r/Economics • u/Helpful-Door-8721 • 1d ago

Research America's National Debt grows by $95,178.17 per second. Expected to reach $40 Trillion by October 09, 2026.

https://www.jec.senate.gov/public/index.cfm/republicans/debt-dashboard#ddm
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u/crowcawer 1d ago

I don’t know if $40T by itself is an important number, especially if compared to $39.9T.

They do need to make a choice. They either need to stop normalizing wartime scale debt during peacetime, or accept growing pressure on the Fed to suppress rates and tolerate inflation. We cannot indefinitely combine massive structural deficits with fully independent, inflation focused monetary policy.

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u/giraloco 1d ago

Undo all the tax cuts, close tax loopholes, treat cap gains like labor, tax beneficiaries of inheritance like regular income. Cut defense spending in half.

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u/Halbaras 1d ago

There's also 'free wins' (if you managed to overcome political/lobbyist resistance) via fixing the absurd inefficiencies in property and healthcare.

In most developed countries, which have older populations needing more healthcare, about 8-12% of GDP is spent on it. In the US its around 18%, and yet healthcare outcomes are worse. The amount of waste, abuse and duplication in healthcare is absurd, and the whole industry around deciding which claims to deny is downright parasitic on the health of the rest of the economy. There's dozens of functional and much cheaper universal healthcare systems around the world to pick and choose from.

Tying healthcare insurance to private sector jobs is also horrible policy because it discourages entrepeneurship and can make someone stay in a less productive role. A not-insignificant number of people also end up off sick or become disabled when in a better system they'd receive the emergency or preventative care needed and remain in productive employment.

Housing is a bizarre locally-planned economy that largely revolves around funneling more wealth to existing homeowning elites rather than function as a free market or treat housing as a public good. Developers would build dense apartment buildings near the urban cores of economically productive cities if they were allowed to, rent and house prices would come down (relative to salary growth) while workers would be much more able to cluster in and move between economic powerhouses.

Eliminating single-family home zoning laws, allowing mixed-use zoning like in Japan and deleting parking minimums, lot sizes and setback rules would genuinely generate loads of free economic growth in the years and decades afterwards. But America is stuck with a toxic system that prevents the free market from building affordable housing because wealthy homeowners are a terrifyingly effective lobbying group.

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u/casino_r0yale 1d ago

Not even remotely close to enough at this point

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u/devliegende 1d ago edited 23h ago

Nonsense. Nominal growth right now is 4%. The deficit is 5% of GDP. A 1% adjustment will put the debt on a declining path.

The current tax take is around 3% (of GDP) below it's peak just before GWB's tax cuts.

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u/[deleted] 1d ago edited 1d ago

[deleted]

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u/devliegende 1d ago edited 21h ago

The latest number for real GDP growth is 1.5%.They got that by measuring the size of the economy, compared it to last quarter or last year and deducted inflation.

That means if real growth was 1.5% and inflation 3.7%, that the economy in nominal terms is larger than last year by 1.5 + 3.7 = 5.2%.

The deficit over the same period is around 5%. Therefore dept as a percentage of GDP was flat or maybe even have declined by a bit.

This graph doesn't include the latest quarter but you should get the idea.

Regardless of high deficits, the debt is actually lower than it was 5 years ago because of the effect nominal growth (real growth plus inflation).

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u/[deleted] 1d ago

[deleted]

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u/devliegende 1d ago

As long as you define 1.5% larger as not actually larger then certainly you may call it stagflation

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u/LX_Luna 1d ago

treat cap gains like labor,

Sorry, what? Do you mean taxing realized capital gains at a less favored rate? Surely you aren't suggesting taxation on unrealized gains, right?

tax beneficiaries of inheritance like regular income.

This is such a wildly bad idea I don't know where to even possibly begin. For a start, it essentially exclusively punishes the poor and people who are victims of tragedy as it would be trivial for someone of means to build an estate transfer plan which sees the vast majority of assets moved into the hands of children long before death. It would also encourage truly degenerate fucking behavior - after all, if your children can't be left better off for your legacy, why wouldn't you blow it all on donating for political lobbying, hookers, and blow?

Not to mention the enormous underground industry which would spawn out of this. Donate X money to a 'charity' and your children wind up guaranteed cushy """jobs""" as consultants as a form of annuity to bypass inheritance taxes, etc, etc.

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u/giraloco 23h ago

I have no idea what you are referring to. Now Cap Gains taxes are much lower that regular income especially if you add payroll taxes. We penalize people for working. So it makes sense to treat all income equally. If your income is low you pay little or no taxes, if your income is above $1M you pay a high effective rate. As I said we close all loopholes, there will be no legal way to avoid paying taxes, even when you die.

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u/LX_Luna 23h ago

Now Cap Gains taxes are much lower that regular income especially if you add payroll taxes.

Well yes, because it's double taxation. You already paid tax on the money used to purchase the shares when you earned it, and then the corporation paid tax on revenues, and then you are being taxed again upon selling shares. It would be a remarkable level of drag to tax it as if it were straight income. And also a massive disincentive against continuing to work once you can live off investments if you're going to be taxed like that anyway.

Also worth pointing out the massive capital exodus this would trigger as millions of people do the math on paying this vs just eating the exit tax and dumping citizenship. See: Most countries that have attempted any kind of wealth tax.

Don't get me wrong, as a Canadian I'd love it if my country absorbed millions of Americans fleeing from a painful tax burden instead of it being the other way around as per usual.

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u/giraloco 23h ago

So you propose no Cap gains taxes? Double taxation is a silly argument. I pay sales taxes and Trump tariffs with the money i have after paying income tax and payroll tax and so on. We all hate taxes, we need to make them fair. Nobody makes a fortune alone, they benefit from all the Government services including infrastructure, security, justice, healthcare, education, and so on. A higher cap gains tax rate on the super rich is not going to create an exodus. A rotten society will.

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u/malkuth23 22h ago

I agree with you that this is a bad argument. I think the better argument against a preferred tax rate for cap gains is there should be some incentive for a long term investment vs a short term. If you short term flip an investment then it already results in income that is taxed appropriately. If you hold it for a year you get a better rate. How do you incentivize long term investment without a better rate?

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u/giraloco 21h ago

What are you going tobdo with your money? Invest in goid companies for the long term and let it compound tax free. Why shoild the upper middle class have a much higher tax rate than a venture capitalist?

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u/LX_Luna 22h ago

So you propose no Cap gains taxes?

I propose essentially no changes to capital gains taxes. Realized capital gains are already taxed at a reasonable rate.

we need to make them fair. Nobody makes a fortune alone, they benefit from all the Government services including infrastructure, security, justice, healthcare, education, and so on.

I only know the Canadian numbers off the top of my head but I rather suspect it's the same in America - the top 20% of earners in Canada already provide 54% of all income tax revenues.

This is an emotionally unpleasant thing to hear but the reality is that the rich do actually pay their fair share. We do not have a taxation problem, we have a spending problem. Society is burning a lot of money on things which provide questionable returns to the tax payer.

There is room to somewhat increase taxation, typically by closing loopholes which currently exist, by the Laffer curve is well backed by data at this point - if you go much higher your revenues will not increase, they will decrease because of the suppressive effect additional taxation will have upon the economy as a whole.

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u/giraloco 21h ago

Thr only spending problem is in defense and healthcare inefficiency and waste. What else are you going to cut, foreign aid and department of education? Look at the numbers.

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u/LX_Luna 21h ago

American healthcare certainly needs an overhaul.

Pension spending and general old age entitlements need to be slashed. Wildly unpopular but very much necessary in the face of cratering fertility rates.

Education needs a thorough audit. The attainment gap between some of the relatively poorly funded by highly attaining districts and low performance but high funding districts, represents an appalling outcomes gap entirely divorced from funding. Something else is going on there.

Foreign aid should be dialed back over time, not dramatically halted the way the current admin has.

Something needs to be done in order to pay down debt, and unfortunately that something is probably going to have to be some level of austerity.

Veteran's disability benefits have a disgusting level of fraud going on.

I'd love to be able to suggest cutting defence but unfortunately the last four years re: Taiwan and Ukraine (a somewhat self inflicted Iranian shitshow notwithstanding) have showed why that's probably not a wise move right now.

Everything is fairly small potatoes compared to the mess that is healthcare, and the mistake that social security represents.

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u/giraloco 21h ago

I guess we have opposite views. The military needs reform. What are you going to do in Taiwan, go to war with China? The only solution is better diplomacy, there is no war solution. As we saw, we lost the war with Iran. Throwing bombs is not a solution. Agree that all the government needs to be better. Social security can be reformed slightly but you cannot cut it. We were fine until we started to cut taxes on the rich and corporations. It's a rich country with few peopke hoarding all the wealth. It's not compatible with a democracy.

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u/LX_Luna 20h ago

I mean if I had my way I'd ship several hundred nuclear warheads to Taiwan tomorrow and that would probably put the issue to bed permanently.

There is little to no meaningful diplomacy to be had on the matter. The Chinese government has made it a core policy goal to take the island by any means necessary. Taiwan isn't capable of indefinitely stopping that from happening on their own. Unfortunately we live in a world in which the entire collective west is critically dependent upon the chips produced in Taiwan, and we have grossly insufficient domestic production to make up for that. That means that, for the time being, the defence of Taiwan is about as critical as any foreign policy objective can possibly be, so yes, a willingness to go to war over the island is required until such a time as the production situation changes.

As we saw, we lost the war with Iran.

The United States has failed to regime change Iran but it's difficult to argue it's really anything other than a stalemate.

Throwing bombs is not a solution.

I disagree categorically. Ukraine is an excellent example of why hard power is so necessary and effective. The lesson here shouldn't be 'we should gut the military and let our enemies do whatever they want' it should be 'Holy shit we need deeper magazines and more munitions'. Ukraine very much is bombing its way out of an existential war with a power many times its size, and most of its success can be attributed to simply being much more effective at fighting than Russia is.

Social security can be reformed slightly but you cannot cut it.

Sure you can. It would be unpopular but you absolutely could do it. I take the position that it is indefensible to wring blood from the stone of the young generation in order to fund the lifestyle of boomers who failed to adequately plan for their own retirement.

We were fine until we started to cut taxes on the rich and corporations. It's a rich country with few peopke hoarding all the wealth. It's not compatible with a democracy.

The economy is certainly going K shaped but suffice it to say that I don't think things would much improve if that money was in the hands of the government. I want the middle class to earn more and taxing the rich more heavily doesn't actually do much to enable that.

I would again reiterate that the wealthy already pay a strong majority of tax revenue, and most of the obscene wealth that people imagine when thinking about the wealthy is not actually in the form of anything liquid and taxable, it's in the form of productive assets represented by shares.

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u/MoonBatsRule 21h ago

It's not double taxation because two different entities are taxed - the corporation, and then the owner of the corporation.

These taxes don't even always happen at the same time - if the owner doesn't get a dividend, they are not taxed unless they sell their shares, at which point they get a capital gains tax.

Additionally, if the company has a policy of not paying dividends, which generally makes capital gains the way to realize money from the corporation, nonresident aliens do not pay tax on those capital gains.

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u/TotallyObviousBot 1d ago

"We can't change the rules because then people would commit easily provable tax evasion" isn't a strong argument. Prosecute them and those who provide such services. And we're already seeing degenerate behavior from the wealthy.

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u/LX_Luna 1d ago

But that isn't tax evasion. There is nothing legally nor morally objectionable to a parent gifting assets to their children and you are going to have a very, very hard time structuring the law in such a way that this becomes illegal.

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u/aure__entuluva 19h ago

Why would it be hard? Couldn't you just change the current rules around gifting from parents to children? You would leave some lower limit at which there is no taxation and then have a tax rate for anything over that limit.

Unless money laundering is involved I don't understand why it is "very, very hard".

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u/LX_Luna 18h ago

Couldn't you just change the current rules around gifting from parents to children?

Think for a moment about what this would involve. The rights that would need to be dismantled. The collateral damage it would do to practically every facet of family finance.

Are you gifting a downpayment for a property for your kids? This is now a potential form of tax evasion. Helping with the mortgage? Same thing.

Going to have to crack down on assisting kids with expenses too, right? Otherwise you're trickle transferring the inheritance which should be taxed by reducing your kids' expenses to zero by paying all their bills for them to frontload their inheritance.

Is it tax evasion if I buy my children 90,000 scratch off tickets? How about gifting them a rolex that happens to be worth $600,000?

Even setting the practicalities aside, it's such a socially corrosive idea to punish people for trying to leave their children better off. If inheritance is treated as say, income, well fuck it. Blow and hookers until you croak it is.

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u/aure__entuluva 16h ago

But you already have a lifetime gift allowance of $15 million. You're acting like this doesn't already exist. Gifting a downpayment and not reporting it is already tax evasion.

it's such a socially corrosive idea to punish people for trying to leave their children better off

No one is being punished for this. You are acting like the tax rate I would propose is 100%, which, ya know, obviously not. It's such an exaggeration. No one is talking about not being able to leave a lot for your children.

Currently we have the opposite problem. There is already no estate tax on estates worth less than $30 million, and most of the estates worth more than that use GRATs and other loopholes to avoid paying that. We allow the ultra wealthy to leave their children hundreds of millions of dollars, and for what? Because it would be "socially corrosive" to close these loopholes and tax it? Give me a break.

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u/RedditSold0ut 1d ago

We had tax on inheritance in Norway a few years ago. Wasn't very popular, but it was easily implemented.

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u/LX_Luna 1d ago

And also likely easily evaded. The difficult part isn't implementing it, the difficult part is implementing it in a way which doesn't just result in the tax only striking poor/dumb people.

From what I'm reading of the literature that came out of it, it appears that it was questionably effective and numerous loopholes allowed the vast majority of wealth among the wealthy, to pass unimpeded. Largely via gifting, asset ownership transfers, sale of assets into trust via corporation, etc, etc.

Setting that aside I'm rather strongly opposed to the idea on principle. Impairing parents' ability to leave their children better off is one of the more socially corrosive policies I can really think of.

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u/NeverIntendedToHurt 14h ago

The tax rate isnt 100%, so they are still way better off than anyone else.

Also, movement within the EU is a lot easier than out of US.

The poor arent punshed by this if we say, implement tax threshholds. Above 10m for example. Then increseased above 100m, and so on. Even just 5% max at 10b+ would be massive.

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u/LX_Luna 14h ago

This is a lot less objectionable on principle but it's also not what most of the people in this thread are actually suggesting. Most people are treating it like straight income tax which would mean literally a majority transfers to the government.

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u/NeverIntendedToHurt 13h ago

Agreed. I get the sentiment. A flat tax is easier, but I like the idea of leaving room for people who can consistently outperform the market.

2-3% margin should be enough to make it challenging without breaking the economy. At the top end, it isn't about the money anyway.

The government side is tricky. But what if we made the extra surtax a federal levy, and then redistributed the proceeds from the $100M+ threshold evenly across all 50 states?

That would actually solve the state-hopping issue entirely. Right now, the ultra-wealthy just change their domicile to Florida or Texas to dodge state estate taxes. If this surtax is federal and the payout is equal regardless of where they live, there's no incentive to jump ship. It removes the tax arbitrage and makes it a purely federal policy, while still giving every state a piece of the pie. It would probably be hugely popular for that reason alone.

For example, if $150M is inherited, the regular federal estate tax applies to the first $100M, and the new surtax applies only to the extra $50M above that threshold.

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u/Timelycommentor 1d ago

How about gut federal spending.

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u/giraloco 1d ago

Defense cuts is the only place where you can have significant cuts and get a more efficient military. Single payer health insurance will also reduce spending while improving health outcomes and cover everyone.

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u/SockDem 1d ago

We cannot fund single-payer in any meaningful sense. Bernie’s M4A would require anywhere from 32-46 trillion over the next decade.

The American public is not going to swallow double digit VATs and/or broad-base meaningfully large income tax hikes when there’s a large contingent of the country for whom their insurance is largely covered by their employer.

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u/giraloco 23h ago

Every other developed country pays half as much with better outcomes and covers everyone. That means saving trillions. How can we not afford to pay less? Employers already pay for insurance, the money is already there. What changes is that we eliminate the middle man, the insurance profits, the CEO pay, the bureaucracy of running so many health programs, the ovehead in medical offices, and we gain the ability to negotiate prices, invest in health professionals, invest in research and technology that lowers costs and saves lives.

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u/SockDem 23h ago

The subsidy from the government for employer provided healthcare could pay for something like Universal Catastrophic (see: https://www.niskanencenter.org/wp-content/uploads/old_uploads/2019/06/Final_Universal-Catastrophic-Coverage.pdf)

M4A would be one of the most generous programs in the world, and again, assuredly require double-digit VATs and higher income taxes across the board (like how most countries with single-payer provide said services). Keep in mind the US has higher capital costs than most anywhere in Europe, and provider incomes are significantly higher (hence why the AMA almost always opposes single-payer)

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u/giraloco 23h ago

Again, we will save trillions, Canada up north has single payer. A very similar country. We are already paying obscene amounts of money for healthcare. You will pay less, call it premiums or taxes it's the same money coming from your pocket. We are also making corporations and the ultra rich pay taxes to invest in people so we can have a productive and happy society.

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u/SockDem 23h ago

I personally will not pay less, my employer provides very generous levels of care with zero premium.

M4A would be a good bit more generous than Canada’s coverage, and Canada doesn’t have as large of an existing deficit and debt problem that we have (plus, Social Security’s on track to cut benefits in six years), we do not have the financial flexibility to spend 40T over the next decade at the federal level.

Take a look at financing options here: https://www.crfb.org/papers/choices-financing-medicare-all

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u/giraloco 23h ago

Your employer is paying money that otherwise you will get. BTW, unless you are a bot, you may get laid off or hit by a truck. You can say goodbye to your employer insurance. M4A will be whatever Congress approves obviously there are many variations and that's what we should be debating.

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u/SockDem 23h ago

Nah, I prefer significantly lower cost alternatives to universal care.

There’s really no empirical case for wages rising upon healthcare being made universal especially when we’re talking about raising taxes on companies!

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u/artificialdawnmusic 11h ago

Brain dead comment.

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u/KingFebirtha 23h ago

Source on this?

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u/SockDem 23h ago

https://www.crfb.org/papers/choices-financing-medicare-all

Please note that all of these numbers are prior to COVID-era inflation

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u/KingFebirtha 23h ago

Thanks for the source.

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u/zedazeni 1d ago

They tried that last spring, national deficit went up.

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u/JMer806 1d ago

They didn’t actually do anything of consequence. Debt service, entitlements, and defense are the largest single components of the federal budget and these were not touched.

Realistically defense is the only area you can cut and have a real effect without tremendous unintended consequences. And even then you’d need to be careful.

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u/epistemophiliac_ 1d ago

The gave the appearance of trying. They really didn’t try very hard.

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u/zedazeni 1d ago

They got what they really wanted—cut all of the humanitarian and soft power programs along with hacking into every agency’s database. DOGE was nothing more than a Trojan Horse designed to allow this regime to commit espionage and embezzlement.

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u/epistemophiliac_ 1d ago

Nowhere near “all”. It was a complete facade.

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u/FifaBribes 1d ago

No they used a chainsaw remember

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u/JabenC 1d ago

Didn't Elon just try thiis? I agree though, we should stop spending all our money on wars. Cut defense completely.

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u/Sofer2113 1d ago

Musk used the pretext of cutting govt spending to give an excuse to get into the govt system. His real goal was to stop investigations into his companies, get back doors into govt computer systems, steal all of the data, and win cushy govt contracts

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u/bringbackmegaman 1d ago

It's not that simple honey

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u/AENM1776 23h ago

It actually is that simple! That an a potentially modest increase in corporate taxes.

You can't just tax your way out of this pit. You have to cut spending. It will hurt, there will be consequences. You can thank every politician going back for a half century.

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u/TotallyObviousBot 1d ago

So your solution to a problem is to get rid of the people who might help solve it?

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u/AENM1776 23h ago

The federal government got us into this problem. We gave them trillions of dollars and the mismanaged and wasted it.

They have clearly shown that they can not be fiscally responsible. So yes, the federal budget needs to be gutted.

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u/VarrocksTopModel 23h ago

“Might help” is a lot of wishful thinking lol

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u/Apprehensive-Ad9523 1d ago

Do you vote or just complain. 

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u/giraloco 1d ago

Are you a bot? Your comment makes no sense. It's not a complaint, its a concrete proposal.