Can U.S. Federal Government Afford a $20 Trillion Debt?

   

1. Debt to GDP is Up

2. Is Private Debt More of a Problem?

3. Recent War Debt Has Not Dropped

4. Entitlements Are Going Up But Could Be Lowered

5. What Else Could Go Wrong?

6. What Could Go Right?

7. Debt Has Been Higher So Why All Static?

8. How Did This Happen?

9. Tax System Benefits Everyone

       Return to Economic Issues      
Updated 4/4/17              Please  Share

   

 
1. Debt to GDP is Up
 

 

See Stagflation and the Rise of Supply Side Economics
 

   
   

 

2. Is Private Debt More of a Problem?

       

3. Recent War Debt Has Not Dropped

 

4. Entitlements Are Going Up Though Not Guaranteed

Editor's Notes:
Conservative solutions:
Safety Net Program Cuts     Liberal Solutions: cuts in defense
No one wants: increase payroll taxes, Medicare/SS program cuts delayed age of qualification  
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5. What Else Could Go Wrong?

Higher Interest Rates Could Make Carrying Debt More Expensive

 Low Inflation from Stagnate Growth Could Continue

Health Costs Continue Up

 

6. What Could Go Right?

A New Entitlement Law Would Make Cash Flow Positive 

  Source

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

3. A Return to Moderate Inflation or High Inflation
 

7. Debt Has Been Higher So Why All Static?

Many want high defense and a low safety net

 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.

       
   

 

8. How Did This Happen?

Spending Up 4%, Tax Revenues Down 4% Deep Do Do Resulted

 

9. Tax System Benefits Everyone

Market Income Plus Transfer Payments and Minus Federal Taxes

Income Quintile         1st 2nd 3rd 4th    5th
1979        7,707          19,131        26,596        35,708     78,520 
1989        7,392        19,324        28,663        40,254     104,318
1999        8,709        22,344        32,688        46,157     139,325
2007        9,290        24,374        35,985        51,379   166,871
 Change        1,584          5,243          9,390

       15,672

 

      88,351

 

Return to Economic Wellbeing
 

   

More Data

   

Low Inflation is Stalling Debt Reduction

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 is Back to Normal

Image result for us annual Federal budget deficit graph

 

Who Will Pay the Current Debt?

End of
Fiscal Year
US Gross Debt
in Nominal $ billions
US Gross Debt
as % of GDP
Who Paid the Deficit?
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

Image result for us annual Federal budget deficit graph