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winsor

Basic Arithmetic

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I occasionally hear someone say 'the debt doesn't matter' and then attempt to support that hypothesis.  A quick look at the numbers belies that contention.

For the U.S. of A. we can figure roughly 100,000,000 people who actually pay taxes, when corrected for children, the elderly and people below the taxable threshold.

Divide a Trillion into 100 Million and you get 10 Thousand, so every Trillion of debt is 10 grand on every taxpayer's tab.

$30 Trillion is thus $300,000 per taxpayer.

At current mortgage rates, the monthly payment for a 30 year $300 grand note is $1,205.

The bottom line is that, if the Government magically stops spending a nickel more than they bring in (quit borrowing) right now, and EVERY taxpayer pays an additional $1,205 a month to pay off our existing debt, by the year 2051 we will be either broke or hand to mouth, depending on how you look at it.

If I was a bookie, I'd take a million to one odds against that happening, all day long.

The bottom line is that we're screwed.  I wish I was wrong.


BSBD,

Winsor

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(edited)
59 minutes ago, winsor said:

I occasionally hear someone say 'the debt doesn't matter' ....

The bottom line is that we're screwed.  I wish I was wrong.


BSBD,

Winsor

"I wish I was wrong." Well you are. Debt per taxpayer is currently $227k per the debt clock.

"50 percent of federal revenue comes from individual income taxes, 7 percent from corporate income taxes, and another 36 percent from payroll taxes that fund social insurance programs "

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"Conclusion The current tax code raises low levels of federal revenues from corporate income taxes, thus contributing to the growing national debt. However, there are opportunities for tax reforms that can help make our nation’s fiscal outlook more sustainable."

Edited by Phil1111

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(edited)
1 hour ago, winsor said:

EVERY taxpayer pays

Taxes are not the only form of government revenue. 

But, to your point. I say we sell California to the highest bidder - debt problem solved.  (That is "IF" someone would buy it) :ohmygod::rofl:

Edited by BIGUN

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7 minutes ago, gowlerk said:

None of that debt is indexed to inflation. The US will simply devalue the debt like it did last time.

The "simply devalue the debt" part is problematic.

Let's say the U.S. followed the lead of other enlightened countries and devalued the currency by 90%.  That would reduce the debt load on each taxpayer to $30,000 and their monthly payment to $120.50 (with the Government forbidden to borrow ANYTHING).

Great solution, right?

One minor side effect is that anyone in another country in their right mind will be unlikely to do business in US dollars, so buying things from overseas might become a bit problematic.

Okay, so we effectively close our borders, economically speaking.  We will then have to make do with our production of energy, clothing, food, whatever we get at WalMart and so forth.  A minor problem is that we import the vast majority of our consumer goods as well as industrial equipment, car parts and so forth.

Since we make the Weimar Republic circa 1922 look like a picture of financial responsibility, I do not have a high degree of confidence that this will turn out well.

I could be wrong, but I'm not.

 

BSBD,

Winsor

 

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10 minutes ago, BIGUN said:

Taxes are not the only form of government revenue. 

But, to your point. I say we sell California to the highest bidder - debt problem solved.  (That is "IF" someone would buy it) :ohmygod::rofl:

There goes the world's fifth-largest economy, and up go all of the tariffs on the food grown there. (source)

Wendy P.

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11 minutes ago, wmw999 said:

There goes the world's fifth-largest economy, and up go all of the tariffs on the food grown there.

True. Maybe just sell certain segments like the movie industry or the Kardashians or sumpin. :)  

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We're going to need a bigger crisis than the recent financial meltdown for the debt to become a priority again. Because, well, our congresscritters (who have a large influence on spending) are more interested in the mechanism of their jobs than the purpose of their jobs. There won't be a perfect solution, because someone's going to get hurt. With the current financial, power, and political climate, that's just not going to happen. The Republicans never met a rich business person they didn't want to give more money to, and the Democrats never met a problem whose solution couldn't be engineered best by the government.

Until those rich businessmen become the problem, it's not going to change. The last fairly honest effort was that gang of 8 (or six, or whatever) who tried to come up with something about 15-18 years ago. It was ugly, but it was at least starting to try. Before that, we depended on a roaring stock market in the 1990's and a fairly honest bipartisan effort. That bipartisan nature was, of course, pissed away in the most recent stock market runup by giving money to, yes, rich businessmen. And women.

Wendy P.

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22 minutes ago, BIGUN said:

True. Maybe just sell certain segments like the movie industry or the Kardashians or sumpin. :)  

we should just accept that the us is too large and diverse to ever be one nation and split into five.  there was a book i read when i was younger, if the south had won gettysburg, and it had the concept in it.  republic of tx, republic of ca, north, south, and the rest (i forgot what they called it, but it was the pacific northwest).  of course they didn't address ak and hi, so maybe we end up with seven.  of course, alternate reality books leave out a lot of the reality, but it couldn't be any worse, provided we had a good united federation of nations or something. 

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42 minutes ago, winsor said:

The "simply devalue the debt" part is problematic.

Let's say the U.S. followed the lead of other enlightened countries and devalued the currency by 90%.  That would reduce the debt load on each taxpayer to $30,000 and their monthly payment to $120.50 (with the Government forbidden to borrow ANYTHING).

Great solution, right?....

I could be wrong, but I'm not.

 

BSBD,

Winsor

 

Wrong again.

Most US debt is held domestically

Who Owns the US National Debt?

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We'll do just like we've done with infrastructure, energy consumption, and climate change. Kick the can down the road. Those cans on the road eventually rust away. Doesn't work that way with large-scale systemic issues.

Wendy P.

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2 hours ago, winsor said:

One minor side effect is that anyone in another country in their right mind will be unlikely to do business in US dollars, so buying things from overseas might become a bit problematic.

This is the power that being the world's reserve currency brings. Are you imagining Rubles, Yuan, or perhaps the return of Sterling? Maybe bitcoin? The US does not actually have a great need to buy things from overseas anyway. Rest assured, your society will find a way to stiff it's lenders if need be. Spend on and keep living the dream.

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To Winsor's point. 20 years ago, we had a 4T dollar debt and it was all the scare. Today, we face a 27T dollar debt - and the US population growth has slowed to 8% - Lowest increase since the 1930's

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5 hours ago, BIGUN said:

Taxes are not the only form of government revenue. 

But, to your point. I say we sell California to the highest bidder - debt problem solved.  (That is "IF" someone would buy it) :ohmygod::rofl:

Hi Keith,

Re:  I say we sell California to the highest bidder

If that were a feasible option, I would try to be first in line to join any consortium wanting to do it.  From what I have read, the economy of California is the best of all 50 states; Covid/lock-down/etc included.

Jerry Baumchen

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(edited)
7 hours ago, BIGUN said:

Taxes are not the only form of government revenue. 

But, to your point. I say we sell California to the highest bidder - debt problem solved.  (That is "IF" someone would buy it) :ohmygod::rofl:

5th largest economy AND has been outperforming the US economy. Sure, we'll take it.

Edited by SkyDekker

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8 hours ago, winsor said:

I occasionally hear someone say 'the debt doesn't matter' and then attempt to support that hypothesis.  A quick look at the numbers belies that contention.

For the U.S. of A. we can figure roughly 100,000,000 people who actually pay taxes, when corrected for children, the elderly and people below the taxable threshold.

Divide a Trillion into 100 Million and you get 10 Thousand, so every Trillion of debt is 10 grand on every taxpayer's tab.

$30 Trillion is thus $300,000 per taxpayer.

At current mortgage rates, the monthly payment for a 30 year $300 grand note is $1,205.

The bottom line is that, if the Government magically stops spending a nickel more than they bring in (quit borrowing) right now, and EVERY taxpayer pays an additional $1,205 a month to pay off our existing debt, by the year 2051 we will be either broke or hand to mouth, depending on how you look at it.

If I was a bookie, I'd take a million to one odds against that happening, all day long.

The bottom line is that we're screwed.  I wish I was wrong.


BSBD,

Winsor

You would think that somebody who is as incredibly smart as you are would know income taxes are not the only source of revenue.

Borrowing to invest during historically low interest rates makes perfect sense. Of course Republicans have been all in favour of borrowing to give to rich people and now object to borrowing to invest in infrastructure.

Edited by SkyDekker

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1 minute ago, SkyDekker said:

Like I said, if you think the US is better off without it's best producing State, whose production is outperforming the rest of your country, we will gladly take it.

The opening bid is 27 Trillion. :)  

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