Where exactly do you think the money for those “tax receipts” come from?
Economies of scale as we onshore more factories and economic activity continue to grow.
The ratio grew the less we produced our own product. We will become more and more of an exporter.
@MarkR @Leap1 here is the data for Debt/GDP.
It’s clear that the rise in debt/GDP after the 2008 financial crisis and the Covid crisis was kept as a steady state. The government programs were rolled back after the crisis ended but the debt is not being paid off.
Wendy
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The debt will not be paid off.
It is paid later as it rolls off.
The issue is the ratio will decline. The policies in place and those added with more wealth in this nation will lower the ratio considerably.
This is a simple discussion China produces it and we are poorer hence the debt or we produce it and we are richer. Something China failed to do with its marriage of public and private sectors. Our mix is much better and our economy is being optimized. This means government policies produce more than one dollar per dollar spent.
Adding
This is one way that the IRA has improved the taxpayer base considerably. Low-wage regions saw major gains. Lifting people makes them much more taxable. Possibly for the first time.
The Inflation Reduction Act: A Place-Based Analysis.
adding again
In our lifetimes we play for 6 decades from our 20s to 80s. Learning working and relaxing. For us the goal is not debt except to finance a home in many cases. The US government is building national wealth. The assets take debt to create. The timeline is not 6 decades.
If we look back at the scale of this experiment each decade is a new level of overall economic size. Generally, each decade has seen a major leap in the wealth of this nation. The factor in how reliable that wealth is has not been the actual nominal size of the debt but the ratio of debt to real GDP.
When a young Irish cousin my contemporary went into the pub business in the US with a partner they quickly built three $2 million concept restaurants. A group of businessmen opposite them built 8 restaurants. The two groups expected to meet head-to-head in some cities eventually.
My cousin came to dinner in CT one weekend. I mentioned that the more debt the business has the less in actual profits that should be counted.
Two years later as the other group of Irish restaurant owners hit 8 restaurants they came to my cousin. Asking to be taken in as they were bankrupted by their debts.
My cousin had frozen his debt and building spree. He was okay.
Later he has 16 pubs. He has since sold off a few. He is now consolidated years later in several concept restaurant bars in three cities.
The US needs a better balance. We must produce our way to that. If that means debt it is wise because production increases incomes and profits. The lower the ratio goes the wealthier we are. But in the 1970s wealth led to inflation. Capital ran down as income ran up. We crossed into a place where the country needed to recapitalize the industrials. We are not at that place at all today. Not yet by over a decade.
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