The 1% Solution to the National Debt

WhoWee

Let's focus on this JDoolin. If we propose a doable opportunity to the individuals and companies with the resources to provide a definitive solution - will the rest of society agree to small cutbacks (if necessary at that point) in order to keep the country solvent and provide the care promised to our seniors and disabled?

DrClapeyron

How about 'We the People' forgive the debt we owe to ourselves? It's so circular and makes no sense to punish ourselves for our own benefit (unless you are into that sort of thing - to each his own). Then that would leave the U.S. on hook for something like $6 trillion out of the $16 trillion. And it only ever becomes a serious problem if short-term holders (like China) decide to not buy back into the system.

Vanadium 50

So, if you were a retiree whose retirement savings are all in US Savings Bonds, you should be sent to the poorhouse? Who is punishing whom here?

JDoolin

I think if people agreed on a good and shared goal, they would be willing to make sacrifices to achieve that goal.

If your "we" refers to all of us working toward a shared goal, I think it would work.

On the other hand, if it is the goal of some distant group of "experts" deciding on that one number, or another number is the correct number for our national debt, or national deficit, that wouldn't be a shared goal, or a shared solution.

However, we could for example, describe our intended goal; for instance, the AIG bailout allowed our economy to continue to run, because if they hadn't been bailed out, it would have triggered a sell-sell-sell-sell-sell phenomenon, lowering everybody's wealth to zero. But right now, there are a lot of houses lying empty, deteriorating, because even though those houses were basically paid off by the government, they still have a cost that is too high for anybody to pay. There were people who were verbally assured they'd be given fixed rate mortgages, and then given variable rate mortgages instead. There are people who bought AAA-rated bonds with the assurance that they would get a long-term-yield, which are now worthless. There are a lot of little problems, and they don't have any clear-cut solutions.

What is our intended goal here? Who is owed money by the government? Is it those guys who were left holding the bag? The ones who have been evicted from their homes? The ones who put their retirement savings in AAA-rated, but now worthless bonds? I don't think so. Before we go paying off the debt, I'd like to find some kind of rubric to separate the crooks from the honest players.

If the shared goal was to reward hard work and honesty, and penalize crooks for just ripping people off, then I think there would be a strong political will behind that, and society would be willing to make some sacrifices to see that happen.

WhoWee

Keeping with the OP and adding large corporations - the 1% would be called upon (persons with ability to achieve a soution - voluntarily) and given an opportunity to pay off the National Debt in exchange for a permenant tax holiday. This would eliminate interest payments on the debt. As mentioned/inferred in a prior post, a portion of the debt is owed to SS - accordingly those funds would actually be held in trust moving forward.

I also like the idea of allowing all new immigrants to accept responsibility for their "fair share" (whatever that might be) of the debt and an agreement not to request any benefits for at least 20 years or until their share is paid.

The 99% not contributing cash to this bailout would be called upon to accept any cutbacks in federal spending required to achieve a balanced budget. It might also be possible (with the national Debt paid) to replace the current income tax system with a single flat tax.

The shared goal would be a financially sound (managed) US Government with a funded pension system.

dipole

You assume it's somehow the people's fault for the U.S. being in debt. We are taxed already, that is paying your fair share. The government can't do whatever it wants, and then try to make other people pay for it's mistakes.

Office_Shredder

If other people aren't going to pay for the government's mistakes, who is?

WhoWee

What assumptions and which people are you referring to - please clarify?

chiro

That is the best thing you can do: lead by example.

This is the one thing that a lot of people don't realize: you're goal is not to save the rest of the world or fix the whole system.

What tends to happen is that if people do lead by example as you pointed out then other people will take notice if they are so inclined. But by leading by example if you so choose to do something that is not easy, then you will no doubt have to bear that burden when you get to it but if you are true to your word and your actions, then undoubtedly people will notice.

I have heard a few different ideas of how to 'fix' the system from a variety of different people who have quite a variety of different focii and backgrounds.

One suggestion I heard for politics is the idea that a contract be introduced for not only political candidates but even for any kind of representative in government. The idea is that if you provide a promise or anything of the sort then you are entering into a legal contract that has certain obligations that are contractual in nature. This would mean that if this were to be the case then they would have a legal responsibility to the people and in the case that this responsibility were neglected then they would be responsible for such actions.

In connection with your answer, this is a way to offer accountability to the public. It is just a suggestion and like all suggestions or initial ideas it needs to be fleshed out and discussed before it would be made into something more viable but IMO it is a good idea none-the-less.

Also a lot of people don't realize that they don't have to do it all at once.

Things like choosing where to spend money have a huge impact.

We all buy cheap goods and there is plenty of incentives for us who don't have access to a printing press to do so. But the thing is, if you told people that they should buy the more expensive locally made brand that has no subsidies of any sort to support local businesses then I would be very interested to see how many people say "thanks for the information" as opposed to actually doing it.

The other thing is that thinking is hard: not many people want to do it if they can avoid it. It takes a lot of effort, it takes courage especially if its not popular and you are opening yourself up to all that comes with it including ridicule amongst other things. Also like you have mentioned, the effects of thinking can get you killed.

This ties in with my comments on personal responsibility: the underlying matter of it all is basically personal responsibility and it includes not only the effect of what you do, but also in acknowledging that you are personally responsible for the thinking that leads to those decisions.

Chances are that people will convince themselves that other people are right if a lot of them are right, if someone with authority says they are right, or if nobody else says they are right.

Like I said, thinking is hard and what's harder is having the courage to take action that is aligned with the result of thinking for yourself.

But you already have the right idea: you are taking responsibility for yourself and leading by example. This is the highest honor for any individual because not only will you hold your head up high, but you will send a message to everyone around you and you will give them courage in the form of a real tangible example.

This is what causes real change and I applaud you for it.

JDoolin

Do you mean, "can't" or "shouldn't?"

Is it the "people's fault" for the U.S. being in debt? Is it the "people's duty" to pay for the government's mistakes?

I think the people's main duties in regards to the government's mistakes are (1) to make sure that these mistakes don't happen again, and (2) to make sure that the people who caused the problem don't get rewarded, and (3) trying to put in place a government that tries to prevent mistakes, rather than let them happen.

From Griftopia by Matt Taibbi:

CaptFirePanda

The government got duped along the way as well. As much as there might be a common belief that politicians are all shysters, it obviously isn't true. I'm sure a few government pockets were fleeced along the way, but this was a case of a very large and well orchestrated ponzi scheme.

To expect some of these very same people to buy into this rather collective idea of erasing the debt is pretty optimistic, to say the least.

Pattonias

The reason that any government is corrupt is due to a tendency toward selfishness of its people over what would work for the greater good in the long run. Any time you take a hand-out, whether you know or not where it comes from, you are contributing to the problem as a whole. I don't think everyone feeling guilty or picking a small number of people to "blame" is going to help the problem. What we have to wrap our minds around is the fact that we will all have to pay for this, and we will all be upset about it.

I think it is irresponsible and plain stupid of our smartest and handsomest politicians to try throw blame when they can't even balance the budget right now.

WhoWee

This thread is intended to discuss solutions to a problem - not to place blame for the problem.

Pattonias

Isn't it though, picking the "1%" to pay off the debt is in essence placing blame on them. If we are looking for a true solution then why do we keep trying to find anyone but the entire population to pay off the debt?

WhoWee

IMO - if the solution is to focus tax increases on the 1% and continue with out of control spending - not even pass a budget for nearly 3 years now - I would agree. However, this thread discusses a solution that would reward the people willing to participate in a definitive solution to retire the National Debt with a permanent tax holiday - and would require a balanced budget moving forward. As noted, it might be possible to instll a flat tax in accordance.

JDoolin

Can you solve a "problem" without understanding what that problem is? I think its important to understand how the problem came about, which involves at least understanding HOW the problem came about.

There are going to be crooks on both sides of the issue; some crooks who want the national debt paid off immediately, because they stand to gain more by an immediate pay-out. Some crooks who want the debt to be paid out over a long period of time, because they stand to gain more if they are paid lots and lots of interest payments. But I think there are more of the former than the latter.

Think of it this way. If I had enough money to invest in a company, I would invest in it, because I believed they were going to make a profit. Not a short-term profit, but a long term profit. If I'm a good-guy, that's the way I think. It's a win-win sort of scenario, where I make money when they make money.

On the other hand, if I'm a bad-guy, I invest money in a company so that it will trick other people into investing in the company. I'm trying to create a "bubble" so that other people will think the company is worth something, then I can sell high, and leave the other people with a bunch of crappy investment.

Now, when I hear that the government has a debt, I think of the lenders as investors. Some of those investors are investing in good-faith, and they don't want their money back immediately, because they think, in the long-haul, the country will turn a profit, and they'll get back interest. Others of those investors are investing in bad-faith, believing the U.S. economy is a bubble that is about to pop, so they want to get back their money right away.

The long-term investors see the government debt as a good thing; not a "problem". The short-term investors see the government debt as money missing from their pockets, which is a "problem."

Vanadium 50

There are 300M people in the US, so 1% is 3M, not 30K. So it's $5M, not $500M. However, there are only about 3 million millionaires in the US, so the numbers still don't work out.

There is a pernicious meme going around that it is possible to have a high level of social spending and it can be accomplished entirely by taxing "other people". The numbers simply do not work out.