News The 1% Solution to the National Debt

[WhoWee]

It doesn't have to. The problems can't be solved by one or the other. Both increased revenues and the elimination of wasteful spending has to happen. Doesn't it?

My proposal would pay off the debt and require a balanced budget - where did I go wrong?

 

[WhoWee]

There's something very twisted and liberal-left about suggesting that a government that borrowed an astronomical sum of money and wasted most of it should be absolved of the crime and then be sanctioned to steal the same sum from its productive class to repay the loan.

It's just par for the course- never placing blame where it belongs but in this case onto those you envy. And it's getting old.

Actually, the decision for the wealthy person would be to pay now and live forever tax free or face an uncertain future. If you consider much of the wealth was inherited - it might make sense?

 

[MarcoD]

My proposal would pay off the debt and require a balanced budget - where did I go wrong?

You went wrong in that it doesn't matter whether you pay of the taxes in one turn, or in twenty years. And the latter is better for your economy because of the described shock to the system.

 

[ThomasT]

My proposal would pay off the debt and require a balanced budget - where did I go wrong?

Other than that it's just silly and has no hope of ever being implemented? Nowhere I guess.

That's why I asked you if you were being sarcastic (ie., to make some point or other).

And of course there's the consideration that after we've paid off the debt and have a surplus (we've had surpluses before ... they didn't last long), and can no longer tax the top 1%, then what happens?

Not a good idea ... but just my opinion.

 

[WhoWee]

You went wrong in that it doesn't matter whether you pay of the taxes in one turn, or in twenty years. And the latter is better for your economy because of the described shock to the system.

There's a big difference in interest payments over 20 years.

 

[SixNein]

As the national debt in the US approaches $16,400,000,000,000 - we approach the 2012 election season - with the talk of fairness and 1% vs 99% in the air - I realized a solution is at hand when combining all of these ingredients.

The national debt of $16.4 Trillion divided by (approx) 35,000 people (the top 1%) approximates $469 million per person. Accordingly, why not extend a one time offer to these people to "pay their fair share"? Specifically, with a one time payment of $500 million (from personal funds) they would no longer be responsible for any future tax obligations.

The Government in turn would commit to a balanced budget moving forward. Does this sound fair?

There is really only two choices for getting our finances in order.
1. We can dramatically reduce spending and raise taxes.
2. We can try to grow our way out.

Both of these options has significant risks. As a business owner, you may one day look at your balance sheet and realize that your company is on an unsustainable path. You could cut your spending and raise prices; however, you will have the risk of running off many of your customers. So your business might be hooked up to life support for an extended period of time. On the other hand, you could take out a loan and use the money to improve your business. You might invest in a better product or machinery to increase production. But if you fail, your going to be in an even worse mess.

 

[JonDE]

There's a big difference in interest payments over 20 years.

The interest on the debt is not as significant as you would think. When you account for inflation it becomes much smaller. Also a good strong economy can easily outgrow the interest payments.
The problem is the deficit, not the debt. I know that seems backwards based on the numbers, but exponential growth is a very powerful force. It is kind of hard to imagine, but if you balanced the budget for the next 20 years, then debt-gdp ratio is going to be cut in half. There would be no real problem with the debt at that point

 

[MarcoD]

There's a big difference in interest payments over 20 years.

All debt always has an economic value 'now.' The twenty years are nicer to economies since it adds the possibility, a bit, to inflate your way out of debt.

There's no magic bullet. You can tax/work it off, or use inflation -a bit,- or default on public debt. That's it.

 

[WhoWee]

There is really only two choices for getting our finances in order.
1. We can dramatically reduce spending and raise taxes.
2. We can try to grow our way out.

Both of these options has significant risks. As a business owner, you may one day look at your balance sheet and realize that your company is on an unsustainable path. You could cut your spending and raise prices; however, you will have the risk of running off many of your customers. So your business might be hooked up to life support for an extended period of time. On the other hand, you could take out a loan and use the money to improve your business. You might invest in a better product or machinery to increase production. But if you fail, your going to be in an even worse mess.

As the government continues to borrow 40% of it's budget - what makes you think a small business will be able to borrow - especially if it's on an unsustainable path?

 

[WhoWee]

All debt always has an economic value 'now.' The twenty years are nicer to economies since it adds the possibility, a bit, to inflate your way out of debt.

There's no magic bullet. You can tax/work it off, or use inflation -a bit,- or default on public debt. That's it.

If you pay the debt now - you don't pay any interest payments in the future. Given rates are at historical lows - the future costs could be substantially higher.

 

[WhoWee]

The interest on the debt is not as significant as you would think. When you account for inflation it becomes much smaller. Also a good strong economy can easily outgrow the interest payments.
The problem is the deficit, not the debt. I know that seems backwards based on the numbers, but exponential growth is a very powerful force. It is kind of hard to imagine, but if you balanced the budget for the next 20 years, then debt-gdp ratio is going to be cut in half. There would be no real problem with the debt at that point

Try to think of the debt pay down deal for the 1% as an equity investment - to require corporate debt - their dividend/incentive will be no future taxation.

 

[chiro]

One thing that should be seriously considered are measures to stop the old ways of encouraging debt.

If you look at countries like for example China, you will find that large of parts (if not the whole) society is structured in a way that discourages debt and encourages savings.

If you want real examples, look at schemes relating to precious metals including gold. Look at the requirements for buying a house and getting a loan: its very very strict. Also for those who are interested take a look at the new PANAM exchange that is being planned to open if the reports are right: real gold in a real vault open to a wide customer base.

This is the kind of thing that needs to be talked about: dealing with the existing debt is of course a problem, but its more important IMO to get everyone to change how they act and this is going to be very very painful for everyone that is addicted to the debt-rollercoaster that many countries are in.

It has to happen across all levels big and small, corporate and non-corporate, employee and employer: literally every level.

A lot of people are making it out that if we 'cut the budget' or whatever that this is a solution: it's not.

Its about breaking some very bad habits. You can pull out all the figures, pull out all the charts talk about all these cuts and whatever, but that is not the problem: the problem is that not only "can" we do it, but we are encouraged to do it and if these two are gone, then things will change out of necessity.

 

[SixNein]

As the government continues to borrow 40% of it's budget - what makes you think a small business will be able to borrow - especially if it's on an unsustainable path?

I suppose it depends on how well the business is able to demonstrate a plan. At any rate, my point is the complexity of the issue.

We could break our federal debt problem into more categories:
1. The taxes collected do not cover government commitments to spending.
2. We have a wicked sick trade imbalance.
3. We have currency imbalances.

Each one of these issues have their own problems and risks.

 

[ParticleGrl]

Here is an idea on part with the original post- institute a program to euthanize people before they become eligible for medicare or social security. Use the resulting budget surplus to employ all the now out-of-work doctors doing scientific research.

 

[JonDE]

Try to think of the debt pay down deal for the 1% as an equity investment - to require corporate debt - their dividend/incentive will be no future taxation.

I wouldn't compare it as an investment as the return on an investment is good when its about 9% per year. No way are they going to get that kind of savings out of it. Or if they do then government reciepts are going to fall drastically and then we still have the same main problem, huge deficit.

 

[JonDE]

Here is an idea on part with the original post- institute a program to euthanize people before they become eligible for medicare or social security. Use the resulting budget surplus to employ all the now out-of-work doctors doing scientific research.

You are comparing one example where someone gives something and gets something in return, to killing people to save money. Its a very poor example.

 

[WhoWee]

Here is an idea on part with the original post- institute a program to euthanize people before they become eligible for medicare or social security. Use the resulting budget surplus to employ all the now out-of-work doctors doing scientific research.

I'm surprised you wouldn't support a plan of this type - the entire debt burden would be placed on persons with accumulated assets - and the debt payments would be eliminated.

 

[WhoWee]

I wouldn't compare it as an investment as the return on an investment is good when its about 9% per year. No way are they going to get that kind of savings out of it. Or if they do then government reciepts are going to fall drastically and then we still have the same main problem, huge deficit.

A return of $45 million per year might be possible for a few - especially if top rates are about to rise significantly - generally though, I agree.

 

[Pattonias]

I really hate that the idea of balancing the budget is so often rejected. I think it is the biggest slap in the face of common since of our day and age. Balanced budgets include planning for borrowing. They just require a plan to pay of the debt.

If we "balanced the budget", and implemented a constitutional amendment that required it remained balanced we would eventually get out of debt. Oh, we would also hate each other.

 

[ThinkToday]

Everyone above the poverty level should pay some income tax. Dump welfare completely and replace it with workfare. Replace the no-work check with a work check. Then perhaps they'll figure out if they have to work to get money, they may as well do something that will pay more. i.e. better paying work than workfare jobs (road trash pickup, scraping gum off sidewakes, anything no one else wants to do, etc.) and push them to a work ethic. Seriously, I'm we're going to send someone money, we should demand and require something in return. Stop nearly unlimited unemployment benefit extentions for all but the ones that can demonstrate SIGNIFICANT effort toward finding a job or getting retraining for a new career.

 

[WhoWee]

Everyone above the poverty level should pay some income tax. Dump welfare completely and replace it with workfare. Replace the no-work check with a work check. Then perhaps they'll figure out if they have to work to get money, they may as well do something that will pay more. i.e. better paying work than workfare jobs (road trash pickup, scraping gum off sidewakes, anything no one else wants to do, etc.) and push them to a work ethic. Seriously, I'm we're going to send someone money, we should demand and require something in return. Stop nearly unlimited unemployment benefit extentions for all but the ones that can demonstrate SIGNIFICANT effort toward finding a job or getting retraining for a new career.

That's a different conversation - do you think a plan to eliminate the national debt with the assistance of the 1% is possible?

 

[Pattonias]

I think anything is possible, but wealth redistribution doesn't solve the problem. The problem is a government which has gotten too used to spending the money of their constituents. They got so used to it that they started borrowing money to make it look like their constituents were getting even more for their money than they originally thought they would.

Today if the debt was wiped clean our current politicians would borrow the current amount of debt again and use it to send us into a golden age with them at the helm. 200 years from now when the debt collectors come calling they will look for someone to pay off the debt for them all over again.

The only way to fix the debt problem is to balance the budget and spend the next few centuries paying down the budget. Once we pay down the debt, then the government can look at incurring a little debt as an investment instead of a policy.

 

[WhoWee]

I think anything is possible, but wealth redistribution doesn't solve the problem. The problem is a government which has gotten too used to spending the money of their constituents. They got so used to it that they started borrowing money to make it look like their constituents were getting even more for their money than they originally thought they would.

Today if the debt was wiped clean our current politicians would borrow the current amount of debt again and use it to send us into a golden age with them at the helm. 200 years from now when the debt collectors come calling they will look for someone to pay off the debt for them all over again.

The only way to fix the debt problem is to balance the budget and spend the next few centuries paying down the budget. Once we pay down the debt, then the government can look at incurring a little debt as an investment instead of a policy.

That's why the OP stated "The Government in turn would commit to a balanced budget moving forward. Does this sound fair?"

 

[Alfi]

Everyone above the poverty level should pay some income tax. Dump welfare completely and replace it with workfare. Replace the no-work check with a work check. Then perhaps they'll figure out if they have to work to get money, they may as well do something that will pay more. i.e. better paying work than workfare jobs (road trash pickup, scraping gum off sidewakes, anything no one else wants to do, etc.) and push them to a work ethic. Seriously, I'm we're going to send someone money, we should demand and require something in return. Stop nearly unlimited unemployment benefit extentions for all but the ones that can demonstrate SIGNIFICANT effort toward finding a job or getting retraining for a new career.

I agree. BUT
The bold part I indicated, introduces the others.
Below the poverty level ... you know ... just a few people ... What are your thoughts to them?

Screw em? If they just died off ... we, the rest of us, would be better off?

 

[WhoWee]

Let's stay focused - please?

 

[MarcoD]

I think, these days, introducing workfare probably means heavy industrial complaints about 'unfair practices.' Maybe minimum wage is just that: workfare?

 

[JDoolin]

It should also be noted that if the government paid off its debts in full right now, then every person that was owed social security and certificates of deposit, government bonds, etc would now have to be paid back in full. I think it would be interesting to explore exactly who would be paid back, and exactly how much, if the top 1% did "pay off the debt."

I'm not sure how the OP got 1% of the population was 35,000. (EDIT: HE EXPLAINS IN POST #6) I come out closer to 3,000,000. 16.4x10¹²/3x10⁶=5.5 million each, but if the top 35,000 want to pay 500 million each, then more power to them.

If you cut it up the other way, with each of the 300,000,000 paying off $55,000 each, you should know that is about how much I make in three years, (living quite comfortably, I might add.) I don't think it is quite feasible to ask me and each of my friends to come up with $55,000 at this time. :)

 

[JDoolin]

I think it would be interesting to explore exactly who would be paid back, and exactly how much, if the top 1% did "pay off the debt."

This question just became even more interesting, as I read "Griftopia" by Matt Taibi... "Except for the right of an elected president to nominate the Fed chief, voters have no real say over what the Fed does. Citizens do not even get to see transcripts of FOMC meetings in real time; we're only now finding out what Greenspan was saying during the nineties. And despite repeated attempts to pry open the Fed's books, Congress as of this writing has been unsuccessful in doing so and still has no idea how much money the Fed has lent out at the discount window and to whom.

Is that part of the 14.6 trillion national debt, or is that something else? In the book, he says "As of this writing, America's international debt is somewhere in the region of $115 trillion, with our debt now well over 50 percent of GDP. This is debt on a level never before seen in a modern industrialized country."

In a sense, I don't care what they do, as long as I'm comfortable, my friends are comfortable, and the money-grubbers leave me alone. I don't need their stinking money. But I do need roads, internet, health-care, food, housing, etc. This stuff matters. I don't care if one guy has a piece of paper with "a billion dollars" written on it, or "a trillion dollars" so long as they leave me alone, and let me enjoy the things that I value.

 

[chiro]

In a sense, I don't care what they do, as long as I'm comfortable, my friends are comfortable, and the money-grubbers leave me alone. I don't need their stinking money. But I do need roads, internet, health-care, food, housing, etc. This stuff matters. I don't care if one guy has a piece of paper with "a billion dollars" written on it, or "a trillion dollars" so long as they leave me alone, and let me enjoy the things that I value.

But this is part of the problem.

The thing is that everyone is looking out for numero uno, and this kind of mentality has caused the very problems that we are trying to avoid.

The idea of 'as long as I'm fine' is obviously good to the individual or even small group of individuals until things 'are not fine'.

Twofish-quant wrote a very good post outlining the fact of how we 'take the system for granted' and that post amongst others gave me some real insight into how much we take for granted and what kind of responsibilities something like standard run of the mill banking is.

We have two-extremes and any set of solutions inbetween: either we all become actively responsible in some way of taking responsibility and making decisions for society as a whole or we just ask someone else to do it all for us.

The first situation requires that people take on more responsibility and deal with more than they 'need to'. It also requires that people take some kind of accountability for the collective and that they take on more than they would otherwise have to.

This kind of situation is good in small communities but its very hard for large complex societies.

The other option is basically to ask someone or some other group to manage the problems that we don't want to deal with and in terms of modern civilization, has been the choice either wanted or unwanted of the people.

This choice means that the people place some kind of 'trust' in the party and hope that they wish to do the job they were asked to do with the interests of the whole in mind. The key word here is the word 'trust'.

We have done the second option and not surprisingly have run into many problems.

If you want to have a system that makes all the important decisions with all the responsibility, then you have to accept that this is not only probable that bad things happen, but also plausible that they will happen.

 

[JDoolin]

But this is part of the problem.

The thing is that everyone is looking out for numero uno, and this kind of mentality has caused the very problems that we are trying to avoid.

The idea of 'as long as I'm fine' is obviously good to the individual or even small group of individuals until things 'are not fine'.

Twofish-quant wrote a very good post outlining the fact of how we 'take the system for granted' and that post amongst others gave me some real insight into how much we take for granted and what kind of responsibilities something like standard run of the mill banking is.

We have two-extremes and any set of solutions inbetween: either we all become actively responsible in some way of taking responsibility and making decisions for society as a whole or we just ask someone else to do it all for us.

The first situation requires that people take on more responsibility and deal with more than they 'need to'. It also requires that people take some kind of accountability for the collective and that they take on more than they would otherwise have to.

This kind of situation is good in small communities but its very hard for large complex societies.

The other option is basically to ask someone or some other group to manage the problems that we don't want to deal with and in terms of modern civilization, has been the choice either wanted or unwanted of the people.

This choice means that the people place some kind of 'trust' in the party and hope that they wish to do the job they were asked to do with the interests of the whole in mind. The key word here is the word 'trust'.

We have done the second option and not surprisingly have run into many problems.

If you want to have a system that makes all the important decisions with all the responsibility, then you have to accept that this is not only probable that bad things happen, but also plausible that they will happen.

I don't think the problem is that everyone is "looking out for numero uno." The problem is that except for a few very goal-oriented individuals, who are looking out for themselves--or more specifically, their own "bottom dollar" very few people have a vision for what goverenment should be.

They only have a good concept of what the governement shouldn't be, hence the electoral races are submarine races, with everyone picking whatever seems "least bad" instead of "best."

We need transparency and accountability, and local control, and shared national vision, and flexible government, and a lot of other stuff.

For most people, if I tell them, "we need transparency and accountability in our government," their response is "That will NEVER happen." They have already resolved themselves to eventual extinction due to other people's dishonesty and greed.

What people really lack is the vision of "government for the people, by the people" because so much of the evidence in our lifetimes says there's no such thing.