What is the best solution for managing the national debt?

[vasuderatorrent]

What are the best options for solving the national debt problem if we ever see our self in a disaster scenario?

Bankruptcy? hyperinflation? less government spending? higher taxes? Something more creative that nobody has thought of?

I'm sure somebody has a good idea. Let's pretend doomsday is here. What do we do? Print money like a mad man? File for bankruptcy? Stop social security checks? Fire 75% of all federal employees? Go door to door collect taxes?

What ever shall we do? Oh my!

vasuderatorrent

 

[francois60]

We're actually in a better position to handle such a crisis than your average country, because we are a federation of states. If the federal government was in a position where they could only pay interest on debts, then the states would simply have to decide which federal services to maintain through their own revenues and which to just let lapse.

However, in the real world we'd probably do what all countries do in those situations: raise taxes a lot, cut spending a lot, endure a depression, and hopefully learn from the experience. The Germans are STILL haunted by their own experience under the Weimar Republic and so have been more fiscally responsible than most countries. I'd imagine any country going through that trauma will spend more wisely afterwards.

 

[Real Korimyr #9]

We don't need to drastically raise taxes or drastically reduce spending as long as we raise taxes and cut spending moderately.

 

[Voltaire X]

Raise some taxes and cut spending, specifically the three gigantic chunks of the federal budget- Medicare/Medicaid, Social Security, and Defense

Defense is totally bloated, we don't need 50,000 troops in Germany and 30,000 and Japan and whatnot. Cuts there are easy

I believe if we had a real universal healthcare system it would cost less than the current crap, because we currently spend more taxpayer money per person than any country on Earth (because the corporate middlemen take most of it)

As for social security, I really think people should be able to opt out of it in exchange for any private retirement plan if that's what they want. Also it needs to be means tested. Warren Buffet shouldn't get a social security check every month.

 

[vasuderatorrent]

Raise some taxes and cut spending, specifically the three gigantic chunks of the federal budget- Medicare/Medicaid, Social Security, and Defense

Defense is totally bloated, we don't need 50,000 troops in Germany and 30,000 and Japan and whatnot. Cuts there are easy

I believe if we had a real universal healthcare system it would cost less than the current crap, because we currently spend more taxpayer money per person than any country on Earth (because the corporate middlemen take most of it)

As for social security, I really think people should be able to opt out of it in exchange for any private retirement plan if that's what they want. Also it needs to be means tested. Warren Buffet shouldn't get a social security check every month.

These are all very obvious solutions. It's amazing that these possibilities aren't even considered. I did hear talk about means testing for Social Security. If you ever look at a pie chart of the federal budget it's easy to see what needs to be eliminated. It doesn't take a degree in accounting to see the solution. All the silly talk about saving $10 billion on cutting waste seems ridiculous when 58% of the federal spending hits you right in the face as soon as you see the budget.

vasuderatorrent

of total spending for FY 2013. President's proposed budget ...

 

[joG]

What are the best options for solving the national debt problem if we ever see our self in a disaster scenario?

Bankruptcy? hyperinflation? less government spending? higher taxes? Something more creative that nobody has thought of?

I'm sure somebody has a good idea. Let's pretend doomsday is here. What do we do? Print money like a mad man? File for bankruptcy? Stop social security checks? Fire 75% of all federal employees? Go door to door collect taxes?

What ever shall we do? Oh my!

vasuderatorrent

I would vote to reduce spending immediately by 15 percent and levy a one off wealth tax of 15 percent on all Americans. Possibly foreigners' holdings in the US should be exempt.

 

[vasuderatorrent]

I would vote to reduce spending immediately by 15 percent and levy a one off wealth tax of 15 percent on all Americans. Possibly foreigners' holdings in the US should be exempt.

Can you explain what you mean by the one off wealth tax?

vasuderatorrent

 

[LaughAtTheWorld]

Overall cleanup of tax regulations to minimize tax evasion while lowering the tax rate to lessen the burden on the lower and middle classes while encouraging business investment. Drastically cut waste at overall govt spending, especially on unnecessary Defense projects, wasteful healthcare and welfare.
Pretty much typical, commonsense, and expected, but the details need to be rolled out (which due to my lack of expertise, is not in my post)

 

[joG]

Can you explain what you mean by the one off wealth tax?

vasuderatorrent

As with all technology the details would be more complicated than the initial statement. Would it be a flat tax or progressive or regressive, would it be 15 percent or 10 or 20?
But in general all wealth owned by persons (and companies) would be subjected to a tax one time only. The rational being that all Americans are responsible for the actions of their elected agents. So they should all and every one of them pay back the debt.

We should do it now, before we cause ourselves to face bankruptcy and economic depression.

 

[vasuderatorrent]

As with all technology the details would be more complicated than the initial statement. Would it be a flat tax or progressive or regressive, would it be 15 percent or 10 or 20?
But in general all wealth owned by persons (and companies) would be subjected to a tax one time only. The rational being that all Americans are responsible for the actions of their elected agents. So they should all and every one of them pay back the debt.

We should do it now, before we cause ourselves to face bankruptcy and economic depression.

How often would it be collected? Every one hundred years? Every ten years? Every year? It seems like a very cruel form of taxation. I'm not sure the government could handle the political backlash of such a policy. I understand the rationale behind it. It just doesn't seem too practical. A milder form of the wealth tax could be a national property tax. In North Carolina all counties, cities and town governments efficiently collect a property tax. A national property tax could be very easily added to the property tax bills that already go out. This may not work nationwide though because I don't know if all states use property taxes to fund their government.

I like your line of thinking. I truly appreciate the discussion.

vasuderatorrent

 

[AliHajiSheik]

Let's build a clock that will show the current amount of debt and then personalize it so that it shows each persons share of the debt.

 

[joG]

How often would it be collected? Every one hundred years? Every ten years? Every year? It seems like a very cruel form of taxation. I'm not sure the government could handle the political backlash of such a policy. I understand the rationale behind it. It just doesn't seem too practical. A milder form of the wealth tax could be a national property tax. In North Carolina all counties, cities and town governments efficiently collect a property tax. A national property tax could be very easily added to the property tax bills that already go out. This may not work nationwide though because I don't know if all states use property taxes to fund their government.

I like your line of thinking. I truly appreciate the discussion.

vasuderatorrent

The spending would remain reduced and the tax would be levied once.

 

[joG]

Let's build a clock that will show the current amount of debt and then personalize it so that it shows each persons share of the debt.

In a way this link does that. You can see the aggregate National Debt per capita in the upper left box to the right of the National Debt.

U.S. National Debt Clock : Real Time

 

[francois60]

Maybe I misinterpreted, but I think the OP was asking what to do once fiscal crisis hits, not what to do about the debt in the present situation.

 

[vasuderatorrent]

Maybe I misinterpreted, but I think the OP was asking what to do once fiscal crisis hits, not what to do about the debt in the present situation.

I don't know what OP means. I keep seeing it but I don't know what it means.

The poll question doesn't specify whether you are managing for a crisis or managing to avoid crisis. The very first post in this thread I specified about how we should react in the event of a crisis. Sorry for any confusion.

I would like to know what OP means. I keep seeing it.

vasuderatorrent

 

[francois60]

It means Original Post. Thanks for the clarification though.

My own opinion on how to deal with the current situation is that we have a spending problem, not a revenue problem. Revenues should be about 18% of GDP in the current environment and spending should not exceed 20% of GDP(and should be 17-18% of GDP when there is 6% or lower unemployment). The root of the spending problem is entitlements. Medicare, Medicaid, SS, and food stamps must be cut down to a more sustainable level. Defense spending should also drop, and programs which are a low priority or do not work should be eliminated.

 

[joG]

We don't need to drastically raise taxes or drastically reduce spending as long as we raise taxes and cut spending moderately.

That would have been a cool solution, when Clinton was President. It would still have worked, when Obama became President, but a little less well.

Sorrily we now owe 17+ Trillions. Just calculate the interest we will have to pay, when the rate is around 5 percent. Think of it as a mortgage. To reduce it to half in 30 years the required payment would be just shy 1 Trillion a year. As the deficit is now $ 700+ Billions that means we need 1,7 Trillions a year. That is not impossible to pay back. But 300 Millions people need to cough up an average per head of $ 5.666, if my calculation is correct. That seems moderate enough at $ 100.000 a year. But do not forget. A lot of Americans do not make $ 100.000. A lot of Americans make less and a lot of Americans make nothing, because they are at school or in a gang or something.

Am I wrong? I could easily have miscalculated.

 

[Real Korimyr #9]

It isn't necessary to pay off the national debt-- merely stop it from growing in proportion to the GDP. If the debt shrinks by any amount per year, or even simply grows slower than the economy, we'll be fine.

 

[francois60]

True. However, even that is a challenge as the Baby Boomers age.

 

[DVSentinel]

It means Original Post. Thanks for the clarification though.

My own opinion on how to deal with the current situation is that we have a spending problem, not a revenue problem. Revenues should be about 18% of GDP in the current environment and spending should not exceed 20% of GDP(and should be 17-18% of GDP when there is 6% or lower unemployment). The root of the spending problem is entitlements. Medicare, Medicaid, SS, and food stamps must be cut down to a more sustainable level. Defense spending should also drop, and programs which are a low priority or do not work should be eliminated.

Social Security and Medicare are separate tax deductions from income tax. Those programs should be trimmed down and only rely upon those withholdings. One way to do that or work towards it is to remove from SS and Medicare everyone who has never paid into those systems.

Welfare can be almost totally eliminated and converted to a self-sustaining or near self-sustaining workfare program.

Medicaid can be converted back to volunteer hospitals/clinics which will also greatly reduce costs for health insurance for working people.

Defense cost could be greatly reduced by reorganizing it and also convert to direct manufacture of military items to eliminate extra cost of contractors and contractor fraud. Also it would greatly benefit from stable funding instead of the bust or boom cycles we have seen since the 1970s.

 

[cpwill]

We don't need to drastically raise taxes or drastically reduce spending as long as we raise taxes and cut spending moderately.

Well.

According to the IMF, we would have to raise taxes and cut entitlement spending by 35%. Then it says if we do not cut entitlements, we will have to increase taxes by 88%.

And that is with the ridiculously optimistic static scoring methodology.

I would call that at least somewhat dramatic.

 

[cpwill]

It isn't necessary to pay off the national debt-- merely stop it from growing in proportion to the GDP. If the debt shrinks by any amount per year, or even simply grows slower than the economy, we'll be fine.

The only problems with that plan are the future projections for Social Security, Medicare, Medicaid, and the ACA.

 

[earthworm]

As usual , the missing option....
"none of the above" .
The people with this responsibility must know exactly what it is.
I suspect that few do, but many pretend.
After we know exactly what we have, and all the ramifications , then we can go to work..

 

[haymarket]

Tax changes are a must if we believe in paying our bills. We need to tax ALL money coming into a persons pockets or accounts according to the same schedule. And we must immediately raise income taxes 5 points across the board for everyone making dollar one.

And yes - we can reduce spending also by some $400 billion dollars a year - and that would be a minimum figure.

 

[Real Korimyr #9]

The only problems with that plan are the future projections for Social Security, Medicare, Medicaid, and the ACA.

Separate issue. Those programs do need drastic reform.