The U.S. government is set to borrow nearly $1 trillion this year | Hacker News Reader

The U.S. government is set to borrow nearly $1 trillion this year

washingtonpost.com

57 pointsenraged_camel55 comments

This article takes up Democratic party talking points by framing the government's massive borrowing jump from $519 to $955 billion as caused by the tax cuts. Yet the "blunt" CBO report the WaPo cites actually says just $136 billion in revenue loss is from the tax cut. So there's $300 billion in new borrowing that's simply from runaway spending. So for the entire $955 billion projected deficit next year, just 14% will be from the recent changes in tax law.

The 519 is a typo or something. The deficit last year was 666B:

https://www.marketwatch.com/story/us-ends-fiscal-2017-with-6...

So 955B is an increase of ~290B.. so roughly half of the increase is from the tax cut.

No, we're already in fiscal 2018 as the baseline, the trillion dollar projection is for 2019.

The article says 955B for this year 2018. 666B was for 2017.

My understanding of the tax cut deficit increase is ~$1.5tn over 10 years was the Republican's target - so ~150bn minus overhead for interest calculations each year for 10 years is probably what it'll average out to.

It's 31% of the "big jump from the $519 billion the federal government borrowed last year". That's not insignificant.

Correct. Ratchet-spending social entitlement programs are responsible for the structural deficit, now and into the future. Getting agreed on this mathematical fact will be the work of patriotic centrist Americans for the next twenty years.

I'm sure you mean "entitlement" in the legal sense, which social security, medicare are (i.e you are entitled to these) - not the pejorative that the word has become. I'm hopeful that "patriotic centrists" will agree with you and finally stand up to the corporate welfare system that is out of control in this country and contributing more to our deficit than social welfare ever has.

Yes, that is the sense in which I meant entitlement.

The title is not very useful; this quote gives some context: “It's the highest amount of borrowing in six years, and a big jump from the $519 billion the federal government borrowed last year.”

If the interest rate on this borrowed money is lower than inflation it makes perfect sense to borrow money as the money that will be used to pay the loan off in the future will be worth less and less.

The Republican motto: "fiscal conservatism, except when it's us in charge".

I'm pretty sure you're quoting the libertarians: "fiscal conservative, socially liberal"

At least that was their 2016 campaign. Honestly, kind supprised there are so few people supporting that stance, when literally your choices are spend like crazy on defense or spend like crazy on welfare.

I don't actually recall a time where the budget was better under Republicans. Often they will even blatently say "tax cuts" and / or "defense spending". I don't believe they claim it will be better either...

Because sex, drugs, and rock and roll is what sells.

Moderation does not.

You can engage people about polarising issues incredibly easily and more importantly, it takes seconds.

Engaging a population in thoughtful discussion about the merits of each side and arriving at a moderate stance is incredibly difficult and takes time.

Time our pocket super computers have taught us we don't have.

This is aggravated bu the fact that there are only 2 parties. Each is in the winner-takes-all game, where demonizing the opponent and polarizing as much as possible is the best strategy.

If there existed 10 parties, and coalition government were the norm, each party would have an incentive to take a moderate stance to pull an additional sliver of votes that could otherwise be had by another reasonably similar party.

In 2012, leagues of people DID support that stance, and Ron Paul was completely blackballed from media coverage and debates.

Hilariously, he was given the treatment that everyone bitched about Donald Trump receiving (even though he didn't, Trump's coverage was amazing, and constant, and will remain so).

What’s the point of government having a great budget if your own bottom line sucks?

Personal fiscal conservative. They're just putting that money in their own pockets.

And the pockets of their friends; probably some of their enemies as well, just for fun.

Yet their supporters cannot see the blatant hypocrisy.

They can see it, but they consider hypocrisy and corruption as just par for the course when it comes to government. Its the reason they are anti-government and want to "starve the beast". The democrats running people like hillary do nothing to dissuade them from this notion.

They also will put up with a lot to keep their white chrisitan pro-gun anti-abortion culture in control. But this is becoming less of an issue.

The democrats have a huge opportunity here to make their party inclusive of all the lower and middle class, abandon anti-gun and identity politics, and run candidates who are trustworthy. But the old guard democrats are still have a huge amount of power.

I’m not sure you can attribute that to some ‘old guard’ establishment wing of the party when perhaps the loudest proponents of the identity politics is the newer wave of Bernie supporters and coastal SJWs. Establishment democrats tend to be more flexible on the identity politics issues, but very conservative about preserving the old New Deal regime and resorting to industrial era pro-labor policies. There’s a strain of pragmatic centrists like Obama, but they tend to be not so great on civil liberties and hawkish on foreign policy.

I don’t see the Dem coalition being able to assemble a ‘best of’ from among its various competing visions that doesn’t get impeded by those differences.

To be fair, most Republicans think the tax bill will generate economic growth and revenue not captured by relatively static budget models. But there's no excuse on spending...there's actually little difference between GWB and Obama on spending outcomes.

They should ask Kansas how that worked out.

https://www.npr.org/2017/12/13/570387479/kansas-2012-tax-cut...

https://www.nytimes.com/2017/10/10/us/politics/kansas-tried-...

Planet Money actually interviewed Arthur Laffer of the Laffer Curve in their episode about Kansas' experiment with lowering taxes:

https://www.npr.org/sections/money/2017/01/11/509378842/epis...

Tax cuts may have not generated more revenue in Kansas, but there is definitely something to the theory that lowering taxes can generate more revenue. As the Laffer Curve predicts, maximum government revenue exists at a tax rate above 0% (no taxes) and below 100% (no reason to work). Determining that maximizing rate is the trick. If your tax rate is below the maximizing rate, then raising taxes would generate more revenue. But if your tax rate is above the maximizing rate, then lowering taxes would actually generate more revenue for the government.

If memory serves, that maximizing rate was somewhere around 50% under Laffer's initial model, which is why the first Reagan tax cut reduced the top income bracket from 70% to 50%.

Now we're at 37%, and I guarantee you that's still considered too high by the Ryan types.

"but there is definitely something to the theory that lowering taxes can generate more revenue"

There isn't. There is something to the theory that changing(!!) tax rates can generate more revenue. I haven't seen any evidence that we are on the side of the maximizing rate where lowering taxes is necessary.

Yes, but is there any evidence to suggest we are moving the right way by lowering taxes?

There is no single tax rate in the US. There are at least three different granularities of jurisdiction (federal, state, local) and many different types of taxation schemes (income taxes, property taxes, transaction/sales taxes, fees, etc) most of which have exclusions, deductions, etc. and all of which distort the effects of taxation.

The Laffer Curve doesn't account for the massive complexity of taxes in the USA nor does it account for the game theory of moving revenues and/or profits to different jurisdictions or transactions moving into the black market.

I don't think there is anything to the theory. The Laffer Curve works great in theory, in practice it never does. http://economistsview.typepad.com/economistsview/2012/06/lau...

"Not aware of any evidence in recent history where tax cuts actually raise revenue. Sorry, Laffer."

Obama added $9.3 trillion to the debt, more than any other president. That's an average of about 1.2 trillion a year.

On January 20, 2009, when he was sworn in, the debt was $10.626 trillion. On January 20, 2017, when he left, it was $19.947 trillion.

It’s quite convenient to present those numbers without context.

In the context of prior performance and international circumstances, Obama brought the deficit down from the end of the Bush era as a recession began to recover, but the first few years required clear action. Trump, meanwhile, is going to drastically increase the deficit during an economic boom.

It should be obvious that Obama’s deficits were strategically necessarily while Trump’s coming deficit makes no financial sense.

You do realize that most of the deficit is due to massive dip in tax receipts during the Great Recession followed by automatic increase in spending triggered by dramatic rise in unemployment rates. Deficit actually was reduced significantly till Obama’s last year. US economy has been growing over the last 6 years and there is no reason for the deficit to explode in the last 2 years. We should have been looking to reduce deficit during good times so that we can respond to the most vulnerable when going gets tough. We all know there is a recession in the horizon. Imagine how crippled US response will be to the next recession

That's extremely misleading. For one, that includes interest accrued on the already existing debt. For two, that doesn't take into account that when Obama became president we were in a major recession, and combating that was why the deficit ballooned the first few years of his presidency. We're not in a major recession anymore.

For three, the deficit (which is approximately the $1 trillion number being talked about here) for 2017 when Obama left was $666 billion. He averaged around a 1 trillion deficit [0]. The Republican's have increased it from $666 billion (And the even lower projected value) to the $1 trillion talked about here.

[0] https://www.usgovernmentspending.com/federal_deficit_chart.h...

(1) The president doesn't control "the purse", only Congress does (even when it delegates that power to The Executive).

(2) The economy and the federal government were already at all-time highs. Proportionately speaking[1]:

  * Reagan increased the debt by 186% in 8 years,
  * George HW Bush increased it by 54% in 4 years,
  * Clinton increased it 32% in 8 years,
  * George W Bush by 101% in 8 years, and
  * Obama by 68% in 7 years (article not updated to include his last year)

(3) Most federal spending is allocated towards non-discretionary expenses (Social Security and MediCare) and Obama can't any more than Trump can (which is to say they neither can nor will). The growth of health care costs has far outpaced inflation in the USA for 30+ years now

(4) The baby boomer generation began retiring during Obama's tenure, which no other president had to deal with

[1] https://www.thebalance.com/us-debt-by-president-by-dollar-an...

He inherited the Great Recession

What have you heard more of in the past year from the Republican party:

1. Tax Cuts.

2. Fiscal Conservatism.

The focus of the GOP has shifted from fiscal responsibility to "starve the beast"

Instead of replying point by point I now post this:

https://www.quora.com/I-think-that-President-Obama-raised-th...

It's 2018. Framing this as political (i.e., party v party) is naive. Both parties continue to bloat the budget. Different spin and rhetoric. Same ends.

In either case:

"We spend more on our military than the next eight nations combined."

Obama SOTU 2016

The rest is obvious.

I mean, the Republicans have been claiming to be "the party of fiscal responsibility". Lying may be common in politics, but are we really at the point we just give up and stop even commenting on it?

Also, while the Democrats may have still run a deficit, they were reducing it. It's not good, but to claim equivalence seems counter-productive. Claiming they "bloated" the budget when they cut the deficit (roughly) in half (not accounting for inflation) seems to be straight up misleading.

Not to even start with how that money is being spent/where it comes from (or not, as the case may be).

Right. War is Peace. Freedom is Slavery. They BOTH generate misinformation while the masses claw and beg for basic service provided at reasonable value (i.e., the taxes to waste and corruption ratio is reasonable).

Meanwhile, while everyone is sucked in the (Mad Magazine) spy v spy ruse the money bubbles to the top - regardless of which side is promising the otherwise.

Actions speak louder than words. Why anyone listens to, let alone trusts, a politician is beyond me.

That sure sounds like a rationalisation to not bother.

Sure, I don't dispute the current system has huge flaws. It is the system we live under, however, and trying to change that system doesn't require not participating in it.

There is an obvious least-bad. It may not be everything I want, but it goes from people I care about suffering seriously to not seeing as much progress as I'd like. I'll take that every time, while also pushing for more serious reform.

With current economic growth and expected growth from the tax cut as well as low rates, it only makes sense to borrow.

Also, 'borrowing' in this sense means selling lots of bonds with a very low face rate. People still gladly buy them...

Well if you look at the last 30-40 years. Republicans talk about improving economy, lowering taxes and small government the deficit balloons up. Democrats talk about increasing healthcare, other social services and increasing taxes the deficit comes down and the economy actually improves.

State borrowing is fine. It's where it's spent and what they chose to ignore which worries me.

Meanwhile, in india: http://www.bbc.co.uk/news/world-asia-india-42899402

India's GDP: "The Gross Domestic Product (GDP) in India was worth 2263.79 billion US dollars in 2016."[0]

America's GDP: "The Gross Domestic Product (GDP) in the United States was worth 18624.48 billion US dollars in 2016."[1]

[0]: https://tradingeconomics.com/india/gdp

[1]: https://tradingeconomics.com/united-states/gdp

Your system is massively inefficient.

In all seriousness, the problem with insisting on comparing the US economy and the economies of China and India is that they are at very different points in economic development. The US developed huge swaths of infrastructure post WWII, and that infrastructure is aging out and it clearly shows. India and China on the other have cheap and widely available labor to develop new infrastructure.

What happens when that labor wants better pay and safer working conditions? Things will naturally slow down, and it will be hard to maintain all the infrastructure that was built during growth years. The same applies to healthcare, yes it is egregiously expensive, and life expectancy is falling slightly. On the other hand, comparing the US health care system to India's is silly. Health insurance might have high costs, but the level of care you get is far better than what you get today in India. Ten years from now, that might be a different story.

As percentage of GDP, India is running a deficit more than twice as high as the US (6.6% vs 2.8% over the last ten years).

But those numbers are meaningless for proving or disproving "inefficiency". The US is obviously getting far better infrastructure/education/welfare system/research/military/etc.

> The US is obviously getting far better infrastructure/education/welfare system/research/military/etc.

Is it?

Research is on shaky ground:

http://www.sciencemag.org/news/2017/03/data-check-us-governm...

https://www.scientificamerican.com/article/dr-no-money/

https://www.theatlantic.com/science/archive/2017/03/trump-bu...

http://theconversation.com/men-get-most-of-the-research-fund...

https://www.vox.com/2016/7/14/12016710/science-challeges-res...

Welfare system is failing:

https://www.washingtonpost.com/news/wonk/wp/2014/09/29/our-i...

http://time.com/5090112/infant-mortality-rate-usa/

https://www.npr.org/2017/05/12/528098789/u-s-has-the-worst-r...