The federal debt topped $40 trillion…
No big deal because Treasury secretary bessett has a secret plan to eliminate the debt: Great News.
“He, Bessent, has had a very discreet plan, of course, supported by the president of the United States, to get the United States to a point where our economy is growing faster than our debt… Vice President Vance announced today
…“And if you look, we are on track. So, even though the debt is too high… JD Vance
Just to balance the current 2026 budget, you have to “grow” Federal Revenues by 35%. !?! Yikes. But we’re on track our elected officials assure us, “it’s a discreet plan”
The United States real GDP is projected to grow by 1.5% overall in 2026..
He’s right! It’s a very discreet plan.
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USA debt increases by 6% per annum and economy grows by 2% per annum. This can not go on forever.
Economic Consequences
- Exploding Interest Costs: Servicing the debt becomes more expensive each year. Interest payments already consume massive portions of federal revenue, crowding out other public spending.
- Market Pressures: Lenders demand higher yields (interest rates) on government bonds when debt grows faster than the tax base.
- Compounding Risk: Higher interest rates drive up the deficit further, creating a self-reinforcing cycle of more borrowing.
U.S. Treasury Fiscal Data. https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/
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True enough. However, when looking at these thing don’t mix numbers that have been adjusted for inflation (real economic growth) and those that haven’t (national debt growth).
DB2
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What does that have to do with the $40Tril National Debt?
Net interest payments on the U.S. national debt are projected to outpacing both overall economic growth and general inflation rates.
What’s the “discreet ” plan for that?
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There continues to be the obvious solution: raise taxes and close loopholes. Contrary to popular opinion, we have a tax problem, not a spending problem. We need taxes to go back to pre-Reagan levels, and eliminate the caveat “no one really paid that rate”.
It took generations to dig this hole, and it will take generations to climb out. Step one is raise taxes by a lot, and make sure wealthier people don’t have loopholes to wriggle through. Reinstate the estate tax to alleviate the accumulation of generational wealth.
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Jag was mixing the two types of data – not a good thing to do when trying an economic analysis.
DB2
Agreed times a bazillion! On other threads, people have compared our debt predicament to wanting something and buying it, even though one doesn’t have the money to afford it. This is only one side of the story.
Sticking with the personal finance comparison - Imagine having a good job with good income. Eventually you’re making enough to afford a house, a car, yada, yada. You get married and have a couple of kids. Like 50% of the population, you eventually get divorced. Your lucrative job has you travelling and child custody is lopsided, leaving you to pay some significant child support.
One day, you wake up with an overwhelming sense of unfairness. Why should you have to pay for everything? On top of that, you don’t like how your ex is spending your money. You decide to quit your job and work at Starbucks.
Little by litttle, you sell your house, your car, and offload expenses you can get rid of. Child support payments prove to be a bit more challenging, you can’t just automatically reduce them because you quit your lucrative job. To afford your child support payments, you could get another job, but that conflicts with your mission of “fairness” and sticking it to your ex. Ultimately, you cover your other living exenses with credit to afford child support.
My dad was a teacher. He often worked multiple jobs during the summers to help support his family. He recognized he had mandatory expenses and did everything he could to bring in the income to cover them.
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I don’t draw a comparison between what good and responsible men do to care for their families and a growing list of mandatory expenses authorized by others to provide to the general public. Like a personal household, the income is what it is and families have to find a way to live within their means.
My Dad worked 2 jobs as well at times to make ends meet. I understood from an early age to appreciate what we had, even though it was less than what other kids might receive. One thing he never did was whine or complain or ask other family members, who may be better off, to pick up the tab to make it more “fair”.
It sounds like we need more people to take personal responsibility, just like our parents. Politicians spending money they didn’t earn based on what they view as mandatory, is in no way the same thing.
We have a spending problem in the sense that we cannot tax our way out of it. The math just no longer works. Once you consider the spending the DSA would like to add, somewhere between 70 to 200 trillion, it’s completely unrealistic. Beyond that, few seem to consider some basic facts. Where govt has intervened, healthcare, education and housing is where we have seen the greatest increase in costs over the last several decades. In other words, the problem has become worse.
It is where it has not intervened, particularly in tech and other areas, where cost have grown at a much slower rate or decreased.
You gloss over two of several debatable statements. All current govt spending is somehow justified (mandatory). Second, more taxation somehow solves the problem with no consequence to overall economic output.
You can of course organize yourself as a collective within a free society. For some reason, it never occurs. Those asking for collective contributions never do much in terms of personal financial sacrifice, just militate on behalf of others and with someone else’s money.
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That’s an understatement, the thought of even balancing the budget in one year is impossible. In order to balance the 2026 Federal Budget, without an increase in Federal Revenues, it would require the end of Medicare & Medicaid, a twenty percent across the board cut in Social Security Benefits, and a 20% cut in Military Spending (Budget). That’s just to balance the budget, the $40Tril Federal Debt continues…
To move in the right direction would require big cuts in spending as well as significant increases in Federal Taxes. Creating a bigger tax base big enough to pay down the Federal Debt is a decade away; with significant increases in Taxes starting now.
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I guess this might be technically correct, but I wonder if it’s another of those “true, but false” sorts of things?
For instance, the Federal government first “intervened” in the housing market in a significant way during the Great Depression, as part of the New Deal. At the time (and at any time prior) home ownership peaked at about 45%. The norm was for people to rent for their entire lives and to die in a rental house at which time the family had to figure out where to move. The percentage of home ownership now is around 65%, so what was “normal” prior to government involvement is now the minority state, and what was “unusual” (home ownership) is now normal.
Yes, it’s “expensive” and there are issues, and government involvement is not perfect, but generally speaking, more people own their own and create generational wealth now than they did prior to government involvement.
Should I continue? Let’s. Here’s Healthcare.
Lifespan of older Americans has increased by 3 years since in passage of Medicare. It’s one of the most popular government programs, an it’s easy to see why, because once people “age out” of corporate America having any use for them, yes, medicine and treatment is expensive. Tip: it was expensive before Medicare too - if you didn’t have an income - and while it is MUCH more expensive now, a big part of that is due to ever more exotic technological diagnosis and treatment options. Presumably many of those would still exist with or without government spending on Medicare - although surely more funding has aided in developing some of them, wouldn’t you agree?
Obviously there is more government spending in health care than just Medicare. There is the support for rural hospitals, about 1/3 of which would close forever if not for the extra support they get from tax funds. Generally speaking, and although I’d be the first to say “They don’t appreciate it”, rural people are better off thanks to government spending on healthcare.
And then there’s the Federal spending on medical research, including prosthetics (particularly valuable to the military), childhood vaccines, and other medicines as have generally or partially been funded by research grants from the NIH. That’s hard to quantify, although I can say with pretty good assurance that fewer dollars would have resulted in fewer therapies and medicines. Wouldn’t you agree with that too?
And your last category was, what, education? While government has been involved in some form of it since the beginning of the Republic, I’m going to note that “publicly funded primary education” didn’t become significantly available until the early 20th century. That was a plus for society I think.
But let’s say you’re complaining about Higher Education, which began with the GI Bill in 1944, and was expanded in 1958 and again in 1968. That, along with the push into science thanks to the Space Race, propelled the US into a technological fervor which we can thank for the beginnings of our current state. The internet, microchips, space, it all traces back to “Higher Education”. You know who didn’t do this? Spain. Portugal. France. Italy. China. Japan. India. All of Africa. The entire Middle East. In other words, most of the rest of the world. You know who else did? Russia. Perhaps that’s why they were ahead of most in the space race? Of course they blew it with their other economic misadventures, but they could have turned their advances in education into something great - as we did - and as almost nobody else did until later. Oops! We need more university graduates!
Does that mean there haven’t been bad side effects, even seriously bad side effects? Of course not. The financial meltdown of 2008. Too many college loans that made that education too costly. Mansions houses that are too expensive but smaller houses that aren’t profitable enough for builders. Nobody is saying it’s all been sweet tea and rosebuds. But overall, every single one of your categories is better off now than it was, and largely better off than in countries where government did nothing.
If you think government isn’t responsible for our high tech success today, I don’t know what to tell you. Texas Instruments lived on NASA research. Google came from NSA. The CIA supported NeXT and Steve Jobs, and that software became the basis for iOS in several flavors. The Internet from ARPANET. GPS. Siri. Semiconductors. DARPA. NIS. Heck, you’ll find DARPA fingerprints and NSF funding all over AI development, and I’m sure in 20 years we’ll find that the CIA and NSA were delivering pallets full of cash all over the place as well.
No, I’m sure that wedded to your “government is always the problem” you can’t be bothered to investigate real history, so my suggestion is go back to the comfort of your Thomas Sowell screeds. They’re fiction, fantasy, and almost entirely removed from reality, but I’m sure they’re soothing.
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It’s a silly argument. The very dollars that funded the govt research were the result of tax payer funds obtained through private enterprise. The fact that early tech developments in the public sector spawned larger private ventures does not negate the importance of private markets. Those businesses have largely flourished on their own. The fact that a $5000 laptop in the 1990’s is now $500 has nothing to do with govt involvement.
The reality still exists that where govt has intervened on the largest scale is where unaffordability is now the greatest. You can accept that reality or pretend otherwise.
Agreed, what those cuts and tax increases look like is the devil in the details.
Indeed!
Government economic intervention should be the exception. When it becomes the norm the result is economic disaster.
How affordable is Affordable Healthcare?
The Captain
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It would look something like Simpson-Bowles on steroids because deficits and debt are so much worse now than the were in 2010.
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Of course. So were the tax dollars that pay for police, fire, and sending astronauts to the moon. Doh!
Nobody said it did. Your assumption that if I support government research means I don’t support private markets is interesting. Terribly flawed, but interesting.
I wonder how Google would have flourished without Page Rank, research which was funded by NSF and DARPA. (The researchers were these guys named Sergey Brin and Larry Page.) I wonder if Steve Jobs would have kept NeXT afloat without the government support he got. Or if the Internet - owned and run in the US - would have started here without ARPANET?
Of course it probably would have happened somewhere , and later. But “Well, maybe France’s Minitel would have invented it, and maybe in 2020” isn’t a very compelling argument to me, at least.
Actually, it was NASA support for TI to make chips lighter and smaller (for space capsules, see?) that enabled them to accelerate designing smaller and smaller, lighter and lighter chips, which became “chips”, then “microchips”, then “integrated circuits”. Anyone at Texas Instruments will tell you that. Incidentally, and you might be interested to learn, Fairchild Semiconductor is also credited with the near simultaneous invention of the integrated circuit - and they also got substantial government funding for the research directly fro NASA and also from the National Science Foundation.
So in a very real way, your formerly $5000 computer, now $500, owes that progression to government research at the beginning, which provided funding for development of what was, to that point, an unprofitable exploration by private companies.
Sure. I understand the point. It’s not perfect. You can accept the reality that overall your examples have been shown, each and every one to improved over time, for the benefit of society as a whole and individuals in particular, thanks to interventions in the private market with the collective use of funding, regulation, and encouragement of government. As I say, not perfect. Not perfect. Never perfect. On the whole, a lot better.
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Corporate taxes need to go up to 50% to incentivize economic growth. We are waiting for China to completely fail. It is our turn to build wealth as a nation. There need to be additional income tax brackets at the top of the income ladder. We need a top bracket of 70% because executives would incentivize only themselves otherwise.
The cut tax crowd need to wake up completely once and for all. That does not work. It is not in this nation’s intersts.
We need debt at a certain rate of growth. The interest or yield off of it underpins our financial tools.
The rest of this debate here is garbage.
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The only point you seem to be making is private tax dollars that go towards public initiatives seems to result at times in some overall good. Nobody is disputing that fact. My entire point is where govt has engaged at the largest scale and in subsidizing certain areas is where overall affordability is the biggest problem. The value of say funding research at universities or private and public partnership with the military is the not the same policy as subsidizing overall education or the tradeoffs of doing so or interfering with the private market development of search products, like Google. A decision to do one does not require the govt to do the other.
The fact simply remains not only is it not perfect but these policies seem to be distorting the costs and where they have climbed faster over the last two decades than in any other area. Now, the cry is for the govt to intervene even further and likely to do so by advantaging a few and continuing to make the problem worse for the bulk of society. Not only in other areas has there been no inflation prices where the GOVT has stayed out of the way, the price of these products have come down dramatically.
There is a substantial difference between using private tax dollars to fund research and work in the public sector vs the govt them weighing in on supply and demand forces and the flow of capital within the private sector. You are conflating those ideas as if one cannot occur without the other. It’s simply incorrect.
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You clearly are not thinking this through as someone that has ever run a business if you think simply imposing massive high tax rates on the top end directs capital towards your intended economic growth. Many businesses like IKEA use almost no debt funding to expand and build new stores. The company saves excess profits to build up the capital to expand the business. Under your approach, it would require immediate redeployment of those profits to avoid punitive taxes. It’s completely impractical. In addition, no intelligent investor is going to put capital to work in businesses where the tax rates are 50%. They will simply gravitate towards lower risk investment options with more attractive tax rates where the net result is the same.
One of the most basic things you ignore is not every nation is going follow through with a similar policy. Govts that take a more friendly approach will draw in new businesses. As we enter a world where fewer individuals are required to build billion dollar enterprises, it makes capital and investors all that much more mobile.
You know zero about economics and the national interest.
We need to incentivize much faster real GDP growth to achieve economies of scale.
Your rationales are only self-serving.
Ireland won’t follow through. So what? Ireland is not heavy industry.
I do not want other nations following suit. Why would I want them to compete with us?
Mandatory spending is NOT based on someone’s opinion, nor “view”. It’s based on laws that were passed that obligate the government to spend money.
It sounds like politicians need to take more responsibility for making sure the government has the revenue to cover these costs. Instead, we’ve seen a slash and burn approach.
Captain Strawman returns! Maybe he never left…
Justified ≠ mandatory. Who said all current government spending? Let’s take it one point at a time.
Mandatory spending is required by laws that have been passed. It can’t be easily changed unless Congress passes new laws to alter the existing laws. Given the current environment, this seems highly unlikely.
≈70% of the government’s budget is allocated to mandatory spending required by law (not quite all, but definitely most). That leaves 30ish% that can be haggled over each year (discretionary spending). FYI - defense spending eats up half of that money.
I’m not aware of anyone taking the position that there will be no consequence to higher taxation. The details are debatable, with some consequences positively impacting economic output, while others likely bringing it down.
I hate to break it to you, but we live in a collective society. Maybe those “free society” folks who complain about living in a collective society can move out to the boonies and live a self-sustainable life. That way they wouldn’t have to pay taxes to support collective society stuff.
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