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Raw data: Spending and the deficit

Here's another look at the federal budget over the next decade. It comes from the Congressional Budget Office:

Nobody wants to cut Social Security or Medicare. Pensions are legally obligated. Veterans and defense have bipartisan support against cuts. And interest on the debt has to be paid.

That leaves a bit under $2 trillion. It includes Medicaid and all other social welfare spending, plus all ordinary domestic spending (national parks, the FBI, the EPA, crop subsidies, etc. etc.). You would have to cut it 100% to eliminate the federal deficit.

Any other ideas?

96 thoughts on “Raw data: Spending and the deficit

  1. zic

    Military spending.

    No more war planes, cut the number of personnel, pull people out of other countries, and stop paying for the world's biggest military. Just an ordinary one would be just fine, thank you.

    1. zic

      Tax both income (all of it) and capital gains for social security, it seems like this would make it self-funding.

      Get rid of the for-profit health insurance industry and go to a single-payer system; but after our experiences with the required for-profit Medicare insurances v.s. Obamacare policies, I'd say Bernie Sanders was wrong. Don't lower the age of Medicare to zero, make it Obamacare for all.

    2. dilbert dogbert

      The reason the deficit has not bit us on the ass is because of all that military spending. Foreigners buying our debt is how they thank us for the spending. Re: Russia/Ukraine.

      1. zic

        So you're attributing our national debt to being a relic of the Marshall Plan?

        Japan is the #1 debt holder. So maybe. #2 is China; def. not.

        Nest nations include the Luxemborg, the UK and Canada.

        So it strikes me as more a response to using the US economy as a hedge against inflation in their own nations. But I'm no expert.

  2. Anandakos

    Any other ideas?

    Yes.

    1. Allow the personal Trump tax cuts to expire completely, for all cohorts of the population.

    2. Add a 3% VAT with an exemption for food and prescription drugs.

    3. Add back the Child Tax Credit, including the first year "Bonus Baby" portion, which is kind and might spur a little bump in fertility.

    4. Remove the "cap" on the EMPLOYER PORTION of OASDI. Expand it to "non-salary" compensation. If Tesla shareholders feel that Elon is worth $25 billion, they ought also to feel that he's worth pitching in another one and a half billion for their retirees.

    DO NOT do the $25,000 "startup business" thingy, Kamala. It is massively too easy to game. Think about it.

  3. shapeofsociety

    Raise taxes on the rich to at least 70% and maybe more. It'll lower the deficit *and* make our nation's elite less wasteful and better behaved.

  4. kenalovell

    Waste! Just eliminate all the waste! And get rid of income tax to generate massive economic growth because incentives!!!

  5. Jim Carey

    Any other ideas? Yes. Always vote for candidates for political office who promise to engage in political practice by serving the whole at the expense of its parts, with the result that everyone benefits in the long term from the system's strength, and then make sure they behave the way they promised to behave, while never voting for candidates who promise to commit political malpractice by serving the parts at the expense of the whole, with the result that everyone suffers in the long term from the system's weakness. Easy peasy!

  6. raoul

    Getting rid of the Trump tax cut will erase about one third of the deficit. Need to find another third (I like the idea of raising the SSA Cap on the employer side- that would go a long way- adding a billionaire tax would take care of the rest). Then having a 600 billion deficit which is less than 3% GDP is sustainable.

  7. James B. Shearer

    "Nobody wants to cut Social Security ..."

    I do. I want to kick all the people on Social Security disability who aren't actually disabled off. Which as I understand it is about half of them.

    1. tigersharktoo

      You understand that? I hope your comment is snark, because you present no evidence.

      SSDI is very hard to get onto. There are hoops, after hoops, after hoops.

      1. NotCynicalEnough

        Heck, the can make you jump through hopes to get old age Social Security - they've been doing it to my spouse because SS reversed her first name/middle name compared to what INS had. She has tons of documentation to prove she is the same person, but rules are rules.

      2. bmore

        I hope it is snark, too. Else he is an idiot. SSDI is based on what someone actually paid into SS, how long they worked. Yes, it is difficult to get. Statistically, only about 1/3 of people get it on their first application. People die waiting to get approved. People who are disabled and did not work enough before they became disabled, get SSI. They get about $943 a month,
        can have no more than $2000 in assets, and if they are married, their benefits can be cut based on the spouse's income. As always, there may be scammers but they are not going to contribute significantly to the deficit

      3. bethby30

        John Oliver just did a piece on this. Seriously disabled people have very long waits and often get denied.

        As for the debt, the same people who kept telling us that the only way to get inflation down was to have a recession that raised the unemployment rate significantly are the ones preaching debt doom if we don’t cut government spending on social to the bone but are fine with tax cuts for the rich. Here is an informed take from someone who isn’t anti-government:
        https://www.ips-journal.eu/topics/economy-and-ecology/debt-paper-tiger-7763/

        1. ScentOfViolets

          I have in down in my rolodex o' trolls starting with Mother Jones. I wonder what happened to the likes of Shooter2422 and Richard Stout; haven't seen them and others equally notorious in ages. Not that I'm saying Betelgeuse, mind you.

  8. Scott_F

    Remove Social Security from this whole discussion. It’s an independent and self funding program. Including it in the budget is just excusing Congress borrowing that money from Seniors all those years.

    As to eliminating the debt, I agree with most of the posters here. Why are taxes off the table in your discussion, Kevin? You’re playing into the hands of the Republicans who want to drown the government in the bathtub… except the part that tells people how to live their sex lives.

    1. johnbroughton2013

      Social Security is actually present in two places in the table. One place is the first row in the table, for spending. The other place is for SS revenues - that would be part of the **hidden** row showing the total for all revenues. It's a bit inexplicable as to why Kevin chose to omit that row.

      The point is that the deficit **would** decrease, and significantly, if SS taxes were increased, as a number of commenters have suggested.

  9. jamesepowell

    We can cut wastefraudandabuse! No money for foreign aid! No money for immigrants! See how easy that was? That's what Republicans say anyway.

    No one cares about the deficit or the debt. It's only what Republicans say when a Democrat is president.

    1. Anandakos

      I care about the deficit and the debt. Things don't have to be in perfect balance, or even close, but the current five or six percent of GDP is unsutainable. We can't grow our way out of it like the huge debt for World War II.

  10. NotCynicalEnough

    So the only solution is to raise taxes especially on the ultra wealthy as that is where most of the money is. I don't see the problem.

    1. megarajusticemachine

      After mistakenly cutting them for decades now, a little movement back in the other direction wouldn't even be felt except by the selfish anyway.

  11. FrankM

    Umm...Remind me again why we need to eliminate the deficit? As long as the debt/GDP ratio doesn't increase drastically, there isn't a problem. And even if it did increase somewhat, there's no evidence that it becomes a problem any time soon. Japan has a debt/GDP of 250% and isn't showing any ill effects. There are plenty of other historical examples of high debt/GDP with no catastrophic effect. As long as you're borrowing in your own currency, no country has ever faced a problem.

    As everyone knows, no one actually cares about the deficit. It's just a cudgel to restrict spending when D's are in charge. It's never an impediment when the R's want to do something.

      1. FrankM

        Which is not to say that we SHOULD be piling up debt to put more money in the pockets of those who already have more than enough. It does matter what you spend the money on.

    1. bbleh

      Thank you, yes! Exactly so! And while there MAY actually be SOME cause for concern about the long-term sustainability of the national DEBT as it currently stands, we should not for a MOMENT believe that all the garment-rending and other hysteria about "THE DEFICIT" is anything other than performative, and more specifically intended to drive the message that Those People (translation: non-White) are getting Our (translation: White peoples') money, and that -- along with Those People actually VOTING -- is just Not To Be Tolerated.

      1. TheMelancholyDonkey

        Exactly how large a percentage of federal revenues being spent on interest payments are you planning to go?

        1. TheMelancholyDonkey

          Like any debtor, the United States government would find its becoming much more onerous in a deflationary period, no matter what currency it's denominated in. There are two main reasons.

          The first is that, as prices fall, every dollar becomes more valuable. That means that every dollar of the national debt represents a greater amount of resources. Even if nominal debt remains unchanged, real debt increases.

          The second is that deflation means that real interest rates go higher. Since you can't run nominal interest rates lower than zero, you lose the ability to lower real interest rates. This, again, causes the cost of servicing the debt to increase even if the nominal amount of debt doesn't change.

          1. zic

            Thank you.

            To that, I would add that deflation would mean debt holders would be more likely to seek full repayment, depending on the terms.

            And the presumption that the American people hold that debt (bonds) is ridiculous; I believe that most of it is held by the Chinese government and foreign banks, and they do expect to get repaid. This is why defaulting on the debt is so serious; and why presuming we won't have a future deflationary cycle is both short-sighted and bad planning.

            1. jdubs

              This is factually wrong.

              Foreign entities (private individuals and governments) own roughly 23% of US debt. The foreign individual vs govt split is about 50/50, so foreign governments own roughly 12%. China is somewhere around 2-3%.

              Given that you now know you were completely wrong about the facts of the situation, does that change your view? Or do you make up new facts to support the same hard-to-support position?

              1. zic

                I'm happy to stand corrected; I already said I'm not expert.

                But at least I'm not a jerk, and can admit when I've made a mistake.

                I stand by what I said, if China calls in the national debt, we've got a major problem.

                1. jdubs

                  What do you think it means when you say 'China calls in the national debt'?

                  China owns roughly 3% of US debt. All of the debt they hold has a set interest rate and maturity date. China cant decide to do anything other than sell the debt to someone else or continue to collect the regular, contractually bound payment schedule.

                  China cant do anything to cause a problem.

      1. Austin

        Which hasn’t happened to any peer country borrowing in their own currency in living memory. Not even Japan which FrankM pointed out has been running massive deficits for pretty much my entire lifetime (47) with no ill effects.

        But sure. Go on worrying about deflationary cycles > ??? > hell in handbasket. Eventually you’ll be correct I suppose, but probably not in anyone currently living’s lifetime.

        1. TheMelancholyDonkey

          Which hasn’t happened to any peer country borrowing in their own currency in living memory.

          There are a couple of problems with this argument. The first is that we've spent just about all of living memory in a specific set of circumstances that are starting to change. For all of that time, the United States has been something of a hegemon. The largest economy in he world was confident enough that it could and did function as a buyer of last resort. British interest rates remained low after WWII, despite enormous public debt, in part because the US pumped a lot of aid into the European economy. So, saying that countries that borrow in their own currencies don't have debt problems in living memory is only relevant if the conditions in living memory will continue. But they won't.

          The second is that there are always long time lapses between large scale debt crises. Saying that they haven't occurred in living memory makes the possibility of one happening now no different than it ever does.

          Not even Japan which FrankM pointed out has been running massive deficits for pretty much my entire lifetime (47) with no ill effects.

          The Japanese situation is more complicated. To say that there have been no ill effects is simply false. What may be true is that persistent budget deficits might be the effect of the problems rather than the cause. But Japan has experienced extremely low GDP growth for about three decades now. It's been negative for 19 of the last 35 years. The Bank of Japan has currently set short term interest rate at 0.25%, which is the highest it's been since 2008. And Japanese population growth has been essentially zero since 1988, and negative every year since 2009.

          Again, Japan would be a valid test for potential problems with American debt if the conditions here matched the conditions there. They don't.

          1. jdubs

            Lots of typing, but in essence your point is that he might be wrong because "its complicated and who knows what will happen!?"

            This isnt really much of an argument. Oddly, its often taken as evidence-free sage wisdom when its used as reasoning to cut services or reduce the deficit.

            1. TheMelancholyDonkey

              No, my point is the arguments being made to support a claim that deficits don't matter are very poor, because they fail to address the context.

          2. Five Parrots in a Shoe

            Have you been to Japan lately? It's one of the best-run countries on Earth. I would trade our economy for theirs without hesitation.

            1. TheMelancholyDonkey

              That's fine, but entirely irrelevant to my point. It was that there are some huge differences between the situations that the US and Japan exist in, which makes a comparison of their debt levels invalid.

    2. TheMelancholyDonkey

      As long as the debt/GDP ratio doesn't increase drastically, there isn't a problem.

      As long as interest rates were close to zero, this was a valid argument. However, they are no longer there. It is now a lot more difficult to run a large deficit without increasing the debt/GDP ratio. When interest rates go up, the deficit has to be smaller than GDP growth to maintain the same ratio.

      And even if it did increase somewhat, there's no evidence that it becomes a problem any time soon.

      That depends entirely upon what you consider to be a problem. No, it probably doesn't have major macroeconomic effects yet. However, the increase in what we are spending to service the debt most definitely is becoming a problem. In fiscal 2024, interest payments made up about 13% of federal spending. Given that there a lot of things I would prefer to be spending that money on, the deficit is a problem right now.,

      Japan has a debt/GDP of 250% and isn't showing any ill effects.

      The Bank of Japan set its key short term interest rate at 0.25% in September. That's the highest it's been since 2008. The current Federal Funds Rate target by the Federal Reserve is 4.75-5.00%.

      Whether a budget deficit is a problem at 0.25% interest rates tells us absolutely nothing about whether the same deficit is a problem at 5% rates.

      There are plenty of other historical examples of high debt/GDP with no catastrophic effect.

      And what were the interest rates? Also, keep in mind that a lot of those historical examples come from European countries in the wake of WWII, when the United States pumped massive amounts of economic aid into them. Who are you planning will do the same for us now?

      As long as you're borrowing in your own currency, no country has ever faced a problem.

      This is absolutely, categorically false.

      1. FrankM

        One could make a good argument that Japan is sui generis. Much of their problem is a result of aging population, low birthrate and strong anti-immigrant policies. (Hello, Trumpies!!! Are you paying attention?) Their low interest rates are a result of the negative GDP growth stemming from these problems. But OTOH, if you're afraid of high interest rates, these result from high GDP growth, which would have the effect of reducing debt/GDP ratio. You can't have it both ways.

        The current Fed funds rate is high because of Fed monetary policy, not because of high debt loads. It's temporary, and we will, before long, be back to around 3% (real rate about 1%), which shouldn't be a problem. At that level, debt/GDP should stabilize, if not decline somewhat. It would certainly be prudent to sunset most of the Trump tax cuts to increase revenues somewhat, especially since they weren't needed in the first place.

        At present, I see no indication that the debt is causing interest rates to rise. It could, possibly in the future, given certain circumstances, but there's no indication as yet that we're close to that point.

        1. TheMelancholyDonkey

          One could make a good argument that Japan is sui generis.

          Fine. I even agree with this. Which means that you can't use Japan as an example to support your argument.

          But OTOH, if you're afraid of high interest rates, these result from high GDP growth

          No, they don't. The Fed often raises interest rates is after a period of high growth. One of the consequences of raising interest rates, one that is intended by the Fed, is to lower GDP growth rates.

          The current Fed funds rate is high because of Fed monetary policy, not because of high debt loads.

          No matter what the cause, high interest rates make financing the debt a lot more expensive.

          It's temporary, and we will, before long, be back to around 3% (real rate about 1%), which shouldn't be a problem.

          You are predicting that interest rates will drop. This is not guaranteed, no matter how confidently you assert it. Further, the arguments that deficits don't matter worked when interest rates were under 1%. This was true for one-year Treasury debt from late 2008 to early 2017, and again from early 2020 to late 2021. Between 2008 and 2022, they were never higher than 2.6%, and even that spike was short lived.

          Again, there is a huge difference in interest payments with rates under 1% than when they are 3%.

          At that level, debt/GDP should stabilize, if not decline somewhat.

          If we significantly cut the deficit, this is true. But you are arguing that deficits don't matter and that they aren't a problem. That you don't recognize that your arguments are inconsistent is one of the indications that you don't really understand the subject.

          At present, I see no indication that the debt is causing interest rates to rise.

          Again, it's irrelevant whether it is the debt level that is causing higher interest rates. No matter what the cause is, higher interest rates demolish the argument that deficits don't matter.

          In 2021, interest payments as a share of federal spending was about 5%. In 2024, they are 13% of federal spending. As a percentage of GDP, it's gone from 1.5% to over 3%. Are you seriously arguing that this can keep going up without negative consequence?

      2. jdubs

        Again, lots of typing but no evidence or even a reason to back up the boogeyman-esque fear of these scary deficits.

        Stating that something is categorically false seems like a good opening to introduce a fact or example or even a counter argument. But alas, there is none. Just straight up boogeyman.

        Deficits are to be feared and must be considered a problem because....deficits are to be feared and must be considered a problem. The end!

          1. jdubs

            They have been much higher with no ill effects.

            Your 'debt is scary' boogeyman is weak. Your boogeyman argument sucks.

  12. horaceworblehat

    Cut the incredibly bloated military budget and increase taxes on the wealthy to 1960 levels. It will balance the budget and have money left over for universal healthcare which will in turn oddly enough reduce medicare spending. Throw the rest into education and nationwide rail.

    But, we don't need to eliminate the deficit. We just need to get it to an acceptable level. Trump's first presidency has made that a tall order to do considering how much it ballooned then (even if you exclude the necessary spending during COVID).

    To the people saying that the deficit doesn't matter and citing Japan as an example of this: Japan's day is coming soon where their racist policies toward foreigners and their negative birth rate will collapse their economy. Their deficit will become a big problem then when they can't pay the interest on it.

    Having a deficit isn't a problem. In fact it's healthy for a government to have a deficit. It means they're borrowing for their future. But, the problem comes in how much the government is having to spend on interest payments, and that is what Kevin is showing in his table. It will be a big problem in 10 years which consequently is around the same time the Social Security well will dry up, so...

    1. FrankM

      Why are interest payments a problem if your government is the issuer of the currency? Once you start thinking critically about debt and deficits you find that all the usual objections don't make any sense.

      Think hard about it. What actually limits the amount of debt that the government can carry and why?

      1. TheMelancholyDonkey

        Why are interest payments a problem if your government is the issuer of the currency?

        You have to pay them even if you issue the currency. What you are arguing for is massive inflation. That's what happens when the government starts printing a lot of money to cover its debts.

        Once you start thinking critically about debt and deficits you find that all the usual objections don't make any sense.

        Only if by "critical thinking," you mean, "without actually understanding the subject."

        What actually limits the amount of debt that the government can carry and why?

        What actually limits the amount of debt that the government can carry is the amount of money that lenders are prepared to use to buy that debt at a given interest rate. Your assumption that this amount is infinitely large is very, very wrong.

        1. FrankM

          What actually limits the amount of debt that the government can carry is the amount of money that lenders are prepared to use to buy that debt at a given interest rate.

          Bingo. This is the real limitation on how much debt you can accumulate. Alternatively, you can look at it as the amount of debt that would consume so much capital that there was insufficient left over for necessary private use. These cases are really two sides of the same coin. At that point the Federal Reserve loses the ability to use monetary policy to control the economy. But there's not the slightest indication that we're anywhere close to that point.

          1. zic

            Again, I'm no expert, but this sounds dangerously similar to the arguments made lenders push synthetic derivatives as a hedge to risk.

          2. TheMelancholyDonkey

            But there's not the slightest indication that we're anywhere close to that point.

            Interest rates on 1-year Treasuries have gone from under 1% to about 5%. So, you are incorrect that we aren't anywhere close to the point where investors demand higher rates to purchase federal debt. We are, in fact, well past that point.

            That you refuse to grapple with the fact that the cost of financing our debt has gone up dramatically means that you are refusing to argue seriously.

            1. jdubs

              FrankM said -
              "At that point the Federal Reserve loses the ability to use monetary policy to control the economy. But there's not the slightest indication that we're anywhere close to that point."

              You pretended that he said-
              "At that point the investors demand higher rates to purchase federal debt. But there's not the slightest indication that we're anywhere close to that point."

              This was deceitful.
              Then you continued to misrepresent what he said about rising interest costs.

              Very dishonest, you cant be taken seriously.

  13. bmore

    Agree that it's ok to have a deficit. If we want to reduce the deficit:
    --Eliminate the cap on Social Security contributions. Whatever the income, pay SS.
    --Increase the upper income tax bracket. It was 90% in the 50's, 70% before Reagan. Even 40 or 50% would bring in more money.0
    --Tax capital gains as income.
    --Extend the Child Tax Credit, increase SNAP, other safety net benefits. This money
    gets spent almost immediately, circulates in society. Eg, every $1 in food stamps adds $1.50 to the economy.
    That's just a start.

    1. Creigh Gordon

      More specifically, spend enough to keep everyone who wants to work doing as much useful stuff as possible, and tax enough to control inflation. Let the deficit float.

      1. TheMelancholyDonkey

        And what is your plan to deal with the fact that the interest payments would eat up a higher and higher percentage of federal spending?

        1. Creigh Gordon

          Under a fiat money regime, interest payments on liabilities issued by the Government are entirely at the discretion of the Government, and will argue, serve no public purpose.

          Under a gold standard, Governments "borrowed" their own currency to protect their gold supply. The (convertible) currency used to pay the Treasury for the (nonconvertible) bonds couldn't be presented to the Treasury for conversion to gold. The interest paid on bonds was reward and motivation for bond buyers assuming the risk that convertibility wouldn't be available when the bond matured, and was market-determined based on risk assessment by the bond buyers. This purpose of "borrowing" obviously has no relevance for nonconvertible currency.

          The current justification for paying interest on Government liabilities (today, both bonds and reserves) is monetary policy: control of the economy and management of unemployment and inflation. I argue that there's little or no evidence that monetary policy actually works, and that fiscal policy does a much more precise and effective job, with the Inflation Reduction Act an excellent example.

          For these reasons I argue that paying interest on Government liabilities is just giving money to people because they already have money. Banks obviously love it, but there's no public purpose..

          That said, for a nation that creates its own currency out of thin air, there's never a financial sustainability problem. The Government can pay any obligation, in any amount, now and forever, as long as that obligation is payable in the currency it creates. This would include interest.

          1. TheMelancholyDonkey

            That said, for a nation that creates its own currency out of thin air, there's never a financial sustainability problem.

            This is complete bullshit. There may never be an inability to pay out the debt, but the cost of that can be very high inflation as the government prints money.

            Can the economy be managed through fiscal policy? Sure, theoretically. But that doesn't mean that the government can run infinite deficits without negative consequences. And have you paid any attention to Congress lately? What do you think the chances are that we can, as a practical matter, govern the economy through fiscal policy?

            1. Creigh Gordon

              My recommendation is to quit paying interest on Government liabilities. Solves that problem.

              You have a point about political practicalities, especially when one party is committed to gridlock. The only solutions to that are political. But beyond that, fiscal policy will probably never be nimble enough by itself, which is why MMT most often advocates for an automatic stabilizer, specifically the Job Guarantee.

  14. MikeTheMathGuy

    Blast from the past: In the first Presidential debate in 2012, Romney was asked to be specific about how he intended to cut federal spending to get to the levels he had promised. (IIRC, he had promised 30% reduction in spending.) The only example he gave was funding for public broadcasting, with a pathetic joke about "Sorry, Big Bird." The dumb joke got all the commentary later, but Obama -- who was having a bad night -- really should have called him on the numbers: "Spending on public broadcasting accounts for less than one one-hundredth of one percent of the federal budget. So Governor, unless you have 3000 more examples like that one, you need to look into the camera and tell the American people that you don't have a clue how you would cut spending enough to meet your goals."

    1. FrankM

      This sounds great, but it actually doesn't bring in as much revenue as people think. The rich have lots of money, but there aren't enough of them. The 99th percentile is currently $631,500 per year. Households bringing in $1 million/year are about 99.5th percentile. This is not to say the top tax rates shouldn't be higher. Only that it isn't the panacea that is commonly thought.

  15. Austin

    Yawn. As Charlie Pierce likes to say on his blog, Fuck The Deficit. Any Democrat who “fixes” it just leaves the door wide open for the next Republican to pass more tax cuts, blowing the deficit up again. We saw this happen with Clinton and Obama. Let Republicans fix the deficit if they care so much about it.

    1. Five Parrots in a Shoe

      "Let Republicans fix the deficit if they care so much about it."

      No. They will take an axe to every form of welfare. And they will also gut every federal agency that provides useful services to the public: NOAA, the National Park Service, FEMA, HUD, everything health-related, OSHA, and especially the IRS.

      As Kevin points out, all of this will eliminate perhaps 10% of the problem, but they will pat themselves on the back nonetheless, and then reward themselves by giving the rich another tax cut.

  16. cmayo

    Who says we have to eliminate the deficit?

    Fuck the deficit. It doesn't actually matter right now, and to the degree that it matters at all/will matter in the future, it's very fucking minor. We'll have to raise taxes by like, eliminating the Bush tax cuts entirely, or something. That's it.

    The deficit can exist in perpetuity.

    1. TheMelancholyDonkey

      So, just how high a percentage of federal spending are you prepared to allocate to interest payments? It's already at 13%.

        1. TheMelancholyDonkey

          Every dollar spent on interest payments is a dollar that isn't spent on government programs, unless you share Creigh Gordon's total misunderstanding of the effects of using fiscal policy to govern the economy. I am accepting, arguendo, that there isn't a tipping point at which the debt becomes unsustainable. There is no bright line. But every dollar added to interest payments has a cost.

          And, yes, I am familiar with the chart that you link to. I am also familiar with the CBO's charts that project interest payments as a share of GDP over the next decade. That sharp rise that begins in 2021 will continue.

          https://www.axios.com/2024/02/08/us-government-debt-gdp-interest-costs

          1. jdubs

            So again, we are left with a pure boogeyman approach to debt and interest payments.

            You ask for others to play your game and determine a maximum interest to GDP ratio...but why would anyone make your argument for you? You cant even make a coherent argument.

            When confronted with a chart showing significantly higher payment costs that coincided with a generally great economy, good asset returns and no long term crippling debt costs that you insist should have happened at some point....you sidestep the history and sidestep the question entirely. Even you wont play your game.

            We have to assume you are acting in bad faith here and this is not a serious argument, because you dont appear to take your own argument very seriously.

      1. cmayo

        OOGA BOOGA

        Are you scared away yet? Your arguments are flim flam. I can't be bothered. I wasn't arguing for your benefit anyway.

  17. ruralhobo

    A dollar is only worth what people think it's worth, and ever since quantitative easing became the go-to solution for every confidence crisis, I've been uneasy. No matter the economic smart talk, it seems to me there's a huge and growing bubble of unreal money overhanging the real world, the problem being that the unreal cash is not Monopoly money and can be converted into the real stuff. Also that QE seems to mostly benefit banks and the rich.

    I'd split deficit talk into two camps in a different way than usual. One side will say spend, spend, spend before the crash comes because it'll equally come for those who didn't live it up so WTH. The other believes the house won't burn down, so it's worth getting it in order. I have no idea which of the two is naive.

    Don't take that as economic insight but as man-in-the-street queasiness.

    1. Jim B 55

      What is "real money" and "unreal money". All mooney is "unreal".. The only difference is whether it is created by the Fed or commercial banks.

      1. dilbert dogbert

        Real money is created by guns, clubs, courts, jails, armies and police. The sovereign controls those. But, who controls the sovereign?

      2. Creigh Gordon

        I think he's talking about converting money into real stuff in terms of spending (potentially unlimited) money on real goods and services. And real goods and services are what we are ultimately concerned with.

    2. jdubs

      If it makes you feel better, the queasy man in the street has always been worried about unreal money and the economic disaster that is always just over the horizon. That it never arrives and the 'unreal money' is always changing to whatever the new thing is might make you feel better.

  18. JohnH

    Sorry, but the only correct answer is "stupid question." Far too many comments here go along with the question, as an impetus to justify the usual liberal agenda that I, too, embrace -- fair taxes on the wealthy, cuts to military spending, whatever.

    But that's what it all means to the wingnuts, too: starve the government, show the masses thereby it's ineffectual, and cut spending on healthcare or whatever else might conceivably to the wrong people. It's always been just an excuse, beyond a very few in the GOP who still genuinely believe in a balanced budget. And of course all mainstream economists argue that trying to balance the budget is a recipe for economic disaster.

  19. Citizen99

    All the sweat over the federal deficit is unnecessary. Most of the bondholders are right here in the U.S. In fact, the biggest single creditor is -- drum roll -- the Federal Reserve. Second biggest? The Social Security Trust Fund. All told, about 75% of federal debt is owned by people right here in the U.S. So when interest is paid on the debt, most of it stays right here in the country. It just shifts around.

    Think of the implication of Social Security being the payee from interest paid on debt that, in part, is being used to fund -- Social Security!

    It's true that about a quarter of the federal debt is owned by foreign creditors. But these are not foreign COUNTRIES as many of the debt alarmists like to say; they are BANKS that happen to be located outside the U.S.. In a few cases, like China, those banks are essentially controlled by the government. But China, for all the huffing about it, only owns about 4% of our national debt, and that is mostly Hong Kong.

    Other than the claim that government borrowing "crowds out" private investment, I just don't see a problem. And even on that note, realize that government "spending" is not like taking the family to Disney World; it's mostly investment in infrastructure and paying for necessary services that would NEVER be supported by the private sector. And even if money is borrowed from CHINA for federal programs, much of that money is going to end up being paid to federal contractors who hire U.S. workers!

    The whole furor about federal debt and spending is, in my view, an illusion meant to line the pockets of the very wealthy.

  20. painedumonde

    A Roman bacchanal for the one per cent, where their wills are rewritten, where finally they see the error of their ways and write the United States as beneficiary, and then each has a long, warm bath that they never leave...

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