Death Knell: CBO Projects 2028 As Year Where Out Debt Will Pass The Value Of Our GDP

images-1The irresponsibility of our leaders has now given the country a fiscal terminal date: 2028.  That is the date that the Congressional Budget Office now calculates as the point where our debt will virtually equal the value of our gross domestic policy.  As countries like Greece have gone into a free fall with such reckless spending, both parties have put the United States on the same course for economic meltdown as politicians continue to avoid tough questions with higher spending — including yielding to the Trump Administration’s demand to left balanced budget limits.

The increasing budget deficit  is currently a crippling 78 percent of the economy and will reach almost 100 percent of gross domestic product by 2028.  By 2048, it will reach ,152 percent of GDP.  We have not been in this position since 1946 when World War II left us at 106 percent of the GDP. That was a World War.  This is just irresponsible spending.

So by 2048 we will be spending as much on just interest for our debt as we would be spending on Social Security.

For most people that is an alarming and catastrophic notion. However, for leading politicians of both parties, it is as relevant as the weather on Mars. It is not their problem.  Spending today is popular and an economic meltdown for our children is still little more than an abstraction.

 

 

127 thoughts on “Death Knell: CBO Projects 2028 As Year Where Out Debt Will Pass The Value Of Our GDP”

  1. i have a great idea. Let’s import another few million sick unruly and uneducated folks from third world countries that don’t speak English. They will go on Medicaid and increase the pressure to cut services to native borns. That will put pressure on racism which is probably the cause of budget over reach too. That will help a lot! Next thing expropriations from white men Zimbabwe style. Then everything will be good.

  2. Big government and high taxes are the way to ruin, not prosperity.

    What will happen to my child when he is older and the economy collapses?

    1. Karen: what statistics do you have that taxes are ‘high’??

      According to almost every statistic out there, taxes are actually at historic ‘lows’. When Reagan first took office the upper income bracket tax was about 70%. It’s now at 37%. And the majority of Americans don’t even make sufficient income to even pay Income Tax.

      It seems like your comments here are just stock talking points that Republicans have used for 40 years regardless of conditions. Whether we’re in recession or good times ‘big government’ and ‘high taxes’ are always the menace. It’s forever 1980 and Reagan is challenging Jimmy Carter and ‘big-spending liberals’.

      1. The ratio of tax receipts to domestic product was as follows at the close of the fiscal years named:

        1929: 9.5%
        1940: 13.9%
        1946: 18.9%
        1953: 21.2%
        1961: 20.8%
        1969: 22.4%
        1981: 20.7%
        1993: 19.2%
        2001: 20.4%
        2007: 20.5%
        2011: 18.8%
        2017: 19.9%

        I’d suggest devoting one’s attention to spending. The appropriate level of taxation is that which finances the spending. All of it, over time.

        1. In 1929 the U.S. was ‘not’ a superpower. Defense Spending back then was fairly minor by today’s standards. And Defense Spending was still fairly minor as late as 1940. On the eve of W.W. II, the U.S. Army, on paper, was smaller than most European powers.

          Interestingly 1969 becomes the high-point on this graph. And that more than likely represents the Vietnam War. But for comparison’s sake it would be interesting to see 1945. After W.W. II, the U.S. disarmed quite rapidly. Therefore 1946 doesn’t necessarily tell us what that wartime ratio would have been.

          1. Interestingly 1969 becomes the high-point on this graph. And that more than likely represents the Vietnam War.

            No, it doesn’t Peter. The ratio of military spending to domestic product declined almost without interruption from 1953 to 1978. It increased only from 1964 to 1966. The Viet Nam War was fought with a redeployment of conventional levels of allocation to the military.

            The U.S. did have a small military during the 1920s (though tremendous productive capacity exceeding that of any other metropole). The Cold War median allocation to the military was around 6.5% of domestic product. Tax collections for domestic purposes weren’t 8.5% of domestic product (concentrated in state and local government). They were around 14% of domestic product, and the subject of much more central direction.

            1. Oh, I get it. You’re one of those Libertarians who imagines the Coolidge era as being an ideal to shoot for. Over and out.

        2. Taxation does not finance federal spending.
          Spending finances taxation is closer to the truth.

    2. “Big government and high taxes are the way to ruin, not prosperity.”
      How do you explain Scandinavia? Big government, high taxes, very prosperous.

      1. Measured at purchasing power parity, Sweden, Denmark, and Iceland have a per capita product about 16% below that of the United States. Finland’s is 28% below that of the United States. Norway’s about the same as ours; however, Norway is sitting atop an unusual natural resources bonanza and oil and mineral exports account for 14% of it’s nominal gross domestic product as we speak. The most affluent countries in the OECD are Switzerland, Ireland, and the United States. Just to point out that the ratio of general government expenditure to domestic product in these three loci is 29% to 38%, v. the range of 42% to 57% in Scandinavia.

  3. When the hordes are starving, our over lords can and shall make up a religious reason to conquer some unwitting foreigners and steal their stuff.

    That’s the military’s true purpose. As long as we can feed the troops and fuel war machines, we’re good.

    1. That’s the military’s true purpose.

      You’d be hard put to find a single example from the last 400 years for your idiot thesis.

  4. WE KNEW LONG AGO THAT BABY BOOMERS WOULD START RETIRING IN 2011

    BABY BOOMERS WILL CONTINUE RETIRING UNTIL 2027

    During Campaign 2000, Al Gore proposed the creation of a so-called ‘lockbox’ to secure money for retiring Boomers. George W, however, saw no need to secure that funding. Instead Bush plunged ahead with tax cuts that favored the rich. Bush and the Republicans pushed those cuts even though opinion polls showed Americans didn’t consider tax cuts a big priority that year. Bush then cut taxes again in the run-up to our invasion of Iraq; becoming the first president in history to cut taxes ‘before’ a war. Within Bush’s first term, deficit spending had jumped considerably.

    The Republican plan to deal with those deficits was enabled by right-wing media. They would simply blame the deficits on Obama! Never mind that Obama inherited a free-falling economy. Never mind that the Boomers started retiring during Obama’s first term. Republicans cynically calculated that right-wing media could blame the widening debt on Black Obama and his ‘big-spending liberal programs’. Republicans, by contrast, were the party of ‘fiscal hawks’. They wanted to cut spending during the Great Recession because Herbert Hoover had done that so ‘successfully’ during the Great Depression.

    This brings us to Donald Trump and the massive tax cuts Republicans passed last fall. That tax cut was, without a doubt, the stupidest and worst-timed tax cut in history. The economy was already on its way to essential full employment. Yet Trump and the Republicans sensed a desperate need for stimulation. That need was the Koch Brothers saying, “Pass this tax cut or we’ll stop funding Republican candidates”. So bravely the Republicans added $1.5 trillion to the debt; providing a sugar rush to an already booming economy.

    This brings us to now, a moment when economists see recessionary indicators in economic data. Which makes perfect sense since the current expansion is now in it’s 9th year. Trump has bravely chosen this moment to start a Trade War with his mindless tariff threats. If indeed a recession unfolds, we have no leeway whatsoever for another stimulus; brilliant planning by Republicans! But we need not be discouraged. Republicans, assisted by right-wing media, will say our best course of action is to drastically cut non-defense spending. Never mind that our infrastructure is slipping to third world levels. Never mind that student debt is crippling the Millennials. Republicans will say the only way to save Social Security, Medicare and Medicaid is to privatize with vouchers while slashing non-defense spending across the board.

    1. What did your magic Kenyan and the DNC do from Jan 2008 through Jan 2010, while the DNC had a larger majority in Congress than the GOP does now? Did they pass any law to fix the infinite GOP errors of the past?

      Crickets…………………………………………………………

        1. Joseph, Democrats passed Obamacare which made modest cuts in the deficit. They also passed the Obama Stimulus which was actually a rescue package to the states. As you may recall at least 10 states were facing bankruptcy due to recessionary pressures on local budgets. Republicans would have allowed those states to go bankrupt, or drastically cut public services including schools, police and fire. Bankruptcies and draconian budget cuts have made the recession an actual depression.

          Republicans would have also allowed the auto industry to go bankrupt. It’s difficult to imagine how a bankrupt auto industry would have helped the recession. In short the Great Recession rather limited Obama’s ability to deal with exploding deficits since we were still fighting wars in two theaters. Nevertheless, Sequestration, the deal Obama made with John Boehner, held defense spending down.

          Joseph, did you think of that that ‘Crickets’ ending by yourself? My understanding was that ‘Crickets’ is a lame cliche primarily used by nerds trying to get cheeky. They see other nerds using it and think, “Gee, that looks clever. I can’t wait to use that”.

          1. Joseph, Democrats passed Obamacare which made modest cuts in the deficit.

            LMAO

    2. Peter, the smallest birth cohort in living memory was that of 1936. The largest bar one was that of 1957. The median retirement age is 63. The ‘baby boomers’ have been retiring for 18 years and only some stragglers will be left in the workforce after the next couple of years. Peri-retirement cohorts currently number about 3.75 million on average while the number of people past the median retirement age who die each year is currently running at about 2 million, so you’re still adding people (net) to the ranks of the retired. The thing is, that the size of death cohorts begins to increase around 2014 and the size of retirement cohorts begins to decline around 2021, so you’re about at the point where the raw difference between them is at its peak. The differential should fall from 1.75 million to about 0.65 million over the next 8 years. At that point, adding two months per cohort to the retirement age might be enough to restore balance.

      1. The oldest Boomers will start dying off by the time the youngest Boomers retire. So trends should eventually balance out. But there will certainly be some fiscal pressures between now and then.

  5. Reduce all government pensions, including the military. VA benefits should continue. Cut the government workforce by 75%.

    1. The federal workforce accounts for about 2.3% of the total employed population. About 40% are men in uniform. The military is an inherently federal function.

      Consider the Department of Housing and Urban Development. It’s among the most troublesome components of the government. Some of what it does are an unwarranted intrusion by the central government and some of what it does could be readily replaced with an increment added to federal cash transfers and tax credits. IIRC, its workforce is about 16,000. Excess is the federal workforce (in funciton, staffing, and compensation) is a problem, but it’s a contextually modest one.

      1. Some things are better left to governments to run and some to the private sector. The arguments against government run stuff seems to be incompetence and unnecessarily high administrative costs. This is sometimes the case. In the case of HUD, it was run incompetently some time ago, costing the taxpayer billions with little to no oversight. Congress told HUD to either fix it or funding would be cut off. HUD created a real estate division of inspection procedures to oversee the 40,000+/- properties receiving funds. It was found, almost immediately, that corruption and negligence was rampant. A system of inspection was developed that utilizes a minimum of administration with private sector inspectors bidding for the properties to be inspected. The protocol used to determine if the responsibilities of the property owners are being met ensures that funds do not go to non existent buildings or where they are not needed. It also ensures that properties are kept in good repair. Losses plummeted and the project has been a success. It’s not that government doesn’t work. It’s that government can work and sometimes it doesn’t. The issue at hand is how to make it work. In the case of HUD it was an amalgamation of the public and private sector. The inspectors are trained by the government and administered by the government, but they are of the private sector, bidding on the jobs. This keeps their costs down through competition.

        If one takes the health care insurance and associated industries in the US one will graphically see hundreds and hundreds of thousands of jobs in the private sector among the twelve hundred +/- parasitical companies that profit from the ‘tax payer’. Administrative costs in this parasitical private, for profit approach are five to seven times what they are in better run systems in other countries. Canada ranks around 14th in the world in quality of health care. The US ranks 24th. The average cost or per capita in Canada is half to a third of what it is in the US. The US ranks next to last as far as the efficiency of how the dollar is spent, or in other words, what you get for your money. The pharmaceutical industry spent 20-21% on advertising-the only country to advertise to couch potatoes-and less than 18% on R&D. Yet they respond to high costs with the the R&D cost argument. If advertising was to be illegal, as it is in the more advanced nations, our costs could drop 20% overnight. Think about the animated advertisements on TV late at night, promising well being and then ask yourself is this is not insult added on to financial injury.

        The downside of having the government administer the health insurance industry would be the loss of up to a million jobs, jobs subsidized by the consumer. Employers would not be able to pay lower wages with the argument of health care benefits. In the end it comes down to the consumer and what the market will bear. Government is not always the most efficient way to go but in some cases it is, as it represents or should represent the best interests of the people. The private sector will always represent the best interests of the few, and only the few. People have the right to make their way in a free enterprise system but in America’s free enterprise system we now have monopolies run by oligarchs that control government for the financial best interests of the top few percent, not the best interests of the people through competition. These are facts that are there to be seen if one takes the time to look.

        It is not a question of one or the other but of one and the other; the most appropriate system for the issue. Mindless ideology based on extreme positions and chaos, is the problem.

      2. But what about womyns in uniform! You sexist spastic Sir! When the budget runs dry, the “patriarchy” will be crushed and the Amazonian utopia will begin anew!

    2. “Cut the government workforce by 75%” Which workers would you RIF, and how would you decide?

        1. So, none of them are doing anything particularly important or critical? They can just be thrown out at random? How about at the Centers for Disease Control? We can get along without 75% of them?

      1. You want to substitute one of Kevin Drum’s cons for Paul’s?

  6. As long as the US is an oligarchy, this will be the case. Trump is the head oligarch. Until Trump, Presidents have come from outside the oligarchical structure, only beholden to the oligarchs as they pay for their elections, or pay to get them smeared. This is the system in America. America is the only developed Democracy that allows money to determine the outcome of elections, from the choice of candidates to who wins. Just as Howard Hughs donated substantially to both parties, not interested in which won, only that who ever won would be connected, today whether or not a Presidential candidate, or any candidate for that matter, is Republican or Democrat, they must represent the oligarchs first and the people second, to what ever degree the oligarchs will allow.

    This is the pivotal point concerning Trump. He is an oligarch. His history is that of extreme irresponsibility regarding investment-bankrupt six times, reneging on financial responsibilities-stiffed contractors and banks, base source of income from oligarchs-real estate based on properties only oligarchs can afford, and no understanding as to how a community works-only focus on his ego. The real problem is not Trump and the oligarchs but the dupes that actually believed and still believe that further enriching the top few percent will trickle down riches to them. History has proven this false.

    The fact of the matter is that, regardless of what level of wealth one is at, if one can make more money by investing in another country and not the US then one will invest in another country and not the US. The recipients of the now transparent focus of the President and the Republicans, not that the Democrats are any different, are the mega rich, whose first priority is their wealth over the best interests of the country. This has been graphically illustrated in the health care industry, coal industry, mining industry, and through the unravelling of the regulations designed to safeguard our nation for all.

    The US is the only country amongst its peers that is run completely by oligarchs. There will never be a country where the population is so informed so as to be able to intelligently vote in the best of the best. However, that is the direction to which our peer nations are pointed. America is pointed the other way. America is rich enough to do this. The question is for how long.

    Borrowing money based on the premise that the next big score will sort things out is not how a country in this ever integrating world must act. The tech revolution saved the US from its rapid industrial decline in the 70’s and 80’s. The next revolution that could repeat this bail out is the transfer of non renewable energy to renewable energy. This is something that doesn’t interest the oligarchs as it deals with causes and effects too far separated in time. At this point the US imports renewable energy products. With the tech revolution the US created and exported, bringing wealth to America. With the renewable energy revolution this creating of the technology and wealth is being done by countries such as Spain, Denmark, Germany, India, and China. Foreign owned utility companies are developing renewable energy projects in the US, importing foreign made wind turbines and solar cells, and the profits are leaving the country-the profits being what every utility bill produces. That is the work of oligarchs, not responsible government.

    The primary ingredient that allows oligarchs to run things is to focus the attention of the people on the extremes, painting the ideology of either side with the actions of the few. A fool of a college dean bans Tacos in the lunch hall and now all liberals are idiots. A racist move on the right tars and feathers all conservatives. My argument is illustrated on a daily basis by Trump and his tweets and many of the posts of this blog. This blog, like Trump seems to focus on the extremes. This is the mob being entertained by the emperor, perhaps not as it was in Ancient Rome, but using the same formula.

    When the US institutes the regulations on which other more successful democracies are founded, no private concentrated wealth in elections, education and health care not to be commodities with costs pegged to what the market will bear, and the proper separation between free enterprise and government, this country will get back on the track intended by its founding fathers. The separation of church and state has been primarily accomplished. The next move is the separation between oligarchs and the people. The oligarchs laugh all the way to the banks, the foreign banks.

  7. As I understand it, the Medicare situation, at least, could be fixed by lifting the ceiling on the Medicare earnings tax cap. And greatly helped by curbing drug prices – no hijacking of generic drug ownership, permitting drug imports from Canada, or even having Medicare directly negotiate drug prices.

    1. Actually dealing with chronic disease would go a long way, too, versus just “managing” expensive diseases like type II diabetes (not to mention other chronic diseases like autoimmune conditions, etc).

      “People with diagnosed diabetes incur average medical expenditures of $16,752 per year, of which about $9,601is attributed to diabetes. People with diagnosed diabetes, on average, have medical expenditures approximately 2.3 times higher than what expenditures would be in the absence of diabetes.”

      http://www.diabetes.org/advocacy/news-events/cost-of-diabetes.html

      By 2050, it is projected that 7% of the population will have diabetes if trends continue.

      1. If insurance benefits were eliminated for diabetes (as a pre-existing condition), why, just think how much medical expense would decline. The only downside to this is that many seniors have diabetes, and if they die off more quickly, it would probably decrease the Republican voter base.
        “Cynicism is the worldview that explains the most facts, with the least effort.”

        1. Jay S.,
          What kind of response is that? I am not disagreeing with you. I think reducing the need for said drugs (which often cause side effects requiring more drugs for those) is an important element towards a solution. That requires actual preventative care and a medical model that does more than treat symptoms with drugs.

    2. Jay S: I’m not sure I understand what you said. There is no cap on the earnings that are subject to the 1.45% Medicare tax. There is a cap for the 6.2% FICA tax.

    3. Don’t think so. A sustainable fix to Medicare would be two-fold: cohort-specific ages of eligibility to maintain the ratio of the retired population to the working population at a consistent level (by way of example 1956 cohort is eligible at 66.5, 1960 at 67, 1965 at 67.5 &c). and the addition of a dollar-value deductible adjusted each year to maintain total Medicare expenditure at a consistent ratio to gross output.

      1. “the addition of a dollar-value deductible adjusted each year to maintain total Medicare expenditure at a consistent ratio to gross output.” Effectively, a form of rationing.

        1. I have news for you, Jay. You can ration with prices, you can ration with queues, you can ration with coupons. You must always ration. It’s a consequence of appetites exceeding production, which is just the human condition.

          It is not administrative rationing. It does encourage people to set priorities in re visits to the doctor and medications by socializing only those costs which exceed a certain annual value.

  8. Hold on there this can’t be correct, why we are going to get FREE Healthcare for all (if there are enough veterinarians), FREE college education for all (to continue the 5th year of high school), FREE Housing for illegals (maybe you’ll get a house next to Madonna), FREE money and food, ABOLISH ICE and have OPEN BORDERS? How can we possibly run out of money or anything, ask any Dumocrat Leader.
    Under such leadership as Maxine Waters, Pelosi, Schumer, Ellison, Joe Crowley (Ooops can’t ask him anymore, just got whupped by a Socialist and she just loves all those FREE things).

    1. Despite Margaret Thatcher’s (in)famous quote, a government with its own sovereign currency and which sets internal interest rates cannot “run out of money.” No more than football refs can run out of points to award to touchdowns. Federal debt is fundamentally different from individual debt, business debt, or even state-level debt.

      1. Yea, I suppose we could default on debt, create more money and have inflation, borrow from the IMF or lets see what do you and I do when money is short Cut Back on Spending. No can’t do that how will the Socialist Dums get all those FREE things and why would anyone want to come here across the border.

        1. There is no need to default on any US debt. More money does not necessarily lead to inflation. There has been a massive increase in the money supply in recent years (aka “Quantitative Easing”) while interest rates have remained low. (Because the Federal Government largely determines interest rates)

          1. J-Then I guess you have a printing press at your house but in my home we cut back on spending when need be.

            1. The “printing press” analogy is flawed. Federal spending is fundamentally different from individual spending, or corporate spending, or state and local government spending. Unlike individuals, at the federal level the US cannot go bankrupt. And at the federal level, there is no requirement that the federal debt be repaid, ever, at any particular time. It is not true that “our grandchildren will have to pay for it.” This is a difficult notion for people to get their heads around.

    2. You can thank those deficit hawks of the GOP and Trump for their tax cut for the oligarchs.

      1. Absolutely!! Prior to that damn tax bill we had a balanced budget and very little debt. /sarc

        1. Bill Clinton had a balanced budget, Dubya and the Republicans blew that up with their tax cuts.

          1. And then after Dubya came Obama for 8 years. But hollywood seems to think it’s all because of the tax cut. I guess you do, too?

            1. From PolitiFact, Trump’s words:

              “”The people opposing us are the same people — and think of this — who’ve wasted $6 trillion on wars in the Middle East — we could have rebuilt our country twice — that have produced only more terrorism, more death, and more suffering – imagine if that money had been spent at home,” Trump said at a Oct. 26 rally in Charlotte, N.C.

              “”We’ve spent $6 trillion, lost thousands of lives,” Trump said. “You could say hundreds of thousands of lives, because look at the other side also.”

              “The United States has listed nearly 7,000 casualties from the wars in Iraq and Afghanistan. For this fact-check, however, we wanted to focus on Trump’s claim that the United States has spent $6 trillion on the wars.

              “Is that right?

              “What we found is that Trump confused what’s been spent, and what is projected to be spent. That said, he’s right to note the large cost of U.S. intervention in the Middle East.”

          2. Dubya felt that Clinton’s balanced budget was bad policy. How has that turned out?

          3. No. The ratio of public debt to domestic product only began to decline when the Democratic Party lost control of the committee architecture in Congress. Then Clinton had to negotiate with Drs. Gingrich and Armey as well as Messrs. Dole and Lott. That was something Clinton knew how to do that BO did not. And of the four men named, Gingrich and Armey actually had some political principles in their interiors and Dole at least had a personal bias contra public sector borrowing.

            Keep in mind that the ratio of federal borrowing to domestic product in fiscal year 2006-07 was 0.012. The gorge fest didn’t start until the Democratic Party had control of the committee architecture again. Because criminals.

            1. “The gorge fest didn’t start until the Democratic Party had control of the committee architecture again. Because criminals.”

              Rubbish. Plenty of “criminals” on both sides of the aisle.

  9. In 1704, Sir Isaac Newton predicted that the world would end around the year 2060. Consider all debt paid in full & all accounts settled!

      1. A 600 meter asteroid would be bad news, for sure, but not would end life on earth.

  10. Is there any particular area where we are glaringly out of budget?

    1. I think the real question is, “Are there many budgets that cost-effectively aid the country as a whole.” I’m sure there are many that do, and most likely many that do not. I leave social security out of the argument. It was a good idea, but as all government ideas, is doomed to failure due to actions of said government.

      1. I think he means within the budget, areas that have been allowed to go in excess of what they were allotted.

        Not that anyone cared that they were only allotted X amount. Full budgets haven’t been faithfully passed for awhile and Congress just raises the debt ceiling and only cuts the rate of increase (so why follow what budget has been passed), nor do they have to be balanced, as far as I know (which seems wrongheaded).

        1. Agree. Most states have their own laws that mandate a balanced budget. We would have to have a Constitutional Convention to pass a similar amendment, but I surely wish we would.
          I don’t think Congress operated under an actual budget during Obama’s entire 8 years. That’s totally dysfunctional and irresponsible, IMO.

          1. There is no compelling reason for a balanced budget at the federal level. Hoover’s response to the Wall Street crash was to keep the budget balanced. How did that turn out?

            Federal finance and debt are different from personal, business, and state-level debt. At a national level, being able to stimulate the economy during tough times is a very valuable capability.

            1. There is no compelling reason for a balanced budget at the federal level. Hoover’s response to the Wall Street crash was to keep the budget balanced. How did that turn out?

              Again, the President does not institute budgets by decree. Only Congress does that. Nominal federal spending was maintained during Hoover’s term of office. BEA reports it as follows during the fiscal years ending in…

              1929: $3.1 bn
              1930: $3.3 bn
              1931: $4.7 bn
              1932: $3.7 bn
              1933: $4.4 bn

              Keep in mind that during this period the GDP deflator declined by 25%. The real value of the 1933 appropriation was about $6.6 bn in 1929 currency units. Keep in mind also the decline in real production over those four years. Nominal gross domestic product declined by 45% during those years. The ratio of nominal federal expenditure to nominal GDP increased from 0.03 to 0.077. That’s a great deal lower than it is today, of course. Nominal federal borrowing was as follows:

              1929: $0.8 bn
              1930: $0
              1931: $2.3 bn
              1932: $1.6 bn
              1933: $1.2 bn

              As a ratio to nominal GDP that’s…

              1929: 0.0076
              1930: 0
              1931: -0.03
              1932: -0.027
              1933: -0.02

              In spite of the small size of the federal sector in that era, the ratio of federal borrowing was over a three year period registering values familiar today, in spite of the tax increase enacted in 1932. Here’s a suggestion: production levels aren’t that sensitive to Keynesian fiscal stimulus. The issue was monetary policy and general panic and uncertainty. The Roosevelt Administration instituted the following measures which addressed these problems:

              1. The Bank Holiday
              2. A devaluation of the currency and an end to private trade in gold and the enforceability of gold clauses
              3. The institution of deposit insurance
              4. The institution of HOLC to organize work-outs of delinquent and defaulted real-estate loans
              5. An end to securities underwriting and equity ownership by (the now insured) commercial banks.

              Growth in real production averaged nearly 10% per year from the spring of 1933 to the end of 1936, in spite of a satchel full of bad policies to go with the good.

              1. correction: nominal federal borrowing in FY 1929 was -$0.8. The federal government ran surpluses from 1922 to 1929, paying down the war debt.

            2. There is no compelling reason for a balanced budget at the federal level.

              There’s no compelling reason not to. We’ve decades of data which suggest that production levels are not that sensitive to public sector borrowing. The old school Keynesian who gave me my second lesson in macroeconomics was a votary of studies which suggested that a balanced budget would have doubled the severity of the 1981-82 recession. We have a passable idea that that’s not usually the case. In any case, we could have a policy of balancing the federal budget over the course of a business cycle, running modest deficits in recession years and small surpluses in good years. Between 1953 and 2008 we experienced no banking and financial crisis and we were never in a general mobilization or anything resembling it. The addition to the stock of nominal federal debt should have been nil.

  11. John Maynard Keynes himself put it this way “This system will work as logn as you can afford to pay the interest on the debt.” Couldn’t have said it better myself. One possible fix? Start a new land rush by selling off some of the governments 30% of the federally owned land.

    They don’t have much else worth anything….BUT then it must be applied to the debt not spent on something else. Which means the country cannot afford to put the progressive socialists in charge again for the foreseeable future and must get rid of all socialists and RINOs on hand as excess to need as well.

    A new phrase will come to have meaning… Fiscal Responsibility.

    Of course they could always start printing new US Dollars each worth ten of the old US Dollars like the French did or some such charlatan trickery. Or dump one administrations debt on the next administration by doing like Clinton did by moving part of his debt forward selling T Bills at high interest short term fire sale prices to increase money on hand. (and you really thought he balanced the budget?)

    The simple fix is lay off 30% of the federal payroll in one of these shutdowns that’s really a slowdown, don’t bring them back at all and voila theirs the new pool of future employees to handle the infrastructure rebuild which becomes an over 30 year project,…..

    1. “The simple fix is lay off 30% of the federal payroll in one of these shutdowns that’s really a slowdown, don’t bring them back at all and voila theirs the new pool of future employees to handle the infrastructure rebuild which becomes an over 30 year project,…..”

      So basically you’re asking to get rid of many dubious high-paying, publicly-funded positions, then have these same people who decry applying standing laws to the immigration process compete with said illegal immigrants and H1 visa holders for a job in the private sector that pays what they were making from public funding?

      1. Compensation for federal employees may be excessive. However, if I’m not mistaken, it amounts to about 12% of total federal expenditure. You can save a few bucks over time by bringing federal salaries closer to Earth but it’s only one tile in the mosaic.

    2. “Start a new land rush by selling off some of the governments 30% of the federally owned land.”
      Yeah, right. How much can I get for the Grand Canyon? Or Yosemite? Besides, once federal assets are sold off, they are gone and can’t be sold again.

      1. Yosemite and the grand canyon may have considerable value, But the vast majority of federal land has very little value. Every fly over or drive across Nevada? Idaho? Eastern Oregon? Yes the government owns considerable land but the value of sagebrush that gets less than 12 inches of rain a year is pretty meager. The BLM was created to manage land that nobody wanted. Forest land may have value but nothing close to the value of an urban lot.

        It is not federal land ownership that is the problem. It is not federal salaries that are the problem. I’ll even go out on a limb and say it is not welfare that is the problem. IMHO, we spend enormous amounts of money on our military and all things military related. Then we have to use this military to create mayhem all over the world.

        1. IMHO, we spend enormous amounts of money on our military and all things military related.

          Again, the ratio of military expenditure to gdp is 0.038. It’s about as low as it has been since 1939. The military is an inherently public function and an inherently federal function. Debt issues are debt issues. They finance every kind of federal expenditure, not just the military. Over the last 4 decades, the military share of federal expenditure has been between 20% and 30%.

      2. Federal park and preserve land accounts for less than 20% of federal landholdings. The vast bulk is timberland or grazing land. There are certain impediments to selling it you’d have to address, but following best practices you would auction it off. With regard to the grazing land, there are status tenures associated with it, so you’d have to contrive a scheme for indemnifying the current holders of federal grazing permits. With regard to the timberland, it might be advisable to pass constitutional amendments at the state level declaring enclosed forest exempt from property taxes, as well as allocating the old growth to the Park Service or Fish and Wildlife Service (there isn’t much old growth, btw). As for park and preserve land, a great deal could be deeded to state parks agencies if they’ll take it. You’ve got multi-state parks and trail systems, coastal parks and preserves, monuments which encapsulate events in national history, and veteran’s cemeteries. The rest could theoretically go to the states or the occasional nonprofit.

  12. Social Security and Medicare account for 42% of Federal expenditures at present.

    So, in 2028 it is projected our debt will exceed our GDP. And then:
    “Both Social Security and Medicare will experience cost growth substantially in excess of GDP growth through the mid-2030s due to rapid population aging caused by the large baby-boom generation entering retirement and lower-birth-rate generations entering employment.”

    https://www.ssa.gov/OACT/TRSUM/index.html

  13. And I hate typos in headlines. As one who has been guilty of this myself, I don’t judge, but request the posts be reviewed by someone else before being approved. For the big questions frequently discussed here, we should at least uphold civilization at this level…

    1. You just confirmed your noob status to the veterans here. Turley works about 20 hour days. He posts at 2 and 3am. He has addressed your concerns. He does not and shall not proof read. Take it or leave it, complain all you want, if desired bark at the moon about the grammar.

      I presume this is the world’s most read legal blog, not for its flawless grammar but rather for it’s thought provoking content.

      BTW, welcome!

  14. Republicans only worry about the debt when they can use it for slashing people oriented programs. They will even slash Social Security in order to lay for tax cuts for the rich and corporations. The FOP just gave billions to their donors and now they are bleating about the debt. It’s not that I don’t care but I’d like this to be a concern when tax cuts are on the agenda or when war is being discussed.

    1. Social Security and Medicare require adjustments to be rendered actuarially sound. It doesn’t matter how many lying animadversions you toss at Republican politicians, the demographic factors are what they are.

    2. The US spends 70+% of revenue on safety net programs. On the current trend it shall soon equal 100%. State now your desired target percentage or your complaint means absolutely nothing.

      Your comment about war is naïve and pathetic. While Bushie was POTUS, 90% of the DNC message comprised, “Illegal war monger Bush!” 90% of Geezis Soetoro Obama’s 2008 campaign comprised his iron clad promise to end the then-2 current (illegal) military excursions (Iraq and Afghanistan). Later, while POTUS, he looked straight into the camera and swore, “NO BOOTS ON THE GROUND IN SYRIA!” (Later, when the press confronted his spokesman, the spokesman looked straight into the camera and said the boots to which they referred “are not boots!” For Geezis’ first 2 solid years the DNC owned all levers of government with larger margin than the GOP has now in Congress. His first day in office Geezis could have ended those 2 lost illegal military excursions, and he chose no to.

      Did you miss that Geezis and the DNC lied through their teeth? That they now foment nuclear winter with NK and Russia for purely political gain and nothing else?

      GOP POTUS Eisenhauer, in his Farewell Address, coined the term “Military Industrial Complex” and warned of it’s inherent danger we now witness, not a liberal progressive.

      Get a grip.

  15. Cheap money leads to all sorts of perversions among humans. Non-stop US military action in generated crises, government cancer that continues to metasticize–feeding itself at the expense of the society it was set up to serve, and a population that can project its human failings as noble acts because it is convenient and the cost deferred. When the bill comes due, upheaval will ensue, and during the operation model replacement the population will have no choice but to retreat to proven values set up for scores of generations before the “live on credit” times. Trump will not be able to trim government enough in the remaining time, so it appears with the current crop of delusional political critters, we are on a set course. See end of Rome for clarification.

    1. That’s nice. It’s also fictional. The ratio of military spending to domestic product is 0.038. There have been only two fiscal years since 1939 where it was just a shade lower. At no time in the last 25-odd years has it exceeded the Cold War nadir. As for ‘cheap money’, the Federal Reserve’s discount rate’s, rates on reserves, and open market operations have been appropriate to circumstances. The rate of increase in the GDP deflator during this business cycle has been 1.6% per year. The last business cycle wherein it was lower than that was the 1958-61 cycle. The Federal Reserve, it should be noted, does not control fiscal policy. Neither does it purchase issues from the Treasury department. It buys in the secondary market and hasn’t engaged in any large-scale open-market purchases in nearly six years.

      1. I would argue that capital is too easy to acquire these days. It is amazing what lending institutions will let people borrow now. The economy is being supported by promises from people whose proven record of responsibility is severely lacking. Homes and autos come to mind. It’s amazing the debt stored in the auto sector alone. And now, there are various new financial instruments being sold that are basically bundled up debt to irresponsible parties.

  16. Which explains why the 1% promotes religion because it keeps the poor from murdering the rich.
    – Napoleon

    1. Napoleon’s troops mutinied and he got himself exiled and died alone and miserable after losing two decisive battles. Maybe his judgment was a little off.

      1. Nice. I was thinking the same thing myself. Not a great historical figure to draw and far-reaching conclusions from. The acts of the time, yes; him personally, ?????????

  17. OMG. I fear that Teaching Spastics to Dance is going to mop the floor with Turley today, then move on to have a banner-waving field day with the remainder of Turley’s kennel of blawg hounds. I can’t stand to watch. Somebody else make it stop. I’m outta here till tomorrow.

      1. Yes, but don’t gloss over the good news – she’s gone for the rest of the day!!!!

  18. The military industrial complex has a ravenous appetite.
    The 1% has an equally ravenous appetite for tax cuts.

    Our government is owned by both groups and their puppets in Congress are their waiters.

    1. Exactly. The Poor People’s March is just the beginning of an enormous backlash by the 99%.

      1. I am not up on this Poor People’s March, but I wonder if they offer any argument based on accountability instead of just need. Best to be a skeptic until proven otherwise. Kind of like being educated by children negating responsibility to attempt to educate adults on gun safety.

      2. There is no ‘blacklash’ nor will there be. Genuinely impecunious people have everyday life to attend to; very few have any time or energy for participating in sorosphere rent-a-crowd.

    2. The ratio of military spending to domestic product is 0.038. It’s quite near the post-1939 nadir. Unlike other species of public spending, it fluctuates up and down in response to external circumstances. Over the last 50 years, public allocations for medical care have gone in only one direction. Ditto higher education.

      1. Okay. So maybe I can stand to watch for little while. Out of curiosity, would you be willing to share with us your knowledge of exactly to whom our national debt is owed. Ballpark.

        1. About 11% is held by the Federal Reserve Banks, about 12% by the Social Security trust funds. The remaining 77% is held by ‘the public’. That can mean pension funds, mutual funds, commercial banks, securities firms, institutional endowments, individual households, and sovereign wealth funds. Roughly 4% are held by deomestically-chartered commercial banks. I’d have to scrounge around for the data on other parties.

          1. What percent is owed to foreign countries? It was my understanding that a portion of Treasuries was sold to other countries since the dollar is typically used in international transactions. Am I mistaken? I have limited knowledge in this arena.

            1. Not sure who would collate authoritative figures (Bank for International Settlements???). There’s an outfit called “SWFI” which publishes newsletters on sovereign wealth funds. They’ve tracked this in the past and contend from Treasury and Federal Reserve data that sovereign wealth funds held about 32% of outstanding Treasury issues as of November 2011. No clue how accurate that is.

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