What The Politicians Don’t Want You To Know About The National Debt

http://www.epinions.com/content_3514867844 ^ | 09-19-03 | Matthew Nehrling

[jd777]

A way to raise capital withouth placing the burden on the US taxpayer? Who do you think pays the interest on the debt. The interest payments are paid by the taxpayers! We paid 330 billion dollars interst payments in 2002. We will be paying more in 2003 and 2004. I understand your argument. But it doesn't sound like you've taken all the factors into account here. Sorry.

[mnehring]

"Debt is dangerous only when assets are declining in value and income is shrinking. During the 1980's, asset values grew far faster than debt."
--George Gilder


Have you ever dealt Three Card Monte? I bet you'd be good at it.

The fact is that we are interdependent with the world economy. Please note my comment earlier. It is a good thing that other governments use the US to hedge their own economy. This gives them a vested interest in the success of our economy.

In looking at our economy we cannot take out the world economic equation just as we cannot take out the equation of a tax burden. Unfair as they both may seem, they do exist and are a part of how the economy works.

[mnehring]

To whom is that interest being paid? Isn't most of it being paid right back into the private economy? If so, could you explain how it's such a huge "burden" to the taxpaying, interest-collecting public?

Are you sure my tax burden would decrease due to debt-elimination?
That would require spending less or taxing more, wouldn't it?
What you are saying means you'd have to increase taxes to eliminate the debt that's causing those interest payments, doesn't it? Isn't that circular logic? Isn't that the same thing as saying, "I can lower your taxes if you'll just let me raise your taxes"?

[mnehring]

I believe the large crux of the disagreement is that people still look at the national debt as 'debt'. Do we consider shares of stock in a company debt?

The so called national debt can be related more to the US selling stock in its future. The return on this stock is the most stable investment available, a safer world (little will doubt that the US has done more for the world's stability than any 2 bit leftist 'peace' group).

Yes, other countries invest (40% of debt at last count). This does not mean they own a chunk of our country. This does not mean the Japanese are coming in to take one of your kids as payment on this debt.

The return they see is a stable hedge for their own economy safer world that hopefully will become more and more like the US, and thus, stronger and stronger economically.

[metesky]

During the 'Toon years they always talked about the "projected" surplus, which is now talked about as though there really was a surplus.

The saddest part of the whole scam is that the Pubbies, including the leadership, went along with the scam instead of spilling the beans.

It's an easy game for the RepubliCrats to play.

For years I projected that I would retire at 45, yet 15 years later I'm still workin' away. Who knew?

[mnehring]

Very good point. You notice that our economy started to decline as soon as they 'projected' a surplus. (I believe the decline started in 99.)

[Willie Green]

It is a good thing that other governments use the US to hedge their own economy. This gives them a vested interest in the success of our economy.

Bookies and Loan Sharks also have a "vested interest" in collecting what is owed to them.
That's why the thugs and hoodlums they employ are likely to only break your arm or kneecap instead of just putting a bullet in your head.

Spare us the being-in-debt-is-good bilge. I'm not buying it.

[mnehring]

Been watching a little too much Sopranos?

The bookie and loan shark analogy is cute but has nothing to do with the reality of economics.

This is not a ‘debt is good’ bilge, this is a reality check that this is not a debt as in the sense most people categorize it.

[Ditto]

"That would be true only if these people own U.S. treasury bonds."

If you pay Social Security taxes, you own US treasury bonds by default.

[mnehring]

Very good point JD.

[mnehring]

I mean, Very good point Ditto. I am still getting used to the Freeper boards.

[Ditto]

Here's a constructive discussion. If the current national debt is too high, there are two ways to fix this problem.

1) Raise more revenue.

2) Spend less $$$

Given that as a premise. List what should be taxed more, or what programs need to go out of existance.

The taxes that will come due once the Boomers start cashing in their 401ks will more than offset the debt payments for the next several decades. The trick is to keep the congress from scarfing up those future revenues for more spending programs.

[.cnI redruM]

Or from seccumbing to political pressure to change that law. Baby Boomers successfully exempt themselves from all of lives challanges and hardships. Mark my words. No Baby Boomer will ever have to pay taxes on their 401K withdrawal.

[mnehring]

Absolutely, The best debt spending is in capital investments. As long as the PTBs keep their pet projects that see no returns they are doing nothing but wasting money. Few will argue (with the exception of the neo-hippies) that an investment in an Aircraft Carrier is a strong capital investment. Investing in the study of pigs and the flu, however, is pure pork (every pun intended.) We need to look at our government as a business. We will accept investment spending (debt spending) if it results in a strong capital investment, but we should not tolerate investment spending in crap. The issue should not be if we have deficit spending or not, but in what we choose to have deficit spending on.

[Ditto]

Mark my words. No Baby Boomer will ever have to pay taxes on their 401K withdrawal.

Being a Boomer, I hope you are right, but keep in mind that Clinton actually managed to raise taxes on Social Security income of the "Greatest Generation" and got away without so much as a scrape. Not even AARP bitched. As to Boomers getting everything they want, please tell me which of us wanted our Social Security taxes to be 10 times higher rate than what our parents paid? I sure as hell didn't want that.

Paying future taxes on 401K's is part of the deal. The money was tax free going in, and it will get taxed going out.

[AmusedBystander]

I wish people would quit giving Clinton credit for having a surplus, he lies about that too.

You are so right! That just goes to show that if the media report the lies long enough, people will just remember it as fact.

[mnehring]

A quick update was made to clarify some points: A close analogy to how the national debt works is to look at how a company operates. When a company wants to expand their business they issue shares of their business to the open market. The US Government works the same. When the government has long term investments greater than the revenue of inflow (a deficit) they issue bonds to pay for these.
Just as we don’t look at a company’s stock as a debt, the federal debt is financed through its own version of a stock issue.
It is not the debt the public has to fear but what drives the debt. If the debt is in strong capital investment, such as defense, then the return is worth the investment. The problem that most people ignore is the unfettered spending on non-capital items that do not show a return on investment.

[jd777]

Where are those treasury bonds held, in Al Gore's lockbox?

[fortaydoos]

gee, the current half a trillion annual deficit must really be HUGE then.

[IGNATIUS]

An issue is that the USA continues to enjoy a monopoly in creating money out of nothing with relative impunity.Other countries that seriously do this have had their currencies trashed sooner or later.Foreigners have been relatively willing to loan us funds based on our productivity & knowing the US taxpayer was on the hook for it.Some of this debt money is monetized by the Fed-- ie they buy it themselves in some convoluted way. Ultimately no country has ever gotten away with these scams.

Given our growing deficits,huge negative trade balance, deteriorated mfg.infrastructure,etc do you think we can continue to sell USA debt to the rest of the planet for a piddly 4-5% return on 10/30 year bonds?