The U.S. federal government debt level has reached somewhere in the range between $122,500 to $174,000 per taxpayer. 50% of taxpayers claim less than $38,000 income. (Note this only includes people who actually pay taxes) Only about 53% of the population pays any federal income tax (not counting withholdings or Medicare/Social Security taxes, primarily due to income level and tax benefits). https://money.howstuffworks.com/only-53-percent-pay-income-tax.htm The amount of interest that would have to be paid on $140,000 at 5% would be $7000. Interest rates were above 5% between 1978 and 1998. That's on top of personal debt. https://www.aol.com/article/finance...-are-in-debt-here-s-how-much-we-owe/22060294/ The average credit card holder owes $4000. https://www.creditkarma.com/studies/i/average-debt-american-household-on-rise/ There is $8.88 trillion mortgage debt in the U.S. That's $113,000 per household that owns their home. https://www.cnbc.com/2018/02/13/total-us-household-debt-soars-to-record-above-13-trillion.html There's also $1.4 trillion in student loan debt. That's $31,800 on average for every person with student loan debt. https://www.cnbc.com/2017/07/03/this-is-the-age-most-americans-pay-off-their-student-loans.html Try and yank more taxes out of people and it could potentially cause a large credit default.
First, how we use trillion$ in debt to fund every day expenditures...pretty much means we have little idea the true economic health of Americans and the nation. It's laughable to hear Trump proclaim how great the economy is doing when in the past few decades we have used $20 trillion in debt money including another $1 trillion in debt for this year alone. We could equate this to an individual who earns $75K annually but spends $100K every year...and I'm talking about operating expenses and not buying assets. Or, regarding the $20 trillion of debt, this is tantamount to an individual earning $75K annually but having accumulated debt of about $500K. It's like a house of cards in which things can work but only when there are zero interruptions in income and no other surprises...
We can't equate it to individuals. The attempt to do that, including the OP, is simply inconsistent with sound macroeconomic comment. It is true, mind you, that the nature of the deficit expenditure is important. Given the US has a structurally flawed economy, you'd hope for more investment...
It was an anecdotal comment to express to others the extreme level of debt the US holds today and how the debt is used for operating expenses and not for emergencies and/or investment. From a business perspective, and personal investment perspective, I'm glad that the US creates our somewhat false economy and Trump is doing this on steroids! The US having $500 billion to $1 trillion debt each year as SOP is done for no reason other than to place the US on some pedestal to portend we are the greatest economy in the world. And we are a great economy but we don't truly know the true economy of the US...only the one propped up with debt...
Its much more than that though. It's used to create a narrative which ultimately celebrates austerity (and microeconomic foundations of macroeconomics really based on sidelining Keynesianism)
I say when we can't identify the problem then we can't find a solution. Having debt is not a problem. The ways in which we can no longer deal with that debt becomes our problems to solve. The US basically uses debt to service the existing debt...which anecdotally is like people paying the service on a credit card with another credit card and we know how that usually ends...
Why? In 2000, the federal government collected 19.7% of GDP in tax revenues. It didn't cause a large credit default. The percentage has never been near that level since the Bush tax cuts. Last year, the federal government collected 17.2% of GDP in tax revenues. Had it collected 19.7%, revenues would have been $523 billion greater. And the deficit would have been $142 billion instead of $665 billion. With a deficit of $142 billion, the debt is shrinking relative to GDP, which is what we want to see happen. But instead, irresponsible leadership is increasing the deficits.
Growing GDP is not necessarily automatically going to make the problem easier to solve, as explained in this thread: GDP to population ratio, and ability to pay down the debt There might be some degree of truth to that, but for all those now fighting against austerity there is a fundamental fact (basic logic really) that they should have understood: If we run deficits now, it means cuts in the future
But you're merely repeating the false narrative. There is absolutely no comparison with a credit card.
Because the economy does not translate into the individual (nor microeconomic foundations). Crikey, even a balanced budget will create growth because of the multiplier effect...
You're being anal while I'm being anecdotal. When the US pays the service on it's debt with more debt money this is quite analogous to a person servicing credit card debt with another credit card...
Nope, I'm referring to economics correctly. There is no comparison between the national debt and a personal debt. Making that comparison ensures zero economic validity, by definition.
Well...I just made the comparison so debate my comparison comment. One pays debt with more debt and the other pays debt with more debt...
One is just debt which necessarily increases. And the other? All bets are off. It impacts on consumption and investment such that the pie is bigger
And just the reverse when it comes time to pay it back. That's the basic argument in this thread, Tax cuts don't make basic economic sense, if you wanted to have a discussion about it there. You can't have your cake and eat it too. Whatever benefits deficit spending might (and that's a very questionable if) have on the economy, when it comes time to pay it back it will be even worse.
Basic error. The pie is bigger and therefore the debt less important. You're still thinking in terms of Auntie Mildred's new kitchen, rather than any credible reference to macroeconomics
Use of debt is fine in carefully planned investment or emergency...debt as SOP and paying debt with debt is a careless illusion...
The use of debt cannot be reduced to that. Take the use of fiscal policy to get out of a downturn quicker. That can be critical in minimising an increase in long term unemployment through destruction of human capital.
But the need goes beyond the business cycle. Take structural flaws, housing crisis, social returns etc etc etc.
Oh boy I LOVE averages!!!! Actually, the total U.S. federal debt is $21,035,490,499,062.02 and if we divide that by the U.S. population (325,700,000) we've got every single American man woman and child owing $64,585!!! Not to worry, if we take the total private net worth of the U.S. of $98,745,500,000,000 and divide that by the population we see that every single American's got $303,179.31 stashed away!!! Ain't the U.S. GREAT or what?
