.
All the people glorifying capitalism don't see that Europe is a bonafide example of diligently following neoclassical economics maxims. The end result? The interest rate drops below zero in the debt brake country (Germany).
Banks are scared of passing the costs onto depositors because they fear their customers withdrawing their money as cash.
Now what? Are you going to eliminate cash? Are you going to introduce an exchange rate vs cash?
What mechanism do you propose for creditors to spend off their savings so that it is mathematically possible for the rest of the economic sectors including the public sector to pay off their debts and shrink the money supply?
What are you going to do about the constantly declining money velocity that, apparently, requires a constant expansion of the money supply?
The problem is that most of these things are defined by mathematical identities and cost benefit structures. Unless you assume some omnipotent market participants with infinite capacity to track everything akin in power to a hypothetical central planner, these problems will stick around and your feelings or sense of justice about what is right or wrong won't matter.
The empirical evidence is that interest rates have been declining for 800 years and that we have basically reached the end of positive real returns.
Go ahead and do more austerity and lower the interest rate even further.
All the people glorifying capitalism don't see that Europe is a bonafide example of diligently following neoclassical economics maxims. The end result? The interest rate drops below zero in the debt brake country (Germany).
Banks are scared of passing the costs onto depositors because they fear their customers withdrawing their money as cash.
Now what? Are you going to eliminate cash? Are you going to introduce an exchange rate vs cash?
What mechanism do you propose for creditors to spend off their savings so that it is mathematically possible for the rest of the economic sectors including the public sector to pay off their debts and shrink the money supply?
What are you going to do about the constantly declining money velocity that, apparently, requires a constant expansion of the money supply?
The problem is that most of these things are defined by mathematical identities and cost benefit structures. Unless you assume some omnipotent market participants with infinite capacity to track everything akin in power to a hypothetical central planner, these problems will stick around and your feelings or sense of justice about what is right or wrong won't matter.
The empirical evidence is that interest rates have been declining for 800 years and that we have basically reached the end of positive real returns.
Go ahead and do more austerity and lower the interest rate even further.
I’m not offended that we act as if someone aged 17 and 11 months is definitely unfit in a way that could never be the case after age 18. If that were true then only a minimum voting age is required.
In reality I can drag my great grandfather to the polls and vote for him so you should be able to vote for your kids.
Who is more impacted by government than parents or people caring for ailing parents?
In reality I can drag my great grandfather to the polls and vote for him so you should be able to vote for your kids.
Who is more impacted by government than parents or people caring for ailing parents?
Perhaps it's more to the point that your problem wouldn't be solved by lowering the voting age, as that would still not give you a perspective tens, hundreds ... thousands of years into the future.
You'd have to get people to vote 1000s of years before they're even born.
You'd have to get people to vote 1000s of years before they're even born.
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Strange article. The first few paragraphs are written as if we haven’t raised the debt ceiling repeatedly. The latter graphs show debt as a % of GDP as a negative number… so the chart shows lines going down to mean debt will comprise a larger portion of GDP.
Yes, it's a little strange - it's basically two articles smooshed together. The first third is a pretty disinterested (perfunctory??) overview of the debt ceiling situation. The last two thirds (which is the actual 'nightmare') is about growing fiscal deficit.
Not just "as if we haven't raised the debt ceiling repeatedly". It's also "as if we haven't had a republican congress pull these shenanigans every few years for as long as I've been alive".
Anyone who is pretending this entire story is new and different or anything other than the R crowd posturing for their base (as always) is trying to sell you beachfront property in Arizona. It may get as far as a short term government shutdown (austerity measures, furloughs) before enough donors make big enough threats for it to pass.
Learn your history and remember the events of your life - this is an established pattern and if it surprises you, it's your fault. (Not that it should be the pattern, but "what is" and "what should" don't often intersect).
Anyone who is pretending this entire story is new and different or anything other than the R crowd posturing for their base (as always) is trying to sell you beachfront property in Arizona. It may get as far as a short term government shutdown (austerity measures, furloughs) before enough donors make big enough threats for it to pass.
Learn your history and remember the events of your life - this is an established pattern and if it surprises you, it's your fault. (Not that it should be the pattern, but "what is" and "what should" don't often intersect).
As if Democrats aren't postering here?
This isn't a dem/repub issue. If you can't see that, you are falling for it just as much as anyone else. Its that kind of thinking that is forestalling reasonable measures that could be taken now instead of fear-mongering that the other side is going to leave old people eating catfood.
This isn't a dem/repub issue. If you can't see that, you are falling for it just as much as anyone else. Its that kind of thinking that is forestalling reasonable measures that could be taken now instead of fear-mongering that the other side is going to leave old people eating catfood.
I'm not saying they aren't posturing. Im saying that an R congress did this twice during Obama, at least once during clinton, and they are doing it now.
I never seen a D congress try to stop the debt ceiling being raised.
Both sides will go dirty over budgets, but this specific detb ceiling thing has a pattern. Show me how I'm wrong, don't just throw nonsequiturs at me that aren't about the thing I actually said.
I never seen a D congress try to stop the debt ceiling being raised.
Both sides will go dirty over budgets, but this specific detb ceiling thing has a pattern. Show me how I'm wrong, don't just throw nonsequiturs at me that aren't about the thing I actually said.
No one cares about any of that political posturing. We can argue back and forth about who is going to get the blame, but eventually its got to be addressed or its going to bite us even harder than it already is.
Like it or not, the debt limit is the only time where we end up talking about it. As soon as its over, they are back to planning another infrastructure spending package. I'm still waiting to see what we got from the one in 2008 that was supposed to change everything.
Like it or not, the debt limit is the only time where we end up talking about it. As soon as its over, they are back to planning another infrastructure spending package. I'm still waiting to see what we got from the one in 2008 that was supposed to change everything.
If that was remotely true, if it was anything other than a lie, why does it only come up when there is an R congress and D president? There are plenty of times in the last 30 years where there's an R congress and an R president, but it never was an issue.
If it was actually a concern, it would come up then too.
If it was actually a concern, it would come up then too.
Maybe because the congress is the place the budget gets written? The president has little to do with it. Democrat congresses tend to initiate larger spending packages.
Regardless, that still doesn't address the debt problem.
Regardless, that still doesn't address the debt problem.
Democratic congresses also raise revenues. Republicans congresses are all about driving wealth inequality and cratering social benefits through taxes, and starving agencies and programs of funding.
> This isn't a dem/repub issue.
Then why has every single debt ceiling crisis, starting with the 1995 abandonment of the Gephardt Rule raising the ceiling with the budget. been instigated by a Republican Congress during a Democratic Administration?
It would be hard to find a more definitively Republican/Democratic issue.
Then why has every single debt ceiling crisis, starting with the 1995 abandonment of the Gephardt Rule raising the ceiling with the budget. been instigated by a Republican Congress during a Democratic Administration?
It would be hard to find a more definitively Republican/Democratic issue.
Maybe because that's the only way we end up talking about it? Would you prefer they keep the Gephardt Rule and keep lifting it and go on to start planning another massive infrastructure package?
People are sick of the finger pointing. No one cares. Something has to be done about the debt or its going to end up biting us even harder than it already is.
People are sick of the finger pointing. No one cares. Something has to be done about the debt or its going to end up biting us even harder than it already is.
The Debt Ceiling is likely unconstitutional and irrelevant. Republicans use it to cut benefits to the poor or middle classes. Getting a hand on debt is what Democrats do. Year after year we get more evidence of this through reductions in our deficits under Democratic administrations. You know what we get under Republican administrations? Massive debt and growing deficits.
This is a Republican issue full stop. The debt ceiling isn't about debt. It never was and it never will be.
This is a Republican issue full stop. The debt ceiling isn't about debt. It never was and it never will be.
Congresses set budgets. Presidents have little to do with it. The last time the budget came into balance was in the late '90s (Dem president, Republican congress). Due to gridlock and some real spending restraints that were put in place.
It's only a Republican issue, because the only time they can make it an issue is when they have control of the Congress. You basically just admitted that Democrats don't care about the debt. You think it can just keep going up forever? You don't think eventually this thing is going to pop? The sooner we deal with it, the lesser the repercussions.
It's only a Republican issue, because the only time they can make it an issue is when they have control of the Congress. You basically just admitted that Democrats don't care about the debt. You think it can just keep going up forever? You don't think eventually this thing is going to pop? The sooner we deal with it, the lesser the repercussions.
The Debt and The Debt Limit are vastly different things. Republicans can bring up the Debt Limit at any time. They only do it when a Democratic Administration is present. They have no problem massively bloating budgets. The Debt Limit is an unconstitutional artificial crisis to approve borrowing of debt already accrued. If you want to solve debt you do it when you set the budget not when the credit card bill is due.
This is only an issue when we have a democrat as president: https://www.snopes.com/fact-check/gop-debt-ceiling-trump-pre...
It's an issue if the dollar looses it's reserve currency status.
What is going to replace it? There is no feasible alternative.
> This is only an issue when it's a democrat president.
You'd think that indeed (dems are indeed, in a long leftist tradition, always ready, willing and eager to spend other people's money).
But, very unfortunately, the last few so-called "fiscal conservative" presidents have been anything but:
https://www.thebalancemoney.com/us-debt-by-president-by-doll...
You'd think that indeed (dems are indeed, in a long leftist tradition, always ready, willing and eager to spend other people's money).
But, very unfortunately, the last few so-called "fiscal conservative" presidents have been anything but:
https://www.thebalancemoney.com/us-debt-by-president-by-doll...
I think that’s what they’re saying.
Who's "they"?
GP you originally replied to. He’s not saying the debt doesn’t go up regardless of who is the presidency, but that republicans only make it into an exercise in brinksmanship when a democrat has the Oval Office.
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The debt goes up continuously under both parties. It's structural.
https://en.m.wikipedia.org/wiki/U.S._economic_performance_un...
I agree. You might read some tea leaves and conclude that democrats or republicans are better from this article. I got the impression that the parties are very similar. There is no party that is the "obvious" choice. The debt goes up either way.
My only opinion is that the republican party is behaving far far more childish in public.
I agree. You might read some tea leaves and conclude that democrats or republicans are better from this article. I got the impression that the parties are very similar. There is no party that is the "obvious" choice. The debt goes up either way.
My only opinion is that the republican party is behaving far far more childish in public.
The Republican Party has done a far better job of weaponizing the debt issue. That’s all.
Not at the same amount and only one party complains about it.
For the last 40 years the deficit has increased under Republican presidents and decreased under Democrats.
This is true in other western democracies if you look at borrowing/expenditure by political flavour.
Ad hominem [1] attacks, even if true, don't make the idea itself less credible.
[1] https://en.wikipedia.org/wiki/Ad_hominem
[1] https://en.wikipedia.org/wiki/Ad_hominem
Demographics are destiny. America can probably attract and assimilate enough immigrants to be OK. That has always been and continues to be America’s superpower. As global birth rates continue to plummet, most of the rest of the world seems headed for a hard landing.
The West has been importing its population for decades, full gas since 1965. Not only is this strategy failing, it is a significant contributor to the West’s current decline. The core problem is more centered on the dynamics of the 20th century that led to mass immigration.
> it is a significant contributor to the West’s current decline.
Can you explain this further please?
Can you explain this further please?
But new immigrants will need a vibrant economy they can assimilate into and pay taxes. If not, we will just be swamped and become another shithole country. That helps no one.
There's several places poised for good demographic growth. Egypt, parts of Africa, Mexico. Not China, most of Europe. USA should be fine as long as the quality of the human capital stays high (education, law and order, etc).
Fleetingly few places that have both the demographics and the institutional stability to capitalize on demographic growth though.
Maybe a couple places in Latin America, but those countries have a habit of electing the wrong autocrat and utterly collapsing.
Maybe a couple places in Latin America, but those countries have a habit of electing the wrong autocrat and utterly collapsing.
Those are certainly big factors but don't underestimate their future potential. There's some big mega projects happening in Egypt that most people in the west are not even aware of, for example. I think Mexico is the really interesting one to keep an eye on as the world bifurcates (huge near-shoring manufacturing potential).
Growth =/= divident. Demographics is more than just pyramid, have to consider workforce / productive composition and actual ability to realize potential, especially when comparing polities with order(s) of magnitude difference in population and human capita catchup/potential.
> Not China
Hence especially China.
Scale of PRC moving workforce from currently 25% skilled to 70-85% over (developed economy level) next few generation even with net population decline is roughly creating 3-5 new Japans, or another 1-1.5 US worth of high productive divident. Within a few generations, through system largely with good track record ability to move up skill/value chain. Most other developing countries have been spinning wheels for too long to take face value postive prognosis seriously. But PRC doing so at PRC scale is special case, no other country is structurally able to replicate this feat, because they lack scale (US even with immigration), or coordination (India on other in same pop class but systemically incapable and not trending towards being so).
> Not China
Hence especially China.
Scale of PRC moving workforce from currently 25% skilled to 70-85% over (developed economy level) next few generation even with net population decline is roughly creating 3-5 new Japans, or another 1-1.5 US worth of high productive divident. Within a few generations, through system largely with good track record ability to move up skill/value chain. Most other developing countries have been spinning wheels for too long to take face value postive prognosis seriously. But PRC doing so at PRC scale is special case, no other country is structurally able to replicate this feat, because they lack scale (US even with immigration), or coordination (India on other in same pop class but systemically incapable and not trending towards being so).
I actually totally agree with you on both.
I mean China regarding pop growth. China will be fine because like you said, highly skilled workforce and fully developed modern infrastructure. And I think AI and robotic automation will fill the void of population decline.
Mainly I'm alluding to the up and coming places that aren't developed. With all the negativity out there now, I see tons of potential - but it's outside of the western world (in particular, outside of Western Europe).
I mean China regarding pop growth. China will be fine because like you said, highly skilled workforce and fully developed modern infrastructure. And I think AI and robotic automation will fill the void of population decline.
Mainly I'm alluding to the up and coming places that aren't developed. With all the negativity out there now, I see tons of potential - but it's outside of the western world (in particular, outside of Western Europe).
>tons of potential
I agree there's a lot of potential, but IMO forces working against pop growth potential is increasing. I'm more weary of associate pop growth with assumed developement potential, there some analysis showing old pop heavy export oriented industrial model working less well - trend last few decades is industrialization opportunites being milked dryer sooner and at lower levels of income. What helped East/South Asia is may not be uplift LATAM or Africa to nearly same degree. Geopolitics and labour saving technologies is going to remove a lot of human potential from being realized, meanwhile a lot of the govs of developing countries are futzing hard themselves.
I'm feeling we're entering era where developing opportunties will be limited, and more people will simply mean more people left behind. And if developed countries with declining pops decide to pivot to immigration, brain drain from developing countries is going to get harsh, especially with opennings in western highered if PRC decides to turn off talent taps i.e. PRC demphasising English to limit talent flow out in future gens. If India gets wise decides to not export their demographic divident away, that's ~2M extra braindrain west will be taking from global south. Countries with 1B+ may have surplus to keep going, large countries with 100s of millions may not.
TLDR is I think potential is going to be harder to realize going forward.
I agree there's a lot of potential, but IMO forces working against pop growth potential is increasing. I'm more weary of associate pop growth with assumed developement potential, there some analysis showing old pop heavy export oriented industrial model working less well - trend last few decades is industrialization opportunites being milked dryer sooner and at lower levels of income. What helped East/South Asia is may not be uplift LATAM or Africa to nearly same degree. Geopolitics and labour saving technologies is going to remove a lot of human potential from being realized, meanwhile a lot of the govs of developing countries are futzing hard themselves.
I'm feeling we're entering era where developing opportunties will be limited, and more people will simply mean more people left behind. And if developed countries with declining pops decide to pivot to immigration, brain drain from developing countries is going to get harsh, especially with opennings in western highered if PRC decides to turn off talent taps i.e. PRC demphasising English to limit talent flow out in future gens. If India gets wise decides to not export their demographic divident away, that's ~2M extra braindrain west will be taking from global south. Countries with 1B+ may have surplus to keep going, large countries with 100s of millions may not.
TLDR is I think potential is going to be harder to realize going forward.
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Afghanistan is growing rapidly. It basically doubled its population in the last 20-something years. It'll be a world leader very soon....
I didn’t mention anything about leadership. What I’m interested in are raising standards of living and the markets that opens up. People who need to buy their first washing machine, etc.
Mexico is below replacement, that's the opposite of good demographic growth
Economically OK, but expect more social fissures between cultures and generations, especially when welfare and upward mobility will diminish with more bodies.
When the debt limit is discussed is telling of its use as a cynical political tool. It’s basically debating to pay the bills previously agreed upon to spend with the passing of the budget. If the budget passes so should the debt limit to spend that budget.
Our politicians play this game then wonder why other nations are starting to coalesce around other reserve currencies.
Our politicians play this game then wonder why other nations are starting to coalesce around other reserve currencies.
The debt ceiling is as enforceable as false weather report laws are enforceable against sharpie gate. POTUS needs to nut up, issue an EO and see who is going to stop him.
I’m not an expert on wether this would be quite legal (or within the “calvinball” bounds of our political system - as the slightly more independent fed would have to go along with the treasury at least).
But the point is, repeatedly testing legal corner cases and economic disruption on basic things like will our govt reps allow the govt to spend what they told it to spend is shooting ourself in the foot for political theatre.
Nations want a stable financial foundation to transact between other nations. They want a stable reserve currency that doesn’t inject added disruption from political instability. Until recently that was the US dollar that was stable beyond all other currencies.
But the point is, repeatedly testing legal corner cases and economic disruption on basic things like will our govt reps allow the govt to spend what they told it to spend is shooting ourself in the foot for political theatre.
Nations want a stable financial foundation to transact between other nations. They want a stable reserve currency that doesn’t inject added disruption from political instability. Until recently that was the US dollar that was stable beyond all other currencies.
He doesn't have the power to do that. If he does and gets away with it, don't complain when that power is abused by other presidents in ways you disapprove.
Jettisoning the debt limit is the consequence after were no consequences for changing federal weather forecast maps on a whim.
The debt ceiling fights only started when BHO won the presidency, 15 years of this nonsense is enough.
The debt ceiling fights only started when BHO won the presidency, 15 years of this nonsense is enough.
You must be young. Debt limit debate has been going on longer than that.
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The Economist seems like it is incapable of not doing a "both sides!" with regards to American politics lately and I find it quite frustrating.
Could it be that in the majority of cases both these political parties are actually more self serving than civil serving?
False equivalence , one is worse than the other.
Are you saying you would prefer them to be more one-sided?
When one side is using the threat of what the article calls an "outcome [that] would be devastating for global markets" as a negotiating tactic, I would prefer if journalists were more forceful in their criticism of that approach.
Sometimes there is an objectively bad option in a political debate. Failing to raise the debt ceiling is one of those. We can have all sorts of debates about the US's debt and how we should cut expenses or raise revenue, but defaulting on our debts to "win" that debate is an objectively bad approach and journalists should make that clear.
Sometimes there is an objectively bad option in a political debate. Failing to raise the debt ceiling is one of those. We can have all sorts of debates about the US's debt and how we should cut expenses or raise revenue, but defaulting on our debts to "win" that debate is an objectively bad approach and journalists should make that clear.
I'm saying you need to look at an issue and the people involved and actually form an opinion sometimes. Not every issue can be split down the middle. An extreme example from US history would be slavery. Most issues are going to have much more nuance than that, but there's usually a better course of action.
The Economist has never been just 'straight up journalism', so I expect them to have an informed opinion. Maybe I disagree with it in some cases, and that's fine, but I find this "on one hand... on the other hand" stuff where they go out of their way to dig up something to say for both sides insufferable.
The Economist has never been just 'straight up journalism', so I expect them to have an informed opinion. Maybe I disagree with it in some cases, and that's fine, but I find this "on one hand... on the other hand" stuff where they go out of their way to dig up something to say for both sides insufferable.
But ... MMT?
Is it really Tax and Spend? Or is it Spend and Tax.
So for example in 2020 QE cycle in UK the UK gov would spend something like 100BN a month, and would fund that out of borrowing - so it would put 100BN of bonds (gilts) onto the market - which were immediately bought not by pension funds but by the Bank Of England - so basically the UK government owes itself something like a trillion pounds worth of bonds - around 40% of total UK debt.
Exactly how does the UK government owe itself money? Our debt to GDP ratio is about half of what everyone says simply because the government printed money.
As long as that reflected real world purchasing - nurses and so on - then fine.
Is it really Tax and Spend? Or is it Spend and Tax.
So for example in 2020 QE cycle in UK the UK gov would spend something like 100BN a month, and would fund that out of borrowing - so it would put 100BN of bonds (gilts) onto the market - which were immediately bought not by pension funds but by the Bank Of England - so basically the UK government owes itself something like a trillion pounds worth of bonds - around 40% of total UK debt.
Exactly how does the UK government owe itself money? Our debt to GDP ratio is about half of what everyone says simply because the government printed money.
As long as that reflected real world purchasing - nurses and so on - then fine.
For the curious, here's the debt limit bill that passed the Republican-led House of Representatives at the end of April, HR 2811:
https://www.congress.gov/bill/118th-congress/house-bill/2811
https://www.congress.gov/bill/118th-congress/house-bill/2811
Had to look this one up:
"swingeing": (chiefly British) : very large, high, or severe
https://www.merriam-webster.com/dictionary/swingeing
"swingeing": (chiefly British) : very large, high, or severe
https://www.merriam-webster.com/dictionary/swingeing
It's really a very solvable problem if there was sufficient political will and right now there just isn't. Half the government (and half the voters) are intent on making things worse to secure short-term gains for those that are already in the top half of society. America could easily stand to raise taxes substantially without significantly slowing growth (long-term) and bring deficits back in line.
Increasing tax rates will lower government revenues though as history has shown. It's a maximization problem under a curve not some simple linear equation to determine where tax rates should be set. We are arguably close to already having a rate that yields the most collection.
This isn't true. To say Tax Rates go up lowers revenue, I'm assuming you think if Tax Rates go down, then revenue would go up? But during last tax cuts, Rates went down, and Revenue also went down, there was NOT some increase in revenue because people somehow used their extra money more efficiently and thus generating more growth to tax on.
Anybody that thinks lowering taxes spurs growth and thus revenue, then what happens if taxes go to 0, shouldn't government revenue go to infinity. This whole, lowering taxes spurs the rick to create more growth is a false narrative.
Anybody that thinks lowering taxes spurs growth and thus revenue, then what happens if taxes go to 0, shouldn't government revenue go to infinity. This whole, lowering taxes spurs the rick to create more growth is a false narrative.
> Increasing tax rates will lower government revenues though as history has shown.
History has not shown that.
An entirely unempirical claim and a napkin diagram are not the same thing as “history”.
> It’s a maximization problem under a curve not some simple linear equation to determine where tax rates should be set. We are arguably close to already having a rate that yields the most collection.
“Arguably” is a claim that a reasonable argument with some basis beyond pure speculation can be made for the conclusion offered, but…I’m not seeing the argument for the claim that there are no tax rates in the current system of taxes which could be increased that would lead to a substantial net increase in tax collections. Care to present the argument?
History has not shown that.
An entirely unempirical claim and a napkin diagram are not the same thing as “history”.
> It’s a maximization problem under a curve not some simple linear equation to determine where tax rates should be set. We are arguably close to already having a rate that yields the most collection.
“Arguably” is a claim that a reasonable argument with some basis beyond pure speculation can be made for the conclusion offered, but…I’m not seeing the argument for the claim that there are no tax rates in the current system of taxes which could be increased that would lead to a substantial net increase in tax collections. Care to present the argument?
That is stupendously untrue. The Laffer Curve is a meaningless tautology crafted by a political hack. No, we cannot set tax rates at 100%. But we can set them way higher than they are now and not cannibalize revenue. Just putting top margins in the 45-50% range would raise a ton of money and not discourage anyone from earning. Ending step up basis would not discourage billionaires from dying.
The current ceiling for gross debt is $31.4trn (117% of gdp), and America is careening towards it.
If the debt is supposed to be no higher than set percentage of the GDP, and the GDP drops, shouldn't the debt-ceiling also drop? Or is setting a debt-ceiling just so much bullshit theatrics that should be done away with entirely?
If the debt is supposed to be no higher than set percentage of the GDP, and the GDP drops, shouldn't the debt-ceiling also drop? Or is setting a debt-ceiling just so much bullshit theatrics that should be done away with entirely?
https://archive.is/oCvhG
very much worth a read in that context:
https://comprehensivemoney.com/blog/thriftville-squandervill...
very much worth a read in that context:
https://comprehensivemoney.com/blog/thriftville-squandervill...
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No it doesn't, and the Economist, as an iconic neoliberal publication, has been saying the same thing since I was a kid and Carter was president.
Nobody cares. The whole thing was a scam, it never actually mattered that much and the entire argument about government debt has basically just been an organized effort to have a reason for the government not to help people.
The debt ceiling is complete bullshit, a totally manufactured crisis that doesn't even make sense on paper. They only reason it's happening at all is because the right-wing Democrats thought that instead of just killing it when it was easy to do, they'd use it as an excuse to cut social programs by pretending it had to happen to compromise with Republicans. Then that clever idea fell apart.
But it still doesn't matter. It has never mattered.
Nobody cares. The whole thing was a scam, it never actually mattered that much and the entire argument about government debt has basically just been an organized effort to have a reason for the government not to help people.
The debt ceiling is complete bullshit, a totally manufactured crisis that doesn't even make sense on paper. They only reason it's happening at all is because the right-wing Democrats thought that instead of just killing it when it was easy to do, they'd use it as an excuse to cut social programs by pretending it had to happen to compromise with Republicans. Then that clever idea fell apart.
But it still doesn't matter. It has never mattered.
It's interesting who the USG owes money to. A non-trivial portion is to social security - ie, the government borrowed from the social security trust fund and has yet to pay it back.
So politicians vote to borrow against this fund to pay for an astronomical defense budget then unsurprisingly start "sounding the warning" that social security will run out of money...
So politicians vote to borrow against this fund to pay for an astronomical defense budget then unsurprisingly start "sounding the warning" that social security will run out of money...
> But it still doesn't matter. It has never mattered.
Following this logic, why pay taxes at all? If the amout of debt the USG taking on is irrelevant and a "scam," then why not just set tax rates to 0%?
Following this logic, why pay taxes at all? If the amout of debt the USG taking on is irrelevant and a "scam," then why not just set tax rates to 0%?
The amount of debt we are taking on is certainly relevant, it has strong effects on interest rates and inflation.
Using those metrics, interest rates, and inflation, to figure out what's going on, makes sense. Using nominal national debt doesn't.
And worrying about the "debt ceiling" is a complete and total scam. It's utterly meaningless and the only reason it exists is because people thought it would be a clever political tactic to use in cutting social insurance.
Using those metrics, interest rates, and inflation, to figure out what's going on, makes sense. Using nominal national debt doesn't.
And worrying about the "debt ceiling" is a complete and total scam. It's utterly meaningless and the only reason it exists is because people thought it would be a clever political tactic to use in cutting social insurance.
And increase the debt ceiling to give everyone UBI at the same time. Because it's a scam and doesn't matter.
The GP's facile and surface level thinking on this issue is click bate content but doesn't give any of us more insight into the meaning of a debt ceiling, budget decifits, and the problems/solutions surrounding them.
The GP's facile and surface level thinking on this issue is click bate content but doesn't give any of us more insight into the meaning of a debt ceiling, budget decifits, and the problems/solutions surrounding them.
Not sure why you're getting downvoted, because you're right in principle. (Probably because you insulted both parties at once).
Where it does matter is as an excuse to push other agendas through with "emergency" bills to raise it.
Where it does matter is as an excuse to push other agendas through with "emergency" bills to raise it.
"The debt ceiling is complete bullshit"
It has an instant impact to value attributed to the currency, which then impacts imports/export prices, which then impacts economic activity.
Look at what's happening in South Africa - they thought they issue debt/ print money to paper over social issues, and everything would be Ok. They are finding out that analysis was incorrect.
It has an instant impact to value attributed to the currency, which then impacts imports/export prices, which then impacts economic activity.
Look at what's happening in South Africa - they thought they issue debt/ print money to paper over social issues, and everything would be Ok. They are finding out that analysis was incorrect.
Let's say you could help everyone and print+spend money without any fake or real reason holding you back.
How long would that go for and at what point would you eventually have to say ok let's turn off the printer because there are consequences we haven't been paying attention to.
How long would that go for and at what point would you eventually have to say ok let's turn off the printer because there are consequences we haven't been paying attention to.
The thing that would hold you back is the amount of productive resources the country has.
You could print millions of dollars and send it to people, but that wouldn't make houses come from nowhere, so it would just increase inflation.
On the flip side, you could print millions of dollars and use it to build housing and infrastructure and fund education in the trades and so on and then it would actually help houses get built.
And so on. The point being that the notional deficit doesn't really matter at all. What matters for increasing wealth is the ability of the country to produce material wealth, and government spending is either helping that or not.
You could print millions of dollars and send it to people, but that wouldn't make houses come from nowhere, so it would just increase inflation.
On the flip side, you could print millions of dollars and use it to build housing and infrastructure and fund education in the trades and so on and then it would actually help houses get built.
And so on. The point being that the notional deficit doesn't really matter at all. What matters for increasing wealth is the ability of the country to produce material wealth, and government spending is either helping that or not.
Debt and entitlements should be the primary issue for under-40 voters. You are sacrificing your prosperity to pay for an insolvent entitlement system. It’s been insolvent for 50 years and now it is bankrupt.
Inflation isn’t a natural mechanism , it’s a way to get people to work harder and longer in exchange for a lower quality of life.
The inflation curve shot up in 1971 as a deliberate policy to compensate for a doubling of the work force. Twice as much time spent at work for a lower quality of life.
Money and debt are just proxy indicators for time. Vote like your life depends on it, because it does.
Inflation isn’t a natural mechanism , it’s a way to get people to work harder and longer in exchange for a lower quality of life.
The inflation curve shot up in 1971 as a deliberate policy to compensate for a doubling of the work force. Twice as much time spent at work for a lower quality of life.
Money and debt are just proxy indicators for time. Vote like your life depends on it, because it does.
for all the down-voters – this isn’t endorsing the debt ceiling or GOP ( i know how that may startle hackernews readers). IT’s urging people to make debt a national issue, and to vote out the pensioners who are stealing our prosperity
alright i got up to 0. that's pretty good on HN
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Don't we go through this like once a year? Everyone freaks out about hitting the debt ceiling and the economy imploding, and then congress just raises the ceiling.
Historically Congress hasn’t been being led around by its most extreme elements, but that’s no longer the case in the HoR. So we might be in for some all new degrees of “let it burn” posturing that we haven’t experienced before.
> Historically Congress hasn’t been being led around by its most extreme elements
The Republican Party in Congress has been since at least 1994, which is why they have engineered debt ceiling crises at least once in every Democratic Administration since the Congress elected in 1994.
The Republican Party in Congress has been since at least 1994, which is why they have engineered debt ceiling crises at least once in every Democratic Administration since the Congress elected in 1994.
Right. My point is that before it was score political points against political opposition. However, that Republican opposition back then was still catering to regular rich people who don’t want the US to actually default just for the lulz and to pwn the libs.
The current lot in charge is more of the “burn it all down” sort which isn’t catering to regular rich people, but rather is catering to QAnon’ers. So, it’s less clear that it’s all just posturing and how far they’ll go with such posturing.
The current lot in charge is more of the “burn it all down” sort which isn’t catering to regular rich people, but rather is catering to QAnon’ers. So, it’s less clear that it’s all just posturing and how far they’ll go with such posturing.
This is what has me on edge a bit. The reps of party in charge is seemingly run by people intent on scoring social media points, and the more they get, the more they double down on crazy.
Much like Trump, many of the reps in place seem to lack basic shame, which makes them dangerous. Most of the processes and norms we have in place assume some level of shame to act as a breaker. If you have just one person acting out, the system might survive. When you have dozens, all acting without shame, we get in to new uncharted territory.
Much like Trump, many of the reps in place seem to lack basic shame, which makes them dangerous. Most of the processes and norms we have in place assume some level of shame to act as a breaker. If you have just one person acting out, the system might survive. When you have dozens, all acting without shame, we get in to new uncharted territory.
Once or twice a decade really. And when the Republicans (it's always them) tie raising this artificial construct to their political goals, it causes panic. At some point, the madman putting a gun to your head may pull the trigger.
The debt limit has nothing to do with budgeting or spending limits. It is a foolish hack in US law that lets the Treasury borrow money to pay for our spending already authorized.
Ideally it would go away entirely.
The debt limit has nothing to do with budgeting or spending limits. It is a foolish hack in US law that lets the Treasury borrow money to pay for our spending already authorized.
Ideally it would go away entirely.
> Don't we go through this like once a year?
No, debt ceiling crises are engineered by the GOP less frequently than that (2011 and 2013 were the closest in sequence, IIRC.)
There’s sometimes media speculation about whether one will be engineered, and that’s more frequent than it actually happening. Maybe you are thinking about that?
No, debt ceiling crises are engineered by the GOP less frequently than that (2011 and 2013 were the closest in sequence, IIRC.)
There’s sometimes media speculation about whether one will be engineered, and that’s more frequent than it actually happening. Maybe you are thinking about that?
The worry is that one day congress won't have that luxury for one reason or another. The uncertainty is when and what means. It is the uncertainty that causes economic panic.
Interest rates weren't this high when we ran up a $33 trillion bill. My fear about this is that as long-term bonds expire, they will need to be re-issued at much higher rates. A significant chunk of US tax revenue goes towards servicing the debt, and that chunk will only get bigger.
The "debt ceiling" is a distraction from the real problem. It's a dumb political football.
The "debt ceiling" is a distraction from the real problem. It's a dumb political football.
> and then congress just raises the ceiling.
Sure, why worry about debt.
If the debt is held internally, we'll just tell the citizens to get over it.
If it's held externally, we'll send in the killer robots (via some loser proxy country, of course) until the debt is pardoned.
Why worry indeed?
Sure, why worry about debt.
If the debt is held internally, we'll just tell the citizens to get over it.
If it's held externally, we'll send in the killer robots (via some loser proxy country, of course) until the debt is pardoned.
Why worry indeed?
More likely we negotiate the terms of debt forgiveness, such as tariff reductions etc.
Domestic debt could be traded in for a permanent tax credit.
Domestic debt could be traded in for a permanent tax credit.
> More likely we negotiate the terms of debt forgiveness, such as tariff reductions etc.
So instead of controlling our own destiny, we have to hope for good terms from negotiations with the holders of that debt - who can apply increasingly more leverage as the amount of debt they hold increases?
So instead of controlling our own destiny, we have to hope for good terms from negotiations with the holders of that debt - who can apply increasingly more leverage as the amount of debt they hold increases?
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you think it can just keep going up forever?
The issue is not whether we reach a sovereign debt crisis, it is when we reach it. Sure, we've been able to avoid it up to now. But eventually something's going to give.
The issue is not whether we reach a sovereign debt crisis, it is when we reach it. Sure, we've been able to avoid it up to now. But eventually something's going to give.
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The United States is the only country in the world where the conservatives vote for a budget, but then when fall rolls around, refuse to pay for it.
It's just a political lever that they discovered, where pulling it damages the country, but somehow scores political points, so they are pulling it over and over and over again.
Stop rewarding them for it.
If they actually gave two craps about the debt, they wouldn't vote for a budget where expenses exceed revenue. But doing that wouldn't score them political points, so...
It's just a political lever that they discovered, where pulling it damages the country, but somehow scores political points, so they are pulling it over and over and over again.
Stop rewarding them for it.
If they actually gave two craps about the debt, they wouldn't vote for a budget where expenses exceed revenue. But doing that wouldn't score them political points, so...
Both not paying your bills, and passing your debts to your children, are now apparently conservative values.
That's because the ceiling is a nonsensical concept. They money has already been spent.
tl;dr, the federal government is spending beyond its means and needs to either cut spending, increase taxes, or both.
> How to avoid this sorry fate? The economic prescription is straightforward; the politics of delivering it are anything but. Even before the interest-rate shock, it was easy to anticipate that deficits would increase over time. The biggest share of federal spending is mandatory expenditures on social security, health insurance and the like, which are prescribed by laws and not subject to the vagaries of the annual budget-setting process. Already big, they will bulge as the population ages. Annual spending on income support for the elderly will be as much as all spending on education, the environment, national defence, science and transportation by 2033.
> The government estimates that trust funds which help bankroll both social security and health programmes will be insolvent by the early 2030s. At that moment America would face a basic choice between slashing benefits and raising taxes. A similar calculation will apply to all other aspects of the federal budget: some combination of reducing expenditures and raising revenues is the only way to prevent a crippling rise in the federal deficit.
> How to avoid this sorry fate? The economic prescription is straightforward; the politics of delivering it are anything but. Even before the interest-rate shock, it was easy to anticipate that deficits would increase over time. The biggest share of federal spending is mandatory expenditures on social security, health insurance and the like, which are prescribed by laws and not subject to the vagaries of the annual budget-setting process. Already big, they will bulge as the population ages. Annual spending on income support for the elderly will be as much as all spending on education, the environment, national defence, science and transportation by 2033.
> The government estimates that trust funds which help bankroll both social security and health programmes will be insolvent by the early 2030s. At that moment America would face a basic choice between slashing benefits and raising taxes. A similar calculation will apply to all other aspects of the federal budget: some combination of reducing expenditures and raising revenues is the only way to prevent a crippling rise in the federal deficit.
> tl;dr, the federal government is spending beyond its means and needs to either cut spending, increase taxes, or both.
What is the federal government's track record past 30 years at achieving a balance of either of these things?
What is the federal government's track record past 30 years at achieving a balance of either of these things?
There was a surplus from 1998-2001[0], so in living memory of most people reading this.
It's worth mentioning this happened under a Democratic president and Republican congress, not far from what we have now.
[0]https://fred.stlouisfed.org/series/FYFSD
Edit: added citation
It's worth mentioning this happened under a Democratic president and Republican congress, not far from what we have now.
[0]https://fred.stlouisfed.org/series/FYFSD
Edit: added citation
What's different now in 2023 than 1998-2001 stopping us from achieving this?
How much would spending need to be cut by, what programs will actually accept these cuts, how much can taxes realistically be raised by, why won't there be lobbying/special interest/loopholes to prevent this?
How much would spending need to be cut by, what programs will actually accept these cuts, how much can taxes realistically be raised by, why won't there be lobbying/special interest/loopholes to prevent this?
Certainly those late 90s budgets all kept government expenditures below 20% of GDP.
You could also try to raise taxes without stifling growth (and thus reducing revenues), but that's an even harder technical problem to pair with a similar political problem. Personally I'd be in support of a constitutional amendment that caps Federal revenues at 20% of GDP, so I wouldn't be on board for this, but to each his own.
Take a look at page 39 in the latest budget summary[0] and see if you can find the right places to raise revenues and cut spending to eliminate the $1.148 trillion deficit for 2023.
[0]https://www.govinfo.gov/content/pkg/BUDGET-2022-BUD/pdf/BUDG...
You could also try to raise taxes without stifling growth (and thus reducing revenues), but that's an even harder technical problem to pair with a similar political problem. Personally I'd be in support of a constitutional amendment that caps Federal revenues at 20% of GDP, so I wouldn't be on board for this, but to each his own.
Take a look at page 39 in the latest budget summary[0] and see if you can find the right places to raise revenues and cut spending to eliminate the $1.148 trillion deficit for 2023.
[0]https://www.govinfo.gov/content/pkg/BUDGET-2022-BUD/pdf/BUDG...
Back in 1998-2001, members of Congress were somewhat sane and reasonable people.
In 2023, half the members of Congress believe in Qanon and Jewish space lasers. And the same is true of the voters.
In 2023, half the members of Congress believe in Qanon and Jewish space lasers. And the same is true of the voters.
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You folks know other countries don't do this silliness right? They don't have an arbitrary debt ceiling they have to constantly raise or else the government goes into torpor? That's just an Americans thing.
Also, did The Economist write an article like this when Trump was doing his "big, beautiful tax cut" or does it only matter when Democrats are in power?
Also, did The Economist write an article like this when Trump was doing his "big, beautiful tax cut" or does it only matter when Democrats are in power?
There was indeed an anti-GOP article on the debt ceiling in late Nov 2016: https://www.economist.com/free-exchange/2016/11/22/the-hole-...
Yeah that's what leads to situations like the Greek debt crisis [1].
You can't just rack up debt forever, and just assume that we'll pay it back later WITH INTEREST. You also can't just "cancel" debt; the bill eventually comes due.
[1] https://en.wikipedia.org/wiki/Greek_government-debt_crisis
You can't just rack up debt forever, and just assume that we'll pay it back later WITH INTEREST. You also can't just "cancel" debt; the bill eventually comes due.
[1] https://en.wikipedia.org/wiki/Greek_government-debt_crisis
The Greeks didn't have their own money printer though, which makes this situation quite different.
> You folks know other countries don't do this silliness right? They don't have an arbitrary debt ceiling they have to constantly raise or else the government goes into torpor? That's just an Americans thing.
The article says exactly this.
The article says exactly this.
It only matters when Democrats are president.
Yep.
api(4)
Wow, no... really?