In fiscal 2024 the US federal government brought in revenues of $4.9T and spent $6.8T (https://www.cbo.gov/publication/61185). Of that $6.8T, mandatory spending accounted for $4.1T (https://www.cbo.gov/publication/61182). Mandatory spending is automatic, the laws are already in place and the money is spent based on the situation and natural demand.
Of the $2.7T of not-mandatory spending, $0.9T was servicing existing debt. Of the remaining $1.8T of actual spending, defense accounted for $0.85T. The final remaining $0.96T is what's actually voted on in any budget, which is about 15% of all government spending (https://www.cbo.gov/publication/61184).
Is "mandatory" spending actually fundamentally mandatory? Characterizing it as such feels like a sleight of hand that prevents us from discussing whether that spend is truly necessary.
In an overspending crisis of such magnitude I wish there was more urgency in the culture to cut spending across every budget segment regardless of whether it's "mandatory" or not.
As my sibling comment states, mandatory spending is spending which is required by existing laws which have already been passed. But a secondary point is that mandatory spending means no one knows how much it'll be ahead of time. You can only find out how much actual mandatory spending happened after the fact. Contrast this with discretionary spending, where the budget says how much can be spent on a given set of things (like airplanes, or road improvements, or new toilets for all the Navy submarines) so you know ahead of time the spending amount.
Debating changing mandatory spending laws in order to hopefully reduce mandatory spending is totally allowed, it's just very hard to know exactly how much you'd save with any change. The CBO will make estimates for you, but those are going to be based on assumptions which may or may not turn out to reflect reality in the future.
“Mandatory spending” is a term of art that means something very specific in this very specific context (congressional budgeting). The common meaning of the words is not particularly relevant.
If you have ever seen the phrase “act of God” in a contract, this is similar. In contract law, “act of God” means something and it doesn’t require either party to subscribe to any religious beliefs.
You have separate Medicare and social security taxes that fund those programs.
If you cut social security and Medicare, at the very least you will need to change the laws so that taxes intended specifically for social security and Medicare can be used for general expenses.
if they refunded every penny we put into (with interest) it’d go well. these should be called entitlements as much you going to grocery story to buy food for your family is an entitlement
It’s strange that even on HN with above average financial literacy people still have this completely wrong mental model of social security.
It’s simply a general tax dressed up in marketing fluff. It’s a pay as you go defined benefits program. Current workers are paying for current retirees.
There is very little difference between it and any other means tested welfare program - it’s just the means testing works in a different manner but can be changed at any time.
It’s no more “your money” than any federal income tax you’ve paid in over the years.
Additionally, even if the "self-funded" aspect was enshrined into the process on all levels, you're looking at a program that dwarfs any other program of this type, worldwide. It would necessarily be in US government bonds, and the real yields of bonds are very much a function of the overall deficit and wider tax current situation and outlook. The treasury actively twists issuance and effectively has yield curve targets. The Federal Reserve does active balance sheet management as well, and monetary and fiscal are increasingly working in sync with one another. A program of the size of social security with inflation adjusted US dollar denominated obligations in trillions can never be and will never be truly separate.
Even if they wanted to do something extremely simple like hold TIPS (inflation linked bonds) and hedge some of the inflation risk internally, buying TIPS from the US government would simply be a circular transaction that would be canceled out by the bond component of the TIPS. Pointless. If SS went out into the global financial market, they would quite literally absorb a big chunk of the global capacity for that risk, and more importantly, on a global level it all feeds back to the US/dollar, especially in times of stress (which having a Gorilla sucking up endless amounts of inflation risk would actually amplify). Again - it would cancel out on net. A program that big is almost too large for traditional financialization. It would need to be buying networks of ports and such like China does with their surpluses, but even here, the US already carries a large amount of geopolitical risk in their financial system (look at the Tariff scare where the bond market almost blew up because the large amount of financial assets held by foreigners were pulled from the country). It's actually fairly interesting to follow these lines and feedback loops and see how everything is connected.
> if they refunded every penny we put into (with interest) it’d go well. these should be called entitlements as much you going to grocery story to buy food for your family is an entitlement
Unfortunately, it's unlikely that the government will collect tax revenues necessary to even keep up with some of these mandatory programs, such as social security. The reality is there is a very serious chance many people do not receive the fully stated benefit value.
> Is "mandatory" spending actually fundamentally mandatory? Characterizing it as such feels like a sleight of hand that prevents us from discussing whether that spend is truly necessary.
> In an overspending crisis of such magnitude I wish there was more urgency in the culture to cut spending across every budget segment regardless of whether it's "mandatory" or not.
I'm betting it includes stuff like Social Security payments, Medicare, etc. So it's fundamentally mandatory as real people's lives were planned around its availability.
So 0.9T of interest and 1.9T of new debt overlap. You can't add them together to get 6.2% of GDP because interest is a subset of new debt - you're double counting.
In general I am a deficit owl, not hawk...but I don't believe the recent tax law, which barely does anything for middle class downwards, is a productive use of debt. Debt accumulated for productive means is usually okay, but not this upwards accumulation of wealth.
Also upwards accumulation of wealth can sometimes mean less tax revenue. Middle class salary workers pay a lot of tax, so with more upwards accumulation of wealth (maybe accelerating due to AI) then what will happen to tax revenue? People getting laid off don't pay tax, and shifting that money to corporate, tax havens, and cap gains types of taxes will probably end up lower overall
You are correct. But you are commenting in a place where mid six figure engineers consider themselves middle class and not wealthy.
Yes, the top 20% pay the vast majority of taxes and are taxed at the highest rate until you get into the ownership classes where income goes down and capital gains goes up. Plus that’s when all the tax deferral strategies come into play.
And yes, by all reasonable definitions if you are in the top 20% either income or wealth you are categorically wealthy.
Corp income tax (paid by shareholders from the rich to teacher pensions to anyone with a retirement account...), estate tax,...
When all is accounted for ... The rich still pay a far larger share than the income they earn. It's why OECD rates the US as the most progressive tax system among member nations.
True or not that the wealthy pay a greater share of their money in taxes, it doesn't matter. The money has to come from somewhere and the middle and lower classes can't afford it. Also the middle class can't pay more and continue buying the super wealthy's goods. We need to spend less and tax more. 1 trillion in interest per year is insane.
Do you not see this as inevitable? It may be the case that money does 'trickle down' but it most certainly gushes upward. And so when the government prints massive sums of money, that's effectively just indirect handouts that end up going to the wealthiest, enabling them to gobble up even more of the overall economy and, in turn, enabling them to grow even wealthier.
The year that the US gained the ability to start 'printing' arbitrary amounts of money is 1971, prior to that we were externally constrained by Bretton Woods. This [1] site is nothing but a bunch of various graphs of all sorts of data. That point is a massive inflection point in just about everything awful that's happened to the country.
It’s complicated. The gold standard in general is an awful system outside of stagnant economies (you end up with deflation + endless boom and bust cycles).
Banning everyone domestically from owning gold and then Bretton Woods massively propping up the US monetary system helped. But eventually West Europeans caught up with it and what happened was hardly avoidable.
The Minneapolis Fed calculated CPI levels since 1800 here. [1] In the 150 years from 1800 to 1950, the CPI never shifted more than 25 points from the starting base of 51. From 1971 to current, it increased by more than 800 points. Keep in mind all the incredible events that 1800 to 1950 covers - World Wars 1 and 2, the Civil War, Great Depression, Spanish Flu, and more. And prices always stayed extremely stable.
Then we give the government the ability to print money at their discretion and money just starts inflating endlessly to the point of having no real meaning all the while wealth inequality grows to unimaginably high levels, to the point that the richest American now has personal wealth greater than the entire GDP of America in the 50s.
So you clearly don't just inevitably end up with deflation. Before 1971 the overall economic system was quite stable. Obviously there booms and busts, but it's not like the current system has changed that. Instead we now just have constant busts which are stabilized only by the government dumping obscene amounts of money into the economy which results makes all the economic and related problems we have even worse. And it's all obviously building up to a completely catastrophic bust that'll likely make the Great Depression look like the 'good ole days.'
> CPI levels since 1800 here. [1] In the 150 years from 1800 to 1950, the CPI never shifted more than 25 points from the starting base of 51.
Yes and there were extreme swings in between. Predictable 2% inflation is better for the economy than unpredictable up and down jumps in prices of 10-20% over a decade or two.
> Keep in mind all the incredible events that 1800 to 1950 covers
You haven’t actually looked at actual charts or yearly figures have you? It was a roller coaster.
I certainly agree about your points on inequality etc. but Fiat money is not the cause of that itself. Monetary and fiscal policy failures are.
> Before 1971 the overall economic system was quite stable
Yes, for several decades. After the roller coaster of ~1770 to ~1950.
Did you look at the data? Over 150 years prices literally never once increased (relative to the baseline of 50) more or less than 50%. And outside of the Civil War and World Wars annual changes would have hardly been noticeable. In fact in the overwhelming majority of years there was no change at all! The CPI was so stable that I was even able to pinpoint a major event I had forgotten about (war of 1812) when looking at the data because it was one of the relatively rare periods of instability.
Then in 1971 things went insane and we went from a base index of 121 to 942! And yes this does directly cause inequality in a wide array of different ways! The most obvious is the 'gush up' effect as already mentioned. Another way is that it makes it much easier to undermine labor. So for instance many people would be relatively happy to be earning 25% more than they were 5 years ago. In reality? They've been given a paycut because that's not even enough to keep up with inflation, and there's 0 chance of it going any direction but up from here. So they've gotten poorer with a smile on their face. Hence why real wages are practically flat since 1971.
It also turns money itself into a somewhat toxic asset and motivates the hoarding of things. For instance Bill Gates is the largest private owner of farmland. By contrast lower income types often think starting a saving accounts, or (ugh...) a cd savings account is a fiscally responsible thing to do. And before 1971 this would have been 100% true. But now a days it's basically a scam, because you're never going to get interest rates that beat inflation, because nobody wants your rapidly devaluing money.
They'd be far better off putting their money into precious metals, land, or basically anything to try to escape the inflation trap. But lower income types often need more access to their funds on demand in case e.g. their car breaks down. So it's a system that very much punishes lower income types.
> somewhat toxic asset and motivates the hoarding of things.
As opposed to hoarding money which is both bad for the economy and made you richer for doing absolutely nothing?
e.g. prices halved between 1865 and ~1900. The rich got richer, lack of freely available capital limited growth and anyone who had loans got screwed (imagine being a farmer who mortgaged his farm and is seeing agricultural prices go down every year). Constant technological progress bailed everyone out but it wasn’t a pretty time.
My point is that consistent and mostly predictable inflation (i.e. that was the case only during a fraction of of the last ~50 years) is much preferable than constant boom and bust cycles and volatile price swings that were frequent under the gold standard.
Of course it’s very easy to mismanage monetary and fiscal policy when you can print an unlimited amount of money and put incompetent/corrupt people in charge.
Try to put yourself in my shoes for a second, and think about what I'm reading from you. The example you chose was not only the exact year the US Civil War had just ended, but also the start of the second US industrial revolution and even a peak of the transition from rural->urban life. So in other words - some very major events. And over 35 years during this wild times, prices dropped by half, all while wages for workers were raising rapidly. And debt was quite rare 'back in the day'. In 1890 about 39% of farms had a mortgage [1], and that was near a peak of the bell curve on that. Go back before the Civil War and other such events and it shrinks down to 10-20%.
For some contrast to this point, I'll pick my date of 1971. Over just 9 years prices more than doubled. If we do the same timeline of 35 years, prices increased by more than 500%. And during this time, wages didn't come even remotely close to keeping up. So people were paying more and earning less. And obviously indebtedness also skyrocketed during this era, which is indeed nice for inflation (at least if wages keep up, which again they often don't), but that's only because people could no longer afford anything! Like in modern times the median home costs 7 years of median salary, which means basically nobody, outside of the very wealthy, can afford a home without going into decades of debt. By contrast in the past there were homes available for less than a year's salary - which is rather necessary when you can't just go get endless funny money to buy something.
And you're arguing that this new system is better for workers. Now of course it's possible I'm straw-manning you, though I assure you it's not intentional if so! But if not, then what am I missing here? Because I think surely, if you put yourself in my shoes, you can see that your argument isn't the most compelling.
We essentially need to increase taxes to pre-trump levels (we've demonstrably seen that these cuts did not "pay for themselves", they're paid with debt), collect the taxes that are already owed (fund the IRS), and fix healthcare spending (which everyone knows is broken in at least half a dozen different ways).
Fixing healthcare is essentially PBM reform, price transparency, drug negotiation, deregulation to increase supply, and subsidized GLP-1s since metabolic illness/chronic disease is like 90%+ of costs.
If we increase revenue and decrease healthcare costs, we could get to within 3% of GDP.
It is important to keep in mind that the treasury rate drives the rate of most consumer credit. If it gets more expensive for the US to borrow due to debt load, consumer credit will stay or get more expensive. This will, very likely, slow the economy due to increased cost of mortgages, auto loans, and unsecured credit.
Definitely, if we could refinance at a 1-2% lower rate it would save us up to $1k/mo which we could spend or save (likely we’d just take that money and pay down the loan faster or invest it though, but most people would probably spend it on making their lives better).
> If it gets more expensive for the US to borrow due to debt load, consumer credit will stay or get more expensive. This will, very likely, slow the economy due to increased cost of mortgages, auto loans, and unsecured credit.
Probably, but for sobering reasons, maybe less so than in the past, because because 50% of US consumer spending is by the top 10%, and the top 10% is far less dependent on credit for their spending.
A society where there is a more balanced distribution of spending power would be more affected by a consumer credit collapse, but the treasuries of such a society might be more desirable anyways.
The top 10% don't hold their money in liquid assets. Most of the time they get loans and use their non-liquid assets as collateral. They just don't have money laying around.
Source? The top decile of the US income distribution starts at $170000/yr.
The top decile of the wealth distribution is around $1M net worth.
The people doing the borrow-for-spending-against-non-housing-assets-as-collateral are beyond the top .01%. While they are also spending whales, they are able to negotiate far more favorable rates than the rest of the top 10%, whose spending is mostly income-driven.
Americans can get a preview of what happens when fiscal irresponsibility spooks markets and forces a rate rise by looking at the short-lived Liz Truss administration.
The rate that most directly affects consumer-facing debt rates is the Fed’s target rate, which is manually set. To some extent it even influences short-term Treasury rates. This rate is managed to deliver the Fed’s dual mandate of full employment and low inflation.
Day gig is at a firm that extends consumer credit, so I keep an eye on cost of capital tracking, monitoring the spread, etc. Any debt packaged and sold into debt markets (asset backed securities) competes against treasuries from a yield (and risk premium pricing) spread perspective. Mortgages, auto loans, some credit card books, etc.
When the Fed cuts rates, your deposit account provider is going to start cutting your interest rate paid right away, but they’re going to maintain their credit rate pricing as long as possible (considering competition from other lenders) to maintain their spread and profit as long as possible. You see this with credit card interest rates, for example.
TLDR 10Y treasury sets the rate floor, broadly speaking.
Cutting out many of the already shaky social safety nets, still accumulating massive debt. This should end well.
I understand the self-interested desire for the ultra wealthy to have lower taxes on an individual level, but yet I still don't understand how they are perpetually blind to the fact that whatever the release valve for the historic and still growing massive wealth inequality we have takes, it won't be great for them either in the long term.
Sure its nice for them to make asset grabs during economic downturns, but eventually there's always a tipping point where things go upside down chaotic and I don't feel like we are that far away from it now.
Well some of the new rich, tech guys are clearly insane. Peter Thiel cannot stop talking about the Antichrist, for example. I don't understand what was so different about the robber barons of the past, who at least had some obsession with their legacy enough to go around building schools and libraries to name after themselves.
> Well some of the new rich, tech guys are clearly insane. Peter Thiel cannot stop talking about the Antichrist, for example.
Agreed on the insanity and it seems to be getting worse over time.
I personally think its due to malignant narcissism bumping up into the (subconscious) midlife realization that there is no chance their theoretical singularity god will arrive in time to make them immortal.
Sorry bro(ligarch)s, you're all going to end up as worm food just like the rest of us. There isn't any amount of underground concrete bunker wall thickness that is going to change that.
What is so hard about understanding their desire? They want to keep more money for themselves so they can buy more yachts, invest in more things, whatever. This is just how humans are.
It's up to policy makers (i.e. government when it comes to taxation) to structure the system to mitigate the inherent self-interest that people have. Obviously that's easier said than done when the ultra-rich buy off the politicians, but human nature just is what it is.
The thing is they have so much money they can't buy enough. Even if all they do is consume, consume, consume they will still be trending upwards. In effect, every yacht has a negative price tag.
It bears the same hallmarks as any other addict: the next hit has to be even bigger than the last, and everyday enjoyments in life are practically invisible to them. Their drug of choice may be different, but the outcome on their life, relationships and society is largely the same.
To clarify, I don't mean all humans want to keep all money for themselves even when filthy rich, I just mean that all humans are self-interested. The extent to which that governs our behavior of course differs and I agree there are people who willingly sacrifice to help others. A bit more in another comment: https://news.ycombinator.com/item?id=45683652
I meant I understand it in the sense that to get that wealthy in the first place you have to have a special kind of self-interested sociopathy, so in that regard I understand their desire. Not that I agree with it.
Every human is self-interested. Fortunately there are a lot of good people out there who try to temper that instinct, but remembering that everybody by default has a "what's in it for me" line of thinking (even if consciously attempting to subjugate it) is important for understanding as much as we can about how the world works. I don't think a sleasy real estate agent is behaving any differently (by jacking up fees, putting people in properties that may not be in their best interest, strong-arming FSBOs into listing with them) than the billionaire is, it's just the scale of their blast radius that is different. That's not to equate the two, because obviously scale matters, but the underlying motiviation is largely the same.
I'm imagining these things happen on scales greater than many people's lifetimes. The Roman empire took hundreds of years to fall, there is so much time for these pathological wealth hoarders to enrich themselves and profit while there's still wine and grapes to be fed.
> but eventually there's always a tipping point where things go upside down chaotic and I don't feel like we are that far away from it now.
The members of the billionaire class with any foresight are making a calculated bet that they will be in control of sufficient technological measures to suppress any kind of mass uprising by the populace. Look at all the resources going to Anduril and Palantir. Foucault's boomerang is on its way back towards the US populace right now.
That said, even that cadre far overestimates what technology can do. Adaptation is a fundamental pillar of the human condition.
> understand the self-interested desire for the ultra wealthy to have lower taxes on an individual level
I don’t. They have tens of millions to billions. What more do they want? Three yachts instead of two? A higher score than some other rich douchebag destroying lives for fun?
"Business is a good game—lots of competition and a minimum of rules. You keep score with money" -- Nolan Bushnell
Once you get that wealthy the money is more of a disk measuring contest. There is no productive way for one person to really use money of that magnitude, the best they can do is dump it into stocks, bonds, real-estate, etc..., but nothing that really moves the economy. It's a big failure from an economic standpoint. Lots of "dead" money not being productively used.
Attempting to, and might get away with it for a while.
But I suspect next time there is an inevitable "equal but opposite reaction" the guillotine plans will be optimized using LLMs with shared open sourced designs.
(And in the current political environment, I think I should clarify this isn't me threatening violence -- I don't want violence. It is me recognizing that history "rhymes" while the rhyming patterns tend to happen on a faster and faster pace)
Conservatives want to cut taxes to force liberals to cut spending. Liberals want to increase spending to force the conservatives to increase taxes. But voters don't like increased taxes (on themselves) or decreased spending. So we end up with the worst of both worlds--higher spending without the tax revenue to afford it. Then we get to watch each side win the war of opinion on cable news. They throw each other under the bus, eventually come to a deal, and both sides claim victory. Rinse. Repeat.
> Conservatives want to cut taxes to force liberals to cut spending. Liberals want to increase spending to force the conservatives to increase taxes.
This is straight propaganda. Both parties increase spending. One party cuts taxes for the rich, the other increases taxes on the rich.
Conservatives haven't been "small government" and haven't cut taxes for folks other than the rich in a long, long time. Even calling them "small government" is a misnomer, because that propaganda is about privatization, not reducing costs (private services are less efficient and more costly than the government service they replace!)
Let's stop calling the problem "both-sides". One side is considerably worse for the economy, and you and I know it's the conservatives.
A 'cost' paid for by a private service directly translates into prices and salaries. Whereas a government wealth transfer program appears as taxation and handouts. Everyone likes the former. No one likes the latter. Why this is still confusing in 2025 is beyond me
The same underlying service is being done. It hasn't been cut. It's been shifted from a government service, to a private industry. The government pays roughly the same amount they were previously paying (or in a lot of cases slightly more, with the promise of paying less in the future), the private company provides the service as cheaply as they can, and takes a cut of the cost for profit, benefiting a small number of people, while providing a worse service level for tax payers.
This isn't a capitalism vs socialism thing. My issue with it is that privatization is blatant corruption sold as "capitalism". There's no capitalism here, because there's no competition, outside of the bidding on the contract. Competing on who can provide the cheapest service doesn't improve the service; in fact, it reduces the service quality to maximize profit. Reducing service quality to maximize profit would be fine, from a capitalism point of view, if others were offering the same service to the customer.
> The tax savings were relatively small for many families, however. The middle fifth of earners got about a $780 tax cut last year on average, according to the Tax Policy Center.
> The top 20 percent of earners received more than 60 percent of the total tax savings, according to the Tax Policy Center; the top 1 percent received nearly 17 percent of the total benefit, and got an average tax cut of more than $30,000. And that’s not even factoring in the law’s huge cut to corporate taxes, which disproportionately benefit the wealthy households that own the most stock.
Don’t be part of the problem Marcus. The reality is cutting taxes for the poor by $2/day, for the rich by $80/day, and telling everyone they got a tax break with a straight face… while you simultaneously cut services, issue policies that cause inflation, and levy taxes domestically on the poor through tariffs is the republican way!
> The tax savings were relatively small for many families, however. The middle fifth of earners got about a $780 tax cut last year on average, according to the Tax Policy Center.
If you take someone who pays a small amount of taxes (the middle fifth paid $2170 in taxes in 2017), and give them a big tax cut ($780 in savings would mean they got a ~30% cut), the number is still small. Pretending that this is insignificant is just goofy.
> The top 20 percent of earners received more than 60 percent of the total tax savings.
People who pay the most taxes get the most out of tax cuts? Scandalous! Income taxes paid by quintile:
Lowest and fourth got a tax increase. Middle class got a minor tax cut, the middle-upper class got a decent cut, and the upper class got a large cut.
It's also worth noting that the cut in question also had temporary provisions that expired, causing a tax increase for nearly all brackets except the upper class.
There has also been a massive cut in social services, which primarily affect the lowest/fourth brackets, which means they're paying more taxes for fewer services.
It's hard to interpret that "tax cut" in a way that doesn't scream "we're increasing taxes on most, and cutting services, to give the wealthy a tax cut".
It’s your link buddy, just quoting your own source.
$780 is insignificant.
Tax policy is written by humans, and they can do what they like with it. If you want to cut taxes for the poor, you do. If you want to cut taxes for the ultra wealthy, but make sure the statistics say poor people got a tax cut, you can do that too.
If you paid 1M in taxes, a 30% cut is 300k, and if you paid 1k it’s $300. One person will buy some bitcoin or a Porsche, the other will be lucky to buy some gas and groceries.
Both got a 30% tax cut, but it would be goofy to claim they have equivalent value.
If you wanted to be an honest person, maybe you correct the poster that there were tax cuts for the poor, but also point out that the cuts heavily favored the wealthy. Which by the way, was their argument.
Yeah, just stating your opinion isn't an argument.
> Tax policy is written by humans, and they can do what they like with it.
Insightful!
> If you want to cut taxes for the poor, you do.
What taxes? The poor pay negative income taxes. Did you read the post you're responding to?
> If you want to cut taxes for the ultra wealthy, but make sure the statistics say poor people got a tax cut, you can do that too.
I would love for the poor to pay zero taxes. It would be an improvement over the amount they "pay" now!
> If you paid 1M in taxes, a 30% cut is 300k, and if you paid 1k it’s $300. One person will buy some bitcoin or a Porsche, the other will be lucky to buy some gas and groceries.
Okay.
> If you wanted to be an honest person
You don't have to seethe, you know. You can be wrong without letting everyone know that you're miserable and angry about an internet post.
> ... maybe you correct the poster that there were tax cuts for the poor, but also point out that the cuts heavily favored the wealthy. Which by the way, was their argument.
You're almost caught up! Now that argument was I making in response? If you tried to understand instead of trying to misunderstand (or worse, just vomiting angry words without any substance to them), you might learn something!
The USA has no negative income tax. There are programs like the EITC which provide benefits to the poor and can be larger than their tax burden depending on the specific circumstances.
The EITC was initially signed into law by Ford (R) and expanded by Reagan (R). Regan apparently called it "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress".
I'm sure you knew all this, so thanks for being honest in this post about the fact that you would like to dismantle this particular social safety net.
Seething comment sounds like projection btw, I'm not mad. The whole point of HN is to have the discussion expand in detail. Seems like it's working:
- Someone generalized
- You called them a liar
- We found out the generalization wasn't strictly correct, but basically true in spirit: the wealthy received the majority of the benefit, the poor got a small token for the sake of statistics / sound bytes.
More specifically, Congress, which doesn't always align with the Executive. Congress largely sets the spending (or not) agenda. The Executive can ask nicely but Congress mostly does what it does.
Outside of retirees, much of the social safety net is funded at the State level. There is a wide variance in the benefits and quality of the social safety net across States.
The joke accurately conveys that the current administration has no actual upside and won power purely on Populism, while the opposition party clearly put the country in a better place while they were in power. I think it’s funny, accurate, and informative.
It is a difficult balance to strike. Unless you outlaw _all_ jokes, there will be some jokes that are just on the line of “funny enough”/“not too trollish”. Personally i find this kind of joke hilarious, but people will all have different tastes
I'd submit if you want to make an argument about HN norms and conventions and what is "allowed" to be posted in a comment, demonstrating that you're actually a part of the community you're attempting to police is a good idea, yeah.
It used to be common nettiquete to expect new account to "lurk" and refrain from posting until they actually learned the norms of board culture and how to behave as expected.
Hacker News would be much better if all new accounts were banned by default until they were vouched for by users and earned a minimum amount of karma. I understand why this doesn't happen, but the problem of green accounts trolling and posting toxicity seems far worse than occasional mediocre humor.
> Hacker News would be much better if all new accounts were banned by default until they were vouched for by users and earned a minimum amount of karma.
Personally, I prefer the model used by lobsters and Tildes where you have to be invited to the community by another member.
I find that a bit too extreme, although I understand why it's attractive. I like HN's "open door" policy, but I think green account abuse is just too rampant and it's getting worse. That isn't the fault of new people, it's the fault of established posters who want to troll while keeping their karma and reputations intact.
So what actually happened is that Clinton said we had to get serious about the deficit, and then passed a budget that pushed the real cuts until after the end of Clinton's second term (that is, more than six years down the road).
Then Republicans took over the House in the midterms. They passed the budget (and Clinton signed it) that actually led to surplus for the first time since Andrew Jackson.
So, yes, it happened under a Democratic president. It only happened because of a Republican House, though.
(But let the president also be a Republican, and Republicans in Congress lose all fiscal discipline.)
Often a surplus? 1 time ever more like. I think its pretty low-brow to act like a presidential administration can be the single biggest cause of a major turnaround within its own administration. One administration is facing knock-on from several previous (plus all the tech advancement, trade deals, congress, SC).
I've made plenty of left leaning comments that got flagged. Try arguing against the literal truth of the Bible or the necessity of religion to morality or society, for instance. Or that vaccines work. Or that free market capitalism has flaws and socialism has merits. Or that transgender identity is valid. Or that DEI is valid. Or that feminism is valid. Or that immigration and multiculturalism are valid. Or that gun control is valid.
There are tons of left leaning views that get flagged on HN. What matters isn't political polarity but the specific zeitgeist of the thread and whether you go with it or against it, and who happens to show up first with the most downvotes.
Every Republican administration in the last 50 years (save Bush Sr.) has passed a giant tax cut without cutting spending nearly enough to pay for it (and usually increasing spending). Trump himself has done this twice.
Let's not pretend like the two parties are the same with regard to fiscal irresponsibility.
If you actually look at the deficit year by year, Obama and Biden each entered office with a huge economic crisis that ballooned the deficit, and then lowered it year by year. I mean, it was highest under Trump.
And if you look at Bush and Trump, they started with a lower deficit and raised it year by year.
If your marker is a "budget surplus", nobody does that. The only people that get close are Democrats because they literally reduce spending. And then a Republican takes office, bangs on about the deficit so they can slash social programs, but spends even more than they slashed on military. This is not hidden information.
I don't care that much about the deficit, it's not the cause of our most immediate problems. It's just something both parties bring up when convenient.
The U.S. government structurally cannot run a surplus because when they have income in excess of obligations they store it in U.S. Treasury bonds, which creates offsetting debt.
They don't care about the spending. They yammer about it as a way of shifting funds towards things they care about, like the military or their new gestapo or buying votes from their disaffected constituents, but they've never given a shit about the deficit, and have never done anything to stop it.
The closest they ever came to actually caring about government was with Musk who went in and actually started (illegally) ripping shit out. But the things he ripped out were inconsequential things that conservatives didn't like, and he didn't even make a dent in the actual budget. All of the things that Musk got rid of were congressionally appropriated and could have easily been congressionally (i.e. legally) de-appropriated accordingly and it supposedly would be easy for them to do with majority control over the house, senate, executive, and judiciary...but they didn't do it, because they don't actually want to cut the budget.
Eh, I would say its well-known in deficit circles that all politicians (intellectually) desire to balance the budget, but it is basically impossible. Social Security, Medicare/Medicaid, and debt servicing are such large pieces of the debt pie that the entirety of discretionary spending makes basically no impact in balancing the budget. These are de-facto untouchable obligations because too many people's lives depend on them and any party that enacts austerity will be swept out of office. Neither party will increase taxes on themselves (the rich) and taxing the middle/poor guarantees you lose the next election. The only path forward in the U.S. is basically kicking the can down the road until it implodes like so many other high debt-load western nations before them.
Are you serious? California has an $180 billion annual obligation just for Medicaid (Cal-Aid). Los Angeles borrowed $1 billion to fund DWP operations this year, and borrowed $3 billion to borrow another $3 billion to fund a $6 billion renovation for the LA convention center that no one wants. Denver wants to borrow $1 billion to basically fund operations.
Neither party has any intention of repaying any of the $38 trillion, or care what it is spent on.
I think Democrats have a logic for not paying it. This is an investment in people. If you want to start a business you raise money first thing and deliver in future. Government raised money, they'll invest it in development which will pay back in the future. Whether the process is efficient is a different debate.
I do not understand though, why Republicans talk about cutting spending, and then blow through the ceiling when they have the power.
> Neither party has any intention of repaying any of the $38 trillion
What are you talking about here? Federal debt is repaid on bond schedules fixed by statute. You can look it all up. You can argue about whether the debt load is too high, too low, whatever. But you can't just pretend they ran away with the money like a thief. People loaned the government that money because they know the government is good for it.
Uh... yes? That $76k is right about median household income, and a little under per capita GDP. Apply that logic to other sorts of finance: mortgage leverage is routinely five times that big, and no one freaks out about how you'll never be able to pay off your home.
Federal budget argumentation is just exhausting. Fight about balancing the budget, sure. Fight about unsustainable deficits, sure.
But to claim that very manageable federal debt payments can't be made is just ridiculous. Yes, the US government is going to pay off that debt. Which is why they were able to borrow it in the first place.
>Yes, the US government is going to pay off that debt. Which is why they were able to borrow it in the first place.
There may come a time when the interest on the debt becomes so out of control that it cannot be serviced, likely in conjunction with people dumping bonds and leaving interest rates soaring. Meaning, America's credit goes up in flames. We're obviously not there yet and maybe it will never happen. That said, remember when Trump backed off extreme levels of the "Liberation Day" tariffs? Real fears of bond-dumping seem to have a lot to do with the more measured (relatively-speaking) approach to tariffs we're now seeing. If debt holders dump the 10-year bonds enough, it causes real issues for debt repayment.
> If debt holders dump the 10-year bonds enough, it causes real issues for debt repayment.
No, it doesn't, it impacts future borrowing. Third time, before my blood pressure spikes: that is an argument about future debt. It being true (or not) has zero relevance to the current size of the debt. You could be right (or wrong) if we had zero outstanding debt, or if it was $70T.
Ergo, it's either an incorrect or bad faith analysis of the situation. The current debt (whatever its size happens to be in the fiction being spun) will be paid off at the bills' rates and on the statutory schedules. Period.
>The current debt (whatever its size happens to be in the fiction being spun) will be paid off at the bills' rates and on the statutory schedules. Period.
Your blood pressure issues notwithstanding, I don't think you believe that the US can possibly default or renege in any way on its debt, so there may not be a point in going on. History has run this experiment before and sovereign nations absolutely can default and/or renege on debt obligations. I certainly hope we don't see that in the case of the US. But I'm also not irrational enough to believe it's impossible.
Yeah, of course. But the argument is, at this future point, you must adjust policy to meet your obligations: either you can print more money, or you can cut services. But you must choose one or the other of those things.
The issue I think most people are correctly pointing out is that our current debt is unreasonable -- that it constrains our future policies way too much. Cutting services is effectively impossible in our politics, which leaves only inflation on the table. That's pretty much the same as default. That is where we're headed.
While I agree with the sentiment, a mortgage is collateralised by the house, usually even the starting point is at most 90-95% of the house value (so the loan is in fact over collateralised) and if any repaying took place along the way, even more so. Sure, it's not idiot proof. But government debt is surely mostly uncolalteralised?
The government can always repay by printing currency, but that's not the same. This is sort of a default too, since inflation eats away the artificially repaid debt.
And this is why politics is broken in the US, and in most of the Western world for that matter. What you just said is completely false, but it's being rewarded because people want it to be true. Here [1] is data on the annual deficit. [1] We've only run a "surplus" four times since 1970. Twice under George W Bush, twice under Clinton. Since then it's been going mostly into loony land.
The reason for the quotes is because that's an incomplete picture since various things can affect the debt without being noted in the annual deficit. For instance some programs are considered off-budget, there's various accounting restructuring, and so on. If you simply look at the total debt it has increased every year (again since at least 1970) with the only exception being 1999 to 2000 depending on when you measure it. If you look end of year vs end of year (as opposed to fiscal year), it decreased by a few billion dollars, and that was the only time.
The years of a nominal surplus were 1998, 1999, 2000, 2001. In reality, the only "real" surplus (in other words the public debt decreased) was in 2000, and it was negligible.
I don't find the partisan arguments interesting. Bush had a lower deficit (each and every year) invading and occupying two different countries than any president has ever achieved since then. That is not to praise Bush, but to emphasize that we're comparing horrible vs terrible and trying to argue over which is which. They're all miserable failures, and not just in regards to spending.
> The years of a nominal surplus were 1998, 1999, 2000, 2001.
That's still not twice under George W. Bush, who became President on Jan. 20, 2001, nearly three weeks into calendar year (and nearly four months into federal fiscal year) 2001.
I do appreciate the nitpick - my count was indeed off by one. Now if people only did anything even remotely similar for posts that confirmed their biases. The post I was responding to (that has been repeatedly edited) originally claimed that 'democrats often have budget surpluses' when in reality the only real budget surplus (in that the public debt declined) was 26 years ago, and of a tiny fraction of a percent.
Are there any things you are leaving out in 2008 and 2020-2021 in this analysis though? One self-inflicted from deregulating the finance industry, another a black swan event.
Running wars is a choice, a pandemic hitting not so much.
COVID was a black swan, the completely irresponsible and unnecessary redistribution from taxpayers to company owners that was the PPP was a choice. (One that most other governments worldwide didn’t make.)
> The Paycheck Protection Program (PPP) is a $953-billion business loan program established by the United States federal government during the Trump administration in 2020
Well I agree than Gold will have the ultimate endurance but for now the Dollar is backed by US Military. As long as the Military is Strong the US economy is guaranteed to at least be better than the median of developed nations there has not been real economic reasons for war yet but as soon as there is the economic reasons become politicized and that will serve as a pretext for taking the resources.
Where is this money actually going? Does anybody see it in their day to day? It all feels like it's spent maintain a fragile status quo, fragile peace, fragile health, (not so) fragile roads but still.
Something doesn't sit right, if Clinton got the deficit under control while maintaining a strong economy it should be easier with modern technology. Lots of fraud going on I guess.
health&pharma, oil&gas, defense have seen major year on year profit increases since then when at best improvements should be very marginal due to the nature of the businesses. They are also large portions of the budget. In general any industry that has exploded in profits that can't be explained by increased market share should be looked into very closely.
If you ever go outside of the US it is shocking how much other countries do with so little. Countires with a tenth of our population and an even smaller fraction of our GDP have cheap, efficient, high quality health care systems and clean, convenient public transportation. They have well equipped classrooms with teachers who don't have to work two jobs to get by. They have highly skilled police forces whose training is measured in years, not weeks. These countries are not perfect, but they seem to govern far nore effectively than the richest country on that planet. I'm not even talking about an idealized Europe; some southeast asian countries are like this too.
So yeah, where is the money going? When you combine state, local, and federal, the US spend nearly a trillion dollars a year on education (more than our military!) but where does it go? We regularly churn out illiterate graduates and teachers have to commute from another state away in order to find somewhere affordable to live. We spend more money per capita on healthcare than anyone else in the world for worse coverage and worse outcomes.
I hypothesize that the dollar's status as the world reserve currency is actually a bad thing. It makes it cheap for us to borrow money and as a result encourages all kinds of social pathologies associated with ZIRP
The money is going to rent seeking middle man corporations. Our system is basically a jobs program for lawyers, defense contractors and insurance companies. They contribute nothing to the country but absorb so much money.
Their talents would be better used if we cut out the middle layer.
The TLDR is: Social Security, Interest payments, Medicare, Defense, Medicaid, Income Security Programs, and then a whole hodgepodge of Other. Politicians can try to cut a bit in Other or maybe Income Security, but the other big blocks are nearly untouchable Third Rails.
FTC didn't go through with their plan on abolishing noncompetes... for doctors... facepalm WHY DO DOCTORS NEED NONCOMPETES!? To keep prices artificially high is the answer
Just more data to show the Musk "doge" team was complete BS and their sole purpose was to disrupt regulatory departments to his and the broligarch advantage. All the drama was just a smokescreen while they gutted bodies that regulated their business interests.
This problem should be fixed on a constitutional level. The Swiss Debt brake seems to be working, and is probably a good model to copy. https://www.efd.admin.ch/en/the-debt-brake
That's nonsense. I think brexit was a terrible idea but people didn't vote to destroy the economy, and the British economy is still there. Losing 4% productivity relative to where it'd be otherwise is bad for sure, but not destroyed.
I’m surprised I haven’t seen anybody on the libertarian end advocating for a default. It would harm the government’s ability to take debt in the future, but presumably they would consider that a good thing. There would be some pain in the middle as assumed future cash flows would evaporate, but I’m not sure how valuable those even are long term in the face of significant monetary debasement.
I’m not able to read the article right this moment, but I immediately wonder if it’s the fastest accumulation after adjusting for inflation? I’m guessing yes.
> inflation doesn't increase the dollar amount owned
In theory no, but when old debt matures, it is often paid by issuing newer debt that is financed at the higher rate. So in practice inflation does increase the dollar amount owned unless the government actively reduces the debt.
it makes servicing a debt easier because the amount owed doesn't inflate but that doesn't actually make it irrelevant to this metric because what we're looking at is new borrowing, not accumulated debt. if an apple cost a penny a hundred years ago and a dollar today, and the government borrowed to buy an apple a hundred years ago and then again to buy another apple today, it makes sense to compare apples to apples and the only way to do that is to adjust that penny to what it would be worth today, one dollar
Investors in bonds look for a percentage growth, year over year. That's an exponential. A linear growth would be non-investable in the longer run.
From the other side, the US debt is quite linear on a log scale, so also exponential. That suddenly looks scary. But that is really to be expected? Exponential is the natural curve. If it wasn't exponential it would disappear, year over year.
I don’t have the answers but we have a system where, if you loan out money we expect a return that is a percentage of the amount of the loan, rather than say a flat loan fee.
Because population grows exponentially, either up or down, and money is a means of quantifying work and labor at the end of the day. Thus its value rises in the same way
Put another way, there is no number of children per couple C such that a population initially composed of N individuals will always add X>1 number of children per year in perpetuity.
If every person has one kid (or alternately, every couple two), then the growth rate is zero and the population constant. Constant population is exponential (exponent = 0).
If the number per couple is below two, then population declines exponentially. Fewer and fewer people die each year but also fewer are added. Eventually the population hits zero
If the number is more than two, then more and more are added each year
About 450 billion of the national debt is held in the Cayman Islands, or a little more than 1% of the 38 trillion total. About the same as Belgium and Luxenberg, but significantly less than Japan, UK, and China.
As others said, U.S. Treasury bonds are widely held across the globe.
But the largest single holder is actually the U.S. federal government itself, which holds about 20% of the total debt as “intragovernmental” debt. These are real, legally binding financial obligations to federal agencies, most famously to Social Security.
US treasuries (bonds, notes and bills) are mostly considered as good as cash. They're used heavily in the international banking system (for payments, and as loan collateral themselves). They're also held to maturity by large institutional investors with predictable liabilities (ie payments) like pension and insurance funds. Banks will hold some of their assets (eg deposits) in treasuries too.
Also foreign governments and central banks will have holdings. Tether (the cryptocoin) is largely backed by US treasuries.
So who owns the obligations? Many individuals and foreign states.
So who's that, it doesn't give any sense of proportion.
It's complicated as one can never be sure how a bond get wrapped into another product sold in foreign, and often obscurely complex structures. But we do have some estimated data points.
Contrary to another comment pointing at China, this country accounts only for tiny fraction of the overall amount credited.
For example, the UK, Japan, individually own more U.S bonds than China.
Anyhow they each represent around 1 trillion, so where is the rest coming from?
The majority of creditors in value are U.S entities and U.S individuals.
Some may recall a bank in California that went bankrupt a year or two ago. Unveiling a financial gig certain institutions enjoy doing: accumulate bonds as it always pays.
This is the big misnomer - it's debt on the U.S. balance sheet, but is a credit on someone else's balance sheet. By itself, it's not necessarily bad; it really depends on who the debt is issued to, why, and on what terms.
Time would be better spent talking about other issues, but national debt is a simple number politicians can complain about rather than talking about the more complex issues that really impact the rest of us.
Can you elaborate? National debt seems like one of the few relatively straightforward metrics one could use to understand the state's fiscal responsibility (or irresponsibility).
It's similar to the problems with GDP, CPI, U-3 (Unemployment rate), etc. You really need at least 30-100 metrics or more to get a grasp of what's really happening in a complex eonomy. Debt can be good if it causes more growth in the economy, and bad if just gets trapped in a few foreign investment funds. But the number by itself doesn't tell us any of that, yet that is all that grabs the focus.
Often politicians will try to shrink or control the debt without deeply investiagting the true causes, because the real causes may be politically inconvenient.
That sounds a little like saying, "Don't check my bank account balance, because I've got lots of things in motion and some of them are going to pay out big." Might be true but the balance still says a lot about your general posture, how aggressive/risky you are, how defensive.
National debt tends to confuse people, because they imagine the government like a household, or maybe a small business: You have some income (taxes), which you use to spend on things (government services, military, social security, etc). If you run out of money, you have to borrow it. If you borrow too much, people stop lending you money, you're up shit creek and have to cut spending.
That's not really the case with a nation-state with sovereign control over their own monetary policy. In that case, currency works a lot more like an MMO currency like RuneScape gold. The government gets to set up sources (government spending, killing goblins), and sinks (taxes, buying stuff from in-game shops), with the risk of screwing up the balance being a shift in perception of value of the currency. Just like how I never need to worry that RuneScape will run out of gold, and the next goblin I kill won't drop any, the government can't run out of money. It can always print more. Taxes are used to induce a demand for the currency (since you need to pay your taxes in USD), creating a flow of money through the economy. Tax too much, or print too little, and you make people expect the money to gain value, and shrink the value proposition of investment compared to hoarding money. Print too much, or tax too little and you end up with money piling up in some subset of your participant's balance sheets, shifting people's expectation to the money being worth less in the future, leading to a devaluation of said currency (since the people with a bunch of money are willing to spend more of it for the same good).
The key is that whole "expectation of future value" element, which differentiates government debt from private debt. It's a much looser coupling than "I have 45 cents in my bank account, I can't buy groceries this month". A currency can be useful, valuable, and perfectly suitable even if it loses a couple percent of its value every year, forever. That would reflect as a forever increasing national debt, but it's fine, because national debt doesn't matter.
Unexpected changes to the rate of change of the national debt is the thing that matters, and even then only indirectly, by way of the public perception of the value of the currency, which leads to the inflation/deflation rate.
Not even someone else's! A significant amount of the national debt is owed to themselves.
At the end of the day, in the world of fiat currency, taxes and spending are not intrinsically linked. They're mediated by public perception of the value of the currency, which can be sensitive to unexpected speed ups of the money printers, but is frankly unaffected by the normal rate.
The entire financial services industry. Even including some of the cryptocurrency parts: USDC is backed by a Blackrock account holding Treasury bills.
(a default on the debt, any of it, would be an extinction level event for the global financial services industry and then most real US industries in the following weeks)
Debt is just promises for future currency. One persons debt is another person asset. But what happens is when you "over promise" by accumulating too much debt then all those people with debt as their assets think they have X dollars, but if there's more debt than underlying resources can cover then it might end up all those people only end up getting like 0.65X or possibly even lower. Kind of like a bank run
Anyone who owns US treasuries. That may be you. But I am sure many here own US debt. Institutions and sovereign entities own quite a bit. The US Social Security Trust Fund is a major holder as well.
Weirdly themselves. Makes my head hurt but the central bank, the social security fund and some other bits of US government basically own most of the national debt. Then it's the Japanese, British, Chinese and Warren Buffet. But less than you would guess.
anyone who is the bearer of a US Treasury bond that hasn't reached maturity
so if you have any investments even in your 401k, or hold any ETFs, much of it is invested in those
holders are individuals domestic and worldwide, retirement plans, foreign governments, banks, central banks like the Federal Reserve
the US government slowly pays people back with revenue and other people's money via newly issued bonds, over time, and does it very reliably, so people keep buying. The US government's revenue comes mostly from tax collection, followed and a few other sources, some private sector ownership in recent decades, and it pays the interest on all of the active bonds.
The real answer is our children. Deficits are complicated and plenty of very smart people have very different opinions on it, however in the end it is similar to a mortgage. At some point, someone somewhere will have to pay some of it off. The people that created this massive debt will most likely be dead and gone by then.
"Ourselves" meaning people who have invested in Treasury Bills and other US bonds. Writing it off would mean eliminating massive amounts of wealth. That isn't really politically tenable for anyone.
That doent make any sense. There's no way we *sold* $1T of bonds and t-bills in 1 year.
That's what I'm asking who the debt actually belongs to. If it's "us", then how was it generated, who accepted the debt risk, and why's it going up faster?
Again, I make an analogy to $10000 tylenol pills, $16000 bandaids, and other obviously absurd medical fake number pricing. This $1T per year feels just as absurd and fake. And well, it's also a great wedge in Congress to bemoan and attack/shut down congress over that made up number.
Yes, we sold $1T of Bonds and t-bills. About half were sold to banks and foreign countries. The other half was sold to the social security retirement fund (in exchange for SS tax revenue)
The same reason you think it is absurd and fake is why others are panicking about the debt.
13% of federal taxes go to paying interest on the debt. That is 13 cents of every tax dollar paid. It is on track to hit 20% in the next 10 years, and that is assuming the US economy and tax revenue keeps growing.
Japan, UK, China, and the Cayman Islands are the largest private holders of US federal debt. [1]
What part of this seems incredible to you? It is indeed a lot of debt spending.
Why does $1T seem unreasonable? You can check the auction results, and from my quick look at a couple recent auctions, combined with knowledge that the auctions are routine and regularly scheduled, the number seems plausible.
It's not really $1T sold though, $1T would be the net sales, as many bonds and bills would have matured in the same period. Gross sales is much more than $1T, but I'm not going to dig through to find those numbers.
You could maybe discount some of the issuance as internal borrowing/lending/savings, but if you want to treat programs as independent, then the interactions between programs and the general budget are real enough.
The government won’t just write it off, that would be a default or magicing the money into existence (which the government CAN do), because the world economy would go insane. The government has the ability to do this but is extremely strongly incentivized not to do it because of the effects it would have.
The US government is a currency issuer so it’s possible but not advisable.
U.S. government debt is the safest investment you can make today. If you "write if off" by simply telling debt holders you won't pay them, you'd make U.S. government debt the most unsafe investment possible. Nobody would ever buy U.S. government debt. That, and peoples' pensions and other retirement accounts that hold U.S. government debt would be hammered.
Although I recognize that at this moment the force of the United States Constitution has been shown to be minimal, I direct your attention to this clause:
"The validity of the public debt of the United States [...] shall not be questioned."
Debt pulls future income into the present, so yes, the $38T is what we owe to our future selves. The thing is, your present self already knows if your future self is owed something (you own a bond). So writing it off is taking that person's money and not giving it back in the future like you promised. That does obviously does not go over well, plus it has unpleasant secondary effect. What you do is that you print more money and inflate it away.
Everyone is in denial about the whole situation. The sensible solution is probably the FED targeting a higher inflation rate than the 2% they would prefer and work it out slowly. Nobody is sensible at the moment, so we risk having either out of control inflation for a shorter time, or a lot of people lose money. If you have too much debt, people are going to lose money. The question is the amount of pain (and the collateral pain from secondary effects) that goes with it.
He or she meant 75% US people. But not everyone. Just the upper ones, who don’t have mortgages but lending the money to people - now on higher rates haha
I don't see how my statement was in any way misleading. The Treasury estimates the upper bound of foreign ownership to be $9.1 trillion. The overwhelming majority of Treasury debt is held by domestic interests, whether agencies or organizations or individuals.
For most people, "ourselves" implies the lender and holder are the same, and directly leads to the idea that it is forgivable without someone left holding the bag.
The US federal government absolutely has the ability to forgive, restructure, or write off debt in its capacity as lender. It has frequently done so.
Where do you see limitations on seeking default or forgiveness in its capacity as borrower?
The US did a pseudo default when it left the gold standard and paid gold denominated debts with paper worth significantly less, telling lenders to put their complaints were the sun doesnt shine.
ourselves, each other, foreign bond holders, remember that anyone who wants to buy a government bond can do so pretty easily and they're basically unlimited in availability so the answer to your question is anyone who was willing to lend the government money before.
Most money being spent on Medicare and social security. Non means tested programs transferring the money from everyone else to the richest demographic in the US. Also the least productive use of it. Self-admittedly structured as a ponzi racket so it would be difficult to undo. Manifestly demographically unsustainable, as is readily admitted by Social security org itself (they have a projected date when full benefits will not be paid without additional money).
Everything else, when talking about debt, is talking about rearranging chairs on the Titanic.
Firing Jerome Powell and pushing rates lower, in spite of reality on the ground, is effectively a form of soft default. (That, plus the laundry list of other things, which is too long to fit into a single HN comment)
The US will never stop paying its obligations. But driving away investment by breaking promises abroad and eroding political stability at home very much will cause the trust in the USD as an ongoing institution to evaporate. Sure, the US still pays its bonds on time in USD, but what is USD worth when the US cannot honor its trade obligations, cannot honor its diplomatic obligations, cannot be relied on as a stable partner?
It will be very scary when the US stops being the dominant financial system. So much of the US political economy (and more fundamentally, our way of life) depends on it.
as long as the military is there there is no need to worry because who decides which debt gets paid who enforces this financial rule, who makes the rule by what power?
Defaulting on U.S. Treasury payments would cause a lot of economic stress around the globe. But so did the 2008 financial crisis and the 2020 COVID pandemic, and we held presidential elections both those years.
No one knows what would happen. That is unprecedented. There would be mayhem in financial systems as all types of collateral is vaporized. All types of on paper net worth would collapse towards zero
It's be unprecedented for the foundation of the contemporary financial system. Argentina defaulting on their debt is very different than a country which every other country, and their banks hold bonds from since it's deemed the safest investment possible.
It would eliminate the notion of the USD as the basis of foreign trade across the world, almost all of the finance system is supported by the USD being the safest investment available.
Certainly triggering a default at a critical time in the election would result in nothing else being on the news for the remaining few weeks of the fragmenting United States, until such time as CA and NY can get their own currencies circulating.
By the constitution states are not allowed to issue currency. Triggering a default would lead to devaluation of bonds and probably currency, but why would it stop elections?
If it gets to that point, the Federal govenrment will have ceased to operate as anything recognizable, and most of the finance industry is faced with two options:
a) update the valuation of their assets, recognizing that they are instantly insolvent, cease trading, and lock their doors;
b) continue operating "illegally" in the hope that some sort of order will materialize
Option (a) causes all the non-cash economy in the US to stop functioning. The gold and silver bugs are, briefly, ecstatic - this is their moment. Everyone else who would rely on their debit or credit cards to buy food and gasoline, less so. The legal order that is supposed to maintain things like elections theoretically remains in place, but the rapid collapse in public order forces states to step in. You have elections to some thing called the "United States", but when most of its money has been rendered worthless, does it really exist any more? Essentially this is the "prepper" fantasy.
Situational. Right now, the Federal bits are stronger than any state.
The Federal bits of the US being strong (and indeed all institutional strength) is not a law of nature, and people who think it is a law of nature are the most likely to blindly run it into the ground while fighting each other to wield that strength.
But right now, the Federal bits are stronger than any state.
Another option is the modern authoritarian model, Competitive Authoritarianism [0] as deployed by Órban, Putin, etc.
You castrate the media, and take control of major vehicles to tilt the balance in your favour in quasi-sham elections; accumulate power in the executive while keeping the remaining seats of power under the thumb of the branch: legislative gets installed with sycophants/acolytes, judiciary power is tamed/dimished and regime-adjacent judges installed.
If you play this well you keep getting elected when elections happen and slowly twists more the sword into all democratic institutions.
Neither defaulting on the debt or starting a major war are effective ways to hold on to power, sheesh. He already tried to hold on to power, so you could just look at how he tried last time, that's one of the typical strategies. The other main one is a military coup.
Creating a global crisis is an excellent way to hold onto power.
Not that they started it or want it to continue, and not that I think Zelenski is anything other than a hero, but the case in point is Ukraine not holding elections since the war started.
When Zelenski told trump there have been no elections during the war trump, on camera, was delighted and said “very good”.
Here is proposal to the boomers from a zoomer. I've paid over 100k in social security in my lifetime. Apparently social security is "not an entitlement(lol)" but you can have it all. Take every cent, but starting tomorrow there are no more checks.
And when im old there sure as hell wont be any money left for me. Also its on the boomers for not maintaining the demographic pyramid required to sustain retirement benefits.
No, the government pays for current services and then spends the rest as a loan to itself (see $38T debt above). The boomers were so big that there was massively more collected then spent. The idea was to loan that extra to the government and the government could structure the debt to smooth things out because eventually the boomers are so big that there will be more spent than immediately collected.
That fine and all but current trends point to the ss drying up because of demographic decline so it seems like it was just a big ponzi at the end of the day with millennials and younger holding the bag. Also, if its true that the boomers have paid surplus into the fund that is meant to smooth out the payment curve, then why do they need my money.
I'd suggest looking at two things. What percentage of the economy tax receipts represent and the breakdown of how much revenue comes from the top tax brackets. You could also look at spending a percentage of GDP over time.
My view with all that in mind is that spending has gone up quite a bit. Overall tax revenue has stayed remarkably consistent and the tax system is progressive (i.e. if you make more you pay more). Is it progressive enough? I don't know. What percent of the budget should that top 10% (or top 1%) be paying? 20%? 30%?
At the end of the day though getting 20% of GDP in to the Federal government as tax has historically been a heavy lift. If you get a government that's willing to vote to do that then I would be that that you will soon find new one that's willing to vote not to do that.
That said getting spending in the range has the same problem.
At some point though it seems inevitable that one (or both?) of those statements will prove to be untrue.
Given that U.S. federal spending always goes up, and inflation always goes up, wouldn't it be the case that every $1T in debt would be accumulated faster than the previous $1T? That's generally how exponential growth works: https://farmdocdaily.illinois.edu/wp-content/uploads/2021/12...
Not to mention population growth. The debt per capita or debt to GDP could be improving (it's not) and we still see headlines like this. It's a fun milestone, but context matters.
The past two administrations, arguably the past three if you think the pandemic was overblown (I don’t), have been totally reckless with spending and their ostrich-like refusal to reform entitlements. Maybe the suspension of SNAP will “break the seal” on further entitlement cuts?
Genuine question - why is taking benefits away from the poorest among us the only answer? Corporations and the wealthy upper crust have made record profits YoY for like a decade now. But we can only find the money by taking it away from people who are just trying to eat?
because the poorest don't have the power to stop anyone taking their benefits whereas being rich by definition is having access to levers of power like the courts and political contributions and have also been running what is essentially a multigenerational PR campaign that says that the poorest among us are the source of all of our problems and that eliminating any help for them will simultaneously make things better for us by cutting spending and make things better for them through vague notions of encouraging responsibility or whatever.
tldr - the reason that going after the poor is always the answer is that it's the rich who are both asking and answering the question.
SNAP should be the last thing that gets reformed, aside from its tendency to fund less than ethical corporations (coca-cola, big agribusiness, Taco Bell). On that I totally agree.
The wealthy boomers who own multi-million dollar California track homes and don’t pay taxes because of prop 13, who are consuming millions on quasi-necessary medical procedures because they partied too hard in the 70s, gorged on trans fats in the 80s, smoked drank and didn’t go for walks, that’s where entitlement reform should start. But those are the base of one, maybe both parties and will vote out anyone that refuses to subsidize their ozempic and knee surgeries. They will even vote to reduce democracy by gerrymandering the state to block third party candidates and ensure nobody can come for their unnecessary health care costs and other ballooning entitlements.
Entitlements and interest on the debt itself make up the majority of spending.
Most corporations don't make extraordinary profits. They make enough to stay in business, and if you tax them too heavily they will either raise prices or just close. So higher corporate taxes will ultimately depress business and be paid for by the consumer.
A few corporations certainly do make a lot of profit, and various "windfall profit" or "excess profit" taxes have been tried, but that's more about politicians trying to earn favor than anything that makes a practical difference.
Spending is the thing that's out of control, so that's where the problem must be attacked.
> Most corporations don't make extraordinary profits. They make enough to stay in business, and if you tax them too heavily they will either raise prices or just close.
Corporate taxes are levied on profit, not revenue. Raising corporate taxes would not cause any businesses to fail. And businesses can only raise prices if the market will bear those higher prices. Prices are set based on what customers will pay, not on what profit margin the company wants.
It’s not the only answer. There are no good answers, that’s the unfortunate truth. An empathic government would avoid getting us to this point, but alas here we are.
Where I live, private sector food programs are very healthy, and so it seems unlikely this will be much of any local impact beyond retailers’ bottom lines. For example, the Taco Bell drive thru down the street from me has a huge sign “WE TAKE EBT!!!” which I assume corresponds to the local consumers being largely subsidized chalupa eaters. I wonder if chalupas will decline in value from $7 dollars or whatever artificially inflated price they’ve reached, back down to their old timey price of $3? (I’m not sure I have those prices exactly right as I’ve only purchased Taco Bell once or twice since in the past few decades. I confess I don’t get EBT yet, so my perspective is a naive one. It may be the case that chalupas are a better value proposition than Safeway prices in the suburban food desert where I live. There’s certainly a dearth of drive thrus.)
I looked this up and it seems like restaurant meals are only available to SNAP users that cannot use a kitchen because they are homeless or too disabled. Programs like meals on wheels have waiting lists now so that might not be an option.
Taco bell seems ridiculous but the alternative is that they eat cat food.
That makes no sense. Who do you think pays the bill for EBT? If entitlement programs are done away with, no one will accept EBT, because it won't exist.
SNAP would be a start. Medicaid, Medicare, Social Security would be the place to end. Those are all politically tricky to take a bite out of, of course.
I don’t approve of a policy that entails the premature death or destitution of millions of Americans while also ensuring that a couple thousand obscenely wealthy families remain obscenely wealthy.
Or we could just raise taxes on high income earners (which will barely make a dent in their quality of life). If the alternative is cutting programs that keep people from starving, from losing their homes, and obtaining basic health care... no thanks, I'll pass on that.
Letting 70M+ Americans, many of which are children, go hungry is good for the country because it saves money. And if they don't die from malnutrition, don't worry, we're going to save even more by cutting their health coverage, and eventually social security, a program that people paid into their entire lives.
Take a step back...do you believe these 70M+ people are just lazy, inept, ...? Do they deserve to suffer, especially the children? What are we buying with their suffering? A reduction in spending? A tax break for the wealthy? Is this the only solution?
What if we were to create a real national healthcare system which cared for everyone at a vastly lower cost? That would also save money AND reduce suffering. Seems like a net win.
But that won't get us all the way there, so what else can we do? Everyone knows the answer, increase taxes on the wealthy. Top marginal tax rate used to be 90% (1950-1964), so perhaps there's some wiggle room between that and today's 37%.
I said this up thread. Trying to get 20% of GDP (or probably even a bit less then that) out of the economy and into the Federal government hasn't worked historically. I would encourage you to look at what people really paid when rates were 90%. They didn't pay 90% of the money that was coming through their door.
I'll agree that eliminating SNAP is an extreme measure that in the overall picture saves little (unlike modest cuts to SS and Medicare) but consider that 20% of Americans are to some measure dependent on SNAP. There's something wrong with that in my view.
> consider that 20% of Americans are to some measure dependent on SNAP. There's something wrong with that in my view.
but what interpretation leads to "therefore SNAP is the problem" ? compared to land management or anti-trust, etc
as a policy alternative, we could say, ban the exports of alfalfa until the SNAP usage is 5%, and split up cisco into 2000 different food distribution companies.
funding for social spending i think is a very strong chesterton's fence, in that the program was introduced to mitigate a problem. getting rid of the mitigation isnt going to get rid of the underlying problem
Not sure why you're being down voted. SNAP was bleeding us on the front end by subsidizing sugar water mega corps and on the backend by subsidizing the collosal medical bills that come from the overweight, diabetic millions.
One day we'll look back and wish we had the self-control to both impose austerity measures to get the spending under control and the foresight to spend wisely on long term functions like infrastructure.
Until then it's business as usual from both political parties.
> Not sure why you're being down voted. SNAP was bleeding us on the front end by subsidizing sugar water mega corps and on the backend by subsidizing the collosal medical bills that come from the overweight, diabetic millions.
Letting people starve is a better solution than letting them drink soda and potentially develop diabetes over the long term? Preposterous. I don't understand why the common sentiment is that everyone who uses SNAP must enter into a contract with the state to lose weight and only eat heads of iceberg lettuce, lest they be labeled leeches.
It's not one extreme or the other. There's a reasonable middle where SNAP can't be used for soda or candy, etc.
But such regulations are easily subverted and ultimately may not make a lot of difference. If people want to live on Dr. Pepper and cigarettes they will find a way to do that.
people shouldnt be prevented from ever drinking doctor pepper because they are poor.
snap should reclaim their money from dr pepper if peopleare spending too much on it, or they should be pushed on making doctor pepper healthier if thats what people are spending snap money on.
I personally agree it shouldn't be one extreme or the other, but the person I was replying to was defending a comment about the suspension of SNAP. My wife and I used SNAP when we first moved in together and she couldn't find a job, so it annoys me when I see people imply that SNAP users just need to make better choices, be less lazy or eat healthier.
Sorry, the entire political establishment learned that debt didn't really matter back during Bush and then Obama.
How different would the world have been if either of the two "grand bargins" that Boehner started, and then Obama torpedo'd last minute (in the first example) or the second one (which biden as VP torpedo'd) happened? No rise of the tea party, working bipartisan arrangement on spending?
The tea party was a front by the Koch brothers to pay less taxes. It was and always will be a thing by the rich, for the rich. It was also just wrapped up in the entire republican agenda of trying to sabotage the first Black president, because too many white folk couldn’t accept that the president was Black. There was never any possibility of a bipartisan agreement.
Well, I think just very rough numbers Biden added about 7 trillion, which was about the same as Trump 1, driven of course by the pandemic. I think we’re headed for another 6 or 7 trillion under Trump 2, give or take tariffs and whether we can Art of The Deal our way with Xi’s communist empire and enter some new era of AI driven prosperity. So if the total debt is, rough numbers, about 40 trillion, then the past 3 admins account for a substantial fraction 15-20 trillion, tough numbers, given that the economy has been objectively strong since Obama’s second term. We should have decreased to debt in those years of strength, aside from the short few months of the pandemic when vaccines were needed and temporary lockdowns had to be subsidized.
In fiscal 2024 the US federal government brought in revenues of $4.9T and spent $6.8T (https://www.cbo.gov/publication/61185). Of that $6.8T, mandatory spending accounted for $4.1T (https://www.cbo.gov/publication/61182). Mandatory spending is automatic, the laws are already in place and the money is spent based on the situation and natural demand.
Of the $2.7T of not-mandatory spending, $0.9T was servicing existing debt. Of the remaining $1.8T of actual spending, defense accounted for $0.85T. The final remaining $0.96T is what's actually voted on in any budget, which is about 15% of all government spending (https://www.cbo.gov/publication/61184).
Is "mandatory" spending actually fundamentally mandatory? Characterizing it as such feels like a sleight of hand that prevents us from discussing whether that spend is truly necessary.
In an overspending crisis of such magnitude I wish there was more urgency in the culture to cut spending across every budget segment regardless of whether it's "mandatory" or not.
As my sibling comment states, mandatory spending is spending which is required by existing laws which have already been passed. But a secondary point is that mandatory spending means no one knows how much it'll be ahead of time. You can only find out how much actual mandatory spending happened after the fact. Contrast this with discretionary spending, where the budget says how much can be spent on a given set of things (like airplanes, or road improvements, or new toilets for all the Navy submarines) so you know ahead of time the spending amount.
Debating changing mandatory spending laws in order to hopefully reduce mandatory spending is totally allowed, it's just very hard to know exactly how much you'd save with any change. The CBO will make estimates for you, but those are going to be based on assumptions which may or may not turn out to reflect reality in the future.
“Mandatory spending” is a term of art that means something very specific in this very specific context (congressional budgeting). The common meaning of the words is not particularly relevant.
If you have ever seen the phrase “act of God” in a contract, this is similar. In contract law, “act of God” means something and it doesn’t require either party to subscribe to any religious beliefs.
"Mandatory" in the sense that there are laws on the books that say it must be spent.
Sure, Medicare or Social Security can be cut, but see how that flies in the polls.
But also they are self funded programs.
You have separate Medicare and social security taxes that fund those programs.
If you cut social security and Medicare, at the very least you will need to change the laws so that taxes intended specifically for social security and Medicare can be used for general expenses.
if they refunded every penny we put into (with interest) it’d go well. these should be called entitlements as much you going to grocery story to buy food for your family is an entitlement
It’s strange that even on HN with above average financial literacy people still have this completely wrong mental model of social security.
It’s simply a general tax dressed up in marketing fluff. It’s a pay as you go defined benefits program. Current workers are paying for current retirees.
There is very little difference between it and any other means tested welfare program - it’s just the means testing works in a different manner but can be changed at any time.
It’s no more “your money” than any federal income tax you’ve paid in over the years.
Additionally, even if the "self-funded" aspect was enshrined into the process on all levels, you're looking at a program that dwarfs any other program of this type, worldwide. It would necessarily be in US government bonds, and the real yields of bonds are very much a function of the overall deficit and wider tax current situation and outlook. The treasury actively twists issuance and effectively has yield curve targets. The Federal Reserve does active balance sheet management as well, and monetary and fiscal are increasingly working in sync with one another. A program of the size of social security with inflation adjusted US dollar denominated obligations in trillions can never be and will never be truly separate.
Even if they wanted to do something extremely simple like hold TIPS (inflation linked bonds) and hedge some of the inflation risk internally, buying TIPS from the US government would simply be a circular transaction that would be canceled out by the bond component of the TIPS. Pointless. If SS went out into the global financial market, they would quite literally absorb a big chunk of the global capacity for that risk, and more importantly, on a global level it all feeds back to the US/dollar, especially in times of stress (which having a Gorilla sucking up endless amounts of inflation risk would actually amplify). Again - it would cancel out on net. A program that big is almost too large for traditional financialization. It would need to be buying networks of ports and such like China does with their surpluses, but even here, the US already carries a large amount of geopolitical risk in their financial system (look at the Tariff scare where the bond market almost blew up because the large amount of financial assets held by foreigners were pulled from the country). It's actually fairly interesting to follow these lines and feedback loops and see how everything is connected.
You can’t refund it because it isn’t a bank account, it is pay as you go. It’s insurance, both cash benefit and medical.
Certainly, it might fly with the uneducated and unsophisticated, but not someone who knows better.
> if they refunded every penny we put into (with interest) it’d go well. these should be called entitlements as much you going to grocery story to buy food for your family is an entitlement
Unfortunately, it's unlikely that the government will collect tax revenues necessary to even keep up with some of these mandatory programs, such as social security. The reality is there is a very serious chance many people do not receive the fully stated benefit value.
> Is "mandatory" spending actually fundamentally mandatory? Characterizing it as such feels like a sleight of hand that prevents us from discussing whether that spend is truly necessary.
> In an overspending crisis of such magnitude I wish there was more urgency in the culture to cut spending across every budget segment regardless of whether it's "mandatory" or not.
I'm betting it includes stuff like Social Security payments, Medicare, etc. So it's fundamentally mandatory as real people's lives were planned around its availability.
Real GDP growth (2024) = 2.8% of GDP
New debt + interest (2024) = 6.2% of GDP
S&P 500 index (2024) = +23%
Good luck.
So 0.9T of interest and 1.9T of new debt overlap. You can't add them together to get 6.2% of GDP because interest is a subset of new debt - you're double counting.
In general I am a deficit owl, not hawk...but I don't believe the recent tax law, which barely does anything for middle class downwards, is a productive use of debt. Debt accumulated for productive means is usually okay, but not this upwards accumulation of wealth.
Also upwards accumulation of wealth can sometimes mean less tax revenue. Middle class salary workers pay a lot of tax, so with more upwards accumulation of wealth (maybe accelerating due to AI) then what will happen to tax revenue? People getting laid off don't pay tax, and shifting that money to corporate, tax havens, and cap gains types of taxes will probably end up lower overall
> Middle class salary workers pay a lot of tax
No they don't. If we're talking about federal income tax, the vast majority of is paid by the wealthy.
You are correct. But you are commenting in a place where mid six figure engineers consider themselves middle class and not wealthy.
Yes, the top 20% pay the vast majority of taxes and are taxed at the highest rate until you get into the ownership classes where income goes down and capital gains goes up. Plus that’s when all the tax deferral strategies come into play.
And yes, by all reasonable definitions if you are in the top 20% either income or wealth you are categorically wealthy.
All tax. Income tax, payroll tax, consumption tax
Corp income tax (paid by shareholders from the rich to teacher pensions to anyone with a retirement account...), estate tax,...
When all is accounted for ... The rich still pay a far larger share than the income they earn. It's why OECD rates the US as the most progressive tax system among member nations.
True or not that the wealthy pay a greater share of their money in taxes, it doesn't matter. The money has to come from somewhere and the middle and lower classes can't afford it. Also the middle class can't pay more and continue buying the super wealthy's goods. We need to spend less and tax more. 1 trillion in interest per year is insane.
... which implies these taxes get actually payed. At least in the same proportions as lower income taxes get payed.
There is no effective taxation when avoidance is easy and risk-free.
They are talking about the final numbers at the end of the day. Effective tax rates.
It’s the same no matter if you want to use effective vs nominal. The numbers change, but relatively speaking they are roughly the same.
Property tax, sales tax, tariffs, ...
Funny how you all rebelled in the good old days over a tax of 3 pence per pound of tea.
IIRC it was mainly about the government giving the East India Company a monopoly on all tea imports sidelining local merchants in Boston.
The tax was used to rile up the mobs by merchants/smugglers, because the monopoly tea was actually cheaper than what they could ship from Holland.
I believe there's a slight typo in your statement, where you use a double-negative where perhaps you meant only one 'NOT'.
> I don't believe the .. is not a ...
Instead, just tell us what you do believe. It's generally clearer to use "positive" language rather than stacking negations.
I edited the typo. Thanks for your other opinion, nerdsniper
Do you not see this as inevitable? It may be the case that money does 'trickle down' but it most certainly gushes upward. And so when the government prints massive sums of money, that's effectively just indirect handouts that end up going to the wealthiest, enabling them to gobble up even more of the overall economy and, in turn, enabling them to grow even wealthier.
The year that the US gained the ability to start 'printing' arbitrary amounts of money is 1971, prior to that we were externally constrained by Bretton Woods. This [1] site is nothing but a bunch of various graphs of all sorts of data. That point is a massive inflection point in just about everything awful that's happened to the country.
[1] - https://wtfhappenedin1971.com/
It’s complicated. The gold standard in general is an awful system outside of stagnant economies (you end up with deflation + endless boom and bust cycles).
Banning everyone domestically from owning gold and then Bretton Woods massively propping up the US monetary system helped. But eventually West Europeans caught up with it and what happened was hardly avoidable.
The Minneapolis Fed calculated CPI levels since 1800 here. [1] In the 150 years from 1800 to 1950, the CPI never shifted more than 25 points from the starting base of 51. From 1971 to current, it increased by more than 800 points. Keep in mind all the incredible events that 1800 to 1950 covers - World Wars 1 and 2, the Civil War, Great Depression, Spanish Flu, and more. And prices always stayed extremely stable.
Then we give the government the ability to print money at their discretion and money just starts inflating endlessly to the point of having no real meaning all the while wealth inequality grows to unimaginably high levels, to the point that the richest American now has personal wealth greater than the entire GDP of America in the 50s.
So you clearly don't just inevitably end up with deflation. Before 1971 the overall economic system was quite stable. Obviously there booms and busts, but it's not like the current system has changed that. Instead we now just have constant busts which are stabilized only by the government dumping obscene amounts of money into the economy which results makes all the economic and related problems we have even worse. And it's all obviously building up to a completely catastrophic bust that'll likely make the Great Depression look like the 'good ole days.'
[1] - https://www.minneapolisfed.org/about-us/monetary-policy/infl...
> CPI levels since 1800 here. [1] In the 150 years from 1800 to 1950, the CPI never shifted more than 25 points from the starting base of 51.
Yes and there were extreme swings in between. Predictable 2% inflation is better for the economy than unpredictable up and down jumps in prices of 10-20% over a decade or two.
> Keep in mind all the incredible events that 1800 to 1950 covers
You haven’t actually looked at actual charts or yearly figures have you? It was a roller coaster.
I certainly agree about your points on inequality etc. but Fiat money is not the cause of that itself. Monetary and fiscal policy failures are.
> Before 1971 the overall economic system was quite stable
Yes, for several decades. After the roller coaster of ~1770 to ~1950.
Did you look at the data? Over 150 years prices literally never once increased (relative to the baseline of 50) more or less than 50%. And outside of the Civil War and World Wars annual changes would have hardly been noticeable. In fact in the overwhelming majority of years there was no change at all! The CPI was so stable that I was even able to pinpoint a major event I had forgotten about (war of 1812) when looking at the data because it was one of the relatively rare periods of instability.
Then in 1971 things went insane and we went from a base index of 121 to 942! And yes this does directly cause inequality in a wide array of different ways! The most obvious is the 'gush up' effect as already mentioned. Another way is that it makes it much easier to undermine labor. So for instance many people would be relatively happy to be earning 25% more than they were 5 years ago. In reality? They've been given a paycut because that's not even enough to keep up with inflation, and there's 0 chance of it going any direction but up from here. So they've gotten poorer with a smile on their face. Hence why real wages are practically flat since 1971.
It also turns money itself into a somewhat toxic asset and motivates the hoarding of things. For instance Bill Gates is the largest private owner of farmland. By contrast lower income types often think starting a saving accounts, or (ugh...) a cd savings account is a fiscally responsible thing to do. And before 1971 this would have been 100% true. But now a days it's basically a scam, because you're never going to get interest rates that beat inflation, because nobody wants your rapidly devaluing money.
They'd be far better off putting their money into precious metals, land, or basically anything to try to escape the inflation trap. But lower income types often need more access to their funds on demand in case e.g. their car breaks down. So it's a system that very much punishes lower income types.
> somewhat toxic asset and motivates the hoarding of things.
As opposed to hoarding money which is both bad for the economy and made you richer for doing absolutely nothing?
e.g. prices halved between 1865 and ~1900. The rich got richer, lack of freely available capital limited growth and anyone who had loans got screwed (imagine being a farmer who mortgaged his farm and is seeing agricultural prices go down every year). Constant technological progress bailed everyone out but it wasn’t a pretty time.
My point is that consistent and mostly predictable inflation (i.e. that was the case only during a fraction of of the last ~50 years) is much preferable than constant boom and bust cycles and volatile price swings that were frequent under the gold standard.
Of course it’s very easy to mismanage monetary and fiscal policy when you can print an unlimited amount of money and put incompetent/corrupt people in charge.
Try to put yourself in my shoes for a second, and think about what I'm reading from you. The example you chose was not only the exact year the US Civil War had just ended, but also the start of the second US industrial revolution and even a peak of the transition from rural->urban life. So in other words - some very major events. And over 35 years during this wild times, prices dropped by half, all while wages for workers were raising rapidly. And debt was quite rare 'back in the day'. In 1890 about 39% of farms had a mortgage [1], and that was near a peak of the bell curve on that. Go back before the Civil War and other such events and it shrinks down to 10-20%.
For some contrast to this point, I'll pick my date of 1971. Over just 9 years prices more than doubled. If we do the same timeline of 35 years, prices increased by more than 500%. And during this time, wages didn't come even remotely close to keeping up. So people were paying more and earning less. And obviously indebtedness also skyrocketed during this era, which is indeed nice for inflation (at least if wages keep up, which again they often don't), but that's only because people could no longer afford anything! Like in modern times the median home costs 7 years of median salary, which means basically nobody, outside of the very wealthy, can afford a home without going into decades of debt. By contrast in the past there were homes available for less than a year's salary - which is rather necessary when you can't just go get endless funny money to buy something.
And you're arguing that this new system is better for workers. Now of course it's possible I'm straw-manning you, though I assure you it's not intentional if so! But if not, then what am I missing here? Because I think surely, if you put yourself in my shoes, you can see that your argument isn't the most compelling.
[1] - https://www.mba.org/docs/default-source/research---riha-repo... (page 32)
We essentially need to increase taxes to pre-trump levels (we've demonstrably seen that these cuts did not "pay for themselves", they're paid with debt), collect the taxes that are already owed (fund the IRS), and fix healthcare spending (which everyone knows is broken in at least half a dozen different ways).
Fixing healthcare is essentially PBM reform, price transparency, drug negotiation, deregulation to increase supply, and subsidized GLP-1s since metabolic illness/chronic disease is like 90%+ of costs.
If we increase revenue and decrease healthcare costs, we could get to within 3% of GDP.
It is important to keep in mind that the treasury rate drives the rate of most consumer credit. If it gets more expensive for the US to borrow due to debt load, consumer credit will stay or get more expensive. This will, very likely, slow the economy due to increased cost of mortgages, auto loans, and unsecured credit.
Definitely, if we could refinance at a 1-2% lower rate it would save us up to $1k/mo which we could spend or save (likely we’d just take that money and pay down the loan faster or invest it though, but most people would probably spend it on making their lives better).
I'm in exactly this position. I keep getting offers that would increase my monthly bill.
Which will increase velocity and quantity of available dollars and lead to more inflation.
But I'd prefer some inflation over a depression. We need lower rates AND lower max credit lines.
> If it gets more expensive for the US to borrow due to debt load, consumer credit will stay or get more expensive. This will, very likely, slow the economy due to increased cost of mortgages, auto loans, and unsecured credit.
Probably, but for sobering reasons, maybe less so than in the past, because because 50% of US consumer spending is by the top 10%, and the top 10% is far less dependent on credit for their spending.
A society where there is a more balanced distribution of spending power would be more affected by a consumer credit collapse, but the treasuries of such a society might be more desirable anyways.
The top 10% don't hold their money in liquid assets. Most of the time they get loans and use their non-liquid assets as collateral. They just don't have money laying around.
Source? The top decile of the US income distribution starts at $170000/yr.
The top decile of the wealth distribution is around $1M net worth.
The people doing the borrow-for-spending-against-non-housing-assets-as-collateral are beyond the top .01%. While they are also spending whales, they are able to negotiate far more favorable rates than the rest of the top 10%, whose spending is mostly income-driven.
Americans can get a preview of what happens when fiscal irresponsibility spooks markets and forces a rate rise by looking at the short-lived Liz Truss administration.
Yes the treasury rate is the base of all interest rates.
It could be said that all your base belong to US
> all your base belong to US
All your base are belong to US
But still, bravo
nailed it lol
Ha ha ha. Saw what you did there. Good
The rate that most directly affects consumer-facing debt rates is the Fed’s target rate, which is manually set. To some extent it even influences short-term Treasury rates. This rate is managed to deliver the Fed’s dual mandate of full employment and low inflation.
https://www.minneapolisfed.org/article/2025/what-drives-cons...
Day gig is at a firm that extends consumer credit, so I keep an eye on cost of capital tracking, monitoring the spread, etc. Any debt packaged and sold into debt markets (asset backed securities) competes against treasuries from a yield (and risk premium pricing) spread perspective. Mortgages, auto loans, some credit card books, etc.
When the Fed cuts rates, your deposit account provider is going to start cutting your interest rate paid right away, but they’re going to maintain their credit rate pricing as long as possible (considering competition from other lenders) to maintain their spread and profit as long as possible. You see this with credit card interest rates, for example.
TLDR 10Y treasury sets the rate floor, broadly speaking.
Additional citation:
https://www.marketplace.org/story/2025/10/23/why-you-should-...
Cutting out many of the already shaky social safety nets, still accumulating massive debt. This should end well.
I understand the self-interested desire for the ultra wealthy to have lower taxes on an individual level, but yet I still don't understand how they are perpetually blind to the fact that whatever the release valve for the historic and still growing massive wealth inequality we have takes, it won't be great for them either in the long term.
Sure its nice for them to make asset grabs during economic downturns, but eventually there's always a tipping point where things go upside down chaotic and I don't feel like we are that far away from it now.
Well some of the new rich, tech guys are clearly insane. Peter Thiel cannot stop talking about the Antichrist, for example. I don't understand what was so different about the robber barons of the past, who at least had some obsession with their legacy enough to go around building schools and libraries to name after themselves.
The robber barons of the past gave us the Great Depression and WWII.
> Well some of the new rich, tech guys are clearly insane. Peter Thiel cannot stop talking about the Antichrist, for example.
Agreed on the insanity and it seems to be getting worse over time.
I personally think its due to malignant narcissism bumping up into the (subconscious) midlife realization that there is no chance their theoretical singularity god will arrive in time to make them immortal.
Sorry bro(ligarch)s, you're all going to end up as worm food just like the rest of us. There isn't any amount of underground concrete bunker wall thickness that is going to change that.
> I understand the self-interested desire for the ultra wealthy to have lower taxes on an individual level,
I don't. It seems like mental illness to me
What is so hard about understanding their desire? They want to keep more money for themselves so they can buy more yachts, invest in more things, whatever. This is just how humans are.
It's up to policy makers (i.e. government when it comes to taxation) to structure the system to mitigate the inherent self-interest that people have. Obviously that's easier said than done when the ultra-rich buy off the politicians, but human nature just is what it is.
The thing is they have so much money they can't buy enough. Even if all they do is consume, consume, consume they will still be trending upwards. In effect, every yacht has a negative price tag.
It bears the same hallmarks as any other addict: the next hit has to be even bigger than the last, and everyday enjoyments in life are practically invisible to them. Their drug of choice may be different, but the outcome on their life, relationships and society is largely the same.
> This is just how *some* humans are.
To clarify, I don't mean all humans want to keep all money for themselves even when filthy rich, I just mean that all humans are self-interested. The extent to which that governs our behavior of course differs and I agree there are people who willingly sacrifice to help others. A bit more in another comment: https://news.ycombinator.com/item?id=45683652
To clarify a bit...
I meant I understand it in the sense that to get that wealthy in the first place you have to have a special kind of self-interested sociopathy, so in that regard I understand their desire. Not that I agree with it.
Every human is self-interested. Fortunately there are a lot of good people out there who try to temper that instinct, but remembering that everybody by default has a "what's in it for me" line of thinking (even if consciously attempting to subjugate it) is important for understanding as much as we can about how the world works. I don't think a sleasy real estate agent is behaving any differently (by jacking up fees, putting people in properties that may not be in their best interest, strong-arming FSBOs into listing with them) than the billionaire is, it's just the scale of their blast radius that is different. That's not to equate the two, because obviously scale matters, but the underlying motiviation is largely the same.
Gotcha. I should have realized you meant that from the rest of your post.
I'm imagining these things happen on scales greater than many people's lifetimes. The Roman empire took hundreds of years to fall, there is so much time for these pathological wealth hoarders to enrich themselves and profit while there's still wine and grapes to be fed.
> but eventually there's always a tipping point where things go upside down chaotic and I don't feel like we are that far away from it now.
The members of the billionaire class with any foresight are making a calculated bet that they will be in control of sufficient technological measures to suppress any kind of mass uprising by the populace. Look at all the resources going to Anduril and Palantir. Foucault's boomerang is on its way back towards the US populace right now.
That said, even that cadre far overestimates what technology can do. Adaptation is a fundamental pillar of the human condition.
They also also hedging this bet by building bunkers in far away places [0]. Truly insane.
[0] https://www.bbc.com/news/articles/cly17834524o
> understand the self-interested desire for the ultra wealthy to have lower taxes on an individual level
I don’t. They have tens of millions to billions. What more do they want? Three yachts instead of two? A higher score than some other rich douchebag destroying lives for fun?
"Business is a good game—lots of competition and a minimum of rules. You keep score with money" -- Nolan Bushnell
Once you get that wealthy the money is more of a disk measuring contest. There is no productive way for one person to really use money of that magnitude, the best they can do is dump it into stocks, bonds, real-estate, etc..., but nothing that really moves the economy. It's a big failure from an economic standpoint. Lots of "dead" money not being productively used.
> Three yachts instead of two?
No, the thing is to have a yacht with a yacht for a dinghy. And that comes with a helicopter.
All. They want it all.
> A higher score than some other rich douchebag destroying lives for fun?
I mean, yeah, I think this is mostly it. Its gamification.
At the top level they all have more wealth than they could ever possibly use, even accounting for many generations of offspring.
In large part, but I also suspect its about consolidation of political control...we are making our own permanent oligarchy.
> we are making our own permanent oligarchy.
Attempting to, and might get away with it for a while.
But I suspect next time there is an inevitable "equal but opposite reaction" the guillotine plans will be optimized using LLMs with shared open sourced designs.
(And in the current political environment, I think I should clarify this isn't me threatening violence -- I don't want violence. It is me recognizing that history "rhymes" while the rhyming patterns tend to happen on a faster and faster pace)
Conservatives want to cut taxes to force liberals to cut spending. Liberals want to increase spending to force the conservatives to increase taxes. But voters don't like increased taxes (on themselves) or decreased spending. So we end up with the worst of both worlds--higher spending without the tax revenue to afford it. Then we get to watch each side win the war of opinion on cable news. They throw each other under the bus, eventually come to a deal, and both sides claim victory. Rinse. Repeat.
> Conservatives want to cut taxes to force liberals to cut spending. Liberals want to increase spending to force the conservatives to increase taxes.
This is straight propaganda. Both parties increase spending. One party cuts taxes for the rich, the other increases taxes on the rich.
Conservatives haven't been "small government" and haven't cut taxes for folks other than the rich in a long, long time. Even calling them "small government" is a misnomer, because that propaganda is about privatization, not reducing costs (private services are less efficient and more costly than the government service they replace!)
Let's stop calling the problem "both-sides". One side is considerably worse for the economy, and you and I know it's the conservatives.
A 'cost' paid for by a private service directly translates into prices and salaries. Whereas a government wealth transfer program appears as taxation and handouts. Everyone likes the former. No one likes the latter. Why this is still confusing in 2025 is beyond me
This is why I say it's propaganda.
The same underlying service is being done. It hasn't been cut. It's been shifted from a government service, to a private industry. The government pays roughly the same amount they were previously paying (or in a lot of cases slightly more, with the promise of paying less in the future), the private company provides the service as cheaply as they can, and takes a cut of the cost for profit, benefiting a small number of people, while providing a worse service level for tax payers.
This isn't a capitalism vs socialism thing. My issue with it is that privatization is blatant corruption sold as "capitalism". There's no capitalism here, because there's no competition, outside of the bidding on the contract. Competing on who can provide the cheapest service doesn't improve the service; in fact, it reduces the service quality to maximize profit. Reducing service quality to maximize profit would be fine, from a capitalism point of view, if others were offering the same service to the customer.
> Conservatives... haven't cut taxes for folks other than the rich in a long, long time.
This is a lie:
https://www.nytimes.com/2019/04/14/business/economy/income-t...
> private services are less efficient and more costly than the government service they replace!
Yes, this is why capitalism famously collapsed in the 90s, and all of the formerly capitalist countries socialized their economies!
> The tax savings were relatively small for many families, however. The middle fifth of earners got about a $780 tax cut last year on average, according to the Tax Policy Center.
> The top 20 percent of earners received more than 60 percent of the total tax savings, according to the Tax Policy Center; the top 1 percent received nearly 17 percent of the total benefit, and got an average tax cut of more than $30,000. And that’s not even factoring in the law’s huge cut to corporate taxes, which disproportionately benefit the wealthy households that own the most stock.
Don’t be part of the problem Marcus. The reality is cutting taxes for the poor by $2/day, for the rich by $80/day, and telling everyone they got a tax break with a straight face… while you simultaneously cut services, issue policies that cause inflation, and levy taxes domestically on the poor through tariffs is the republican way!
This makes me laugh.
> The tax savings were relatively small for many families, however. The middle fifth of earners got about a $780 tax cut last year on average, according to the Tax Policy Center.
If you take someone who pays a small amount of taxes (the middle fifth paid $2170 in taxes in 2017), and give them a big tax cut ($780 in savings would mean they got a ~30% cut), the number is still small. Pretending that this is insignificant is just goofy.
> The top 20 percent of earners received more than 60 percent of the total tax savings.
People who pay the most taxes get the most out of tax cuts? Scandalous! Income taxes paid by quintile:
Lowest: $-476
Fourth: $-677
Third: $2170
Second: $6952
First : $31,132
https://fred.stlouisfed.org/series/CXUFEDTAXESLB0102M
https://fred.stlouisfed.org/series/CXUFEDTAXESLB0103M
https://fred.stlouisfed.org/series/CXUFEDTAXESLB0104M
https://fred.stlouisfed.org/series/CXUFEDTAXESLB0105M
https://fred.stlouisfed.org/series/CXUFEDTAXESLB0106M
Lowest and fourth got a tax increase. Middle class got a minor tax cut, the middle-upper class got a decent cut, and the upper class got a large cut.
It's also worth noting that the cut in question also had temporary provisions that expired, causing a tax increase for nearly all brackets except the upper class.
There has also been a massive cut in social services, which primarily affect the lowest/fourth brackets, which means they're paying more taxes for fewer services.
It's hard to interpret that "tax cut" in a way that doesn't scream "we're increasing taxes on most, and cutting services, to give the wealthy a tax cut".
It’s your link buddy, just quoting your own source.
$780 is insignificant.
Tax policy is written by humans, and they can do what they like with it. If you want to cut taxes for the poor, you do. If you want to cut taxes for the ultra wealthy, but make sure the statistics say poor people got a tax cut, you can do that too.
If you paid 1M in taxes, a 30% cut is 300k, and if you paid 1k it’s $300. One person will buy some bitcoin or a Porsche, the other will be lucky to buy some gas and groceries.
Both got a 30% tax cut, but it would be goofy to claim they have equivalent value.
If you wanted to be an honest person, maybe you correct the poster that there were tax cuts for the poor, but also point out that the cuts heavily favored the wealthy. Which by the way, was their argument.
> $780 is insignificant.
Yeah, just stating your opinion isn't an argument.
> Tax policy is written by humans, and they can do what they like with it.
Insightful!
> If you want to cut taxes for the poor, you do.
What taxes? The poor pay negative income taxes. Did you read the post you're responding to?
> If you want to cut taxes for the ultra wealthy, but make sure the statistics say poor people got a tax cut, you can do that too.
I would love for the poor to pay zero taxes. It would be an improvement over the amount they "pay" now!
> If you paid 1M in taxes, a 30% cut is 300k, and if you paid 1k it’s $300. One person will buy some bitcoin or a Porsche, the other will be lucky to buy some gas and groceries.
Okay.
> If you wanted to be an honest person
You don't have to seethe, you know. You can be wrong without letting everyone know that you're miserable and angry about an internet post.
> ... maybe you correct the poster that there were tax cuts for the poor, but also point out that the cuts heavily favored the wealthy. Which by the way, was their argument.
You're almost caught up! Now that argument was I making in response? If you tried to understand instead of trying to misunderstand (or worse, just vomiting angry words without any substance to them), you might learn something!
As an outside observer: it's your comment that seems seething and out of place on HN, not theirs.
The USA has no negative income tax. There are programs like the EITC which provide benefits to the poor and can be larger than their tax burden depending on the specific circumstances.
The EITC was initially signed into law by Ford (R) and expanded by Reagan (R). Regan apparently called it "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress".
I'm sure you knew all this, so thanks for being honest in this post about the fact that you would like to dismantle this particular social safety net.
Seething comment sounds like projection btw, I'm not mad. The whole point of HN is to have the discussion expand in detail. Seems like it's working:
- Someone generalized - You called them a liar - We found out the generalization wasn't strictly correct, but basically true in spirit: the wealthy received the majority of the benefit, the poor got a small token for the sake of statistics / sound bytes.
The underlying belief of both is that America is exceptional thus will magically be saved from debt.
Now America is exceptional for many reasons, but if we don't fix our debt we will meet the same unexceptional fate as many empires before us.
Somehow during Dem administrations, we have an improving budget deficit (even sometimes a surplus) while maintaining more of a social safety net.
That should pretty much tell you everything.
More specifically, Congress, which doesn't always align with the Executive. Congress largely sets the spending (or not) agenda. The Executive can ask nicely but Congress mostly does what it does.
Outside of retirees, much of the social safety net is funded at the State level. There is a wide variance in the benefits and quality of the social safety net across States.
Medicaid is administered at the state level but funded federally, as a number of people might discover next month.
"The Executive can ask nicely but Congress mostly does what it does."
Oof
but were they winning as hard as the current administration?
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The joke accurately conveys that the current administration has no actual upside and won power purely on Populism, while the opposition party clearly put the country in a better place while they were in power. I think it’s funny, accurate, and informative.
It is a difficult balance to strike. Unless you outlaw _all_ jokes, there will be some jokes that are just on the line of “funny enough”/“not too trollish”. Personally i find this kind of joke hilarious, but people will all have different tastes
I don't come here for jokes, so I downvote pretty much any joke I see, regardless of whether or not I think it's funny or clever.
look at me: i'm the downvoter now
What is trollish? The "winning" is copied verbatim from White House communique.
Weak trollish humor is now allowed in the White House as well. What's left of it.
Evidenced by: Your mom.
Some may miss the meta meta.
> White House press secretary Karoline Leavitt responded minutes later with: “Your mom did.”
https://www.huffpost.com/entry/white-house-wild-response-to-...
Your account was made today.
What the fuck does that matter? And no, it wasn't made today.
It matters because now he can't follow you around and downvote you on the basis of just your username.
So what? Are they supposed to make an account weeks before they have something to say?
I'd submit if you want to make an argument about HN norms and conventions and what is "allowed" to be posted in a comment, demonstrating that you're actually a part of the community you're attempting to police is a good idea, yeah.
If you don't want to appear impulsive, yes.
It used to be common nettiquete to expect new account to "lurk" and refrain from posting until they actually learned the norms of board culture and how to behave as expected.
Hacker News would be much better if all new accounts were banned by default until they were vouched for by users and earned a minimum amount of karma. I understand why this doesn't happen, but the problem of green accounts trolling and posting toxicity seems far worse than occasional mediocre humor.
> Hacker News would be much better if all new accounts were banned by default until they were vouched for by users and earned a minimum amount of karma.
Personally, I prefer the model used by lobsters and Tildes where you have to be invited to the community by another member.
I find that a bit too extreme, although I understand why it's attractive. I like HN's "open door" policy, but I think green account abuse is just too rampant and it's getting worse. That isn't the fault of new people, it's the fault of established posters who want to troll while keeping their karma and reputations intact.
So what actually happened is that Clinton said we had to get serious about the deficit, and then passed a budget that pushed the real cuts until after the end of Clinton's second term (that is, more than six years down the road).
Then Republicans took over the House in the midterms. They passed the budget (and Clinton signed it) that actually led to surplus for the first time since Andrew Jackson.
So, yes, it happened under a Democratic president. It only happened because of a Republican House, though.
(But let the president also be a Republican, and Republicans in Congress lose all fiscal discipline.)
A strong argument in favor of divided government.
Often a surplus? 1 time ever more like. I think its pretty low-brow to act like a presidential administration can be the single biggest cause of a major turnaround within its own administration. One administration is facing knock-on from several previous (plus all the tech advancement, trade deals, congress, SC).
Nobody said "Often a surplus"?
I believe the post was edited, but I have no proof.
Fair enough! It probably was.
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I've made plenty of left leaning comments that got flagged. Try arguing against the literal truth of the Bible or the necessity of religion to morality or society, for instance. Or that vaccines work. Or that free market capitalism has flaws and socialism has merits. Or that transgender identity is valid. Or that DEI is valid. Or that feminism is valid. Or that immigration and multiculturalism are valid. Or that gun control is valid.
There are tons of left leaning views that get flagged on HN. What matters isn't political polarity but the specific zeitgeist of the thread and whether you go with it or against it, and who happens to show up first with the most downvotes.
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Every Republican administration in the last 50 years (save Bush Sr.) has passed a giant tax cut without cutting spending nearly enough to pay for it (and usually increasing spending). Trump himself has done this twice.
Let's not pretend like the two parties are the same with regard to fiscal irresponsibility.
> Obama and Biden ran gigantic budget deficits
If you actually look at the deficit year by year, Obama and Biden each entered office with a huge economic crisis that ballooned the deficit, and then lowered it year by year. I mean, it was highest under Trump.
And if you look at Bush and Trump, they started with a lower deficit and raised it year by year.
If your marker is a "budget surplus", nobody does that. The only people that get close are Democrats because they literally reduce spending. And then a Republican takes office, bangs on about the deficit so they can slash social programs, but spends even more than they slashed on military. This is not hidden information.
I don't care that much about the deficit, it's not the cause of our most immediate problems. It's just something both parties bring up when convenient.
You're referencing a chart like this:
https://www.aljazeera.com/wp-content/uploads/2025/05/INTERAC...
Notably when the background is red, the line goes down, and when the background is blue, the line goes up.
https://www.aljazeera.com/news/2025/5/20/the-us-has-36-trill...
You don't care that ~15% of federal spending is interest on the debt?
I don't. One of the largest holders of US debt is US citizens' investment and retirement accounts. It's a win-win situation
Republicans objectively don't
The U.S. government structurally cannot run a surplus because when they have income in excess of obligations they store it in U.S. Treasury bonds, which creates offsetting debt.
always been like that. GOP takes power then cuts taxes so they can yell about the deficit, which gives them leverage to cut spending.
They don't care about the spending. They yammer about it as a way of shifting funds towards things they care about, like the military or their new gestapo or buying votes from their disaffected constituents, but they've never given a shit about the deficit, and have never done anything to stop it.
The closest they ever came to actually caring about government was with Musk who went in and actually started (illegally) ripping shit out. But the things he ripped out were inconsequential things that conservatives didn't like, and he didn't even make a dent in the actual budget. All of the things that Musk got rid of were congressionally appropriated and could have easily been congressionally (i.e. legally) de-appropriated accordingly and it supposedly would be easy for them to do with majority control over the house, senate, executive, and judiciary...but they didn't do it, because they don't actually want to cut the budget.
> they don't actually want to cut the budget
Eh, I would say its well-known in deficit circles that all politicians (intellectually) desire to balance the budget, but it is basically impossible. Social Security, Medicare/Medicaid, and debt servicing are such large pieces of the debt pie that the entirety of discretionary spending makes basically no impact in balancing the budget. These are de-facto untouchable obligations because too many people's lives depend on them and any party that enacts austerity will be swept out of office. Neither party will increase taxes on themselves (the rich) and taxing the middle/poor guarantees you lose the next election. The only path forward in the U.S. is basically kicking the can down the road until it implodes like so many other high debt-load western nations before them.
It actually isn't as simple as 'always,' as military spending alone as an axis of evaluation yields interesting nuance
curious to hear more about your argument. can you expand it? "an axis of evaluation yields interesting nuance" isn't very direct language.
Are you serious? California has an $180 billion annual obligation just for Medicaid (Cal-Aid). Los Angeles borrowed $1 billion to fund DWP operations this year, and borrowed $3 billion to borrow another $3 billion to fund a $6 billion renovation for the LA convention center that no one wants. Denver wants to borrow $1 billion to basically fund operations.
Neither party has any intention of repaying any of the $38 trillion, or care what it is spent on.
https://www.torched.la/why-this-convention-center-expert-is-...
I think Democrats have a logic for not paying it. This is an investment in people. If you want to start a business you raise money first thing and deliver in future. Government raised money, they'll invest it in development which will pay back in the future. Whether the process is efficient is a different debate.
I do not understand though, why Republicans talk about cutting spending, and then blow through the ceiling when they have the power.
> Neither party has any intention of repaying any of the $38 trillion
What are you talking about here? Federal debt is repaid on bond schedules fixed by statute. You can look it all up. You can argue about whether the debt load is too high, too low, whatever. But you can't just pretend they ran away with the money like a thief. People loaned the government that money because they know the government is good for it.
I think the point was, it doesn't look like it will ever be paid off entirely. It just grows, as do the payments.
That 38 trillion is 76 thousand dollars per person in the USA for instance. Pay that off? Really?
It’s highly unlikely there are 500,000,000 people living in America. The debt is $110,000+ per American and $327,000+ per taxpayer.
https://www.usdebtclock.org/
Uh... yes? That $76k is right about median household income, and a little under per capita GDP. Apply that logic to other sorts of finance: mortgage leverage is routinely five times that big, and no one freaks out about how you'll never be able to pay off your home.
Federal budget argumentation is just exhausting. Fight about balancing the budget, sure. Fight about unsustainable deficits, sure.
But to claim that very manageable federal debt payments can't be made is just ridiculous. Yes, the US government is going to pay off that debt. Which is why they were able to borrow it in the first place.
>Yes, the US government is going to pay off that debt. Which is why they were able to borrow it in the first place.
There may come a time when the interest on the debt becomes so out of control that it cannot be serviced, likely in conjunction with people dumping bonds and leaving interest rates soaring. Meaning, America's credit goes up in flames. We're obviously not there yet and maybe it will never happen. That said, remember when Trump backed off extreme levels of the "Liberation Day" tariffs? Real fears of bond-dumping seem to have a lot to do with the more measured (relatively-speaking) approach to tariffs we're now seeing. If debt holders dump the 10-year bonds enough, it causes real issues for debt repayment.
> If debt holders dump the 10-year bonds enough, it causes real issues for debt repayment.
No, it doesn't, it impacts future borrowing. Third time, before my blood pressure spikes: that is an argument about future debt. It being true (or not) has zero relevance to the current size of the debt. You could be right (or wrong) if we had zero outstanding debt, or if it was $70T.
Ergo, it's either an incorrect or bad faith analysis of the situation. The current debt (whatever its size happens to be in the fiction being spun) will be paid off at the bills' rates and on the statutory schedules. Period.
>The current debt (whatever its size happens to be in the fiction being spun) will be paid off at the bills' rates and on the statutory schedules. Period.
Your blood pressure issues notwithstanding, I don't think you believe that the US can possibly default or renege in any way on its debt, so there may not be a point in going on. History has run this experiment before and sovereign nations absolutely can default and/or renege on debt obligations. I certainly hope we don't see that in the case of the US. But I'm also not irrational enough to believe it's impossible.
Yeah, of course. But the argument is, at this future point, you must adjust policy to meet your obligations: either you can print more money, or you can cut services. But you must choose one or the other of those things.
The issue I think most people are correctly pointing out is that our current debt is unreasonable -- that it constrains our future policies way too much. Cutting services is effectively impossible in our politics, which leaves only inflation on the table. That's pretty much the same as default. That is where we're headed.
While I agree with the sentiment, a mortgage is collateralised by the house, usually even the starting point is at most 90-95% of the house value (so the loan is in fact over collateralised) and if any repaying took place along the way, even more so. Sure, it's not idiot proof. But government debt is surely mostly uncolalteralised?
The government can always repay by printing currency, but that's not the same. This is sort of a default too, since inflation eats away the artificially repaid debt.
And this is why politics is broken in the US, and in most of the Western world for that matter. What you just said is completely false, but it's being rewarded because people want it to be true. Here [1] is data on the annual deficit. [1] We've only run a "surplus" four times since 1970. Twice under George W Bush, twice under Clinton. Since then it's been going mostly into loony land.
The reason for the quotes is because that's an incomplete picture since various things can affect the debt without being noted in the annual deficit. For instance some programs are considered off-budget, there's various accounting restructuring, and so on. If you simply look at the total debt it has increased every year (again since at least 1970) with the only exception being 1999 to 2000 depending on when you measure it. If you look end of year vs end of year (as opposed to fiscal year), it decreased by a few billion dollars, and that was the only time.
[1] - https://fred.stlouisfed.org/series/FYFSD
How are you reading this graph? There is a surplus and it's not "twice under Bush."
https://fiscaldata.treasury.gov/americas-finance-guide/natio...
And the graph clearly shows we trend towards less spending under Democrats and then Republicans spend more again.
The years of a nominal surplus were 1998, 1999, 2000, 2001. In reality, the only "real" surplus (in other words the public debt decreased) was in 2000, and it was negligible.
I don't find the partisan arguments interesting. Bush had a lower deficit (each and every year) invading and occupying two different countries than any president has ever achieved since then. That is not to praise Bush, but to emphasize that we're comparing horrible vs terrible and trying to argue over which is which. They're all miserable failures, and not just in regards to spending.
> The years of a nominal surplus were 1998, 1999, 2000, 2001.
That's still not twice under George W. Bush, who became President on Jan. 20, 2001, nearly three weeks into calendar year (and nearly four months into federal fiscal year) 2001.
I do appreciate the nitpick - my count was indeed off by one. Now if people only did anything even remotely similar for posts that confirmed their biases. The post I was responding to (that has been repeatedly edited) originally claimed that 'democrats often have budget surpluses' when in reality the only real budget surplus (in that the public debt declined) was 26 years ago, and of a tiny fraction of a percent.
Are there any things you are leaving out in 2008 and 2020-2021 in this analysis though? One self-inflicted from deregulating the finance industry, another a black swan event.
Running wars is a choice, a pandemic hitting not so much.
COVID was a black swan, the completely irresponsible and unnecessary redistribution from taxpayers to company owners that was the PPP was a choice. (One that most other governments worldwide didn’t make.)
Ah, yes, for PPP you're absolutely correct, also:
> The Paycheck Protection Program (PPP) is a $953-billion business loan program established by the United States federal government during the Trump administration in 2020
maybe take a “how to read graphs and follow along” course somewhere :) wild, wild stuff… seldom do I see such self-own, made my evening
And the eastern aligned nations are buying gold like there is no tomorrow
Think the dollar may soon find itself as not only game in town for trade sooner than initially thought
Well I agree than Gold will have the ultimate endurance but for now the Dollar is backed by US Military. As long as the Military is Strong the US economy is guaranteed to at least be better than the median of developed nations there has not been real economic reasons for war yet but as soon as there is the economic reasons become politicized and that will serve as a pretext for taking the resources.
Of course that was back when a trillion dollars was worth something.
Where is this money actually going? Does anybody see it in their day to day? It all feels like it's spent maintain a fragile status quo, fragile peace, fragile health, (not so) fragile roads but still.
Something doesn't sit right, if Clinton got the deficit under control while maintaining a strong economy it should be easier with modern technology. Lots of fraud going on I guess.
health&pharma, oil&gas, defense have seen major year on year profit increases since then when at best improvements should be very marginal due to the nature of the businesses. They are also large portions of the budget. In general any industry that has exploded in profits that can't be explained by increased market share should be looked into very closely.
If you ever go outside of the US it is shocking how much other countries do with so little. Countires with a tenth of our population and an even smaller fraction of our GDP have cheap, efficient, high quality health care systems and clean, convenient public transportation. They have well equipped classrooms with teachers who don't have to work two jobs to get by. They have highly skilled police forces whose training is measured in years, not weeks. These countries are not perfect, but they seem to govern far nore effectively than the richest country on that planet. I'm not even talking about an idealized Europe; some southeast asian countries are like this too.
So yeah, where is the money going? When you combine state, local, and federal, the US spend nearly a trillion dollars a year on education (more than our military!) but where does it go? We regularly churn out illiterate graduates and teachers have to commute from another state away in order to find somewhere affordable to live. We spend more money per capita on healthcare than anyone else in the world for worse coverage and worse outcomes.
I hypothesize that the dollar's status as the world reserve currency is actually a bad thing. It makes it cheap for us to borrow money and as a result encourages all kinds of social pathologies associated with ZIRP
The money is going to rent seeking middle man corporations. Our system is basically a jobs program for lawyers, defense contractors and insurance companies. They contribute nothing to the country but absorb so much money.
Their talents would be better used if we cut out the middle layer.
The nitty gritty is here: https://bidenwhitehouse.archives.gov/wp-content/uploads/2023...
The infographics version is here: https://www.cbo.gov/publication/61181
The TLDR is: Social Security, Interest payments, Medicare, Defense, Medicaid, Income Security Programs, and then a whole hodgepodge of Other. Politicians can try to cut a bit in Other or maybe Income Security, but the other big blocks are nearly untouchable Third Rails.
FTC didn't go through with their plan on abolishing noncompetes... for doctors... facepalm WHY DO DOCTORS NEED NONCOMPETES!? To keep prices artificially high is the answer
Just more data to show the Musk "doge" team was complete BS and their sole purpose was to disrupt regulatory departments to his and the broligarch advantage. All the drama was just a smokescreen while they gutted bodies that regulated their business interests.
This problem should be fixed on a constitutional level. The Swiss Debt brake seems to be working, and is probably a good model to copy. https://www.efd.admin.ch/en/the-debt-brake
>> 85% of voters approved the constitutional provision on the debt brake in 2001
Impossible to imagine this in any other country.
Compare to voting where 50% of Brits voted to destroy their economy.
That's nonsense. I think brexit was a terrible idea but people didn't vote to destroy the economy, and the British economy is still there. Losing 4% productivity relative to where it'd be otherwise is bad for sure, but not destroyed.
It takes decades to destroy economy. Even Brexit or Trump or putin cannot destroy it overnight.
The sick man of Europe gets sicker
I’m surprised I haven’t seen anybody on the libertarian end advocating for a default. It would harm the government’s ability to take debt in the future, but presumably they would consider that a good thing. There would be some pain in the middle as assumed future cash flows would evaporate, but I’m not sure how valuable those even are long term in the face of significant monetary debasement.
I’m not able to read the article right this moment, but I immediately wonder if it’s the fastest accumulation after adjusting for inflation? I’m guessing yes.
Oddly enough inflation makes money worth less, and that makes the debt easier to manage because inflation doesn't increase the dollar amount owned.
> inflation doesn't increase the dollar amount owned
In theory no, but when old debt matures, it is often paid by issuing newer debt that is financed at the higher rate. So in practice inflation does increase the dollar amount owned unless the government actively reduces the debt.
it makes servicing a debt easier because the amount owed doesn't inflate but that doesn't actually make it irrelevant to this metric because what we're looking at is new borrowing, not accumulated debt. if an apple cost a penny a hundred years ago and a dollar today, and the government borrowed to buy an apple a hundred years ago and then again to buy another apple today, it makes sense to compare apples to apples and the only way to do that is to adjust that penny to what it would be worth today, one dollar
Also US crises make money to worth more. You can buy the same asset for a less amount.
Is economic growth typically adjusted for inflation?
Yes, it is called “real GDP growth.”
That's right. If the IMF says so, we are good.
Here is a puzzle:
Investors in bonds look for a percentage growth, year over year. That's an exponential. A linear growth would be non-investable in the longer run.
From the other side, the US debt is quite linear on a log scale, so also exponential. That suddenly looks scary. But that is really to be expected? Exponential is the natural curve. If it wasn't exponential it would disappear, year over year.
Why the assumption that things are all exponential?
I don’t have the answers but we have a system where, if you loan out money we expect a return that is a percentage of the amount of the loan, rather than say a flat loan fee.
Because population grows exponentially, either up or down, and money is a means of quantifying work and labor at the end of the day. Thus its value rises in the same way
Put another way, there is no number of children per couple C such that a population initially composed of N individuals will always add X>1 number of children per year in perpetuity.
If every person has one kid (or alternately, every couple two), then the growth rate is zero and the population constant. Constant population is exponential (exponent = 0).
If the number per couple is below two, then population declines exponentially. Fewer and fewer people die each year but also fewer are added. Eventually the population hits zero
If the number is more than two, then more and more are added each year
Apparently shell companies in the Cayman islands own a lot of this debt? Can anyone validate? https://www.threads.com/@shresht/post/DINKpmAzqm0/can-someon...
About 450 billion of the national debt is held in the Cayman Islands, or a little more than 1% of the 38 trillion total. About the same as Belgium and Luxenberg, but significantly less than Japan, UK, and China.
https://ticdata.treasury.gov/resource-center/data-chart-cent...
(not an American) .. but only if there was a group of people with lots of extra money just sitting around invested in things growing in value ;-)
If they just fire the person reporting these deficit numbers, we won't have a deficit. It's very simple.
I'm painfully aware that this is a stupid question, but who do they owe that to?
As others said, U.S. Treasury bonds are widely held across the globe.
But the largest single holder is actually the U.S. federal government itself, which holds about 20% of the total debt as “intragovernmental” debt. These are real, legally binding financial obligations to federal agencies, most famously to Social Security.
US treasuries (bonds, notes and bills) are mostly considered as good as cash. They're used heavily in the international banking system (for payments, and as loan collateral themselves). They're also held to maturity by large institutional investors with predictable liabilities (ie payments) like pension and insurance funds. Banks will hold some of their assets (eg deposits) in treasuries too.
Also foreign governments and central banks will have holdings. Tether (the cryptocoin) is largely backed by US treasuries.
Bonds for the most part.
So who owns the obligations? Many individuals and foreign states.
So who's that, it doesn't give any sense of proportion.
It's complicated as one can never be sure how a bond get wrapped into another product sold in foreign, and often obscurely complex structures. But we do have some estimated data points.
Contrary to another comment pointing at China, this country accounts only for tiny fraction of the overall amount credited.
For example, the UK, Japan, individually own more U.S bonds than China.
Anyhow they each represent around 1 trillion, so where is the rest coming from?
The majority of creditors in value are U.S entities and U.S individuals.
Some may recall a bank in California that went bankrupt a year or two ago. Unveiling a financial gig certain institutions enjoy doing: accumulate bonds as it always pays.
A few references: https://www.nasdaq.com/articles/20-countries-holding-most-us...
https://www.crfb.org/papers/qa-gross-debt-versus-debt-held-p...
Edit: another comment nicely broke down list of which U.S entities own what.
This is the big misnomer - it's debt on the U.S. balance sheet, but is a credit on someone else's balance sheet. By itself, it's not necessarily bad; it really depends on who the debt is issued to, why, and on what terms.
Time would be better spent talking about other issues, but national debt is a simple number politicians can complain about rather than talking about the more complex issues that really impact the rest of us.
Can you elaborate? National debt seems like one of the few relatively straightforward metrics one could use to understand the state's fiscal responsibility (or irresponsibility).
It's similar to the problems with GDP, CPI, U-3 (Unemployment rate), etc. You really need at least 30-100 metrics or more to get a grasp of what's really happening in a complex eonomy. Debt can be good if it causes more growth in the economy, and bad if just gets trapped in a few foreign investment funds. But the number by itself doesn't tell us any of that, yet that is all that grabs the focus.
Often politicians will try to shrink or control the debt without deeply investiagting the true causes, because the real causes may be politically inconvenient.
That sounds a little like saying, "Don't check my bank account balance, because I've got lots of things in motion and some of them are going to pay out big." Might be true but the balance still says a lot about your general posture, how aggressive/risky you are, how defensive.
National debt tends to confuse people, because they imagine the government like a household, or maybe a small business: You have some income (taxes), which you use to spend on things (government services, military, social security, etc). If you run out of money, you have to borrow it. If you borrow too much, people stop lending you money, you're up shit creek and have to cut spending.
That's not really the case with a nation-state with sovereign control over their own monetary policy. In that case, currency works a lot more like an MMO currency like RuneScape gold. The government gets to set up sources (government spending, killing goblins), and sinks (taxes, buying stuff from in-game shops), with the risk of screwing up the balance being a shift in perception of value of the currency. Just like how I never need to worry that RuneScape will run out of gold, and the next goblin I kill won't drop any, the government can't run out of money. It can always print more. Taxes are used to induce a demand for the currency (since you need to pay your taxes in USD), creating a flow of money through the economy. Tax too much, or print too little, and you make people expect the money to gain value, and shrink the value proposition of investment compared to hoarding money. Print too much, or tax too little and you end up with money piling up in some subset of your participant's balance sheets, shifting people's expectation to the money being worth less in the future, leading to a devaluation of said currency (since the people with a bunch of money are willing to spend more of it for the same good).
The key is that whole "expectation of future value" element, which differentiates government debt from private debt. It's a much looser coupling than "I have 45 cents in my bank account, I can't buy groceries this month". A currency can be useful, valuable, and perfectly suitable even if it loses a couple percent of its value every year, forever. That would reflect as a forever increasing national debt, but it's fine, because national debt doesn't matter.
Unexpected changes to the rate of change of the national debt is the thing that matters, and even then only indirectly, by way of the public perception of the value of the currency, which leads to the inflation/deflation rate.
That all tracks, and it's a helpful framing. I think the alarmism here is more about the rate of increase rather than the absolute value.
Not even someone else's! A significant amount of the national debt is owed to themselves.
At the end of the day, in the world of fiat currency, taxes and spending are not intrinsically linked. They're mediated by public perception of the value of the currency, which can be sensitive to unexpected speed ups of the money printers, but is frankly unaffected by the normal rate.
The entire financial services industry. Even including some of the cryptocurrency parts: USDC is backed by a Blackrock account holding Treasury bills.
(a default on the debt, any of it, would be an extinction level event for the global financial services industry and then most real US industries in the following weeks)
When all the dust settles, what has actually changed?
Who knows? The possible outcomes range from Argentina to Zimbabwe.
In rough order of size of treasure holdings
- The Federal Reserve
- Intergovernmental holdings
- Mutual Funds
- state and local gov
- Pension funds
- Insurance companies
- Deposit insurance
- Foreign holdings of all types
>Deposit insurance
Does this mean the FDIC's Deposit Insurance Fund?
Yes, DIF is funded by a mix of insurance premiums charged to banks and investments which are primarily US treasuries.
Debt is just promises for future currency. One persons debt is another person asset. But what happens is when you "over promise" by accumulating too much debt then all those people with debt as their assets think they have X dollars, but if there's more debt than underlying resources can cover then it might end up all those people only end up getting like 0.65X or possibly even lower. Kind of like a bank run
Anyone who has bought US treasuries/bonds, which includes regular people, but also most nation states.
Thank you for asking the question. I wondered about this in the back of my mind.
Anyone who owns US treasuries. That may be you. But I am sure many here own US debt. Institutions and sovereign entities own quite a bit. The US Social Security Trust Fund is a major holder as well.
Thank you all for the excellent answers, that's helped my brain model it somewhat.
raises hand
I buy Treasury products for my investment portfolio sometimes.
I-bonds had a great buying opportunity a couple years ago.
It's not a stupid question
Weirdly themselves. Makes my head hurt but the central bank, the social security fund and some other bits of US government basically own most of the national debt. Then it's the Japanese, British, Chinese and Warren Buffet. But less than you would guess.
This is what a "fiscally conservative" party in charge of government looks like
at some point - spending stops becoming a political game, and we start to take debt seriously.
But no one in politics won't do that.
whats the big fuss,it's only .38 quadrillion bucks
So... can someone explain who do we owe this 38T$ *TO*?
Or is this more similar medical debt funny money where they just use a RNG to make up a number.
anyone who is the bearer of a US Treasury bond that hasn't reached maturity
so if you have any investments even in your 401k, or hold any ETFs, much of it is invested in those
holders are individuals domestic and worldwide, retirement plans, foreign governments, banks, central banks like the Federal Reserve
the US government slowly pays people back with revenue and other people's money via newly issued bonds, over time, and does it very reliably, so people keep buying. The US government's revenue comes mostly from tax collection, followed and a few other sources, some private sector ownership in recent decades, and it pays the interest on all of the active bonds.
The real answer is our children. Deficits are complicated and plenty of very smart people have very different opinions on it, however in the end it is similar to a mortgage. At some point, someone somewhere will have to pay some of it off. The people that created this massive debt will most likely be dead and gone by then.
Mostly to ourselves.
If that's the case, why not write it off then?
Or is this some 38T$ leveraged against our future? Like how this debacle in Chicago screwed over 75 years of residents.
https://www.courthousenews.com/seventh-circuit-upholds-chica...
"Ourselves" meaning people who have invested in Treasury Bills and other US bonds. Writing it off would mean eliminating massive amounts of wealth. That isn't really politically tenable for anyone.
That doent make any sense. There's no way we *sold* $1T of bonds and t-bills in 1 year.
That's what I'm asking who the debt actually belongs to. If it's "us", then how was it generated, who accepted the debt risk, and why's it going up faster?
Again, I make an analogy to $10000 tylenol pills, $16000 bandaids, and other obviously absurd medical fake number pricing. This $1T per year feels just as absurd and fake. And well, it's also a great wedge in Congress to bemoan and attack/shut down congress over that made up number.
> There's no way we sold $1T of bonds and t-bills in 1 year.
Yes? They're sold at auction. https://www.treasurydirect.gov/auctions/upcoming/ - I make that $547bn for auction over the next couple of days.
> who accepted the debt risk
The financial services industry. It's kind of what they do. Just because it "feels fake" doesn't make it so.
Yes, we sold $1T of Bonds and t-bills. About half were sold to banks and foreign countries. The other half was sold to the social security retirement fund (in exchange for SS tax revenue)
https://fredblog.stlouisfed.org/2025/03/who-holds-us-nationa...
The same reason you think it is absurd and fake is why others are panicking about the debt.
13% of federal taxes go to paying interest on the debt. That is 13 cents of every tax dollar paid. It is on track to hit 20% in the next 10 years, and that is assuming the US economy and tax revenue keeps growing.
Japan, UK, China, and the Cayman Islands are the largest private holders of US federal debt. [1]
What part of this seems incredible to you? It is indeed a lot of debt spending.
https://ticdata.treasury.gov/resource-center/data-chart-cent...
Why does $1T seem unreasonable? You can check the auction results, and from my quick look at a couple recent auctions, combined with knowledge that the auctions are routine and regularly scheduled, the number seems plausible.
It's not really $1T sold though, $1T would be the net sales, as many bonds and bills would have matured in the same period. Gross sales is much more than $1T, but I'm not going to dig through to find those numbers.
You could maybe discount some of the issuance as internal borrowing/lending/savings, but if you want to treat programs as independent, then the interactions between programs and the general budget are real enough.
$1 trillion is just the net increase, the sales volume (total value of all Treasury bond auctions during the year) was more like $5 trillion.
Also, fun fact, $1 trillion is about the daily private transaction volume of U.S. Treasuries.
That's people's pensions and bank operating capital and so on. People tend to get upset if you zero out their 401k.
"We", meaning the people and organizations, is not the same entity as "we" meaning the government.
Forget everyone’s 401(k). Canceling the US debt would wipe out very large fractions of most businesses’ and individuals’ operating capital.
The government won’t just write it off, that would be a default or magicing the money into existence (which the government CAN do), because the world economy would go insane. The government has the ability to do this but is extremely strongly incentivized not to do it because of the effects it would have.
The US government is a currency issuer so it’s possible but not advisable.
U.S. government debt is the safest investment you can make today. If you "write if off" by simply telling debt holders you won't pay them, you'd make U.S. government debt the most unsafe investment possible. Nobody would ever buy U.S. government debt. That, and peoples' pensions and other retirement accounts that hold U.S. government debt would be hammered.
Although I recognize that at this moment the force of the United States Constitution has been shown to be minimal, I direct your attention to this clause:
"The validity of the public debt of the United States [...] shall not be questioned."
How about your pension fund to write off some of the debt it is holding? Would you be happy with such move?
Debt pulls future income into the present, so yes, the $38T is what we owe to our future selves. The thing is, your present self already knows if your future self is owed something (you own a bond). So writing it off is taking that person's money and not giving it back in the future like you promised. That does obviously does not go over well, plus it has unpleasant secondary effect. What you do is that you print more money and inflate it away.
Everyone is in denial about the whole situation. The sensible solution is probably the FED targeting a higher inflation rate than the 2% they would prefer and work it out slowly. Nobody is sensible at the moment, so we risk having either out of control inflation for a shorter time, or a lot of people lose money. If you have too much debt, people are going to lose money. The question is the amount of pain (and the collateral pain from secondary effects) that goes with it.
He or she meant 75% US people. But not everyone. Just the upper ones, who don’t have mortgages but lending the money to people - now on higher rates haha
This is extremely misleading. About half of it is owned by private investors and foreign nations.
The part that is internal is mostly owed to social programs like social security.
I don't see how my statement was in any way misleading. The Treasury estimates the upper bound of foreign ownership to be $9.1 trillion. The overwhelming majority of Treasury debt is held by domestic interests, whether agencies or organizations or individuals.
For most people, "ourselves" implies the lender and holder are the same, and directly leads to the idea that it is forgivable without someone left holding the bag.
There is no sense in which federal debt is "forgivable" under the Constitution.
How do you think the constitution plays into it?
The US federal government absolutely has the ability to forgive, restructure, or write off debt in its capacity as lender. It has frequently done so.
Where do you see limitations on seeking default or forgiveness in its capacity as borrower?
The US did a pseudo default when it left the gold standard and paid gold denominated debts with paper worth significantly less, telling lenders to put their complaints were the sun doesnt shine.
ourselves, each other, foreign bond holders, remember that anyone who wants to buy a government bond can do so pretty easily and they're basically unlimited in availability so the answer to your question is anyone who was willing to lend the government money before.
You don't owe anything. You're spending someone else's money!
Most money being spent on Medicare and social security. Non means tested programs transferring the money from everyone else to the richest demographic in the US. Also the least productive use of it. Self-admittedly structured as a ponzi racket so it would be difficult to undo. Manifestly demographically unsustainable, as is readily admitted by Social security org itself (they have a projected date when full benefits will not be paid without additional money).
Everything else, when talking about debt, is talking about rearranging chairs on the Titanic.
What happens if Trump decides to default on the debt?
Could this be how he stops the election, or stops the vote count?
He already has.
Firing Jerome Powell and pushing rates lower, in spite of reality on the ground, is effectively a form of soft default. (That, plus the laundry list of other things, which is too long to fit into a single HN comment)
The US will never stop paying its obligations. But driving away investment by breaking promises abroad and eroding political stability at home very much will cause the trust in the USD as an ongoing institution to evaporate. Sure, the US still pays its bonds on time in USD, but what is USD worth when the US cannot honor its trade obligations, cannot honor its diplomatic obligations, cannot be relied on as a stable partner?
It will be very scary when the US stops being the dominant financial system. So much of the US political economy (and more fundamentally, our way of life) depends on it.
This is what is happening a bit now, USD is being sold and gold is being brought by various central banks
Do you mean Americans way of life, or everyone’s?
Yes, speaking from USA perspective. For everyone else, some win some lose I'm sure.
as long as the military is there there is no need to worry because who decides which debt gets paid who enforces this financial rule, who makes the rule by what power?
Defaulting on U.S. Treasury payments would cause a lot of economic stress around the globe. But so did the 2008 financial crisis and the 2020 COVID pandemic, and we held presidential elections both those years.
No one knows what would happen. That is unprecedented. There would be mayhem in financial systems as all types of collateral is vaporized. All types of on paper net worth would collapse towards zero
Other countries defaulted in the past, so not exactly unprecedented.
I am not saying it would be pretty or desirable, but by reading what happened to countries can give a notion.
It's be unprecedented for the foundation of the contemporary financial system. Argentina defaulting on their debt is very different than a country which every other country, and their banks hold bonds from since it's deemed the safest investment possible.
It would eliminate the notion of the USD as the basis of foreign trade across the world, almost all of the finance system is supported by the USD being the safest investment available.
What? Can you explain how you are getting from a to.... z here? He defaults on debt, and then the election goes away in 3 years?
Certainly triggering a default at a critical time in the election would result in nothing else being on the news for the remaining few weeks of the fragmenting United States, until such time as CA and NY can get their own currencies circulating.
By the constitution states are not allowed to issue currency. Triggering a default would lead to devaluation of bonds and probably currency, but why would it stop elections?
If it gets to that point, the Federal govenrment will have ceased to operate as anything recognizable, and most of the finance industry is faced with two options:
a) update the valuation of their assets, recognizing that they are instantly insolvent, cease trading, and lock their doors;
b) continue operating "illegally" in the hope that some sort of order will materialize
Option (a) causes all the non-cash economy in the US to stop functioning. The gold and silver bugs are, briefly, ecstatic - this is their moment. Everyone else who would rely on their debit or credit cards to buy food and gasoline, less so. The legal order that is supposed to maintain things like elections theoretically remains in place, but the rapid collapse in public order forces states to step in. You have elections to some thing called the "United States", but when most of its money has been rendered worthless, does it really exist any more? Essentially this is the "prepper" fantasy.
The federal government wipes its ass with the constitution every day, why shouldn't states do the same?
Situational. Right now, the Federal bits are stronger than any state.
The Federal bits of the US being strong (and indeed all institutional strength) is not a law of nature, and people who think it is a law of nature are the most likely to blindly run it into the ground while fighting each other to wield that strength.
But right now, the Federal bits are stronger than any state.
I will bite... What are you talking about?
It seems likely he’s going to try to hold onto power indefinitely.
His options are start a major war, default on the debt, ?
Hold onto your hats
Another option is the modern authoritarian model, Competitive Authoritarianism [0] as deployed by Órban, Putin, etc.
You castrate the media, and take control of major vehicles to tilt the balance in your favour in quasi-sham elections; accumulate power in the executive while keeping the remaining seats of power under the thumb of the branch: legislative gets installed with sycophants/acolytes, judiciary power is tamed/dimished and regime-adjacent judges installed.
If you play this well you keep getting elected when elections happen and slowly twists more the sword into all democratic institutions.
[0] https://www.journalofdemocracy.org/articles/the-new-competit...
Neither defaulting on the debt or starting a major war are effective ways to hold on to power, sheesh. He already tried to hold on to power, so you could just look at how he tried last time, that's one of the typical strategies. The other main one is a military coup.
Creating a global crisis is an excellent way to hold onto power.
Not that they started it or want it to continue, and not that I think Zelenski is anything other than a hero, but the case in point is Ukraine not holding elections since the war started.
When Zelenski told trump there have been no elections during the war trump, on camera, was delighted and said “very good”.
The VAST majority of this growth will continue to be in healthcare and/or social security (mostly healthcare though).
Until our healthcare markets become more free market, this growth in spending will accelerate as boomers age.
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Reminder: as long as we have the printers running[1] and the dollar being the fiat currency of the world, this doesn't mean anything.
[1] https://brrr.money/
Is the site down? I wanted to visit based on the name alone.
Try this - https://www.moneyprintergobrrr.com
it does matter when printers go brr, a lot. Printing/QE is the most likely way out and its really going to hurt main street
Here is proposal to the boomers from a zoomer. I've paid over 100k in social security in my lifetime. Apparently social security is "not an entitlement(lol)" but you can have it all. Take every cent, but starting tomorrow there are no more checks.
We all grow old. Your situation today may not be the same as tomorrow and you may find your smug self needing social security.
And when im old there sure as hell wont be any money left for me. Also its on the boomers for not maintaining the demographic pyramid required to sustain retirement benefits.
Americans have been saying that for at least 40 years.
https://abcnews.go.com/Business/social-security-fund-run-dry...
Same story in the 90's. They'll do some maintenance and it will be fixed for a decade or so. Rinse and repeat.
You do realize that boomers have already paid way more into the system? The people who didn't pay in (old poors 100 years ago) are dead and gone.
Oh but I thought it was a saving program?
No, the government pays for current services and then spends the rest as a loan to itself (see $38T debt above). The boomers were so big that there was massively more collected then spent. The idea was to loan that extra to the government and the government could structure the debt to smooth things out because eventually the boomers are so big that there will be more spent than immediately collected.
That fine and all but current trends point to the ss drying up because of demographic decline so it seems like it was just a big ponzi at the end of the day with millennials and younger holding the bag. Also, if its true that the boomers have paid surplus into the fund that is meant to smooth out the payment curve, then why do they need my money.
The debt isn't the issue, spending is, and it has bipartisan support.
Well taxation also. As the debt has exploded over the decades we've dramatically cut top tax brackets.
I'd suggest looking at two things. What percentage of the economy tax receipts represent and the breakdown of how much revenue comes from the top tax brackets. You could also look at spending a percentage of GDP over time.
My view with all that in mind is that spending has gone up quite a bit. Overall tax revenue has stayed remarkably consistent and the tax system is progressive (i.e. if you make more you pay more). Is it progressive enough? I don't know. What percent of the budget should that top 10% (or top 1%) be paying? 20%? 30%?
At the end of the day though getting 20% of GDP in to the Federal government as tax has historically been a heavy lift. If you get a government that's willing to vote to do that then I would be that that you will soon find new one that's willing to vote not to do that.
That said getting spending in the range has the same problem.
At some point though it seems inevitable that one (or both?) of those statements will prove to be untrue.
I thought the U.S. government was shutdown specifically because spending didn't have bipartisan support?
No, the issue is we stopped taxing the rich to pay for spending without stopping the spending.
Given that U.S. federal spending always goes up, and inflation always goes up, wouldn't it be the case that every $1T in debt would be accumulated faster than the previous $1T? That's generally how exponential growth works: https://farmdocdaily.illinois.edu/wp-content/uploads/2021/12...
Not to mention population growth. The debt per capita or debt to GDP could be improving (it's not) and we still see headlines like this. It's a fun milestone, but context matters.
No, not if tax receipts grew faster than spending was growing. In that case, deficit spending would shrink and the debt would accumulate slower.
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The past two administrations, arguably the past three if you think the pandemic was overblown (I don’t), have been totally reckless with spending and their ostrich-like refusal to reform entitlements. Maybe the suspension of SNAP will “break the seal” on further entitlement cuts?
Genuine question - why is taking benefits away from the poorest among us the only answer? Corporations and the wealthy upper crust have made record profits YoY for like a decade now. But we can only find the money by taking it away from people who are just trying to eat?
because the poorest don't have the power to stop anyone taking their benefits whereas being rich by definition is having access to levers of power like the courts and political contributions and have also been running what is essentially a multigenerational PR campaign that says that the poorest among us are the source of all of our problems and that eliminating any help for them will simultaneously make things better for us by cutting spending and make things better for them through vague notions of encouraging responsibility or whatever.
tldr - the reason that going after the poor is always the answer is that it's the rich who are both asking and answering the question.
SNAP should be the last thing that gets reformed, aside from its tendency to fund less than ethical corporations (coca-cola, big agribusiness, Taco Bell). On that I totally agree.
The wealthy boomers who own multi-million dollar California track homes and don’t pay taxes because of prop 13, who are consuming millions on quasi-necessary medical procedures because they partied too hard in the 70s, gorged on trans fats in the 80s, smoked drank and didn’t go for walks, that’s where entitlement reform should start. But those are the base of one, maybe both parties and will vote out anyone that refuses to subsidize their ozempic and knee surgeries. They will even vote to reduce democracy by gerrymandering the state to block third party candidates and ensure nobody can come for their unnecessary health care costs and other ballooning entitlements.
i was with you until you wanted to means test healthcare
We do that already so I’m not sure what you’re talking about.
Entitlements and interest on the debt itself make up the majority of spending.
Most corporations don't make extraordinary profits. They make enough to stay in business, and if you tax them too heavily they will either raise prices or just close. So higher corporate taxes will ultimately depress business and be paid for by the consumer.
A few corporations certainly do make a lot of profit, and various "windfall profit" or "excess profit" taxes have been tried, but that's more about politicians trying to earn favor than anything that makes a practical difference.
Spending is the thing that's out of control, so that's where the problem must be attacked.
> Most corporations don't make extraordinary profits. They make enough to stay in business, and if you tax them too heavily they will either raise prices or just close.
Corporate taxes are levied on profit, not revenue. Raising corporate taxes would not cause any businesses to fail. And businesses can only raise prices if the market will bear those higher prices. Prices are set based on what customers will pay, not on what profit margin the company wants.
It’s not the only answer. There are no good answers, that’s the unfortunate truth. An empathic government would avoid getting us to this point, but alas here we are.
Or it'll be a real-world test of the whole "three missed meals away from violent revolution" quote of Lenin's.
Where I live, private sector food programs are very healthy, and so it seems unlikely this will be much of any local impact beyond retailers’ bottom lines. For example, the Taco Bell drive thru down the street from me has a huge sign “WE TAKE EBT!!!” which I assume corresponds to the local consumers being largely subsidized chalupa eaters. I wonder if chalupas will decline in value from $7 dollars or whatever artificially inflated price they’ve reached, back down to their old timey price of $3? (I’m not sure I have those prices exactly right as I’ve only purchased Taco Bell once or twice since in the past few decades. I confess I don’t get EBT yet, so my perspective is a naive one. It may be the case that chalupas are a better value proposition than Safeway prices in the suburban food desert where I live. There’s certainly a dearth of drive thrus.)
When did EBT start being legal at restaurants? I thought it was only for unprepared food (e.g. grocery store items).
When someone realized that people exist who don't have ready access to kitchens?
I looked this up and it seems like restaurant meals are only available to SNAP users that cannot use a kitchen because they are homeless or too disabled. Programs like meals on wheels have waiting lists now so that might not be an option.
Taco bell seems ridiculous but the alternative is that they eat cat food.
That makes no sense. Who do you think pays the bill for EBT? If entitlement programs are done away with, no one will accept EBT, because it won't exist.
Or, instead of taking from the most vulnerable among us, we could restore higher taxes on high income earners.
Yes, the rich would whine about it and raise a fuss, but ultimately their lives would not actually change for the worse.
Whereas taking away SNAP and other entitlements would demonstrably make the lives of millions of people significantly worse.
As always, “reforming entitlements” barely moves the needle on paying down the debt.
Even SNAP only cost 100 billion last year, and its net effect on revenue was probably positive, though these things are hard to measure in isolation: https://www.cbpp.org/blog/snap-food-assistance-is-a-sound-in...
(Because humans are bad at large numbers: 100 billion / 38 trillion is 0.2%, or alternatively 38T represents 380 years of SNAP at 2024 levels.)
SNAP would be a start. Medicaid, Medicare, Social Security would be the place to end. Those are all politically tricky to take a bite out of, of course.
I don’t approve of a policy that entails the premature death or destitution of millions of Americans while also ensuring that a couple thousand obscenely wealthy families remain obscenely wealthy.
Or we could just raise taxes on high income earners (which will barely make a dent in their quality of life). If the alternative is cutting programs that keep people from starving, from losing their homes, and obtaining basic health care... no thanks, I'll pass on that.
A slight rephrasing:
Letting 70M+ Americans, many of which are children, go hungry is good for the country because it saves money. And if they don't die from malnutrition, don't worry, we're going to save even more by cutting their health coverage, and eventually social security, a program that people paid into their entire lives.
Take a step back...do you believe these 70M+ people are just lazy, inept, ...? Do they deserve to suffer, especially the children? What are we buying with their suffering? A reduction in spending? A tax break for the wealthy? Is this the only solution?
What if we were to create a real national healthcare system which cared for everyone at a vastly lower cost? That would also save money AND reduce suffering. Seems like a net win.
But that won't get us all the way there, so what else can we do? Everyone knows the answer, increase taxes on the wealthy. Top marginal tax rate used to be 90% (1950-1964), so perhaps there's some wiggle room between that and today's 37%.
Historical Tax rates: https://thesocietypages.org/socimages/files/2012/12/1.png
This country needs a big old heaping of empathy and compassion.
I said this up thread. Trying to get 20% of GDP (or probably even a bit less then that) out of the economy and into the Federal government hasn't worked historically. I would encourage you to look at what people really paid when rates were 90%. They didn't pay 90% of the money that was coming through their door.
I'll agree that eliminating SNAP is an extreme measure that in the overall picture saves little (unlike modest cuts to SS and Medicare) but consider that 20% of Americans are to some measure dependent on SNAP. There's something wrong with that in my view.
> consider that 20% of Americans are to some measure dependent on SNAP. There's something wrong with that in my view.
but what interpretation leads to "therefore SNAP is the problem" ? compared to land management or anti-trust, etc
as a policy alternative, we could say, ban the exports of alfalfa until the SNAP usage is 5%, and split up cisco into 2000 different food distribution companies.
funding for social spending i think is a very strong chesterton's fence, in that the program was introduced to mitigate a problem. getting rid of the mitigation isnt going to get rid of the underlying problem
Not sure why you're being down voted. SNAP was bleeding us on the front end by subsidizing sugar water mega corps and on the backend by subsidizing the collosal medical bills that come from the overweight, diabetic millions.
One day we'll look back and wish we had the self-control to both impose austerity measures to get the spending under control and the foresight to spend wisely on long term functions like infrastructure.
Until then it's business as usual from both political parties.
> Not sure why you're being down voted. SNAP was bleeding us on the front end by subsidizing sugar water mega corps and on the backend by subsidizing the collosal medical bills that come from the overweight, diabetic millions.
Letting people starve is a better solution than letting them drink soda and potentially develop diabetes over the long term? Preposterous. I don't understand why the common sentiment is that everyone who uses SNAP must enter into a contract with the state to lose weight and only eat heads of iceberg lettuce, lest they be labeled leeches.
It's not one extreme or the other. There's a reasonable middle where SNAP can't be used for soda or candy, etc.
But such regulations are easily subverted and ultimately may not make a lot of difference. If people want to live on Dr. Pepper and cigarettes they will find a way to do that.
forcing moralisms aint gonna do it either.
people shouldnt be prevented from ever drinking doctor pepper because they are poor.
snap should reclaim their money from dr pepper if peopleare spending too much on it, or they should be pushed on making doctor pepper healthier if thats what people are spending snap money on.
I personally agree it shouldn't be one extreme or the other, but the person I was replying to was defending a comment about the suspension of SNAP. My wife and I used SNAP when we first moved in together and she couldn't find a job, so it annoys me when I see people imply that SNAP users just need to make better choices, be less lazy or eat healthier.
Tax cuts for a few that raise taxes on millions was not a good idea and was a poison pill. And now we're poisoned.
Sorry, the entire political establishment learned that debt didn't really matter back during Bush and then Obama.
How different would the world have been if either of the two "grand bargins" that Boehner started, and then Obama torpedo'd last minute (in the first example) or the second one (which biden as VP torpedo'd) happened? No rise of the tea party, working bipartisan arrangement on spending?
Shit matters.
The tea party was a front by the Koch brothers to pay less taxes. It was and always will be a thing by the rich, for the rich. It was also just wrapped up in the entire republican agenda of trying to sabotage the first Black president, because too many white folk couldn’t accept that the president was Black. There was never any possibility of a bipartisan agreement.
Well, I think just very rough numbers Biden added about 7 trillion, which was about the same as Trump 1, driven of course by the pandemic. I think we’re headed for another 6 or 7 trillion under Trump 2, give or take tariffs and whether we can Art of The Deal our way with Xi’s communist empire and enter some new era of AI driven prosperity. So if the total debt is, rough numbers, about 40 trillion, then the past 3 admins account for a substantial fraction 15-20 trillion, tough numbers, given that the economy has been objectively strong since Obama’s second term. We should have decreased to debt in those years of strength, aside from the short few months of the pandemic when vaccines were needed and temporary lockdowns had to be subsidized.