Tackling the Deficit

[_Res Ipsa]

Out of curiosity, what number would you two feel ok’ish with the debt sitting at? I’ve probably read around a dozen or so opinion pieces that argues maintaining a sitting debt is a good thing. Because I’m a simple, simple, astonishingly average man, I intuitively feel we should pay our debt off with the caveat we can go into debt during downturns and wars, BUT we must pay our debt off. I feel, and it’s just a feeling, that paying so much in interest robs us of streets and bridges in the future, so to speak.

- Doc

Hiya, Cam. I’d be comfortable with something like 40% debt to GDP as a baseline, depending a bit on the interest rate. I don’t think debt service at that level is high enough to be a problem. Money does have a time value, and a dollar in my hand today is worth more than a dollar I won’t get for thirty years. When investing in infrastructure like Highways or buildings, or navy ships or satellites, it makes sense to pay for the asset spread out over the asset’s useful life. That way, the taxpayers who are using or benefiting from the asset are the people paying for it.

Since I got my Econ degree in the far, far past, there’s a new school of economics that, I think, places much less emphasis on the importance of government debt. I can’t remember the name (I bet EA know it) and I’ve never tried to learn what it’s about. I’m pretty much a Keynesian.

[_honorentheos]

Money does have a time value, and a dollar in my hand today is worth more than a dollar I won’t get for thirty years. When investing in infrastructure like Highways or buildings, or navy ships or satellites, it makes sense to pay for the asset spread out over the asset’s useful life. That way, the taxpayers who are using or benefiting from the asset are the people paying for it.

That makes sense. Thanks Res.

[_aussieguy55]

In Australia people are focusing on paying down credit card debt. Trump on Michelle Obama's birthday reversed her program of vegetables etc in school meals and accept pizza etc. So more obese kids. The most obese states are red states. Having a healthy population would surely be good for the economy.
https://stateofchildhoodobesity.org/adult-obesity/

(Update) about 29 to 30% of Australians are obese in 2017. In the 2005 National Health Survey, 53.6% of Australians reported being overweight with 18% falling into the "obese" category.

[_ajax18]

[_aussieguy55]

If someone takes a second or a third job to survive is that counted as jobs growth?

[_Brackite]

Jobs Created:
2015 2.728 million jobs
2016 2.318 million jobs
2017 2.153 million jobs

https://data.bls.gov/timeseries/CES0000 ... w=net_1mth

[_ajax18]

If someone takes a second or a third job to survive is that counted as jobs growth?

I'd like to see a system where people have an incentive to work more. I don't think raising their taxes on hours worked over 40 is helpful. Nor is offering a paltry $5k annual net difference in income for continuing to work vs. retiring.

Our last president said 1% GDP annual increase was the new norm. Thankfully he's been proven wrong by someone who understands people will find a way to work and even prosper if they have an incentive to do so.

I don't think many voters have any intention of paying off the debt. Think of it like a marriage. Your spouse has secretly ran up $150k in credit card debt and is planning on divorcing you. With that she'll take 60-75% of your income for the rest of your life and probably put you in another $300k of debt in attorneys fees securing the terms for it. Are you really that concerned about the interest charges on the new vehicle you want to buy now? Will waiting another year and saving really help your cause that much? Your savings is her savings but your debt is also her debt.

We're kind of in a bad marriage as a society. Each side can see that saving, working longer hours, going without things, is not really going to benefit you or even your family in the future. It just frees up money for other people to take from you in the present.

Before we even start to pay down the debt or deficit politicians will find ways to use that money to purchase votes. The more robust our social welfare system becomes, the more impoverished people it will attract (3rd world immigration) and literally create (unwed motherhood).

[_honorentheos]

When Obama took office the White House made bold predictions of a rebounding economy with 4% GDP growth. Turned out the recession had legs. The idea that 2% GDP growth was the new normal, the general average we saw during the recovery, was challenged by Trump when the spurts happened around the tax law taking effect in 2018 but the reality is we are still experiencing GDP growth of around 2% on average. Trump's economy isn't what you think it is, but I guess it helps if you lie about what Obama said to make it seem better than it is.

[_ajax18]

What would a $20 trillion debt to a country look like to the average voter in personal debt? $10 million? Maybe a $1 billion? Would the average voter say, I need to start saving and working longer to pay this down? Or would he just file for bankruptcy?

[_Res Ipsa]

Except in recessions, as long as our population grows, we expect to see the number of jobs increase. So, there’s nothing unexpected, let alone magical, about the fact that the number of employed people has continued to increase during Trump’s term. But what jobs has he brought back? Which industry were these jobs lost in?