What drives US debt?

[ksen]

I've read and heard that a common complaint about social security, medicare and medicaid is that they are the reason the US is so far in debt.

But . . .

According to the Summary of the 2015 Annual Reports the four trusts that make up those programs bring in more revenue than they expend by $10.9 billion a year on a consolidated basis. So contrary to the common view that those programs drive the debt the reality is that those programs don't add to the debt at all.

The question then remains: What is the actual driver of US indebtedness?

Anyone that points to Social Security, Medicare and Medicaid either hasn't bothered to actually look at the financial status of those programs or knows and has a different agenda than really addressing the deficit and debt.

 

[prideandfall]

what drives US debt is the fact that about half the country are paranoid delusional right wing assholes who have a raging shit fit about taxes, and so we as a nation do not properly fund the normal functioning of our own governmental infrastructure.

 

[ksen]

Yeah, I've argued that too: we don't have a spending problem, we have a funding problem.

Thanks a lot Grover Norquist.

 

[fromderinside]

Geez.

A chance to make recommendations and what do we get.... complain, complain, complain

Bernie isn't right but he's in the ball park. Need government incentives to get business refocused on reinvestment and innovation rather than cost reductions. If we can tilt the economy with natural stuff we should be able to tilt the economy with better technology demands. Get what I'm sayin'

 

[Nice Squirrel]

Single mothers, welfare for minorities, PBS, and teachers unions.

 

[Horatio Parker]

What drives the debt is that most people wish to see some money remain in private hands. Govt debts are private assets.

Balance the budget and you remove from the economy through taxation all the dollars created that year. If that situation persists, the private sector will have to diminish savings to pay taxes. Continue until all pension funds and other private savings or investments have been exhausted, and the national debt will be removed.

Govt deficits and national debt are the other side of the ledger from private assets.

Ignorance of this reality enables austerity mongers opportunity to scare the public. Sovreign currency govts aren't revenue constrained.

The govt could create money without issuing debt. Some economists say that that is unproductive activity, a form of corporate welfare, and should stop.

 

[ksen]

How many austerians would shit a brick if all of a sudden there were no more treasuries to invest in?

 

[Horatio Parker]

How many austerians would shit a brick if all of a sudden there were no more treasuries to invest in?

Set up a national savings program.

 

[dismal]

Yeah, I've argued that too: we don't have a spending problem, we have a funding problem.

Tip: Deficit = [receipts] - [outlays]

You don't get a deficit because of one or the other, but by one being bigger than the other.

 

[jonatha]

I've read and heard that a common complaint about social security, medicare and medicaid is that they are the reason the US is so far in debt.

But . . .

According to the Summary of the 2015 Annual Reports the four trusts that make up those programs bring in more revenue than they expend by $10.9 billion a year on a consolidated basis. So contrary to the common view that those programs drive the debt the reality is that those programs don't add to the debt at all.

The question then remains: What is the actual driver of US indebtedness?

Anyone that points to Social Security, Medicare and Medicaid either hasn't bothered to actually look at the financial status of those programs or knows and has a different agenda than really addressing the deficit and debt.

Actually, any surplus in those funds must by law be invested in government securities, so that's causing the debt to increase by $10.9 billion.

ETA - assuming the debt figure doesn't eliminate that as being akin to an intra-agency thing, I suppose...

 

[dismal]

I've read and heard that a common complaint about social security, medicare and medicaid is that they are the reason the US is so far in debt.

But . . .

According to the Summary of the 2015 Annual Reports the four trusts that make up those programs bring in more revenue than they expend by $10.9 billion a year on a consolidated basis. So contrary to the common view that those programs drive the debt the reality is that those programs don't add to the debt at all.

The question then remains: What is the actual driver of US indebtedness?

Anyone that points to Social Security, Medicare and Medicaid either hasn't bothered to actually look at the financial status of those programs or knows and has a different agenda than really addressing the deficit and debt.

Actually, any surplus in those funds must by law be invested in government securities, so that's causing the debt to increase by $10.9 billion.

ETA - assuming the debt figure doesn't eliminate that as being akin to an intra-agency thing, I suppose...

People with practical points to make usually quote the "debt held by the public" number which excludes these because they are meaningless inter-governmental accounting manipulations.

People who intend to exaggerate the size of the debt and/or have previously fallen on their sword to defend the meaningless inter-governmental accounting manipulations and are now stuck with it might throw out the gross debt number.

 

[ksen]

Yeah, I've argued that too: we don't have a spending problem, we have a funding problem.

Tip: Deficit = [receipts] - [outlays]

You don't get a deficit because of one or the other, but by one being bigger than the other.

Tip: Receipts > outlays = surplus not deficit.

 

[SimpleDon]

I've read and heard that a common complaint about social security, medicare and medicaid is that they are the reason the US is so far in debt.

But . . .

According to the Summary of the 2015 Annual Reports the four trusts that make up those programs bring in more revenue than they expend by $10.9 billion a year on a consolidated basis. So contrary to the common view that those programs drive the debt the reality is that those programs don't add to the debt at all.

The question then remains: What is the actual driver of US indebtedness?

Anyone that points to Social Security, Medicare and Medicaid either hasn't bothered to actually look at the financial status of those programs or knows and has a different agenda than really addressing the deficit and debt.

Actually, any surplus in those funds must by law be invested in government securities, so that's causing the debt to increase by $10.9 billion.

ETA - assuming the debt figure doesn't eliminate that as being akin to an intra-agency thing, I suppose...

No, the funds buy government securities but they actually reduce the deficit, not add to it. If they didn't take in the 10 billion dollar surplus the deficit would be 10 billion dollars higher and private sales of Treasury bills would have to be 20 billion dollars higher.

 

[dismal]

Tip: Deficit = [receipts] - [outlays]

You don't get a deficit because of one or the other, but by one being bigger than the other.

Tip: Receipts > outlays = surplus not deficit.

I wrote it like that so your compulsive need to disagree with me would cause you to say something true and correct for once.

 

[ksen]

I accept your apology.

 

[Cheerful Charlie]

Actually, any surplus in those funds must by law be invested in government securities, so that's causing the debt to increase by $10.9 billion.

ETA - assuming the debt figure doesn't eliminate that as being akin to an intra-agency thing, I suppose...

People with practical points to make usually quote the "debt held by the public" number which excludes these because they are meaningless inter-governmental accounting manipulations.

People who intend to exaggerate the size of the debt and/or have previously fallen on their sword to defend the meaningless inter-governmental accounting manipulations and are now stuck with it might throw out the gross debt number.

Originally, SS surpluses were supposed to be invested, not used as taxes and in return, get special issue treasury bonds, AKA, IOUs. That IS a debt and can that keeps getting kicked down the road for future tax payers to deal with

What we need is the old issue that the GOP keeps killing, put SS and medicare funds in lock boxes. Also military retirement funds and other funds similarly being raided. I have seen estimates that had the roiginal plan been followed, we would have $8 -$10 billion in surpluses rthaer than IOUs.

Bush tax cuts. in 2003 when Bush proposed his massive tax cuts for the poor, 450 eminent economists incuding 10 Nobel laureayes warned it would create massive deficits. They were right. CBO estimates show that the Bush deficits had 30% of the total deficits due to the tax cuts. Obama managed only a 6% cut in these thanks to the GOP Congress who wants to make these tax cuts permanent. Up to the melt down, 24% of our total deficits came from Bush tax cuts.

https://en.wikipedia.org/wiki/Economists'_statement_opposing_the_Bush_tax_cuts

[h=1]Economists' statement opposing the Bush tax cuts[/h] From Wikipedia, the free encyclopedia

The Economists' statement opposing the Bush tax cuts was a statement signed by roughly 450 economists, including ten of the twenty-four American Nobel Prize laureates alive at the time, in February 2003 who urged the U.S. President George W. Bush not to enact the 2003 tax cuts; seeking and sought to gather public support for the position. The statement was printed as a full-page ad in The New York Times and released to the public through the Economic Policy Institute. According to the statement, the 450 plus economists who signed the statement believe that the 2003 Bush tax cuts will increase inequality and the budget deficit, decreasing the ability of the U.S. government to fund essential services, while failing to produce economic growth.<sup>[1][2]

______


Under Bush, the national debt doubled from $5.807 billion to $11.929 billion. The Bush era saw government spending rise 26% in the 3rd and 4th Bush budget years, when Bush gained control of House and Senate. Wild and crazy spending.

Much of the rest was the result of the War in Iraq.

And then we had the tremendous cost of the Bush economic meltdown.

When you here some outraged blathering right winger bellow about our massive national debt, consider how we got there. It wasn't Obama.</sup>

 

[Cheerful Charlie]

Actually, any surplus in those funds must by law be invested in government securities, so that's causing the debt to increase by $10.9 billion.

ETA - assuming the debt figure doesn't eliminate that as being akin to an intra-agency thing, I suppose...

People with practical points to make usually quote the "debt held by the public" number which excludes these because they are meaningless inter-governmental accounting manipulations.

People who intend to exaggerate the size of the debt and/or have previously fallen on their sword to defend the meaningless inter-governmental accounting manipulations and are now stuck with it might throw out the gross debt number.

It is meaningful. Baby Boomers are a large number of people who are retiring. These IOUs need redeeming from voters when the surpluses inevitably end and the IOUs need redeeming. The Demographics makes it an important issue.

Brushing it all of as some sort of unimportant bean counter's technicality is just plain wrong. There is no exaggeration, its the other way around. A denial of plain facts. We have a looming problem due to political gamesmanship and stupidity. Its stuff like this that is why I am no conservative, and not a Republican. A lack of basic economic competence.

 

[SimpleDon]

The talk of a deficit in Social Security is primarily based on the hope that no one will notice that it depends on the government effectively defaulting on the 2 trillion dollar plus of government bonds that Social Security holds in its trust fund.

If Social Security cashes in the bonds then the overall budget goes into an even larger deficit to pay of the bond. Each dollar of the bonds that Social Security cashes in is a dollar added to the deficit. The Republicans want to retire the 2 trillion dollars worth of government bonds. Essentially to default on them. Then they can blame part of the deficit on Social Security.

This why you can't say that the government can save money the way that you and I save money. Whether or not the bonds exist doesn't matter for the bottom line of the budget. Each dollar of Social Security benefits paid out that isn't matched by a dollar of revenue adds to the deficit. It only matters on what you blame the deficit.

But it never is a good idea to default on your bonds. Even if you are the largest economy in the world.

 

[dismal]

People with practical points to make usually quote the "debt held by the public" number which excludes these because they are meaningless inter-governmental accounting manipulations.

People who intend to exaggerate the size of the debt and/or have previously fallen on their sword to defend the meaningless inter-governmental accounting manipulations and are now stuck with it might throw out the gross debt number.

It is meaningful. Baby Boomers are a large number of people who are retiring. These IOUs need redeeming from voters when the surpluses inevitably end and the IOUs need redeeming. The Demographics makes it an important issue.

Brushing it all of as some sort of unimportant bean counter's technicality is just plain wrong. There is no exaggeration, its the other way around. A denial of plain facts. We have a looming problem due to political gamesmanship and stupidity. Its stuff like this that is why I am no conservative, and not a Republican. A lack of basic economic competence.

*sigh*

Not again.

 

[Cheerful Charlie]

Yes, again. Until people realize, sooner or later these special interest treasury bonds need to be paid off or rolled over, creating even bigger future debts. As massive numbers of baby boomer retire, eventually SS no longer gets surpluses. These treasury special interest notes are IOUs, needing to be paid off by the public, sooner or later. It's basic math.

The longer we put off getting a correct understanding of all of this and start dealing with it realistically, the worse future problems will be when the inevitable hits us.

Lock box now!