Will our national debt ever be controlled again?

[rigney]

Will government ever take its foot off the gas pedal of spending? We're up to our necks people and the engine is revving even faster than ever. So, can this "insane" attitude of borrowing to spend more be curbed before we destroy America? Is there a ceiling to it? The link below may be absolute truth, or a fantasy of one party kicking at the other. Let's face it, there is no innocence of either party. Both are at fault. Whatever, the whole sad mess must come to an end soon or we will all say goodbye to our freedoms. The wolf, (us) is at our own door. "HELP"!

 

http://www.youtube.com/embed/VtVbUmcQSuk

Edited April 12, 2011 by rigney

[CaptainPanic]

I think we had a rather excellent thread (65 posts, all good quality) on this same topic only last February.

 

Is there anything in particular that you wish to discuss? Otherwise it may be better to simply refer to that one, instead of having the same discussion again? I certainly would simply copy-paste some of my posts. I still think they're valid.

[rigney]

I think we had a rather excellent thread (65 posts, all good quality) on this same topic only last February.

 

Is there anything in particular that you wish to discuss? Otherwise it may be better to simply refer to that one, instead of having the same discussion again? I certainly would simply copy-paste some of my posts. I still think they're valid.

 

Every post I read was excellent. I just don't recall seeing the particular link I'm using to start this discussion. Swansont probably asked the most profound question of all by saying, "has either party ever stopped spending"? And the answer had to be no.

My concern is, when does this nations people get it through their heads and punch drunkenness enough to realize the game must end. We can't keep bailing out big losers at the average tax payers expense. Neither can we destroy every entrepreneur who makes an invstment. Right now our government seems to be at a standstill of stalemate. What happens if politicians and "big money" find the going to rough and decide to vacate? Oh! it can happen. That's what revolutions are made of. What shall we do then, start all over again?

 

#16 17 February 2011 - 10:50 AM CaptainPanic

The problem is much larger than just your government. The imbalance between expenses and income is just one of the symptoms of a much larger problem. You Americans have way too many people working in jobs that do not add value to your economy.

Security, army, weapons, government, but also the millions of people employed in all kinds of financial institutions pushing money around... None of those produce any physical wealth. I think that can all be considered "overhead

 

You could have left the Army, Security and Weapons out of the mix since they are all necessary. Even some of the folks pushing money around serve a purpose. But government protects the lazy and worthless to no end, whis is the saddest thing. People pushing money around to fund to this foolishness are as bad as those to whom they are giving it. I suppose you could really call it, the greedy leading the greedier.

Edited April 12, 2011 by rigney

[Phi for All]

My concern is, when does this nations people get it through their heads and punch drunkenness enough to realize the game must end. We can't keep bailing out big losers at the average tax payers expense. Neither can we destroy every entrepreneur who makes an invstment. Right now our government seems to be at a standstill of stalemate. What happens if politicians and "big money" find the going to rough and decide to vacate? Oh! it can happen. That's what revolutions are made of. What shall we do then, start all over again?

We're voters and we're consumers in a democracy. We can demand better representation and refuse to buy products made by companies we disagree with. The tough part is keeping enough people interested once things start to get a bit better. Keeping on top of who represents your vote is the toughest part.

 

Personally, I think the vast majority of people are closer on many major issues than we think. But we listen to far too many spinsongs sung to the choir and believe we're polarized. We average taxpayers need to realize that we aren't represented well by this two-party system and our present representatives.

[John Cuthber]

"But government protects the lazy and worthless to no end,"

http://xkcd.com/285/

[Marat]

As I pointed out in the earlier thread, the real force generating the deficit is not excess spending but inadequate taxation to meet the inherent demands of a modern state under pressure to sustain the degree of humane intervention that people rightly insist upon. As long as the illusion persists that cutting spending is the only way out of the problem of large shortfalls between income and expenditure, rather than higher taxation, the problem can never be solved, since the pressure of humanity to maintain some protection for the poor and vulnerable, together with the ludicrous but immovable commitment of America to the national potlach of wasting money on excess defense spending to preserve the illusion that power still depends on the number of tanks a country has, will always limit cost-cutting.

 

To get some idea of how miniscule the American level of taxation to meet basic necessities of running a state is, despite the fact that the U.S. spends vastly more on its military than other nations do, just look once more at the league table of the amount of gross domestic product taken by leading nations in taxation:

 

France: 46%

Germany: 40%

United Kingdom: 39%

Canada: 34%

United States: 28%

 

Thus the tax intake in the U.S. is just absurdly low for the needs of a modern state. In many ways this reflects the predominance of right-wing interests in the U.S., since low progressive taxes help those with the largest incomes, and a high debt increases interest rates so that the excess wealth which only the rich have in large amounts can be invested at a better return. So the rich benefit coming and going from the artificial creation of a large debt by low taxes.

 

But the debate is entirely framed in terms of the need to reduce this already insanely low level of taxation in the U.S. Interestingly, no one ever mentions in this debate the main political significance of taxation, which is that it redistributes wealth and improves the condition of the poor and the middle class at the expense of the wealthy. The fact that this part of the debate is suppressed shows how illegitimate the entire political process is in the U.S., since obviously the wealthy and their political agent, the Republican Party, hope to delude the vast majority of the electorate who benefit from the redistributive effects of higher taxes by pretending that deficit reduction through spending reduction is the only relevant issue, and is also merely a technical issue of sound accountancy, rather than a political choice about humane redistributive efforts vs. the inhumane maldistribution of wealth.

[lemur]

You could have left the Army, Security and Weapons out of the mix since they are all necessary. Even some of the folks pushing money around serve a purpose. But government protects the lazy and worthless to no end, whis is the saddest thing. People pushing money around to fund to this foolishness are as bad as those to whom they are giving it. I suppose you could really call it, the greedy leading the greedier.

I find the hardest thing for people to do when discussing economics is to get down to the fundamental level of what is going on at the level of labor, production, distribution, etc. In other words, the economy consists of numerous exchange relationships where people perform some labor or sell some non-labor resource in exchange for money, which they then spend or pay to government for taxes, etc. The networks of exchanges that emerge and the patterns of production and distribution are what we're concerned with regulating using either government, corporate management, small-business, household-level management of consumption choices, etc. So all the politics of taxing, spending, and regulation of labor, business, and trade all dance around the general issue of how to live, what to do with your labor and property, and how to influence other people to do something with theirs in other people's interest (whether you name those other people specifically or just call it "the nation" or "GDP" or "the economy" or however you view what goes on beyond individual households.

 

 

So what would happen if the government completely stopped spending money? Wouldn't we have to re-legalize slavery so that people could perform collaborative labor without pay? Is there any other way for people to legally work for each other without having money to pay each other? If people who do have money pay it only to certain other people, and those people in turn pay it back to the people who paid them, forming essentially a closed spending-circuit; should those that are excluded coin their own money or find some other way to barter and exchange goods and services? Do people just need to reduce their own spending to avoid relying on credit and government funding? If they do that, what level of economic activity would be reached as stable equilibrium?

[Doc. Josh]

How did Andrew Jackson do it? I mean what was so special about him compared to Obama/Bush etc...?

[John Cuthber]

"So what would happen if the government completely stopped spending money?"

A mess.

"Wouldn't we have to re-legalize slavery so that people could perform collaborative labor without pay?"

No. We had a society of sorts without money; we even had a government. There's no reason, in principle, why you need money. It just makes things a lot easier- particularly in a complex society. Imagine a bizarre event; all the money in the world suddenly disappears. However, all the people decide to just keep on doing what they were doing.

People go to the shops and get the goods they need. The shopkeepers still keep ordering from suppliers. The factories keep running and the workforce still work.

People who work in finance go and sit in front of computers and press buttons- but no real transfers are made.

Everything happens except there's no actual money.

It would need a huge rethink by the whole race- but it would work.

With no money the government obviously couldn't spend any but that wouldn't matter.

See- no need for slavery.

Of course, with a more realistic view of human nature slavery might be a more likely outcome- but there's no need for it.

 

"Is there any other way for people to legally work for each other without having money to pay each other?"

Yes, it worked for ages- it was called barter. It still happens today on a small scale.

Did you really not know that?

 

The same is true for collaborative labour- though it isn't seen so often these days. Perhaps the commonest examples are the aftermath of disasters where people volunteer to help others with no expectation of payment.

 

" Do people just need to reduce their own spending to avoid relying on credit and government funding?"

The people who really spend a lot are the rich.

They are not, in general, in need of government support. Through tax breaks and government deals, they are often in receipt of it.

 

If taxes only run to 28% of GDP then the other 72% must be spent by people other than the govt.

[lemur]

Imagine a bizarre event; all the money in the world suddenly disappears. However, all the people decide to just keep on doing what they were doing.

People go to the shops and get the goods they need. The shopkeepers still keep ordering from suppliers. The factories keep running and the workforce still work.

People who work in finance go and sit in front of computers and press buttons- but no real transfers are made.

Everything happens except there's no actual money.

It would need a huge rethink by the whole race- but it would work.

With no money the government obviously couldn't spend any but that wouldn't matter.

Interesting thought experiment. It's a good one for generally shifting people's perspectives from the money-finance part of economics to everything else that goes on between transactions.

 

Still, what would people do when they started realizing they could make purchases without their bank balances decreasing?

 

 

See- no need for slavery.

Of course, with a more realistic view of human nature slavery might be a more likely outcome- but there's no need for it.

Well, it WOULD be slavery if people weren't getting paid for going to work. Slavery doesn't require racial distinctions or whips and chains or having farmer's markets with humans on an auction block. It just requires people working for others without compensation. I suppose though if everyone was free to compensate themselves by taking whatever they wanted, there would be compensation. That would actually be what Marx meant with communism, i.e. "producing all you can and taking only what you need."

 

"Is there any other way for people to legally work for each other without having money to pay each other?"

Yes, it worked for ages- it was called barter. It still happens today on a small scale.

Did you really not know that?

Of course I know that. But I was referring to big projects that require a lot of people working to produce something complex.

 

The same is true for collaborative labour- though it isn't seen so often these days. Perhaps the commonest examples are the aftermath of disasters where people volunteer to help others with no expectation of payment.

Yes, but in more stable economies people tend to refuse to contribute labor and resources without guaranteed compensation. If you pay attention to the news, you can identify all sorts of instances where it is assumed that as funding is cut, the services will be lost. In fact, they were just planning to shut down the US federal government instead of working without pay. Whereas FDR's new deal democrats put people to work as volunteers, the present day party prefers strikes and government shut-downs until the desired debt-spending cycle is established.

 

Do people just need to reduce their own spending to avoid relying on credit and government funding?"

The people who really spend a lot are the rich.

They are not, in general, in need of government support. Through tax breaks and government deals, they are often in receipt of it.

It's not about how much people spend. If your funding gets cut completely, you don't have ANY money to spend. The question is whether the economy can reach equilibrium by people cutting their budgets to a level that doesn't require government subsidization. I.e. if they tighten their belts enough, will the private economy provide them with sufficient funding to stay out of debt?

 

 

If taxes only run to 28% of GDP then the other 72% must be spent by people other than the govt.

Maybe, but it could all be in the same money-supply chain. E.g. I get 1million from the government and spend it to build a road. Then the road builders get it and spend it on sandwiches. Then the sandwich makers spend it on housing. Then the landlords spend it on building maintenance. Each time that million dollars changes hands, it adds to GDP right? But if building maintenance is waiting on money from the landlords, housing deteriorates, etc. But the question is whether those people could organize their own economy without government spending to initiate the cash-flows and help people cover their bills/debts?

 

 

[rigney]

To get some idea of how miniscule the American level of taxation to meet basic necessities of running a state is, despite the fact that the U.S. spends vastly more on its military than other nations do, just look once more at the league table of the amount of gross domestic product taken by leading nations in taxation:

 

France: 46%

Germany: 40%

United Kingdom: 39%

Canada: 34%

United States: 28%

 

Marat says: Thus the tax intake in the U.S. is just absurdly low for the needs of a modern state.

In many ways this reflects the predominance of right-wing interests in the U.S., since low progressive taxes help those with the largest incomes, and a high debt increases interest rates so that the excess wealth which only the rich have in large amounts can be invested at a better return. So the rich benefit coming and going from the artificial creation of a large debt by low taxes.

 

rigney asks:,"Tell me, would you call George Soros a Right-Winger"?

 

Few countries are blessed by nature to be sitting in such a perfect situation as the United States and Canada. We have over 300.1 million folks in America alone, yet; only the combined population of France, The British Commonwealth, Germany and Italy, equal our 300 million. So tell me, how many people do you have in your country on the "dole", taking a daily nap and draining your piggy bank like America does? "I'd say few, if any." Edited April 13, 2011 by rigney

[lemur]

Few countries are blessed by nature to be sitting in such a perfect situation as the United States and Canada. We have over 300.1 million folks in America alone, yet; only the combined population of France, TheBritish Commonwealth, Germany and Italy, equal our 300 million. So tell me, how many people so you have in your country on the "dole", taking a daily nap and draining your piggy bank like America does. America? "I'd say few, if any."

When the government organizes spending and taxation to promote job-creation in all sectors through trickle-down from military, social redistribution payments, government contracts, or whatever; whose income ISN'T the result of government spending? The problem isn't whether the government generates spending or private business. The problem is that people spend too much money and that sets high expectations for how much money people think they need. What many people in developed economies consider intolerable poverty would be sufficient means to live well in developing economies.

Edited April 13, 2011 by lemur

[rigney]

Your statement is right on target.

The problem is that people spend too much money and that sets high expectations for how much money people think they need. What many people in developed economies consider intolerable poverty would be sufficient means to live well in developing economies.

Many economies are spoiled to hell and gone. I can understand why people with wealth don't worry about where their next million is coming from. Dumb Asses will give it back to them before the week is out. Personally, in my 78 years; I've never spent $100.00 on my best pair of dress shoes. Little more than that for my Sunday suit. Some kids today run around with hundred dollar sneakers on, a pair of jeans costing little less, and his/her Mom and Dad don't even have a job. Tell me, where the hell do they get all the money and where did I go so damned wrong? I've worked an entire life time and still "don't own a pit to hiss in". Edited April 13, 2011 by rigney

[lemur]

Your statement is right on target. Many economies are spoiled to hell and gone. I can understand why people with wealth don't worry about where their next million is coming from. Dumb Asses will give it back to them before the week is out. Personally, in my 78 years; I've never spent $100.00 on a pair of shoes. Little more than that for a suit. Some kids today run around with hundred dollar sneakers on, a pair of jeans costing little less, and his/her Mom and Dad don't even have a job. Tell me, where the hell do they get their money? Why did things go so wrong for me? I've worked my entire life and still "don't have a pit to hiss in".

I think this is one of those rare instances where we agree to some extent. I just don't agree with that little part where you say that the parents having a job or not makes it any better or worse for the kids to waste money like that. You imply that rich kids are causing less problems by setting the bar of consumerism high than when poor kids do it. They both stimulate an unnecessarily high level of consumer demand based on status-concerns that drives GDP to unsustainable levels.

 

 

 

[CaptainPanic]

Imagine a bizarre event; all the money in the world suddenly disappears. However, all the people decide to just keep on doing what they were doing.

People go to the shops and get the goods they need. The shopkeepers still keep ordering from suppliers. The factories keep running and the workforce still work.

People who work in finance go and sit in front of computers and press buttons- but no real transfers are made.

Everything happens except there's no actual money.

It would need a huge rethink by the whole race- but it would work.

With no money the government obviously couldn't spend any but that wouldn't matter.

 

I love the idea, but you overlook one huge sector of our economy: The real economy would continue. But millions of people who are working in the financial sector would lose their jobs, because the only thing they do is move money around...

 

Which shows that the importance of these financial jobs is overrated.

[rigney]

'lemur'

I think this is one of those rare instances where we agree to some extent. I just don't agree with that little part where you say that the parents having a job or not makes it any better or worse for the kids to waste money like that. You imply that rich kids are causing less problems by setting the bar of consumerism high than when poor kids do it. They both stimulate an unnecessarily high level of consumer demand based on status-concerns that drives GDP to unsustainable levels.

 

You stated:

What many people in developed economies consider intolerable poverty would be sufficient means to live well in developing economies.

The very essence of my thinking, but you missed my intent totally. I had previosly asked in post #13: Tell me, where the hell do they get all their money, and you dissed my question completely. I've worked an entire life time and still "don't own a pit to hiss in". But somehow these poor downtrodden outcasts of the elite manage to live far above "my" means. WHY? Believe me, the wealthiest kids I've ever known didn't dress to the nines, drive a big Cadallac, Porsche; BMW, or flaunt their Daddy's money. Most, if not all of them would have got their a--es kicked had they done so. Wealth makes wealth, not ignorance and stupidity. But then I ask myself. Self, where did you go wrong? Edited April 13, 2011 by rigney

[lemur]

You statedThe very essence of my thinking, but you missed my intent totally. Then I asked:Tell me, where the hell do they get all their money and where did I go so damned wrong? You failed to answer the ignorance of my question. I've worked an entire life time and still "don't own a pit to hiss in". But somehow these poor downtrodden outcasts manage to live far above my means. WHY? Believe me, the wealthiest kids I've ever known didn't dress to the nines, drive a big Cadallac, Porsche; BMW or flaunt their Daddy's money. Most, if not all of them would have had their a--es kicked if they had done so. Wealth makes wealth, not ignorance and stupidity. But then I ask, what was my problem?

I'm not sure exactly which rich kids you're generalizing about now. I do know that a lot of wealth goes into maintaining property-price differences that are basically nothing more than a club-membership fee for displaying a socioeconomic status. So there are some houses that cost $300k-$600k a mile away from other houses that cost $50k-$150k. I mean, think about it. If you would buy a $150K house instead of a $300K house, you would have $150K to spend on cars or whatever else you wanted. Some people invest(ed) in property because they though it would be a good way to save and grow their wealth. The problem is that in the process, certain properties were made into "black sheep" to avoid, which drove down the property prices in those areas. Then, the surplus income this results in for the people paying lower prices gets spent and thus drives the rat-race to make more money to afford hyper-appreciating properties in the 'good areas.' That would seem to be one possible economic explanation of why you might be seeing some people with seemingly high levels of disposable income while other people seem to have less while actually probably having higher net worth.

[swansont]

Few countries are blessed by nature to be sitting in such a perfect situation as the United States and Canada. We have over 300.1 million folks in America alone, yet; only the combined population of France, The British Commonwealth, Germany and Italy, equal our 300 million. So tell me, how many people do you have in your country on the "dole", taking a daily nap and draining your piggy bank like America does? "I'd say few, if any."

Is spending a reasonable proxy for number of people on the dole? Germany and France spend more than 25% of GDP on welfare (excluding education), Italy and the UK are between 20 and 25%. The US is under 15%. That might be mitigated to some extent by having a higher GDP per capita in the US — the payout and cost of living matter. But "few, if any?" No, I'm not buying it.

 

http://en.wikipedia.org/wiki/Welfare_state#The_welfare_state_and_social_expenditure

 

Your statement is right on target. Many economies are spoiled to hell and gone. I can understand why people with wealth don't worry about where their next million is coming from. Dumb Asses will give it back to them before the week is out. Personally, in my 78 years; I've never spent $100.00 on my best pair of dress shoes. Little more than that for my Sunday suit. Some kids today run around with hundred dollar sneakers on, a pair of jeans costing little less, and his/her Mom and Dad don't even have a job. Tell me, where the hell do they get all the money and where did I go so damned wrong? I've worked an entire life time and still "don't own a pit to hiss in".

 

3% inflation doubles the price every 24 years, and we've seen spikes into double-digits on occasion. That same $100 pair of shoes cost you less than a double sawbuck when you were in your twenties. Considering dropping a c-note as extravagance today has to be compared with that number.

[John Cuthber]

" So tell me, how many people do you have in your country on the "dole", taking a daily nap and draining your piggy bank like America does? "I'd say few, if any." "

Unemployment in the UK is currently running at about 7.9% It's hard to say how many are napping.

9.6% in France

6.3% in Germany

8.4% in Italy

 

Compared to 9.2% in the USA

 

from

http://www.google.com/publicdata?ds=z9a8a3sje0h8ii_&met=unemployment_rate&idim=eu_country:IT&dl=en&hl=en&q=%22unemployment+in+italy%22

etc

 

 

So there's not a huge difference among these countries

[rigney]

" So tell me, how many people do you have in your country on the "dole", taking a daily nap and draining your piggy bank like America does? "I'd say few, if any." "

Unemployment in the UK is currently running at about 7.9% It's hard to say how many are napping.

9.6% in France

6.3% in Germany

8.4% in Italy

 

Compared to 9.2% in the USA

 

from

http://www.google.com/publicdata?ds=z9a8a3sje0h8ii_&met=unemployment_rate&idim=eu_country:IT&dl=en&hl=en&q=%22unemployment+in+italy%22

etc

 

 

So there's not a huge difference among these countries

 

Perhaps my question should have been; Of folks unemployed in your countries, how many of them are on welfare as compared to those actually seeking a job? Our problem here is, we probably have a good 35% of Americans not working. Of that, 10% are actually seeking employment, while the other 25% wouldn't take a job if it was shoved under their nose. Tell me, what is your mix?

 

Is spending a reasonable proxy for number of people on the dole? Germany and France spend more than 25% of GDP on welfare (excluding education), Italy and the UK are between 20 and 25%. The US is under 15%. That might be mitigated to some extent by having a higher GDP per capita in the US — the payout and cost of living matter. But "few, if any?" No, I'm not buying it.

 

http://en.wikipedia.org/wiki/Welfare_state#The_welfare_state_and_social_expenditure

 

 

 

3% inflation doubles the price every 24 years, and we've seen spikes into double-digits on occasion. That same $100 pair of shoes cost you less than a double sawbuck when you were in your twenties. Considering dropping a c-note as extravagance today has to be compared with that number.

 

In all honesty, I never owned a pair of shoes costing more than $3 or $4 dollars in my life until I went into the Army during the Korean War, Then it was two pairs of combat boots, a pair of dress browns,(plus the shorts and socks)to go with them. Until 1988 or 89, I thought dress shoes were something on a mannequin in a store front. My wife bought me a pair of Florshimes about that time,$80.00; which I still have and wear on occasion. Tell me, not to be snide; but have you ever worked at a job requiring physical labor for any length of time? Edited April 13, 2011 by rigney

[swansont]

Perhaps my question should have been; Of folks unemployed in your countries, how many of them are on welfare as compared to those actually seeking a job? Our problem here is, we probably have a good 35% of Americans not working. Of that, 10% are actually seeking employment, while the other 25% wouldn't take a job if it was shoved under their nose. Tell me, what is your mix?

 

Not working or seeking work ≠ on welfare. Stay-at-home moms and dads still comprise part of the population, there are students and probably more categories. There are more than 80 million not in the workforce, but only about 4-5 million on welfare in the US.

http://www.bls.gov/news.release/empsit.a.htm

 

In all honesty, I never owned a pair of shoes costing more than $3 or $4 dollars in my life until I went into the Army during the Korean War, Then it was two pairs of combat boots, a pair of dress browns,(plus the shorts and socks)to go with them. Until 1988 or 89, I thought dress shoes were something on a mannequin in a store front. My wife bought me a pair of Florshimes about that time,$80.00; which I still have and wear on occasion. Tell me, not to be snide; but have you ever worked at a job requiring physical labor for any length of time?

 

Depends on what you mean. I've never worked construction or anything like that, but by the same token, I don't just sit at a desk all day. I served in the navy and since then I've done my share of lugging equipment around, assembling and disassembling equipment and tightening bolts in the lab. Your point?

[rigney]

'swansont' Not working or seeking work ≠ on welfare. Stay-at-home moms and dads still comprise part of the population, there are students and probably more categories. There are more than 80 million not in the workforce, but only about 4-5 million on welfare in the US.

http://www.bls.gov/news.release/empsit.a.htm

 

Depends on what you mean. I've never worked construction or anything like that, but by the same token, I don't just sit at a desk all day. I served in the navy and since then I've done my share of lugging equipment around, assembling and disassembling equipment and tightening bolts in the lab. Your point?

 

Statistically this may be close to the truth, but it's the other categoriies that worry me?

http://www.heritage.org/Research/Reports/2007/08/How-Poor-Are-Americas-Poor-Examining-the-Plague-of-Poverty-in-America

 

No point. It's just that most folks on the forum are so reticent, you might think of them as FBI or CIA Agents. Good to know you had some military time, hopefully not war time.

 

We got away from the issue. But what is the possibility that five generations from now, our kids, kids, kids, kids, will still be paying on this monsterous debt?

Edited April 14, 2011 by rigney

[Marat]

How big is the U.S. debt really? Let's just address the problem in terms of some ballpark figures. The debt is about 80% of one year's GDP. The U.S. now collects 28% of GDP in taxes every year, which is freakishly low for a developed country, since Canada (34%), the United Kingdom (39%), Germany (40%), and France (46%) all take very much larger tax bites out of the GDP of their countries and seem to do all right economically. Suppose the U.S. were to raise its taxes to an intermediate rank level among the developed countries and to take the same tax bite out of the economy as Germany does, devoting all the taxes taken above the normal level for the U.S. to debt reduction. This would then allow us to reduce the national debt of 80% of GDP by 12% of GDP each year, so with more rapid amortization of interest payments we could probably eliminate the debt in just 6 years, and do so while leaving all social programs plus the bloated military budge intact.

 

But since the military budget is insanely over-inflated for any realistic self-protection needs of the U.S., we could easily draw another 1% of GDP off of that in savings per year, and thus pay off the debt even faster.

 

There was also an interesting solution presented by Donald Trump the first time he ran for the Presidency, which was to have a one-time tax of 14% on all personal bank account holdings above one million dollars, which he claimed would pay off the national debt in itself. I don't know whether his assumptions were right at the time or whether they still are, but this would be another painless way to accomplish this goal of debt reduction without harming the poor or the middle class.

 

In short, if you are willing to address the debt problem by increasing taxes to levels which would be normal for the typical G8 country, the whole issue could be quickly and painlessly solved. The problem comes from the ideological premise that the only possible way to tackle the debt is by gouging programs that ensure a basic level of humane treatment for the poor, the aged, and sick, while sparing any cost to millionaires and billionaires.

 

Even on the expenditure side, there are interesting ideologically motivated choices which create unnecessary budgetary stresses. Thus it seems that while there is always a spare trillion dollars available to spend opposing the highly questionable threat that Iraq not only has weapons of mass destruction, but that the threat is so immediate that we must act before the Blix investigation is complete, and Saddam somehow can mobilize these weapons against the U.S., and also sees some advantage in doing so, there is now no spare cash around to preserve the very real services provided by Medicare.

Edited April 14, 2011 by Marat

[John Cuthber]

"Our problem here is, we probably have a good 35% of Americans not working. Of that, 10% are actually seeking employment, while the other 25% wouldn't take a job if it was shoved under their nose. "

You asked them all (or, at least, a statistically significant number of them)?

That must have been a lot of work.

Or is that a set of made up numbers that may well reflect your prejudice, rather than the facts?

[lemur]

"Our problem here is, we probably have a good 35% of Americans not working. Of that, 10% are actually seeking employment, while the other 25% wouldn't take a job if it was shoved under their nose. "

You asked them all (or, at least, a statistically significant number of them)?

That must have been a lot of work.

Or is that a set of made up numbers that may well reflect your prejudice, rather than the facts?

Look at the content of the jobs available and ask yourself if you would want to do them. I think economic culture needs to be re-worked so that there won't be a sizable amount of jobs/work that some people just get stuck with because they need money and there's no other way to get it. This creates the means of economic exploitation.