Is defaulting on the debt constitutional?

Investment Analysis Clubs Macro Economic Trends and Risks
42

Outside of the echo chamber that is the vista.

I have been discussing this respectfully. You do not acknowledge any of the facts.

I will go over this again. The 1950 to 1980 period had an industrial policy which is why the debt to GDP ratio dropped.

The 1981 to 2020 period had a capital policy which is why the debt to GDP ratio rose.

You are asking why I think an industrial policy would bring down the debt to GDP ratio going forward from here? I am saying it worked like a charm from 1950 to 1980. That is inherent in the chart. All your energy is denying that and missing all the facts involved.

There was far more welfare from 1950 to 1980. There was in relative terms often more military spending, more infrastructure spending, more R&D, more of all of it. Our factory production made that possible.

Most of the debt incurred from 1981 to 2020 was incurred because of tax cuts and little to no investment in the USA. That is supply side economics.

I do not know which side of the aisle you are on. You have not declared yourself.

I must say I did not imply you were ignorant or stupid. I am sure you are very talented otherwise. This just is not your forte.

No one needs to kid themselves that you are knowledgeable about economics.

Everyone here deserves an honest representation of what is expertise and what is not.

You have asked me other questions. I will not answer them for a very good reason.

You have been discussing things in this thread and clearly have done no due diligence to even see if you have any facts. So it is entirely on you whether it is your points or mine to finally do some of your own due diligence.

The point of view that budget cuts are necessary is not sound at all. Again do your own due diligence. Do not rely on others. People are parroting things that are nonsense.

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In the linked article I posted, with no National Debt, the US govt would have to buy investment securities on the open market–from businesses, etc. So NOT paying off the US National Debt was a deliberate choice by the right. Thus, the National Debt is irrelevant.

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Let’s just be clear this is nothing but a political ploy. If anyone was really serious about the National Debt they would have done something about it when there party was in power. Both sides have been spending money for years, its just there “stuff” they want to spend it on. So when I see these fights about the deficit come up and people actually trying to argue that their “side” is going to solve the problem I just roll my eyes. It’s all in what Cheney said and none of the Republicans kicked back on it. “Deficits do not Matter”

So anyone after reading this that says this is anything but a political ploy needs to have their head examined.
Andy

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45

No, but it is fair to follow the law. One can reduce one’s taxes by buying muni bonds. I don’t see that as “unfair”. If you do, then try to get people to change the law.

DB2

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Is there a difference in corruption from cheating on your taxes, vs complying with a tax code that was corruptly influenced by “protected free speech”?

If Shiny-land made every corrupt practice legal, would Shiny-land be corruption free?

Steve

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47

Okay let’s dice that up!

We have less and less manufacturing in “relative terms” from 1981 till today.

Hence the tax receipts in “relative terms” have not grown as much as they would have.

Everything goes up in cost. That does include social spending, military spending all of it.

My basic argument is we need to produce more. That takes major spending on infrastructure by the federal government. Factory production needs infrastructure spending. Those working on the government projects spend which creates economic demand.

China is no longer our competitor. They do not have the water to carry on as such.

When we build out our industrial base federal tax receipts rise.

If we were to cut taxes that promise of more in tax receipts is a bold faced lie. We have not grown our industrial base or increased our federal tax receipts since 1981 with any of the tax cuts.

That very last bit about growing our industrial base or our tax receipts has been said over and over again as a promise during the supply side period. I do not care what side of the aisle you or any of us are on…for any of us it is idiotic to believe a lie for 40 years. The nonsense about social spending just muddies the water. All that is wanted is the tax cut.

I have to add, constantly having some people lie to the American public about tax cuts has done massive harm to our nation. We have lost far more of our manufacturing as a result than we ever should have.

That lie is self fulfilling, if we cut social spending we can cut taxes and we will see higher tax receipts and a larger US economy. In relative and absolute terms that never happened. Instead we have $32 trillion in military, healthcare and tax cut debt.

If you are going to logically call healthcare spending debt social spending debt okay. But what does that have to do with cutting taxes? Currently what does that have to do with cutting infrastructure spending to increase our industrial base going forward?

The only reason to cut the budget currently is to have our nation fail so power can shift and another tax cut is passed. In other words add to the debt.

You can not actually cut healthcare spending in real terms. You can do things here and there but the bulk of the cost will happen. Without as many factories it is far more expensive in relative terms to our society.

In relative terms the more the factories produce the less of a burden our tax system is on most of us.

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Leap, you posted the chart I responded to and I supplied facts/questions about it.

Why has the % of debt/GDP generally gone up over time, and why it will continue to do so, based upon the increasing dominance of SS, Medicare/Aid and other social spending, plus the over-spending on COVID and rising interest rates.

All you have done is not answer the questions I raised, and try to change the subject, or repeat that it is primarily due to “industrial policy” moves over time.

I disagree.

Others have said it is because the “rich” are not paying enough taxes and/or are paying less over time. I presented facts to the contrary, which were basically ignored and then the subject changed to “wealth” and whatever else.

The charts of federal receipts versus the % debt/absolute debt/GDP show that we have a spending problem, not a revenue problem, with too many politicians on both sides buying votes with public monies.

Yours and others mileage may vary. End of discussion
Murph

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49

I would say yes.

DB2

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I am glad you are bowing out. It is important that when someone here does not know much about econ, our topic here, that they not go on and on.

Spreading misinformation about social programs being a problem is just wrong.

Over the decades of a century at the end of the day we consume what we produce. After all the global trade etc that is our reality.

You can disagree all day long but most of us just see you do not know the topic.

Some people want to believe giving to the poor or to seniors is the root of the problem. That does not mean they understand economics. It really does not matter if they bring up a chart on spending. It matters where the funding comes from for our spending. We have $32 trillion in debt. Just dumping the seniors mostly into the gutter is close to being hateful. Yes the next tax cut would be possible. The country would get poorer yet.

There has never been a tax cut since 1981 that made the country wealthier. You are smart to bow out.

I love the pretense that cutting social spending is their issue, when really not paying taxes is their issue. Sarcasm!

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51

They pay more because their income has grown at a rate that far exceeds their increase in taxes:

Heck, in 2021 alone the top 1% increased their wealth by $6.5 TRILLION dollars - or 500% more than the national debt increased in 2022.

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52

Let’s look at historical facts. All that social spending was going on from 1998-2001 yet the US ran a balance budget during those years. Bush cut taxes while simultaneously fighting a war in Afghanistan and later Iraq. Fighting a war or two without raising taxes guarantees running big deficits.

When Trump and the GOP took over the economy was on the rise from the Great Recession. That would have been a great time to start reducing the debt by using the increasing tax revenues from a growing GDP. Instead, taxes were cut. A case of putting ideology ahead of fiscal responsibility.

In short, over the last 25 years the deficit has exploded primarily because of tax cuts coinciding with two wars, a near depression caused in large part because of lax financial/banking regulations, the decision to cut taxes instead of paying off the debt, and a pandemic that began under Trump’s watch who made it needlessly partisan in order to deflect blame.

Sure, as the country ages social spending needs will increase. But social spending isn’t why the deficit/debt has risen so rapidly since 2001.

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53

There are three broad categories of R&D. Basic research that studies problems of intellectual interest. Applied research that is directed toward specific economic or social good objective. Developmental research that is done to bring a product to market.

The great majority of business R&D is in Developmental research with a fair amount in Applied research. Most Basic research is supported by the government or universities.

All three categories are important, but Basic research is what is most responsible for the disruptive/revolutionary technology that creates new markets. That is why the public sector is critical for America’s continued competitiveness in the global market. Yeah, it’s a type of socialism, but it is essential to America’s future.

The business sector, with its focus on new and improved goods, services, and processes, dominates both experimental development (90% of performance and 85% of funding) and applied research (57% of performance and 54% of funding). In comparison, nearly half (48%) of U.S. basic research is performed by higher education institutions, while 42% of funding for all basic research is provided by the federal government https://ncses.nsf.gov/pubs/nsb20201/u-s-r-d-performance-and-funding

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54

Exactly and worth repeating.

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Murph why did the debt go up before Social Security and way before Medicare. Medicare started in 1965 the same year that we entered the Vietnam war and look the debt went down. Oops then Reagan lowered taxes and lo and behold the debt started climbing. Ahh then Reagan increased spending and it starts going up more. So then Reagan cut taxes and what ? It went up even more. But yes this was all because of Social Security and Medicare. That was the exact problem sarcasm. Let’s be real. Social Security and Medicare are funded by people’s paychecks. If they are going broke then just raise the level they can be charged on Social Security and Medicare to 1 million dollars annually. What fully funded. Here is the graph and you can look at year by year to see what was going on. Let’s not blame this on the people struggling on Social Security and Medicare when the true blame is right on that graph.

Andy

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That’s correct. As such I believe it is disingenuous to consider them part of the national debt. They are not funded by regular taxes, they have their own separate funding mechanism.

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57

Medicare in part and Medicaid are funded by tax dollars.

The issue is only getting that next tax cut. Everything else is a line of shinola.

The more important matter is making the US a much wealthier nation. In the shell game that is capitalism which countries have demand side econ and which have supply side econ gets reshuffled. This is our lucky day if the GOP wises up.

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A new twist. Something I’ve wanted to see for quite a while. Hard to imagine the court will want to insert themselves in an executive vs legislature food fight, but this needs to get sorted out.

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59

Biden and Yellen have the option of losing this case. The House would have no power over the loss. If the Supremes find the PDA unconstitutional “as argued”…woops!!

:rofl: :rofl: :rofl:

That of course will be at Yellen’s discretion. Imagine her last boss fired her for being too short. The intelligence of supply side economics should never be underestimated, said with dripping sarcasm.

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I think btresist’s CBO study answers your questions pretty well. I invite you to read it.

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Lack of a dynamic industrial base domestically that creates economies of scale is exactly why the debt has risen.

We produce our way out of this. Two men in a room. Both have an opinion that contradicts the other’s. It does not matter what one point of view is because that point of view is entirely wrong.

It is not a matter of being mean and nasty. But there needs to be some intolerance for ejits pushing just plain stupid.

Opinions are not all equal.

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