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The US debt has the following consequences:

1. The US will be paying interest on it forever.

2. The US is chained to maintaining low interest rates forever no matter what unless it wants to bankrupt itself. The Fed is not so independent from the rest of the government that it can set policy to bankrupt the US.

3. This game can go on basically forever as long as the economy keeps growing faster than the debt. That will happen as long as every dollar in spending creates (one dollar times the interest rate) in recurring tax revenue. So, the government can spend... as long as it spends wisely.

If you want some financial science fiction, imagine a world where you can borrow money directly from the Fed at an interest rate that exactly balances your disk of defaulting. In that world, the USG can borrow at 0% interest because it structurally can't default. That's the world we're heading towards.

Why not take advantage of the dollar being the global reserve currency and just keep increasing the debt? Its not like the debt is in some other currency. Its in the same currency so all that the debtors want is more of the same.

Any good arguments on why this can't continue forever? (obviously other nations can't do this)

Losing reserve currency status happened to the Brits beginning in the 1930's and the upheaval it caused was masked in part by the greater hardships and sacrifices of WWII, and the assistance a wealthy (in terms of goods production) America provided GB. It didn't take much for the world to lose confidence in sterling... just the loss of a few colonies to independence & out of control spending. Sound familiar?

A new reserve currency need not be the Yuan or the Euro. There's ample cryptocurrency analogs with the transactional capacity to assume the dollar's reserve/transactional role.

Overconfidence in the dollar is what national security experts might term: "Strategic narcissism".

Why is the debt bad? Can you explain it without using the false analogy of citizen debt?

I'm not your economics teacher. Research it yourself. You can start here:

- The need to find buyer's for your country's debt at rates that don't greatly exacerbate the problem.

- The surprising frequency with which countries were forced to default on their debt & the implications for social order.

- How government debt impacts corporate & personal debt appetites & rates.

- What uncontrolled debt & spending does to your currency and the cost of necessary imports.

Why is the analogy of citizen debt false?

For one, people have different stages of their life. People, at some point, no longer earn income, and so, it makes sense to plan your debt within your lifecycle of income generation. While you may retire or die some day, there is no date at which the US government stops taxation. The whole idea of "paying back a loan" really only makes sense in the context of a borrower who has limited time to do so.

Secondly, when you borrow money, you borrow it from other people. Most US debt is in the form of treasuries issued to American people and businesses. The people offering the loans to the US government are the often same ones benefiting from it. It's less like "buying a pizza on a credit card" and more like "lending my wife $20 to pick up groceries for dinner".

Thirdly, the US government controls monetary policy. If you want rack up debt on your credit card, you have to pay the interest rate that the credit card company wants, and you have to pay it in the denominations they ask for. The US government controls the monetary supply and the interest rate at which they obtain debt.

And there are many more differences, like the fact that institutions trust storing their wealth in debt issued to global nuclear powers, more so than they trust issuing it to the average Joe on the street.

Because it tries to rationalize or equivocate government debt with household debt. They are not the same for a whole bunch of reasons.

But lets go with this equivocation for a moment. It ignores an incredibly significant part of the equation to the affordability of debt. It always ignores the fact that the US is worth in excess of $200+ Trillion dollars and that combining all debt (personal, government, business) and getting an accounting of the Net Worth of the United States comes in around $141+ Trillion.

That is, we have a debt equal to our income and assets many multiples our current debt and income levels. I have a mortgage that is a multiple my income, so the US is doing much better than myself and I am quickly ascending the Net Worth ladder despite this debt.

It also ignores the fact that this money --specifically money spent directly on the welfare of citizens-- is investment in said citizens in order to continue to grow the wealth and prosperity of the country as a whole and keep us competitive with the rest of the world.

It makes zero sense NOT to improve the lives of as many American citizens as possible in a global economy.

> At what point, if ever, do Americans acknowledge the horrific fiscal situation the Baby Boomer generation bequeathed to us and accept that painful & deep spending cuts must be made, instead of piling more spending atop expenditures this country cannot afford?

Thank you. Exactly this.

I am very fiscally conservative, but I have no problem with welfare in general. However, this country cannot afford it. Many other countries can, and I think that's great. We cannot. There is really no question here.

> I have no problem with welfare in general. However, this country cannot afford it. Many other countries can, and I think that's great. We cannot. There is really no question here.

There is absolutely a question here, and it is obvious.

Other countries raise more revenue (taxes) and pay for more things. That is "great", you say. The US could do the same.

Other countries spend less on other things (classic example is defense). The US could do the same.

The US can absolutely positively definitely afford welfare, and universal health care too.

If we prioritize these things the way other countries do.

The important question is: which countries get the best outcomes for their people through government spending? There are strong arguments that the US is not at the top of that list.

> Other countries raise more revenue (taxes) and pay for more things. That is "great", you say. The US could do the same.

Well sure, but we'd have to pay off our debt first. If you want to raise taxes to pay off debt, I'm actually more in support of that than raising taxes to pay welfare. So far, all tax raising plans to pay off welfare just continue to increase the debt (and it's not like the anti-welfare people end up decreasing it either). So really until then, I'm not in support of anything other than lowering the debt.

I'm not sure that raising taxes will help. The US federal government pulls in a larger percentage in taxes as percentage of GDP than ever before, and yet is still spending it all + some. This is not sustainable.

> The important question is: which countries get the best outcomes for their people through government spending?

No it's not. The important question is: which countries get the best outcomes, whether via government spending or not, and do so while not being in debt?

We agree on one point: the important question is which countries get the best outcomes, regardless of spend or funding.

But I'm unclear on the importance of paying down debt in this case. Will it lead to a better state of things, or is that expectation just a habit we have from thinking about household debt?

Govt debt is different, and US govt debt is even more different.

It is not strictly bad to carry debt at the national govt level. Especially when your debtholders are mostly citizens. People talk about China and other countries holding US debt, but the numbers are not significant.

So what is the right level of debt? That's a good question, but it doesn't seem to be terribly relevant right now (and literally no one knows the answer!). When your debtholders will no longer lend you money, then it becomes an issue. We are not there yet, regardless of what the number is.

Debt is not different. How can you honestly say this? German WWI debt is widely recognized behind many of the lead ups into WWII.

Debt owed to your neighbor is usually bad. You deprive them of resources, and the math is zero-sum.

Debt to your bank is usually OK. Everyone benefits from the transaction, at least by design.

Debt to your citizens is great! Your debt limit is a meaningful fraction of the sum of economic value of the nation. Your creditors are also the beneficiaries of your spending. The more you spend, the more you can borrow, because you create economic activity on behalf of your creditors, who then have more to lend.

Debt is absolutely very different when the debtors and creditors are the same people.

Debt to other nations (if you're the US) is also great! But that's a special circumstance.

> Debt to your citizens is great

Except it's not. Debt to citizens represents tax payments that are owed from all citizens to the subset of citizens owning debt.

The rich own a disproportionate amount of bonds. This is expected.

By taxing all people to pay interest to the rich you're just taking from the poor to give to the rich.

Especially considering that the next generation is made up of larger numbers of children of the poor rather than children of the rich, this is tantamount to stealing from the future of the already disadvantaged to give to the ready advantaged.

That is not correct. Something like the bottom 50%(?) of earners, including all of the truly poor, do not pay taxes at all, but they benefit from the spending done on their behalf -- in some cases through directed programs, and in other cases just like all citizens.

There is a stratum of taxpayers who do not benefit directly (i.e. loan repayments) from government debt because they do not hold bonds. And as you say, in the upper economic strata, bond holding is more common.

So the strata that are least-benefitted are somewhere in the middle to upper middle class (such as it is). But these people are mostly OK -- their needs are met, most of their wants are met, but they could optimize better. NBD.

AND: If those strata did optimize better (move some income/savings into govt bonds), then the govt could borrow more and everyone would be even happier except the folks who obsess over the number for political reasons (when political party "not-mine" is in office).

Of course there is a "donut hole" in the middle where the social benefits available (programs) are inadequate, and the economic benefits (bond holding) are unreachable.

But the proposed programs which are running into this wall of discussion are in many cases designed to address this gap. There are good arguments about how best (effectively, cost-effectively, etc) to address the gap, how to design the programs.

But the argument that "we can't afford it" is short, pithy, and easily-comprehended, but much too simplistic to be honest. "We don't want to" is more correct.