Solutions to government debt

[upsideguy]

Ok, this thread is going to be different from anything else you have read here so far. I am a grass roots activist, just started actually about 2wks ago, and I am looking for critique and input on three specific ideas that I have had involved with solving the federal debt problem. I am nonpartisan, have little interest in discussing the debt just to give me something to talk about and have zero interest in blaming a particular politician or party for our problems. This thread is based strictly on solving the problem and I need as much constructive criticism and input as possible from all the intelligent posters I have read here.

I have built a very basic information website that it will be necessary for people to read but then I want to debate them here on this site. I will be posting links to that site but please do not consider it to be spam. It is just that the ideas have a lot of verbiage and it wouldn't be recommended to post all of that on here. The site the links lead to was built by me, has no advertising and doesn't sell anything and is strictly for information purposes. I just considered it to be the easiest way to expose people to the ideas in a way that everyone can easily reach. So, please read the link and then return here so that we can debate them and I can get as much input and constructive criticism as possible where everyone can take part.

The ideas posted on the links are not short so please keep this in mind if you decide to become involved in this thread. It will involve quite a bit of reading and critical thought, not just short posts. Please bring any questions or comments back here because this site provides the best format for us to discuss them. I sincerely appreciate the forum this gives me to debate these ideas and would not want to do anything to abuse the resource provided by this site and staff.

Since there are three ideas please begin any replies with which idea you are referring to try to avoid confusion. Thank you in advance for your participation.

The debt is not a problem; its deficits that are the problem. Fix the deficits and the debt will take care of itself over time.

 

[cpwill]

The debt is not a problem; its deficits that are the problem. Fix the deficits and the debt will take care of itself over time.

That is correct. So long as our interest rates remain at rock-bottom prices. Um. Which they probably will not. Which is unfortunate - as interest rate increases act as deficit spending, but for which we get no actual "benefit" in terms of provision of government services.

Fixing the deficit requires drastic expenditure reductions to our social programs just as the Baby Boomers - who have saved very little of the massive amount of wealth that flowed through their hands - are set to retire. Politically this is ridiculously easy to demagogue, making it incredibly hard to accomplish.

 

[douglas]

:shrug: according to good ole USAA, over the last 6 years, starting as an E-3 and moving on up to an E-5 in the Marine Corps, raising a family the entire time (and rating food stamps for part of it), I've thus far managed to save about $42K for retirement and another $16K for my kids' education. My pay scales are publicly available.

It's not that we don't have the money. It is that the vast majority of Americans were raised in a set of consumerist assumptions that told us that if it feels good, do it, if you want it, buy it, and if you can't afford it, put it on a credit card, and worry about it later. The vast majority of Americans can afford this plan, just as the vast majority of Americans have the ability to maintain good health. The vast majority of Americans just choose not to because we would rather (apparently) be lazy profligates.



It's not going into the bank to sit there in a giant money silo a'la scrooge mcduck - it's going into the market allocated as investment, either in loans or in investment in business. And I think that your math may be backwards - shouldn't reducing the supply of money increase its' relative price, which is good for savers?

According to that scale, that would be a range of $1787-2707 per month. I worked for 3 years full time at minimum wage and made less than $800 a month. The median income in 2010 was $32,140, so you're income is typical. If you say you can afford the plan, then it might have more merit than I thought. But, I can't afford this plan without going bankrupt and I don't think I personally know anyone who can. I don't use credit cards, own entertainment devices, and budget my money wisely (I have a degree in Math/Science with a minor in Economics/Business).

I might have a bias towards what is considered a typical income in America, because I live in a fairly poor area. But, I still have a valid doubt in the efficacy of this plan. The poor people are the ones who really need this plan, but are the least likely to be able to implement it. There are other issues, but they mostly stem from that.

My issue with saving increasing the inflation rate is due to the way this would decrease the short term spending ability of the people who save. This would be like a negative stimulus package. Although not all of the saved money will be removed from the market, due to fractional banking and other ways that the money is loaned out, this will still create a big enough drop in available spending money that more money would inevitably be printed to compensate (good ol' federal reserve bank). The total amount of money in the market, on hand, and in trusts would increase if the FRB prints even just one dollar bill, so there'd be inflation. I'm not an expert economist, so I'd be open to criticism on this theory.

I'm a proponent of embracing utopian socialism, so I propose that we just give up money, debt, and working as a means of distributing wealth. An automated society with an emphasis on volunteerism would have no problems with retirement, since work would never be an issue at any age. What other plan offers you retirement at birth?

 

[Joe Steel]

... Look, I understand why you would choose to ignore the fact that your claim (that the idea that our debt was a problem was a partisan claim) was wrong. Cognitive dissonance can hurt when you lack the ability to easily integrate new information that conflicts with your preferred conclusions. But, as the man said, everyone gets a right to their own opinion - not their own facts.

Utter nonsense. Opinion is divided on the threat debt creates and the weight of opinion holds it is not a crushing burden on America prosperity. Republicans are trying to use what little support for the opposite view for their political advantage.

 

[cpwill]

Utter nonsense. Opinion is divided on the threat debt creates and the weight of opinion holds it is not a crushing burden on America prosperity. Republicans are trying to use what little support for the opposite view for their political advantage.

:lol: yup. You caught 'em, Joe. Republicans secretly run the IMF, the GAO, and the CBO. Bill Clinton, Barack Obama and a host of other "supposed" Democrats.... are secretly Republicans. :roll:


Opinion is indeed divided. On the specifics. Does debt begin to dramatically reduce growth once it hits 90% of GDP, or 100? But these are quibbles. Arguments over how much trouble we are in, not whether or not we are in trouble. The idea that we can continue to deficit spend as we are projected to do without trouble is an idea embraced by virtually nobody because to do so would get one laughed off the public stage. Even Krugman, for all his many faults, does not hew to such an reality-free claim; that's why he wants to raise taxes.

 

[Baralis]

I do not feel any piece of legislation will fix our deficit problem. Any bill will need an emergency clause that allows overspending in times of war or disaster to insure we are not putting ourselves in a vulnerable position. This emergency clause will be used as a means to continue overspending, mark my words. Iraq war, Afghanistan, war on terror, bank and auto bailouts, jobs bill..the list goes on for ready excuses in recent years.

The only thing that will fix our spending problem is if we hold our politicians accountable when they overspend, vote em out! Let them know it is not acceptable to us.

 

[Blue_State]

The first idea is called the Political Performance Act. It is designed to fix the incentive structure of our government to give them a vested interest in running our country in a fiscally responsible manner.

http://www.mynewfederaldebtideas.com/Political Performance Act.htm

Not a fan of the first one. Anytime you tie performance to pay, you get one type of outcome. Meaning, if we say, for every 1 Billion you lower the deficit, we pay you $1, then the deficit will be gone tomorrow. But the measures they did to get there may kill the country. Some will be willing to sacrifice their career and country for a big pay day.

 

[blaxshep]

the vast majority of Americans were raised in a set of consumerist assumptions that told us that if it feels good, do it, if you want it, buy it, and if you can't afford it, put it on a credit card, and worry about it later.

This certainly has been the liberal Government's monetary policy since FDR.

 

[Joe Steel]

yup. You caught 'em, Joe. Republicans secretly run the IMF, the GAO, and the CBO. Bill Clinton, Barack Obama and a host of other "supposed" Democrats.... are secretly Republicans.

Politically influenced organizations and Republican wannabes don't comprise principled opposition to Republican mythology. Both Clinton and Obama wills say whatever they have to say to get whatever political advantage comes from saying it and the agenc

Opinion is indeed divided. On the specifics. Does debt begin to dramatically reduce growth once it hits 90% of GDP, or 100? But these are quibbles. Arguments over how much trouble we are in, not whether or not we are in trouble. The idea that we can continue to deficit spend as we are projected to do without trouble is an idea embraced by virtually nobody because to do so would get one laughed off the public stage. Even Krugman, for all his many faults, does not hew to such an reality-free claim; that's why he wants to raise taxes.

I'm not sure I said running-up the debt without a thought to how far we can take it was OK. Right now, the debt is not a problem and if we just follow Krugman's advice it never will be. US debt is not now the looming catastrophe the Republicans say it is.

 

[Sisyphus]

Solutions to government debt [...]

Revenue, via increases in tax rates, progressively, and increased population, combined with higher minimum wage laws. Then spend 30 years steadily eliminating the debacle, for which we've been getting something for nothing over the last 30 years creating it.

 

[blaxshep]

Revenue, via increases in tax rates, progressively, and increased population, combined with higher minimum wage laws. Then spend 30 years steadily eliminating the debacle, for which we've been getting something for nothing over the last 30 years creating it.

No, reduce the government to the 18 enumerated powers, and pass a living wage amendment, making 19 enumerated powers.
Eliminate the 14th Amendment, returning us to 18 enumerated powers and galvanize the constitution against contemporary jurisprudence.
Taxes and the liberal entitlements liberals support are very definition of "Something for nothing".

 

[Sisyphus]

No, reduce the government to the 18 enumerated powers, and pass a living wage amendment, making 19 enumerated powers.
Eliminate the 14th Amendment, returning us to 18 enumerated powers and galvanize the constitution against contemporary jurisprudence.
Taxes and the liberal entitlements liberals support are very definition of "Something for nothing".

It wouldn't eliminate the debt. You cannot take Trillions out of the economy and grow revenue, nor even avert a recession to end all recessions. The point is, it's money spent, and we need to pay it down, regardless of what the pay-for-nothing Libertarians "think."

 

[davidtaylorjr]

First fix to the problem. Throw out Obama and the Democrats and Rinos.

 

[Sisyphus]

First fix to the problem. Throw out Obama and the Democrats and Rinos.

Yeah; and bring back those deficit hawks Bush 43 and Reagan. That's the ticket!!!

 

[Unitedwestand13]

First fix to the problem. Throw out Obama and the Democrats and Rinos.

then that would only leave the republicans....

Wait a minute.. :thinking

that would mean that the Conservatives in the republican party would control everything

how on earth is a one party government a solution to anything?

 

[cpwill]

Politically influenced organizations and Republican wannabes don't comprise principled opposition to Republican mythology. Both Clinton and Obama wills say whatever they have to say to get whatever political advantage comes from saying it and the agenc

I'm not sure I said running-up the debt without a thought to how far we can take it was OK. Right now, the debt is not a problem and if we just follow Krugman's advice it never will be. US debt is not now the looming catastrophe the Republicans say it is.

:doh: okay Steel. I would love to hear all about how we are not currently in a fiscally problematic state. As for "running up the debt", well the current debt is part of that. There is a thing called "interest", and at our current rate of expansion, a return to normal interest rates means that we are going to need 25% of the rest of the worlds' GDP in order to pay it.

But seriously. Cite all these economists who argue that the US is fiscally sustainable under our current path.

As for Krugmans' advice....

It didn't work even back then. The idea that you can accurately statically score a tax rate increase is one that has been successfully demonstrated in the real world precisely zero times - though it has been disproven plenty enough.

 

[blaxshep]

It wouldn't eliminate the debt. You cannot take Trillions out of the economy and grow revenue, nor even avert a recession to end all recessions. The point is, it's money spent, and we need to pay it down, regardless of what the pay-for-nothing Libertarians "think."

You can not eliminate the debt without eliminating the deficit first.

Who said anything about taking trillions out of the economy, we want to take it out of government.

 

[Joe Steel]

... I would love to hear all about how we are not currently in a fiscally problematic state. As for "running up the debt", well the current debt is part of that. There is a thing called "interest", and at our current rate of expansion, a return to normal interest rates means that we are going to need 25% of the rest of the worlds' GDP in order to pay it.

That's pretty much the heart of the matter. If things were normal, we might have a problem. But they're not. Right now, the private sector isn't borrowing at anything near the normal level of activity and rates are low. Public debt isn't crowding-out private debt. Were that the case, we might have a serious issue. As it is, we can tolerate a high level of debt.

 

[Brain Stock]

It's a voice of many hearts and many people want to see some change in this scenario. What else solutions can be there to overcome this problem and how one can look at this.

 

[cpwill]

That's pretty much the heart of the matter. If things were normal, we might have a problem. But they're not. Right now, the private sector isn't borrowing at anything near the normal level of activity and rates are low. Public debt isn't crowding-out private debt. Were that the case, we might have a serious issue. As it is, we can tolerate a high level of debt.

that has.... nothing whatsoever to do with what I said or cited.

 

[Joe Steel]

that has.... nothing whatsoever to do with what I said or cited.

Maybe so but I don't want to play citation poker.

As I said, it's the heart of the matter. The debt is only a problem if it hurts the economy. Right now, it doesn't and in the near future, it's not likely to hurt the economy. As the economy improves, tax revenues will increase, borrowing will be slowed and the debt can be reduced and eventually eliminated. It's not a problem.

 

[blaxshep]

Maybe so but I don't want to play citation poker.

As I said, it's the heart of the matter. The debt is only a problem if it hurts the economy. Right now, it doesn't and in the near future, it's not likely to hurt the economy. As the economy improves, tax revenues will increase, borrowing will be slowed and the debt can be reduced and eventually eliminated. It's not a problem.

Non-sense. The debt has not been reduced since 1960, the last year of the Eisenhower administration. As long as liberals control congress (Both D & R) the deficits and debt will continue.

 

[Joe Steel]

Non-sense. The debt has not been reduced since 1960, the last year of the Eisenhower administration. As long as liberals control congress (Both D & R) the deficits and debt will continue.

Then you've proven my point; the debt is not a danger to America's economic health.

 

[blaxshep]

Then you've proven my point; the debt is not a danger to America's economic health.

The ignorance of that statement is staggering.

 

[imagep]

Payroll taxes for one. It is overhead and must be taken into account when you determine the price you must charge to make a profit. For another example, consider a loaf of bread. There are a lot of people behind getting that loaf of bread to your table, and every one of them has a tax liability. When you buy that loaf, you're paying a portion of all the bills, including tax bills, of every person or entity that had anything to do with getting that bread to your table. Start with the seed producer. He is a taxpayer and his taxes are reflected in the price he charges for seed. The farmer buys the seed, and tractors, irrigation equipment, fuel, labor, etc., all bought from tax paying business people. Then there's the trucking company that gets the raw materials to the producer and from the producer to the grocer. Every step of the way, there is a tax component that is passed along to the next step.

That doesn't even consider the tax components in truck manufacturing, advertising, the list is nearly endless - just to get a loaf of bread on your table. Every single entity on the list is paying taxes, and at least a portion of the taxes are passed along. When you buy that loaf of bread, the only thing transparent to you is the cost of that one loaf. You're not concerned with the steps along the way that contributed to the cost you pay, and upstream taxation is no different. You just pay it without a thought, just as government prefers it.

Essentially what you are suggesting is that no one actually pays their own taxes (or bills in general), except when purchasing stuff. Rediculous.