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What does under control mean here? It's not that long ago (late 90's) the United States has a budget surplus. Our debt to GDP ratio could also be shrinking substantially if we repealed the Bush and Trump tax cuts (i.e. went back to the tax rates we had when we had a surplus). The growth of United States debt to some unmanageable level only seems inevitable because one of the primary ways of reducing it is implicitly off the table. This asymmetry also infects US political discourse. Any new spending must justify itself with how it is going to be paid for but the same is rarely asked of tax cuts.
Any discussion here needs to start with the actual federal budget. About 60% of which is Social Security/Medicare/Medicaid/Military. Cutting the DOE down to 0 would cut ~10% off the deficit. You could eliminate a solid majority of federal government departments and still not arrive at a budget surplus. Most of them are tiny relative to the size of the deficit.
The largest one is probably the Pendleton Civil Service Reform Act. The Act was a direct response to executive branch employees (including the President) giving out government positions as a kind of patronage. The Act reformed the hiring process for large swathes of administrative agencies to be based on merit and competitive exams rather than political appointment. You might have heard about this in the context of Trump trying to create Schedule F to designate a bunch of positions in the executive branch as exempt from civil service protections.
I am not sure how Elon is "without political connections." He just hosted an interview with a candidate for President. His companies are government contractors. He has adversarial relationships with particular executive branch departments. He is not exactly someone with no personal financial interest in the operation of specific government departments.
Are you claiming that if we reverted to the Clinton-era tax code that we would have a surplus again?
It depends on the year, but yes. If we have the Clinton-era tax code in many recent years (assuming no changes in spending) we would have had a budget surplus.
This is not true.
The budget for 2025 will be around $7.3 billion in spending and $5.5 billion in revenue, with a deficit of $1.8 trillion.
To close the gap via taxation alone, we would need to increase revenue by 32.7%. But the tax rates today are only slightly lower today than in 2001. Employment taxes have not changed. Personal tax brackets are changed only a small bit (the top bracket is 37 now vs 39.6 then). And some taxes have increased! For example, there is the 3.8% Obamacare surcharge on capital gains. The biggest reduction was in the corporate tax, but corporate taxes are only a small percentage of revenues.
It gets worse. Even if we increased tax rates by an incredible 32.7%, tax receipts would not actually increase 32.7%. People would work less. They would avoid taxes more. The economy would shrink. We would need to increase taxes by a LOT more than 32.7% to balance the budget. It may not even be possible, since at some point increasing tax rates actually decreases tax revenue.
Expenditures, meanwhile, have grown by leaps and bounds. In 2001, total outlays were just $1.862 trillion, less than 18% of GDP. In 2025, federal outlays will exceed 25% of GDP.
What’s the source on the deficit? I think we need to borrow about 1t every 100 days so 1.8t is probably too small.
https://www.cbo.gov/publication/59946
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Servicing debt now outstrips military spending.
Citing a brief budget surplus in 25 years ago isn’t really something to crow about.
Finally, we don’t have a revenue problem; we have a spending problem. But I’m fine if you want to raise the taxes back to Clinton level taxes if you also reduce government spending to that level.
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Yeah, man social security is such a screwed up situation. Really unfortunate for all around.
TBH I think creating social security may have been the #1 political blunder of the last century. Just an incredibly awful decision. I can understand where it was coming from but oof... it has crippled us economically.
Every developed country on earth has public pensions.
In place of social security, what should we have instead? An opt-out system like Germany? Chile’s semi-private system?
Maybe a pension system where it can't be raided to fund overseas wars and other things? Or I don't know, a system where instead of going into a big government account, the money goes into an account you actually personally own?
I'm not saying it's a terrible idea, I'm saying that the implementation is beyond fucked.
AKA the Australian superannuation system where every few years the government notices that people who make a lot of money have a lot in their retirement accounts and the poor people don't and maybe we need to mess with the rules a bit to mitigate this unfairness...
Yeah, creating pots of money under government control often has unintended consequences.
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I think it could be salvaged to be a great policy. We just need to tie political positions to a maximum age that is the same as the retirement age. If you are eligible for social security, then you are ineligible for office.
Older politicians would have an incentive to raise the retirement age, but voters and younger politicians would have an incentive to block it. Raising it solves the fiscal crisis, lowering it keeps the old fogies out from running our government further into the ground.
This is a clever idea. Me likey.
This would be interesting in industry too. Maybe we put a cap on full time, but let older folks come in as consultants or advisors or something and cap em at 10 hours a week.
Eh, I'd keep it limited to government. Because many people suck at saving for retirement, even with social security as a guaranteed minimum income.
If anything, just change the way laws work with respect to age discrimination. Legalize discrimination by age for people that are over the retirement age.
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Not sure I agree. Social Security existed in the same form it does now when we last had a budget surplus.
Worker to retiree ratio was far different, however.
I wonder how much the people who instituted Social Security, which is basically the world's largest pyramid scheme, can be reasonably blamed for not seeing this coming.
On the one hand, the theoretical argument that "exponential population growth can't go on forever" is pretty strong. On the other hand, literally all empirical evidence up to that point was that population always grows exponentially until it hits Malthusian limits; the demographic transition was a hell of black swan.
And, of course, trying to make up for the missing grandchildren by importing infinite low-productivity foreigners into the magic dirt is just retarded.
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Is that true?
This chart says the ratio was just over 3:1 starting in the 70s. It cuts off at 2013, which makes me suspicious as hell, but there’s not a ton of movement.
It was 3.4 at the end of Clinton's term. It's ~2.7 now. The figure after the decimal matters
Thanks.
I’m having a hard time seeing a 25% drop as categorically different. It’s certainly not an improvement…
That 25% drop is a 25% increase in the cost of the program as a burden on individual payers. If the program previously made up 40% of the budget then it would now make up 50% if nothing else changed. Seems like a big difference to me when that is basically a trillion dollars.
Its why small changes to social security basically make or break the US budget. Raising the retirement age is one way to help the ratio, and they've started doing that. They can also undercount inflation and then the program gets an effective paycut. They've been doing that.
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"Interest payments on bonds are the 3rd highest item on the US Budget, half of the entire public deficit goes to paying them alone, and the interest rates aren't even that high." sounds pretty out of control to me.
Sounds like we should repeal the Bush tax cuts. Their permanent extension was expected to cost 16T over a decade. That, amortized, would have covered the federal deficit in its entirety every year since it was made permanent (in 2016), with the exception of 2020 and 2021.See this comment.
I’m not against tax increases, but AFAICT developed countries do not generally fund the government with taxes on high earners- including those which are very willing to tax high earners.
Instead, middle class taxation, debt, and natural resource wealth are the three options for funding a big government. The US doesn’t have enough oil for the petrostate option, so the options are middle class taxation a la the nordics or debt, or massive cuts.
I can oppose personally paying Norway level taxes, even while supporting tax increases at the high end to go with spending cuts.
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You're right, I misread my source which includes all revenue drops post the making permanent of the Bush tax cuts (in 2012). So that number is also inclusive of Trump's tax cuts and some similar measures.
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I'm not against tax increases, if they go with an automatic death penalty for the entire congress, senate, the president, and the Secretary of Housing and Urban Development (just for good measure) for spending the money on anything other than paying back the public debt.
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So interest payments account for half the budget, and there are two items that cost even more $?
Is this some new kind of math?
Of the deficit.
Sorry. I read the comment several times. Guess I should have read a few more.
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