News Article: Treasury secretary says US to hit debt limit on Jan. 19

[2003TIDE]

And still the real root of the problem remains undiscussed...

Which is? Lack of collecting taxes?

 

[TIDE-HSV]

Which is? Lack of collecting taxes?

Worse. It's a total failure to face the operating costs of a developed nation. If our tax structure were rational, there would be no deficit, even with our bearing an undue proportion of the defense of democracy...

US stats

 

[JDCrimson]

I would...

- Repeal Trump era tax cuts
- Remove payroll tax cap on all wages
- Incrementally increase retirement age to 80yrs
- Establish a franchise or asset tax on on all investments over $1mm outside of retirement plans or pensions
- Establish a leverage tax on debt to prohibit shareholders living tax free on borrowings against accreting assets
- Convert the military budget to a 4yr budget approval like the Farm Bill and index it to a % of GDP
- Charter a tax credit Infrastructure Bank - this would avoid political drama in Congress - think of it as crowdfunding infrastructure projects
- Issue 50y and 100y bonds to take advantage of low interest rates for infrastructure and social obligations/emergencies
- Open approved immigration to increase the tax base and repatriate industry
- Evaluate what GDP is needed to service national debt and see what GDP needs to be imported from other nations to pay for the debt
- Expand Medicare to lower age groups
- Expand substantially child tax credit to encourage new births
- Accept 4-5% inflation is the norm
- And a whole bunch of other smaller things

Nothing improves for the next 30 years while the Boomers are in retirement. I would tally up this liability and put it on the 50y bond. I would build a nationwide network of reservoirs to collect flooding and redistribute across the nation for consumption and irrigation and put that on the 100y bond. Also, build high-speed rail systems with 100 mile radius of any urban city with 1mm people to help with costs of living/transportation.

 

[AWRTR]

80 is too high for retirement. I can go with an increase but not that high. Many people can work to that point depending on what they do and how there health holds up, but many people in their 70’s begin to deal with serious health issues, and certain professions are just not going to be done by people that old.

 

[Tidewater]

I wonder how much we actually paid on the debt, not debt payments, just debt. I think its $125B.

Not sure what you mean.
If you mean the principal debt, then not only did we not pay any of the debt, we added $1.4 trillion to the debt in FY 2022.
If you mean how much money did we spend just to service the debt already contracted in previous years, then the servicing for past debt amounted to $475 billion. Just to tread water. This amount pays off none of the debt. It just buys us a year to think about it.
$475,000,000,000.

 

[Tidewater]

In very broad strokes...
1. Repeal Trump tax cuts.
2. Raise taxes on the opt tax bracket.
3. Close a bunch of loopholes.
4. Implement a 5% across the board budget reduction, excluding Social Security and Health care. (No specifics on how to implement, but the general guidelines are to begin by reducing middle and upper management. Basically, streamline.)

Now, will this have a massive impact? Probably not. (I'll also be the first to state that I pretty much know jack about tax and budget policy.) At the same time, we didn't get into this in one year, so it's silly to think that we'll get out of it in a year. The important thing is to get things moving in the right direction.

Repeat the next year. After two years, re-evaluate and adjust.

IMO, one of the key sources of this death spiral is that the policy makers have separated tax policy with spending policy, instead of thinking of them as two sides of the same coin.

I agree with all of those.

 

[JDCrimson]

True, but there are alot of occupations like administrative, clerical, and hospitality where there is a shortage of workers that someone in their 70s may need to fill to keep wage inflation in check and to assist them in retirement with cost of living. I can assure you on the farm there is no retirement age, they keep right on working...

80 is too high for retirement. I can go with an increase but not that high. Many people can work to that point depending on what they do and how there health holds up, but many people in their 70’s begin to deal with serious health issues, and certain professions are just not going to be done by people that old.

 

[Bama_N_Va]

Not sure what you mean.
If you mean the principal debt, then not only did we not pay any of the debt, we added $1.4 trillion to the debt in FY 2022.
If you mean how much money did we spend just to service the debt already contracted in previous years, then the servicing for past debt amounted to $475 billion. Just to tread water. This amount pays off none of the debt. It just buys us a year to think about it.
$475,000,000,000.

So the $475B was interest, and thats the way I read it.

So think about this....31.5T is 31,500B, now divide that by $125B, which is what I think we actually pay in a year towards paying off our debt, and you get 248 years...248 years to pay off $31,500B. And you guys like the Dems?????? For the record, I hate both parties!

248 years is older than the founding of America!

Signed,

Independent Fiscal Conservative

 

[Tidewater]

So the $475B was interest, and thats the way I read it.

So think about this....31.5T is 31,500B, now divide that by $125B, which is what I think we actually pay in a year towards paying off our debt, and you get 248 years...248 years to pay off $31,500B. And you guys like the Dems?????? For the record, I hate both parties!

248 years is older than the founding of America!

Signed,

Independent Fiscal Conservative

I think I was not clear. The United States has not paid off any of the principal since FY2001 (and then it paid off a tiny amount before deficit spending resumed).

The United States have added to the principal pretty much every year since FY 1834.

To draw to the analogy of a home mortgage, we have paid some tiny portions of the principal on a few occasions, but we have taken out second mortgages on the house almost every year since 1834. We now have the 180th mortgage on the same house.

We are not paying anything to pay off the debt. We are adding $1.4 trillion to the debt this year alone.

 

[JDCrimson]

Yes, and half that has been rung up in the last 6 years...

Had never really considered that but it's 100% truth. Wow.

 

[AWRTR]

I think I was not clear. The United States has not paid off any of the principal since FO2001 (and then it paid off a tiny amount before deficit spending resumed).

The United States have added to the principal pretty much every year since FY 1834.

To draw to the analogy of a home mortgage, we have paid some tiny portions of the principal on a few occasions, but we have taken out second mortgages on the house almost every year since 1834. We now have the 180th mortgage on the same house.

We are not paying anything to pay off the debt. We are adding $1.4 trillion to the debt this year alone.

This is the real fun part of this. The American public has no appetite for fixing any of this. People may say cut spending, but then when you ask them what to cut in a serious way you get crickets. Some people will say defense or some might say entitlements, but when you look at how much has to be cut in those areas to make a difference No one wants it. The public doesn’t really feel the debt. It doesn’t affect their lives in a concrete enough way. Both parties have run up enormous sums of debt. They have just been rewarded for doing it. Why would they stop?

we can’t tax our way out of it without severe cuts to go along with the taxes. It would crush the economy to do so. We owe so much taxing the top 10% to death won’t fix it.

 

[Bama_N_Va]

And no one has mentioned the broken tax system...

I don't think the tax system is nearly as broken as the spending system...I'm 100% confident the Federal Gov't could tax everyone at 100% of their income and still deficit spend!!!!

 

[TIDE-HSV]

80 is too high for retirement. I can go with an increase but not that high. Many people can work to that point depending on what they do and how there health holds up, but many people in their 70’s begin to deal with serious health issues, and certain professions are just not going to be done by people that old.

I have to agree. That's beyond the life expectancy of most localities in the US, Alabama for one. If you do that, you're essentially denying retirement to a large slice of the population. Read the obits daily (something I have to do as an estate attorney), and you'll see what I mean. I would think the max you could edge it up to would be around 72, but you'd have to make disability more accessible and generous than it is now. I'm 83 and still productive, but over half my high school graduating class is dead...

 

[NationalTitles18]

but over half my high school graduating class is dead.

That's an intended and coldly calculated feature of the plan, not a bug.

 

[Tidewater]

You made me curious.
How much would these help in solving the problem? I did a little research. (My comments in red)

I would...
- Repeal Trump era tax cuts. ~$190B/year
- Remove payroll tax cap on all wages. ~$100B/year.
- Incrementally increase retirement age to 80yrs
- Establish a franchise or asset tax on on all investments over $1mm outside of retirement plans or pensions
- Establish a leverage tax on debt to prohibit shareholders living tax free on borrowings against accreting assets Interesting.
- Convert the military budget to a 4yr budget approval like the Farm Bill and index it to a % of GDP Interesting. Not sure how much that would garner, but interesting.
- Charter a tax credit Infrastructure Bank - this would avoid political drama in Congress - think of it as crowdfunding infrastructure projects
- Issue 50y and 100y bonds to take advantage of low interest rates for infrastructure and social obligations/emergencies Good idea. I fear the window has closed somewhat on this idea. Really low rates seem to be gone for the foreseeable future.
- Open approved immigration to increase the tax base and repatriate industry. I think that would depend on whom the US admits as legal immigrants.
- Evaluate what GDP is needed to service national debt and see what GDP needs to be imported from other nations to pay for the debt
- Expand Medicare to lower age groups. This is, I fear, heading in the wrong direction.
- Expand substantially child tax credit to encourage new births
- Accept 4-5% inflation is the norm
- And a whole bunch of other smaller things

 

[crimsonaudio]

That's an intended and coldly calculated feature of the plan, not a bug.

It may well be a necessary 'feature' in the future.

I believe it was mentioned above but we've only had 'retirement' as we know it for a couple of generations - unless we get serious about our borrowing, we may well find that we revert to the norm.

 

[Bamaro]

We need to bury the idea of 'starving the beast' once and for all. Cutting taxes just doesn't cut it.

 

[crimsonaudio]

We need to bury the idea of 'starving the beast' once and for all. Cutting taxes just doesn't cut it.

Cutting spending is necessary.

As is removing many tax loopholes, maybe all of them. We need not only greater revenue but reduced spending. If / when we get spending back under control and are actively paying our debts we can consider additional spending, if it's truly needed.

But short of a serious reckoning of some sort, the US federal government will continue to borrow and spend, undermining the value of all of our futures in order to enrich themselves now.

 

[CrimsonNagus]

80 for retirement. Jeez. I want to be able to enjoy retirement, not roll into my coffin.

 

[Go Bama]

I believe it was mentioned above but we've only had 'retirement' as we know it for a couple of generations - unless we get serious about our borrowing, we may well find that we revert to the norm.

Maybe the key phrase is "as we know it." I certainly remember people from my grandparents generation who planned for retirement and retired.

Also, most of the generation before my parents only had one income earner per family and that was generally the male.

Seems to me the elephants in the room are SS and military spending.