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First let me say that I've always found myself to be pretty knowledgeable in Politics and have always been a history buff.
I have observed this debate on America's Debt crisis for some time now. As you know it has really ramped up since the Tea Party Movement/Obama election.
I have a lot of Conservative/Republican friends I talk to, I watch primarily Fox News, I also see so much of this Debt Crisis talk in this forum.
Everyone is screaming the sky is falling, America is bankrupt, America is going to blow-up and we will turn into Greece (or insert any 3rd world country) because of Obama's spending.
I have really taken an honest objective look at this debt problem (and history of America's debt) and I am still trying to figure out what in the heck is all the fuss about?
For example I have researched and pulled up articles on exactly how bad the debt problem is. Every article I've read talks about how much we're in debt and also does the America is doomed rhetoric. But NO ONE explains exactly how it could or would happen.
Again I don't want to get into a partisan debate, I really want someone who feels that this problem will destroy America. Please Explain to me how!
In my obvious unaware point of view I'd like to make a few points on some of the main talking points
1) America's debt problem will cause higher taxes
How can this be true? When America had NO debt or very little, taxes were much higher in the last generation. Historically, taxes have not went up as America's debt rose. So why would the taxes magically increase because of America's debt all of a sudden?
The way I see it our taxes and America's debt have no relation to each other. 2) Our children and grandchildren will have to pay America's debt (through taxes)
This is sort of an extension of my first point on how taxes and the debt have nothing to do with each other. Because our children and grandchildren will be paying taxes REGARDLESS of America's debt. Everyone since taxes has been introduced have to pay taxes. So why am I supposed to care that my children's taxes will go to pay down the debt?
What different does it make if a % of their taxes go to the debt or if it goes to something else?
Its the same amount of money that they will be paying. Again why do I care where the money will be going, its still coming out of their checks! 3) America's Economy/Jobs will suffer as the debt rises. The U.S. Dollar will diminish. Inflation. Bread will cost $20 bucks a loaf.
This is one I REALLY do not get. HOW is this possible? I always look at how something could happen by looking at our history and what has/hasn't happened.
And historically we've have great economic times and bad economic times. And good/bad economic times (unemployment, GDP growth or loss, stock market) has never been caused or reflected by how much debt America is in?
Explain to me why in the heck would Wal-mart or Apple care about how much debt America is in when they are hiring or looking at their profit margins?
How can a free-market society be affected by how much Uncle Sam owes? I honestly don't get it! 4) America will go bankrupt, utter chaos in the streets!
Again I really do not understand how this could possibly happen. Uncle Sam gets its money from the taxpayer. So as long as everyone is paying taxes, how in the heck could America go completely broke? The U.S. gets nearly 3 trillion dollar a year in taxes.
Even if we owe 14 trillion or 30 trillion dollars, that money isn't due RIGHT NOW! We have payments, just like mortgage payments.
That's like saying that a person with a 5 million dollar home but they make 1 million dollars a year is broke! How? As long as they can afford the payments and they are still making 1 million bucks a year. How is this person broke?
I am really trying to understand. 5) China (insert name of another country) owns us!
How is this true? Yes foreign debt is relatively high. But the U.S. Government owes far more money (through Treasury bonds, etc.) to Americans/ American companies than we do to foreign countries! America's hold way more Government debt than China/Japan. So how does that translate into China owns us?
Please educate me on that.
Even if the WORSE possible scenario happen and America defaults on the debt to other nations. Whats going to happen? Why would this be Armageddon? They're going to go to war with us, what are they going to do? Nations throughout history have defaulted/not repaid back foreign debt, they are still alive.
I'm seriously trying to understand why would America be doomed if China decides to not loan us any more money? OR if we didn't pay them back?
Why would this be the end of our existence?
Again lets say the worse case scenario happens. Foreign countries no longer loans us money. What would we do? The way I see it we would HAVE to do what everyone is screaming for US to do now, which is CUT SPENDING. If for some reason the U.S. COULD only operate on it 3-4 trillion dollars in income. OK well cut spending. And we'd be fine. That's in the very worst case scenario the way I see it. That the U.S. Government would be force to Cut spending. But still thats FAR from utter destruction, Thats far from ARMAGEDDON!
Again I am not trying to be partisan here. I really would like to be informed on why this is the #1 problem in America right now. Fear tactics and rhetoric aside, please indicate or inform those of us who are not getting it.
**I will make this last point, in no way am I not saying paying down the debt is NOT good or smart. It is. But again I'm trying to honestly and objectively understand exactly how America will be destroyed by this**
1. With rising US debt, we must pay interest on those bonds. When the debt becomes quite high, the majority of tax revenues will be used to pay interest on the debt.
2. With most tax revenues used to pay US debt, there is no money for the military, social programs, or infrastructure.
3. With rising debt, the US must raise interest rates to attract more buyers of US debt. As our debt increases, our "credit rating" or national bond rating declines. It is analagous to the corporate bond interest rates that a debt ridden company must pay to secure credit. This can spiral into hyperinflation, as has occurred in other debt ridden nations in the past.
4. Currency- When there is alot of something, it loses value. This is why diamonds are expensive and sand is cheap. With more and more money "printed", our currency loses value relative to other currencies. This diminishes our purchasing power and the value of any assets denominated in US dollars (all US property).
If Obama is re-elected, it would seem as though default would be our only option, as hyperinflation and currency devaluation would destroy the nation. Default would-
1. ensure fiscal discipline- the US would not be able to easily borrow and would have to "live within our means".
2. Dismantle socialism. Without deficit spending, social programs and the social democracy would be eliminated.
Yep thats pretty scary. But still even at the estimate $800 billion of our budget is not even 25% of our income.
And as I said earlier IF that does happen, worse case scenario we'd just have to cut spending.
The government has also had the power to borrow against the credit of the united states as per the constitution. Difference is the money is usually backed by something of value other then the trust of the tax payer.
Before the federal reserve bank we had national banks, no banks, and the government was the creditor of the money supply. Its not so much the debit as it the money supply itself. To much of anything makes the value worthless and since we have printed 14 trillon of it in debit its value of the dollar against all other curreny and purchasing power is changed.
in 1913 we have more value in our money then we do now comparing the money supply to the actual gold and the dollars value.
If you're standing by the premise that "historically we've taken in high revenues when our debt was much lower....(during the Clinton era).....You're forgetting to mention ONE MAJOR component. The revenue was NOT used to control debt..it was SPENT on entitlement programs, military operations, etc. etc....and whatever our past and present Presidents and Congresses have voted for....Allowing the FED to print more money b/c the piggy bank is empty...makes things MUCH worse....it devalues our US Dollar throughout the entire world as well as here in America. It causes goods and services to escalate in price..causing either a double dip recession or hyper inflation....the S and P (view them as the World Credit Bureau)...just LOWERED our US Standing and gave America it's SECOND warning since 1941....when FDR was President..(how ironic)...Democrats LOVE to point out that Bill Clinton gave us a balanced budget....which is true..but let's look at 2 important facts....1. He worked with a Republican majority congress.....2. Although he raised taxes on America's wealthy....AND WHILE he did that..he ALSO reduced the Capital Gains Tax of 20 percent.....it's like handing someone a bill at 30 percent of their income...then mailing them a coupon for 20 percent off their bill.....Obama will not include "part 2" in his "tax the rich" scheme.....Obama forgets that the problem with socialism is eventually you run out of other people's money. FOR THE FIRST TIME IN OUR HISTORY....AMERICA IS REACHING THE POINT WHERE OUR DEBT IS NOW HIGHER THAN THE GDP....It isn't about "your children and your children's children will continue to pay taxes "like you did"....It's they will be starting their young lives PAYING the majority of their pay to the federal income tax...with NO flexibility b/c of the massive debt this government has been irresponsible.....Future generations are going to see a time of tax rates being like they were in the 20's and 30's in the 70-90 percent range.....Is that what you want for you kids?
SIMPLY PUT! AMERICA IS NOT USING ITS REVENUE TO PAY BILLS! IT HAS FOR YEARS, B/C OF OUR GOVERNMENT GONE ON WILD SPENDING SPREES AT THE AMERICAN PEOPLES EXPENSE!
If they keep increasing the debt, inflation will get as bad as it did in Germany when people had to use a wheelbarrow full of money to buy a loaf of bread. It has happened to a few countries and it is always a huuuge mess. Inevitably things will happen like people's life savings won't be able to keep up with the inflation and the whole system will break down. Since our currency isn't backed by anything, you can't trade it in if no one is willing to accept it. You could have a trillion dollars and it will be worthless, except as toilet paper.
First let me say that I've always found myself to be pretty knowledgeable in Politics and have always been a history buff.
I have observed this debate on America's Debt crisis for some time now. As you know it has really ramped up since the Tea Party Movement/Obama election.
I have a lot of Conservative/Republican friends I talk to, I watch primarily Fox News, I also see so much of this Debt Crisis talk in this forum.
Everyone is screaming the sky is falling, America is bankrupt, America is going to blow-up and we will turn into Greece (or insert any 3rd world country) because of Obama's spending.
I have really taken an honest objective look at this debt problem (and history of America's debt) and I am still trying to figure out what in the heck is all the fuss about?
For example I have researched and pulled up articles on exactly how bad the debt problem is. Every article I've read talks about how much we're in debt and also does the America is doomed rhetoric. But NO ONE explains exactly how it could or would happen.
Again I don't want to get into a partisan debate, I really want someone who feels that this problem will destroy America. Please Explain to me how!
In my obvious unaware point of view I'd like to make a few points on some of the main talking points
1) America's debt problem will cause higher taxes
How can this be true? When America had NO debt or very little, taxes were much higher in the last generation. Historically, taxes have not went up as America's debt rose. So why would the taxes magically increase because of America's debt all of a sudden?
The way I see it our taxes and America's debt have no relation to each other. 2) Our children and grandchildren will have to pay America's debt (through taxes)
This is sort of an extension of my first point on how taxes and the debt have nothing to do with each other. Because our children and grandchildren will be paying taxes REGARDLESS of America's debt. Everyone since taxes has been introduced have to pay taxes. So why am I supposed to care that my children's taxes will go to pay down the debt?
What different does it make if a % of their taxes go to the debt or if it goes to something else?
Its the same amount of money that they will be paying. Again why do I care where the money will be going, its still coming out of their checks! 3) America's Economy/Jobs will suffer as the debt rises. The U.S. Dollar will diminish. Inflation. Bread will cost $20 bucks a loaf.
This is one I REALLY do not get. HOW is this possible? I always look at how something could happen by looking at our history and what has/hasn't happened.
And historically we've have great economic times and bad economic times. And good/bad economic times (unemployment, GDP growth or loss, stock market) has never been caused or reflected by how much debt America is in?
Explain to me why in the heck would Wal-mart or Apple care about how much debt America is in when they are hiring or looking at their profit margins?
How can a free-market society be affected by how much Uncle Sam owes? I honestly don't get it! 4) America will go bankrupt, utter chaos in the streets!
Again I really do not understand how this could possibly happen. Uncle Sam gets its money from the taxpayer. So as long as everyone is paying taxes, how in the heck could America go completely broke? The U.S. gets nearly 3 trillion dollar a year in taxes.
Even if we owe 14 trillion or 30 trillion dollars, that money isn't due RIGHT NOW! We have payments, just like mortgage payments.
That's like saying that a person with a 5 million dollar home but they make 1 million dollars a year is broke! How? As long as they can afford the payments and they are still making 1 million bucks a year. How is this person broke?
I am really trying to understand. 5) China (insert name of another country) owns us!
How is this true? Yes foreign debt is relatively high. But the U.S. Government owes far more money (through Treasury bonds, etc.) to Americans/ American companies than we do to foreign countries! America's hold way more Government debt than China/Japan. So how does that translate into China owns us?
Please educate me on that.
Even if the WORSE possible scenario happen and America defaults on the debt to other nations. Whats going to happen? Why would this be Armageddon? They're going to go to war with us, what are they going to do? Nations throughout history have defaulted/not repaid back foreign debt, they are still alive.
I'm seriously trying to understand why would America be doomed if China decides to not loan us any more money? OR if we didn't pay them back?
Why would this be the end of our existence?
Again lets say the worse case scenario happens. Foreign countries no longer loans us money. What would we do? The way I see it we would HAVE to do what everyone is screaming for US to do now, which is CUT SPENDING. If for some reason the U.S. COULD only operate on it 3-4 trillion dollars in income. OK well cut spending. And we'd be fine. That's in the very worst case scenario the way I see it. That the U.S. Government would be force to Cut spending. But still thats FAR from utter destruction, Thats far from ARMAGEDDON!
Again I am not trying to be partisan here. I really would like to be informed on why this is the #1 problem in America right now. Fear tactics and rhetoric aside, please indicate or inform those of us who are not getting it.
**I will make this last point, in no way am I not saying paying down the debt is NOT good or smart. It is. But again I'm trying to honestly and objectively understand exactly how America will be destroyed by this**
i haven't read all the posts so i dont know if youve found your answer yet, but this is how the govt will go bankrupt if we do nothing. First, you must understand about 75 cents of our dollar goes to simply paying the interest on our debt, the rest goes to funding current govt programs. So, as our debt piles up the interest will only get larger while we still continue to not even make a dent in the prinicipal. Soon...or hopefully not if we do something, we will not be making enough money to even pay the interest on our bills, and we will have to say basicly... "we screwed up guys" and default on all our loans. Then when this happens foreign countries will not trust the safety of the dollar any longer and will pull out of it as the international currency, which means people will no longer have to sell us items in order to get dollars for them to buy things from other countries with. Our status as the international currency has for long meant that if we werent making how much we take in that we could simply make more money, but if people pulled out of our currency as the international currency...we wouldnt be able to buy anything because we dont produce as much as we spend, and therefore wouldnt be able to get enough of the new international currency to sustain ourselves. The grandchildren one, they wouldnt be paying high taxes to pay off our huge deficit, because if things continue we will default...and therefore not have any deficit...technicly. They would more be paying high taxes to try and maintain any power status that we would still have, and trying to rebuild our nation from the ashes of economic collapse.
Total Revenue: $2.469 trillion
Total Interest Payment: $200 billion
75% of 2.469 trillion = 1.852 trillion
0.2 trillion of 2.469 trillion != 1.852 trillion
If my math is wrong, someone please correct me.
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