General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsU.S. debt is now equal to economy
http://www.usatoday.com/news/washington/story/2012-01-08/debt-equals-economy/52460208/1WASHINGTON The soaring national debt has reached a symbolic tipping point: It's now as big as the entire U.S. economy.
The amount of money the federal government owes to its creditors, combined with IOUs to government retirement and other programs, now tops $15.23 trillion.
That's roughly equal to the value of all goods and services the U.S. economy produces in one year: $15.17 trillion as of September, the latest estimate. Private projections show the economy likely grew to about $15.3 trillion by December a level the debt is likely to surpass this month.
"The 100% mark means that your entire debt is as big as everything you're producing in your country," says Steve Bell of the Bipartisan Policy Center, which has proposed cutting nearly $6 trillion in red ink over 10 years. "Clearly, that can't continue."
more at link...
There's a lot of doom-n-gloom about this. Those providing such doom-n-gloom can't provide any actual facts to back up their doom-n-gloom.
If you want to claim this means disaster is right around the corner, you're going to have to explain how Japan has had >100% Debt:GDP for about a decade now, has not embraced austerity, and yet borrows at < 2%.
Javaman
(62,534 posts)if you want to rant, knock yourself out. I was just posting a link that I though relevent to the times.
SharonAnn
(13,778 posts)that was titled "America could pay off public debt by 2009, Clinton says"
It was subtitled "Bush favors using $1.3 trillion of budget surplus for tax cut"
Guess we know how all that worked out, don't we.
Javaman
(62,534 posts)Romulox
(25,960 posts)inequality...
jeff47
(26,549 posts)And has everything to do with other policies, notably tax policy.
Romulox
(25,960 posts)(notably perpetual overseas wars) of the self-same class of people (including "corporate people" who refuse to be taxed to pay for all of this to begin with.
"Nothing to do with debt"?
jeff47
(26,549 posts)They've cost a lot, but not that much in terms of dollars.
The debt is a result of tax policy. But with a completely balanced budget, trickle-down economic policies will still produce stagnat wages.
Romulox
(25,960 posts)jeff47
(26,549 posts)karynnj
(59,504 posts)- Consider how many people carry mortgages greater than their annual pay.
Now with incredibly low interest rates, the cost of carrying that debt level is relatively low. (ie if the average interest rate is 1% - we have to pay 1%.) Obviously, we can not continue adding to this debt indefinitely, but now is not the time to drastically cut government spending.
Cutting it would slow the already painfully slow recovery and if it plunged us into another recession - we could end up MORE in debt as revenue from taxes decrease and spending on unemployment etc increases.
It is better now to continue to stimulate the economy, which when it recovers, increases tax revenue - and will naturally lower the deficit - as it did in the 1990s when a roaring economy eliminated the deficit faster than expected.
Yupster
(14,308 posts)that the family with the mortgage plans to pay off a little bit of that mortgage every year until eventually the debt is paid off. In my own life I've had two mortgages and paid them each off.
With the National Debt, we're buying another new house every year and adding that to the total. We aren't currently ever projecting paying the debt off, ever. We're projecting it rise every year forever.
Japan has been a stagnant economy for over a decade growing not a bit. They are hardly a good example for us to be using.
Romulox
(25,960 posts)Imagine that--we could ALL be rich!
jeff47
(26,549 posts)Most of the debt is owed to Americans. So we're collecting tax money from ourselves to pay ourselves interest payments.
Not a sustainable model, but one of the reasons it's not a big deal is who the money is owed to.
Romulox
(25,960 posts)jeff47
(26,549 posts)'Cause what I wrote has nothing to do with "the integrity of debt".
Treasury issues bonds.
Americans buy bonds.
Americans are taxed to pay for interest on bonds.
We owe ourselves an awful lot of money. But on the plus side, we owe it to ourselves, so the damage of paying interest is minimized.
karynnj
(59,504 posts)that resulted in paying of some of the debt. Also, I did say that you can't perpetually have a deficit - for the reason you give. I don't think we are following the example of Japan.
I don't see a problem that the current 10 year projections do not show us paying off the full debt. The projections do show the debt becoming a smaller percent of GDP.
I do agree that we need to have real reform on the tax code. There are loopholes that needed to be closed. I also think we need to NOT extend the Bush tax cuts - even if to do that means not extending them for everyone.
Yupster
(14,308 posts)There is a projected deficit every single year, and a huge projected deficit every single year.
Wouldn't it be nice if our problem was not paying off the FULL debt?
And all these projections are very rosy. They assume an average 4 % a year growth which would be outstanding and they don't include spending which we all know will happen.
The every year doctor fix is not projected. Neither are extending tax cuts, extending unemployment benefits, natural disaster costs and war costs.
Our budget currently borrows over 40 % of the money we spend, and that's with optimistic assumptions that won't pan out.
We are very screwed financially and no one has a plan to deal with it because it's too big to deal with. Europe is finding out now that it's too big to fix and we'll be right there with them soon, and our obese generation which spent their kids and grandkids into poverty will be damned for it someday as will our leaders.
karynnj
(59,504 posts)some time in the future. My point is that cutting drastically now will halt the recovery - and actually result in more debt. The funny thing about 10 year predictions is that they are not very accurate. The best way to lower the deficit is to return to whatever is now full employment. That, in and of itself, reduces the deficit drastically.
It looks like the war costs will be greatly lower. I think that there are estimates in the budget for the wars - that was a change Obama made with his first budget - and incidentally part of the reason for the huge increase in the deficit.
This year, likely the best think we can do is to reject the Republican cuts to programs that aid the poor and refuse to extend the Bush tax cuts. In fact, if the viable choices are extending none of them or all of them - the first what the republicans want and the latter which could be done by refusing to do anything - which is easier than passing anything.
Yupster
(14,308 posts)The numbers are actually way worse than they look.
If we would have done nothing in December, we'd be way better off, but the President's out there saying we must do the doctor fix, we must extend unemployment, we must extend the payroll tax cut for another year.
All these huge budget items are off the budget, so the deficit will be much worse than projected.
It will be the very same next year.
Forget making things better.
Couldn't we just stop making it worse?
karynnj
(59,504 posts)almost entirely return immediately to the economy as people buy what they need. This is how the multiplier effect works - and in the end, it raises the GDP much more than just the amount spent. As GDP increases, some of this returns as higher tax revenues (from the people whose goods or services were bought.) As to the doctor fix, the real thing that needs to be done is to fix it permanently in the Medicare budget. But it pretty much has to be done. If it isn't, in many places, people on Medicare will not find doctors. The payment is too low without the fix.
Yupster
(14,308 posts)will help the economy.
I don't think you could argue it helps the government's budget. People on unemployment don't generally pay a whole lot of income tax. Same thing to a lesser degree with the payroll tax. It can help the economy, especially retail spending, but it sure doesn't equate to extra taxes being paid to help reduce the deficit. Those programs just expand the budget deficit even more if that can be imagined. Are we heading for the first $ 2 trillion annual deficit?
And as far as it having to be done. that's the whole problem isn't it?
It all needs to be done.
We take in 2.3 billion and spend 3.9 billion and we can't even cut 1 % of the budget. Everything is equally vital, as everything else. Nothing can be cut out. Nothing is a low priority. Everything has to be kept.
I don't know how we ever get out of this?
I guess we can watch how Europe does it over the next few years.
SharonAnn
(13,778 posts)The article goes on to say that the projected 2000 surplus of $1.9 trillion excludes projected surpluses in Social Security and Medicare funds.
Clinton said there are "huge economic benefits" from following "a long-term responsible budget policy."
How'd all that work out for us?
Yupster
(14,308 posts)the day the tech bubble burst.
The year 2000 was the stock market's worst year in 20 years. Then 2001 was even worse than that. Then 2002 was even worse than that.
And all those revenue projections were thrown out in the trash.
Response to Javaman (Original post)
redqueen This message was self-deleted by its author.
JDPriestly
(57,936 posts)just cutting back won't solve the debt problem. We have to increase the value of goods and services we produce -- and we can't do that unless we end the bleeding of jobs.
This is the result of too much free trade too fast.
Charity is great. We should all share. But if you don't have a job yourself, you cannot just open your kitchen up to all the homeless in the city. You can't do it.
The charity that the government gives to Americans is not the problem. It's the jobs we have given away to other countries -- our jobs -- our kids' jobs -- that are the problem. We just let a lot of third world countries come into our kitchen and help themselves. Of course we have a lot of debt.
It isn't that we should not help others. It's that we have to balance the two jobs: feeding the world and keeping our own kitchen stocked.
We used to be too unwilling to share. Now we have gone to the other extreme.
Proud Liberal Dem
(24,437 posts)as an indictment of Obama. Of course, there will be absolutely no discussion of the previous 8 years or who's to blame for it (other than Obama)
Be ready for it.
JackRiddler
(24,979 posts)National debt is a small part of all debt.
To create this chart, someone helpfully plugged in the numbers from the table at Federal Reserve, "Flow of Funds Accounts of the United States," Release Z.1, March 2010: Table D3, "Debt Outstanding by Sector" (1978-2009). The full report is at http://www.federalreserve.gov/releases/z1/Current/z1.pdf)
The Bipartisan Policy Center exists to give a neutral-sounding imprimatur to whatever new unpopular outrages against the people a tiny number of the policymaking elites have decided are inevitable.
The largest segment of federal debt is intra-governmental.
The word bipartisan means some larger-than-usual deception is being carried out. - George Carlin
cthulu2016
(10,960 posts)There is no legitimate economic implication of the datum.
ddeclue
(16,733 posts)Yupster
(14,308 posts)Maybe Iran?
ddeclue
(16,733 posts)The debt is no big deal to me.
It's the young people who will pay the price for it.
Us old guys will just be damned for our shameful greed.
Don't blame me yungins. I'm at least sounding the warnings. Blame the guys who whistle while the debt compounds to unbelievable numbers.
Would anyone ever believe even five years ago that a congress would be so irresponsible to vote for a budget deficit of a trillion dollars and a president who would be so irresponsible to sign it?
It's unfathomable, but hey, I'm old. Won't be my problem.