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Unites States National Debt - How Much And What For

Willmark

Well-Known Member
Neither solution is going to fix the problem. It will do no good to increase taxes on the rich if at the same time you are increasing spending on social programs. And vice versa - lowering taxes without lowering expenditures is not going to do anything to bring down our debt.
Exactly.

What Trump did: cut taxes, but didn’t cut spending.

What Biden will likely do: raise taxes but not cut spending.

What needs to happen and neither one did or will do? Cut spending, drastically.
 

Laketravis

Well-Known Member
Original Poster
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Reasonable is relative to the GDP.

That was going to be my response as well. $24 TRILLION is an awful lot of money, our GDP was almost $22T in 2019.

So roughly a little more than a years worth of economic production is national debt.

I sometimes compare that in my mind to someone who may earn $100K a year and has a $300K mortgage, three times their annual earnings. Of course, the house is an asset that can be sold for revenue while debt spent on consumables (health care, education) is a sunk cost.

Looking at many of the (promised?) programs and incentives that many voters are hoping to see come to fruition, I would not be surprised at all to see our national debt almost double over the next 4-6 years at a rate of 12-18% a year.

GDP is highly unlikely to see growth rates of that magnitude.
 

Willmark

Well-Known Member
That was going to be my response as well. $24 TRILLION is an awful lot of money, our GDP was almost $22T in 2019.

So roughly a little more than a years worth of economic production is national debt.

I sometimes compare that in my mind to someone who may earn $100K a year and has a $300K mortgage, three times their annual earnings. Of course, the house is an asset that can be sold for revenue while debt spent on consumables (health care, education) is a sunk cost.

Looking at many of the (promised?) programs and incentives that many voters are hoping to see come to fruition, I would not be surprised at all to see our national debt almost double over the next 4-6 years at a rate of 12-18% a year.

GDP is highly unlikely to see growth rates of that magnitude.
They are going to promise that X will be revenue neutral. There is no way that can happen.

At this stage taxes going up on everyone is a forgone conclusion should the Democrats get control of the Senate. And to preempt those just waiting to pull out X link that “it’s only going to be on those making 400k or more”

Not. Buying. It. For. One. Second.

I’m glad you started this conversation as a departure from the “orange man bad” thread.

This problem is decades in the making and will take decades to solve. Unless we going something like the penny plan, which is probably now closer to the nickel plan.

About the best we could hope to realistically get both parties to agree to is raise the rates back to Obama levels and cut spending. I think you could maybe get the GOP to do that, I highly doubt the Dems will go for cuts. Look how much they chaffed about sequestration last time.
 

MinnieM123

Well-Known Member
From what I've learned about the problems with Social Security, the fixes are relatively simple and effective. For example, raising the contribution cap. That alone goes a long way towards solvency. Yet for some reason it hasn't been raised substantially or even removed.

Please bear with me, as I'm not really sure what the contribution cap means, but from what you said, that sounds like a good idea.

May I kindly ask -- what do you think about the President not asking businesses to take out payroll taxes, like they've done for years? I don't understand this fairly recent move by him, as that will be taking money away from funding Soc. Security.
 

The Mom

Moderator
Premium Member
Please bear with me, as I'm not really sure what the contribution cap means, but from what you said, that sounds like a good idea.

May I kindly ask -- what do you think about the President not asking businesses to take out payroll taxes, like they've done for years? I don't understand this fairly recent move by him, as that will be taking money away from funding Soc. Security.
It's complicated but this article helps to explain how benefits are calculated. Basically, high income earners will be getting a much smaller "return" on their contributions - but still enough that it will most likely raise the amount of money being distributed long term above what can be collected short term. There will continue to be a shortfall unless they keep today's maximum benefit far into the future, and do not use those increased payments (due to removing the cap) into the system to calculate future benefits.

 

Laketravis

Well-Known Member
Original Poster
Please bear with me, as I'm not really sure what the contribution cap means, but from what you said, that sounds like a good idea.

Currently, wages are taxed at 6.2% for the employee and 6.2% for the employer. Meaning, that muc is deducted from the employee paycheck and the employer also pays an equal amount. This 12.4% of wages is the social security payroll tax.

BUT - the tax only applies to wages up to $132,900 (2019). Removing that cap and taxing ALL wages for social security would go a long way towards making social security benefits secure.
 

TheDisneyDaysOfOurLives

Well-Known Member
In the Parks
Yes
That was going to be my response as well. $24 TRILLION is an awful lot of money, our GDP was almost $22T in 2019.

So roughly a little more than a years worth of economic production is national debt.

I sometimes compare that in my mind to someone who may earn $100K a year and has a $300K mortgage, three times their annual earnings. Of course, the house is an asset that can be sold for revenue while debt spent on consumables (health care, education) is a sunk cost.

Looking at many of the (promised?) programs and incentives that many voters are hoping to see come to fruition, I would not be surprised at all to see our national debt almost double over the next 4-6 years at a rate of 12-18% a year.

GDP is highly unlikely to see growth rates of that magnitude.

I was going to make a joke, but didn't want to get yelled at via PM later ;)

I think the question is, what are the long-term benefits of:
  • Free childcare
  • Free post-secondary education
Feasibly, both of those things should actually end up producing additional tax revenue. Not immediately, but over 2-5 years we should start to see a return on that, shouldn't we?
 

Nubs70

Well-Known Member
I think the question is, what are the long-term benefits of:
  • Free childcare
  • Free post-secondary education
Not immediately, but over 2-5 years we should start to see a return on that, shouldn't we?
Universities will expand basket weaver curriculum. The increase in need for basket weaving degrees will increase the cost to the government. We would have a glut of degreed basket weavers. The median wage of basket weavers will decrease producing less tax revenue.

In the end, the government will pay more and get less. The nature of government.
 

TheDisneyDaysOfOurLives

Well-Known Member
In the Parks
Yes
Universities will expand basket weaver curriculum. The increase in need for basket weaving degrees will increase the cost to the government. We would have a glut of degreed basket weavers. The median wage of basket weavers will decrease producing less tax revenue.

In the end, the government will pay more and get less. The nature of government.

I love how the argument immediately goes from discussing the benefits to this apparent onslaught of basket weaver and lesbian dance theory (by the way, Northwestern is where you can get that degree, but nowhere else from what I can tell) degree seekers that never takes into account something I like to call guardrails.
 

Willmark

Well-Known Member
In the end, the government will pay more and get less. The nature of government.
Related to this is when people say “tax corporations” to fund the government.

Corporations do not and never have paid taxes. Any (smart) company builds the tax liability into the cost of their goods and services. So who pays the corporations taxes? The customers of said business.
 

TheDisneyDaysOfOurLives

Well-Known Member
In the Parks
Yes
Related to this is when people say “tax corporations” to fund the government.

Corporations do not and never have paid taxes. Any (smart) company builds the tax liability into the cost of their goods and services. So who pays the corporations taxes? The customers of said business.

They can build some of that tax liability in, but eventually the demand for said product/market will decrease, thus making all of it moot. I do think some of it is built in, but to suggest all of it is built in is simply not true.
 

Willmark

Well-Known Member
They can build some of that tax liability in, but eventually the demand for said product/market will decrease, thus making all of it moot. I do think some of it is built in, but to suggest all of it is built in is simply not true.
I’m not suggesting all of it is; point still stands that raising taxes on corporations means the customer gets taxed in the long run.

Then there’s the idea of income tax as a whole, tax when you make money, then of course we tax when it’s spent too.
 
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Nubs70

Well-Known Member
I love how the argument immediately goes from discussing the benefits to this apparent onslaught of basket weaver and lesbian dance theory (by the way, Northwestern is where you can get that degree, but nowhere else from what I can tell) degree seekers that never takes into account something I like to call guardrails.
Basket weavers, doctors, Sub Sharan non cis interpretive dance theory, etc... pick a degree and the cost will increase and value of degree will decrease.
 

TheDisneyDaysOfOurLives

Well-Known Member
In the Parks
Yes
I’m not suggesting all of it is; point still stands that raising taxes on corporations means the customer gets taxed in the long run.

Then there’s the whole idea of income tax as a whole, tax when you make money, then of course we tax when it’s spent too.

Agreed. I'm not an economist by any stretch of the imagination (and I don't play one on TV, though I'm pretty happy that I'm rocking a 99% in my Macroeconomics MBA course right now), but the way we do taxes in this country is just all sorts of messed up.
 

MinnieM123

Well-Known Member
Currently, wages are taxed at 6.2% for the employee and 6.2% for the employer. Meaning, that muc is deducted from the employee paycheck and the employer also pays an equal amount. This 12.4% of wages is the social security payroll tax.

BUT - the tax only applies to wages up to $132,900 (2019). Removing that cap and taxing ALL wages for social security would go a long way towards making social security benefits secure.

Thank you for taking the time to explain. Sounds reasonable. (I know you have financial experience, and probably have a better understanding than many.) Just as an fyi: I found some information from the Associate Press that did raise some issues (in August). So, if you're interested, I'm happy to share this.

 

Laketravis

Well-Known Member
Original Poster
I was going to make a joke, but didn't want to get yelled at via PM later ;)

I think the question is, what are the long-term benefits of:
  • Free childcare
  • Free post-secondary education
Feasibly, both of those things should actually end up producing additional tax revenue. Not immediately, but over 2-5 years we should start to see a return on that, shouldn't we?

I once read an analogy that described in great detail what would happen if the government began giving away free hamburgers at local drive thru's already equipped and provisioned to do so.

> People who wouldn't normally order a hamburger began to do so
> People who normally ordered hamburgers began to order more
> The costs to produce the hamburgers to meet increased demand began to rise
> The quality of the hamburgers began to decline due to efforts to reduce costs
> Menu prices for other items rose substantially in order to subsidize the losses of free hamburgers
> Customers began to demand cheese be added to the free hamburgers
> People who wouldn't normally order a cheeseburger began to do so
> People who normally ordered cheeseburgers began to order more
> The costs to produce the cheeseburgers to meet increased demand began to rise

And on....and on.....and on.
 

The Mom

Moderator
Premium Member
I love how the argument immediately goes from discussing the benefits to this apparent onslaught of basket weaver and lesbian dance theory (by the way, Northwestern is where you can get that degree, but nowhere else from what I can tell) degree seekers that never takes into account something I like to call guardrails.
This is sort of the argument that was used when college loans started to be given without considering credit worthiness. The purpose was designed to make it easier for poorer families to pay for college, with the belief that the student would then be able to get a good paying job after graduation, so would contribute more to the tax base and also be able to afford to pay back the loan.

It hasn't worked that way for every college graduate. A college degree doesn't necessarily lead to prosperity, as so many people now have them that their value has dropped - unless a graduate has a degree in specific fields. And jobs that didn't require a degree in the past now do - even though the nature of the work hasn't changed. There is a feeling (ala the Wizard of Oz) that just having the diploma makes you smarter.

And finally, because of the "Buy Now, Pay later" mindset that surrounds the cost, colleges were able to raise costs to higher and higher levels without the pool of buyers decreasing in size. This has meant that more and more families have to borrow money, rather than earning enough, or being able to save enough over a child's lifetime, to cover the cost out of pocket.
 

Nubs70

Well-Known Member
I love how the argument immediately goes from discussing the benefits to this apparent onslaught of basket weaver and lesbian dance theory (by the way, Northwestern is where you can get that degree, but nowhere else from what I can tell) degree seekers that never takes into account something I like to call guardrails.
I use basket weaver as a collective term for degrees with very poor ROI. Prospective students need to investigate what the payback.on a degree will be before investing in said education.
 

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