US Debt Service Costs

[lawpoke87]

Total U.S. debt will be $35T at the end of this year. Current debt service costs on obligations coming due is roughly 5%. We have a large amount of debt coming due in the next 12 months. Do the math

$35T x .5% = $1.75T in debt service. This is assuming we can keep debt service at 5% which is hardly a guarantee due to the extremely large amount of treasuries which have to be sold. The Federal Reserves is about the only buyer of U.S. Treasuries at this point. Just printed money. It’s a shell game.

At what point will our political leaders address this issue.? What point will the media cover this issue?. What point will the American people pay attention? Assume the answer to all the above is “when everything crashes and we can’t pay entitlements or we continue to print money and inflation hits 20-30% (maybe higher).

 

[astonmartin708]

Total U.S. debt will be $35T at the end of this year. Current debt service costs on obligations coming due is roughly 5%. We have a large amount of debt coming due in the next 12 months. Do the math

$35T x .5% = $1.75T in debt service. This is assuming we can keep debt service at 5% which is hardly a guarantee due to the extremely large amount of treasuries which have to be sold. The Federal Reserves is about the only buyer of U.S. Treasuries at this point. Just printed money. It’s a shell game.

At what point will our political leaders address this issue.? What point will the media cover this issue?. What point will the American people pay attention? Assume the answer to all the above is “when everything crashes and we can’t pay entitlements or we continue to print money and inflation hits 20-30% (maybe higher).

Maybe we should try increasing the deficit with more tax breaks to the wealthy (again), or impose some inflationary tarifs, or drop interest rates by executive fiat….

All Trump campaign promises.

 

[aTUfan]

maybe congress should quit spending money it doesn't have

 

[noble cane]

Maybe we should try increasing the deficit with more tax breaks to the wealthy (again), or impose some inflationary tarifs, or drop interest rates by executive fiat….

All Trump campaign promises.

You mean like billions in green energy tax breaks and subsidies to wealthy americans through the "inflation" reduction act, just imposed new higher tariffs on chinese steel and aluminum, or dropping interest rates on wealthy earners by cancelling student debt by executive fiat?..

 

[lawpoke87]

You mean like billions in green energy tax breaks and subsidies to wealthy americans through the "inflation" reduction act, just imposed new higher tariffs on chinese steel and aluminum, or dropping interest rates on wealthy earners by cancelling student debt by executive fiat?..

Aston is simply deflecting because he doesn’t like the question. Trump isn’t the President. We need leadership today. This issue will have grave consequences. Aston response sounds a lot like Biden. Ignore the crisis and change the subject to Trump is bad. Much like the Dems and Pubs, he provides zero solutions.

 

[aTUfan]

just tax the hell out of the rich. until they quit and just live off the gov like everyone else.

 

[astonmartin708]

Aston is simply deflecting because he doesn’t like the question. Trump isn’t the President. We need leadership today. This issue will have grave consequences. Aston response sounds a lot like Biden. Ignore the crisis and change the subject to Trump is bad. Much like the Dems and Pubs, he provides zero solutions.

My point was, the solution is not going to come from either party.

BTW it’s not my job to propose solutions for the national debt / deficit.

 

[lawpoke87]

My point was, the solution is not going to come from either party.

BTW it’s not my job to propose solutions for the national debt / deficit.

Your response annoyed me because it’s the same answer (or lack thereof) we get from those in DC. Deflect the question and change the subject to how bad the other guys are because we don’t want to deal with real problems.

You’re correct it’s not your job to come up with solutions. However, this is a message board. We discuss solutions to our current issues everyday. Using that excuse when you either don’t want to discuss solutions or have none is extremely weak considering the nature of this board and our years and years of discussing solutions to the problems we face.

 

[astonmartin708]

Your response annoyed me because it’s the same answer (or lack thereof) we get from those in DC. Deflect the question and change the subject to how bad the other guys are because we don’t want to deal with real problems.

You’re correct it’s not your job to come up with solutions. However, this is a message board. We discuss solutions to our current issues everyday. Using that excuse when you either don’t want to discuss solutions or have none is extremely weak considering the nature of this board and our years and years of discussing solutions to the problems we face.

I simply don’t think 10 people with little background in macro economics / complex global finance will be able to solve the entire government budget problem which touches hundreds of different departments and subdepartments.

 

[aTUfan]

I simply don’t think 10 people with little background in macro economics / complex finance will be able to solve the entire government budget problem which touches hundreds of different departments and subdepartments.

issue each congressman a budget credit card with a limit. when they reach their limit they can't vote for more spending.

 

[astonmartin708]

issue each congressman a budget credit card with a limit. when they reach their limit they can't vote for more spending.

This comment is akin to people who say “why don’t we just have a tax on wealth”?

 

[lawpoke87]

I simply don’t think 10 people with little background in macro economics / complex finance will be able to solve the entire government budget problem which touches hundreds of different departments and subdepartments.

So from here on out you’re going to refrain from discussing topics which you either cant solve due to lack of knowledge or sophistication. This should be interesting going forward.

 

[aTUfan]

This comment is akin to people who say “why don’t we just have a tax on wealth”?

no. this puts the responsibiliy on congress.

 

[astonmartin708]

no. this puts the responsibiliy on congress.

Sorry, what I meant to say was…. Stop suggesting dumb crap.

 

[astonmartin708]

So from here on out you’re going to refrain from discussing topics which you either cant solve due to lack of knowledge or sophistication. This should be interesting going forward.

You asked the question at what point will people wake up about the issue…. You just aren’t willing to accept the real answer. It is the same answer to the question “when will people realize that humanity wasn’t meant to have weapons powerful enough to destroy itself?”

Answer “after it’s already too late”

You’re preaching about an economic “Sword of Damocles” What I don’t understand is why this is your pet phobia when there are so many others you could subscribe to? Global Warming, Nuclear War, Plagues, swarms of locusts…. All are valid(ish)…. None will be solved by any of us.

 

[aTUfan]

Sorry, what I meant to say was…. Stop suggesting dumb crap.

why cant congress live within its means?

 

[lawpoke87]

You asked the question at what point will people wake up about the issue…. You just aren’t willing to accept the real answer. It is the same answer to the question “when will people realize that humanity wasn’t meant to have weapons powerful enough to destroy itself?”

Answer “after it’s already too late”

You’re preaching about an economic “Sword of Damocles” What I don’t understand is why this is your pet phobia when there are so many others you could subscribe to? Global Warming, Nuclear War, Plagues, swarms of locusts…. All are valid(ish)…. None will be solved by any of us.

Maybe because this issue is 100% solvable by the U.S. and the U.S. alone. The others you mentioned are not. Stark difference. Imagine if the financial cliff we’re approaching received 1/10th of the attention from the Admin as global warming. Hell…at this point I would consider the simple mention of it a victory. Where the hell is Yellen?

 

[noble cane]

Maybe because this issue is 100% solvable by the U.S. and the U.S. alone. The others you mentioned are not. Stark difference. Imagine if the financial cliff we’re approaching received 1/10th of the attention from the Admin as global warming. Hell…at this point I would consider the simple mention of it a victory. Where the hell is Yellen?

Sad thing is that 40% of the GDP is dependant on government spending...

 

[aTUfan]

is that military spending, foreign aid, social programs

 

[astonmartin708]

Maybe because this issue is 100% solvable by the U.S. and the U.S. alone. The others you mentioned are not. Stark difference. Imagine if the financial cliff we’re approaching received 1/10th of the attention from the Admin as global warming. Hell…at this point I would consider the simple mention of it a victory. Where the hell is Yellen?

I concede that we currently have more influence in our debt than other entities, but I do not necessarily agree that the problem is entirely within our control nor do I agree that I can assume the problem is definitively solvable. At least I would say that solving it might be so incredibly difficult that it’s functionally impossible for our inertially stagnant governmental system.

Other powerful countries have interests of their own and their pursuit of prosperity might come at the detriment of ours.

What if the only way to truly solve this might not be through austerity measures? Cutbacks are essentially the only proposals that are ever put forward when talking about this with conservatives. There is a real possibility that solving the problem might necessitate the US engaging in a much more globally aggressive economic and military policy. (Akin to what we’re seeing from Russia / China)

The discussion you and Huffy are continually having reminds me of grandparents telling their grandchildren that if they would only stop buying lattes and avocado toast they could have 2.5 kids and a 4 bedroom home next to the beach. That lifestyle is not out of reach because they’re having Avacado toast.

 

[cmullinsTU]

At what point will our political leaders address this issue.? What point will the media cover this issue?. What point will the American people pay attention? Assume the answer to all the above is “when everything crashes and we can’t pay entitlements or we continue to print money and inflation hits 20-30% (maybe higher).

Never. Political leaders will never address the issue. It is political career suicide to even bring it up.

Well, maybe they'll bring it up if the dollar isn't the global reserve currency. If/when that happens we will be in a world of hurt.

 

[noble cane]

Well, maybe they'll bring it up if the dollar isn't the global reserve currency. If/when that happens we will be in a world of hurt.

I believe that is their goal.

Many members of the Obama/Biden inner circle believe that American economic might is Imperial Colonialism at its worst.

 

[lawpoke87]

I

This is Biden’s Chief Economic Advisor. 90% of this board understands our financial system better than him. Unbelievable stuff. Take a listen

 

[astonmartin708]

Anyone care to recall what happened the last time someone actually decided to tackle the deficit?

In 93 Clinton and his economic advisers combined tax increases and spending cuts to put a dent in debt leftover from the Reagan / Bush spending sprees. 0 Republicans voted for the bill which relied on Gore’s tiebreaker in the Senate to pass. Then in the following midterms and general election cycles the Republicans in Congress used the gripes about tax hikes and the fact that the deficit reduction was had a delayed function (not recoverable until after Clinton’s first term) to skewer the congressional leadership and take back control of Congress… only to lower the Capital Gains tax (and government revenues) a few years later and install the Bush 2.0 tax cuts (spending) a few years after that.

Maybe it should be Republicans’ turn to raise taxes + revenues and cut entitlements. I’m sure it will turn out incredibly well for them. No landmines to step on whatsoever.

 

[lawpoke87]

Anyone care to recall what happened the last time someone actually decided to tackle the deficit?

In 93 Clinton and his economic advisers combined tax increases and spending cuts to put a dent in debt leftover from the Reagan / Bush spending sprees. 0 Republicans voted for the bill which relied on Gore’s tiebreaker in the Senate to pass. Then in the following midterms and general election cycles the Republicans in Congress used the gripes about tax hikes and the fact that the deficit reduction was had a delayed function (not recoverable until after Clinton’s first term) to skewer the congressional leadership and take back control of Congress… only to lower the Capital Gains tax (and government revenues) a few years later and install the Bush 2.0 tax cuts (spending) a few years after that.

Maybe it should be Republicans’ turn to raise taxes + revenues and cut entitlements. I’m sure it will turn out incredibly well for them. No landmines to step on whatsoever.

As you stated in your example, any significant action must be spearheaded by the President. Biden must know the dire consequences were in as far as debt service going forward (well…I’m sure he has no clue but someone in his inner circle does). Only crickets. He must start talking about this now. Time is not on our side.

 

[watu05]

Clinton left Dubya with a budget surplus and Bush's immediate reaction was a tax reduction to "give the surplus back to the voters". IOW a federal budget surplus as an actually bad and had to be corrected by lowering taxes.

Got a problem, lower taxes. Then complain about budget deficits. Wash, rinse, repeat.

 

[lawpoke87]

Clinton left Dubya with a budget surplus and Bush's immediate reaction was a tax reduction to "give the surplus back to the voters". IOW a federal budget surplus as an actually bad and had to be corrected by lowering taxes.

Got a problem, lower taxes. Then complain about budget deficits. Wash, rinse, repeat.

Stop. You know full well that surplus was created due to the tech bubble. Which promptly burst as Clinton was leaving office resulting in an economic crisis. I really liked Clinton btw. Would love to have that type of centrist President today. He did a lot of good things.

 

[astonmartin708]

Stop. You know full well that surplus was created due to the tech bubble. Which promptly burst as Clinton was leaving office resulting in an economic crisis. I really liked Clinton btw. Would love to have that type of centrist President today. He did a lot of good things.

I think many of the modifications Clinton made to the tax code as well as cuts made the surplus possible. Without those you wouldn’t have seen it. And the tech bubble likely would have been stifled by high interest rates (that was the entire reason Clinton went after the changes in the first place)

 

[astonmartin708]

As you stated in your example, any significant action must be spearheaded by the President. Biden must know the dire consequences were in as far as debt service going forward (well…I’m sure he has no clue but someone in his inner circle does). Only crickets. He must start talking about this now. Time is not on our side.

How would he get something like that passed? Remember, zero republicans voted for Clinton’s changes. And when the Democrats passed it by the skin of their teeth they paid for it in subsequent election cycles.

Why would they try that again just to be abused by an opposing party that hasn’t shown any degree of trustworthiness or willingness to compromise to this point?

Again…. Let a Republican Congress do their jobs…. And by that I don’t mean cutting taxes like they would inevitably propose.

 

[Gmoney4WW]

As you stated in your example, any significant action must be spearheaded by the President. Biden must know the dire consequences were in as far as debt service going forward (well…I’m sure he has no clue but someone in his inner circle does). Only crickets. He must start talking about this now. Time is not on our side.

I assume you will attack Trump for this if it has not been done by Biden, and Trump is reelected and not attending to it either. Because that is what I assume will happen.

Stop. You know full well that surplus was created due to the tech bubble. Which promptly burst as Clinton was leaving office resulting in an economic crisis. I really liked Clinton btw. Would love to have that type of centrist President today. He did a lot of good things.

I would take Clinton in a New York Minute(with policy success that he had then) over Biden & Trump. I'd take any president we've had since Reagan with the policy success they had over Trump & Biden. I believe Biden would have been a better president before Trump/before pressure he has received from the extreme left of his party. Neither one of them(Trump and Biden) have been strong enough leaders to take us through covid the way we needed to be. But Trump and his followers made that job much more difficult for anyone following Trump.

 

[lawpoke87]

I assume you will attack Trump for this if it has not been done by Biden, and Trump is reelected and not attending to it either. Because that is what I assume will happen.


I would take Clinton in a New York Minute(with policy success that he had then) over Biden & Trump. I'd take any president we've had since Reagan with the policy success they had over Trump & Biden. I believe Biden would have been a better president before Trump/before pressure he has received from the extreme left of his party. Neither one of them(Trump and Biden) have been strong enough leaders to take us through covid the way we needed to be. But Trump and his followers made that job much more difficult for anyone following Trump.

I will attack any President who does not address our debt crisis. Don’t care if it’s a Pub or Dem. This is beyond party of politics. This is our future.

I would take Clinton as well.

 

[lawpoke87]

I think many of the modifications Clinton made to the tax code as well as cuts made the surplus possible. Without those you wouldn’t have seen it. And the tech bubble likely would have been stifled by high interest rates (that was the entire reason Clinton went after the changes in the first place)

I don’t blame Clinton for the Tech bubble or resulting recession. Lots of overly bullish people pouring billions into new technologies causing valuations and expansion which weren’t supported by market fundamentals. Going by memory but wasn’t it Alan Greenspan who went on for months warning about the impending Tech crash. No one listened of course until the bottom fell out. The recession of course followed.

Spending cuts were largely the resulting peace dividend from the break up of the USSR under Reagan. The boogie man was now gone defense cuts were justified.

 

[HuffyCane]

I don’t blame Clinton for the Tech bubble or resulting recession. Lots of overly bullish people pouring billions into new technologies causing valuations and expansion which weren’t supported by market fundamentals. Going by memory but wasn’t it Alan Greenspan who went on for months warning about the impending Tech crash. No one listened of course until the bottom fell out. The recession of course followed.

Spending cuts were largely the resulting peace dividend from the break up of the USSR under Reagan. The boogie man was now gone defense cuts were justified.

It’s pretty simple really. With little to do with government.

The mid to late 1990s saw historically low energy prices with the greatest single market place innovation since the steam engine. Economic productivity and efficiency rose to unheard of levels while operating costs were at historic lows. The economic gains gave us unheard of tax receipts. Government had nothing or very little to with the success in the 1990s.

If you think Biden had nothing to do with this inflation, then you must believe that Clinton had nothing to do with the surplus.

 

[watu05]

I don’t blame Clinton for the Tech bubble or resulting recession. Lots of overly bullish people pouring billions into new technologies causing valuations and expansion which weren’t supported by market fundamentals. Going by memory but wasn’t it Alan Greenspan who went on for months warning about the impending Tech crash. No one listened of course until the bottom fell out. The recession of course followed.

Spending cuts were largely the resulting peace dividend from the break up of the USSR under Reagan. The boogie man was now gone defense cuts were justified.

No it was a chance to lower the national debt and reduce the deficit. The Bush tax cuts didn't stop the economic down turn. It was just the excuse used after the "return the money to the taxpayers" line. Do you think Trump would do anything thing to reduce the deficit? His 2T borrow from the Chinese already provided an answer.

 

[watu05]

It’s pretty simple really. With little to do with government.

The mid to late 1990s saw historically low energy prices with the greatest single market place innovation since the steam engine. Economic productivity and efficiency rose to unheard of levels while operating costs were at historic lows. The economic gains gave us unheard of tax receipts. Government had nothing or very little to with the success in the 1990s.

If you think Biden had nothing to do with this inflation, then you must believe that Clinton had nothing to do with the surplus.

Everyone has a story to support his personal beliefs. The one above is one. What is undeniable is that Bush saw a surplus and went very public to get rid of it. Multiple 'stories' about why, but he got rid of it. Trump couldn't wait to borrow from China to further cut taxes mostly for the wealthy. Cutting a country's revenues has the same result of cutting a company's revenues.

The social costs are high. For example, back when we were in college and feds funded public 80+% of college revenues and tuitiions paid 20%. Remember working your way through college? Today it's the reverse. How did students pay for the much higher tuition? Cheap intractable student debt. Who got the benefit? Boomers did through lower taxes and by shifting the burden to the next generation. Eventually those generators will get wise and don't ever think future generations will ever call us "the greatest".

 

[lawpoke87]

No it was a chance to lower the national debt and reduce the deficit. The Bush tax cuts didn't stop the economic down turn. It was just the excuse used after the "return the money to the taxpayers" line. Do you think Trump would do anything thing to reduce the deficit? His 2T borrow from the Chinese already provided an answer.

How can you say the tax cuts didn’t stop the economic downtown. GDP growth went from less than 1% in 2001 to 3.85% in 2004?

I would hope any competent President would see the current debt service costs as well as the projections and make reducing deficits and interest rates his #1 priority. Biden obviously won’t. Maybe Trump won’t either? Four more years of $2T annual deficits and debt service costs between 4-5 percent should just about end any hopes of digging our way out of this hole without major economic pain.

 

[lawpoke87]

Everyone has a story to support his personal beliefs. The one above is one. What is undeniable is that Bush saw a surplus and went very public to get rid of it. Multiple 'stories' about why, but he got rid of it. Trump couldn't wait to borrow from China to further cut taxes mostly for the wealthy. Cutting a country's revenues has the same result of cutting a company's revenues.

The social costs are high. For example, back when we were in college and feds funded public 80+% of college revenues and tuitiions paid 20%. Remember working your way through college? Today it's the reverse. How did students pay for the much higher tuition? Cheap intractable student debt. Who got the benefit? Boomers did through lower taxes and by shifting the burden to the next generation. Eventually those generators will get wise and don't ever think future generations will ever call us "the greatest".

Stop….there’s was no surplus when Bush took over in 2001 due to the economic crash he was handed. You know this or at least should with a basic understanding of economics. Greenspan was telling everyone in 2000 what was coming. No one listened (Clinton or Congress) because the money from the bubble was rolling in. Don’t really blame them btw. In politics you let the good times roll and let the next guy deal with the mess.

 

[Gmoney4WW]

Stop….there’s was no surplus when Bush took over in 2001 due to the economic crash he was handed. You know this or at least should with a basic understanding of economics. Greenspan was telling everyone in 2000 what was coming. No one listened (Clinton or Congress) because the money from the bubble was rolling in. Don’t really blame them btw. In politics you let the good times roll and let the next guy deal with the mess.

That's not what he was saying. He's saying that Bush turned around and took the extra money that Clinton used to pay down the debt, and returned it to the taxpayer. Thus the debt paydown that Clinton did got negated, and the debt rose like every year before.

 

[lawpoke87]

That's not what he was saying. He's saying that Bush turned around and took the extra money that Clinton used to pay down the debt, and returned it to the taxpayer. Thus the debt paydown that Clinton did got negated, and the debt rose like every year before.

There was no extra money by 2001. We were in the middle of an economic crisis due to the tech bubble bursting. Companies were failing. Tax receipts were falling. You guys are forgetting the economic dynamics which were at play come 2001 and immediately thereafter.

I’m not saying that Dubya cared a lick about the deficits. He didn’t. His sole priority was digging out of the tech bubble collapse and he care about deficit soending

 

[lawpoke87]

Here’s a very brief but accurate description of the rapid economic expansion spurred by the Tech sector and ultimate collapse of the bubble in 2000.

Goldman Sachs | Commemorates 150 Year History - The Late 1990s Dot-Com Bubble Implodes in 2000

www.goldmansachs.com