National Debt

Debt Denialists

Democrats and Republicans fiddle while the balance sheet burns.


Joanna Andreasson

It was eight hours before the biggest media opportunity any Libertarian Party candidate had had in decades, and Gary Johnson was in a New York hotel room talking on the phone with Harvard economist Jeffrey Miron about the nuts and bolts of entitlement reform. "When it comes to Social Security," Johnson told his senior economic advisor as they rehearsed for a June 22 CNN town hall that would end up being viewed in more than 900,000 households, "I'm mimicking the lines from four years ago regarding raising the retirement age, fair means-testing, being able to self-direct as many funds as Congress would authorize.…"

After wondering aloud whether even these reforms would prevent the Social Security Trust Fund from going "bust," Johnson arrived at his bottom line: The system as currently constituted is fiscally unsustainable. "That's the reality," he said, "and, you know, you can't run for this office and not speak that truth, in my opinion."

Johnson, bless his fiscally responsible heart, was confusing can't with shouldn't. Because one of the most ominous and overlooked developments of the head-spinning 2016 presidential election has been that the winning candidates were precisely the ones who steadfastly refused to speak the truth about how rapidly old-age entitlements are scarfing up the pie of federal spending. In fiscal year 2016, $2.47 trillion of the federal government's $3.66 trillion in non-interest expenses came from the "mandatory spending" categories of Social Security, Medicare, and Medicaid. Within a decade, according to the Congressional Budget Office (CBO), those figures are projected to grow to $4.14 trillion out of $5.7 trillion.

In its latest Long-Term Budget Outlook, released on July 12, the CBO concluded that even near-term projections show publicly held debt (which is the national debt minus the debt held by government institutions) "growing larger in relation to the economy than ever recorded in U.S. history," from a current debt-to-gross domestic product (GDP) ratio of 75 percent (up from 39 percent as recently as 2008), to 86 percent in 2026 (higher than it has been since World War II), and then 141 percent in 2046 (wheeee!). Debt service alone is on pace to become the third-largest federal spending category during the next president's first term.

"Large and growing federal debt over the coming decades would hurt the economy and constrain future budget policy," the CBO warned. "The amount of debt that is projected…would reduce national saving and income in the long term; increase the government's interest costs, putting more pressure on the rest of the budget; limit lawmakers' ability to respond to unforeseen events; and increase the likelihood of a fiscal crisis." That almost sounds like something worth mentioning during a presidential campaign!

Yet instead of addressing that reality, Donald Trump has campaigned as the Republican who would protect rather than tweak entitlements. "We're going to save your Social Security without killing it like so many people want to do," he said at a June 18 rally in Phoenix. "And your Medicare." How will the GOP nominee overcome the cruel logic of actuarial tables, which show that the ratio of workers paying into the system to retirees receiving transfers continues to plunge from 16:1 back when Social Security was launched to less than 3:1 now? Through a combination of "dynamic" economic growth and an always-vague promise to root out "waste, fraud, and abuse." As Steve Bell of the Bipartisan Policy Center told The Wall Street Journal in June, "Any notion of waste, fraud and abuse meeting our fiscal needs remains…silliness." Not just silly, but sad! "Trump's comments are just another kick in the stomach to all of us who have worked for more than 30 years for solvency for Social Security."

The Democrats, if anything, have been worse. Insurgent runner-up Bernie Sanders promised to expand, not contract, both Social Security and Medicare, and after long negotiations he helped push those planks into the Democratic platform, widely hailed as the "most progressive" in party history. It is now Hillary Clinton's official position to hike monthly Social Security benefits, boost cost-of-living increases, and reduce the age of Medicare eligibility, at least in terms of being able to "buy in" to the program, from 65 to 55. This at a time when mandatory spending plus debt service already accounts for around 70 cents of each federal dollar, in an era of historically low interest rates.

"After all," Clinton said in one of her biggest applause lines at the Democratic National Convention (DNC) on July 28, "when there are no ceilings, the sky's the limit!" Though the Democratic nominee was referring to glass ceilings for women, she may as well have been talking about the nation's debt ceiling, which, after being used as leverage to keep federal spending growth in check from 2011 to 2014, was quietly waved out of existence in October 2015 by the Republican-controlled Congress until after the 2016 election. Fiscal rectitude as even a rhetorical feint among major-party politicians has gone the way of the Whigs. The sky's the limit on how irresponsible we can get from here.

But don't tell that to Gary Johnson just yet. While his June 22 CNN performance was widely judged to be more face-plant than break-out, the Libertarian's response to naming "the greatest challenge facing our country's next president" eventually meandered near the vicinity of the bullseye: "I think it is the fact that government tries to accomplish too much, and in doing that, it taxes too much, and so we have some real issues with entitlements that—look, nobody is addressing the fact that there does need to be reform to Social Security, there does need to be reform to Medicaid and Medicare," Johnson said. "And that's not to say that we're not going to provide safety nets and provide services that people do need. But look, if we're going to bury our heads in the sand over these issues, that's not what we're about. There's a truth here. These issues have to be addressed. It's an economic catastrophe. And we'll address them."

At press time, Johnson's lonely insistence on being a fiscal realist was coinciding with the best-ever presidential polling results for a Libertarian Party candidate—consistently at around 8 or 9 percent. Meanwhile, the unprecedented enthusiasm on both sides of the aisle for protecting and expanding the welfare state was accompanied by the weakest major-party polling support in a quarter-century.

Yet the odds are stacked overwhelmingly in the statists' favor. Unless an unpredictable political year coughs up the mother of all Black Swan events, June and July of 2016 could go down in history as the period when America's 19th century political parties finally and decisively waved the white flag on fiscal responsibility, making inevitable what budget analysts and presidents from both parties over the past two decades have been desperately seeking to prevent.

Don't Say We Didn't Tell You
Between 1997 and 2013, American presidents delivered 15 State of the Union addresses and two addresses by presidents-elect to joint sessions of Congress. All 17 speeches addressed the need for long-term entitlement reform.

"Today," Bill Clinton declared in 1999, "Social Security is strong. But by 2013, payroll taxes will no longer be sufficient to cover monthly payments. By 2032, the Trust Fund will be exhausted and Social Security will be unable to pay the full benefits older Americans have been promised."

"Seven years from now," George W. Bush continued in 2001, "the Baby Boom generation will begin to claim Social Security benefits. Everyone in this chamber knows that Social Security is not prepared to fully fund their retirement. And we only have a couple of years to get prepared. Without reform, this country will one day awaken to a stark choice: either a drastic rise in payroll taxes or a radical cut in retirement benefits. There is a better way."

Barack Obama picked up in the same rhetorical place where Clinton and Bush left off. "We…still face the massive deficit we had when I took office," the president said in 2010. "More importantly, the cost of Medicare, Medicaid, and Social Security will continue to skyrocket.…Rather than fight the same tired battles that have dominated Washington for decades, it's time to try something new: Let's invest in our people without leaving them a mountain of debt."

Yet Obama, who as a candidate characterized President Bush's doubling of the national debt from $5 trillion to $10 trillion as "un-American," ended up presiding over a doubling of his own. And on June 1 of this year, as the debt clock ticked closer to the $20 trillion level, the president plunged the first of this season's many daggers into the heart of entitlement reform. "It is time we finally made Social Security more generous," Obama pronounced in an economic policy speech, "and increase the benefits so that today's retirees and future generations get the dignified retirement that they have earned." As economist Andrew Biggs put it the next day over at the American Enterprise Institute's website, "On Social Security, Bernie Sanders is now the leader of the Democratic party."

It Wasn't Supposed To Be This Way
Bill Clinton and then–House Speaker Newt Gingrich, those '90s sparring partners whose occasional teamwork produced some of the decade's best policy making (and also some of its worst), came to a secret agreement in October 1997 to push for Social Security reform. But just before Clinton was set to announce the resulting bipartisan initiative in his 1998 State of the Union Address, word splashed on the Drudge Report that a White House intern named Monica Lewinsky had had an affair with the president, throwing American politics into a year of turmoil. After Clinton's impeachment there were a few halfhearted suggestions on both sides of the aisle to spend budget surpluses on a Social Security–protecting "lockbox" (made famous in a Saturday Night Live send-up of Al Gore), but they went nowhere.

George W. Bush made his big retirement reform push in the 2005 State of the Union Address, vowing to spend his re-election mandate on overhauling Social Security so that younger workers could choose voluntary personal retirement accounts instead of sitting idly back and hoping the trust fund would still be solvent by the time they retired. The president's lips said "voluntary," but Democratic ears heard the hated word "privatization," and in a few short months not only was Bush's plan dead on arrival in a Republican-led Congress but the long-beleaguered opposition had a rallying point to take back the House of Representatives for the first time since the Gingrich revolution of 1994.

This proved a watershed moment for the modern Democratic Party. Bill Clinton, a self-styled "New Democrat," had championed trade agreements, entitlement reform, and the application of U.S. military power. But now Democrats had retaken Congress by declaring their blanket opposition to Bush's trade, privatization, and war agenda. No more "triangulating" between the progressive base and the moderate political center; the newly successful Democrats were tapping into their old, pre-Clinton values and policy commitments.

One of the first politicians to fully grasp and take advantage of the party's leftward shift was a freshman U.S. senator from Chicago. Barack Obama battered the initially prohibitive presidential favorite Hillary Clinton from her left flank on both war and trade, promising that ripping up Bill Clinton's North American Free Trade Agreement (NAFTA) would be "one of the first things I'll do as president." Hillary at this point quickly switched from a qualified free-trade proponent to a full-on skeptic, calling for a "time out" on future international agreements. On entitlements, both candidates campaigned on fulfilling the generations-old progressive dream of providing health care for all (a goal that Democrats had mostly shied away from after Hillarycare was defeated in 1994), but Obama again ran to Clinton's left when it came to his main idea for addressing the Social Security imbalance: lifting the income cap on payroll taxes. "I don't want to raise taxes on anybody," Clinton countered back then.

The 2008 Democratic National Convention was a remarkable exercise in bragging about Bill Clinton's economic results while repudiating most of the policies that helped produce them. Yet the party's leftward heave had only just begun. Barack Obama, Hillary Clinton, and other top politicians still hammered away back then at the country's mounting pile of debt, and they still expressed preference for that old go-to of long-term entitlement reform: the bipartisan commission.

'We're Now at the End of the Road'
American politics, this year more than ever, is a collective exercise in short-term memory loss. Distracted by populist authoritarians shouting collectivist insults or by machine politicians repeating lies about personal accountability, voters quickly forget or straight-up ignore massive policy shifts happening right in front of their eyes. So it is with the bipartisan approach toward debt, deficits, and long-term fiscal management.

From November 2008 to November 2014, these topics—along with the exacerbating, intertwined pig-in-a-python that was the financial crisis and subsequent bailouts and stimuli—dominated national politics. After the alleged party of fiscal conservatism retook the Senate, these subjects largely vanished. If the country is ever going to head back in the direction of long-term fiscal sanity, fighting back against this amnesia will be key. Obama's June 1 call this year to expand entitlements heedless of long-term sustainability should thus be recognized as one of the biggest cases of policy whiplash in modern times.

In January 2009, before being sworn into office, Obama told The Washington Post that even in the teeth of the financial crisis and economic downturn, he would seek to forge a grand bargain with Republicans and Democrats on entitlement reform. "There are going to be some very difficult choices, and issues of sacrifice and responsibility and duty are going to come in," he said, "because what we have done is kicked this can down the road. We're now at the end of the road. And we are not in a position to kick it any further.…We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else's."

So much red ink has washed over the land since then that it's hard to remember, but candidate Obama had campaigned on enacting a "net spending cut." He repeatedly vowed no new taxes—not even "one dime"!—for any Americans making less than $250,000 a year. Even his signature legislative achievement, the Patient Protection and Affordable Care Act, was sold consistently as a way to get long-term spending and debt under control. All three of those promises, it turns out, were bunkum, but they pointed to a set of perceived political constraints.

Democrats may have rejected Bill Clinton's economics, but they still styled themselves, contra George W. Bush, as the party of fiscal responsibility—so much so that Obama's first budget was given the pompous title A New Era of Responsibility: Renewing America's Promise. The only problem: That very same budget as submitted carried a deficit of $1.17 trillion. Democrats were starting the Obama era by divorcing fiscal reality from rhetoric. Within a few years, the rhetoric would follow downhill as well.

But not before the president fulfilled a campaign promise he shared with Hillary Clinton. "That's why I've called for a bipartisan fiscal commission," he said in his 2010 State of the Union address. "This can't be one of those Washington gimmicks that lets us pretend we solve a problem. The commission will have to provide a specific set of solutions by a certain deadline."

Co-chaired by former Republican Sen. Alan Simpson and former Democratic White House chief of staff Erskine Bowles, the National Commission on Fiscal Responsibility and Reform came into being in April 2010 and issued its recommendations that December, a month after Democrats were driven out of the House of Representatives by a Tea Party wave of conservative revulsion at federal government overreach and overspending. The fraught partisan politics of the moment haunted the commission throughout: Only 11 of the 18 members, short of the 14 required to send their final report in bill form to Congress, ended up endorsing the recommendations.

The rough calculus of this proposed grand bargain was $2 trillion in future spending cuts and $1 trillion in future tax increases, combining to stem the rapid growth in federal debt by 2014 and then begin to reverse it. Social Security benefit growth would be slowed, the retirement age would be raised, and Medicare increases would be snipped. Personal and corporate taxes would be lowered, but tax breaks would be phased out. Discretionary spending caps would be put in place.

On the right, critics such as Americans for Tax Reform President Grover Norquist opposed the plan because it raised taxes on net. On the left, progressives such as New York Times columnist Paul Krugman—who called the deal "terrible"—criticized it for daring to raise the retirement age. But even in death, the Simpson-Bowles framework lived on, as the newly emboldened Republican House demanded some concessions from the White House in exchange for raising the federal debt ceiling in August 2011. The ensuing Budget Control Act forged into being a Joint Select Committee on Deficit Reduction, otherwise known as the "supercommittee," which was tasked with either agreeing on $1.5 trillion in spending cuts over the next decade or having across-the-board "sequestration" spending cuts imposed on January 1, 2013.

The supercommittee, too, proved unable to forward an agreement to Congress, leaving 2012 as a steady march to what became known as the "fiscal cliff" of New Year's Day. Having used the debt ceiling—the only point of Republican brinkmanship that broad majorities of Americans in recent years have favored leveraging—to force the issue on long-term fiscal reform, and then having that reform fail to coalesce, the GOP at least had to show for it some spending discipline for a few years.

Meanwhile, some Democrats still retained the muscle memory of talking about fiscal responsibility. In his speech to the 2012 Democratic National Convention, made famous for his crack that his was the party that favored basic budget "arithmetic," Bill Clinton both endorsed the Simpson-Bowles framework, and issued a warning across the bow of both parties:

"Now, let's talk about the debt," the former president said. "Today, interest rates are low, lower than the rate of inflation. People are practically paying us to borrow money, to hold their money for them. But it will become a big problem when the economy grows and interest rates start to rise. We've got to deal with this big long-term debt problem or it will deal with us. It will gobble up a bigger and bigger percentage of the federal budget we'd rather spend on education and health care and science and technology.…We've got to deal with it."

By 2016, both parties had given up trying.

Trump's Fantasia
Among the scores of colorful trial balloons Donald Trump has belched forth into the air this season was his suggestion in a May 2016 CNBC interview that when it comes to America's debt obligations, "There are times for us to refinance. We refinance debt with longer term. Because you know, we owe so much money…I could see long-term renegotiations, where we borrow long-term at very low rate."

Asked to clarify whether he was really suggesting renegotiating America's sovereign debt, Trump, who is famous in his business life for negotiating and lawyering his way out of financial obligation, said "I don't want to renegotiate the bonds. But I think you can do discounting, I think, you know, depending on where interest rates are, I think you can buy back. You can—I'm not talking about with a renegotiation, but you can buy back at discounts, you can do things with discounts.…I would refinance debt. I think we should refinance longer-term debt."

None of this makes much sense, and neither did his follow-up with The Wall Street Journal explaining that if the Treasury "can buy the debt back at good deals, you could buy it back in the market. And if rates go up, you'll always—you're always given that opportunity." The bad news for Trump is that these weren't even his craziest comments about America's fiscal situation this year.

"We've got to get rid of the $19 trillion in debt," Trump told The Washington Post's Bob Woodward in April. How long would it take to get to zero? "Well, I would say over a period of eight years," he said. Making the absurd claim even more nonsensical were the candidate's vows that he could accomplish this unprecedented pay-down simply by virtue of renegotiating trade deals. No taxes need be raised, he said, to come up with the extra $2.375 trillion per year.

Trump walked back the promise three weeks later, largely on the grounds that the federal government has some big-ticket spending items to accomplish, in addition to fulfilling his promises to protect entitlements. "I'd rather not be so aggressive," he told Fortune. "Don't forget: We have to rebuild the infrastructure of our country. We have to rebuild our military, which is being decimated by bad decisions. We have to do a lot of things." In August, he unveiled a plan to outspend even Hillary Clinton on infrastructure, throwing a half-trillion dollars at rebuilding bridges and highways and so forth.

Donald Trump's pronouncements on fiscal matters are, as a general rule, untethered to reality. On July 27, the independent, bipartisan Committee for a Responsible Federal Budget estimated that under Trump's announced plans thus far, the national debt would double over the next decade to $39.5 trillion. As Peter Suderman has observed at, the Republican nominee's "proposed Social Security reform would attempt to cover a $150 billion fiscal gap by cutting waste, fraud, and abuse—which only amounts to about $3 billion. Trump has also suggested that the government could save $300 billion through savings in a program that only spends $78 billion. It's total nonsense."

Hillary's Amnesia
Remember back in 2008, when candidate Hillary Clinton pushed back on Barack Obama's plan to raise payroll taxes on wealthier Americans by saying "I don't want to raise taxes on anybody"? In her 2016 DNC speech, Clinton vowed, among many other things, to expand Social Security, "pass the biggest investment in new, good-paying jobs since World War II," "make college tuition free for the middle class and debt-free for all," "liberate millions of people who already have student debt," and "help more people learn a skill or practice a trade and make a good living doing it." And how, pray tell, is the federal government going to pay for all this? "Here's how," she said. "Wall Street, corporations, and the super-rich are going to start paying their fair share of taxes." The sky's the limit, remember.

During the primary season, Clinton and her supporters fought back against the Sanders insurgency by pointing out, almost defensively, that the democratic socialist's various promises would add more than $1 trillion a year to the federal budget. But after feeling political pressure from Bernie's bad economic ideas—as opposed to his more salutary views on war, civil liberties, surveillance, and drugs—Clinton shrugged and adopted many of them as her own. Now the Democratic nominee opposes the Trans-Pacific Partnership agreement, supports a $15 federal minimum wage (albeit with more conditions than Bernie suggested), wants to create tuition-free higher education for the children of households that earn $125,000 a year or less, and no longer talks about any limiting factors in terms of cost, taxes, or debt. It's Trump's fantasia, only with more line items.

The same Committee for a Responsible Federal Budget that dinged Trump had unflattering things to say about Clinton. Under her plans, the group found, the national debt would increase from $19 trillion to $29 trillion over the next decade. Both candidates would maintain the federal government's current level of historically high annual spending as a ratio of GDP—from 22.1 percent today to either 22.5 percent (Trump) or 22.7 percent (Clinton). Traditionally, federal spending in the post–World War II era, regardless of wildly varying taxation schemes, has settled in around the 19 percent level. The Bush/Obama bailout/stimulus period from 2008 to 2009 was no one-off injection; it was a ratchet to a new level. And as widely predicted by libertarians and other economists at the time, the ensuing level of indebtedness has coincided with more-sluggish-than-projected economic growth.

The Last Man
The Republican Party, having made hay on deficits, debt ceilings, and federal spending from 2011 to 2014, quietly let all that lapse upon resuming bicameral control over Congress after the 2014 elections. Almost immediately, Senate Majority Leader Mitch McConnell (R–Ky.) announced that there would be no breath-holding brinkmanship, soon-to-be Speaker Paul Ryan (R–Wisc.) cut a deal with Democrats to lift the hated-by-both-parties sequestration caps, and away we went.

These GOP moves toward fiscal irresponsibility had two main effects. The first was to move the center of political attention away from the constant budget battles in the District of Columbia. No longer was Sen. Rand Paul (R–Ky.) a constant feature on the Sunday talk shows, explaining why this or that budgetary compromise was unacceptable, and thumping the tub for cuts in both entitlement and military spending. As a partial result, discussion of debt and deficits was largely absent in the long presidential primary season, even on the Republican side. It was mostly Paul, and—ironically, given his future strong support for Donald Trump—New Jersey Gov. Chris Christie who made long-term fiscal reform central to their campaigns. Both candidates soon flamed out.

The second effect of the Republican can-kicking was more predictable, albeit slower to manifest. On July 15, the White House announced that for the first time since Obama's first term, the annual budget deficit would rise, this time by more than $160 billion to $600 billion total. All competent forecasters show annual increases for as far as the eye can see. The president who came into office vowing a new era of responsibility has instead steered the country toward the precipice of disaster.

"If you want to know what keeps me up at night, more than anything," Sen. Jeff Flake (R–Ariz.) told reason in January, "it's waking up some morning and having the markets already decided that we're not going to buy your debt anymore, or we'll only buy it at a premium, and interest rates are going to have to go up. When that happens, then virtually all of our…non-defense discretionary spending goes just to service the debt. And then we are Japan."

At press time, Flake was one of a handful of GOP senators who had so far refused to endorse Donald Trump. "All I can say is he's not a good candidate for the Republican Party," he told Arizona's KJZZ in early August. "Somebody's got to push back, and somebody's got to say, 'This is not how responsible candidates act.'" And lest there be any doubt, "There's one sure thing," Flake told Politico days before that. "I don't want Hillary Clinton to be president."

Hmmm, so who's left to vote for?

Gary Johnson and his running mate, William Weld, were back on CNN for a second town hall August 3, this time with sharper knives aimed at Hillary Clinton's fundamental fiscal irresponsibility. "Was there anything that she didn't promise to anyone in her acceptance speech?" Johnson asked. "The two-party monopoly in Washington," Weld added, "has gotten to the point where it's kind of run out of gas."

NEXT: Brickbat: U-S-A! U-S-A!

National Debt Social Security Medicare Entitlements Fiscal policy Election 2016 Gary Johnson Donald Trump Hillary Clinton Debt

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86 responses to “Debt Denialists

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  2. This debt issue is causing me slot of emotional distress so I’m suing it in a class action lawsuit.

    1. Your settlement will simply be added to the debt.

  3. +19,523,***,***,***

    1. Make that 524.

    2. Those last nine digits only look like asterisks because they’re increasing so fast you can’t see them.

    3. Would you feel better about the “debt clock” if I told you that it should be called the “net financial savings” clock instead? Because that’s what it is. If people saving their money (not spending every dime they make each week) makes you happy, then the debt clock’s inexorable ticking must make you happy.

      1. Cool. Let’s save $100T. Or are you confusing government debt with personal debt?

        1. Every additional dollar of government debt is an additional dollar of personal net financial assets. If the SSA gives grandma one additional dollar in her SS check, the government goes one more dollar in debt, and grandma gets a dollar to spend or save.

          1. It’s not “savings”. It’s currency that’s traded on the open market (treasuries) and it’s inflationary as a matter of principle.

            And to give grandma an additional dollar, you don’t need another dollar of debt. At all. You MMT folks live in an imaginary world where the amount of currency is exactly dependent on the amount of governmental debt. We could decrease government spending drastically, stop all deficit spending and be perfectly fine, and STILL increase the currency supply if we wanted to. We don’t need a single dollar in governmental debt for anything whatsoever.

          2. And yes, the deficit and debt are a huge problem. If treasury interest rates ever go back up to what the were in the 80’s (think 15%), which is entirely possible, this entire monetary system will collapse, just like all the examples of hyperinflation in other nations that you want to try to discount for various petty reasons. You can smugly keep up your weird theories that currency additions don’t cause inflation and your insistence that debt doesn’t matter right up until we pull a Zimbabwe or Venezuela and people are grilling Fido in their backyards.

            And Venezuela is a great example. MMT folks are scrambling for yet another reason why this sovereign currency nation with MMT leaning finance advisers doesn’t “really” count either. It’s like talking to Socialists in that regard. Yeah, you can bring up the ways that it’s failed before, but they always have a reason for why that’s not a “real” example of currency expansion causing hyperinflation.


  4. I’ve just been calling these people fucking retards, but Debt Denialists is probably wittier. So maybe I’ll…

    Nah. I’ll just keep calling them fucking retards. I saw some article somewhere or someone suggest the debt doesn’t matter because we just owe that money to ourselves.

  5. Tony will no doubt be along shortly to explain that Social Security is the most successful government program EVAR, which, as any kindergartener can tell you, is obvious, because people keep paying into it!!!1!!ione!

    1. +1 Lockbox

    2. Tony will also tell you that imprisoning people for changing diapers and picking up eagle feathers is a small price to pay to make it marginally easier to prosecute corporations.

  6. “I have a cell phone and a printing press.”

  7. The following things are off limits in American elections:

    Scrutiny of the FED
    Discussion of bankrupt entitlements
    the folly of the congressional military industrial complex and spending and never ending wars
    debt finance.

    Although, I cannot believe it but Trump has actually criticized the FED and our foreign adventures although I have no faith that he would stop the debacles of all.

    If he is serious about reigning in all of these disasters, he’s a dead man.

  8. The majority of the US (and world) population seem to be debt denialists. I heard my co-worker say “It’s just funny money. It doesn’t mean anything. The government will just pay if off.”

    1. “They’ll just write it off.”
      “You don’t even know what that means, do you?”
      “No, I don’t. But THEY do, and they’re the ones writing it off!”

    2. As I’ve attempted to explain before in these comments, your idiot co-worker is closer to the truth than you and the rest of the conservatives and libertarians are. It’s not that the debt “doesn’t mean anything.” It does. It just doesn’t mean what you think it means. The US national debt has nothing in common with household debt, and other types of “debt” with which we are all familiar. It would be more accurate to call it “national aggregate savings” or “national net financial assets.” You could in principle pay off the debt tomorrow by removing financial assets from people’s bank accounts: the debt is $19T whereas total household assets are above $85T. This would obviously cause an economic collapse of historic proportions.

      The federal government doesn’t need money; it is an issuer of its own sovereign money. Taxes are not used to raise revenue; they are used to control inflation.

      1. It would be more accurate to call it “national aggregate savings” or “national net financial assets.”

        So the fedgov took a lien against my assets… and that’s a good thing?

        1. I’m not saying our system is “good.” I’m just describing how it works. You wouldn’t have net financial assets in the first place if it weren’t for the government creating money out of thin air.

          They want to tax you in order to 1) give value to the fiat currency (making it necessary to hold in order to pay taxes) and 2) control inflation.

          I object strenuously to the current income tax system: its purpose is to redistribute wealth and achieve the government’s social goals, as well as control inflation, not raise revenue.

          1. You wouldn’t have net financial assets in the first place if it weren’t for the government creating money out of thin air.

            I don’t understand what you’re trying to say here. If the government shut down the printing presses today, the existing dollars would still retain their value (and then some, due to the large deflation that would occur). Not to mention that there is value in other items such as land, precious metals, etc. if all of the dollars were to magically disappear tomorrow.

            I’m not entirely following your line of thinking in your comments, but I get the sense that you have currency and value much more strongly coupled in your mind than I do in mine.

            1. Thanks for engaging the argument instead of dismissing out of hand. I am trying to be careful to state net financial assets. Not all assets.

              1. And right as I say that he points out the distinction. ^_^

            2. He’s not wrong but all that being said objects and commodities have innate value whereas the currency does not. So it’s a little backwards but the fundamentals aren’t wrong.

              1. Read or Listen to – “The Creature from Jekyll Island” is talks about the setup of the FED and related mess. One of those books I’m really glad I read and then really wish I would never have known about it.

      2. Taxes are not used to raise revenue; they are used to control inflation.

        What the fuck is this bullshit?

        1. It’s called Modern Monetary Theory. It’s as crazy as it sounds. Essentially, they believe that the government can always make it’s money worth something even if it prints hundreds of trillions of dollars, because taxation gives it intrinsic value. There’s other points to the theory but that’s one of the underlying ones.

          I’ve been down this rabbit hole with a MMT guy before. Any time you bring up the many examples of sovereign currency hyper inflating its way to uselessness there’s always an excuse of why that that wasn’t a “real” example. It’s like arguing with “real” socialists in that regard.

          1. Yes, I think Draco is a fan of MMT. My previous comments probably made you think I am also a fan of MMT – but I have moved on a bit.

            MMT gets a lot of things right, but I don’t buy in to its theory that all money comes from the federal government. The private sector actually creates much of the growth in the money supply in our economy. Loans create deposits — the federal government does not have to press any buttons when you finance a car loan.

            I’ve done some studying on instances of hyperinflations since 1900 and have learned that in each case, is was not just a case of high government spending or debt – there were always other severe exogenous economic circumstances. Those circumstances, or events, tend to be: loss of a war, a collapse in production, rampant government corruption, regime change (or regime collapse), and ceding of monetary sovereignty via a pegged currency or foreign denominated debt.

            Some specific cases: Weimar – regime change and foreign denominated debt. Russia (WWI) – regime change, civil war. China (1948) – civil war, regime change. Hungary (1945) – foreign denominated debt, war. Zimbabwe (2004) – regime change, foreign denominated debt.

            1. This is what I’m talking about. MMT, Chartalism and Hyper Keynesians in general so badly want their easy money theories to work that they make all of these elaborate excuses as to why all of these examples of hyperinflation (and many more) aren’t due to a huge part in an increase in the money supply, when an increase in money supply is the ONE thing that the many examples of hyperinflation all have in common. You’re ignoring the ONE concurring factor in all of these to focus on the distinguishing factors because that obvious concurring factor discredits your theories. It’s not reasonable.

              In other economic circles it’s taken an axiom that money creation devalues that money. To keep your guy’s desire to maintain an artificial economic stimulus, you’ve created entire theories that can never be proven wrong, because of course in economies and countries that have billions of factors you’ll always be able to come up with distinguishing factors of why it’s different. THIS time and won’t lead to hyperinflation, until it actually does lead to full blown hyperinflation. It’s the same argument of how Socialism will really work this time.

              Or in other words you get to be smug on internet forums about your theories because they can’t be “proven” wrong, until hyperinflation destroys the economy and we’re all eating rats over drum fires and it doesn’t matter anymore.

    3. Yep they will. You should tell him that the dollars in his pocket will then have an equal value to the lint in his pocket….

  9. It’s just money that we owe ourselves. No big deal. Right? Right?

    1. Exactly. The snake can continue to eat its tail as long as it outgrows itself? I think

      1. You are closer to being correct than you might know. The amount of money that must exist in order for an economy to function is proportional to the size of that economy, and that means that in order for the economy to expand, the national debt must increase every year – assuming that people want to save some of what they earn. Sovereign debt in a regime of fiat currency is necessary to support net savings desires of the people. That is very obvious in the case of government bonds. If people don’t want to spend what they earn each year, there will have to be a deficit.

        1. People do not have to spend what they earn every year to keep the economy solvent; or as you stated, to avoid a deficit.
          The wealth effect in healthy economies, which we have seen in the 80s and 90s properly invests newly created capital in the best ROI and thus the winners create more wealth.

          Savings are entirely as necessary part of any healthy economy as debt though credit banking. Savings allow capital accumulation which leads to the creation of credit, not the other way around.

        2. Savings don’t go under a mattress. It is how banks get money for loans. Those loans become investments which grow the economy. Wealth creation grows the economy, not money. Money is not wealth. It is a promise of wealth. Government bonds are a promise to steal money from future taxpayers. Fiat money, which is backed by nothing of substance, when issued by a government to “grow” the economy, is theft from savers because it reduces the value of their savings. So government debt is theft from current savers, and promised theft from future earners.

          So your argument is that in order for the economy to expand, governments must rob both savers and future earners alike.

          I don’t buy it.

          1. Government debt is left from current savers but so are bonds. Anytime the Gvt issue bonds, or does a bailout (creates money out of nothing) inflation occurs (no matter what the gvt says). More money supply means the value of what you currently have goes down.

            It is an unsustainable process, at some point (looks to be pretty soon), the interest payments on our national debt will be larger than the gvt income. At that point the value on loans to gvt will be zero and the us dollar will be worthless.

        3. The amount of money that must exist in order for an economy to function is proportional to the size of that economy

          No. An economy can function with a constant or decreasing amount of money. You statist quo banking cartel backers always state this with no backup and expect us rubes to accept it uncritically. I don’t.

          1. Can an economy grow without increasing the money supply? I don’t think so. It can function, but not grow.

            We live in a credit based economy. As somebody who leans Libertarian, I would prefer that the private sector handle more of the spending and borrowing – loans really do create deposits – but federal spending will always be part of the equation.

            1. 1: You don’t need government debt to increase the money supply and

              2: You don’t need government debt to grow the economy. The greatest period of US economic expansion was also the period when we paid down our (until then) highest amount of debt.

  10. Predictably, the writers don’t bother to mention the asset side of the federal balance sheet — and they continue to reveal their weak grasp on understanding how our modern fiat currency system works.

    There are certainly risks to our living standards from federal debt, but the writers need to do a lot of homework, then perhaps they would do a better job of properly framing the risks.

    The risk is inflation, not solvency. The federal government cannot run out of money that it can create at will. Libertarians are right to advocate for a much, much smaller federal government – but the reasons are more about liberty, opportunity, and freedom – not about federal spending. The private sector can do a better job at so many things that government does badly – but make no mistake, the private sector would be spending – AND borrowing money. We live in a credit based economy and over time, if one expects the economy to grow, then so will aggregate debt. Loans create deposits, one person’s spending is another person’s income.

      1. The problem I have with your line of thinking is that, caveats about the moral case for taxing and spending less aside, you are effectively saying we have unlimited purchasing power. The problem with fiat money is that’s it’s backed by the faith of the people, which is a currency impossible to quantify, and thus completely ignored by finance wonks – the same people who miss every catastrophe in history.

    1. What is interesting in our current situation is that they haven’t blown up inflation, but they have destroyed interest rates.

      The message from the fed is do not save, and it’s not going to get better. No savings = no loans = no growth

      That’s why the economy is so stagnant.

      1. Perhaps we shouldn’t limit our definition of “savings” to interest bearing accounts, like money market fund, bank savings accounts, or bank certificates of deposit, or even things like Treasury bills, notes, and bonds.

        Think of it this way: if you spend less than you bring home in your paycheck, the excess is savings. You can stick that excess in a savings account at a bank, any sort of mutual fund you want, shares of common stock, corporate bonds and other marketable securities. It’s all still “savings” – you’re just making choices about how to allocate those savings. When you’re putting your money in shares of Amazon stock, you’re not “investing’ in Amazon – those shares were already issued a long time ago – it’s a secondary market transaction.

        As to the Fed’s zero interest rate policy – I agree that it is causing distortions in our economy and the financial markets. My point is that the Fed isn’t destroying savings – it is pushing savers to allocate their savings in riskier assets. The Fed was hoping that cheap loan rates would stimulate borrowing followed by spending, but it hasn’t helped much.

        There’s only so much monetary policy can do – the rest is up to fiscal policy. Congress has been f*cking off on fiscal policy for a very long time – that’s the key reason our economy is so stagnant.

    2. Solvency is a huge risk. The Gvt can not just print money forever. Yes our economy is based on debt, no doubt. The problem comes when the interest payment on the fed debt is larger than what the fed takes in. At this point all investors will pull out as the value of the dollar will go to zero. If you can’t make money off of a loan (too risky) you don’t loan the money.

      The we owe it to ourselves is kinda correct but again, if the loans are failing to be repaid (not even the interest is being paid) it will collapse.

      1. Inflation – hyperinflation – is the risk, not solvency. The pain may end up being the same, but from an operational standpoint, the federal government faces no solvency risk.

  11. Predictably, the writers don’t bother to mention the asset side of the federal balance sheet — and they continue to reveal their weak grasp on understanding how our modern fiat currency system works.

    There are certainly risks to our living standards from federal debt, but the writers need to do a lot of homework, then perhaps they would do a better job of properly framing the risks.

    The risk is inflation, not solvency. The federal government cannot run out of money that it can create at will. Libertarians are right to advocate for a much, much smaller federal government – but the reasons are more about liberty, opportunity, and freedom – not about federal spending. The private sector can do a better job at so many things that government does badly – but make no mistake, the private sector would be spending – AND borrowing money. We live in a credit based economy and over time, if one expects the economy to grow, then so will aggregate debt. Loans create deposits, one person’s spending is another person’s income.

    1. The difference between printing your way out of extreme debt (extreme as in Weimar Germany) and insolvency are not significant enough to differentiate for purposes of discussion. If we continue down this path, and we have to print our way out of it, the dollar will become worthless, and the government will be, for all practical purposes, bankrupt.

      1. They will have to attempt to print out of this. Once you have committed to total debt finance and every other country is doing the same, then devaluing currency is the next step to stimulate trade. which is of course, a race to the bottom and one of the schemes involved as well is concurrently devaluing the debt, or inflate it away.

        There is no discussion to be had about fixing this. The dollar amounts are too gargantuan to overcome unless we have major austerity.

        As austerity is clearly never to be discussed, we must continue to fund it until it implodes. Americans do not have the stomach for hardship and thus would never vote for a guy who says the right stuff.

        The next logical step, as has been in every instance in recorded history, is descension into chaos and war. Hopefully we survive the reset and collateral damage, in whatever form it takes wherever.

        1. You are wrong timbo, whereas blondrealist is correct. Think about what you just said. How can there be this existential problem if (nearly) every country (that has a fiat currency) is in the same exact situation (and they are – just read the back page of The Economist every couple of weeks to see the debts of the major western economies)?

          I think we can blame the Austrian Economists for leading libertarians astray on this point. The world of fiat currencies is a much different world than the world of hard money. Whether you like it or not, we are not in the world of hard money.

          1. How can there be this existential problem if (nearly) every country (that has a fiat currency) is in the same exact situation

            So you’re saying that there could never be a global problem due to debt? Rampant indebtedness isn’t a relative problem between countries, and printing money doesn’t fix systemic overspending issues. Sure, it’s possible that the US FedGov could inflate away $19T without the country descending into chaos. However, when another $19T of debt is accrued in 4 years, and another $38T accrues 4 years after, there is no printing out of that situation. Eventually there’s a crossroads. Either you stop spending more than you take in, or you inflate all your currency’s value away trying to chase solvency.

          2. Austrian Economics seems more of a political philosophy than a framework that makes a serious attempt to understand the operational realities of monetary systems, especially today.

            1. It is precisely a framework. Just like capitalism is a framework(your word) vs Marxism. Austrian economics properly explain how things should be working and are the foil to the keyenesian experiments that are proven folly more and more every day.

              All these Austrian dopes have been saying for the last 100 years is that fiat money leads to loss of purchasing power-True.
              Steering markets via central bank economic planning leads to misallocation of capital, implied bailouts(moral hazard) and picking winners and losers. – all True.
              And lastly, they have been advocating against the expansion of national debt to pay for largesse which by the way, holds true for the bureaucratic scum just as much as the household budget.
              I think you are dismissing life as it is as the only way it can be. It was much different before FDR and Nixon. Blonde and Draco are wrong.

      2. Weimar Germany ceded monetary sovereignty. They lost a war too. The USA won’t likely cede monetary sovereignty – but we might lose a war. In the history of hyperinflations over the past 100 years, merely having high government debt has not been the cause, there has always (every time) been another event, such as losing a war, a collapse in production, ceding monetary sovereignty via a pegged currency or foreign denominated debt.

        1. Weimar Germany was completely bankrupt, partly because of the first attempt at a social safety net. Their financial woes contributed to political shenanigans and power grabs that lead to war. The outcome of the disastrous great war was WWII.

  12. We know how this story plays out. They’ll continue to rack up debt, if anything at an accelerated pace. They’ll introduce any number of schemes to paper over the problem – soak the rich, eliminate the cap on payroll taxes, exit taxes, etc. None of them will really do much to make a dent in the problem. They’ll mostly just further retard economic activity. Eventually, they’ll resort to the printing press. Mass monetization will seem attractive at first. It will be mildly stimulative, as consumers and investors attempt to front-run inflation. The stimulus will be short-lived. Quickly, it will devolve into hyperinflation and financial and economic collapse.

    From there, it gets really nasty. My guess is that the republic doesn’t survive. The irony is that the only people likely to have no particular say in what emerges will be the people who’ve been warning of this outcome for years.

    1. The world should be planning strategies on how to survive in underground economies.
      They will flourish out of necessity and the good thing is that the government blob will be so mired in bureaucracy that certain areas of commerce will thrive under the radar; with the very real and scary exception of the few that are caught and gutted to make an example.

      I think the republic survives with a bruised ego like the brittish and hopefully we fade into an economy that makes it with the necessity of capitalism as once again, the only thing that works.
      I think a reset is required like the German and Japanese economies after WWII. They were relieved of their debt burden and were able to explode as developed economies. We also must have population growth to have production growth. What smart people are going to have kids in this sh*t? Its idiocracy times 100.

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  14. 1) Comparing the hard basis debt against individual assets doesn’t take into account the “accrual basis” debt, which very likely exceeds current assets held.

    2) Based on the above, the amount needed to be “sunk” today to grow at some rate of return (probably about 5%) exceeds all that has been made as of right now and held by individuals.

    3) Does ANYBODY see 5% growth? Neither do I.

    4) There is no way in hell we’re going to “grow the economy” faster than payoff of promises.

    So, in short, anybody who thinks we’re going to get out of this mess without PAIN, probably to a degree we haven’t seen in about 150 years, is insane.

    1. There is no recession so deep that it cannot be rectified with a sufficiently large deficit (fiscal stimulus). Same with “slow growth period” (as opposed to “recession”).

      Do you really think that cutting taxes (fiscal stimulus) is painful? Personally, I’d love it.

      We’ve been hearing for at least 10 years that our level of debt would soon lead to ruinous inflation. Well, where is it?

      In a fiat economy, austerity is idiocy.

      1. We’ve been hearing for at least 10 years that our level of debt would soon lead to ruinous inflation. Well, where is it?

        It’ll come. Just because the economic engine is chugging along fine on 3 cylinders doesn’t mean that it isn’t going to seize up in the future.

        What many people don’t realize when looking at these short time horizons for economic consequences is that the US had built up 150 years of economic steam before the Fed was created. Then, the US built up another 75 years of steam as the economy outpaced the governmental meddling. 225 years of momentum isn’t just reversed in 10 years. A train doesn’t stop on a dime.

        There is no recession so deep that it cannot be rectified with a sufficiently large deficit (fiscal stimulus).

        Ah, the broken windows fallacy.

        1. It may well come eventually, but we see no signs of it now. Japan has a fiat currency system that is very similar to ours. Their government debt relative to their GDP has been far higher for far longer than ours, and yet no signs of harmful inflation in Japan.

          Historically – at least for the last 100 years or so, each and every instance of hyperinflation included some other event besides high government debt. Losing a war, regime change, a collapse in production, massive government corruption, or ceding monetary sovereignty via a pegged currency or foreign denominated debt. Which one of those events is most likely to happen to the USA? We won’t be ceding monetary sovereignty any time soon. Government corruption exists, but seems no worse today than 25 (or more) years ago. Regime change? It’s hard to tell the GOP and the Democrats apart most of the time. We still have one of the most dynamic and productive economies in the world, so I don’t see a collapse coming soon. That leaves the risk of losing a war. Perhaps we should be learning to speak Chinese. Which dialect do you recommend?

          1. Darco and Blond,

            “There is no recession so deep that it cannot be rectified with a sufficiently large deficit (fiscal stimulus).” – Krugman and Draco. This is what we have been doing for the last 8 years. For the sake of argument, what would it take for you to consider enough is enough? I am afraid your criticism of free market capitalism comes without putting a little reading in of bastiat, Hazlitt, and friedman; although freidman was wrong about making the FED work. Stimulus is just future spending brought forward. It is forcing the unborn to pay our debts because we want our cool sh*t now.

            Blond, the Jap Nikkei lost half its value in 1989. It has never recovered. It has been doing BOJ stimulus ever since and it has not made one impact on their growth. It has kicked the can like we are doing and it has only lead to more stimulus, QE and now NIRP. Please explains when and where the payoff comes from. The Japanese economy has been stagnant for 25 years by attempting to do what we have been doing since 2008. You guys are sorely mistaken.

            1. To be clear, I am a huge fan of free-market capitalism. It’s the system I fervently desire to live under. I’m simply describing the operational realities of the monetary and fiscal system that has been bolted onto our economy. It is dismaying to me to see people worrying about “the debt our grandkids are going to have to pay” when that “debt” is simply a notional value. Your grandkids (born or unborn) don’t owe anything to anyone. You’re grandkids are as free as they decide to be.

              Also, you can’t really borrow from the future. As an economy, we create a certain number of goods and services each year, which we generally consume (or invest if they are capital goods). It’s really hard to save, too, without financial assets as symbols of past production and claims on future goods. Think about it – sure you can can some food and store it for a while, but it’s really hard to save real goods for an indefinite period.

            2. I’m not suggesting that we need not worry about government spending or government debt. I’m also not suggesting that more government spending and/or debt is always a good thing.

              I’m just saying that in a modern fiat currency system, we need to understand the operational realities of the system before making policy change suggestions. Too often, we see concerns about government debt described in terms that apply to households – and that is just wrong. You and I are currency users – we can run out of money. The federal government is a currency issuer, it cannot run out of money. Too much money “printing” could cause harmful inflation and our living standards would suffer.

              You bring up Japan – and I submit that Japan supports my point that high levels of government debt don’t automatically lead to rampant inflation. Japan experienced a severe corporate balance sheet recession after their commercial real estate bubble burst. Japan is also dealing with demographic challenges – their population is aging, their birth rate is low and their restrictive immigration policies are likely hurting their economy. They have been fight deflation for more than 20 years. I won’t argue that Japan’s high government spending levels have been good or successful – but will say again that the predictions of run-away inflation in Japan have clearly been wrong.

      2. We’ve been hearing for at least 10 years that our level of debt would soon lead to ruinous inflation

        Have you checked the CPI over the last 60 years–the same timeframe since we last paid down the national debt on a year-to-year basis?

        That’s the problem with you “debt is awesome” types–you have no understanding of how exponential functions work.

        1. I’m not a “debt is awesome” type – but I am a “debt isn’t necessarily bad – or good type”. As to history, did you know that our federal government has been in debt throughout its entire history – except for a brief time when Andrew Jackson was president – when the entire federal debt was paid off and there was an actual federal surplus. Within 3 years of that surplus, the economy experienced its worst depression ever.

          As to annual budget surpluses, including the one under Jackson that I mentioned, we’ve had a total of 7 in our history. For the first 6 instances, the economy fell in to a severe recession or depression within 3 years – each and every time. The 7th budget surplus was under Bill Clinton, and it’s been suggested that the tech stock and real estate bubbles merely delayed the inevitable by a few years, then we had the “great recession”. Correlation does not prove causation – but the pattern is interesting.

  15. I work at a medical provider’s office. Recently we had a 67 year-old gentlemen come in for services who presented with private insurance, not Medicare or a Medicare advantage plan. He said he was still working & preferred to keep his private insurance. But low & behold, when we received payment for the services rendered, they were paid at the Medicare rate, which is less than half of the normal fee schedule for that insurer. When I called to ask why, they said that it was required by law to pay claims for all beneficiaries aged 65 & older as if they were on Medicare even if they chose not to be, that way it is more “fair” for retirees who cannot afford private insurance. So even if in your retirement you can afford to not be on Medicare, it will be forced on you whether you want it or not, therefore why not just take the free Medicare?

    I’m no expert, but if Social Security & Medicare are in a death spiral, why not start by allowing people to opt out? Of course, that would deprive Uncle Sam of the required healthcare reporting measures for a certain percentage of the population, not to mention it might give people the silly notion that they can live without the government, & we can’t have that, now can we?

    1. I think that insurance company fed you a line of BS.
      To my understanding, no insurance company will take on a customer, over 65, without them being enrolled in Medicare. The reason being that no fiscally responsible company would take on the entire risk, when a government system is in place to share it. I wouldn’t be surprised if FEDGOV allows companies to enroll individuals, without them knowing, for just the reason you had explained to you – it is more “fair” for retirees who cannot afford private insurance, and it puts government in control of more people: their overall goal.
      So, part of his premium, paid to the private company, goes to pay his Medicare premium, and the rest covers the “Medigap”. And you guys get paid at the Medicare rate.
      Isn’t that special?

  16. The US government will default on the debt. It is the de facto position, not in the future, but now. Anyone buying government debt today will, because of the Fed’s interest rate and open market policies, receive only 50-60% of their original investment back in constant dollars.

  17. Unlimited national debt is perhaps the biggest area of agreement between war boners and SJWs. Borrow, borrow, borrow, baby! Until we have crushed our enemies and all our problems go away.

    1. There is no problem that can’t be rectified by nationalism. nationalism can be several things. It can be war to the average guy that likes rush limbag or environmentalism to the average brain dead sheep on the left.

      No better way to get away with theft than by starting a war to distract the unwitting. Or create a bathroom tranny crisis, or kneeling during a song, or made up women’s rights issues, or gluten.

      Must be fun to be in the marketing department in the capital.

  18. i’m really disappointed in the government. if they’re going to misrepresent the numbers, they might as well just tell us there is no such thing as debt, so we can stop having this conversation. when they lied about the surpluses in the 90’s, they could’ve just said they ended debt forever and ever…but i guess they need to maintain the fear, even if they say it’s someone else’s fault and only they can fix the problem. stupid government.

  19. Trump is partially right but I doubt he even knows how. Renegotiating with the creditors of Federal debt would lead to spiking interest rates and insolvency. That would be suicide. We need to keep interest rates rock bottom so we can continue to service the debt and still have revenue for other priorities.

    However, the Federal government can renegotiate with current and future beneficiaries. Face it, we elected the worst retirement fund managers in history. Madoff had better returns. Everyone is going to take a haircut if we want to avoid anarchy. But in exchange for a haircut, citizens need to demand personal accounts which can be passed down to heirs in lieu of Social Security. Those not choosing personal accounts can still get traditional Social Security benefits at a reduced rate. The personal accounts will be in the form of an annuity worth substantially less than a Social Security plan but is inheritable to your heirs’ accounts.

    Thus over time, your heirs and the rest of the citizenry will be less dependent on government largesse. The government can write off a substantial amount of liability keeping interest rates low. If “we owe it to ourselves” but we have to take a haircut; we better make sure we renegotiate the future terms in our favor.

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