US Published National Debt: $28T. The Truth: $146T. Each Taxpayer's Share: $951k

https://www.truthinaccounting.org/about/our_national_debt

by miles • 5 years ago

103 161 5 years ago

truthinaccounting.org

sharemywin• 5 years ago

Here's an interesting article about how much the total US is worth.

https://finance.yahoo.com/news/much-entire-united-states-ame....

It's interesting about how much is owned by foreign corporations and other entities.

basically we slowing turned our entire workforce into indentured servants to foreign "investors"

RealityVoid• 5 years ago

There is this old joke that if you owe the bank 10 thousand dollars, it's your problem. But if you owe the bank 10 million dollars, then it's the bank's problem.

boringg2• 5 years ago

What would be more interesting if this was done for all countries of the world. The web of connectivity is quite fascinating.

vmception2• 5 years ago

The nationalism is for the plebs.

The entire point of the United States is for foreign investors to come to this continent and lever up on the resources here. That's how this reign started, culminated into the United States, and continued.

Over the last 600 years there was a brief moment when Andrew Jackson was like "hey stop that", and then 80 years later they all came back and got the second central bank formed and slapped his face on a $20 fiat bill for the lulz.

Its actually an ongoing gag, when you see it from that perspective.

janandonly• 5 years ago

This is more a discussion of semantics than about the amount itself.

The way I read the statistics is that the current debt is $28T of money that is already spent while the quoted debt of $146T is the amount of money needed to be spent to fill full current promises and expenses.

It's interesting that since the USA got off the gold standard in 1971[1], and thereby all countries that had a currency backed by dollars, the average household income has risen 5x but the price of goods like a house have gone up 10x. This became possible because all for a sudden money was not backed by gold anymore, but could simply be printed when needed. This created huge money supply inflation [2].

Everything is getting too expensive, and the only reason we don't feel this too much just yet, is because often times cheaper alternatives where available.

My parents are in their 70's and they still have furniture that was (second hand) given to them when they got married. Can you imagine an piece of IKEA furniture being used daily and lasting for >40 years? My point about "cheaper alternatives" exactly...

[1] https://mises.org/wire/today-1971-president-nixon-closes-gol...

[2] https://twitter.com/WTF_1971

rllearneratwork• 5 years ago

this is a good point. Everybody keep saying that US had a small inflation in the last 2 decades. Yes, prices of eggs/milk maybe didn't go up to0 much. But what about prices of child care, education, housing, health care, retirement. Yes all these have many factors behind their cost rise, but money printing just can't be ignored here.

bserge5• 5 years ago

The rest of the world has seen the same price increases.

jfengel4• 5 years ago

All of those things are figured into the Consumer Price Index. It's not like they're just guessing over at the Bureau of Labor Statistics.

The one thing that's not included is retirement. You're entitled to Social Security, which is inflation-indexed with the CPI.

Individual retirement accounts are usually based in the stock market, which has been doing gangbusters -- for those who can afford it. That is becoming unaffordable, and it probably is because of "money printing".

That's where the inflation shows up: asset markets. The increase the money supply but it disappears out of the consumer economy almost immediately. Consumer prices don't go up, but asset prices do.

jonnycomputer• 5 years ago

I apologize, but this reveals fundamental misunderstandings of how inflation is measured, and what it measures, and of how US dollars enter the economy.

Look at this post to see how many different measures of inflation there are. Each of these get at different aspects of the economy:

https://econbrowser.com/archives/2021/08/measured-inflation-...

https://econbrowser.com/archives/2021/09/inflation-a-compreh...

As for money printing. Per US law, money cannot be just printed by the Treasury. It must be borrowed from people who already had dollars to lend.

New dollars enter the economy when banks lend money; that is the main engine of new money creation, and it is responsive to the economy. Usually, banks don't lend when its too risky, and businesses don't borrow when it won't lead to profitable growth.

ethbr02• 5 years ago

You can have both inflation (in terms of purchasing power) and a simultaneous decrease in the cost of goods (in constant dollar terms).

If both of these happen to balance, prices appear to stay the same.

Presumably you'd only get a true number out of something (a) with a fixed amount in circulation, (b) internationally traded, & (c) universally valued. Even precious metals are subject to production costs and industrial consumption.

mschaef• 5 years ago

My parents are in their 70's and they still have furniture that was (second hand) given to them when they got married. Can you imagine an piece of IKEA furniture being used daily and lasting for >40 years?

Two answers:

1) Yes. Very, very easily. For at least some IKEA furniture. 2) I somehow doubt that second hand furniture was from the 'IKEA of that day'.

Macha• 5 years ago

I somehow doubt that second hand furniture was from the 'IKEA of that day'.

I think that's the parent poster's point. Presumably his parents are not significantly wealthier in relative terms than he was, but they could afford more premium furniture than most people today do.

heinrichhartman2• 5 years ago

Ad 2) There were no alternatives to local carpenters 100 years back. If you wanted a wardrobe, you would get one built for you.

You can still do that today, and get a wardrobe for 8K, that lasts 40years. But now we do have "cheaper alternatives". His point exactly.

whimsicalism2• 5 years ago

thereby all countries that had a currency backed by dollars, the average household income has risen 5x but the price of goods like a house have gone up 10x

Real personal income has consistently gone upwards.

https://fred.stlouisfed.org/series/RPI

xwdv• 5 years ago

Who cares though? Do you really want to keep something like the same pieces of furniture your whole life? Sounds depressing. People like buying new stuff.

dhritzkiv2• 5 years ago

If it's nice and in good condition, then yes. Nothing "depressing" about that.

Even if tastes change, styles usually come back around, hence why good century- or MCM furniture is so sought after as antiques/vintage.

It's to be seen if laminate or pressed fibre board furniture will stand the test of time, even if it comes back into style in 25 years. HDPE might last longer, as long as it doesn't discolour or crack.

heleninboodler• 5 years ago

This got downvoted, presumably because someone probably think it sounds like a "lol, old people r dumb" view, but ... it's insightful to realize that if, on average, people's attitudes change such that they don't WANT to keep their goods forever, there is no value placed on a piece of furniture that lasts forever, and that drives cheaper, more disposable furniture to be made. I think a lot of people make the mistake of putting the cause-effect the other way around, where you HAVE to buy new furniture because "they don't make it the way they used to," but that may actually be what consumers want.

throwdecro• 5 years ago

Can you imagine an piece of IKEA furniture being used daily and lasting for >40 years?

Yeah. IKEA's not bad.

chucknthem• 5 years ago

Some of the higher end IKEA stuff is not bad, I have a bed frame that's solid wood, looks great and I could easily keep it for decades. Most of the IKEA furniture I bought in my younger days is compressed cardboard and have been replaced because it was starting to fall apart after a few house moves and wear and tear.

grawprog• 5 years ago

Every piece of IKEA furniture I've owned has collapsed or fallen apart within 5 years. I've got an old coffee table I carried in on a skateboard when I was like 13 or something that I found during spring cleanup. It's solid and made of real wood. It's been going strong for 20 years now of heavy use and who knows how long it was used before I got it. I can see it lasting another 20 years easily.

hncurious• 5 years ago

It varies a lot though. Some of their stuff lasts a long time and some of it falls apart when you move.

vmception2• 5 years ago

Everything is getting too expensive, and the only reason we don't feel this too much just yet, is because often times cheaper alternatives where available.

and because my LEAPS go up way more. They can increase the money supply by 40% and it won't matter when my LEAPS rise 10,000%

Don't forget, when "everything" goes up in value, so do stocks as well. Don't focus on the potential of Weimar bread lines, and look at the stock speculators who made baaaaaank! Its not an egalitarian system, play the cards you were dealt!

seneca2• 5 years ago

Everything is getting too expensive, and the only reason we don't feel this too much just yet, is because often times cheaper alternatives where available.

Dead on. It's pressure from both sides, so to speak. Not only are we paying more for goods, the goods themselves are declining in quality.

Furniture is a great example. Another is home appliances. Refrigerators, washers and driers etc have absolutely tanked in quality.

We are getting less for more money, but inflation only counts half of that.

mfer2• 5 years ago

Furniture is a great example. Another is home appliances. Refrigerators, washers and driers etc have absolutely tanked in quality.

We also have a tendency to replace them when broken for simple things.

When I tell people I repaired or had someone repair an appliance in my house they are often surprised. They just think of tossing it and getting something new. Repair isn't even on their mind unless their part of one of the older generations.

kube-system• 5 years ago

Cost-engineered home appliances just didn’t exist in the mid 20th century. Appliances were luxury goods. The average clothes dryer in 1950 was very reliable because it was a clothesline. The fact that we fix them now is because affordable options exist. And the fact that many people throw them away instead of investing in a repair on their vacuum is because they’re now cheap enough that the labor doesn’t make sense to spend on it.

mfer2• 5 years ago

My parents are in their 70's and they still have furniture that was (second hand) given to them when they got married. Can you imagine an piece of IKEA furniture being used daily and lasting for >40 years? My point about "cheaper alternatives" exactly...

Part of this is cultural.

People now consume more than they used to. For many generations people patched their clothes. Now they throw them out. It's a culture of consume, toss it, consume some more.

That culture influences personal decisions and those we influence for our companies.

You can still get high quality furniture. If you're going to replace it soon due to style changes do you care about quality?

slv77• 5 years ago

Outside of housing, healthcare, daycare, education and transportation the two income household of today consumes less then a single income household in the 1970’s. The spending is different, with households today spending less on things like china or formal clothes but net it all out and it is less.

Housing is larger but also older and mostly driven by proximity to good schools. It is hard to consider the other expenses discretionary.

This was the conclusion a Elizabeth Warrens research summarized in The Two Income Trap.

agentdrtran2• 5 years ago

There's no good data suggesting that getting rid of the gold standard led to higher prices or, as your twitter account suggests, obesity.

mywittyname3• 5 years ago

but could simply be printed when needed. This created huge money supply inflation

This could and did happen before 1971. The US government has always been able to issue debt. And paper money, in the form of bonds, has been a staple of the country's financial systems since long before it was a country. Mostly owing to the fact that England largely prohibited the export of specie to the colonies. Forcing states to figure out their own monetary systems.

Can you imagine an piece of IKEA furniture being used daily and lasting for >40 years?

Yes. I have plenty of of IKEA furniture that's seen daily use for ~20 years and still looks brand new. People don't seem to realize this, but IKEA does sell solid wood furniture. I have an entire bedroom set (and matching shelves) that are made of solid wood with a thin resin coating that prevents scratches and dings. The bedframe does need the screws tightened on occasion, but with the dresser, I put it together with wood glue and never bother to empty it when moving (glued dowels are essentially as strong as a mortise and tenon joint) . It's survived like five moves without issue. My old desk found a spot as a work bench in my shop as the tabletop is incredibly durable. I'd love to find another one.

My parent's house still has the IKEA flooring that we installed in like 2002. Even their cheapo furniture isn't bad. I'm still rocking these $5 end tables that I bought in like 2008. I put some dowels in the feet and stacked them to make a shelve that converts into a low table for my shop.

Not only will IKEA furniture still be around in 40 years, due to survivorship bias, they will be known for making incredibly durable furniture by future generations.

Iwan-Zotow• 5 years ago

I'd love to find another one

how about bamboo tabletops?

https://www.ikea.com/us/en/p/anfallare-tabletop-bamboo-00465...

nickthemagicman• 5 years ago

the only reason we don't feel this too much just yet, is because often times cheaper alternatives where available.

There is a trick, what I like to call value extraction, that companies do in place of financial extraction(or raising prices).

This is commonly known as shrinkflation in regards to commodities, such as cereal, as the company provides less product for the same price and as such the product has to be bought more. People just buy their product as usual and don't realize the quantity has gone down and just have to purchase more and more.

In the sense of a more tangible product, like a tool or shoe, the company lowers the 'value'...it is cheaper pricewise by say a factor of 3 but the actual quality of the product is lowered by a factor of 10 or more, in materials, in manufacturing, etc..so the value is reduced massively, and it's cheaper financially in the short run on the price tag, but not cheaper in the long run, because the product fails much more often than the quality product and has to be purchased over and over again.

As humans we just see the price tag in the short term for all of it. Prices are easy to compare and are objective, value is much harder to quantify.

This is also part of Ubers business model of milking drivers as well, not out of money, but out of asset depreciation. The drivers just see the money they're making today, and aren't thinking about long term asset depreciation. So the less educated driver thinks they're making 20 bucks an hour, but in reality that driver is making like 4 bucks an hour after operating expenses, however, Uber advertises the 20 dollar an hour number in employment ads.

I haven't formed a complete framework for it but this idea of 'value extraction' is one way companies make money without raising prices.

officeplant• 5 years ago

Well my $100 IKEA desk is currently 11 years old. I'll get back to you in 29 years.

Aunche• 5 years ago

The gold standard ended in 1933. Bretton Woods wasn't really a return to the gold standard. It was really just a way for the US to profit off of the recovery from WW2. They wasn't particularly careful with printing money back then either. Europe and Japan were desperate for international liquidity to rebuild their economies, so they were initially happy to exchange gold for dollars at unfavorable rates. After they no longer needed the dollar, they stopped purchasing them, so the US had no choice but to end Bretton Woods.

coding123• 5 years ago

I remember when I was a kid and the number was 4T going soon to 5 and it was like actually something democrats and republicans wanted to tackle.

What the fuck did we do?

outside12342• 5 years ago

People got old and wanted social security and medicare

The reality is that the Baby Boomers only cared about the deficit when they were paying taxes. Now they aren't (retired) so f it, let's spend on us as much as possible until we die.

munk-a2• 5 years ago

The US National Debt being viewed like a bad loan is a load of BS - that's a sum invested and leveraged against the projected continued growth of the country and, honestly, nobody on earth has the ability to forcefully collect from the US government.

outside12342• 5 years ago

And even if they could collect, its in US Dollars, which they can print.

munk-a2• 5 years ago

That, unfortunately, is not as great of a loophole as you might imagine - you can ask interwar Germany and the Papiermark[1] how that worked out for them. Effective debt (a concept I'm coining here) is essentially the product of: 1) the abstract value of a debt and 2) the ability of anyone to actually collect that debt - this is why it's hard to get a loan in the US if you're a government backed organization in Russia - since the issuing bank can only expect repayment on pure faith. The US government can now (and for the foreseeable future) fend off any potential collection attempts with a combination of military might, economic might, international good will and self-destructive power - this may change in the future (at which point the debt will become a lot more critical) but for the time being the US is pretty immune to collections. It always pays back its interest (that itself contributes to the continued good will) but nobody can forcefully collect the lump sum of debt.

1. https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_R...

ceejayoz7• 5 years ago

You can see this in their article on Chicago, too.

https://www.truthinaccounting.org/news/detail/chicago-in-deb...

"Chicago in debt despite balanced budget and federal aid"

Well, yeah. I have a balanced household budget and a big mortgage (debt). It works fine.

thehappypm• 5 years ago

You aren’t taking a new mortgage every year though.

mattnewton2• 5 years ago

As far as I understand it, it has nothing to do with creditor’s ability to collect but the interest future creditors will be willing to part with their money for.

With an institution even a fraction the size of the US federal government, I don’t think people can reasonably collect, and instead the incentive to take care of current creditors is to give future creditors confidence that their investment is safe. Historically this allows the US to borrow at very low rates.

merpnderp• 5 years ago

People often get all full of bravado about this, but they miss your point. It isn't about the money already loaned, it is about the billions a year the US government needs to borrow to stay functional. Scare off investors and they'll find somewhere else to keep their money safe.

heinrichhartman2• 5 years ago

Who are those creditors? Who set's that interest rate?

It's largely the FED, right? What prevents the FED from keeping the interests low, if the US-Gov does not want to pay?

Donotbeliveme• 5 years ago

Interest Rates! You nailed it. Nobody is going to collect on the US, but if we default we basically lower our national credit score. It then becomes harder to get/give loans internationally. Debt is also super complicated. The most recent estimate is only ~40% of all public debt owed is foreign. That means the rest of our debs it owned by Americans themselves or intergovernmental. This article is mostly highlighting that we will need to borrow in order to fund some of these programs. I doubt that will be difficult for us considering our current credit rating. https://sgp.fas.org/crs/misc/RS22331.pdf

tomcam• 5 years ago

These numbers don't include state debts and state pension fund liabilities.

bserge5• 5 years ago

Nobody cares anymore. People are working, resources are being extracted, created and traded, economies are rolling. Money is there to facilitate that, but on its own it's pretty much worthless. Just wish inequality wasn't so fucking huge.

TbobbyZ9• 5 years ago

Inequality will keep getting greater till businesses stop sleeping with the government AND the government stops handing out free money. Corporations, and that means executives, got fatter cause they lined their pockets with all that free covid money.

boringg2• 5 years ago

On the inequality front - I just wish the media didn't fan the flames all the time and make it feel like the only thing that matters. If I didn't know how the rest of the world lives I probably wouldn't care as much about it. If I see stories about it all the time and people flaunting their wealth it aggravates me.

I also recognize it is a real problem and we can solve it likely through policy/political will power. It in and of itself is not going to solve our problems.

adventured2• 5 years ago

It is exceptionally deceptive, particularly in massive economies like the US which produce dramatic scaling outcomes like a Bezos or Gates, an Apple or Netflix or Walmart. China is going to struggle with that same issue persistently.

And it's also true that it's pretty clear the US median wealth figure should be higher than it is, considering the vast average wealth figure in the US. The gap between those two numbers should not be as great as it is. And blatantly the bottom 50% of the population should have a lot more wealth than they do at present.

Maybe if the US had eg a good universal healthcare system (and no more medical bankruptcies), half of the country wouldn't mind so much that that median vs average wealth gap is what it is. Social contracts are important. You get this, they get that. As it is, the US social contract is not so great these days, compared to other affluent peer nations. The US has a large welfare state and gets a lot less for its spending compared to other peers. If our healthcare costs matched Britain per capita, Medicaid could instantly expand to cover 40-45% of the population for example, at no additional cost.

_red• 5 years ago

Just wish inequality wasn't so fucking huge.

Printing money leads to greater inequality. Expect more of it.

mempko3• 5 years ago

Depends on who gets those flows. It's clear right now it's the rich.

mshanowitz• 5 years ago

Until money no longer becomes a reliable measure of value and then everything goes to hell.

Right now we are benefitting both from the stability of the US Dollar, as well as from the benefits of pumping more and more of it into the system (rising asset prices etc), if they lose the ability to maintain this balancing act it won't be pretty.

bojangleslover• 5 years ago

Inequality is not necessarily a bad thing.

http://paulgraham.com/ineq.html

bserge5• 5 years ago

Sure bruh, as long as you are not among the poor.

wallawe• 5 years ago

Inequality seems like a meaningless metric. It's not a good measure of a society's well being.

For example, let's assume a country of 10 where 9 people have $1 million and 1 person has $100 trillion. The inequality is massive but everyone has a great standard of living.

agentdrtran2• 5 years ago

that thought experiment is nice but in the real world we have widespread poverty and 1% with more money than any human could ever spend

sassifrass• 5 years ago

That’s not how the Gini coefficient[1] is being calculated.

[1] https://en.wikipedia.org/wiki/Gini_coefficient

Ekaros4• 5 years ago

Without external trade I doubt that 1 million will buy too much.

bserge5• 5 years ago

And now let's take a real example where 100 people have a trillion and 100,000,000 people have 10,000. And that's not even the bottom end.

drtz• 5 years ago

This is a fair point.

Treating things like Social Security and Medicare obligations as unfunded debt is akin to me declaring that I have a large amount of debt because I have to pay for food and clothe myself from now until I die.

It's money I will pay, most certainly, but it's only an obligation to myself to sustain my life at some reasonable standard. Much like Medicare and Social Security, it will be paid for with money I earn in the future as I live my life.

TbobbyZ9• 5 years ago

Flat tax, cut spending, cut welfare programs, fire everyone in the government who overspends the budget during their term. Problem solved.

TbobbyZ9• 5 years ago

Ahhh I love left wing hacker news. Lots of down votes on conservative principles, zero responses.

msla• 5 years ago

Flat tax is regressive: https://www.investopedia.com/terms/f/flattax.asp

While a flat tax imposes the same tax percentage on all individuals regardless of income, many see it as a regressive tax. A regressive tax is one in which the government taxes high-income earners at a lower percentage of their income and low-wage earners at a higher percentage of their income.
The tax is seen as regressive due to a more significant portion of the total funds available to the low-income earner going to the tax expenditure. While the upper-income payer still pays the same percentage, they have enough income to offset this tax load.

Cutting spending never seems to involve military or police or coal subsidies...

"Welfare" doesn't exist anymore: https://fivethirtyeight.com/features/most-welfare-dollars-do...

Fire anyone in government who overspends? OK, how do you define overspending?

TbobbyZ9• 5 years ago

https://youtu.be/EPjrFjAxwlw

david-cako• 5 years ago

Invisible works require invisible funds. Don't worry about it, it's not good for you.

m_ke2• 5 years ago

Sounds like we need to start taxing the rich a lot more to pay it off.

TbobbyZ9• 5 years ago

If you tax 100% of the money rich people have, it wouldn’t even put a dent in the debt.

ceejayoz7• 5 years ago

Sure it would. We could pay the entire thing off with that.

https://www.cnbc.com/2021/06/23/how-much-wealth-top-1percent...

The wealthiest 1% of Americans controlled about $41.52 trillion in the first quarter, according to Federal Reserve data released Monday.

Can't do it again as easily, of course.

seneca2• 5 years ago

Yeah, just strangle the golden goose and we'll eat like kings tonight.

Tonight.

meepmorp• 5 years ago

Oh no, whatever shall we do without if we no longer have rich people but still have all their assets?

jfengel4• 5 years ago

It's a misleading way of calculating the number, since it refers to all of the future debt obligations, including Social Security out many decades -- but also ignoring the fact that we'll be collecting taxes all that time.

It's a bit like concluding that you're a million dollars in debt because you are going to need to buy food for the rest of your life. I suppose it's true -- it is something you need to plan for. But it's misleading to suggest that it means you're automatically destined for bankruptcy.

The fact is that Social Security is in trouble: the pay-as-you-go plan doesn't work with an increasing lifespan. The establishment of the Trust Fund didn't really solve it -- it really just increased the size of the federal government without having to explicitly borrow money (and then still somehow managed to also have to explicitly borrow money).

But that doesn't make "$146T" a meaningful number. The meaningful number is 2033, the year Social Security is projected to run out of money. Also, conveniently, the year I qualify for Social Security -- this is something Gen X'ers have always expected, though it got worse during the pandemic.

That doesn't automatically mean we won't get anything, but it does mean that the government is going to have an even harder time meeting its obligations.

megablast• 5 years ago

Wouldn’t the date it runs out of money be pushed out further due to increased deaths during the pandemic?

ceejayoz7• 5 years ago

That might be confounded a bit by https://www.ssa.gov/benefits/survivors/.

smaryjerry4• 5 years ago

600,000 over the last two years may seem like a lot of deaths at face value but over the same period of time about 4,500,000 died from other non COVID things and 6,000,000 people were born. So the deaths from COVID are relatively small in comparison. Plus the debt only increased due to COVID as they printed and spent trillions upon trillions of dollars.

JumpCrisscross2• 5 years ago

Would also note that if you're incorporating unfunded future liabilities, it also makes sense to cancel out intergovernmental debt, e.g. Treasuries held by the Federal Reserve or by agencies.

nickff• 5 years ago

You can't quite 'cancel out intergovernmental debt', as their sale (to extract their value) would cause devaluation. I am not sure how you would model the loss in value.

Bostonian• 5 years ago

If you were valuing a company you would add the value of the pension fund but subtract the present value of the pension liabilities. When considering the level of indebtedness of the Federal government, I think liabilities such as Social Security and Medicare should be included.

Kranar• 5 years ago

ignoring the fact that we'll be collecting taxes all that time.

This is all wrong and it does not ignore this. The calculation only includes the portion of future obligations that can not be funded based on future revenue estimates. It does not simply take future expenses without taking into account future revenue as that would be patently absurd.

Furthermore it only includes future obligations that have currently been committed to, so for example it does not make projections about people who will at some point in the future be enrolled into Social Security (for example people not yet born).

DFHippie• 5 years ago

The meaningful number is 2033, the year Social Security is projected to run out of money.

This is the year the trust fund runs out of money, at which point Social Security won't be able to meet its full obligations, only what it can cover with current payroll taxes. Social Security can't run out of money unless the taxes that support it are eliminated. "Social Security won't be available for you Gen X'ers" is misleading propaganda spread by people who want Social Security to go away. When the trust fund is tapped out, unless we remove the income cap, Social Security will be less generous. It won't go away. If we remove or lift the income cap, this problem goes away altogether.

tibbon• 5 years ago

Removing the income cap is really a clear way to mitigate this problem greatly. From what I understand it doesn't fix it entirely.

I wonder if we could put SS on capital gains, even at 1%. That would help this include investment gains.

28698367• 5 years ago

As someone who makes far in excess of the $100k income cap, I find the income cap to be bonkers. I funnel a lot of that excess into my own investments, and maybe that’s the point, but $100k sure ain’t what it used to be. Why not make it $250k?

jfengel4• 5 years ago

That's correct: the trust fund runs out and it won't be able to meet the full obligation. It will be able to meet partial obligations, though there's no law specifying how.

This isn't GenX complaining that Social Security should go away. That was GenX complaining that Boomers spent the 80s spending extravagantly through the federal government, and racking up enormous debts, while patting themselves on the back for being fiscally conservative.

It wasn't the Social Security they were unhappy with, but the other expenditures. Which expenditures, of course, are always hard to pin down -- it's easy to complain about the bottom line but not to say what you want to cut. Many would point to the ballooning military budget -- and that's all before 9/11.

But that's water under the bridge. We still expect to receive less Social Security than our forebears, and there's practically nothing we can do about it.

matthewdgreen• 5 years ago

The meaningful number is 2033, the year Social Security is projected to run out of money.

This comment is excellent, except for one clarification: "Social Security" is not going to run out of money. The "Old-Age and Survivors Insurance Trust Fund" will run out of money in 2033 (the disability insurance fund is solvent until 2057). After this happens -- and assuming no action by Congress -- Social Security will still be able to pay 76% of benefits to retirees based solely on payroll taxes collected. This isn't a great outcome, but it's far from insolvency.

platz• 5 years ago

the government can't be insolvent to by owing money to itself.

throw0101a2• 5 years ago

Social Security will still be able to pay 76% of benefits to retirees based solely on payroll taxes collected.

78% actually. See Figure II.D2:

* https://www.ssa.gov/OACT/TR/2021/tr2021.pdf

It falls to 74% by 2095.

hartator3• 5 years ago

But that doesn't make "$146T" a meaningful number.

If you have to pay annuity to a relative until they die, I don't think it reflects a good picture of your net worth to ignore that number either.

listless• 5 years ago

If I’ve learned anything during the pandemic, it’s “that’s not how money works”. If it runs out, they’ll just borrow more. The real question is at what point are we so leveraged that we default on bonds because we can’t meet our obligations? 10 years? 100 years? I don’t think anyone can answer this. But this is how it will likely end.

OldHand20183• 5 years ago

Isn't it more like 3 weeks, according to Janet Yellen?

bscphil2• 5 years ago

The real misleading part, to the point of being actively malicious, is "Each Taxpayer's Share: $951k".

This is intended to make the median viewer, who will never see that much money at once in their entire life (and will take 20+ years to even make that much before-tax), feel that the Federal government is being irresponsible. It's an obvious push for fiscal conservatism which, crucially may or may not be warranted by the actual facts.

To state the obvious, most people out there do not make enough money to plausibly pay one million dollars in taxes. Therefore they will not be paying one million dollars in taxes (you can't squeeze blood from a stone). The inevitable result is that either the U.S. government is doomed to go bankrupt (what they want you to think), or rich people will be contributing more than that to the United States' debt obligation (hint: they already are).

bassman9000• 5 years ago

feel that the Federal government is being irresponsible.

It is.

https://tradingeconomics.com/united-states/government-spendi...

nradov• 5 years ago

A sovereign can't literally go bankrupt. Instead when debt service inevitably becomes unmanageable then the Federal government will most likely force creditors to take a cram down.

throw0101a2• 5 years ago

The fact is that Social Security is in trouble: the pay-as-you-go plan doesn't work with an increasing lifespan.

The situation is not ideal, but it isn't cataclysmic:

The authors of the most recent report even took their calculations out to the year 2095. At that point, they estimate payroll taxes should still be able to cover 74% of payouts to Social Security recipients.

* https://awealthofcommonsense.com/2021/09/can-young-people-st...

The report in question:

* https://www.ssa.gov/OACT/TR/2021/tr2021.pdf

Two possible solutions (non-exhaustive): increase pay cheque contributions, use general revenues to make up the shortfall.

smaryjerry4• 5 years ago

I thought it could be misleading as well but it is not just calculating the “food you’ll need,” it is also calculating receipts over the same time that pay for food. It’s like saying you promised to buy a TV for $900 in December and by December you will only have $300. That means you will have to borrow $600 before then to meet that promise. Does that mean you owe $600 now, no, it does mean you either can’t buy the tv or will have to borrow that much more. It is essentially debt.

EastOfTruth• 5 years ago

28T or 150T ... either way it is really bad....

VictorPath• 5 years ago

medicare...social security....pension & retiree

Funny how all the money given to Raytheon etc. to fund 20 years of Afghan war and nation building, and military bases all over the world never adds any debt!

The only government spending lobbyists and think tanks ever see is the spending that I might at some point see some benefit from.

literallyaduck2• 5 years ago

If America defaults and wipes the foreign debt, what happens worldwide?

ivalm3• 5 years ago

Why would it default? It has USD (fiat it controls) denominated debt, it can literally pay any debt through monitory expansion.

literallyaduck2• 5 years ago

Not that it would, it just a thought experiment.

Hyperinflation and passing the tax via watering down the money supply to the foreign investors is essential the same as default right?

medvezhenok2• 5 years ago

Why would it default? It has USD (fiat it controls) denominated debt, it can literally pay any debt through monitory expansion.

Not if it wants to be able to borrow in the future... Look at what happened in 1978 - they had to issue non-USD bonds since foreign banks weren't willing to purchase USD bonds: https://en.wikipedia.org/wiki/Carter_bonds

mywittyname3• 5 years ago

I don't think we want to find out. Best, and most probable case, the government renegotiates the debt and agrees to pay stiff penalties. Worst case? Countries start seizing assets worldwide. Maybe just America government assets, maybe also American citizen's assets. Who knows how far that escalates. Perhaps the government will reimburse citizens, maybe they will sabre rattle. It's hard to tell.

This is like Brexit. It's really hard to predict what will happen as a result, but we know it's going to be both bad, and far reaching.

I strongly suspect that the Administration, Treasury, and Fed all have provisions in place for if this were to happen. The debt ceiling debacle has been getting worse every year, and given the events of 2020, it's not crazy to think that there is a real possibility of default. There are probably members of Congress who are hoping for a default, thinking it may cripple the country.

kingforaday• 5 years ago

If I were to accept the numbers as real and accurate. Am I correct to assume $951k over my "working" lifetime? Assuming if I start working at 18 and stop at 67, is that 951K "owed" over that time period? ~20K/yr in taxes owed to repay the debt.

Is this correct thinking? Asking for a friend. :)

mempko3• 5 years ago

That's the amount that went into the private sector. It's literally how much money went into the private sector, every penny of it. To put it another way, if the government didn't spend, then the private sector would get less income. Or, every American would be fiscally poorer. One's spending is another person's income.

ivalm3• 5 years ago

What matters is velocity of money, and to be fair that number has gone down.

ivalm3• 5 years ago

Yes, but better since with inflation the “real” dollars are lower. At 3% inflation that 20k in 30 years is like 8k now.

glenstein• 5 years ago

Numerous good responses already, but basically the first thing you should do when you see anyone talk about The Debt is say "Okay, now do assets and revenues."

The second thing you should do is note that talk of "unfunded liabilities" is a 10 year old debunked talking point that invites you to imagine future spending over an infinite horizon without setting it side by side with future revenue. Nobody will ever give you a clear, simple explanation of why you should think that way.

The third thing is take to heart some good points being raised here - debt is an investment in U.S. growth and not just a bad loan you are carrying around, the whole thing gets reframed if you consider what the U.S. is "worth", and probably many more after this post has been up for an hour or two.

I think articles like this really highlight the value of a place like hackernews. The instinct to tear apart assumptions and unstated premises is at its best in response to articles like these, so I tend to upvote these items even though I disagree with their framing.

adventured2• 5 years ago

And since that $146t figure is long-term obligations looking out decades, the US net worth also must be adjusted for future terms matching those forward decades. Even a modest growth rate applied to the US asset base over 30-40 years produces an extraordinary sum. As you note, the people that like to pretend the $146t is actual debt, go out of their way to evade such discussions.

Since the peak of the real-estate bubble circa 2007 (right before household assets dropped), US household wealth has more than doubled, while household debt has remained very tame by comparison.

The gain has roughly been $66t to ~$145t since 2007, in household assets. The debt increase has been $14.6t to ~$17.3t.

So nearly $80 trillion in added wealth, stacked against $2.7 trillion in new debt, over ~14 years. That's beyond extraordinary. You can hear the skeptics though: yeah, but that's bubble wealth; ok, chop it in half, $40t stacked against $2.7t in new debt, still extraordinary.

Over that time US households produced more new wealth than China did, to put that gain into perspective (and yes, most of it went to the top 1/3).

Also interesting, the debt of US states has shown no consequential increase in those 14 years. The total debt of the states went from $3t to $3.23t. That's another great positive for the US when it comes to debt (stacked against the growing federal debt mess of course). States fortunately often have restrictions on deficits.

cs7022• 5 years ago

This is disingenuous, alarmist, click-bait, bulls**t.

The $28T figure consists of:

* ~$6T held by the Federal Reserve: https://fred.stlouisfed.org/series/FDHBFRBN -- this is money that the government owes, quite literally, to itself, made possible by the independence of the Federal Reserve, which has been buying government obligations to keep interest rates low.

* ~$7T held by foreigners: https://fred.stlouisfed.org/series/FDHBFIN -- this is money that will have to be paid to foreigners, over the long run.

* ~$15T held by US taxpayers, calculated as total held by the public (https://fred.stlouisfed.org/series/FYGFDPUN) less total held by foreigners (above).

Thus the US federal government owes $15T to taxpayers. If you have a bond index in your 401(k), then YOU are one of those taxpayers to whom the US government owes those $15T. The federal government owes money TO you. Your share is how much you will receive.

The social-safety-net figures in excess of the $28T are future obligations... also owed to, guess who? US taxpayers. If you expect to benefit from Medicare and/or Social Security in your old age, then YOU are one of those taxpayers to whom the US government owes those future obligations. The federal government owes those obligations TO you. Your share is how much you will receive.

Ekaros4• 5 years ago

I think it is reasonable to count debt that is owned to other tax payers. As clearly that debt is not going to be defaulted on so taxpayers not owning it must pay it back to someone else...

cs7022• 5 years ago

It makes no sense for a single taxpayer to look at how much will be owed over time to millions upon millions of other taxpayers, without taking into account that all of those taxpayers are also simultaneously paying and will be paying taxes.

lettergram• 5 years ago

For those interested, I wrote a website that lets you easily contact your local, state, and federal representation. Still building it out, if anyone has anything they'd like added please let me know:

https://vocalvoters.com?category=increased%20government%20sp...

Note, the current options are all based on who was willing to work with me. If you have any suggests happy to add.

mempko3• 5 years ago

Everyone reading this needs to watch The Gaurdian's short video about government debt with David Graeber.

https://www.youtube.com/watch?v=LxJW7hl8oqM

It's amazing how little the general public and especially our elected officials understand this.

999900000999• 5 years ago

https://www.politifact.com/personalities/truth-accounting/

It's worth researching the bias of your source before taking it too seriously. Like jfengel said, they're using funky math. Oh no I'm over 2 million dollars in debt because over the next 40 years I'll probably end up spending that much money on food and housing.

The national debt itself is basically a fiction, it has absolutely no bearing on anyone.

crobertsbmw• 5 years ago

I don’t understand how social security isn’t a pyramid scheme. It seems to me like something we should just do away with.

TbobbyZ9• 5 years ago

Amen. It takes away personal responsibility.

ceejayoz7• 5 years ago

https://www.washingtonpost.com/blogs/ezra-klein/post/is-soci...

The superficial similarity to a Ponzi scheme is that different sets of investors are relying on future investors, or at least future growth, to get paid back. But that defines a Ponzi scheme so broadly as to make the term meaningless. In that definition, any intergenerational transfer system is a Ponzi scheme.
What makes a Ponzi scheme a Ponzi scheme is that it’s a giant fraud. People think they’re investing in postal stamps. Their money is actually being invested in nothing. In Social Security, conversely, it’s perfectly clear what is going on. Every year, Social Security’s actuaries release an insanely detailed report on the system’s finances, its balance of payments, the potential problems it could face, and so on. You can read their report here. In a Ponzi scheme, the finances are a secret, and that’s central to the enterprise. In Social Security, they are, as a matter of law, public.

medvezhenok2• 5 years ago

In a Ponzi scheme, the finances are a secret, and that’s central to the enterprise.

Reminds me of the Ponzi that explicitly announced it was a ponzi scheme - kind of like a game of hot potato. You can profit as long as you're not the last one in. Or maybe that's just called crypto :)

mywittyname3• 5 years ago

It's not a pyramid scheme because there's no promise of returns. One may pay $1,000,000 in social security and receive $0, but other may pay in only $10,000 and receive $100,000 over their lifetime. People who pay into it will get $X, unless the surplus runs out, in which case they get a reduced amount proportional to the amount of money coming in.

A pyramid scheme guarantees returns, and those guarantees can, and will eventually, exceed the amount of money held by the scheme. Social security makes no such guarantee.

Social Security is basically a modified tontine. You pay in during your working life, and then receive payments at some age until you die. Like a tontine, the longer you live, the more payout you receive.

rundmc• 5 years ago

Fully agree with the analogy but you disparage tontines!

49/50 US state workers pension will run out of money by 2033 because they are purely run as 'guaranteed' ponzi schemes.

The exception is the state of Wisconsin which operates more like a tontine in the sense that the payments you can expect is adjusted based upon on the mortality of other members in the system.

I know this because I am making progress convincing governments and supranational organisations that the only sustainable pension system is the one we are enabling through our platform at https://tontine.com

jazzyjackson• 5 years ago

Another way to think of "debt" is "money supply"

The more debt the US government goes into, the more money there is to go around.

goalieca• 5 years ago

Liabilities are different than debt.

DSMan195276• 5 years ago

I honestly don't get why anybody ever mentions the "taxpayer's share" as though it means anything. Yes we have a lot of debt, but the debt has actual terms for paying it, it's not like someone can go "BTW we expect that $28T in the mail tomorrow" and we'd have to pay up.

IE. I own a house, which costs more than I make in a year. But the bank is not allowed to just email me tomorrow and ask for all the money, I have 30 years to pay it off with a set schedule I'm capable of meeting, so the actual amount of debt is pretty irrelevant.

hartator3• 5 years ago

Another figure I like to focus on it's public spending as percentage of GDP.

In 2020, the U.S. government has spent 46.18% of the total GPD. Which means almost half of every economic activities in the U.S. were directly spent by the government.

I think it's a more interesting number than debt or taxation as you can immediately see how much the government controls the economy whereas debt and taxation are just technically playing the money supply at the end of day.

dragonwriter3• 5 years ago

In 2021, the U.S. government has spent 46.18% of the total GPD.

Even for Fiscal Year 2021 (which ends tomorrow), we won't have solid GDP numbers for a while, so that's at best speculative, and higher than most projections I’ve seen (most of which are down several points from 2020, which was a little below that.)

If the reference is to calendar year 2021 (which is the most natural unqualified reference), its even more speculative, as there is a day more than a full quarter of the year left.

Which means almost half of every economic activities in the U.S. were directly spent by the government.

No, it doesn't. While GDP is the most common current measure of economy size, and may vary in proportion to total economic activity, it by design does not capture all economic activity. GDP measures end-purchaser value of production, not total economic activity. Lots of economic activity is (for instance) resale, which doesn't matter to GDP.

hartator3• 5 years ago

Even for Fiscal Year 2021

Sorry meant 2020. The number is from wikipedia and is not speculative as far as I know: https://en.m.wikipedia.org/wiki/List_of_countries_by_governm...

Lots of economic activity is (…) resale, which doesn’t matter to GDP.

The government reported expenses don’t included internal resale as well. GDP and public spending will go to infinite if it does, I fail seeing why it’s relevant here?

US Published National Debt: $28T. The Truth: $146T. Each Taxpayer's Share: $951k

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