National debt????

CuriousKiddosMama · July 2015

Hey guys! I was reading an article on the drudge yesterday and completely do not understand what the heck is going on. If somebody has insite, please explain this to me. How has the national debt stayed the same for 15 weeks now? We all know that's a lie, but that's what it says on paper.

vlagrl29 · July 2015

eh - I"ve started ignoring it. We "US" will always be in debt. Just a fact of life at this point.

Sisugal · July 2015

Ignore it? Not a good plan.
We are nearing the tipping point of not being able to even pay the interest on our debt. Think China will ignore that we owe them and can't pay?

lbonga1 · July 2015

I'm not at all expecting Social Security by the time I retire. It makes up a huge portion of the debt, and they're going to have to start making some major changes. Are we still sitting at about a 70% increase in national debt since Obama took office? I think I remember reading something like that a while ago.

CuriousKiddosMama · July 2015

One thing I've never understood is why states have to balance their budgets, and yet the federal government doesn't have that same requirement. Seriously we would be way better off. But that will only happen when it absolutely have to because telling people you have to cut their pet project, whatever it is, loses you votes and most politicians don't have backbones.

RosieC18 · July 2015

CuriousKiddosMama said:
One thing I've never understood is why states have to balance their budgets, and yet the federal government doesn't have that same requirement. Seriously we would be way better off. But that will only happen when it absolutely have to because telling people you have to cut their pet project, whatever it is, loses you votes and most politicians don't have backbones.

The difference is that the federal government controls the money supply, and the states don't. the feds can control the value of their debt in a way that states can't, by printing money and buying it back from creditors. You don't want to do this all the time forever, but it's an important tool to use during economic crises. When the government spends more, it buys things and services, which allows citizens to buy more things and services and pay more in taxes. A virtuous circle. Austerity in bad economic times slows down national recovery.

A national economy is not a household. The same financial rules do not apply. I'm not saying put everything on credit and never think about it, but the effects of debt, as a percentage of GDP, are very different on a national scale than on an individual one. You feed a recession, you don't starve it, and over time the increased GDP funds increased tax revenues that allow us to keep the debt at a manageable size. The goal isn't to pay it off, it's to keep the economy moving for citizens and provide good services. How would we be better off with 0 national debt?

vlagrl29 · July 2015

Sisugal said:

Ignore it? Not a good plan.
We are nearing the tipping point of not being able to even pay the interest on our debt. Think China will ignore that we owe them and can't pay?

No I basically mean I've given up hope of us every keeping a budget and ever getting out of debt.

MommyLiberty5013 · July 2015

RosieC18 said:

One thing I've never understood is why states have to balance their budgets, and yet the federal government doesn't have that same requirement. Seriously we would be way better off. But that will only happen when it absolutely have to because telling people you have to cut their pet project, whatever it is, loses you votes and most politicians don't have backbones.
The difference is that the federal government controls the money supply, and the states don't. the feds can control the value of their debt in a way that states can't, by printing money and buying it back from creditors. You don't want to do this all the time forever, but it's an important tool to use during economic crises. When the government spends more, it buys things and services, which allows citizens to buy more things and services and pay more in taxes. A virtuous circle. Austerity in bad economic times slows down national recovery. A national economy is not a household. The same financial rules do not apply. I'm not saying put everything on credit and never think about it, but the effects of debt, as a percentage of GDP, are very different on a national scale than on an individual one. You feed a recession, you don't starve it, and over time the increased GDP funds increased tax revenues that allow us to keep the debt at a manageable size. The goal isn't to pay it off, it's to keep the economy moving for citizens and provide good services. How would we be better off with 0 national debt?

Maybe a clarification is needed on the bold part. It would be great to not owe money to other nations, like China. The debt holder controls the debtor. I wouldn't like to be under China's thumb. However, bonds are a form of debt that the U.S. government has with its citizens. I suppose if those didn't go away that may be okay.

That said, I read awhile ago, like last year, I think (it may have been at the Congressional Budget Office website, sorry I cannot recall and don't have time to look for it) that debt as a percentage of the GDP can be good IF it remains in a state of equilibrium in a range of middle numbers. Too low a percentage is bad for GDP and too high is bad also and is unsustainable. Sadly, the U.S. is at the too high point of debt and is moving toward the unsustainable level, which means crash.

I do believe we are headed for a severe stock market crash. While we still do invest, we have diversified parts of our investments to both ETF and physical gold and silver as a portion of our portfolio and assets.

RosieC18 · July 2015

I

MommyLiberty5013 said:

RosieC18 said:

CuriousKiddosMama said:
One thing I've never understood is why states have to balance their budgets, and yet the federal government doesn't have that same requirement. Seriously we would be way better off. But that will only happen when it absolutely have to because telling people you have to cut their pet project, whatever it is, loses you votes and most politicians don't have backbones.
The difference is that the federal government controls the money supply, and the states don't. the feds can control the value of their debt in a way that states can't, by printing money and buying it back from creditors. You don't want to do this all the time forever, but it's an important tool to use during economic crises. When the government spends more, it buys things and services, which allows citizens to buy more things and services and pay more in taxes. A virtuous circle. Austerity in bad economic times slows down national recovery.

A national economy is not a household. The same financial rules do not apply. I'm not saying put everything on credit and never think about it, but the effects of debt, as a percentage of GDP, are very different on a national scale than on an individual one. You feed a recession, you don't starve it, and over time the increased GDP funds increased tax revenues that allow us to keep the debt at a manageable size. The goal isn't to pay it off, it's to keep the economy moving for citizens and provide good services. How would we be better off with 0 national debt?

Maybe a clarification is needed on the bold part. It would be great to not owe money to other nations, like China. The debt holder controls the debtor. I wouldn't like to be under China's thumb. However, bonds are a form of debt that the U.S. government has with its citizens. I suppose if those didn't go away that may be okay.

That said, I read awhile ago, like last year, I think (it may have been at the Congressional Budget Office website, sorry I cannot recall and don't have time to look for it) that debt as a percentage of the GDP can be good IF it remains in a state of equilibrium in a range of middle numbers. Too low a percentage is bad for GDP and too high is bad also and is unsustainable. Sadly, the U.S. is at the too high point of debt and is moving toward the unsustainable level, which means crash.

I do believe we are headed for a severe stock market crash. While we still do invest, we have diversified parts of our investments to both ETF and physical gold and silver as a portion of our portfolio and assets.

_______________boxes____________________

Sounds about right. I also think the stock market is overvalued, but mostly because interest rates everywhere else have been in the tank for ages, and people don't feel like there are any other good investment options.

I get kind of riled up about the national debt because people tend to frame it incorrectly. The best and easiest way to keep a handle on the debt and deficits (in the long run, because in the short run they don't really matter) is to keep enough money coming in. The best way to keep money coming in is to have a hot economy that raises tax revenues without necessarily raising rates. I'm also for fair, progressive taxes and in general an active government, but that's almost beside the point.

ETA boxes.

MommyLiberty5013 · July 2015

RosieC18 said:

I

RosieC18 said:

One thing I've never understood is why states have to balance their budgets, and yet the federal government doesn't have that same requirement. Seriously we would be way better off. But that will only happen when it absolutely have to because telling people you have to cut their pet project, whatever it is, loses you votes and most politicians don't have backbones.
The difference is that the federal government controls the money supply, and the states don't. the feds can control the value of their debt in a way that states can't, by printing money and buying it back from creditors. You don't want to do this all the time forever, but it's an important tool to use during economic crises. When the government spends more, it buys things and services, which allows citizens to buy more things and services and pay more in taxes. A virtuous circle. Austerity in bad economic times slows down national recovery. A national economy is not a household. The same financial rules do not apply. I'm not saying put everything on credit and never think about it, but the effects of debt, as a percentage of GDP, are very different on a national scale than on an individual one. You feed a recession, you don't starve it, and over time the increased GDP funds increased tax revenues that allow us to keep the debt at a manageable size. The goal isn't to pay it off, it's to keep the economy moving for citizens and provide good services. How would we be better off with 0 national debt?

Maybe a clarification is needed on the bold part. It would be great to not owe money to other nations, like China. The debt holder controls the debtor. I wouldn't like to be under China's thumb. However, bonds are a form of debt that the U.S. government has with its citizens. I suppose if those didn't go away that may be okay.
That said, I read awhile ago, like last year, I think (it may have been at the Congressional Budget Office website, sorry I cannot recall and don't have time to look for it) that debt as a percentage of the GDP can be good IF it remains in a state of equilibrium in a range of middle numbers. Too low a percentage is bad for GDP and too high is bad also and is unsustainable. Sadly, the U.S. is at the too high point of debt and is moving toward the unsustainable level, which means crash.
I do believe we are headed for a severe stock market crash. While we still do invest, we have diversified parts of our investments to both ETF and physical gold and silver as a portion of our portfolio and assets.

_______________boxes____________________ Sounds about right. I also think the stock market is overvalued, but mostly because interest rates everywhere else have been in the tank for ages, and people don't feel like there are any other good investment options. I get kind of riled up about the national debt because people tend to frame it incorrectly. The best and easiest way to keep a handle on the debt and deficits (in the long run, because in the short run they don't really matter) is to keep enough money coming in. The best way to keep money coming in is to have a hot economy that raises tax revenues without necessarily raising rates. I'm also for fair, progressive taxes and in general an active government, but that's almost beside the point. ETA boxes.

It's hard to have a hot economy when all the jobs are overseas due to taxes and the services industries can only do so much to make an economy "hot."

"Active government" is a euphemism for "big," right? When you say "fair" taxes, you mean that the high earners give more than other people? And when you say you would want to "raise taxes without raising rates," I translate that as you want to raise taxes on the wealthy but not across the board. It's interesting you didn't mention anything about your position on cutting spending or "lessening our dependence on unneeded goods and services."

RosieC18 · July 2015

MommyLiberty5013 said:

RosieC18 said:

I

RosieC18 said:

One thing I've never understood is why states have to balance their budgets, and yet the federal government doesn't have that same requirement. Seriously we would be way better off. But that will only happen when it absolutely have to because telling people you have to cut their pet project, whatever it is, loses you votes and most politicians don't have backbones.
The difference is that the federal government controls the money supply, and the states don't. the feds can control the value of their debt in a way that states can't, by printing money and buying it back from creditors. You don't want to do this all the time forever, but it's an important tool to use during economic crises. When the government spends more, it buys things and services, which allows citizens to buy more things and services and pay more in taxes. A virtuous circle. Austerity in bad economic times slows down national recovery. A national economy is not a household. The same financial rules do not apply. I'm not saying put everything on credit and never think about it, but the effects of debt, as a percentage of GDP, are very different on a national scale than on an individual one. You feed a recession, you don't starve it, and over time the increased GDP funds increased tax revenues that allow us to keep the debt at a manageable size. The goal isn't to pay it off, it's to keep the economy moving for citizens and provide good services. How would we be better off with 0 national debt?

Maybe a clarification is needed on the bold part. It would be great to not owe money to other nations, like China. The debt holder controls the debtor. I wouldn't like to be under China's thumb. However, bonds are a form of debt that the U.S. government has with its citizens. I suppose if those didn't go away that may be okay.
That said, I read awhile ago, like last year, I think (it may have been at the Congressional Budget Office website, sorry I cannot recall and don't have time to look for it) that debt as a percentage of the GDP can be good IF it remains in a state of equilibrium in a range of middle numbers. Too low a percentage is bad for GDP and too high is bad also and is unsustainable. Sadly, the U.S. is at the too high point of debt and is moving toward the unsustainable level, which means crash.
I do believe we are headed for a severe stock market crash. While we still do invest, we have diversified parts of our investments to both ETF and physical gold and silver as a portion of our portfolio and assets.

_______________boxes____________________ Sounds about right. I also think the stock market is overvalued, but mostly because interest rates everywhere else have been in the tank for ages, and people don't feel like there are any other good investment options. I get kind of riled up about the national debt because people tend to frame it incorrectly. The best and easiest way to keep a handle on the debt and deficits (in the long run, because in the short run they don't really matter) is to keep enough money coming in. The best way to keep money coming in is to have a hot economy that raises tax revenues without necessarily raising rates. I'm also for fair, progressive taxes and in general an active government, but that's almost beside the point. ETA boxes.

It's hard to have a hot economy when all the jobs are overseas due to taxes and the services industries can only do so much to make an economy "hot."
I don't see what this has to do with the national debt discussion? To answer your point, it's a balance. I don't think the jobs are all overseas due to taxes, they're mostly overseas because other places have cheaper labor, mostly because they don't have labor protections and the cost of living (as well as standard of living) is very low in the places our jobs have been off-shored to. Actually, more and more manufacturing is coming back to the US, but when it comes back it comes back automated, which means there are very few jobs associated with it.
"Active government" is a euphemism for "big," right?
Yes, but "euphemism" makes it sound like I'm trying to hide something and I'm not. I say active because when people talk about "big" they usually mean some hulking behemoth that sucks the resources and energy out of the nation. That doesn't make sense to me. Government is you and your neighbors and everyone who votes coming together and making decisions about how to use our resources as a community. I think everyone in our community is better off when we work together to solve social problems. That's what I mean by active government - one that actively tries to make the country a better place, particularly for the least fortunate. Because you know what? Aside from the morality of not letting others suffer, any one of us could wake up "less fortunate" tomorrow.
When you say "fair" taxes, you mean that the high earners give more than other people?
Yes. Flat taxes are regressive taxes that are a larger burden on low-income earners than progressive taxes, in which the rich pay more. I say that as someone who is unabashedly in the "rich" category as far as taxes go. H & I had a $6,000 tax bill this year, due to some job switching and moving, as well as some marriage penalty. We took it out of our savings, and that kind of sucks. It puts us a little further back on getting that down payment together. It was about 5% of our income for the year. A couple that makes $30,000 a year who had an equivalent tax bill ($1,500) probably doesn't save nearly as much of their income as we do, just because the minimum costs of living are what they are. Some (if not most) of that tax bill would come from money they would otherwise be spending on consumables, helping the economy in doing so. My savings don't help the economy in the same way. That tax bill is coming from their food budget, their eating out budget, their clothing budget. $1,500 is a hardship to them in a way that $6,000 just isn't to me.
And when you say you would want to "raise taxes without raising rates," I translate that as you want to raise taxes on the wealthy but not across the board.
No, I meant that if nation as a whole has $100 in income, and the tax rate is 20%,the government gets $20. If the national income is $150, the government gets $30. I do want to raise taxes on the wealthy but not across the board. I want to tax capital gains like income and raise the social security cap to $250k.
It's interesting you didn't mention anything about your position on cutting spending or "lessening our dependence on unneeded goods and services."

Again, I'm not sure how this relates to what level of national debt is good and what level is problematic. I have a feeling that we would seriously disagree about our dependence on unneeded goods and services. I think there are some (mostly corporate supports), but that by and large government programs and a net good. And when they aren't the solution isn't to stop providing those goods and services, they're to make the systems we have for providing them better.

hoffse · July 2015

I'm not necessarily opposed to a progressive tax system.

But taxing capital gains as ordinary income would slow down business transactions significantly. I see this all the time in my work. I have a client right now who is thinking of backing out of a deal because he would be personally taxed at capital gains rates if it went through - and for him, that's going to be 28% given his income and the nature of the deal. If he were taxed at ordinary income rates, there's absolutely no chance. He would be losing around 40% to taxes.

The buying, selling, and merging of companies generate enormous tax bills - in fact it's so high that on any given deal, there is almost always at least one tax person who is doing everything they can to minimize it (on larger deals you might have two or three). It's worth paying somebody $600/hour to be on a deal for a couple of months, because the parties actually save money by doing it.

The capital gains "cut" rate has less effect on you and I who buy and sell stock in relatively piddly amounts. But it has an enormous effect on a shareholder of a closely held business who is about to sell his or her shares for multiple millions. When you raise the tax rate, you also raise the needed purchase price to trigger those transactions.

The last time business deals really slowed down? 2008. The housing bubble wasn't the only thing that caused the economy to crash.

The capital gains rate used to be extremely high. Once it was lowered Congress saw a huge boost in business transactions because companies could suddenly afford to do it. That injected money into local economies, increased spending, caused stock prices to go up (for publicly-traded companies), etc. Congress does give up a lot of tax revenue under this system, but notice they haven't gone back to the old model.

smerka · July 2015

I don't know what marriage penalty you are talking about. That no longer exists since the standard deduction for MFJ is now double the single rate.

National debt????

Re: National debt????

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