We can only control what we can control.
Income is a finite number. There is only so much money being earned. That number is NOT determined by the government. The government can only control how much they SPEND.
The amount of taxable income is determined by a multitude of outside factors, whether they be the weather, the political machinations in a country other than ours, or scarcity (or abundance) of a particular resource. Over the past 50 years, the federal revenue has fluctuated between 15 and 20% of the GDP. Federal Receipts as Percent of Gross Domestic Product
Since 2000, the GDP has grown at about an average of 2.5%. So, we have an economy that is growing at a 2.5% growth rate, and a relatively consistent drain on that growth for federal income.
Logic says that, since the revenue has grown consistent with GDP growth, government spending should grow commensurately. In order to maintain the relative balance, spending should grow at about 1/2 of 1% (20% or 2.5% GDP growth). Instead, we know that, since 2000, our spending has exceeded our income by 19%!!Historical Tables
Thus, as you can see, our spending increase greatly exceeds our income increase. However, that is still only half the tale.
For every dollar removed from the economic mainstream in taxes, $0.37 is lost (for maintenance of the infrastructure necessary to collect, distribute, and manage the monies received and services purchased). Of that $0.37, $0.24 is paid out in wages and is re-injected into the economic mainstream (government workers buy stuff), except that of the $0.24 paid out in wages, approximately $0.08 is recollected in taxes, and on and on and on.
So - we spend more than we collect. Is that good or bad? Can we, as some postulate, simply ignore the federal debt? Two decidedly different questions, with two decidedly different answers.
First question - we currently spend money we don't have in the hopes that it will generate enough future income to offset the cost of borrowing the money we don't have. It's called "deficit spending". As we have seen over the past 50 years, we don't seem to be very good at it. In fact, we are downright terrible at it. We continuously raise our debt ceiling in order to borrow more money, rather than try to live within the fiscal constraints we have placed on ourselves. These loans are secured with "... the full faith and credit of the United States."
The impact? We are rapidly approaching the point "full faith" is no longer going to be sufficient. We will begin to pay higher and higher interest rates, just further exacerbating the problem (we can't pay our bills, so we are going to borrow money to make the payments on the money we've already borrowed).
There have been informal inquiries, within our own government, on the impact of paying off some debt at an $0.85 on a dollar ratio. They are trying to determine what impact that will have on 1) credit rating, and 2) availability of capital in the future. Imagine an immediate 15% cut in Social Security or other federal pensions. Imagine the impact of decreasing the medical funding for Medicare, Medicaid,etc by 15%.
In June of this past year, the UN Economic and Social Council held discussions about the viability of collateralized governmental loans - loans from other countries that would be collateralized by national assets. Imagine, if you will, a loan from China with the deed to Yellowstone National Park as collateral. In fact, there are some economists who claim that we are reaching the point where conquering the US is no longer necessary - our enemies only need to wait for the bill to come due on our debt.
Which leads to the second point - can we just ignore the national debt? Can we just tell everybody we aren'tpaying it? The most obvious result will be that there will be no more money to borrow - we immediately will have to cut government services back to a level equal to our revenues. Lenders will, of course, take us to court, win, and try to collect their money. Undoubtedly, those countries would seize all assets, both government and private, in their countries. We would be crippled financially.
But, even that isn't the worst impact. The international economy depends on a stable and vibrant American economy. Too many countries rely on the US - too many countries sell to the US - too many countries buy from the US.
So, ignoring/defaulting on the national debt is a non-starter. How then, to get that runaway train back under control? Some economists say it's already too late. We cannot increase our income (GDP) at a rate to offset the cost of our debt. Others say it can be done, but it will require a change in spending attitude, and a belt-tightening unlike anything the US has ever experienced. You will remember that, during the Depression, government spending didn't scale down to the slowed economy - it, in fact, increased spending manifold to try to stimulate growth. That is a fine approach, except that deficit spending is what got us to this stage, and it would have to stop.
If you review the government contribution to the GDP, you can see that it is getting less and less every year. No longer are we generating jobs (by purchasing products and services), but rather, a much greater percentage of our government spending is consumed in entitlement programs. So, we have a rapidly increasing debt, a decreasing ability to borrow money and corresponding potential increase in borrowing costs, a marginal increase in revenue, significantly greater spending, less residual value of government assets purchased, and greater loss of income thru entitlements and hand-out programs.
A clear recipe for disaster.
I note that you say " ... not about what was spent, but rather what that spending produced." Were it ours to spend, then you might have a point. But, it's not OUR money we are spending. You are simply pushing the final collection day down the road. It should be about conscientious and moderate spending based on value received and overall total cost. Telling me that spending $500K for a new Mustang is a good deal because it has shiny wheels and leather seats makes no sense at all.
You use "deficit spending" as if it should be a normal government activity. If you study the economists who have advocated deficit spending, they have been unanimous in their application of deficit spending. They claim that "... deficit spending should only be used to boost the economy out of a recession." Therefore - no recession - no deficit spending. Deficit Spending Is Out of Control. Here's Why. [one of many references, but you get the point.]
Obviously, you missed something when you objected to my statement "The cumulative deficit has increased every year" - going to into a rant about the deficit going down in Obama's terms. The term "cumulative deficit" refers to not only the deficit, but also the interest incurred as a result of that deficit. If you borrowed $50 from me, and paid back $25, your cumulative deficit isn't $25, it is the $25 you owe me, the interest on the $50 you borrowed, and any future interest on the remaining $25 unpaid.
In addition, you're playing word games. The reason that Obama's deficits decreased is because of the massive deficit he invoked upon taking office. I quote:
President Obama had the largest deficits.
By the end of his final budget (FY 2017), his deficits were $6.690 trillion. Obama took office during the
Great Recession. He immediately needed to spend billions to stop it. He convinced Congress to add the $787 billion
economic stimulus package to Bush’s FY 2009 budget. This added $253 billion to the FY 2009 budget. The
American Recovery and Reinvestment Act added another $534 billion over the rest of Obama’s terms.
In 2010, the
Obama tax cut added $858 billion to the debt in its first two years. Obama increased
defense spending, adding as much as $800 billion a year.
Federal income decreased due to lower tax receipts from the
2008 financial crisis.
Which President Rang Up the Highest Deficit?
Then, frankly, you make some weak ass claim that we should ignore the national debt because, after all, those T-bills aren't going to come due for 30 years. I can think of nothing more irresponsible or immature than to foist debt onto your children so that you can avoid your responsibilities today.
Then, you have the temerity to question how much debt is held by foreign countries without providing an alternative reference that countermands my claim? Try this one ...
On November 7, 2016, debt held by the public was $14.3 trillion or about 76% of the previous 12 months of GDP.[5][6][7][8]Intragovernmental holdings stood at $5.4 trillion, giving a combined total gross national debt of $19.8 trillion or about 106% of the previous 12 months of GDP;[7] $6.2 trillion or approximately 45% of the debt held by the public was owned by foreign investors, the largest of which were Japan and China at about $1.09 trillion for Japan and $1.06 trillion for China as of December 2016.[9] National debt of the United States - Wikipedia
or this one ....
What About Foreign Ownership of the Debt?
In July 2017,
China owned $1.166 trillion, making it the largest foreign holder of U.S. debt.
Japan owns $1.091 trillion. Both Japan and
China want to keep the
value of the dollar higher than the value of their currencies. That helps keep their exports affordable for the United States, which helps their economies grow. That's why, despite China's occasional threats to sell its holdings, both countries are happy to be America's biggest foreign bankers. China replaced the
United Kingdom as the second largest foreign holder on May 31, 2007. That's when it increased its holdings to $699 billion, outpacing the United Kingdom's $640 billion.
Ireland is third, holding $311 billion.
Brazil is the fourth largest holder at $272 billion.
The Cayman Islands is fourth, at $259 billion. The Bureau of International Settlements believes it is a front for
sovereign wealth funds and
hedge funds whose owners don't want to reveal their positions. So are Luxembourg ($213 billion) and Belgium ($99 billion).
The next largest holders are Switzerland, the UK,
Hong Kong, Taiwan, Saudi Arabia and
India. They each hold between $135 and $245 billion. (Source: “
Foreign Holding of U.S. Treasury Securities,” September 18, 2017. "
Petrodollars and Global Imbalances," U.S. Treasury, February 2006.)
The Real Owner of the U.S. Debt Will Surprise You
But, that's not even the scary part ---- almost 50% of the national debt is owed to "intragovernmental agencies" - that's YOU!
Here's the detailed breakdown (as of December 31, 2016).
- Social Security (Social Security Trust Fund and Federal Disability Insurance Trust Fund) - $2.801 trillion
- Office of Personnel Management Retirement - $888 billion
- Military Retirement Fund - $670 billion
- Medicare (Federal Hospital Insurance Trust Fund, Federal Supplementary Medical Insurance Trust Fund) - $294 billion
- All other retirement funds - $304 billion
The remaining debt is called "public debt". For your edification:
Here's the breakdown of holders of the public debt:
- Foreign - $6.004 trillion
- Federal Reserve - $2.463 trillion
- Mutual funds - $1.671 trillion
- State and local government, including their pension funds - $905 billion
- Private pension funds - $553 billion
- Banks - $663 billion
- Insurance companies - $347 billion
- U.S. savings bonds - $166 billion
- Other (individuals, government-sponsored enterprises, brokers and dealers, bank personal trusts and estates, corporate and non-corporate businesses, and other investors) - $1.662 trillion. (Sources: “Factors Affecting Reserve Balance,” Federal Reserve, January 18, 2017. “Treasury Bulletin, Table OFS-2, Ownership of Federal Securities", U.S. Department of the Treasury, December 2016.)
You do the math --- you'll find that they hold about 30% of our overall debt.
I suggest that, the next time, you wish to challenge something presented that, rather than throwing a little hissy fit, you come to the table with facts. You will save yourself a lot of embarrassment.[/QUOTE]
They must have brain damage.
