dagblog - Comments for "The U.S. Will Never Pay Off Its Debt (Update)"

Yep, I sucking on a frozen

Dan Kervick — Thu, 15 Sep 2011 15:55:04 +0000

In reply to I think you and I should mark

Yep, I sucking on a frozen Demon Treat right now! :)

It's a good piece, d23. My

DF — Thu, 15 Sep 2011 15:48:00 +0000

In reply to The U.S. Will Never Pay Off Its Debt (Update)

It's a good piece, d23. My guess would be that your offense was mentioning the gap between the ability of labor to produce and the means to consume. This points us to that nasty inequality that true capitalists don't like to look at. If workers in the US can't afford to buy what they produce, that points us toward domestic income inequality.

It also forces us to ask what we should do with the excess capacity. Sell it, natch! Of course, this means we have to run a trade surplus in order to actually sell everything that we make. And that points us to another kind of inequality, because it's impossible for every nation on earth to run a trade surplus. In nominal terms, the global balance of trade is always a zero sum game.

And that, my friend, puts the lie to the right-wing trope that my wealth is not your poverty in this system. And then people might start to consider a more democratic economic system, but we can't have that.

EDIT: Also, there's a shorter reason why, aside from the realities of long-term fiscal management, that the US will always be servicing debt. If the US had an actual surplus, everyone would immediately scream that this was evidence taxes were too high and would demand their money back.

Excellent point about debt

Michael Maiello — Thu, 15 Sep 2011 15:06:40 +0000

In reply to Back up and think a minute.

Excellent point about debt vs. aid. I hadn't thought of that!

I think it was a real,

Michael Maiello — Thu, 15 Sep 2011 14:53:47 +0000

In reply to I wonder this too. Did they

I think it was a real, fundamental disagreement with a new editor who may well be a deficit hawk.

Too many thinkings. Plus, you

Qnonymous — Thu, 15 Sep 2011 14:23:41 +0000

In reply to The U.S. Will Never Pay Off Its Debt (Update)

Too many thinkings.

Plus, you hate America.

I think you and I should mark

tmccarthy0 — Thu, 15 Sep 2011 14:09:35 +0000

In reply to Isn't it also the case that

I think you and I should mark this day right now... I agree with you 100%. Oh snap.. did hell actually freeze over?

Right on the point, Dan.

Oxy Mora — Thu, 15 Sep 2011 13:37:23 +0000

In reply to Isn't it also the case that

Right on the point, Dan. Corporations, including mega banks, have access to the bond market like no one else has. Debt usually lowers the cost of capital compared to straight equity financing. Interest is tax deductible. But a small business owner such as myself doesn't have access to low cost debt. I have a good financial statement but my borrowing costs would still be around 9-10% compared to a mega corporation around 1 of 2%. And people still wonder why small businesses aren't generating more jobs.

I think the piece was

Oxy Mora — Thu, 15 Sep 2011 13:28:44 +0000

In reply to I wonder this too. Did they

I think the piece was rejected because of Destor's statement, "...the rich hate over-paying for things like anyone else." That statement is simply false.

In fact, the rich hate over-paying for things much much more than we folks do--especially if it's the services of a maid or a gardener.

Just kidding, Destor, good piece. We are in perpetual interest bondage.

Back up and think a minute.

Beetlejuice — Thu, 15 Sep 2011 13:20:45 +0000

In reply to The U.S. Will Never Pay Off Its Debt (Update)

Back up and think a minute. Which would you rather have ...

1) A country on the doorstep of the White House asking for financial aid?

2) A country investing their sovereign wealth in US Treasury bonds where their principle is secured and they earn a constant revenue flow from the interest earned?

I'd prefer the latter.

As for paying off the debt, Clinton had it in the bag when he handed the White House over to Bu$h in 2000 ... remember the projected surplus? Of course, both Clinton and Bush Sr. started to cannibalize the ColdWar infrastructure cashing in on the valuable land assets and withdrawing and downsizing the military in order to get the over-inflatted deficit down to a manageable level. An option not available to Obama since most of what is left is strategic for future mobilization if it ever became necessary for the US to become involved in global situations.

There are two methods by which the deficit can be lowered, and they're mutually inclusive not exclusive.

First being getting the 25 million unemployed and under employed back to full time employment ... full time employment means the government is taking in more tax revenues - hint, hint. Also, since all municipalities and states rely on full-time employment as revenue resources for state run services, there's one less beggar at the federal door step. Besides just think about the average wage of 25 million people and the tax revenue such wages would draw into the government coffers ... that's a big chunk of change.

Second being increasing taxes. Since it's well known the business sector is paying a rate of taxation not enjoyed since the 60's, there's an immediate source to recapture. And if people want more government services, then there's a price tag that must be acknowledged and paid. For example, during Ronnie Raygun's first term, he increased social security withholding to create the trust fund. Good idea for the future, however, only the employee had to pay the increase, not the employer. So if there's an issue with social security becoming insolvent, the it's about time to increase the employer's contribution ... fair is fair.

What is hard to comphrend is how people can complain about taxes being too high while not acknowledging the reason for the high deficit is because of past legislation that was approved without the necessary funding ... the deficit is high because Congress didn't allocate the money so they floated a loan.

So the best way to curb the deficit is to force Congress to only pass legislation with available funds. If there they need more, then they either cut spending from some other source or raise taxes. So the public will either have to accept diminished government services or pay more in taxes.

So if all legislation has the necessary funding allocated from existing revenues, then what's leftover can be used to buy down the debt. It will take time, but without Congress using the revolving deficit credit card to make impulse purchases, the debt will eventually drop to a manageable level.

As far as the purchasing the fruits of the world's productive capacity, that requires a solid employment foundation with salaries and benefits. But even more so, enough net income after satisfying one's needs ... housing, clothing, transportation, food and so forth ... to make those purchases to keep the engine of consumerism alive. Otherwise you end up with one person in poverty needing to make a purchase of an item produced by another person in another country who is more impoverished than the first. Such a vicious cycle is a downward trend to the bottom. The current system of global commerce is the driver that is creating the havoc in the global economic and employment picture. Fix that and the rest will follow.

Isn't it also the case that

Dan Kervick — Thu, 15 Sep 2011 11:26:55 +0000

In reply to The U.S. Will Never Pay Off Its Debt (Update)

Isn't it also the case that corporations never pay off their debt? Corporations borrow every day. They are always indebted, and they need to borrow just to stay operational. And as they grow, their debt load grows too. I think most economists would say that is a good thing. That's how capitalism is supposed to work, and that's why capitalism has been so successful at generating growth. Surpluses monetary savings are always flowing, in the form of lending, into productive activity.

There is one way in which someone could reasonably say destor's headline is misleading. Read straightforwardly, one might take it to mean that the US has certain debts that it will never repay; that is, that it has debts on which it will default.

But that never happens either. The US always pays its debts, and it never defaults. What destor clearly means is that as the US pays off old debts it is always acquiring new ones. So it is always indebted. And not only is it always indebted, the world of lenders likes it that way.

Maybe the headline should just say, "The US Will Always Be Indebted".