The National Debt - Is it really a problem?

[FUNKMAN]

not looking to be Political here. I've heard some people 'play down' the significance of the ND and say things like 'why worry, we only owe the money to ourselves"

what is your opinion on it?



U.S. Hits Debt Limit After Senators Put Off Raising Ceiling

The federal government reached its $7.4 trillion debt ceiling yesterday, forcing Treasury Secretary John W. Snow to delay contributing to one of the federal employees' pension systems to avoid running out of cash and possibly defaulting on government debt.




http://story.news.yahoo.com/news?tmpl=story&cid=1802&e=5&u=/washpost/20041015/ts_washpost/a32985_2004oct14

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[HBox]

We don't owe the money just to ourselves. We owe a shitload of money to the Japanese and the Bank of China. It's a problem, but we can't begin to tackle it until we eliminate the deficit.

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[GodsFavoriteMan]

Here's where I get fuzzy. There is a difference between the National Debt and the Deficit.

I don't know what they are, and right now I'm too lazy to look it up. So if someone wouldn't mind helping out?

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[HBox]

The deficit has to do with the budget. The deficit is the amount of money in a given year that we have overspent. There is a deficit when we spend more than the government receives in taxes and other income. It's more complicated than this, but the deficit is about the amount of money we borrow in a given year.

The national debt is just that, how much money we owe from all the times we borrowed.

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This message was edited by HBox on 10-15-04 @ 1:03 PM

[42nd-delay]

It's not true that we owe it to ourselves. The debt is money we owe to those who have purchased government bonds. True, some of those people might be US citizens, but over half the money owed on these bonds is to foreign investors, much of it to the Chinese and Saudis.

The problem as I understand it, aside from the fact that this owed money (plus interest) is a drain on our budget and economy, is that foreign ownership of bonds gives them enormous leverage over our country. If we got into a disagreement with China, they could potentially sell off their bonds, which would be an economic disater for us. The value of our bonds would decline, as would the value of our dollar, and we'd have to jack up interest rates to make our bonds more attractive.

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"42nd-delay is the only person who's making sense." - Ron, 3-12-02

[mdr55]

We don't owe the money just to ourselves. We owe a shitload of money to the Japanese and the Bank of China.

Fuck that. Let's declare War on them to erase our debt.


The debt is money we owe to those who have purchased government bonds.....over half the money owed on these bonds is to foreign investors, much of it to the Chinese and Saudis.

Jesus Christ. Even the U.S. doesn't own America.

[Recyclerz]

Ah Funkman, you know how to bring me out of the lunchtime lurk. :
Is it really a problem? Yes. And if you are under 50 YO and don't plan on dying young, it is a big problem.

H-Box has it about right (the deficit is the amount the government has to borrow in any given fiscal year to pay its obligations; the national debt is the cumulative sum of all the deficits). Now let me describe the coming fiscal trainwreck and how Bush is standing on the accelerator (or whatever you call it that makes the train go faster.)

Social Security. Wage earners pay 7.(something) % of their salaries up to $86,000 into the system; this is matched by your employer so like 15% of your salary goes to the SS administration. The Gov't does two things with the money: 1. sends a check to everybody's grandma; and 2. buys special Treasury bonds that pay like 2% interest. Since, at the moment, more money is going into SS than coming out (building a fictional "Trustfund"), this masks the true size of the deficit for the rest of the government. However, in a few years, when the first wave of boomers start to retire, there will be no more "extra" money going in and the SS will start to cash in its bonds, we are going to see interests rates shoot up like crazy as the government has to borrow more money, bringing on a permanent half of a recession in our economy. How Bush is making this worse is, with the big tax cuts, the Feds can no longer pay down the national debt with the surpluses that had been envisioned. By slowly paying down the debt with non-SS money, the govt. had a lot more options to keep the old people happy while not raising payroll taxes to a ridiculous level for the smaller number of working people paying into the system. Now it is just taking on tons of new debt at just about the time that all this old debt is about to come due. Smart.

Bush is correct when he says "It isn't the government's $; it's your money." But it is equally true that it's not the government's debt it's yours (and your children's). And since W, Cheney and the ruling posse will be getting to the far end of their expected lifetimes just about the time this becomes a crisis, their concern is somewhat limited. If you expect to live longer than 10-15 more years yours shouldn't be. End of lecture.


PS 42nd also raises a good point about having to stay on China's good side. Does anybody remember the Spring of 2001 when some dopey Chinese pilot shot down one of our spy planes? If you do, you'll also remember how we had to apologize for getting in the way of that schmuck's missiles or bullets before we could get our crew back and I think China kept the plane. I'm sure one of the reasons we played the be-y-otch was to not get them riled so they would stop buying our debt. Imagine how much salad we'll have to toss if they decide they want Taiwan back - NOW!



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This message was edited by Recyclerz on 10-15-04 @ 3:00 PM

[FUNKMAN]

PS 42nd also raises a good point about having to stay on China's good side.


Not sure if it's just me but it seems like at least 50% of items i buy 'other' than food are Made In China... Alot of it have been items like patio furniture. I always thought this had to have some reason behind it and in my simple view was "we owe them for something"...

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