America’s national debt has now surpassed $31 trillion

[JEDI]

https://www.cnn.com/2022/10/04/economy/us-national-debt-31-trillion

The outstanding public debt was $10.6 trillion when former President Barack Obama took office on January 20, 2009;
$19.9 trillion when former President Donald Trump took office on January 20, 2017;
and $27.8 trillion when Biden took office on January 20, 2021.


And now with interest rates MUCH higher, interest payments to service the debt will take a bigger chunk of the budget.

At $2.8 trillion, the FY 2021 budget deficit was the second largest in history—just short of the FY 2020 deficit of $3.1 trillion.
There's no budget for 2022. we're under continuing resolution.



Wonder what the budget and deficit will look like for 2023 (if a budget passes)?

And what do you think will be the consequences if we continue to deficit spend in the $Trillions$ every year?
.

 

[fskimospy]

My question would be what you think the consequences will be.

 

[pmv]

Curious why the 'projection' part shows such a massive rise. What is it that's expected to happen in 2030 to cause it to rise continuously after that year?

 

[fskimospy]

Curious why the 'projection' part shows such a massive rise. What is it that's expected to happen in 2030 to cause it to rise continuously after that year?

America gets old.

 

[sportage]

Actually, when Trump was running things America printed then spent money like a drunken sailor (no offense to drunken sailors).
Those Trump tax cuts cost a lot and all that debt was charged to the national debt bill.
So, you can not blame democrats.
Trump, like GW Bush, knows that you can spend and spend and ignore the consequences because they can simply slip the bill to the middle class taxpayer. It worked before....

 

[zinfamous]

Curious why the 'projection' part shows such a massive rise. What is it that's expected to happen in 2030 to cause it to rise continuously after that year?

2027 is when the Cake Monsters from the baguette quadrant invade earth and establish their bulkhead across the northern hemisphere, displacing human settlements and enslaving us to work in their intergalactic gluten farms--apparently, the earth climate was determined to be the premiere planet in the galaxy to grow their ultra-organic space wheat.

Of course, this complete loss of world-wide human GDP is going to collapse our economies, and further erosion occurs when the survivors are subjected to a new lifetime diet of (considerably delicious) pastries and artisan breads, developing diabeedus across the population and greatly increasing instances of celiacs disease. Curiously, it wasn't the invasion or the enslavement that really angered the human population and encouraged them to fight back, it was the demand that all earth humans must now speak intergalactic French. That was the worst part--but we lost, anyway.


In all seriousness, I do actually believe that those ^ scenarios are quite seriously considered when these dildos draft these absurd 30-years-later economic predictions.

 

[IronWing]

Hmm, better start restoring taxes on the rich to take care of those deficits. What, that's too much pain? Well, then deficits don't matter, do they?

 

[fskimospy]

It's funny to me how the national debt being bad is just taken as an article of faith and no effort is expended to examine the alternatives.

 

[nOOky]

Donald J Trump campaigned on reducing the debt to zero. His economy was going to be so great, it would pay down the debt, and people would be tired of all the winning. Maybe we should give him another shot at it?

I don't worry about the national debt, there's nothing I can do. I worry about my personal debt, and try to keep it at zero. Collect interest, don't pay it.

 

[brycejones]

The debt is important now that a Democrat is in office.

- GOP

 

[K1052]

It's funny to me how the national debt being bad is just taken as an article of faith and no effort is expended to examine the alternatives.

Implicit in most of these debt panic posts is that destroying the lives of tens of millions, mostly those on the lower economic rungs, is preferable to ever raising taxes. Indeed that is is somehow a moral imperative to do so.

 

[fskimospy]

Implicit in most of these debt panic posts is that destroying the lives of tens of millions, mostly those on the lower economic rungs, is preferable to ever raising taxes. Indeed that is is somehow a moral imperative to do so.

Forget tax rates or whatever else, I would just like a simple answer to this question: why would the US be better off if we had enacted policies that left us with a national debt of $0?

 

[Brovane]

It's funny to me how the national debt being bad is just taken as an article of faith and no effort is expended to examine the alternatives.

It isn't so much that national debt is bad IMHO, but too much national debt can be bad. For US treasuries they are rated as a extremely safe investment so business and people have used them over the years to park their money in a safe place. What is bad if we take on so much debt that the servicing of the debt overtakes all other government spending and at some point with so much Debt that US treasuries will get a lower rating which will raise the interest rates that new debt will have to issued at. That can become a debt spiral with the servicing of the current debt becoming harder and harder. This happened with Greece there was massive cuts to services because it could no longer be afforded. Not saying that will happen to the US but it is what can happen if you allow your national debt to get out of control. IMHO debt levels should be maintained at around 60%-100% of national GDP.

 

[K1052]

Forget tax rates or whatever else, I would just like a simple answer to this question: why would the US be better off if we had enacted policies that left us with a national debt of $0?

A lot of people would say yes because the actual implications of such a decision have never been really comprehended by regular people.

 

[fskimospy]

It isn't so much that national debt is bad IMHO, but too much national debt can be bad. For US treasuries they are rated as a extremely safe investment so business and people have used them over the years to park their money in a safe place. What is bad if we take on so much debt that the servicing of the debt overtakes all other government spending and at some point with so much Debt that US treasuries will get a lower rating which will raise the interest rates that new debt will have to issued at. That can become a debt spiral with the servicing of the current debt becoming harder and harder. This happened with Greece there was massive cuts to services because it could no longer be afforded. Not saying that will happen to the US but it is what can happen if you allow your national debt to get out of control. IMHO debt levels should be maintained at around 60%-100% of national GDP.

Greece ran into debt problems because its national debt was denominated in a currency it did not control.

Japan's debt/GDP ratio is roughly double ours and Japan seems to be doing just fine. If what you're saying is the result of excessive debt when can we expect the effects you're talking about? Clearly we should be able to at least double our current debt/GDP ratio without difficulties?

 

[fskimospy]

A lot of people would say yes because the actual implications of such a decision have never been really comprehended by regular people.

I think people say this because they think national debts are at least somewhat analogous to household debt when they have essentially nothing to do with one another.

 

[K1052]

I think people say this because they think national debts are at least somewhat analogous to household debt when they have essentially nothing to do with one another.

Yes and some politicians encourage this linkage even though they know it's bullshit.

 

[K1052]

Greece ran into debt problems because its national debt was denominated in a currency it did not control.

See Also: Southern Europe's hard feelings towards Germany

 

[Brovane]

Greece ran into debt problems because its national debt was denominated in a currency it did not control.

Japan's debt/GDP ratio is roughly double ours and Japan seems to be doing just fine. If what you're saying is the result of excessive debt when can we expect the effects you're talking about? Clearly we should be able to at least double our current debt/GDP ratio without difficulties?

Japan has been able to keep it's borrowing rate low because most of the Japanese debt is either purchased by the bank of Japan or Japanese trust funds. This kind of insulates Japanese government bonds against the global bond market.

US Government bonds don't have this advantage since they are regularly purchased and traded on the global bond market. We don't know for sure what impact it will have on US government bond rates if we continue borrowing at the current pace we are borrowing. If the US government can keep borrowing rates low then continued borrowing will not have much of an impact. However if rates that the US government can borrow at increase even by a few percentage points the amount of the US budget that has to be allocated to servicing that debt could raise significantly. Currently maintaining the debt requires about 12% of the US Budget. What would happen if debt servicing required 20% of the budget? Nobody is really sure, should we find out?

 

[fskimospy]

Japan has been able to keep it's borrowing rate low because most of the Japanese debt is either purchased by the bank of Japan or Japanese trust funds. This kind of insulates Japanese government bonds against the global bond market.

Approximately 75% of US debt is held by the fed or private US entities. What's the difference?

US Government bonds don't have this advantage since they are regularly purchased and traded on the global bond market.

If that were the reason why Japan's debt/GDP is not an issue we could just do the same thing. (it's not the reason)

We don't know for sure what impact it will have on US government bond rates if we continue borrowing at the current pace we are borrowing. If the US government can keep borrowing rates low then continued borrowing will not have much of an impact. However if rates that the US government can borrow at increase even by a few percentage points the amount of the US budget that has to be allocated to servicing that debt could raise significantly. Currently maintaining the debt requires about 12% of the US Budget. What would happen if debt servicing required 20% of the budget? Nobody is really sure, should we find out?

The debt is denominated in currency we print so this is not an issue. Our yearly deficits matter in terms of inflation but the sum total of our debt is essentially irrelevant. After all, that debt servicing is overwhelmingly us paying money to ourselves. Why would that be an issue?

 

[Brovane]

Approximately 75% of US debt is held by the fed or private US entities. What's the difference?

70% of Japanese Debt is held by the bank of Japan. It would be the same thing if the FED held 70% of the US government debt and it currently on holds about 20%.

If that were the reason why Japan's debt/GDP is not an issue we could just do the same thing. (it's not the reason)

Ok if you think that is a good idea.

The debt is denominated in currency we print so this is not an issue. Our yearly deficits matter in terms of inflation but the sum total of our debt is essentially irrelevant. After all, that debt servicing is overwhelmingly us paying money to ourselves. Why would that be an issue?

Ok if you don't think it is a issue.

 

[fskimospy]

70% of Japanese Debt is held by the bank of Japan. It would be the same thing if the FED held 70% of the US government debt and it currently on holds about 20%.

You said the BOJ and Japanese trust funds - most of US bonds held by private US entities are in similar funds. Can you describe the difference here and the mechanism by which you think the US would run into problems with a similar debt/GDP ratio?

Ok if you think that is a good idea.

You appear to believe this allows Japan to have a debt/GDP ratio double ours without issue so you seem to think it's fine?

Ok if you don't think it is a issue.

If you think it's an issue can you describe in broad strokes when it will be? Again, Japan has double our debt/GDP ratio and this is clearly no issue.

This is what I'm talking about - people have this idea in their heads that sovereign debt is bad but when actually asked to describe why and what bad effects will follow they can't.

 

[JTsyo]

Blanaced budget would mean there would be no need for US treasuries. That would be bad for the financial markets.

 

[96Firebird]

Sorry guys, just got back from a vacation and put some stuff on the card. Don't worry though, I've paid it off.

 

[Leeea]

I dislike national debt, but in fiscal terms I do not think this is a problem right now.

Nearly all of this debt is for interest rates that were locked in near 0%. Factor in the rate of inflation, and all the people holding those bonds are just giving* the US government their money.


*interest rates were horrible and inflation exceeded interest when they gave the US government the money. Nobody hid this information. It was always understood you give us $10, and we give you $8 back a while from now.