Isn't the 1-2% savings from DOGE going to solve that?Interest costs on U.S. debt to exceed economic growth by 2045, increasing risk of fiscal crisis
"Interest costs will reach a record 3.2 percent of GDP this year – exceeding the cost of defense and Medicare," said a budget watchdog group. That may signal a debt spiral.justthenews.com
Many like myself would argue we are already in that debt spiral and that the 2045 figure is only possibly by keeping on the rose colored glasses and presuming that at some point on the path between now and then, people will actually embrace some pain points rather than jumping off a cliff and continuing down the same path. As an example the 2045 figure probably presumes that when Social Security goes "banktupt" in 2035 the pain is just allowed to happen and the shortfall in benefits won't be borrowed and thrown on to the rising debt.
Yeah that won't happen so in reality we are probably in that spiral now and have been for a while.
The thing that makes me far more pessimistic than most is that the projections pretty much assume things will continue as they when life is seldom that way. Many people earn a good living until suddenly they can't as an example. Many people are in great health until they aren't. That is the great argument about where you draw the lines in a planning discussion. "Just save $500 a month for the next 20 years" presumes you never have bumps in the road. My style of planning presumes the bumps and thus is far more conservative.
So what is a debt spiral and why is it so bad? You can't grow your way out of the debt at the point. Worse still (and this is why I say we are there now) the pain on the return is so large that the shock can't be fully absorbed and even if successful, there are a lot of secondary factors that just show you managed to mitigate the worst outcome while still having serious secondary outcomes be major problems.
So you can't grow your way out of the debt when the amount of debt you need is more than the economy can likely grow. If you need to add 8% of debt a year and an economy as large as the United States can grow reasonably 3-5% a year (which is great grown BTW) then the debt will just keep growing.
We understand this in smaller matters quite easily. You can't earn your way out of a spending problem. You can't exercise your way out of an eating problem.
The secondary matter is that big spending cuts likely SLOW the rate of economic growth. I'd say that is 100% true but you can't just keep adding debt either. It's a tightrope walk for the most part. Right now the Trump administration is talking about trying to get out spending down to ONLY borrowing a trillion dollars a year.
That will indeed bring pain but seriously, the pain is coming in one form or another. You can't go from borrowing $2 trillion a year to a dollar less than that without someone having some pain involved.
There's a lot more pain coming too. The best one could hope for is promoting the most growth possible while trying to absorb just enough pain to try to correct the path going forward. There is no path with zero pain. It doesn't exist.
The future pain points are coming and the less pain we are willing to confront today, the more we will confront in the future.
It does every day. It's a terrible idea to let Congress spend at it's discretion.We've already got a pretty big pile of treasuries out there. Shouldn't any debasement have occurred already?
Just the taxes that remain permanent.You believe that the last tax cuts during the previous Trump administration we tax cuts for the rich?
It's not my problem that you've been lied to by the Dems, Libs and Progs, and their compliant and complicit MSM.
You need to work on that.
It does every day. It's a terrible idea to let Congress spend at it's discretion.
We've been through this. Remember?
We have inflation. Do you see that?Debasement due to too much money happens every day? I'm just not seeing that.
You don't have to buy it. We can observe when this occurs. Luckily enough, it hasn't gotten to the point where we have a full-blown currency crisis.but I still don't buy into the idea of govt. spending crowding out investment.
Absolutely! There are instances when government spending crowds in private investment. Countercyclical policy is based on this theory by Keynes which turned out to also be observable.In fact, I think it's more likely that govt. spending crowds in investment.
This is your thread, and you obviously think that the national debt is a problem.
Do you think that a government with its own currency goes into real, household-style debt when they issue bonds? Or is it merely another way that they exercise their power to create and spend currency, just with another step added?
We have inflation. Do you see that?
You don't have to buy it. We can observe when this occurs. Luckily enough, it hasn't gotten to the point where we have a full-blown currency crisis.
Absolutely! There are instances when government spending crowds in private investment. Countercyclical policy is based on this theory by Keynes which turned out to also be observable.
We've been through this already.
I'm familiar with MMT but the points that get glossed over are what most of us call, valid criticisms.
You say......just with the step added.
My point is, if the step is really superfluous, why add it.
That was why I circled back on taxation. When you get deep into the discussion about how honestly governments can just issue their own currency and spend as they want with zero taxation necessary in reality (minus inflationary concerns) then you get lots of empty platitudes about why all the taxation has to be on the "rich" and lots of mentions about equality, concentration of wealth and so on.
However how can wealth REALLY be concentrated in terms of currency when the government can issue, borrow and do whatever they want there?
The issues here often drift to "education" and "managing societal expectations" and well, they are far off any actual economic points.
I find the explanations for such matters lacking. If it isn't a zero sum game with regard to borrowing and spending, that is also true on the taxation side.
I'm not even speaking for money supply growth. I'm talking about when income exceeds productivity. That's that hart of the demand induced inflationary reality of trusting Congress to manage spending without a financial intermediary (like we have today)... they are politicians.Of course I see it, but there are other reasons for the inflation.
You kind of post the same thing every couple of years.I haven't been on DP for a couple of years, so forgive me if I don't remember everything we talked about.
Well, we're at risk of one right now. As the world continues to dump dollars (really, it's dumping dollar denominated assets) because this administration is making it more costly to trade goods for dollars, input shortages will manifest into pockets where giffen goods markets emerge. This initial wave of debasement will be followed by a revaluation and severe decline in aggregate demand. The currency rebounds as a chunk of debt was erased by high levels of inflation, and an entire generation of productivity is lost (recession / depression). All the while, the rest of the world learns how to live with less access to the American consumer.How do you picture a full-blown currency crisis unfolding, if it were to happen?
To be clear, operationally, as a description of of sovereign money using government's work, MMT is correct.You should just be more brief and say... yo, bro, MMT and then we can just reply with all the conventional criticisms and concerns around it.
Proof? There is no "proof" in something as complex as macro-econ, evidence yes, but proof will always be illusive in a system as complex as as an economy with nearly $30 trillion in GDP. That said, I'm happy to explain and provide evidence and sources.Isn't it funny how folks like yourself never have cite, explain or prove anything.
Speaking of lack of explanation or citing anything.....Touché?I mean starting with if debt isn't a real concern and spending short of inflation isn't a real concern and taxes are just a form of inflation management, then at some point you have to get beyond "management of societal concerns and equity" when it comes to "taxing the rich".
I understand the premise of MMT but it really falls apart on the explanation of the taxation angle. It becomes too many rainbows and unicorns there.
I just want to interject here.I'm talking about when income exceeds productivity.
To be clear, operationally, as a description of of sovereign money using government's work, MMT is correct.
So, please.....Tell me where descriptions of sovereign money, of which MMT is one, are incorrect.
Proof? There is no "proof" in something as complex as macro-econ, evidence yes, but proof will always be illusive in a system as complex as as an economy with nearly $30 trillion in GDP. That said, I'm happy to explain and provide evidence and sources.
Speaking of lack of explanation or citing anything.....Touché?
Your turn.
It's pretty simple, I hit the key criticism of mine pretty clearly. Debt isn't important, spending isn't important but somehow taxation is incredibly important and that is just too incredibly convenient. That's the shorthand version of it. Within these "tax the rich" MMT scenarios I've read, the chief complaint is that the "rich" keep their money and do not spend it while the poor obviously use it to "survive" but the reality is that the rich seldom have their money just sitting in some savings account, it's in the form of assets.
When you have a criticism of Warren Buffet as is often made and declare that he pays a far lower tax rate than his secretary as an example, it is because his secretary is paid a salary while Buffet has his corporations control his money for him and then when they give him his money they do so via dividends that he gets paid by holding large amount of assets aka STOCKS.
So if the secretary gets paid $100k and is taxed on it as income that's a higher rate than a dividend. If the company paying the dividend were paying at say 4%, I'd need to hold $2.5 million in stock to get that same amount of dividend income at the lower rate. Again that stock holding isn't "savings" and something I am intentionally trying to deprive others of in the economy. It is ownership interest that I have to keep to get that dividend income.
Income is something almost all investor class wealthy people tend to avoid. It's far easier to simply control money via your assets than to worry about a "salary" and since intelligent wealthy investors understand this the claims from MMT proponants that they need to "tax the rich" when the other two legs of the chair really show they don't need to do anything to borrow and spend just fall flat to me.
In this world you see, who gets to decide if a procedure is covered? Who get's to decide how much a medical care costs? Because, for most commodities the cost is whatever the market will bear. How much do you think life saving medication is worth to the person that needs it? Do you think that's a good measure?The best thing we could do is Walmartize healthcare
In this world you see, who gets to decide if a procedure is covered? Who get's to decide how much a medical care costs? Because, for most commodities the cost is whatever the market will bear. How much do you think life saving medication is worth to the person that needs it? Do you think that's a good measure?
If the idea is competition, how many real competitors to Walmart are there?
In this world you see, who gets to decide if a procedure is covered? Who get's to decide how much a medical care costs?
Because, for most commodities the cost is whatever the market will bear.
How much do you think life saving medication is worth to the person that needs it?
If the idea is competition, how many real competitors to Walmart are there?
Healthcare as you’ve been shown, isn’t a commodity. It makes no difference what the posted price is for a heart attack treatment, broken bone treatment, stroke treatment etc. you have no choice when it comes to life saving treatment. It’s not like choosing the best procedure on a tv. This is why the libertarian fantasy doesn’t and has never worked in all of human history. And also why single payer systems provide better care at a fraction of the cost of the US system.Prices would appear just like they do in any other market. Why wouldn't they? There's no reason to think Walmart would be the only provider. Walmart already has an optical department, and you still have plenty of other options.
You want the price to be "whatever the market will bear", because the alternative is price controls, which leads to shortages and rationing. You know, like in socialist economies.
That’s like asking, "How much is oxygen worth to a drowning man?". It’s emotionally manipulative, not economically sound. The goal is to expand supply and reduce cost through competition, not to base pricing on desperation.
Tons, actually - target, costco, amazon, local chains, dollar general - and even within walmart, you get price competition between brands.
Why do you find the idea of cheap healthcare so offensive? Markets aren’t perfect, but they’re the best system we’ve got for driving down costs, increasing quality, and giving people real choices.
It doesn't matter whether or not the rich keep dollars in bank accounts; it's the income distribution that matters. A company's income gets distributed to labor via wages and to rich guys via dividends and/or stock options. If one gets less, the other gets more.
I think we are pretty clear on the fact that the government doesn't need the money from taxing the rich. But as I said before, there are other good reasons to do so.
As I said you make it a zero sum game except when the government controls it's own money and can create and borrow as much as they want, it really isn't a zero sum gain.
"Other good reasons" doesn't work for me as economics.
A company's income is a zero sum situation when we are talking about distributing their income between labor and shareholders.
I explained the economic reasons a few posts ago. I didn't feel like repeating myself yet again, but I guess you don't feel like scrolling back. Basically, too much of the income pie going to the rich results in less consumption due to their lower propensity to spend. And that is what necessitates higher deficits, and the resulting higher debt, that you seem so worried about.
What percentage of their revenue do most companies devote to salaries vs dividends?
HIgher deficits are simply an illusion per MMT. They could mint a single coin and erase it tomorrow. The government cannot really default since they can create currency at will. You say they have a lower propensity tp spend. You cannot spend that which is not liquid.
So to clarify here you ask if something is correct and incorrect and then below declare that there is no proof or that you can't basically demand or declare something to be correct. Be consistent here.
We didn't have to go far to find a flaw in your argument. MMT does not say, full stop, that debt is unimportant. Perhaps you can cite something? And please, should you decide to, make it someone qualified to opine on the topic.Debt isn't important, spending isn't important....
Taxation is one variable of many.........taxation is incredibly important and that is just too incredibly convenient
This is why you won't ever find me talking about or referring to MMT. I have a dispute with some of the people that support it. I see MMT as a description, of how money works. Sort of like how physics is a description of how the universe works (not to imply that MMT is as rigorous as physics, only that they are both descriptions). Concepts of Physics tell us how to build a bridge, but not what to build it out of, or where to built or if it should be builtWithin these "tax the rich" MMT scenarios I've read
Sure, but economies run on spending, not on saving or investment. If there is too much money in those areas of the economy, relitive to the productivity that results and as a follow on, the number of good paying jobs and creating goods and services that people need and want, you'll find a nation in trouble.the chief complaint is that the "rich" keep their money and do not spend it while the poor obviously use it to "survive" but the reality is that the rich seldom have their money just sitting in some savings account, it's in the form of assets.
Ok, so let's summerize:When you have a criticism of Warren Buffet as is often made and declare that he pays a far lower tax rate than his secretary as an example, it is because his secretary is paid a salary while Buffet has his corporations control his money for him and then when they give him his money they do so via dividends that he gets paid by holding large amount of assets aka STOCKS.
So if the secretary gets paid $100k and is taxed on it as income that's a higher rate than a dividend. If the company paying the dividend were paying at say 4%, I'd need to hold $2.5 million in stock to get that same amount of dividend income at the lower rate. Again that stock holding isn't "savings" and something I am intentionally trying to deprive others of in the economy. It is ownership interest that I have to keep to get that dividend income.
How did that work out? Do you think Lift and Uber deliver the same or better product as the same or lower price?a. Taxi companies lobbied for rules that made it harder for Uber and Lyft to operate.
Regulated to disproportionately favor the wealthy.The system we have now is regulated capitalism
That's what happens when the wealthy are disproportionately favored in an economy. It tends to get worse for those that aren't.and it's obviously terrible.
I won't disagree. People need to think of healthcare as something that has a cost and that they consume. They need to be incentivized to shop for it rather than it being a fixed cost that they learn when they get the bill.Both are terrible under the regulated capitalism model. Costs are through the roof, and medical errors are the third leading cause of death. Speed of service is also shit. Dealing with a hospital today is like dealing with any other government regulated monopoly - it's awful.
America is the only country in the world where "Walmartizing healthcare" sounds like a good idea to some people.
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