# How will the US debt be resolved? **URL:** \ **Category:** Great Debates\ **Created:** [August 23, 2009, 10:23pm UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429 "2009-08-23T22:23:50Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [August 28, 2009, 12:04am UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/61 "2009-08-28T00:04:13Z")
> [@wmfellows](#): > > Governments essentially tax the value added, and transformation / processing is where much of that is, rather than primary production. As such, given I believe the US actually does most of own processing, the Gov’t revenues are not likely to massive shift. > > There we get into seeing potentially significant gains in potential revenues to the Treasury. This comment is simply absurd. The transformation and processing (midstream) industry has significantly lower margin returns than the exploration and production (upstream) industry. As an example, based on Exxon’s most recent quarter, they made $813 million on their U.S. upstream business and lost $15 million on their midstream and downstream businesses together. Which one of those do you think the U.S. earned tax revenue. Further, that ignores the significant other sources of revenue beyond income taxes that are earned by the government (Federal and local) on the upstream business such as royalties, lease sales fees, ad valorum taxes, and production taxes. It is simply ludicrous to say that the revenues from exploration and production are not going to be a difference maker. ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [August 28, 2009, 12:13am UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/62 "2009-08-28T00:13:43Z")
> [@wmfellows](#): > > Insofar as I am looking at global markets, unless you have a substantive cite, I will take this as American provincialism. A lead there may be, Huge or Massive as you put it (relative to other advanced producers) strikes me as nationalistic boastfulness. Does the [Wall Street Journal](http://online.wsj.com/article/SB124716768350519225.html) work for you? > [@](#): > > Earlier this decade, companies such as Devon Energy Corp. and Chesapeake Energy Corp., both based in Oklahoma City, were among the first to use the shale-gas extraction technique. Their success spawned a host of imitators and competition for acreage in Louisiana, Arkansas, Texas, Pennsylvania and elsewhere. > > Rather than compete with these smaller exploration companies, Exxon began looking for shale formations that were outside the U.S., but near major energy markets. The strategy set it apart from its big globe-trotting competitors, which built up unconventional-gas reserves through acquisition. BP PLC, for instance, spent $3.65 billion on a pair of deals with Chesapeake. Royal Dutch Shell PLC spent $6 billion to acquire Canadian Duvernay Oil Corp. and its acreage in a prospective unconventional-gas formation. > > So far, companies are drilling for shale gas only in North America and to a lesser extent in eastern Australia, said Rhodri Thomas, head of consulting firm Wood Mackenzie, in Edinburgh, Scotland. By the way, guess where Devon learned the technology: from their 2001 acquisition of Mitchell Energy who was the original major producer of the Barnett Shale. ---
**Author:** ![FoieGrasIsEvil](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foiegrasisevil/32/16638_2.png) [@FoieGrasIsEvil](https://boards.straightdope.com/u/FoieGrasIsEvil)\ **Post date:** [August 28, 2009, 12:38am UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/63 "2009-08-28T00:38:58Z")
> [@Henrichek](#): > > With? Those we owe money to, whether that war be overt, subterfuge, economic or what have you. ---
**Author:** ![Try2B\_Comprehensive](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/try2b_comprehensive/32/65_2.png) [@Try2B\_Comprehensive](https://boards.straightdope.com/u/Try2B_Comprehensive)\ **Post date:** [August 28, 2009, 3:36am UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/64 "2009-08-28T03:36:25Z")
Ok, here are some data and links concerning the efficiency factors I mentioned earlier. First, the [brushless DC electric motor](http://en.wikipedia.org/wiki/Electric_motor), the type used in ev’s: > [@](#): > > Some of the problems of the brushed DC motor are eliminated in the brushless design… Brushless motors are typically 85-90% efficient or more (higher efficiency for a brushless electric motor of up to 96.5% were reported by researchers at the Tokai University in Japan in 2009[10]) Next, from an [article](http://www.gizmag.com/camless-combustion-engine-cargine-engineering/12200/) about a new technology aimed at improving ICE efficiency (to be fair): > [@](#): > > A petrol powered Internal Combustion Engine (ICE) is approx 25-30% energy efficient at the flywheel and around 15% energy efficient at the wheels. There are many losses within the engine itself including friction and waste heat from the combustion process From a [wiki article on electricity transmission](http://en.wikipedia.org/wiki/Electric_power_transmission#Losses), the (rather trivial IMHO) losses of power during transmission: > [@](#): > > Transmission and distribution losses in the USA were estimated at 7.2% in 1995 [14] And finally, from a [pro-natural gas article](http://www.naturalgas.org/overview/uses_eletrical.asp), various efficiencies from various methods: > [@](#): > > Natural gas may be used for this process, although these basic steam units are more typical of large coal or nuclear generation facilities. These basic steam generation units have fairly low energy efficiency. Typically, only 33 to 35 percent of the thermal energy used to generate the steam is converted into electrical energy in these types of units. > [@](#): > > In combined-cycle plants, the waste heat from the gas-turbine process is directed towards generating steam, which is then used to generate electricity much like a steam unit. Because of this efficient use of the heat energy released from the natural gas, combined-cycle plants are much more efficient than steam units or gas turbines alone. In fact, combined-plants can achieve thermal efficiencies of up to 50 to 60 percent. > [@](#): > > Advantages to microturbines include a very compact size (about the same size as a refrigerator), a small number of moving parts, light-weight, low-cost, and increased efficiency. Using new waste heat recovery techniques, microturbines can achieve energy efficiencies of up to 80 percent. > [@](#): > > These types of engines are also commonly known as combustion engines. They convert the energy contained in fossil fuels into mechanical energy, which rotates a piston to generate electricity.Gas fired reciprocating engines typically generate from less than 5 kW, up to 7 megawatts (MW), meaning they can be used as a small scale residential backup generator, to a base load generator in industrial settings. Gas fired reciprocating engines offer efficiencies from 25 to 45 percent The last two quotes are most relevant in the debate of natural gas vs electricity as a motor fuel. A microturbine can yield 80% (electricity generation) efficiency, while a natural gas combustion engine offers 25-45% efficiency. Compare that to a max ~96% for an electric motor, and even counting transmission losses, electric motors fueled by natural gas generated electricity is the hands-down winner 🙂 and, in response to Digital Stimulus: > [@](#): > > I think there might be one more consideration – the (in-car) conversion of electric power to mechanical. I’m not 100% clear what you’re getting at here, but I think it has to do with the difference mentioned in the second quote above, in which the efficiency ‘at the flywheel’ is greater than the ‘real’ efficiency ‘at the wheels’. I can’t see why this would differ between an ICE car and an ev, but I’m willing to listen. ---
**Author:** ![Koxinga](https://avatars.discourse-cdn.com/v4/letter/k/4af34b/32.png) [@Koxinga](https://boards.straightdope.com/u/Koxinga)\ **Post date:** [August 28, 2009, 3:52am UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/65 "2009-08-28T03:52:39Z")
Hemp, I tell you. It’s hemp that will save us. And breastfeeding. ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [August 28, 2009, 2:03pm UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/66 "2009-08-28T14:03:13Z")
> [@LonghornDave](#): > > I’ll answer your post in pieces. Very well. > [@](#): > > Of course I do not think that various crude oil prices are “utterly unrelated to each other”. In fact I never said anything of the type. To claim so is a complete strawman. I actually believe they are highly correlated to each other. Well, my “straw man” was simply the best read I could get out of your peculiar use of the Brent-WTI comparison, without any clear elucidation. > [@](#): > > Now without putting words in your mouth, your general argument seems to be that prices are dependant upon quality of the crude. While I don’t disagree that certainly gravity and sweetness make a huge difference, there is clearly more to it than that. In fact, I believe that history shows the markets have a degree of independence. There is certainly no global price that can simply be adjusted for by quality to come up with a local price. Well… You’re wrong from the perspective of economic analysis and you’re also talking about micro-economic minutia that in the end are mere details relative to the petrol market that is driven by global referents. But that is not, however, on topic for this discussion so let us leave it at that. ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [August 28, 2009, 2:08pm UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/67 "2009-08-28T14:08:53Z")
> [@LonghornDave](#): > > Who is saying natural gas reserves are infinite? Who the hell plans for the infinite. Further, what the hell is near term to you? Again, based on current technology, the U.S. has more than 2 quintiliion BTUs of natural gas. That will last us far beyond the “near-term”. Based on current natural gas usage (as measured by the EIA over the past 12 months) and the current reserves in just the United States (based on current technology which continues to improve) the U.S. has enough natural gas to last us 92 years. Is that really near-term to you? Further, in case you think this is some sort of static number, realize that based on new technologies, this number rose by 24 years from 2006 to 2008. That’s with plays like the Marcellus and Haynesville in their infancy and probably without even counting plays like the Eagleford. Well, what is evidently clear is you’re fairly myopic in your understanding of the issues here. I am not speaking to Natural Gas in isolation, but the total profile of energy consumption for any given nation. My comment as with respect to total energy policy, not merely Nat Gas. Nat Gas reserves, if there is heavy substitution into Nat Gas will doubltess be consumed at higher rates, potentially rapidly escalating consumption (including ex-national demand as other sources run off, taking the case of non-substitution into alternatives). Focusing excessively on Nat Gas given current demand and reserve profiles, and not taking into account longer term development is the near term short sightedness I was and am referring to. Macro economic strategy in short, and the same error committed with respect to petrol, say if one rewinds to 1960. We are evidently speaking and thinking on rather two different planes, in particular as I am looking at this question on a strategic pov and looking to the lead times needed and costs involved for infrastructure transitioning (and implied expense of stranded assets). ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [August 28, 2009, 2:12pm UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/68 "2009-08-28T14:12:39Z")
> [@LonghornDave](#): > > This comment is simply absurd. The transformation and processing (midstream) industry has significantly lower margin returns than the exploration and production (upstream) industry. As an example, based on Exxon’s most recent quarter, they made $813 million on their U.S. upstream business and lost $15 million on their midstream and downstream businesses together. Which one of those do you think the U.S. earned tax revenue. > > Further, that ignores the significant other sources of revenue beyond income taxes that are earned by the government (Federal and local) on the upstream business such as royalties, lease sales fees, ad valorum taxes, and production taxes. > > It is simply ludicrous to say that the revenues from exploration and production are not going to be a difference maker. I rather disagree on my international experience (and my sense the US integrated producers play with their account). But regardless of quibbling over taxation of primary production, it is simply self evident from the history of primary producers that said activity simply is not a good economic driver, does not drive technology change and growth that are key to real sustained economic growth. The classic dutch disease. ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [August 28, 2009, 2:17pm UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/69 "2009-08-28T14:17:34Z")
> [@LonghornDave](#): > > Does the [Wall Street Journal](http://online.wsj.com/article/SB124716768350519225.html) work for you? > > By the way, guess where Devon learned the technology: from their 2001 acquisition of Mitchell Energy who was the original major producer of the Barnett Shale. You keep harping on Shale Gas. Is it your proposition that Shale Gas is the primary Natural Gas resource globally? I return again to your interesting ad hoc assertion that the US has a huge (or was it massive, synonyms in any case) technological advantage in Natural Gas production (period). I reiterate that I find the assertion dubious (not the potential for a tech edge, but the qualifier “Huge” (or the synonym)) given what I understand relative to international nat gas production. The WSJ article does not support the general observation. I readily concede (although that was not the point of my objection) that the US is a leader in Shale Gas, although whether the qualifier for Huge Lead (or synonym) is justified… ---
**Author:** ![Kearsen](https://avatars.discourse-cdn.com/v4/letter/k/82dd89/32.png) [@Kearsen](https://boards.straightdope.com/u/Kearsen)\ **Post date:** [August 28, 2009, 2:30pm UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/70 "2009-08-28T14:30:52Z")
How much is owed the USG from outside sources? I say we collect on the debts owed us first and foremost. Granted, this will not be an easy task. Second, government spending needs to stop. No entitlement packages. No war spending and no more new tax increases. Bush did a lot of things wrong but his tax cuts definitely stimulated growth (for the short term) If the government would just stop spending what they don’t have, we wouldn’t have a deficit. ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [August 28, 2009, 2:56pm UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/71 "2009-08-28T14:56:53Z")
> [@Kearsen](#): > > How much is owed the USG from outside sources? I say we collect on the debts owed us first and foremost. Granted, this will not be an easy task. The US is a massive net debtor. Calling your bills would be a staggeringly stupid idea. > [@](#): > > Second, government spending needs to stop. Murder needs to stop. The Eating of Improperly Picked Tomatoes needs to stop. Overly Simplistic Declarative Sentences need to stop. > [@](#): > > no more new tax increases. You will most definately need to raise taxes to pay CURRENT debt, never mind future debt. You may thank your preceding president for that. > [@](#): > > Bush did a lot of things wrong but his tax cuts definitely stimulated growth (for the short term) Actually that was a staggeringly stupid thing he did, as he raised your war spending but cut taxes, helping create a massive acceleration of government debt, for a fairly trivial short term boost. > [@](#): > > If the government would just stop spending what they don’t have, we wouldn’t have a deficit. Use of credit is entirely rational. Excessive use of credit is bad. Both government and private sector take out loans, there is nothing wrong with that. However, excessive debt is a problem. I would point out that your deficit is a FLOW, your debt is a STOCK. You already have a massive stock run up in the past few years, after some pay-down during the Clinton presidency. A perfectly balanced budget or surplus however in current economic conditions would throw you into a depression. This was already done (balancing the books in recession) in c. 1930s by the various leading powers. It turned out rather badly. ---
**Author:** ![Try2B\_Comprehensive](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/try2b_comprehensive/32/65_2.png) [@Try2B\_Comprehensive](https://boards.straightdope.com/u/Try2B_Comprehensive)\ **Post date:** [August 29, 2009, 4:16am UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/72 "2009-08-29T04:16:32Z")
> [@wmfellows](#): > > Afraid not. You are confusing imports with budget deficit. They are not the same problem. Maybe you can help me with my ignorance problem in this area then. There seems to be a connection in my mind. $500 billion per year (an axe-wielding estimate) sent outside the country seems quite a drain, especially for an ‘asset’ that we burn. Stop that, even to a degree, and there is more money in everybody’s pockets, especially the pockets of people who could use some more spending money. Doesn’t that raise revenue, and make it easier to live within (government) means? At least in the presence of some other smart government moves. Probably naive at some point. Fill me in! > [@](#): > > An assertion. > > There is no economic evidence that the US can not service its current and near-term (5 yr say) debt load. > > It may become uncomfortable, depending on growth paths, but given the example of other developed countries, European and Asian, the US is not at forced default levels. I agree, we are not sunk yet. But the path we’re on does not lead to a good place, no? I think something has to give before we can meet the example of the European and Asian countries you mention. > [@](#): > > Renewables will not meet “all” of your domestic energy needs in any currently realistic time frame. > > While I find the hypothesis that Renewables (in combination with investment in overall energy efficiency, both retail and industrial) may be able to provide a real boost to GDP growth to be colourable, and worth investing in, the idea your GDP would “explode” on this basis is absurd. And I would observe new technologies **always** lead to bubbles (for the very reason illustrated in your wide eyed enthusiasm and unrealism above). You might generate a Renewables bubble. Part of the game in the end. Well ok, ‘all’ is a long way off. But you must admit (actually, you do admit) that a massive investment in renewables would make a significant difference. Exploding GDP ‘absurd’? Ok, ‘exploding’ is an immoderate term. But. Allow a 10 year, a 20 year time frame. Reduce oil imports by 1/3 and 4/5 respectively. Hundreds of billions of spending dollars are freed up every year, and a new (material) industry is chugging along. Maybe GDP doesn’t go through the roof as you point out, but if you can think of a program that can give a bigger boost I’d like to hear it. By ‘no bubble’ I meant that the whole thing is not just a paper pyramid- it is an ongoing major infrastructure and manufacturing industry. I suppose you’re right that people could go bananas speculating on it, but there would still be a base of genuine material value underneath. > [@](#): > > Insofar as other countries, including China, are investing heavily in renewables research, it is rather unlikely the US would end up in a sort of 1950s Part II scenario of massive exports. Maybe not as good as the 50’s, unless every other country gets bombed to rubble a la WWII. I still think there is a very significant export market here. And do we want to compete with China or not? Export goods-\> bring in cash-\> get out the black ink pen, no? ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [August 29, 2009, 1:55pm UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/73 "2009-08-29T13:55:11Z")
> [@Try2B\_Comprehensive](#): > > Maybe you can help me with my ignorance problem in this area then. Well, first and most simply, a governmental budget deficit is an issue of Government Spending versus Government Income. There is absolutely no necessary relationship between a government budget deficit and a trade deficit. A Government in a country with a trade surplus is PERFECTLY capable of running serious budget deficits (France comes to mind, 92-01 in particular). And on the flip side, a country with a trade deficit can most certainly run a balanced budget. That is a political choice. Your fundamental confusion appears to be confusing the General Economy with the Government Budget. They are not the same thing. > [@](#): > > There seems to be a connection in my mind. $500 billion per year (an axe-wielding estimate) sent outside the country seems quite a drain, especially for an ‘asset’ that we burn. It depends on how it is used. US$500bn invested in infrastructure is not a drain, its an investment. The same amount in consumption is a drain. The drain may or may not be a drag on the overall economy, depending on how much surplus wealth the American economy generates. Also note that the flip side of that trade deficit is the financing of the economy; without foreign buying of American private and public debt, you would not be able to run the trade deficit. > [@](#): > > Stop that, even to a degree, and there is more money in everybody’s pockets, especially the pockets of people who could use some more spending money. This is nothing but primitive mercantilist thought, something that was discredited in economic analysis 100 years ago. > [@](#): > > Doesn’t that raise revenue, and make it easier to live within (government) means? No. No it does not. The government raising revenues is dependent on the economic health of the country (which a trade deficit is not a bad thing as such, although the size of the current US deficit is not sustainable). Japan runs massive surpluses, and the Government runs massive deficits, and the domestic economy is moribund - has been for 15 years. There is your answerr. > [@](#): > > Well ok, ‘all’ is a long way off. But you must admit (actually, you do admit) that a massive investment in renewables would make a significant difference. I indicated it MIGHT make a difference and that difference might in the long run have significance. Not would, might. > [@](#): > > Exploding GDP ‘absurd’? Ok, ‘exploding’ is an immoderate term. But. Allow a 10 year, a 20 year time frame. Reduce oil imports by 1/3 and 4/5 respectively. Hundreds of billions of spending dollars are freed up every year, and a new (material) industry is chugging along. Maybe GDP doesn’t go through the roof as you point out, but if you can think of a program that can give a bigger boost I’d like to hear it. This is incoherent. Reduction of oil imports does not “free up” anything of necessity. What counts is the cost per unit of energy of the fuel. If your renewables dream is more expensive per unit of energy, then rather than “freeing up” money, you will in fact shrink the amount of capital available for non-energy uses. That is, you impoverish yourself. Only if the new renewables are more EFFICIENT and COST EFFECTIVE do you get a boost. Otherwise, you are merely engaging in pernicious economic illiteracy. > [@](#): > > By ‘no bubble’ I meant that the whole thing is not just a paper pyramid- it is an ongoing major infrastructure and manufacturing industry. I suppose you’re right that people could go bananas speculating on it, but there would still be a base of genuine material value underneath. You have no understanding of bubbles. It is perfectly possible to have a bubble in hard assets. An ongoing mfg and infrastructure investment that is massively overvalued over long term sustainable values is a bubble. The Railroads of the 19th century are a perfect example of this. “Genuine material value underneath” means bloody fucking nothing. But this is a perfect example of the thinking that leads to such bubbles. > [@](#): > > Maybe not as good as the 50’s, unless every other country gets bombed to rubble a la WWII. I still think there is a very significant export market here. And do we want to compete with China or not? Export goods-\> bring in cash-\> get out the black ink pen, no? There may be eventually a significant market. ---
**Author:** ![Koxinga](https://avatars.discourse-cdn.com/v4/letter/k/4af34b/32.png) [@Koxinga](https://boards.straightdope.com/u/Koxinga)\ **Post date:** [August 29, 2009, 11:16pm UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/74 "2009-08-29T23:16:40Z")
While this thread debates whether or not to include oatmeal cookies at its 10-cent lemonade stand, [here’s what’s happening in the real world](http://www.frontlinethoughts.com/gateway.asp) (online newsletter, registration required): > [@](#): > > The US national debt is now over $11 trillion dollars. The interest on our national debt is now $340 billion. This is about at 3.04% rate of interest. In ten years the Obama administration admits that they will add $9 trillion to the national debt. That would take it to $20 trillion. Let’s say that by some miracle the interest on the national debt in 10 years will still be 3.09%. That would mean that the interest on the national debt would be $618 billion a year or over one billion a day. No nation can hold up in the face of those kinds of expenses. Either the dollar would collapse or interest rates would go through the roof. > > That would be at least 30% of thenational budget. How would your household do, paying that much as interest? How can you operate when interest payments are 30% or more of the budget? Do you borrow to pay the interest? And the Obama administration openly admits to deficits of over a trillion a year for the next ten years, under very rosy growth assumptions. Anyone outside of Washington and rosy-eyed economists think we will grow 4% next year? I am not seeing many hands go up. > > And Then We Face the Real Problem > If we do not maintain high deficits, it is likely we fall back into recession. Yet if we do not control spending, we risk running up a debt that becomes very difficult to finance by conventional means. Monetizing the debt can only work for a few trillion here or there. At some point, the bond market will simply fall apart. And it could happen quickly. Think back to how fast things fell apart in the summer of 2007. When perception of the potential for inflation changes, it changes things fast. ---
**Author:** ![I\_Love\_Me\_Vol.I](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/i_love_me_vol.i/32/521_2.png) [@I\_Love\_Me\_Vol.I](https://boards.straightdope.com/u/I_Love_Me_Vol.I)\ **Post date:** [August 30, 2009, 7:11am UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/75 "2009-08-30T07:11:04Z")
> [@Chief\_Pedant](#): > > We have become a nation of predatory borrowers, borrowing from our children. Even the current generation of new workers is comfortable borrowing from their children. They have no clue what it means to be fiscally responsible. We do this because we refuse to pay our fair share. We don’t pay enough in taxes. We demand more and more and more but then demand lower taxes on top of it. We could begin to make a dent in our deficit, AND take some responsibility for our own spending, AND relieve our grandchildren from having to pay our debts, AND relieve ourselves from the apparently irresistible temptation of spare cash/credit sitting around just screaming to be spent on more unnecessary Chinese electronic-gewgaw crap, IF… IF, we would face up to our responsibility to help raise desperately needed government revenue. We do this by finally growing up. Becoming a big-boy nation and start paying our dues. The dues we owe for belonging to the richest club on the planet. They say anyone can get rich in the USA–what a fortunate circumstance to be a citizen here!! How much would you pay for that? Because you almost certainly ain’t paying enough right now. Grow up, stop bitching, and accept your responsibilities. ---
**Author:** ![Sandwich](https://avatars.discourse-cdn.com/v4/letter/s/22d042/32.png) [@Sandwich](https://boards.straightdope.com/u/Sandwich)\ **Post date:** [August 31, 2009, 3:48pm UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/76 "2009-08-31T15:48:54Z")
> [@wmfellows](#): > > Not that I would recommend being Belgian mind you. Why not? As far as I can see, being Belgian is a splendid thing to be. ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [August 31, 2009, 4:16pm UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/77 "2009-08-31T16:16:02Z")
Looking at the debt-to-GDP chart, I’d classify the problem of U.S. debt as worrisome in the medium term, but the curve would have to continue to go sharply upward after the jobless rate gets back to normal after the current recession ends to convince me that we’ve got to react as if to an imminent catastrophe. The U.S. has had debt-to-GDP levels like this before. We improved our situation by growing our way out of the problem, not by austerity measures. (Higher taxes did help, though.) The elephant in the room is health care costs, since the U.S. government currently pays directly or finances something like 46% of American health care costs right now. Unless we ‘bend the curve’ on health care costs as a nation, the debt-to-GDP ratio will continue to get worse - which is why we need national health care with the sorts of cost control mechanisms that are in the bills that have recently passed their committees. If we deal with health care, if we invest in infrastructure in a way that provides a solid foundation for long-term economic growth, and if we modestly increase taxes on the rich, we’ll do fine. ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [August 31, 2009, 4:17pm UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/78 "2009-08-31T16:17:25Z")
> [@Sandwich](#): > > Why not? As far as I can see, being Belgian is a splendid thing to be. Especially if one appreciates good beer. Belgium is the source of many excellent brews. 🙂 ---
**Author:** ![Dick\_Dastardly](https://avatars.discourse-cdn.com/v4/letter/d/c4cdca/32.png) [@Dick\_Dastardly](https://boards.straightdope.com/u/Dick_Dastardly)\ **Post date:** [September 1, 2009, 8:39pm UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/79 "2009-09-01T20:39:11Z")
> [@Koxinga](#): > > While this thread debates whether or not to include oatmeal cookies at its 10-cent lemonade stand, [here’s what’s happening in the real world](http://www.frontlinethoughts.com/gateway.asp) (online newsletter, registration required): Whoever wrote this is being disingenuous or doesn’t have a clue what he’s talking about. He’s getting 30% by comparing the expected 2019 debt to the 2009 national budget revenue, sort of. You can expect revenues to double over the next ten years so it’s a manageable payment. The nine trillion increase in debt will probably cost around 5% of total revenues to service in 2019, nothing to get too worried about. In 2019 debt:GDP will be roughly 70%, it was 120% at the end of WW2 and we managed to pay that down just fine. As long as the debt doesn’t keep spiralling, is stabilized and we run sensible monetary and fiscal policy for the next decade we’ll be fine. Of course that can’t be guaranteed but we have grownups in charge till at least 2013. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [September 1, 2009, 9:43pm UTC](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429/80 "2009-09-01T21:43:02Z")
Huge difference between the debt of WWII and today’s debt. In WWII, the bulk of government spending was discretionary and easily reduced. Mainly, through cutting the military budget. Today, the bulk of spending is in the form of mandatory entitlements. And they are getting worse with every passing year. Another huge budget item is interest on the debt itself, and this is also mandatory spending. There is no possible way you can conclude that eliminating the current deficit will be remotely as easy as it was to reduce the WWII deficit. The U.S. debt problem was solved by massive economic growth, but that growth was the result of a major shift in economics as the wealth of the rest of the world rapidly grew and the U.S. stood as the sole free superpower with an untouched industrial infrastructure, which caused a huge expansion in foreign trade, to America’s benefit. Another one-time boost came as a social shift moved women into the workforce, nearly doubling the productive manpower of the U.S. economy. This and the baby boom led to a period of unprecedented productivity growth during a period of low social spending. That’s how the U.S. escaped the WWII debt. Nothing remotely like that exists today. All the trend lines that were up in 1946 are down today. Social spending is increasing. The population is aging instead of getting younger. The number of workers available to provide for the elderly and the non-working poor is declining. The U.S. is losing competitive advantage against the world rather than gaining it. Government spending is increasing rapidly. Instead of the rest of the world increasingly being a source of new markets and new wealth, major markets are declining as the populations of the major economies age even faster than they are aging in the U.S. This is not 1945. This deficit and debt are the biggest threats the U.S. faces, and it needs to be taken extremely seriously. You need major entitlement reform, a major scaling back of government services, and probably some additional tax increases, so long as they go to debt service. Another way in which this is not 1945: The rich and their wealth have much greater international mobility. Your ability to tax them with impugnity is much lower now than it was in 1945, where America was really the only game in town. Set tax rates of 70% on the rich, and watch as your most productive, wealthiest citizens pack up and move to Canada, Australia, and Europe. The high levels of U.S. debt (both government and personal) have been sustained in large part by the rapid increase in wealth in Asia. At some point, when growth in Asia slows down and Asian countries move from policies of savings to policies of local investment and maybe even run their own deficits, the pool of available capital will collapse. Eventually a U.S. treasury auction will fail. Then look out. [Previous page](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429.md?page=3) [Next page](https://boards.straightdope.com/t/how-will-the-us-debt-be-resolved/507429.md?page=5)