alt Hacker NewsUS federal budget deficit jumps 12% in one year to nearly $2 Trillion
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At some point I realized: there is no plan to fix it. Both of the parties are just hoping that the upcoming crisis happens while the other party is in power.
The US federal deficit is growing at an alarming rate; if nothing is done, it will solve itself with inflation. US debt is denominated in USD, so the US will not default; the value of money just steadily declines until the debt burden matches the capacity of the US economy to pay for it. Also, US tax rates are relatively low, US can pay the debt by increasing tax rate if there is political will.
The country with the worst debt crisis is France. Their tax rate is 40%, they don't have their own currency (It's EUR), they have a large primary deficit and it's politically impossible to cut spending. EU must rescue France in next 4-5 years.
Category error. These comments are only relevant with a democratic administration.
In the 1970’s the Belgian deficit ran from 66 to 100+ percent of the BNP. Every governement since had serious trouble getting the deficit manageable. We never really got it unde control, and the intrest is hurting us. Afaik we got to 104% because we had to when joining the euro, which was our best. We are now at 109% again, and even that is hurting us hard.
The smart thing to do would be to raise taxes (not just on the wealthy) and cut entitlements. Reducing the deficit would indeed slow down inflation, give the Fed room to cut interest rates, and boost business investment. The economy would be in a much healthier place.
This is expected. Every Republican administration increases the deficit, every Democrat administration lowers it
The deficit is an illusion. We owe most of it to ourselves. The real problem is balance of trade and steady deindustrialization, which no administration has been able to tackle yet.
It’s a question of inputs and outputs.
Right now we’re moving towards more balanced trade by shipping gold overseas. Nonmonetary gold and metals are our largest export YTD. That’s not going to work forever.
We need to take one on the chin and allow the currency to devalue versus gold, then revalue the gold reserves which haven’t been revalued since 1973. It will result in some short term pain, but it doesn’t have to fall in the usual distribution. (Distribution of financial pain is a policy choice.)
Only after the currency is weakened will manufacturing return home. Gold revaluation can be used to buy back some bonds to reduce the interest expense.
Edit: to the drive by downvotes, if you’ve got a better idea then free to share it. This is the only option I’ve seen recently that may work before we’re in a total crisis. I don’t love it either, but this actually puts the process in our control rather than having it happen involuntarily. Continued devaluation of the dollar is guaranteed at this point.
The US is in debt to itself, in a currency it can print. What could go wrong?
Over his 1.5 presidential terms, Trump has accumulated over a quarter of the US debt ($11T / $40T):
* https://www.us-debt-clock.com/presidents
Some mitigating circumstances are COVID in his first term (also effecting Biden), but there's also a lot of 'self-inflicted' damage, especially the last two years.
It turns out tax cuts may not actually pay for themselves (never mind ill-considered military adventures).
> The red ink has led to dire warnings from economists that the US now routinely runs annual deficits that were previously seen only during recessions
imagine what's going down after two more years of this
Iran War will still be happening at a BILLION dollars a day
gas will still be draining an extra BILLION dollars a day from everyone's pockets
how much healthcare and homes could have been bought with that
1. Elect Claude.
2. Prompt Claude for a balanced budget.
...
??? Profit!
what matter is he printed money to send people in rest of world to hell.
Abolish medicare medicaid social security and welfare. The system will sort itself out by mass unrest.
I'm half joking but I think we keep being saved from our bad decisions at the ballot box so we don't learn.
What's really striking is the current administration performed one of the most brutal cost cutting programs in recent memory. And despite the massive amount of disruption caused (and to be caused) there is almost nothing to show for it financially. Just pennies in the ashtray of a Lamborghini.
Obviously the people behind it were not serious, and did nothing to actually address government waste or reform the welfare system. But the result is the same - the idea of cost cutting as a means of addressing the deficit is effectively dead. There is no dry powder on the "slash budgets" side of the ledger. All that's left is raising taxes. (Or do nothing until there's an actual hyperinflation event).