How Can the US Afford a $17 Trillion Debt?  
provided by textbooksfree.org/        return to Election Issues 2016    
Please 

   
   

Here is What Happened to Debt as % of GDP


 

2016 Campaign Stuff

Hillary Clinton’s plan would raise tax revenue by $498 billion over the next decade. However if predicted negative budget effects on growth occur the plan would end up collecting only $191 billion over the next decade when accounting for decreased economic output in the long run.  "Hillary Clinton wants more spending for child care, clean energy and infrastructure." Source Editor's Note I'm still waiting for economist to agree on any economic projection."

A majority of the revenue raised by Clinton’s plan would come from a cap on itemized deductions, the Buffett's 4 percent surtax on taxpayers with incomes over $5 million. Editor's Note 1 Had the Buffett tax passed it would  have lowered the 2015-16 deficit from $690 billion to $670 billion. Editor's Note 2 The American Public is allowing candidates to ignore the annual deficit and resulting addition to the debt. See Deficits Fade as Campaign-Issue

   
       
       

Added Cash Drain Unmentioned
by Both Candidates

Medicare/Social Security Will Need More of Our GDP

 

Conservative solutions: Safety Net program cuts
Liberal Solutions except Hillary: cuts in defense
No one wants: increase payroll taxes, Medicare/SS
program cuts delayed age of qualification

Both Promise More Healthcare Spending

President Reagan's large deficits were made economically smaller by economic growth and inflation. See Stagflation and the Rise of Supply Side Economics

   

Historically complaints about war debt vanished
as long periods of growth after wars lowered
 Federal Net Debt Below 40% of GDP Then
\

US debt as a percent of GDP hasn't returned to 40%
after President Reagan's 1980's buildup although the debt
 is not as high as after WW2.

What Could Go Wrong?

Higher Interest Rates Could Make Carrying Debt More Expensive
Stagnate Growth and High Interest Could Postpone Return to 40%Obamacare and Other Contingent Liabilities Could Extend Timeline.

What Would Reduce Time Line to 40%?
1. A Reagan/O'Neil/Greenspan 1983 Style Payroll Tax Increase

2. Cost Effectiveness in Education, Military Spending and
 our Redundant Safety Net

3. A Return to Moderate Inflation or High Inflation

Please             Source Economics 17 Budget Deficits

   
   

Is a New Entitlement Law Needed
to Stop Cash Flow From Going Negative?
 
 
Source

So Why All The Static About the Debt
It's not the debt but what is bought. 

Many want high defense and a low safety net and vice versa.

Most don't to be taxed for what the other person gets.

Politicians and Media Need to Fill Space with Inflammatory Half-Truths.

Economic Wellbeing
is Up But We Need Something to Complain About.

 

   
   

Spending Up 4%, Tax Revenues Down 4%
Result Was Debt Deep Doo Doo!

How Can Federal Government
Continually Spend More than It receives?

   
   

 

Inflation when added to growth makes our country's debt like any mortgage smaller over time.

Editors Note: My 1977 mortgage of $250 seemed a burden but within a few years inflation from the second oil embargo and a better job grew my salary so the mortgage became insignificant. The controlled inflation since 1985 seems to be the good for the economy and the current deflation puts those paying debt in Deep Doo Doo!

   
   

Annual Federal Deficit Back to Normal

 
End of
Fiscal Year
US Gross Debt
in Nominal USD billions
US Gross Debt as % of GDP Question Answer
1940 43.0 52.4 No One
1950 257.4 94.1
1960 290.2 56.1
1970 389.2 37.6
1980 930.2 33.3 No One
1990 3,233 55.9
2000 5,674 58 TBD
2005 7,933 64.6
2007 9,008 65.5
2008 10,699.8 74.6 (EST)
2009           11,046.2   TBD
United States public debt - Wikipedia, the free encyclopedia
President Obama continued the Bush policy of fighting the Great Recession with debt and by 5/13 this policy seemed to be working better than the austerity policies of Europe,
   
   

Who Owns the Debt

 

 

Editor's Note: Historically Great powers have declined because of excess debt caused by military expenditures which not paid for by taxes. Today the U.S. adds extensive health care spending debt to the mix.

Inflation has historical cured debt problems by lowering its relative to the nation's productivity poorly measured by GDP. This is happening today.

Historically high interest payments caused by large debts have been a problem but today's excess world savings is keeping interest rate low allowing not only low interest payments but low interest rate debt refinancing. This lower real relative U.S. debt and low interest payments should ease the fears of some older Americans who are concerned over the financial

Personally, as a college educated 72 year-old with a 13 year life expectancy; I would gladly accept higher deficits for another ten years of healthy living. Then I would be a happy, somewhat poorer, and still good-looking ninety-five year-old crotchety old-man.

The easiest debt cure is account for people living longer. It would increase the ages for early SS retirement, the receipt of full SS retirement benefits and the receipt of Medicare. Next is an increase Medicare payroll tax rate for high earners who are living much longer. Last is an increased income base for Social Security.

Others debt cures include larger health care deductibles, less military spending made possible by requiring Japan and South Korea to handle more of the perceived threat from the Chinese military and NATO nations living up to their 2% of GDP commitment.

For me the soundness of Social Security and Medicare is not much of a problem but these Unfunded Government Liabilities may prove a problem for our children and grandchildren if we continue to delay an increase in payroll taxes.

 

Return to Election Issues 2016      2/17/16

   
   

Subtracting Federal Debt Owed to Itself
Brings Net Debt to a Reasonable Level.

   

See 2015 Social Security-Medicare Trustees Reports/     What is the Federal Debt: a primer for politicians    The Big Lie   
Balance the budget is a simulation that allows participants to make changes and balance the budget. 
prepared by Walter Antoniotti