Specifically, in 2014 $271 billion were spent on interest payments to those holding US debt. That is $271 billion dollars that wouldn't need to be gathered through taxing and more loans if we had balanced budgets.
In case thinking about the regular effects of the national debt is not convincing, in the light of Halloween we will look at some scary situations : )
If you believe in Keynesian economics, it is nice to run some surpluses so that running a deficit (selling bonds so that the government can spend a lot one year) can be used to pull out of the occasional recession.
Senator Mike Lee has supported a balanced budget amendment to the Constitution. This would require our two-year budgets to have at least as much tax revenue as spending, allowing congressmen to bring deficit budgets to the court; two-thirds of both houses of congress would be needed to raise taxes or run a deficit. I believe that such a structural change is necessary. For some reason, it is hard for politicians to cut specific programs even though they would like government spending to decrease. Bills with higher spending than revenue, like the one passed in the Senate yesterday, would come to be unacceptable and a balanced budget would become the norm, we hope : )
Hey Rees! It's been a while. These are great thoughts. I'd like to suggest one point of view, that is that Greece and the USA are very incomparable because of one major factor, the Federal Reserve. Greece did not have the ability to monetize its debt through quantitative easing as the U.S. government has. Greece had no choice but to enforce austerity measures because there was no easy alternative. In the U.S. spending is virtually unlimited because it has its own central bank. Massive spending cuts will not happen because the american welfare mentality is too heavy to support spending cuts in any significant category, and the politicians have an easy alternative via debt financed in a large part by the federal reserve. Even if other credit sources were to dry up, the arrogance of the federal reserve system would still prevent needed austerity measures. The USA doesn't face the same level of risk as Greece because reality checked Greece's spending habits. in reality it's risk level is much higher because of the possibility of much higher debt levels being piled on top of a continually weaker currency. This is my opinion on the matter. Unfortunately politicians have a built in incentive to do the politically expedient rather than the moral thing. Their continued government salary relies on whether they are re-elected each term. And their re election depends on them keeping the welfare flood gates open. Hopefully enough would have the nobility to change their spending habits to turn things around.
ReplyDeleteI'm glad to hear that you want a balanced budget!!
Hey good to hear from you : ) That is very interesting. Senator Lee said something about just getting rid of the debt by allowing huge inflation, which hurts people in the form of higher prices and seems less predictable, so yeah I think that sounds like a worse option than spending cuts. Thanks for commenting!
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