OT: US National debt

[Starhawk]

Okay without trying to start a flame war here (this is a genuine question not an argument) it is my understanding that every nation on Earth has a national debt and that those "debts" are pretty much used as a sort of credit system for a nation, for example say UK owes US 5 billion dollars but instead of being forced to pay it streight up they'd be asked to back the US in a UN vote or something of that nature instead.

Now I was only using US UK as an example but is that true that often nations pay their debts to one another through non monetary means?

I mean face it if the United State called in every debt we were owed we'd get a few trillion bucks to pay off our own debts but we'd also bankrupt many nations in the process and likely be bankrupted afterwards ourselves?


Like I said I'm not doing any political US is superior stuff here I am just trying to figure out why I've heard so many people saying "national debt is a political plus sometimes". I mean I am far from a professional economist so heh .

[geoschmo]

Yah, a debt in and of itself is not always a bad thing. It's basically a line of credit. Never allowing the government to borrow for short term needs would be unrealistic and to rigid. The problem is if you run up so much debt that the interest on it becomes an unmanageable expense, or if you become unable to make your payments and default.

[Starhawk]

Ah, very interesting info there Geoschmo thanks .

[Will]

And the problem with the US debt is that the interest payments on it is the second biggest expense each year for the Federal government... the only thing costing more is the military. I think right now, the breakdown is something like 40% of income tax (this excludes the SSA and Medicare taxes taken out of paychecks, as these are supposed to be seperate budgets) goes to the military, and about 33% goes to interest on the debt. (I can't seem to find any numbers Online to confirm this...) Which is why I'm not happy with Bush for cutting taxes, because now I'm going to have to carry that huge debt for most of my life. I know it's not feasible to completely pay it off, and I don't expect the Feds to pay off everything. But paying off enough to get payments down to around 7%-12% of total budget from income tax would make things infinitely better (IMHO).

At the rate we're going now, there can legally be no more debt (we've hit the $7.4 trillion limit already). So, we're either increasing the limit to pay for the wars, or Bush is cutting more programs to keep his precious corporate tax cuts, or he raises taxes on everyone, going against his promises... While Osama laughs as his plans succeed yet again. Something has to break soon.

[Starhawk]

Will said:
And the problem with the US debt is that the interest payments on it is the second biggest expense each year for the Federal government... the only thing costing more is the military. I think right now, the breakdown is something like 40% of income tax (this excludes the SSA and Medicare taxes taken out of paychecks, as these are supposed to be seperate budgets) goes to the military, and about 33% goes to interest on the debt. (I can't seem to find any numbers Online to confirm this...) Which is why I'm not happy with Bush for cutting taxes, because now I'm going to have to carry that huge debt for most of my life. I know it's not feasible to completely pay it off, and I don't expect the Feds to pay off everything. But paying off enough to get payments down to around 7%-12% of total budget from income tax would make things infinitely better (IMHO).

At the rate we're going now, there can legally be no more debt (we've hit the $7.4 trillion limit already). So, we're either increasing the limit to pay for the wars, or Bush is cutting more programs to keep his precious corporate tax cuts, or he raises taxes on everyone, going against his promises... While Osama laughs as his plans succeed yet again. Something has to break soon.

Okay that whole Last Paragraph was rather useless as you had made a good point with the first on and then just blew that out the window with your second paragraph.

Okay we get the point you don't like Bush but at least we aren't paying for his laywers while he bangs interns lol.... Or in Kerry's case at least we're not paying for his botox hehe. (just a joke don't start anything!)

[Will]

Umm... the Last paragraph is why I don't like Bush, not me just saying I don't like him. I thought Kerry would have kept up the deficits too, just not as huge as Bush is keeping them. Just about any other politician would have run up the debt as well.

I fail to see how my point in the first paragraph (that it would be a Good Thing(tm) to get the debt down to the point where it's 7%-12% of the annual budget from income tax, instead of 33%) is invalidated by me applying it to a specific politician. Would you have prefered that I apply it to Kerry instead, even though he lost and has almost no influence on budget issues now (except as a minority senator)? That doesn't do anything.

My second paragraph makes a very valid point as I see it. The law as it stands now says the Federal government cannot accumulate more than $7.4 trillion in debt. We now have $7.4 trillion in debt, and are spending more than we have every day. At some point, Bush either has to stop paying for things, or raise taxes, or (most likely option) he continues to screw over my and your generation by shifting the burden to us. There are estimates that take the average economic growth in the US over the past few decades, and extrapolate to several decades in the future, and the estimate is that the people just now about to enter the work force will be paying 75%+ of income in taxes, if government programs stay the same. Osama stated his goal is to bankrupt this country, and so far we're doing it. And, something has to break soon.

Tell me, what part of this is not valid? Because I certainly can't see it, even after putting my conservative blinders on.

[Starhawk]

I just meant that you basically just made it sound like you were going off blaming one man for every problem of the country's economy, instead of leaving it at a good point that we need the defecit down and how to do it (or at least as far as your opinion on the matter goes), I mean face it the president does not have AS MUCH say on the economy as people seem to think, that relies mainly on what the Senate can do as well you know?

I mean face it if the Senate didn't like the Bush tax cuts they were have just used their veto powers right? (at least it is my understanding that the senate can veto any bill the President tries for if they want). So I mean you can't just blame a president for every thing that goes wrogn however convient that may be right?

And like I said at least we aren't paying his lawyers fees lol.

[Will]

Senate has no veto power. The House and the Senate have to ratify the same Version of a bill, which is then sent to the President to either sign or veto. The House and Senate can over-ride the Presidential veto by 2/3rds vote (67 Senators, 290 Representatives).

My comments have nothing to do with the US economy. It's all about the Federal budget, which consists of those taxes not already set aside for Medicare and Social Security. I don't have a paycheck handy, but as I recall from my summer job, I would be paid about $480 a week, and usually $60 was deducted for income tax, $35 for Social Security, and a bit under $30 for Medicare. The amount taken depends on how you fill out tax forms, how much you make, etc. YMMV. The $35 and $30 are (technically) not supposed to be touched by Congress, but are repeatedly robbed anyway. The overall budget comes from the $60, which I think right now the Federal government is spending around $75 for every $60 it takes in. I have no official numbers in front of me, this is all ballpark figures.

Now, since this is not about the economy, it is my position that the President does indeed have huge control over the Federal budget. Especially since he has the power to veto any measures which excessively strain the budget... such as large spending programs (I've seen reports that spending has increased 8% per annum under Bush Jr, compared to about 3% for the previous four Presidents) and huge tax cuts. And true, these bills must go through Congress before being signed by the President, but both houses of Congress are held, and have been held, by the Republican Party. As a Republican and the President, Bush Jr. is the head of the Republican Party, which pretty much means... what he says, goes. Republicans can break rank and vote against these measures, but in the past decade, the Party leadership has been especially brutal to those who do this, and they are soon replaced by politicians who more easily fall into line. This is harder to do in the Senate, since they have longer (6 year) terms, but the Republican Party has found a way to deal with these mavericks as well. Exhibit A, the character assassination of John McCain, who will likely never be able to run for an office other than Senator of Arizona again.

Because of the structure of the Republican Party, the fact that Bush Jr. is the current head of the Party, and the fact that the Party controls both the Presidency and the Congress (and probably the Supreme Court within a few years), means that Republicans have almost unlimited control over the Federal budget. What used to be the fiscally responsible party is now putting to shame even the most ambitious of the Democratic Party's spending campaigns from the 40s onward. That translates to huge debt. Which, unless you're planning on being an unemployed high school student all your life (trust me, it seems like it's going to take a long time to end, but it ends up finishing FAST), you and I are going to be paying for. If there's any country left to pay for.

Oh, and as for his lawyers' fees... what do you think the Department of Justice is? Just one big law firm for the Executive Branch.