Worries Rise on the Size of U.S. Debt

[groovedaddy]

The nation’s debt clock is ticking faster than ever — and Wall Street is getting worried.

As the Obama administration racks up an unprecedented spending bill for bank bailouts, Detroit rescues, health care overhauls and stimulus plans, the bond market is starting to push up the cost of trillions of dollars in borrowing for the government.

Last week, the yield on 10-year Treasury notes rose to its highest level since November, briefly touching 3.17 percent, a sign that investors are demanding larger returns on the masses of United States debt being issued to finance an economic recovery.

While that is still low by historical standards — it averaged about 5.7 percent in the late 1990s, as deficits turned to surpluses under President Bill Clinton — investors are starting to wonder whether the United States is headed for a new era of rising market interest rates as the government borrows, borrows and borrows some more.

http://www.nytimes.com/2009/05/04/business/economy/04debt.html?th&emc=th

[Common Sense Party]

1. The article focused too much on the deficit, not the debt

While the deficit is alarming, it's nothing compared to the long-term projections for the national debt. Those are truly terrifying.

[phantom power]

2. Wall Street concern trolls are very concerned.

:rofl:

[Yupster]

3. Your post went over my head phantom?

Are you not worried about the debt the nation is piling up?

It is sure worrying me.

[phantom power]

4. Here's the thing...

We are currently in a deflationary spiral. There has been a collapse in demand. In that kind of economic climate, the government is The Spender Of Last Resort. So, there is a need for government stimulus spending. What that money should be spent on is a subject of debate (I favor projects that build out infrastructure and employ people, not propping up the Banksters).

Now, the reason I'm specifically laughing at Wall Street... I already ranted about that here:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=132&topic_id=8389673&mesg_id=8389721

[Yupster]

5. I understand the Keynesian idea, but

when things get better is the government spending going to go down by $ 800 billion a year? It never has before.

It just seems like there's no plan or idea on how to address the debt and we can't add $ 800 billion to the debt every year, yet that is the projection.

[phantom power]

6. Yes, in the long run it has to be dealt with.

And that will be a problem, since it isn't ever politically convenient to ask people to pay extra taxes in the name of debt reduction. Too easy to kick the can down the road.

[Yupster]

7. In 2008 the US treasury only took in

1.25 trillion in income taxes.

How can you possibly raise taxes by $ 800 billion? It just can't happen.

I'm afraid we're going to end up with 40 % of our budget going to interest on the debt and projected 41 % next year and 42 % the year after that with no end in sight.

Don't we all know people who spend 50 % of their income just on interest on their credit card debts. It can't ever work.

But that's what the projections say we're looking at, and the projections are always rosy.

[phantom power]

8. Well... we can raise taxes. If I was responsible for solving this problem...

I would solve it by raising taxes somewhat, but the biggest single change I would make would be cutting our military spending budget by 30-50%. We would still be outspending every other nation on earth, and it would free up a colossal amount of money to pay down debt.

Another tool that can be applied, for better or worse, is inflating our way out of it. That obviously comes at the cost of devaluing currency. And it only has a prayer of working if the debt is stabilized, and future budgets remain balanced. And if you do it very very carefully.

I think it's a solvable problem, but the biggest real barrier is that it can only be accomplished over decades, and America's political attention span is 4-8 years at best. You'd have to have several consecutive presidents all more or less on the same page in terms of making this long-term plan work. The odds of that seem very very small.

Probably, what will eventually happen is some kind of national analog of bankruptcy. How that will play out I don't know, but it won't be fun. It may involve warfare, and it's up for debate whether the United States as we know it continues to exist.

[JohnWxy]

10. We are in the depths of the Republican Deregulation Dystopia. Millions are out of work, we

saw the economy shrink in productivity.. we better think about getting OUT Of THIS REPUBLICAN DEREGULATION DYSTOPIA before we can think of ANY KIND OF FUTURE for this country.

now the IRS has said they lose $100 Billion per year to tax evaders http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=114&topic_id=57686#57694

IF we were to close those lobbyist crafted loop-holes (with the Republican Party's permission, since they can sabotage or pervert any worthwhile program - they have demostrated an ability to do this over the last 5 decades) that would be a start.

Much of the Stimulus package is to induce demand and create jobs but at the same time involves INVESTMENT IN BUILDING A MORE EFFICIENT ECONOMY.

At any rate, talk about any time beyond this REPUBLICAN DEREGULATION DYSTOPIA frankly, holds NO INTEREST for me - I only hope this country makes it to a future where we can discuss tax cuts, where people have enough income to afford paying for any taxes. If WE DO NOT DO SOMETHING TO INVEST IN A STRONGER, GROWING ECONOMY WE WON'T BE ABLE TO AFFORD THE MOST BASIC PUBLIC SERVICES SUCH AS PROVIDING TAX BREAKS TO CORPORATIONS AND THE WEALTHIEST 2% OF THE POPULATION (that last part was a bit of sarcasm referring to major features of any Republican economic plan).

IT IS NOT JUST HOW MUCH IS SPENT, IT IS HOW IT IS SPENT. OBAMA AND THE DEMOCRATS CHOOSE TO INVEST IN A MORE EFFICIENT FUTURE. INVESTING IN A MORE PRODUCTIVE ECONOMY IS SOMETHING YOU REPUBLICANS KNOW NOTHING ABOUT. YOU JUST WANT TO GIVE OIL COMPANIES (and all corporations) and the wealthiest campaign contributors TAX BREAKS (OVER THE LAST THREE DECADES WHICH HELPED GET US INTO THIS FUCKING MESS (by gradually bringing down the real buying power of the average american working family which necessitated creating demand out of too-easy credit) - IN ADDITION TO OF COURSE, THE DEREGUALTION OF THE CREDIT MARKETS WITH MAKING TRADE IN CREDIT DEFAULT SWAPS LEGAL AND UNREGULATED).(I found it quite hypocritical (surprise, surpise!) of the Republicans to castigate domestic automakers for "Not making the cars people want" when they the Republicans consistently fought Democratic efforts to increase CAFE requirements over the years.)

WE NOW HAVE NO OTHER OPTION THAN TO INJECT PUBLIC FUNDS INTO THE ECONOMY TO KEEP IT FROM CRAWLING TO A COMPLETE HALT. BUT OBAMA AND THE DEMS WANT TO DO SOMETHING MORE THAN THAT. THEY WANT TO INVEST IN A MORE EFFICIENT FUTURE WHICH WILL CONTRIBUTE NOT ONLY TO ECONOMIC HEALTH BUT TO A MORE VITAL AND STRONGER GROWING ECONOMY.

one of the entrepreneurs republicans liked to talk about http://www.geocities.com/jwalkerxy/Republican_sucker.htm

Have a nice day. and may we have a promising future.

[Warpy]

9. Wall Street didn't think it was a problem until January 20

so they can go fuck themselves now.

My own hope is that Congress is sufficiently alarmed that they start to cut the Pentagon's budget. That's the gorilla on our backs, right there, and we need to bring it in line with what other countries spend.

We the people can't afford an imperial military that's used as hired muscle around the globe to protect multinational corporations that don't pay taxes to support it.