EPTThe debt itself isn't really relevant for anything, though. Debt is a problem for other countries, but the US can always inflate out of the debt. The debt is a weird thing to haggle over, because it's only tangentially related to anything that matters. Countries selling oil in yuan because they start trusting China more than the US, for instance. And yeah, if the US starts needing to borrow in yuan or some other currency, because trust has degraded so far that they don't trust the dollar will keep its value. Those would be big problems.
US Politics Mega-thread - Page 5710
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Acrofales
Spain18459 Posts
The debt itself isn't really relevant for anything, though. Debt is a problem for other countries, but the US can always inflate out of the debt. The debt is a weird thing to haggle over, because it's only tangentially related to anything that matters. Countries selling oil in yuan because they start trusting China more than the US, for instance. And yeah, if the US starts needing to borrow in yuan or some other currency, because trust has degraded so far that they don't trust the dollar will keep its value. Those would be big problems. | ||
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dyhb
United States775 Posts
On May 01 2026 14:27 Acrofales wrote: Calling in the debt isn't really a thing anyway. There's contracts. The thing that happens is that the US simply borrows more money to pay off the debts that come due. And bonds come due all the time. The thing is that someone needs to want to borrow money, and how willing people are to take on that debt depends partially on the risk they see of that investment becoming worthless (note that I didn't say not paying it back: the US is trivially capable of paying back all debt that is issued in USD), and the interest payment offered to offset that risk. The debt itself isn't really relevant for anything, though. Debt is a problem for other countries, but the US can always inflate out of the debt. The debt is a weird thing to haggle over, because it's only tangentially related to anything that matters. Countries selling oil in yuan because they start trusting China more than the US, for instance. And yeah, if the US starts needing to borrow in yuan or some other currency, because trust has degraded so far that they don't trust the dollar will keep its value. Those would be big problems. Let me develop and extend this a bit. "The US simply borrows more money to pay off the debts" and "the debt itself isn't really relevant for anything" are true to a certain extent. It's also true that the US spends more on its military than every other country on the planet. However, the US now spends more money on the interest on the debt than on the entire budget of the department of | ||
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CuddlyCuteKitten
Sweden2893 Posts
It's a problem for other reasons. 1) Interest rates. Obviously paying 14-17% of the total budget on your loans is not good and it can crowd out other critical spending. 2) Risk. A large debt is not automatically a problem (looking at Japan...). However that requires interest rates to be low. If they go up things can spiral out of control quickly. Obviously there is also a reduced capacity to take on loans in a real emergency (like a new world war) but that can be handled in other ways. A big problem here is that both US households and private sector also has very high debt making this a double edged risk. Compared to say Sweden which has even higher household debt but low national debt which means if there is massive interest rate hikes the Swedish government can use economic policy to shield citizens when spending goes down. Or the opposite when a low public debt means spending isn't impacted as much when the government has to make cuts. 3) Economic policy capture. At a certain point the central bank can reach a point when they should be raising interest rates to combat inflation but they can't because doing so would hurt the countries economy to much (their secondary mandate). At that point economic policy is captured and inflation can't effectively be controlled. 4) For major powers only. There can come a point for the US when it has to either choose from dramatically reduced spending or runaway inflation. The former threatens global dominance when defence spending is cut, the second economic dominance as a currency with massive inflation is not suitable as the global reserve currency. There are some additional aspects of the US economy that are not good. First of all government spending is already pretty low, 23% of GDP. Compare this to France at 57%. There is no way near as much spending to cut. Secondly the US is already geared for growth. Regulations are low and policies for growth are already in place. So cutting spending and deregulating to promote growth won't be as easy as in other places. Raising taxes is of course possible but will slow growth. It's necessary but ideally you need both or the economy will be hit. I think this is the main reason China is doing nothing. As long as the US is pushing towards unsustainable debt they are content to wait. Once it goes critical and the US is force to react they will see which route they take (inflation or cutting defense) and react accordingly to take that role. I do think this could be solved politically quite "easily". If both parties and all candidates could agree on a) forcing Trump to reduce deficit spending to 4% at the end of his term and b) that the next president and congress will reduce deficit spending to 3% in the first year and 2% at the end of the term that would do it. Then the debates should be about how to do this (cuts vs taxes) instead on if. | ||
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oBlade
United States6553 Posts
On May 01 2026 12:22 WombaT wrote: FDR had some shit to deal with, grew the deficit. Truman pulled it back to basically even stevens. Eisenhower kept it basically there. Kennedy grew it a little, Johnson grew it a little more. These last few were talking deficit/surpluses of a few percent, nothing crazy. Then Nixon made a decent dent in it of a 2.4% narrowing from a deficit of 2.8% that he inherited from Lyndon Johnson Since Nixon, every single Republican President has grown the deficit. Every single Democratic President has shrunk it. I’m sure that’s just fluke or something. It is interesting to be looking at the numbers. Outside of big epochal events,such as WW2 the deficit tended to be floating between 0-3% for quite some time. "Shrinking" the deficit is not enough. Sometimes the deficit is $2 trillion, sometimes half a trillion, sometimes $1 trillion. Obviously half a trillion is best but if the "reduce deficit" approach is limited to being incapable of crossing over to a surplus then you need a new paradigm. There hasn't been a surplus since Clinton and without a surplus you can't reduce the debt which is the main problem. Congress for the last quarter century then hasn't worked out a budget surplus. They either can't or won't. But that's Congress. | ||
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CuddlyCuteKitten
Sweden2893 Posts
On May 01 2026 15:32 oBlade wrote: "Shrinking" the deficit is not enough. Sometimes the deficit is $2 trillion, sometimes half a trillion, sometimes $1 trillion. Obviously half a trillion is best but if the "reduce deficit" approach is limited to being incapable of crossing over to a surplus then you need a new paradigm. There hasn't been a surplus since Clinton and without a surplus you can't reduce the debt which is the main problem. Congress for the last quarter century then hasn't worked out a budget surplus. They either can't or won't. But that's Congress. It would easily be enough if you could run a 1% deficit with >3% GDP growth (as long as that also translates into taxes) for 10 years or so. It would of course be better to run positive budget but it's not necessary. Even a 2% deficit could be enough if you really hard commit to it, like write it into the constitution. At this point it's mainly a political issue. I think you should take a page from the Vatican and lock Congress up every year until they come out with a balanced budget. 😉 | ||
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ZerOCoolSC2
9069 Posts
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Vivax
22415 Posts
Paper spigot management to build pastimes on. | ||
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Acrofales
Spain18459 Posts
As expected any deal with Trump is not worth the paper it is written on. Why bother? And in other news, Trump is committing 9000% to the Schrodinger's war narrative. The war is over, not over, won and still requiring significant resources all at the same time. Because there is a truce, the 60 days of war before it needs explicit Congressional approval is irrelevant, but also there is no truce, and Iran should expect more bombs at any time if they don't open the Strait of Hormuz, which btw is 100% open! | ||
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KT_Elwood
Germany1200 Posts
US average net worth per citizen is $620,000 | ||
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RvB
Netherlands6322 Posts
On May 01 2026 15:26 CuddlyCuteKitten wrote: The debt doesn't really work like it does for us normal people when it comes to countries. There is no risk of it being called in and if it's in national currency you can always inflate out of it. If you can grow your GDP faster or at least on the same rate you never really have to pay it down. It's a problem for other reasons. 1) Interest rates. Obviously paying 14-17% of the total budget on your loans is not good and it can crowd out other critical spending. 2) Risk. A large debt is not automatically a problem (looking at Japan...). However that requires interest rates to be low. If they go up things can spiral out of control quickly. Obviously there is also a reduced capacity to take on loans in a real emergency (like a new world war) but that can be handled in other ways. A big problem here is that both US households and private sector also has very high debt making this a double edged risk. Compared to say Sweden which has even higher household debt but low national debt which means if there is massive interest rate hikes the Swedish government can use economic policy to shield citizens when spending goes down. Or the opposite when a low public debt means spending isn't impacted as much when the government has to make cuts. 3) Economic policy capture. At a certain point the central bank can reach a point when they should be raising interest rates to combat inflation but they can't because doing so would hurt the countries economy to much (their secondary mandate). At that point economic policy is captured and inflation can't effectively be controlled. 4) For major powers only. There can come a point for the US when it has to either choose from dramatically reduced spending or runaway inflation. The former threatens global dominance when defence spending is cut, the second economic dominance as a currency with massive inflation is not suitable as the global reserve currency. There are some additional aspects of the US economy that are not good. First of all government spending is already pretty low, 23% of GDP. Compare this to France at 57%. There is no way near as much spending to cut. Secondly the US is already geared for growth. Regulations are low and policies for growth are already in place. So cutting spending and deregulating to promote growth won't be as easy as in other places. Raising taxes is of course possible but will slow growth. It's necessary but ideally you need both or the economy will be hit. I think this is the main reason China is doing nothing. As long as the US is pushing towards unsustainable debt they are content to wait. Once it goes critical and the US is force to react they will see which route they take (inflation or cutting defense) and react accordingly to take that role. I do think this could be solved politically quite "easily". If both parties and all candidates could agree on a) forcing Trump to reduce deficit spending to 4% at the end of his term and b) that the next president and congress will reduce deficit spending to 3% in the first year and 2% at the end of the term that would do it. Then the debates should be about how to do this (cuts vs taxes) instead on if. You misunderstand the effects of inflation. A large fiscal adjustment and inflation are functionally the same in the context of reducing debt loads. Fiscal consolidation does so by lower spending and/or higher taxes and inflation by decreasing value of money. It's just a different kind of tax. As we've seen during covid it's not any less painful. Your numbers for US government expenditure are also off. You're comparing federal government expenditure in the US to total government expenditure in France. The US is at 37.92%. Still low compared to other developed countries but less of a difference than many expect. https://www.imf.org/external/datamapper/exp@FPP/USA/FRA/JPN/GBR/SWE/ESP/ITA/ZAF/IND/DEU/NLD/PRT/THA | ||
KwarK
United States44368 Posts
On May 02 2026 05:43 KT_Elwood wrote: US national debt is $115,000 per citizen US average net worth per citizen is $620,000 It’s more reasonable to measure by tax paying household. Children etc. don’t pay taxes and about a third of households end up with no tax burden. It’s about $550,000 per household that actually pays tax. The government asking for $21k per taxpaying household for annual defence is pretty nuts too. | ||
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dyhb
United States775 Posts
On May 02 2026 05:43 KT_Elwood wrote: But good luck selling everybody’s houses without crashing the market, and extra luck on the consequences of liquidating everyone’s retirement. US national debt is $115,000 per citizen US average net worth per citizen is $620,000 (Also try it while including unfunded liabilities, the historical growth in the debt, and probably talk with totals and the median. The average wealth in a room gets quite richer when Bill Gates walks in … but does that capture something meaningful?) | ||
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Manit0u
Poland17850 Posts
On May 02 2026 05:58 RvB wrote: Your numbers for US government expenditure are also off. You're comparing federal government expenditure in the US to total government expenditure in France. The US is at 37.92%. Still low compared to other developed countries but less of a difference than many expect. It's actually a very big difference (not really favorable to the US). You're comparing socialist EU countries with 60% expenditure vs capitalist US at 40% (40% of being the richest country with largest economy) which doesn't run free healthcare, state-owned pension fund, free education, barely any public transport, 25+ paid days of leave at work mandated by law so you're almost forced to use it up, 1-3 years of paternity/maternity leave at 80% pay etc. etc. Like, where does the money go? | ||
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CuddlyCuteKitten
Sweden2893 Posts
On May 02 2026 05:58 RvB wrote: You misunderstand the effects of inflation. A large fiscal adjustment and inflation are functionally the same in the context of reducing debt loads. Fiscal consolidation does so by lower spending and/or higher taxes and inflation by decreasing value of money. It's just a different kind of tax. As we've seen during covid it's not any less painful. Your numbers for US government expenditure are also off. You're comparing federal government expenditure in the US to total government expenditure in France. The US is at 37.92%. Still low compared to other developed countries but less of a difference than many expect. https://www.imf.org/external/datamapper/exp@FPP/USA/FRA/JPN/GBR/SWE/ESP/ITA/ZAF/IND/DEU/NLD/PRT/THA But it's not functionally the same for the rest of the world. There is going to be a rather large degree of reduced US purchasing power regardless of which way is used. But if I'm looking to buy say $200 billion worth of oil, ship it somewhere and then sell it inflation matters a lot. It's interesting because if the debt issue was solved with inflation and the dollar stayed on as a reserve currency it would outsource a lot of the inflation to the rest of the world, acting as a massive tax on the rest of the world. Traditionally as the world economy expanded the economic expansion means the rest of the world needs to get more dollars from the source, adding demand and driving up the dollar value. Essentially "giving" money to the US. It's the boon of being a reserve currency. If global trade was no longer denominated in dollars theoretically the reverse would happen as demands falls sharply. It would certainly be possible for a country that has a massive global military advantage, excellent diplomatic ties with the rest of the world, a solid reputation and an ironclad respect for done deals to convince their allies and partners that it's in their interest to help them solve their debt problem as softly as possible. Probably by a combination of foreign ownership of debt with artificially lowered interest rates and a slightly elevated inflation. You are very lucky your current president is a master of the art of the deal. And yeah, the $73 trillion unfunded future commitments to medicare and social security is like the cloaked wraith-elephant in the room. | ||
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Vivax
22415 Posts
On May 02 2026 10:46 dyhb wrote: But good luck selling everybody’s houses without crashing the market, and extra luck on the consequences of liquidating everyone’s retirement. (Also try it while including unfunded liabilities, the historical growth in the debt, and probably talk with totals and the median. The average wealth in a room gets quite richer when Bill Gates walks in … but does that capture something meaningful?) Yeah net worth isn‘t too accurate. You can own everything, but if nobody has the money to buy what you got, you‘re still broke. | ||
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oBlade
United States6553 Posts
On May 02 2026 11:05 Manit0u wrote: It's actually a very big difference (not really favorable to the US). You're comparing socialist EU countries with 60% expenditure vs capitalist US at 40% (40% of being the richest country with largest economy) which doesn't run free healthcare, state-owned pension fund, free education, barely any public transport, 25+ paid days of leave at work mandated by law so you're almost forced to use it up, 1-3 years of paternity/maternity leave at 80% pay etc. etc. Like, where does the money go? Like half of all spending is social security and healthcare (medicare, medicaid, the VA, ACA subsidies, etc.). These are plainly free healthcare and state-owned pension fund. And through those programs the government makes up 40-50% of healthcare spending in the country. It's not the capitalist badlands you think. The percent of that share can go down even if private and public spending both increase, but private at a faster pace. That's not a bad thing, part of it is that people in the US have the ability and means to spend money on healthcare that can be had nowhere else in the world in some cases. That's valuable. Public school is free in the US to grade 12. There is a growing trend of free community college programs. The government pays for every road and bridge and tunnel and rail and airport. The majority of communities in Alaska are air access only. 23% federal and 38% total fits right, but if you want the US government to be more efficient you aren't the only one. | ||
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DarkPlasmaBall
United States46503 Posts
On May 03 2026 02:33 oBlade wrote: Like half of all spending is social security and healthcare (medicare, medicaid, the VA, ACA subsidies, etc.). These are plainly free healthcare and state-owned pension fund. And through those programs the government makes up 40-50% of healthcare spending in the country. It's not the capitalist badlands you think. The percent of that share can go down even if private and public spending both increase, but private at a faster pace. That's not a bad thing, part of it is that people in the US have the ability and means to spend money on healthcare that can be had nowhere else in the world in some cases. That's valuable. Public school is free in the US to grade 12. There is a growing trend of free community college programs. The government pays for every road and bridge and tunnel and rail and airport. The majority of communities in Alaska are air access only. 23% federal and 38% total fits right, but if you want the US government to be more efficient you aren't the only one. This is false. Public school funding comes primarily from local families' property taxes, sometimes with state/federal supplementary funding. Local families pay for most of the public education in their area, so it's not "free". | ||
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oBlade
United States6553 Posts
On May 03 2026 02:41 DarkPlasmaBall wrote: This is false. Public school funding comes primarily from local families' property taxes, sometimes with state/federal supplementary funding. Local families pay for most of the public education in their area, so it's not "free". Wow, the government pays for things with revenues? For once in your life read the quote chain. | ||
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DarkPlasmaBall
United States46503 Posts
On May 03 2026 02:56 oBlade wrote: Wow, the government pays for things with revenues? For once in your life read the quote chain. Don't use "free" if "free" is incorrect or if you don't actually mean "free". Also, "for once in my life"? What makes you think that I generally ignore quote chains? Because you're wrong there too. And I did read this quote chain. No need to lash out when you're being corrected. | ||
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oBlade
United States6553 Posts
On May 03 2026 03:01 DarkPlasmaBall wrote: Don't use "free" if "free" is incorrect or if you don't actually mean "free". Also, "for once in my life"? What makes you think that I generally ignore quote chains? Because you're wrong there too. And I did read this quote chain. No need to lash out when you're being corrected. DPB passing samples at the supermarket: "Would you like to try a free ice cream?" "Funding for ice cream comes from the cash flow from revenues taken from paying customers at this store. Don't use 'free' if 'free' is incorrect." You're an adult dude. Give Manit0u your "actually" for thinking healthcare and education can be free first. As though he meant they fell out of the healthcare and education tree. (He didn't mean that. Nobody does.) | ||
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