To answer the OPs question, if the national debt continues to rise, eventually people may begin to wonder if they will get their investment back. This means the US Government will need to increase interest rates in order to sweeten the deal. That will increase interest rates for ALL borrowing. For the regular Joe Citizen, that means higher mortgage rates, higher car and school loan rates and so on.
Increasing debt is essentially printing money. As national debt increases, there the potential for inflation to increase as well as the value of the dollar is lower. So for you, that means everything will seem to cost more. You’ll keep getting paid the same, but you won’t be able to buy as much.
I’ve heard some economists say that unlike personal debt, national debt is a good thing, because unlike people nations don’t die (or if they metaphorically die, the debt becomes null anyway).
IANA economist, or even particularly learned about such things, but I always had the impression that national debt was bad because:
Debt accrues interest. The things we bought with the debt end up being much more expensive than that had to be over time with all of the accrued interest.
As a corollary, it’s damn selfish. It’s saying: I want this shit now, but I’ll make my children pay for it.
Doesn’t too much debt eventually worsen inflation?
Oh, good, an easy one: because there are immediate negative consequences for legislators who raise taxes or cut spending, but no immediate negative consequences for those who borrow.
There’s a saying to the effect of “politics is about surviving until next week. Diplomacy is about surviving until the next century.”
It’s equally apt in terms of government spending.
I’m wondering if an apolitical long-term appointee to oversee the federal budget might not be a bad thing. Somebody who can say, “okay, you can spend this, but only if you cut this, or raise this” to Congress.
Good idea (a ‘budget czar’?), but it’d be blatantly unconstitutional, as I’m sure you realize.
Of course from time to time Congress has tried to self-impose a little discipline in the form of Pay-Go legislation, with a modicum of success I’d say, but it often gets ignored (by designating spending as ‘emergency’; this was the issue why Sen Bunning was holding up the unemployment benefits extension earlier).
It wouldn’t be blatantly unconstitutional at all. Congress is not constrained from limiting its own power. Hell, we already do much the same thing in terms of government lending with the Federal Reserve.
I think what you’re proposing is actually something akin to BRAC, which is kind of a deal made beforehand to shortcut normal congressional bullshit. Of course the Constitution is pretty much silent on where Defense bases are located…
But not on the power to raise, spend, and borrow money. That’s pretty much the most important job Congress has, and I can’t see it being outsourced in a constitutionally consistent manner (even if you’re only talking about a veto).
Now if you’re talking a purely advisory role… well maybe then you’d have something. I thought that was the job of CBO and OMB though.
Consider it insurance, both for Medicare / Medicade when you retire and for America to send warships to rescue you if things turn sour.
Except they still pay the most in taxes. Various sources say different things and give different years which makes verifying data difficult, so I’ll just cite the NTU for 2007.
There’s nothing absurd about it. Do some research and you’ll see that the Chinese have been steadily increasing their purchases of American stuff (i.e. property and businesses) over the past several years. Along with those purchases comes influence, the ability to push around the United States Government. So yes, in a manner of speaking, The Chinese Repo Man is in the process of towing the USA to China.
Countries like the US with a strong economy can get away with high debt because we make enough to cover the interest. Debt can be crippling for developing countries though.
Because people typically demand more services from their government than they are willing to pay in taxes.
No argument from me. I agree that the rich pay the VAST majority of taxes. My statement was that the idea of raising taxes on the rich will not result in as big a reduction in the debt as people believe. It just makes some people feel good to stick it to the rich.
The average taxpayer (who wants to pay down the debt) does not like the uncertainty of debt. We don’t have to learn what would happen if we were to ever default, because the truth is we don’t know what the consequences will be, other than to say, we know it will be disasterous.
What terrific government services do the rich get that the 50% of the workforce that presently pays no income tax doesn’t get?
The income tax scheme in this country has nothing to do with fair and everything to do with politicians buying votes with someone else’s money. The rich (so-called or actual), being in the minority, are easy pickings for a majority that wants more than it’s willing or able to pay for. The rich in this country pay far more than their fair share in taxes and they have for decades.
If you want the government to disproportionately take people’s earnings away simply because they have more and give it to you instead, at least have the decency to admit that’s what you’re doing rather than falsely trumpeting the fiction that they aren’t paying their fair share.
Here is how it works, more or less. Interest rates aren’t set - new bonds are auctioned off, with the bond going to the person willing to accept the lowest interest rate. So, stuff China buys now stays at that interest rate until it matures. Now, there is a market in bonds, so if that rate seems bad the price on the bond will fall until the rate matches the prevailing rate, but that does help to set the price for the next auction, but does not affect what the government pays in interest for that bond.
And certainly interest rates are not negligible, but neither are the savings from today’s low rates.
We are spending money today to try repair the sails shredded by the last drunken sailor in there. As for the horrid effects of higher taxes on the wealthy, the rates will go back to those of the Clinton era. Please tell us of the rich people streaming out of the country then, could you? As for investment, please stop calling the wealthy stupid. Given over capacity and a demand gap, where exactly would you suggest they invest? There is tons of money piled up already - a small tax increase on the wealthy is unlikely to affect investment very much, and can be used to fuel demand, which will build sales, increase profits, and return a lot more money to the rich than the continued tax cut would. Remember, the Clinton tax increase let to the boom and made the rich a lot richer than they would have been with lower taxes and no boom.
And maybe the boogie man will spring out and eat us all up. With interest rates near 0, the Fed could have a problem dealing with deflation. Inflation is a simpler matter - raise rates and slow the economy down - there is tons of room to do that. Given that the inflation rate isn’t even at the Fed’s target value, fears of hyperinflation are just a scare tactic with little or nothing to back them up.