madhatter wrote:freeski wrote: We need a balanced budget so we can pay down the debt and there is no political will for that in sight.
this will NEVER happen....EVER...
We may never pay down the debt completely, but there does need to be a limit. And since there needs to be a limit, you need to operate most years with a balanced budget. The comfortable debt amount you haven't borrowed yet is your cushion for emergencies. Having a high debt leaves no room for emergencies.
Think about one of the causes for the great recession - interest rates went up, and sub prime mortgagees couldn't re-finance. They couldn't qualify for the higher interest payments.
This is what could happen here. With interest rates going up at some point, the debt load will be crushing.
The current debt is 19 Trillion. Do any of you know how many zeroes that is without writing it out? Imagine a million dollars. Right there in your hand. A million. Cool.
Now imagine a million of those. A million million. Now imagine nineteen of those. That's how far in the hole we are.
If we divide the debt by 300 million US residents, we get 63,000 per individual. Pretty sobering. If we divide by the number of tax filers, working to some extent, that's 171 million people, you get 111,000 per working person. That's 2 years average salary. Who can afford that? Now if we divide the debt by the number of people that actually pay income tax, it gets twice as bad. Only 94 million pay taxes, 77 million filers pay nothing, or get an earned income credit. So for each tax
payer, not filer, the debt is $202,000. Anyone concerned yet? Can you take on a second mortgage like that?
I listened to the Democrat debate last night. I heard about free college, high rates of incarceration, women's rights, global warming. I didn't hear a word about the budget.
None of those Democrat issues mean diddly if we go bankrupt. I know the Republicans didn't do a good job either. But it's time for the adults in the room to get serious.
Next up: What happens when rates go up. (spoiler: it's not good.)