Full of simple facts that I wish our Politicians understood or our voters understood enough to pick different politicians… 21 minutes to “get it” about Government Real Debt and why we can’t possibly tax enough to cover it (even before any stupidity like the Green Slime New Deal).
To paraphrase it as bullet points:
1) We owe way more than $20 Trillion, closer to $150 Trillion.
2) Agency and other hidden debt makes that even higher. Call it $165 T.
3) Social Security is not owed to “ourselves” it is owed to retirees.
4) The government can’t go bankrupt, but it can bankrupt the currency.
5) Raising tax rates does not raise tax revenue. It’s stuck at 17% of GDP.
6) If you account for transfers TO people as well as taxes, only the rich pay net.
7) The government could sell all it’s assets and not put a dent in the debt.
8) The government can service the debt but only if 100% of revenue is used.
9) We’re running out of places to borrow more (by the $Trillions…)
10) They present a proposed solution that might work. Cut costs. Hope for growth.
What it presents is how we could, in fact, avoid an implosion. They don’t include “just inflate it away”. The total solution space comes down to 3 things:
1) Grow GDP. This creates more revenue and lets you pay off some debt, or at a minimum take on less. Trump is doing this largely through eliminating regulations, cutting tax rates (remember revenue will be a near constant percentage anyway), and forcing abusive trading partners to clean up their act while also dumping stupid abusive trade “treaties”.
2) Inflate the currency (AFTER you remove inflation escalators…). This lets you pay back the debt in nominal terms while just blowing it off in real terms. This is the favored method across all time, BTW, as paper currency becomes worthless and then a new currency is floated. The $US today is about a nickle in terms of the $US I used in about 1965. They do talk about this as a “tax on savings” but do not point out most of the government debt is bonds, i.e. savings. So essentially you tax the debt…
3) Reduce expenditures. This can be done in an orderly way, by cutting the salaries Government will pay, reducing benefits, buying less stuff, etc. Or it can be done in a disorderly way by collapse of the economy. They propose an across the board 10% cut in government departments. I’d advocate for just eliminating some departments (most departments) wholesale. Just look back at the “legacy” of each President and chop away. Carter? Knock off the Dept. of Education. It’s a State responsibility anyway. Obama? Get us OUT of the Federal Health Care business. Nixon? Dump the EPA (or at a minimum, cut it back to about 5% of present size / duties). You get the idea. Add that to a 5% PER YEAR overall cut in other departments and you are making good progress. Don’t do it, and you don’t fix it.
Beyond those, I’m not seeing much… Take in more, spend less, repudiate the debt in the most acceptable manner; kind of covers the options.