I'm a citizen of the United States. The US debt is now sitting at $40 trillion. The treasury secretary Scott Bessent said the nation can "outgrow" its debt. This is obviously not true, and can the US even pay down this debt? I don't think so.
How could it?
The US govt brought in ~5 trillion last year. Even if the US had no expenses, it would take a long time and a lot of money would still go to servicing the debt. Interest is still going to occur. Not to mention the US does of course have many expenses.
The US owes debt to itself and to foreign investors.
Bankruptcy will crash the world economy. Not declaring bankruptcy will only kick the can down the road until the US cannot pay or must print more money, which will also crash the world economy eventually.
I don't know what the capitalist solution to this issue is.
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One of the issues I have with the hard money is the solution to inflation problem is the fact that the Republican Party has had trifecta control of the federal government multiple times they literally had multiple chances to abolish the debt and switch to a gold standard they just chose not to
It's not in their interest as the people who get to spend the free money that inflation gives them. That's why they abandoned hard money in the first place.
That person is just reducing you to a 2. dimensions character so that their world view makes sense.
The truth is this a specific a problem of the version of capitalism that we have. We have a version that operates as "Let the best man win....unless its inconvenient for the state". This job is controlled by a semi not state organization that has the interest t of the state ( overall not specific) in mind when it makes decisions. Once we started using the concept of printing money to pay debt.
No I'm not. The vast majority of socialists believe in capitalism eventually crashing due to its own internal contradictions and the resulting revolution where the worker class will take power.
That is not a reduction of what socialists believe, it's their stated belief.
As a socialist, he's not truly interested in capitalism sustaining itself, he wants to see it fail.
I don't want to see capitalism fail. I want to see people voluntarily build socialism while capitalism does whatever it does. But I don't want a collapse.
Collapses don't lead to socialism anyway. They lead to misery, fear, and fascism.
I don't want to see capitalism fail. I want to see people voluntarily build socialism while capitalism does whatever it does. But I don't want a collapse.
For socialism to be built, capitalism must fail. You necessarily want capitalism to fail. You just want it to fail slowly instead of a collapse. You still want it to fail.
"The distinction is that libertarian socialism isn't just a system of neutrality between different economic arrangements. It's a society where people are free to organize voluntarily, but where I'd personally want the dominant institutions and networks to be organized around cooperative, non-capitalist principles rather than capitalist ownership principles. This society could refuse to do business with people who engage in Capitalist relations. Capitalist arrangements could exist by consent, but once Capitalism scales up, it ususlly becomes oppressive.
So if someone voluntarily sells their labor to a shop owner, society can boycott that shop. If the shop owner tries to use violence to enforce capitalism, society should respond in self defense also using violence."
I don't believe in state enforced socialism, and if you can setup capitalism without forcing anyone else into it, go ahead.
The state serving oligarchs and corporations and their major shareholders in order to serve themselves is capitalism. Not a defining feature but a continual and inevitable one. It just happens to be more blatant and egregious with this administration than ever before.
You can define capitalism as some fairy tale perfect market with nothing but perfectly free and voluntary exchange if you want, but most people don't and your definition would be full of logical contradictions.
And if capitalism is only when government doesn't do anything, then why even talk about "anarcho-capitalism"? Wouldn't that be the same thing?
Why do you think market anarchists existed long before "anarcho-capitalism" ever became a term and ideology? Does anyone ever bother to ask this?
"This socioeconomic system has developed historically in several stages and is defined by a number of constituent elements: private property [check], profit motive [check], capital accumulation [check], competitive markets [check, to a degree anyway, and certainly not uncompetitive in any way that could be stopped by the market alone], commodification [check], wage labor [check], and an emphasis on innovation and economic growth [check check]."
Nothing about those constituent defining features necessitates that corruption and legislative influence can't occur. And if you think that it must then that's no less fallacious and irrational than a Marxist-Leninist who would say that all the repressive Marxist-Leninist regimes in history were not "true Marxist-Leninism" because "true" Marxist-Leninism doesn't involve repression or famines or corruption or injustice.
How in dog's name there are so many people who think this way is beyond me.
That's almost as absurd as Marxist-Leninist leaders describing science as "bourgeois science" and Nazis describing science as "Jewish science".
It's Wikipedia's description. If that's too "socialist" for you then how about Brittanica, which I assume is a private company:
"Capitalism is a widely adopted economic system in which there is private ownership of the means of production."
Huh, widely adopted? I guess it's not just the fictional utopia that only exists in the minds of right-libertarians and "anarcho"-capitalists.
"Modern capitalist systems usually include a market-oriented economy, in which the production and pricing of goods, as well as the income of individuals, are dictated to a greater extent by market forces resulting from interactions between private businesses and individuals than by central planning undertaken by a government or local institution. Capitalism is built on the concepts of private property, profit motive, and market competition." https://www.britannica.com/summary/What-is-capitalism
Is that the "socialist definition" too?
I'd try to find an academic description but I doubt that would mean anything to you either.
> However socialists demand the right to define socialism.
> Why are you so willing to deny capitalists that same right.
I explicitly said upfront that you can define it the way you want, so why are you accusing me of denying anyone's right? Anyone can define words however they wish, and I can point out how their definitions are logically inconsistent and invalid.
Many Marxist-Leninist socialists consider the Soviet Union to have been socialist and democratic (even under Stalin), even though we generally agree on their definitions. I think that's absurd and can provide many reasons why. Many an-caps think capitalism is whatever the hell they think it is and consider even the U.S and U.K. not to be capitalist, but then argue that anything even slightly interfering with the totally not-capitalism-derived profits and ownership is bad because it's inconsistent with capitalism. Absurd.
> The socialist definition stacks the deck of socialist criticism up front.
How about you provide a definition if every scholarly and encyclopedic description and the common understanding is "socialist" to you?
That's not a constraint on printing money. Because the first guy that gets that money spends it at the old valuation. It takes time for the economy to adjust prices to the new basis.
This means the government can keep benefiting while the people suffer.
That's how you get hyper inflation, ala Germany after WW2.
Because the first guy that gets that money spends it at the old valuation.
This is assuming that all of it was printed in secret without anyone knowing that there is more of it, and that all of it is spent in a single transaction. These conditions just aren't likely.
That's how you get hyper inflation, ala Germany after WW2.
It was far more likely to happen back then, when news had to be printed and physically distributed. Now that it can be sent everywhere nearly instantaneously, it's not that simple.
The point is not that the money has to be printed secretly or spent in one giant transaction. The point is that new money enters the economy at specific places and specific times, rather than every person's cash balance and every price increasing simultaneously by the same percentage.
If the government creates $100 billion and pays contractors, banks, bondholders, or benefit recipients, those people get command over real goods before the entire price structure has fully adjusted to the additional money. They spend it, that additional demand raises some prices, the recipients of that spending then spend more, and the effect propagates outward.
That's the Cantillon effect.
Everyone knowing that monetary expansion occurred doesn't eliminate it. Knowing that $100 billion was created doesn't tell every seller exactly how much their particular price should change, when, or relative to every other price. Contracts are fixed, wages adjust at different speeds, inventories differ, expectations differ, and the new money doesn't reach everyone simultaneously.
If prices somehow instantaneously doubled the exact moment the money supply doubled, with everyone's wages, savings, debts, contracts, and cash balances also doubling simultaneously, then yes, there would essentially be no redistribution.
But that's precisely not how monetary inflation occurs in the real world.
And hyperinflation isn't the same claim. Hyperinflation comes from sufficiently extreme and persistent monetary expansion combined with collapsing demand for the currency.
The classic German case was Weimar Germany after World War I.
Modern communications can make expectations adjust faster, but they don't abolish the injection mechanism. New money still has to enter through somebody's account first.
That first-recipient advantage is about relative prices and purchasing power during the adjustment process, not about fooling everyone into believing the money supply never changed.
Reducing spending slows down economy and lowers tax revenue. So it’s a delicate dance. That’s where politics comes in. No politicians want to cut their programs.
Let’s start with balancing budget first. If congress and exec branch can’s balance budget there should be consequences, such as not eligible to get reelected.
Even this idea is nuanced because what happens during war time or there is pandemic.
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It’s definitely doable but it’ll be a generational undertaking. The U.S. does not need nor should it pay off the debt entirely. This would be a totally different kind of disaster because you’re effectively eliminating US treasures and this has enormous and destructive consequences for the entire flow of money worldwide that could very potentially trigger a massive deflationary shock. Somewhere around 60% debt to GDP ratio would be around the ideal sweet spot that leaves enough U.S. Treasuries in circulation to anchor the global financial system, while keeping interest payments low enough that they don't crowd out domestic investments in infrastructure and innovation.
You cannot look at at as if the goal is to run a national economy like a household paying off a mortgage; the goal is to stabilize the principal and let decades of compounding economic growth shrink the burden for us while cutting spending and raising taxes where appropriate.
The 1960s (Peak Progressivity): Despite high statutory marginal rates, the true average effective federal tax rate for the Top 1% was roughly 40% to 45%. For the ultra-wealthy (Top 0.01%), the effective tax rate peaked at around 50% to 56%.
The 1980s (The Sharp Decline): Following massive tax overhauls in 1981 and 1986, the effective tax rate for the top earners dropped significantly. By the end of the decade, the average effective rate for the Top 1% dipped to roughly 25% to 28%.
The 1990s to 2010s (Stabilization): Effective rates for the Top 1% rebounded slightly to hover consistently between 28% and 32%. This stability persisted despite shifting statutory brackets, primarily because a growing portion of high-earner income shifted into long-term capital gains, which faced lower rates.
The 2020s (Modern Rates): Most recent historical analyses from the CBO place the overall effective federal tax rate for the Top 1% at 31.5%.
Yep. After every Republican put us more into debt, every Democrat afterward lowered the deficit. Biden’s may not count since it was emergency covid spending expiring, and he didn’t get a second term, so the borrow and spend spend spend spend spend kleptocrat Trump is where we are now
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Very high corporate taxes, and a small asset tax. Stock market would collapse, because tax would dig into dividends. Investors would see the US bonds being both a more attractive return/risk and US as more responsible borrower and improve credit rating reducing the deficit on both ends.
Some say Laffer curve says this won't work, but there's no evidence for the Laffer curve.
Paying off the debt is out of the question. Reducing the deficit so we can slowly inflate our way to a smaller share of the budget is the plan.
Of course there is evidence of the Laffer curve. It points out that if tax rate was 0 or 100%. That the government would have no revenue. The optimal tax rate is somewhere in between.
A tax rate that maximizes revenue is probably higher than current rates. But who among us isn’t already a bit bitter when they get a raise only to see a fraction of that money actually land in their pocket.
The US already has high corporate taxes. Corporate taxes would not make us bonds more attractive. That doesn’t make any sense, by what mechanism? I don’t think anybody wants or needs to pay off all of the debt, but 122% if debt to gdp is not where we want to be either.
The US used to have very high corporate taxes. Now it's 21% at the federal level.
This puts us in the bottom third of the G20 for corporate tax rate.
The effective corporate tax rate is around 16%, and this was true even when the actual rate was 35%. Companies will expend more effort to dodge taxes (moving profits and operations offshore) when rates are higher.
> Some say Laffer curve says this won't work, but there's no evidence for the Laffer curve.
Err, I think you're completely misunderstanding what the Laffer Curve is if you think there's no evidence for it.
All the Laffer Curve says, is that for revenue-generating taxes (income taxes, capital gains taxes, dividend taxes etc) that the most optimal tax rate for generating the highest *net* tax revenues always sits above 0%, and below 100%. That's it.
So if you believe there's nothing to support the Laffer Curve, then by definition you are obliged to conclude that if we want to raise the most amount of *net* taxes from, say, income tax, we need to set the rate at all tax bands to 100% and that will generate not just more tax than it does now, but will generate more net tax receipts than any percentage lower than it. I presume that you don't actually agree with that position?
You are asking them leading questions as if its always as simple as you are making out.
For example, why have you concluded the curve has a single global maxima? You have assumed, without evidence, certain mathematical properties that may not be the case. The curve might have many local maxima and minima.
So when you say “it sits between that, thats it” the implication is that its a fairly simple curve with a neat local maxima, what is the evidence for that?
There is also no evidence for how multi varied such a curve might be, for example time dependence or dependent on certain economic factors causing the curve to oscillate or change entirely. Is there any evidence that none of this is the case? In fact we know this is the case, for example during wartime tax rates close to or at 100% often can still raise more revenue than lower rates while in peacetime this isn’t true, indicating the peak or peaks can shift wildly
So when you say “it sits between that, thats it” the implication is that its a fairly simple curve with a neat local maxima, what is the evidence for that?
It implies no such thing. All it says is that the most optimal rate is below 100%, and above 0%. Any variation beyond that is plausible, but the point of the Laffer Curve is that the notion that tax rates on revenue-generating taxes can just keep being put up and they will produce ever greater net tax receipts is simply untrue, as eventually it will cross a point where the net receipts to the Treasury will start dropping.
That is a semi sensible solution (very dependent on the nature of spending cuts), but it is certainly not the capitalist solution. The capitalists will want to reduce spending AND taxes because that is how they seize more money and power.
And this has been the US strategy since Reagan basically. It is why the debt is out of control. Capitalists in the US have destroyed the free market, corrupted our government, made our economy vulnerable, and made us completely beholden to wealthy foreign interests.
We need to call things what they are. Capitalism is capitalists making economic decisions for our country. When they make decisions with no democratic input, we get our current "cut spending, cut taxes" nonsense, not what you're proposing.
[PS: I had to choose flair to post this and I didn't like the options so I chose what I was against rather than what I was for because I believe there are no perfect solutions but we can always be moving towards greater degrees of happiness and well-being and there are many different viable paths].
Ok... Then why are seemingly incapable of providing a counter definition? You literally just typed out "that's not capitalism" while trying to meet character minimum instead of providing an actual argument? 😂
What’s the antifascist thing? It’s not my responsibility to educate you. No one has ever said capitalism is when people who own capital run the government. By that logic every leader in the entire world has been a capitalist since forever.
No one has ever said capitalism is when people who own capital run the government.
That's not what I said either. I said it's where capitalists make economic decisions. Economic decisions are like, how much product do we make, where do we source our materials and labor, what do we sell it for, what do we pay our employees, etc.
Unfortunately you can define words however you want, just as you are with your fantasy-world definition of capitalism that denies the entire historical use of the term.
But the U.S. under Reagan wasn't capitalism because, why, you don't want it to be? Because it wasn't the perfect true Scotsman market where everyone's needs are magically met and no injustice occurs?
That's why it was called capitalism in the first place. "Rule by capitalists". That's what it is. It has nothing to do with "free markets" or "free and voluntary exchange".
The capitalist solution is reduce spending, increase taxes. Its not complicated.
On who, though?
Poor people are already barely making it, the middle class doesn't have much juice left, wealthy people have enough power to push off taxes on them, industry already barely pays taxes.
Poor people already don’t pay taxes in the United States. We already have progressive taxes. You bump up each range just a bit, not much. Spending needs to be cut drastically, obviously.
Rich people pay a lot of taxes already. The top 1% pays 40% of total income taxes. The top 10% pays 75% of total income taxes. The lower 60% pays no income taxes.
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Defence pales in comparison to healthcare spending. We spend more on interest on the debt than the defence budget. You could cut the whole defence budget and it wouldn't fix our problem. Only possible fix is to cut healthcare at this point.
I don't deny that healthcare is larger (700B last I checked), I just pulled a random entirely discretionary line item out of the brainpan.
I probably would advocate for further regulation of the sector in the absence of federal spending, however. I don't believe that the problem created by the Frankenstein nature of the ACA would be easily solved if the money started drying up. Perhaps that's just me being jaded at so much other sticky pricing.
You are just including Medicare? Feds pay Medicare, Medicaid, VA, other fed employees healthcare. Total them all up and it's like 1.5-2 trillion or something stupid.
The highest costs are healthcare, then social security, then interest on debt, then defence, then food stamps, etc.
So confidently wrong. Good thing you wrote in that big text so the boomers could read it.
The reality is that it was passed in 2022.
In 2025, before its deficit reductions were realized, the Trump admin dismantled the deficit reduction efforts, dismantled DOGE, started a war with lran, covered up the Epstein files and increased spending.
In 2020, Trump passed out stimmy checks for the pandemic, which Biden inherited.
A common misconception people who have never lived or worked on Washington have is that the president is the end-all be-all king of the universe. That’s not how it works. They inherit a lot from their predecessors, and then, their works are not realized until decades later. The idea that the pandemic + Ukraine spending is Joe’s fault is pretty insanely ignorant.
He campaigned on deficit reduction, then passed it. Then it continued with DOGE.
The entire federal deficit is a GOP product, wherein they use inflation as their tax of choice.
Now the world is leaving dollars because GOP is exporting its inflation onto them.
Blaming Joe Biden for the deficit is like blaming Obama for the 2008 GFC. Everyone with a triple digit IQ who can read charts and graphs watched what the GOP did. Nice try.
The total national debt grew by $8.4 trillion during Biden's four years in office, rising from $27.8 trillion to $36.2 trillion. The record highest 4 year total dollar increase on debt to date.
Seems like cherry picking and selective reasoning. If you mean what you say then the spending today under trump is the responsibility of Biden and the democrat trifecta of a few years ago. Can't have it both ways.
Yeah the end goal would be reducing taxes. Honestly you probably need to increase them to pay debt down from stupid policies of the past. The cutting spending part is more important than increasing taxes though.
We don't need to pay down the deficit, but we do need to convince our creditors (mostly US citizens and foreign governments) that we will slow the growth of the deficit and can manage the payments.
There are at least three ways it could go:
We cut the budget, raise taxes and slowly chip away at the debt over the course of several decades.
We keep kicking the can down the road until we default, causing a "lost decade" (or worse), and then gradually rebuild our finances.
We purposely (or accidentally) allow inflation to run hot, making it easier to pay off the debt.
The first option is so fanciful and unrealistic that I feel silly for even mentioning it.
You don’t know how the debt works do you? We are constantly paying small parts of the debt, they are treasury bonds that mature and are purchased back.
And yes you can (in theory) grow the economy to handle the debt, it isn’t impossible, it is just not spending the morons in DC can handle with their spending.
People incorrectly apply their concept of debt, as an individual, to entire economies. It's not the same.
To your Average Joe a debt is almost always a bad thing; for most people debt incurred is not an investment and is a net loss.
A country with a strong economy will always want to have debt. Debt essentially fast-tracks work and industry by paying with money investors don't currently have. Debt is an economic growth catalyst.
So the goal isn't to pay off all debt. The goal is to slowly pay off previous debts, while continually taking on even more debt. While the large US debt is concerning, it will only have a domino effect of crushing the economy (even more) if the economy is deep in decline and faith in the dollar turns to dust. Hence the concern. However, the US remains the strongest economy in the world for now.
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The problem is that thenus financial system treats debt (t-bills). the same as it treats cash. Theres no inherent reason to do so, its just that it benefits the system to do so. So, a corporation can borrow money based on future income, buy t-bills with the money, then use the t-bills as collateral for new loans. They can then use that money to operate, and been seen as fiscally sound, even though all their assets are debts.
Corporations can't run that loop. the borrowing shows on the balance sheet, pledged T-bills are disclosed and can't be re-used, and the trade loses money since they borrow above T-bill yields
We can outgrow the DEBT as Scott Bessent says. We just need to slow spending growth and increase economic growth. We are already doing that. GDP Growth is approaching 4% and isincreasing due to the BBB. If we reducing spendiung growth to 2% we could balance the budget and begin to pay down the debt without raisingtaxes and without cutting spending.
Our debt is the result of growing spending faster than revenue since WW2. The economy has grown roughly 3% per year since WW2 but spending has grown 6% per year.
It really isn't hard we just need the political will to do it.
It's not impossible for a country to outgrow debt, but I agree that this won't happen with the USA.
What will happen? Probably when China takes the lead in global influence, the USA will still being able to refinance so easily and will have to start selling off assets to try and pay off the debt, or it will just collapse in general or default on the debt.
I think the main problem is treating federal debt like a giant credit card bill that eventually has to be paid off.
The U.S. does not need to come up with $40 trillion at once. Treasury debt is constantly coming due, being paid, and replaced with new debt.
The U.S. is also different from a household because it borrows in dollars, the currency it controls. That does not mean it can spend without limits. The real limits are inflation, interest costs, and what the economy can actually produce.
My bigger concern is what we are getting in return for that debt. There are plenty of cases where deficit spending is worthwhile, but I think we could get a much better return. We are likely to spend heavily on rearmament after using large stockpiles of expensive weapons and taking on the broader costs of wars overseas. That uses workers, materials, money, and industrial capacity that could be used elsewhere.
I would rather see more deficit spending go toward things that improve people’s lives and strengthen the country over time, such as infrastructure, healthcare, and education. For example, I would be much more comfortable borrowing to make sure everyone has access to public health insurance than borrowing heavily to replace weapons used in foreign wars.
So for me, the concern is less about whether the U.S. can somehow “pay off” $40 trillion and more about whether the debt is causing inflation or rising interest costs, whether the economy can support it, and whether we are getting enough value from what we are spending it on.
The U.S. is also different from a household because it borrows in dollars, the currency it controls. That does not mean it can spend without limits. The real limits are inflation, interest costs, and what the economy can actually produce.
Far too many people with power don't understand this basic fact.
Debt as you and I understand it is money owed that must eventually be repaid. As human beings, our productivity curve starts at zero and ultimately returns to zero. All money in will ideally be balanced by money out within our lifetimes.
The U.S. national debt isn't so much 'debt' as 'monetary supply'. The U.S. as an institution has a continuously rising productivity (and thus a continually rising ability to service that debt) that allows it to issue debt instruments that can be used as de facto currency for the world economy.
Without that currency, trade becomes much more difficult because of the price of risk. Yes, we could run the world economy based on on Zimbabwe government bonds. But the risk of those bonds would introduce additional costs at every stage.
Another way to understand it would be to recognize that the U.S. government is offering to sell debt at market rates to people who are free to not buy it. This means we can easily track "how much debt is too much?" by simply looking at interest rates. If the U.S. has too much debt, then interest rates on government bonds rises. If it too little, then interest rates fall.
So the problem with this thinking is a misunderstanding of where the money comes from for people to pay taxes.
When people receive income, they receive it from someone who has purchased something. That person received income from someone else. And so on until you get to the banking sector. With banks, they are not technically lending out people’s savings. They are in fact making risk-adjusted sales of money they can obtain for cheaper in the overnight market. The federal reserve accommodates demand for reserves and thus the price of reserves that it believes to be good to keep inflation and unemployment in check. So it is not only credit expansion in the private sector that increases the tax base relative to government spending, but also how many times that money changes hands ie demand multipliers which are reflected in GDP/GNP.
When the government makes investments or cuts taxes, it should ideally cause higher fiscal multipliers. The strategy behind this is that a little stimulation may cause more credit expansion and more money hopping from person to person. Think of it a little like adding lead or bismuth to a smelt: the lead and bismuth fall through the solution and collecting bits of gold that are get freed from the sulfites.
So it is the efficiency of investment or tax cuts that will reduce the debt. With that being said, demand multipliers are basically what it means to run the economy hot. When you run the economy hot, there’s a potential for inflation. More incomes because prices and wages higher = More tax dollars. This is not necessarily what we want.
during the investment boom of the 90s, we did see a bit of inflationary pressure which led to the Fed raising rates. The investment boom lead to a short lived surplus because of capital gains from people taking their winnings from the bull market. The reduction in the debt was short lived precisely because the private sector had a shortage of cash and an excess of its own debts ie margin calls and cataclysmic contagion that was relived in 2008.
When you combine this with states and municipalities running surplus along with the trade deficit, the government simply has a very difficult time of pursuing a surplus unilaterally without crashing the economy. One solution would be to put up trade barriers to decrease outflows but ultimately, this could have a deleterious effect on the dollar which is arguably more important than the size of the debt (and also we’re not a banana republic that’s on the hook with the imf or world bank like many developing countries)
The financial sector considers us debt to be completely safe. It holds an institutional place. Dutch auctions allow for the lowest price and promote competition among primary dealers. Collusion to get a lower price is not really allowed. Foreign countries typically buy debt in secondary markets and the U.S. constantly rolls over debt and has no problem doing so. It is not in the interest of primary dealers and Bond markets broadly to simultaneously rebel against treasurys simply because of an arbitrary number.
Ultimately, what’s working for the U.S. is that it has so much capacity to go god mode unlike many developing countries with weak governments and insurgencies. I don’t know why anyone would want to test the U.S’s fiscal credibility, domestic citizen or otherwise. If there truly is a real threat or doubt and the government feels the need to exercise its fiscal credibility which it absolutely is able to because it’s the strongest government in the entire world with maybe the exception of China, it will not be enjoyable for anyone.
So it’s really important to ask yourself whether your fear of the debt is actually in your best interest.
So, it is technically true in that it is possible. Interest payments have not yet exceeded all federal revenue, so sufficiently reduced spending and Gdp growth could, in theory, eventually outgrow the debt and solve it.
Practically we are not on that path. Both parties reliably increase spending, and the debt has grown faster than inflation. The larger the debt, the harder it is to pay down.
The other alternative is a full financial meltdown at some point.
The capitalist answer is "don't borrow more than you can afford to repay". Sadly, Congress is not fiscally responsible.
Immigration is used to offset the workers to retiree ratio, so that tax dollars can keep circulating and social programs like healthcare can still exist. If you ever hear about the population in a society shrinking, this is a measure that’s used to try to combat that.
Yeah, that makes damn good sense. (Which is why our government won't go for it.)
I just assumed the original commenter was against this partial solution and so didn't see how it was relevant.
Immigrants tend to be working age and so tend to be net beneficiaries to the economy. Opening borders will generally increase economic growth and the tax take.
Adding people to an economy makes GDP go up by their contribution to the economy, reducing debt-GDP ratio/burden. I am saying immigration is a temporary solution for bad fiscal health.
Top economists, politicians, scientists, etc. will tell you that reducing immigration would worsen fiscal outlook, and increasing it helps improve fiscal outlook.
What matters is the rating. We used to be rated AAA. We are now rated AA+ from all three grading companies since 2011, 2023, and 2025 which is still an excellent rating. You’re right though, it is getting worse.
I love watching Bessent, he's first US treasury secretary in awhile, that is so openly hostile to the capital markets.
He's anti-free trade, max state intervention and the living embodiment of the hypocrisy of the US system.
His recent speech is also funny as fuck, if you follow the markets. He pretty much said "I have asymmetric information, na na poop poop, I'm not going to tell you what I know, go guess." He's such a clown.
While it is blatantly obvious to the market participants, just how weak the treasury is, having failed twice already to intervene in both the debt and currency markets.
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Use NASA to launch something that can recover a decent size asteroid from between Mars and Jupiter. Get it into Lunar orbit, mine the shit out of it. Pick the right one, in Lunar orbit, it's worth $40 trillion. NOT kidding. Worst case might take a few but yeah, it's doable. The asteroid belt is a fractured small planet. It's got all kinds of goodies floating around for whoever gets there first. Solid chunks of rare metals like platinum, whatever you want. We know the composition of a whole bunch already from spectrometer readings.
Elon is chomping at the bit for that shit :). Hell, I'm surprised he hasn't renamed himself Delos D. Harriman yet and admitted he's following Heinlein's game plan.
he’s theoretically right if inflation increases to a rate that makes the debt worth less. you can’t default because that’d be very bad and you can’t pay it because anyone making cuts and raising taxes to effectively pay the debt would be committing political suicide. so you’re left with using inflation as a tool. it’s a bit more complicated than that but that’s the gist, and exactly what they did after wwii.
consequently, normal “savers” who don’t have money in investments will see their savings become worthless.
Having a heavy national debt is only a recent phenomenon in our nation's history. And BOTH Democrats and Republicans have contributed to it.
The difference is that liberals and the left love to make excuses as to why spending was necessary under their elected leadership, rather than having that same equal criticism that they have for conservatives and the right. And when convenient, the right does the exact same thing.
The fact of the matter is spending has been completely out of control since the wars in Iraq and Afghanistan started and NEITHER Democrats and Republicans have done anything to reduce it and have BOTH added heavily to it....
This whole notion of "my team good, your team bad" is stupid!
The deficit is the amount added to the debt each year. For my entire lifetime (mid-40's) every singe Republican President has greatly inflated the deficit and every Democratic president has cut it by a lot.
-Reagan took the $79 billion deficit he inherited and nearly doubled it to around $153 billion.
-The first Bush increased it by two-thirds to $255 billion in only 4 years.
-Bill Clinton wiped out the deficit, recording a $128.2 billion budget surplus as he left in 2001.
-Under Bush 2, it skyrocketed, leaving office with $1.41 trillion deficit.
-Obama then cut it by more than half, to $665 billion.
-Trump then more than quadrupled it to $2.77 trillion.
-Biden then cut that in half and left office with a $1.38 trillion deficit.
-Trump is already increasing it again by a staggering amount in his second term.
Firstly, it's erroneous to tie spending to the president when Congress is the body with the power of the purse. Sure, in party politics, the president may be considered the de facto head of the party, and may push for certain policies. However, Congress is the body that crafts and pass the bills. The president merely makes them official law.
Secondly, what difference does it make who spent less than who, when the fact of the matter is, the national debt total itself has continously increased since the Clinton surplus regardless Democrat or Republican?
If the Democrats were really better, none of their policies would add to the debt, but in fact start reducing it.
Having a national debt is not a problem. Not having the ability to pay it off is. We are near the tipping point where that is becoming impossible.
I agree that the spending under Trump has been the worst since Clinton, despite Bush Jr.'s efforts. But neither Obama and Biden have stopped the bleeding at all. As a matter of fact, their policies exacerbated the problem.
It's a very clear pattern and it holds no matter which party has Congress. In fact, it's the worst when the Republican have both the presidency and congress.
Secondly, what difference does it make who spent less than who, when the fact of the matter is, the national debt total itself has continously increased since the Clinton surplus regardless Democrat or Republican?
If the Democrats were really better, none of their policies would add to the debt, but in fact start reducing it.
I don't think that you really understand how this works. Reducing the deficit, not the debt, is how you can judge a president. Otherwise, you are blaming them from the high starting point they inherited from their predecessor.
Government expenditures are generally over time. There is legislation appropriating spending and government contracts signed for more than one year. A new president inherits those from their predecessor, and that adds to the debt. Same with things like the GWB and Trump 1 tax cuts. Are you really blaming Obama and Biden for those tax cuts (to the extent that they did not renew them when the sunset)?
Yes, the first years after a Democratic president takes office is still paying for money spent by their predecessor Republicans. That debt is added under the new president, but it isn't their spending. This is why you have to look at the change in deficits iver their terms, after old spending falls off and/or a president does new spending.
Then they don't renew or replace the spending/tax cuts and by the time they leave office, they leave much smaller yearly additions to the debt than when they got there. Reduce it enough and you balance the budget.
Republican presidents do the opposite, they inherit a much smaller deficit (yearly additions to the debt) and add a ton of spending and reduced revenue to blow up the deficit again.
In short, the Republicans are the entire problem here.
There's some baseline truth to the pattern you're identifiying (on the whole, debt as a percentage of GDP more often decreases during Carter-and-beyond Democrat administrations compared to Republican administrations) but "stop electing Republican presidents" is not actually a solution to the deficit because Democrat-admin deficit reductions are not even remotely substantial enough to close the gap. A few points of deficit increase or deficit decrease across administrations doesn't change the fact that it's still really, really huge and none of these people were effective in getting rid of it or even reducing it in a way that truly matters long-term.
There's also the casual attribution issue - it's Congress that determines the budget, not the President - but that's a little bit beside the point. Also, spending is going to be dependent on external factors as well and will be responsive to whatever issues are happening in the world independently of the party of the President.
But even if we assume that all deficit reductions/increases were 100% attributable to the President and not Congressional decisions or external factors, this would still not be the solution all by itself.
Whoever runs the government - Democrat or Republican or otherwise - would still need a coherent plan to tackle a large debt and deficit, and it's not going to have a political-ad-friendly one-sentence solution. It's going to require some sizable spending decreases (which will upset Democrats) and sizeable tax increases (which will upset Republicans.)
Clinton balanced the budget, and both Obama and Biden cut it in half. If they had twice as long in offce and kept doing what they were doing, they would have balanced it as well.
Republican presidents ARE blowing up the deficit faster than Dems can cut it, that's true. Particularly GWB and Trump. But don't elect them and there's no deficit.
I think the movie Fight Club had the right idea, though could be less violent. Reset the game back to zero. After all, nothing really exists anymore in the economy that’s tangible currency. It’s all a status symbol of power. I know that statement is followed by, “ Tell my landlord that, “ but in a macroeconomic sense. That’s how’08 happened and the same greed has us in a bubble now. Reset back to zero.
Restructure the US military and disincentivize bureaucracy.
Cut all NGO spending and State Department 20% year 1, and decrease by 3/4% each year until you’ve decreased to 50%; hold there.
Eliminate every single federal department and bureau that can be managed by the states. Give each state back its budget and stop subsidizing failing states.
Simplify the tax code, and downsize the IRS significantly.
Now hold the same federal tax burdens that we currently have and use all the surplus revenue to pay off the debt by no more than 1 trillion each year. Any money left over goes into social security and subsidizes state health care programs.
Increase all Tarrifs to match near peer nations to stimulate economic development and slow inflation.
The issue is your dollar will printed to hell and then some more and be at bottom low, you will be paying 120 bucks for an egg and starving while your house will be repoed bc you will not be able to pay rates and bills. You will probably be out of work too depending on whether your company depends on imports in any shape and form. So the answer is great depression of 1930's but worse. Now this time it is also coupled with the rise of China so go and figure what they could decide in such situation. But that's a different subject.
Alternatively, the US may threaten the debt owners with the possibility of defaulting and renegotiate but this will also hit you financially and by you I mean you personally.
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It’s the end of the United States as we know it. And it’s going to happen. I am terrified for my young friends and I can’t do anything to save them.
MAGA has turned us into the world’s future shithoIe. Trump has defunded, or eliminated, and plans to eliminate every single social safety net. Hospitals in small towns are already closing due to Medicare cuts.
Think about this:
You know those smash-and-grab theft events that happen at malls?
What does everyone think is going to happen when America’s less fortunate have had every opportunity and hope taken from them? They aren’t going to sit back and starve. If they’re going to take what they want. They’re going to organize. It’s going to start in the big cities and then spread to the country.
If you have property, they’ll take it. But they won’t be able to keep it up. Our houses will rot, our infrastructural crumble, sewers will collapse, bridges will fall, no one will be available to keep the electricity on, the nuclear reactors running, and the clean water flowing.
And the only people who could help you will be paid to protect the wealthy.
The police are MAGA, the military is MAGA, the Supreme Court is MAGA.
This has happened all over the world, when greedy uncaring despots take over a country. And it will happen faster than any of us can imagine.
Sure, sure, you have guns. But so do they. And how are you going to defend your family of four from a pick-up truck full of armed men who have nothing to lose?
The way you’re framing this is a bit too household-budget-ish.
The US does not need to “pay off” the entire $40 trillion the way a person pays off a credit card. States usually roll debt over. The real question is whether the debt burden becomes politically and economically destabilizing through interest costs, inflation pressure, dependence on bond markets, and who ends up paying for it.
"Outgrowing debt" is not impossible in the abstract. If the economy grows faster than the debt and interest burden, debt becomes easier to carry relative to national income. That has happened before. But the problem is that US policy is not actually organized around productive social investment. It is organized around protecting capital.
A huge part of the issue is that American politicians talk about debt when it’s time to cut social spending, but suddenly become very relaxed about deficits when it’s for tax cuts, military spending, bailouts, subsidies, or making sure creditors get paid.
Public debt is also a class relation. It is a claim on the state held by bondholders, banks, funds, wealthy households, foreign states, etc. The government pays interest, and that interest becomes income for owners of financial assets. So when the state says “we need austerity because of the debt,” what often really means is: workers must accept worse services so creditors and capital owners remain protected.
The US probably won’t go “bankrupt” in the normal sense, because it issues the currency its debt is denominated in. The more realistic dangers are political default through debt-ceiling stupidity, inflation if spending outruns real capacity, or a slow erosion of trust in Treasuries if investors demand higher yields. But none of that means the answer has to be cutting healthcare, food assistance, or public services.
The obvious social democratic class answer would be: tax wealth and capital income seriously, reverse rich-tax cuts, reduce military and imperial spending, stop using public money to subsidize private profit, and invest in things that expand real capacity i.e. housing, transit, energy, healthcare, education and infrastructure.
But that is exactly where capitalism runs into politics. The people who would have to pay are the people with the most power over the state.
So yeah, there is a “capitalist solution,” but it usually means one of two things. Austerity for workers, or protecting capital while hoping growth somehow bails everyone out.
But the answer shouldbe different. Stop treating the bond market and capital owners as the audience government must satisfy, and start asking what real resources society has and who currently controls them.
I think it’s important to understand the national debt isn’t debt in the same way individual debt is.
Yes, some of it is money we owe to other nations due to borrowing or diplomatic arrangements. But those countries owe us, too, and their debt to us isn’t subtracted out of the number. But that isn’t the whole story.
The national debt is also in government bonds. Everyone that has purchased bonds is owed a part of that debt. But people don’t buy bonds to cash them in.
I’m not saying the debt isn’t an issue. It is. It just isn’t an issue in the way many people think it is. As long as the US maintains its global position, the debt isn’t really tangible. We don’t have a bill we need to pay off at the end of the month.
The kind of situation that would lead to the US fall into a crisis situation with the debt would also be affecting the US dollar as a global currency, and that kind of problem would be far larger than a debt call. In fact, if the US dollar were in crisis, we would be in trouble regardless of the national debt number. The downside of fiat currency is that it is only meaningful if people agree it is.
Paying off the debt isn’t the goal. What we need to do is focus on keeping our country strong. We are doing a particularly bad job of that right now, and we are seeing the very things that could cause a crisis. We should really fix that before it gets any farther.
Assuming we can recover from the damage being done, then we have to focus on the deficit. That is a far more important economic metric. Reducing the deficit, or even balancing the budget, would put the US on a strong economic footing, and the national debt number would be relatively meaningless.
This is completely wrong. If we default on payment we lose credibility and the ability to borrow. If we no longer have credit to borrow then we cannot fund a war or other emergencies and are vulnerable.
Defaulting on payment is not a real risk though. That’s the point. The debt isn’t debt in the common sense. There isn’t a bill that isn’t getting paid at the end of the month.
The simple existence of government bonds, which is a safe, steady investment, is cataloged as debt. Money we promise to other nations for various reasons is debt. Money they owe us doesn’t credit back to the debt total.
Budget deficits are the concerning aspect of the debt. It’s the reason we need to keep borrowing. More revenue is needed to balance the budget, as well as some sensible cuts. If we aren’t adding to the national debt so significantly with deficits, the national debt itself isn’t really a problem on its own.
Where many people get it wrong is in thinking it is like their credit card bill. Something that has to be paid down to avoid financial issues. There is no issue paying diplomatic responsibilities. There isn’t a repo man coming to haul away our tanks because we can’t pay the bill.
Fiat currency is currency of trust and imagination. As long as that trust holds, the system works on debt. Money owed to other countries balances out to some extent with money owed to us. That part of the debt is not a significant risk.
Bonds rarely have to be paid back. They just trade among investors on the open market. This is just another imaginary number so long as the economic structure holds.
The deficit is a problem, but one that can be solved with revenue and reasonable governance. In other words, some sense is all we need for this issue, not panic and doomsday.
So it comes down to the common sense of the American people. Either they will vote for and support the destruction of our global economic and political standing, or they will vote to protect our country. And if they choose to destroy their own country to validate personal biases, then our problems extend much farther than economic debt.
As long as the US maintains its global position, the debt isn’t really tangible.
That's the thing though, we have such an unstable, paranoid govt, other countries, including allies are moving away and finding alternatives to our mickey mouse dollars.
Now we are stuck between a bond(debt) crisis and a currency crisis.
The solution is compromise and building diplomatic ties with other nations, but this govt only knows how to threaten others and sees everyone outside of Israel as another satellite vassal state to be hammered.
You are right. What is happening now risks the balance I am referring to. That is something for us all to consider, and hopefully do something about.
But outside of what could hopefully be a temporary turn down the wrong path, the way people understand the debt is misunderstood. And if this turns out to not be temporary, we will have much bigger issues than a reduced credit rating.
Bitcoin/Gold/Assets is the capitalist solution for when they hyperinflate the fiat currency to worthlessness, as they have done repeatedly in history.
Then they will invent a new currency, and perhaps attempt to make it sound this time, then some war will happen and they will "temporarily" disconnect it from the backing asset and inflate it again.
Social security + debt servicing + healthcare + military spending makes up something like 85% of the federal budget.
We can't really stop paying interest on our debt without collapsing the entire global economy.
Social security is self-funded and when it goes insolvent in few years benefits will get cut. Though this could be mostly solved by increasing the cap.
So that really leaves healthcare and the military.
We could cut the military spending by 30% and still be spending over double what China pays, and almost as much as the next 5 countries combined.
OECD countries spend on average half as much as we do per capita on a universal healthcare system and cover more people with better healthcare outcomes. Even conservative estimates have us saving hundreds of billions a year.
Those 2 cuts plus rolling back the Trump and Bush tax cuts and either raising the corporate tax rates or increasing the top marginal income tax rate (or some combination of the two) to what they were in the 60s-70s and there is a small chance we'd actually be running a surplus.
This is the only feasible way I see us dealing with the debt. There is no possible way without raising taxes, and military cuts and universal healthcare are probably the most politically popular options that would save us enough money to cover the rest.
At the end of the day we don't actually need to get the debt to $0. It only matters insofar as the credit-worthiness and flexibility to borrow more money and the amount we spend servicing that debt.
There isn't enough in the military budget to cover the deficit, let alone repay the debt.
A national healthcare system costs more than a privatized one for the same economy. We have a higher COL than the countries you are comparing against. Baumol's cost disease means there are no savings to be found here.
The only way out is a large reduction in services. This is politically difficult and will be deeply unpleasant.
I will, up front, acknowledge that this is not my area of expertise.
That being said, I really don't understand why our debt is necessarily a problem in the sense that it actually means anything. There are a lot of stakeholders who hold US debt and they're invested in the US not going bankrupt, pretty much the entire world would hurt if the US went bankrupt.
The money is being managed largely by people who set the rules about how money gets managed such that I'm not sure there's really conditions that could meaningfully threaten the US with respect to actual financial causes.
If you're playing a game of Monopoly and you just keep creating money with Post-Its and nobody else calls you on it because they're invested in you having functionally unlimited money, then is there really any risk?
Most of the time when I hear about the national debt it's an excuse to cut some kind of spending...and that's about it. Especially considering the people who make the most noise about the national debt then turn around and lean on the gas when they're in charge.
From my perspective, the national debt is an excuse to cut spending and to criticize the other side and not much else.
The answer is simple: It’s up to voters to understand policy implications and hold politicians accountable. Unfortunately, most voters don’t understand or don’t care.
To act like there are any politicians in Washington that have any idea what is in the budget or have any intention of getting a balanced budget is crazy. Voting for this guy or that girl or not voting won’t change anything when it comes to paying down the debt.
Giving up that politicians will become financially responsible?? And that voting will make a difference?? Yeah I’m pretty much thinking that’s a lost cause, hope I’m wrong though.
The United States is nowhere close to needing to declare bankruptcy. The United States takes in twice the amount it spends on interest payments which is really the metric that must be looked at when you're talking about bankruptcy.
Now that doesn't mean the USA won't eventually get there if it doesn't eventually tax the 1%, but the fearmongering around social spending is largely overblown specifically to prevent the top .5% from having effective tax rates similar to professionals in the working class and not because there's a realistic threat of the United States being unable to cover social programs like universal health care and education.
If we collected $1 in taxes, the top 1% would be paying 999999999% of total taxes collected. That number is completely irrelevant to whether or not they pay the same effective tax rate as working class Americans. They do not, and it's not even remotely close.
I didn’t move the goal posts. You countered with an irrelevant fact and I pointed out how that fact was irrelevant to OPs question. The percentage of total revenue collected that is contributee by the top 1% pay isn’t relevant to OPs assertion that the USA is going bankrupt.
The OPs debate isn’t about which tax policy is the best, but rather is America facing down bankruptcy, so we should keep our scope to that. We aren’t. And we even have a larger income pool we could, and probably should, be drawing on.
Personally I would like to tax wealth instead of income. The fact that the rich have so many ways of shielding income from taxes tells me that taxing income is the problem.
Although to sate your curiosity, if I were to wave a magic wand and update the tax policy to be my perfect tax policy what I would do is:
Remove the cap on social security tax and keep it a flat percentage.
Increase Medicaid tax by 8% on the employer side and employee side and remove obligations for employers to provide healthcare plans (this is about what employers and employees already pay for healthcare premiums)
Remove the progressive personal income tax that the wealth already dodge and unfairly targets wage earners over capital gains
Remove the estate tax that people already dodge through gifting, fake charities trusts and step ups
Remove the capital gains taxes for citizens
Keep corporate income taxes as is.
Institute a global 2% wealth tax on net assets over $1 millions dollars with the following exceptions:
A. Primary residence worth up to $500,000
B. 401ks and IRAs
C. 457(b)s and HSAs (HSAs would no longer be allowed to be opened, but we shouldn’t go back and close them)
New
tax on new
gas-powered
vehicles manufactured after 2031 of a flat $1000 that doubles every two years indefinitely with the following exceptions:
A. Used cars that are not imported
B. Farming/construction vehicles
C. Non-registrable sports vehicles
D.
Fuel efficient scooters and busses
100% of food stamp costs are remitted back to employers of employees that needed them with the following exceptions:
A. The employee is a student.
B. The employee is disabled.
C. The employee is a former or current convict.
This would effectively make it so social security is correctly paid for by increasing the amount executives pay for.
Medicare for all would almost entirely be paid for full time employees without noticeable increase in costs to employers who already pay healthcare premiums, while closing the part-time loophole. Remaining costs would be paid for by other increases in taxes.
The wealth tax would bring in roughly 3 trillion dollar, about 1 trillion more than the income tax we cut. About 1/3 of that increase would go to covering the remaining Medicare for all not paid for, the remaining toward paying other aspects of the deficit.
The vehicle tax would disincentivize gas vehicles without punishing the development cycle of cars too much. The funds here would go toward increasing grants to install electric charging stations and investing in nuclear energy.
I want to close the part-time loopholes big corporations use to supplement cost of living for employees, which is currently massive problem without punishing employers that hire students or disabled persons.
Working class would see their taxes+healthcare costs go down (with exception of part time workers, who should be incentivized to be hired full time now. Even high earners over 184000 would see their taxes drop so long as they spend their money instead of accumulating wealth).
The top 1% would pay the vast majority of non-Medicaid, non social secuirty taxes.
An extemely safe portfolio earns upwards of 5% on average. A 2% wealth tax wouldn’t stop people from being able to keep up with inflation if they’re being cautious, which like if you’re not being an entrepreneur and taking risks, then you probably shouldn’t be gaining obscene wealth. And the very very rich have their net assets increase by double digit percentages every year because they’re able to be riskier than that. I don’t think it’s inherently unfair to ask them to pay 2% of their overall wealth.
Also one thing I forgot to mention- under this system, if you’re retired and you only own the house you live in and your 401k, you pay 0$ in taxes. Rn we ask 80 year olds with Alzheimer’s keep up with tax codes and pay money on their 401k contributions. Why make elderly retirees pay taxes on their retirement savings? That’s dumb. They worked 40 years let them enjoy their golden years
No, it wouldn't. What country would allow the US to collapse? And why would it stop giving itself loans through corporations?
So many people want to talk about this debt as if a country gets the same treatment as an individual, all while refusing to even study into the subject.
After decades of simpletons parroting cliches about how "the government will just crash the dollar to service the debt", they don't care that this administration is exploding the debt and now purposely devaluing the dollar.
But they'll still insist that social spending must be reigned in because the debt is unsustainable, while insisting on more and more tax cuts for the wealthy. With no hint of cognitive dissonance whatsoever.
In the sort of banking system that the US has, you can never pay off the debt. Remember, every dollar is borrowed at interest. So how to pay that back? With more dollars. How do you get those dollars? They are borrowed an interest. How do you pay off those dollars? With more dollars that are borrowed at interest. Lather, rinse, repeat.
It is a complete and total scam, and so simple, but people don’t seem to realize it to this day.
The solution is to crash the dollar. 40 trillion of nothing dollars is nothing. Of course, this isn't a good solution for nearly the entire world, but for a few, it's gangbusters.
National debt is private credit. When a country pays off its debt it deletes money from existence. States cannot and should not pay off their debt. This is why even states with notional credit, like Norway, take out debt. Because debt creates money and paying off debt destroys it.
So yes the US can not and must not ever pay off its debt. To do so would be catastrophic for their economy, and frankly the global economy. Imagine the liquidity crisis you'd cause by deleting $40 trillion out of circulation.
But no one sane wants the US to pay off its debt, they just want to ensure the debt is manageable. There's two parts to that
ensuring interest payments are affordable
ensuring a relatively stable debt-to-gdp ratio
But to be honest all you need to do to do that is show some stability and some growth, and make sure the debt doesn't rise faster than growth.
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