the US government has to start paying for things again

The last time an administration engineered a budget surplus, voters soundly rejected a continuation of that regime in favor of an 8-year spending binge. A substantial number of voters are planning on voting this fall for the candidate whose economic policy has contributed the most to the current debt.

Generally, looking at the last 30 years or so, it is evident that voters do not care about this issue very much.

I love the lack of self awareness from this author. "My generation of reporters was right to encourage the government to go into debt, but now it's different". No it's not, the consequences of the bad decisions in ~2010 are just catching up to us now. I guarantee you that there are people who want the government to deficit spend today who will say the same sort of thing 20 years from now as they get older and wiser.

The end result of runaway debt will be one of:

1. the government repudiates the debt and the bonds become worthless (FDR did that partially with repudiating the gold bonds by forcibly replacing them with dollar bonds, and pocketing the difference in value).

2. simply print money to pay them off (aka Yellen's trillion dollar coin)

Of course, there would be major consequences from these banana republic measures.

I don't invest in T-bills because of these risks.

> There’s no magic number at which the debt load becomes a full-on crisis.

When the US loses its AAA borrowing status and countless funds are required to sell all US Bonds, you will see that statement is incorrect.

Characterizing the problem as "debt" is misleading. The real problem is the government printing money. What we call the "national debt" is just government printed money where whoever "has" it can only draw on a portion of it (the interest) until a certain date (the maturity date of the government bond). And "paying back" the "debt" just means moving the government printed money from one account (the "bond" account) to another (the "bank account" of whoever gets the interest or sells the bond). The actual problem has nothing to do with "not being able to pay back the debt"; the government will just print more dollars (or more precisely, just move more accounting entries from the "bond" account to "bank" accounts). The actual problem is how printing money skews the economy and transfers wealth to the financial system from everyone else.

> What’s growing is spending on Social Security, Medicare, and Medicaid. As you can see in the above chart, the CBO sees spending on “major health care programs” (including Medicare, Medicaid, and Obamacare subsidies) growing from 6.3 percent of GDP in 2024 to 9.8 percent of GDP in 2054; Social Security is set to grow from 5.2 percent of GDP in 2024 to 5.9 percent of GDP in 2054.

The US refuses to do many things that would save it money in the long run. Complete universal healthcare would save money and would enable more entrepreneurs as the US claims to love small business. Mitt Romney knows this and that is why Massachusetts has the best Medicaid coverage and why he wanted to take his Massachusetts plan to the federal level.

Hard to reduce deficits substantially without much bigger policy changes: https://en.wikipedia.org/wiki/Triffin_dilemma

That said, Medicare and other entitlements is where my mind went too as I was reading. Negotiating drug prices is a good step in this direction by the current administration.

https://www.usatoday.com/story/news/local/2024/08/16/10-pres...

>> A huge share of the US debt is held by the government itself, in vehicles like the trust funds of Social Security and Medicare. Still more was purchased by the Federal Reserve as part of its “quantitative easing” programs to fight the Great Recession and the Covid downturn.

>> Thus, it’s money that the federal government owes to itself. That makes it fairly unimportant, economically; it doesn’t actually limit the resources available to the government.

These are very common misunderstandings. The money borrowed from the trust funds are real debt that needs to be repaid. In particular when the boomers retire and the net flow of money is OUT of the funds rather than IN. Up until now, congress has happily spent that net inflow and now they owe it back which makes them hate social security. One politician was claiming its not "real" debt in some way and was corrected by someone at the Federal Reserve who insisted it's as real as any debt purchased by anyone else. Which brings us to the Fed - that's not the government borrowing from itself as the author says. The Fed might be OK with lending at lower rates than the treasury can get otherwise, but they aren't offering an infinite trough for congress to spend - only an emergency bandage.

The last few years have disproven this idea that we need to stop with debt spending. We just conducted a beautiful experiment: since 2020 the USA has had more deficit spending, more economic growth, and less inflation, than the EU, which has had less deficit spending, less growth, and more inflation.

A government without debt would be like a business without debt: obviously wasting good opportunities, instead of pursuing them aggressively.

But even that analogy is wrong, since a business has to make money to pay its debts, so a business does face some ultimate limit on how much debt it can take on. By contrast, the USA faces no such limit. We can always print as much money as we need to pay any debt. So long as we're willing to deal with the inflation, we can print as much money as we need.

But realistically, with birth rates falling, the government will have to engage in more and more stimulus spending as time goes by. We used to be able to rely on population growth to be the real engine of the economy, but we no longer have that. So to keep the economy going in the future, we will have to rely on immigration and deficit spending. And there, too, the EU offers an important counter-point: the USA has had a much easier time integrating immigrants, in part because of our deficit spending. By contrast, the EU is seeing how difficult it is to integrate immigrants in a climate of austerity. The EU is close to stalling, in that it needs immigrants to prop up economic growth but it is not printing enough money to put the immigrants to work -- a stall which could lead to a vicious downward cycle. Meanwhile the USA has pulled in millions of immigrants and also printed enough money to put them to work, resulting in strong economic growth.

Time magazine, March 1972, "Is the U.S. Going Broke?":

* https://content.time.com/time/covers/0,16641,19720313,00.htm...

* https://time.com/archive/6639432/money-empty-pockets-on-a-tr...

I worry that the whole US economy is bloated and fragile due to govt spending but I am not an economist.

When the govt spends $7 trillion it basically goes to various Americans for various work. It's a $7 trillion injection to the economy. There are also various leeches or other businesses/work that aren't culled naturally via competition. This all worries me.

This story is incredibly frustrating because it seems to throw a lot of numbers at things (which isn't a bad thing, it's just not super useful) as if that's going to change things politically. Debt is political and the fundamentals of government debt have not changed at all.

Government debt is a red herring that many fiscal conservatives wave to say we're spending too much. Unfortunately those same conservatives don't actually want "fiscal responsibility", they want to cut programs they don't agree with and continue handing out lucrative military contracts that we arguably don't need.

Government debt has always been about borrowing today to fund growth for tomorrow. However, that's not what we're actually doing at all. Much of our current debt is due to COVID stimulous, which was an incredibly exceptional event. Of course that was more to "keeping things going" than fund growth initiatives. That's not to say that debt was "bad" or that we shouldn't have done it, but that much of the debt we're taking on is not going to fund infrastructure, education, or health which are all things that have significant long term benefits to society.

Lastly, debt only matters in comparison to rates. If you're borrowing lower than growth of GDP, then that borrowing is generally considered a net positive. Artificially deflating rates in the late 2010s and the rapid increase in rates post-COVID is not going to do well for government debt because we can't shift our budgets quickly enough to adjust. Of course that also assumes a functioning congress, which we certainly don't have.

Since it is a political issue, it will be a football and a dog whistle. Cut programs for minorities from the right, and raise taxes on the rich from the left. While one party is likely to be more irresponsible with this than the other, it's still not going to go away because it's never supposed to. Government debt is all about the cost to borrow compared to growth. The challenge we're at is that the cost is no longer cheap and we haven't been truly focusing on growth as much as we should. Instead we've just had political distractions.