Decreasing the Deficit

[Balthazzar]

It's quite a large chunk ... never mind the exact double digit trillion in the red, it's a large sum of money. In 2016, we were working on the interest with intent to be able to pay on the principle in about 20 years time. Considering the amount and international threats to US security, is it even possible to honor anytime soon and not jeopardize our defense capabilities? I don't think so, so ... other options are? It appears to be increasing annually, which means we've missed that 20 year timeframe for the interest and the time required to pay off the principle has increased to ???? our great grandkids 4 generations down?

I mean, unless we figure sometime out that doesn't demand Americans to lose our liberties or our defense capabilities to secure our nation from potential land disputes, we'll need to negotiate the terms and deals. I don't like the thought of selling off our properties either, so outsourcing is sounding pretty great .... if we can develop as many, if not more similar type jobs for Americans in the states as our foreign counterparts. It would appear trade deals are on the docket as well as added industrial complexes to be erected here and abroad.

Or...

are there other satisfactory ways to accomplish the goals at hand?

 

[F1fan]

Raise taxes on the wealthy. Their wealth increased during the pandemic because they were given opportunities to get free money. Plus the republicans have passed two tax cuts in the last 22 years that have benefited the rich the most.

Eventually taxes will have to go up and it will be the middle class and poor who will be paying more in proportion to wealth.

As I keep saying the USA will have to have a massive crisis and hit bottom before citizens make smart decisions.

 

[sun rise]

Here's where I'd start:

• Raise the tax rates on the wealthy - make system more progressive
• Eliminate socialism for businesses (special tax breaks for oil companies, farmers etc)
• Cap spending growth to flatten and decrease the deficit
• Eliminate the IRS bureaucracy with a gross receipts tax rather than the current horrible system
• Cut President, VP, Senators and Congress salaries for spending over the spending cap (go 5% over, salaries cut 5%)
• Fix Social Security by eliminating the salary cap and raise retirement age

 

[Nakosis]

It's quite a large chunk ... never mind the exact double digit trillion in the red, it's a large sum of money. In 2016, we were working on the interest with intent to be able to pay on the principle in about 20 years time. Considering the amount and international threats to US security, is it even possible to honor anytime soon and not jeopardize our defense capabilities? I don't think so, so ... other options are? It appears to be increasing annually, which means we've missed that 20 year timeframe for the interest and the time required to pay off the principle has increased to ???? our great grandkids 4 generations down?

I mean, unless we figure sometime out that doesn't demand Americans to lose our liberties or our defense capabilities to secure our nation from potential land disputes, we'll need to negotiate the terms and deals. I don't like the thought of selling off our properties either, so outsourcing is sounding pretty great .... if we can develop as many, if not more similar type jobs for Americans in the states as our foreign counterparts. It would appear trade deals are on the docket as well as added industrial complexes to be erected here and abroad.

Or...

are there other satisfactory ways to accomplish the goals at hand?

As I'm trying to understand this,

First, the government never has to pay off the deficient. Doing so most see as unhealthy for the economy anyway.
The economy is viewed as sustainable as long a interest rate - GPD growth is a negative number.

The Fed has control over the interest rate so in theory could drop this below the GDP growth whenever they want.
Currently however i > g. This is done on purpose to stifle inflation which has work. inflation has come down to a manageable level.
The Fed plans to reduce interest rate later this year.

Supposedly the amount of debt/deficit is irrelevant as long as growth exceeds the interest rate the economy remains sustainable.
Whatever the government spends is important to stimulate growth.
Whatever the Fed sets interest rate to should ideally not exceed growth except in this case of stifling inflation. i > g is not sustainable for long.
The important thing here is not the deficit but propping up the value of the dollar which is done through economic growth.

The Fed also cannot reduce the interest rate to the point that no one is willing to purchase that debt. So they only really need to balance the interest rate to GDP growth ration to prop up the value of the dollar in order to sustain the economy.

So the deficit can increase forever as long as the interest rate doesn't exceed the rate of GDP growth.

Why? because the government can simply print more money as long they can continue to prop up the value of the dollar.

 

[Balthazzar]

As I'm trying to understand this,

First, the government never has to pay off the deficient. Doing so most see as unhealthy for the economy anyway.
The economy is viewed as sustainable as long a interest rate - GPD growth is a negative number.

The Fed has control over the interest rate so in theory could drop this below the GDP growth whenever they want.
Currently however i > g. This is done on purpose to stifle inflation which has work. inflation has come down to a manageable level.
The Fed plans to reduce interest rate later this year.

Supposedly the amount of debt/deficit is irrelevant as long as growth exceeds the interest rate the economy remains sustainable.
Whatever the government spends is important to stimulate growth.
Whatever the Fed sets interest rate to should ideally not exceed growth except in this case of stifling inflation. i > g is not sustainable for long.
The important thing here is not the deficit but propping up the value of the dollar which is done through economic growth.

The Fed also cannot reduce the interest rate to the point that no one is willing to purchase that debt. So they only really need to balance the interest rate to GDP growth ration to prop up the value of the dollar in order to sustain the economy.

So the deficit can increase forever as long as the interest rate doesn't exceed the rate of GDP growth.

Why? because the government can simply print more money as long they can continue to prop up the value of the dollar.

with all our allies and all of our enemies and all that is expected from those we associate and do business with, there are some things we just can't neglect. One of which is our deficit, despite your input, suggesting we have no need to pay it off. As foreign relations go, integrity, reliability, trust, and being or remaining in "good standing" with our partners, I'd suggest a paradigm shift in your thinking. It's important, expected, and quite a pressing issue we're facing as a nation, particularly as it pertains to our progeny.

 

[Nakosis]

with all our allies and all of our enemies and all that is expected from those we associate and do business with, there are some things we just can't neglect. One of which is our deficit, despite your input, suggesting we have no need to pay it off. As foreign relations go, integrity, reliability, trust, and being or remaining in "good standing" with our partners, I'd suggest a paradigm shift in your thinking. It's important, expected, and quite a pressing issue we're facing as a nation, particularly as it pertains to our progeny.

As long as they can remain confident in the value maintain by the dollar, why should they care about the US government's deficit?

 

[Wandering Monk]

US Debt to GDP ratio is about 120%. That may sound high, but China's is about 350%, Japan about 225%. Our biggest economic competitor, China, has three times our deficit problem.

On the other side of the equation, the EU is about 84%.

 

[metis]

If having a deficit is so intrinsically horrible, how is it logically possible for the U.S. to be the world's #1 economic power since we've had one since before WWII?

 

[esmith]

One thing that they have to look at is the "3rd-Rail" issue of Social Security.
When Social Security was first estabilished in 1935 average life span was 59.9 for men and 63.9 for women and the majority of people did not get a chance to draw social secuirty. Life span in 2023 is 79.11. So politicans are going to have to touch the third rail to ensure that Social Security remains solvent.
Another issue is government economic and medical expenditures. You can't have a welfare state with open borders.