U.S. Debt Ceiling. 31.4 Trillion!

[SAJ-99]

The amazing thing to me is in 2021 we collected $4 trillion for the US Treasury but spent $6.8 trillion. How can we as a society have a real conversation about what services we want or expect from the government when we start with spending that is so unsustainable?

Already had the conversation. It’s the Boomers. I’m not blaming them, but it’s them. We have seen this coming for years. They are living longer, healthier lives (with the assistance of medical advancements) than was ever anticipated. I guess we can blame some government actuaries in the 1950’s and 60’s.

Boomers are about 20% of US population.
They hold over 50% of the household wealth.
They accounted for 33% of the 2022 US government spending (SS and Medicare).

 

[SAJ-99]

Better yet, maybe more reasonable Q that may answer my Q w/in your quote, raising the debt "ceiling":
Is this akin to having the ungodly power of raising our own personal credit card *limit?


*Edit added: To max out again?

The debt ceiling is the dumbest thing in politics. It just creates artificial deadlines to argue over stuff again. They should be working on real spending and revenue solutions in the budgets.

Government debt is not like personal debt. And it increasing is not a problem if the income (GDP) grows faster than the debt. That is the “unsustainable path” they talk about. But we are a mature economy. Getting to that necessary level of growth is hard, and getting harder.

 

[Sytes]

The debt ceiling is the dumbest thing in politics. It just creates artificial deadlines to argue over stuff again. They should be working on real spending and revenue solutions in the budgets.

Government debt is not like personal debt. And it increasing is not a problem if the income (GDP) grows faster than the debt. That is the “unsustainable path” they talk about. But we are a mature economy. Getting to that necessary level of growth is hard, and getting harder.

Thanks. So, when discussing "ceiling" and "default", these two do not correlate?

 

[Bob-WY]

If the USA owns part of the debt does that mean we owe ourselves? If so can't we forgive that? Or is it that private entities are owed by the government?

 

[SAJ-99]

Thanks. So, when discussing "ceiling" and "default", these two do not correlate?

No, the do. The ceiling is the statutory limit in debt. I read we hit that limit in January, but the government gets tax receipts and can move some stuff around to keep paying bills. Default is when those accounting tricks aren’t enough to pay the bills. Normally they would just issue debt on the Monday auction, but if they are at the limit they cant. So default.

I own a tbill that expires on 5/30. I laugh that it may be the payment they can’t make, or the last one they can. Both funny and sad.

 

[SAJ-99]

If the USA owns part of the debt does that mean we owe ourselves? If so can't we forgive that? Or is it that private entities are owed by the government?

Forgive? No. Social security holds nothing but treasuries. Those income payments to people are made from the cash generated by those securities. We owe those receiving SS payments. We can’t really default on ourselves in that case. The Federal Reserve’s holdings? Maybe? I mean, they created money out of thin air to buy the securities. Do they care if they take a loss? That is super complicated and very much uncharted waters.

 

[Deleted member 28227]

That is super complicated and very much uncharted waters.

What happens in 20 years when all the boomers (globally) are gone?

What I'm getting at is take Japan, huge retiree population so as a population they own a ton of bonds (not just US) what happens if their kids sell them... like what if in general there is a huge shift away from bonds, could that also crash things?

Also the weird deal with how small Gen Alpha and Beta are + Gen Z and how that's going to effect social security.

 

[406dn]

Better yet, maybe more reasonable Q that may answer my Q w/in your quote, raising the debt "ceiling":
Is this akin to having the ungodly power of raising our own personal credit card *limit?


*Edit added: To max out again?

No, it is not akin...yet anyway. Your ability to more credit is limited when banks will not extend more of it to you. Also, credit cards carry a pretty high interest rate, since the debt is not secured.

So long as Uncle Sam's debt offerings have eager buyers, they have not hit the limit of their line of credit. That debt is secured, I guess, by the full faith and credit of the country. If we prove through our actions that the debt carries risk of not getting repaid, there will be many changes in the assumptions presently held.

 

[Blue Steel]

Treasury Secretary Janet Yellen warned lawmakers Monday that the federal government could run short of money to pay its bills as early as June 1 unless the debt ceiling is raised soon.

Yellen acknowledged the date is subject to change and could be weeks later than projected, given that forecasting government cash flows is difficult. But based on April tax receipts and current spending levels, she predicted the government could run short of cash by early June.

Also saw an article where she acknowledged that the exec branch invoking the 14th amendment could create a constitutional crisis

 

[SAJ-99]

What happens in 20 years when all the boomers (globally) are gone?

What I'm getting at is take Japan, huge retiree population so as a population they own a ton of bonds (not just US) what happens if their kids sell them... like what if in general there is a huge shift away from bonds, could that also crash things?

Also the weird deal with how small Gen Alpha and Beta are + Gen Z and how that's going to effect social security.

First, I can't predict what will happen in the next 30 days. I keep asking people that should no, and I'm not getting great answers. I think we all continue to assume this is political theater and will get worked out before the fire starts.

Second, let's try anyway. Millennials are the largest group, slightly larger than the Boomers. They are entering their prime earning years- saving, having kids, buying homes, etc- but their salaries on a relative basis are less than Boomers pulled in. I think 20yrs is too short a time to kill off the Boomers as some are just approaching 60. That said, in 20years, Boomers go but the Millennials will be hitting retirement. That change in mix makes predicting 20-30yrs hard. What is a good bet in the prediction is that Millennials are not paying enough into SS and Medicare to compensate for what they will take out, so the problem doesn't go away. We are not going to go backwards in medical advancements, they will not get cheaper, and people will continue to look toward retirement about two weeks after they start working.

Regarding markets, a good example is that we thought as Boomers advanced to and thru retirement they would move away from stocks and into bonds, thus causing equity returns to decline and bond prices to increase (prices up/yields down). We got the latter, but equity returns held up very well. The result of money printing??? Maybe. But we did see net outflows from equities for at least the last 15 years. It's just that equity prices remained strong.

I think part of our collective anxiety stems from out inability to process large numbers. A billion, a trillion, etc. We have no scale. Like trying to think about dinorsaurs living 50m years ago. We just don't comprehend. Citadel CEO Ken Griffith made $22Billion last year. That is $700/sec for every second of the year (31.5m of them). Try spending that. And we are supposed to empathize with him when he moves the firm to Florida for tax reasons?

 

[noharleyyet]

First, I can't predict what will happen in the next 30 days. I keep asking people that should no, and I'm not getting great answers. I think we all continue to assume this is political theater and will get worked out before the fire starts.

Second, let's try anyway. Millennials are the largest group, slightly larger than the Boomers. They are entering their prime earning years- saving, having kids, buying homes, etc- but their salaries on a relative basis are less than Boomers pulled in. I think 20yrs is too short a time to kill off the Boomers as some are just approaching 60. That said, in 20years, Boomers go but the Millennials will be hitting retirement. That change in mix makes predicting 20-30yrs hard. What is a good bet in the prediction is that Millennials are not paying enough into SS and Medicare to compensate for what they will take out, so the problem doesn't go away. We are not going to go backwards in medical advancements, they will not get cheaper, and people will continue to look toward retirement about two weeks after they start working.

Regarding markets, a good example is that we thought as Boomers advanced to and thru retirement they would move away from stocks and into bonds, thus causing equity returns to decline and bond prices to increase (prices up/yields down). We got the latter, but equity returns held up very well. The result of money printing??? Maybe. But we did see net outflows from equities for at least the last 15 years. It's just that equity prices remained strong.

I think part of our collective anxiety stems from out inability to process large numbers. A billion, a trillion, etc. We have no scale. Like trying to think about dinorsaurs living 50m years ago. We just don't comprehend. Citadel CEO Ken Griffith made $22Billion last year. That is $700/sec for every second of the year (31.5m of them). Try spending that. And we are supposed to empathize with him when he moves the firm to Florida for tax reasons?

Supposed to empathize? Do we demonize?

Ken Griffin's Net Worth and Inspiring Story

Discover the jaw-dropping figure behind billionaire Ken Griffin's net worth, and learn how he built his fortune from scratch.

www.capitalism.com

 

[Deleted member 28227]

Supposed to empathize? Do we demonize?

Ken Griffin's Net Worth and Inspiring Story

Discover the jaw-dropping figure behind billionaire Ken Griffin's net worth, and learn how he built his fortune from scratch.

www.capitalism.com

Start from scratch... went to Harvard... he and his partners started a hedge fund...

mmmk

I'd love some of that scratch...

 

[Derek44]

Start from scratch... went to Harvard... he and his partners started a hedge fund...

mmmk

I'd love some of that scratch...

Probably flipped burgers and stocked shelves to pay his way through that Ivy League joint.

 

[SAJ-99]

Supposed to empathize? Do we demonize?

Of course not. But we have to recognize that money is power and more money is more power and this country was sort of created to decentralize power. No? I admit I get triggered when people with "more money than God", as the saying goes complain, about taxes.

Hell, I just got this news flash. No need to read it, but just acknowledging that it is news is admitting to the problem and why none of our problems actually get solved. We have a large amount of debt, and no one wants to get taxed more, but no one wants to give up the benefits they get.

Steve Schwarzman Holds Off Giving Money to DeSantis After Meeting Him

Steve Schwarzman will hold off donating money to Ron DeSantis for now, after a meeting with the expected presidential aspirant left him unconvinced of the Florida governor’s White House prospects.

www.bloomberg.com

 

[noharleyyet]

Of course not. But we have to recognize that money is power and more money is more power and this country was sort of created to decentralize power. No? I admit I get triggered when people with "more money than God", as the saying goes complain, about taxes.

Hell, I just got this news flash. No need to read it, but just acknowledging that it is news is admitting to the problem and why none of our problems actually get solved. We have a large amount of debt, and no one wants to get taxed more, but no one wants to give up the benefits they get.

Steve Schwarzman Holds Off Giving Money to DeSantis After Meeting Him

Steve Schwarzman will hold off donating money to Ron DeSantis for now, after a meeting with the expected presidential aspirant left him unconvinced of the Florida governor’s White House prospects.

www.bloomberg.com

I suppose DeSantis needs to convince his party's 'Clyburn' to assure Schwarzman he can deliver the nomination...

Griffin should've moved to Mother Texas.

 

[noharleyyet]

Start from scratch... went to Harvard... he and his partners started a hedge fund...

mmmk

I'd love some of that scratch...

..fluff pieces happen.

-Karine J-P

 

[406dn]

Laurence Tribe wrote an editorial in the NYT with his thoughts about the debt ceiling debate.

In a nut shell, he states a president is bound by the Constitution to execute what the Congress has passed into law. All of the spending was authorized previously by the Congress. He states that Congress can't then stop a president from executing the laws and spending they have passed.

There is just no trust between the two parties. The growth in the debt and deficit were significant during the prior administration. The debt ceiling was raised without drama. It is when the country has divided power, as it is presently, that there is a showdown over a debt ceiling.

 

[BigHornRam]

Of course not. But we have to recognize that money is power and more money is more power and this country was sort of created to decentralize power. No? I admit I get triggered when people with "more money than God", as the saying goes complain, about taxes.

Hell, I just got this news flash. No need to read it, but just acknowledging that it is news is admitting to the problem and why none of our problems actually get solved. We have a large amount of debt, and no one wants to get taxed more, but no one wants to give up the benefits they get.

Steve Schwarzman Holds Off Giving Money to DeSantis After Meeting Him

Steve Schwarzman will hold off donating money to Ron DeSantis for now, after a meeting with the expected presidential aspirant left him unconvinced of the Florida governor’s White House prospects.

www.bloomberg.com

Both Biden and Trump have made it clear they have no intention of touching the 3rd rail, and are attacking anyone who would even mention it's insolvent future. Looks like a repeat of 2020.

 

[Deleted member 28227]

So, not party posturing? Have a color graph for when Gavin's latest stunt goes national...won't take long.

Definitely both parties pulling the stunt but can we for a moment just consider that McConnell was Whip when that scene was aired… 20 years same dude leading the Rs about the debt ceiling… talk about a broken record

 

[Nick87]