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Comment by wbl | Hacker News Reader

Higher taxes is not a default: it's what balancing the budget means

It is impossible to balance a budget with 130% debt to GDP. We crossed the event horizon, every country that has ever crossed this (save Japan which is doing horrible now) has defaulted through very high inflation or out of control deflation [1].

https://static.seekingalpha.com/uploads/sa_presentations/470...

Are you aware that debt is a cumulative metric, and GDP is an annual metric? If you want to compare apples-to-apples, our budget deficit (an annual metric, which measures the delta in debt) was $1.4 trillion in 2022, which is 5.5% of GDP.

It's not impossible to balance a budget with 130% debt to GDP.

If we did it we would be the first country in history to do so [1]

1. https://static.seekingalpha.com/uploads/sa_presentations/470...

We are a country of firsts! USA USA!

Do you have any source to this claim?

The letter that you linked doesn't cite any sources, and doesn't come from a reputable fund (based on a quick SEC search, Hirschmann Capital seems to only managing ~$20m AUM, meaning it's likely a one-man operation)

Not impossible, but it might as well be. Politically, I see it as virtually impossible for 'both sides' to compromise on higher taxes and lower spending. I wish we could do that, but it seems hopeless.

Beyond the "both sides" problem, no State's representation (House and Senate) has any incentive to tangibly reduce spending. Federal money will always be seen as something to maximize for your constituents because it is primarily funded by the rest of the country. Even if you managed to elect some severely stingy representatives, they can only really manage to reduce spending to their own districts. That void would be filled by greedier and less fiscally concerned representatives from other states. Politicians that unilaterally cut spending to their own constituency run the risk of losing the next election to a candidate who has no qualms with bringing in the pork.

Sure it is, especially with long-term (30+years debt) paid at under the rate of inflation. Plus, a lot of that "government debt" is also "government savings" (social security excess must buy t-bonds). The Treasury provides the extremely useful service of being a bank for entities with massive deposits.

It turns out that having a balanced budget is kind of dumb when you're the US government. If people are willing to essentially pay you to give you money (when rates - inflation is negative), you should take that deal.

The persistent debt-ceiling debates are really the only serious risk to the country.

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