Why isn't government debt more of a problem in people's minds?

[fmw]

The US owes almost 20 trillion dollars to so many countries. They could easily ask for it back any day. :shock:

The reason it isn't more of a problem in people's minds is that they don't pay for it directly.

 

[Visbek]

The US owes almost 20 trillion dollars to so many countries. They could easily ask for it back any day. :shock:

Not so much.

As noted, foreign debt is around $6 trillion. Which is a lot, but far less than you indicated.

US federal debt are issued as securities and bonds, which have a specific maturation date. I'm not sure if it's redeemable before maturation; if it is, they'll pay penalties.

The US also holds significant foreign debt, probably around the same amount, albeit with a different distribution.

Debt is only a problem if we get to the point that we are unable to meet our obligations, i.e. pay the maturing bonds and interest. We are a long, long, long way off from that. As a result, it's a pretty remote issue. We've also been harangued by debt scolds for decades, while the doom they predict keeps not happening.

That said, there certainly are people who are worried, vocally so. Unfortunately, that fear often drives them to terrible decisions, like refusing to spend on stimulus efforts during a downturn (a step that in the long run reduces deficits). Some of those same individuals refuse to take steps that will address debts, such as increasing any taxes, or cutting military spending; many will now gladly sign a tax bill that slashes taxes for the most wealthy, which will increase our debts, because... reasons.

 

[Exquisitor]

Have you really taken to quoting yourself???

I do it once in a while.

 

[Helix]

False

Biggest owner of US debt.. Social Security, with almost 2.8 trillion.

Biggest foreign owner of US debt... Japan with about 1.11 trillion, followed by China with 1.1 trillion.

Federal reserve is owed 2.5 trillion and various Mutual funds are owed 1.4 trillion.

Fact is, out of the almost 20 billion, only 6.3 billion is owed to foreign countries.

This is why the "debt problem" debate by the US right is so false and meaningless.

yeah, it isn't situation critical when you look at the numbers and who is owed what. however, there's no way around it : individual taxes need to go up, and we need to find new revenue streams. we should be reporting a surplus at least occasionally, and the debt shouldn't be going up by this much in such a short period of time.

 

[PeteEU]

yeah, it isn't situation critical when you look at the numbers and who is owed what. however, there's no way around it : individual taxes need to go up, and we need to find new revenue streams. we should be reporting a surplus at least occasionally, and the debt shouldn't be going up by this much in such a short period of time.

Dont disagree, but the "we hate taxes" factor is deadly.. just look at Greece. There is no way to cut your way out of the deficit unless you are willing to gut the economy in the short and medium term and pray that it works in the long term despite it never working before in history.

 

[Helix]

Dont disagree, but the "we hate taxes" factor is deadly.. just look at Greece. There is no way to cut your way out of the deficit unless you are willing to gut the economy in the short and medium term and pray that it works in the long term despite it never working before in history.

one sided austerity rarely works. my opinion is that our best move is to cut the corporate rate and treat all individual income as income above a cap. also, we should be spending a lot less on military interventionism. if we do choose to enter a conflict, that should automatically trigger wartime tax rates for all brackets. then we'll watch as most of the hawks fly away as soon as they find out that they actually have to pay extra for it themselves. it's almost comical that those who bitch the most about debt also want tax cuts and war at the same time. i don't waste much time responding to the protestations of anyone who fits that description.

 

[jimbo]

False

Biggest owner of US debt.. Social Security, with almost 2.8 trillion.

Biggest foreign owner of US debt... Japan with about 1.11 trillion, followed by China with 1.1 trillion.

Federal reserve is owed 2.5 trillion and various Mutual funds are owed 1.4 trillion.

Fact is, out of the almost 20 billion, only 6.3 billion is owed to foreign countries.

This is why the "debt problem" debate by the US right is so false and meaningless.

You are correct, Pete. People tend to think of the debt in terms of other nations, but mostly we borrow from ourselves. Something that if private individuals do it's called kiting and is illegal.

That does not mean however that the debt is meaningless. It's just out of site, out of mind.

 

[radioman]

We've also been harangued by debt scolds for decades, while the doom they predict keeps not happening.

This is true.
I recall Reagan castigating Carter for his deficits.
Then Reagan never submitted a balanced budget and ran huge deficits for his entire presidency.

 

[Lyndon'sJohnson]

Psychologically speaking, when we turn to cable news networks and see nothing but either the 24/7 Russia scandal or global terrorism/"rampant" illegal immigration, our minds tend to perceive whatever is being talked about as the greatest of threats.

Which is why Fox News viewers probably find immigrants, terrorism, and the deep state as being the greatest threats, and CNN/MSNBC viewers finding the current administration as greatest threat.

If no attention by the cable news networks are being placed on ACTUAL issues like the debt, student loan debt, income inequality & the shrinking middle class, poverty, obesity, mental health issues, healthcare, climate change, partisan polarization, mass incarceration, the war on drugs, etc., most people would find that as lower on the list of greatest threats to the U.S. (even though they're at the top).

 

[cpwill]

one sided austerity rarely works. my opinion is that our best move is to cut the corporate rate and treat all individual income as income above a cap. also, we should be spending a lot less on military interventionism. if we do choose to enter a conflict, that should automatically trigger wartime tax rates for all brackets. then we'll watch as most of the hawks fly away as soon as they find out that they actually have to pay extra for it themselves. it's almost comical that those who bitch the most about debt also want tax cuts and war at the same time. i don't waste much time responding to the protestations of anyone who fits that description.

I'll take two exceptions to that.

1. On 9/11, we had to quickly expand our military footprint overseas in order to project and sustain force in Central Asia (whether we should still be there now is a different question, and one I'm frankly on the fence about, leaning toward "no"). However, our economy had also just taken a massive hit - contra broken-windows-theory, the way to get rich is not to destroy all of your own capital. Hiking tax rates on top of that would have exacerbated the effects of the enemy's attack on our nation, when we were already dealing with the 2001 recession.

2. In times of crises (say, "war"), you pay for the response, understanding you will have to figure out how to pay for it later. During WWII we issued massive (for that time) amounts of warbonds for precisely that purpose. When your house is on fire is not the time to complain about all the firemen trampling on your grass.


The extent to which you tax is part of the extent to which you choke down economic activity. I can understand people not wanting to do that at the same time we will be ramping up other sacrifices.

 

[Helix]

I'll take two exceptions to that.

1. On 9/11, we had to quickly expand our military footprint overseas in order to project and sustain force in Central Asia (whether we should still be there now is a different question, and one I'm frankly on the fence about, leaning toward "no"). However, our economy had also just taken a massive hit - contra broken-windows-theory, the way to get rich is not to destroy all of your own capital. Hiking tax rates on top of that would have exacerbated the effects of the enemy's attack on our nation, when we were already dealing with the 2001 recession.

i wouldn't have advocated raising taxes right after 9/11. when it became obvious that we were looking at long term war, though, definitely. that was more apparent by 2005 or so.

2. In times of crises (say, "war"), you pay for the response, understanding you will have to figure out how to pay for it later. During WWII we issued massive (for that time) amounts of warbonds for precisely that purpose. When your house is on fire is not the time to complain about all the firemen trampling on your grass.

if people aren't willing to embrace shared sacrifice, then it's not a war that i can support. if it's important enough to send our troops there, then civilians of all income levels need to chip in, as well, if only to ensure that we choose our wars more carefully. if everyone knows that their income tax is going to jump five or ten percent every time a boot is on the ground, then there will be more pushback, and we won't enter wars unless it's absolutely necessary.

The extent to which you tax is part of the extent to which you choke down economic activity. I can understand people not wanting to do that at the same time we will be ramping up other sacrifices.

it's easy to put a sticker on your truck that says "i support the troops." it's another thing to actually take an economic hit. war is not supposed to be palatable. it is supposed to be a necessary evil that is only entered into as a last option.

 

[cpwill]

i wouldn't have advocated raising taxes right after 9/11. when it became obvious that we were looking at long term war, though, definitely. that was more apparent by 2005 or so.



if people aren't willing to embrace shared sacrifice, then it's not a war that i can support. if it's important enough to send our troops there, then civilians of all income levels need to chip in, as well, if only to ensure that we choose our wars more carefully. if everyone knows that their income tax is going to jump five or ten percent every time a boot is on the ground, then there will be more pushback, and we won't enter wars unless it's absolutely necessary.




it's easy to put a sticker on your truck that says "i support the troops." it's another thing to actually take an economic hit. war is not supposed to be palatable. it is supposed to be a necessary evil that is only entered into as a last option.

I can understand all your points as described, especially since you are quick to jump to all people being expected to participate. Maybe had we raised taxes in 2004/5 we would have reduced economic growth, pre-popped the bubble, and it would have been less painful.


Full Disclosure: when I discuss taxes and welfare, I have a strong bias in favor of a particular set of structures

 

[Helix]

I can understand all your points as described, especially since you are quick to jump to all people being expected to participate. Maybe had we raised taxes in 2004/5 we would have reduced economic growth, pre-popped the bubble, and it would have been less painful.

this crossed my mind as well when i was composing that post.

Full Disclosure: when I discuss taxes and welfare, I have a strong bias in favor of a particular set of structures

optimal peacetime tax structure could be a thread of its own.

 

[PeteEU]

one sided austerity rarely works. my opinion is that our best move is to cut the corporate rate and treat all individual income as income above a cap. also, we should be spending a lot less on military interventionism. if we do choose to enter a conflict, that should automatically trigger wartime tax rates for all brackets. then we'll watch as most of the hawks fly away as soon as they find out that they actually have to pay extra for it themselves. it's almost comical that those who bitch the most about debt also want tax cuts and war at the same time. i don't waste much time responding to the protestations of anyone who fits that description.

Cutting the corporate tax rate wont do anything... unless you take away all the loopholes. The problem in the US, is the whole tax system is designed to be complicated to confuse and is in reality a reverse progressive tax system where the rich pay the least in % compared to the masses. And no a flat tax is certainly not the solution and would make things worse.

This is of course a problem across the western world, but it is not as bad as in the US.

The first thing that should go, is capital gains tax of any kind. That kind of profit should be taxed as normal income or as corporation tax.

The personal tax rate should be progressive.. the more you earn, the more you pay in %. In stages of course.. so the first 30k is 20%, 30-50k is 30% and so on.

Most deductibles need to die... only the standard deductible really needs to say.. say the first 10k of ones income is tax free or something like that.

And a thing I really want to see even in my own country, is an itemised tax return where it is stated that so much in % goes to this and that. That way the population can see what their tax money actually goes too. So for example, of the 30% taxes you pay, 10% goes to military, 5% to healthcare, 5% to SS, 4% to administration, 4% to other or something similar.

Also the first law that needs to be passed in the US, is that SS needs to be paid back fully and future administrations are banned for taking out money of SS.

 

[PeteEU]

You are correct, Pete. People tend to think of the debt in terms of other nations, but mostly we borrow from ourselves. Something that if private individuals do it's called kiting and is illegal.

That does not mean however that the debt is meaningless. It's just out of site, out of mind.

Debt is not meaningless, but needs to be taken in context. And "kiting and it is illegal" is not true when talking about a country. The money that is loaned to the state, is actually investments from banks, companies and individuals. The only time that this becomes a problem, is if the state does not meet its obligations, which cant really happen in a stable state that can print their own money.

The reality is, individuals have far more personal income to debt ratios than almost every nation on the planet. And unlike individuals, the state does not run out of income. An individual can lose his/her job and suddenly there is a problem. A state wont run out of income.. it might have less income or more, but the only situation a state runs out of income is state disintegration, which is rare and if it happens debt will be the least of our worries.

 

[Unitedwestand13]

yeah, it isn't situation critical when you look at the numbers and who is owed what. however, there's no way around it : individual taxes need to go up, and we need to find new revenue streams. we should be reporting a surplus at least occasionally, and the debt shouldn't be going up by this much in such a short period of time.

Raise property taxes?

 

[jimbo]

yeah, it isn't situation critical when you look at the numbers and who is owed what. however, there's no way around it : individual taxes need to go up, and we need to find new revenue streams. we should be reporting a surplus at least occasionally, and the debt shouldn't be going up by this much in such a short period of time.

Actually there is a way around it. We need to reduce expenses to meet revenue.

 

[sangha]

Why isn't government debt more of a problem in people's minds?

Mainly because it is not a problem at all.

 

[joG]

Actually there is a way around it. We need to reduce expenses to meet revenue.

That won't usually get you elected, you know?

 

[joG]

Raise property taxes?

Property like in real estate?

Not a good idea. C.p. that reduces investment in an asset meaning less housing, if it was that you meant.

 

[cabse5]

Once power is given to the government...it is not returned. I for one am not happy with this. There is no such thing as good debt. But seriously...I was reading an article this morning and it seems Trump is wanting the debt ceiling to go up and the left is already saying no. Which is opposite of what they said for the past 8 years.

They have to be obstructionists, right?

 

[MrShangles]

False

Biggest owner of US debt.. Social Security, with almost 2.8 trillion.

Biggest foreign owner of US debt... Japan with about 1.11 trillion, followed by China with 1.1 trillion.

Federal reserve is owed 2.5 trillion and various Mutual funds are owed 1.4 trillion.

Fact is, out of the almost 20 billion, only 6.3 billion is owed to foreign countries.

This is why the "debt problem" debate by the US right is so false and meaningless.

Unless you need social security one day!


Sent from my iPhone using Tapatalk

 

[Unitedwestand13]

Property like in real estate?

Not a good idea. C.p. that reduces investment in an asset meaning less housing, if it was that you meant.

I live in state suffering the cancer known as prop 13

 

[jimbo]

That won't usually get you elected, you know?

And therein lies the problem.

 

[Helix]

Cutting the corporate tax rate wont do anything... unless you take away all the loopholes. The problem in the US, is the whole tax system is designed to be complicated to confuse and is in reality a reverse progressive tax system where the rich pay the least in % compared to the masses. And no a flat tax is certainly not the solution and would make things worse.

This is of course a problem across the western world, but it is not as bad as in the US.

The first thing that should go, is capital gains tax of any kind. That kind of profit should be taxed as normal income or as corporation tax.

The personal tax rate should be progressive.. the more you earn, the more you pay in %. In stages of course.. so the first 30k is 20%, 30-50k is 30% and so on.

Most deductibles need to die... only the standard deductible really needs to say.. say the first 10k of ones income is tax free or something like that.

And a thing I really want to see even in my own country, is an itemised tax return where it is stated that so much in % goes to this and that. That way the population can see what their tax money actually goes too. So for example, of the 30% taxes you pay, 10% goes to military, 5% to healthcare, 5% to SS, 4% to administration, 4% to other or something similar.

Also the first law that needs to be passed in the US, is that SS needs to be paid back fully and future administrations are banned for taking out money of SS.

i agree with that for the most part. as for the corporate tax, cut it to something reasonable, and collect it from all corporations, not just the ones that are too small to dodge it. i don't support a flat tax, either. a flat tax is nothing more than another attempt at trickle down, which hasn't worked.