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US Government Debt: Republicans refuse any tax, Democrats want to spend more


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Herbert Stein's Law is that something that cannot continue forever, won't.

At present, the Democrats primarily want to increase spending and are willing to negotiate on taxes.

The Republicans want to limit taxes but are willing to negotiate on spending.

Clearly, various US governments (federal/state) cannot continue to increase spending while decreasing/maintaining tax revenue. It is clear to the world what is happening.

Note: I started this thread because of a discussion elsewhere: 

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Macroeconomists define a Ponzi scheme when government borrowing is rising faster than the GDP.

Mankiw, Ball, Elmendorf 

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Graph

Some points:

This graph only shows federal debt - not state debt obligations.

The graph also shows a dip in early 2021, before the planned Biden spending package that will add about 20% to the debt:GDP ratio.

At present, Japan has a government debt to GDP ratio above 200%. IOW, the Japanese government owes more than 2X its GDP.  (IOW, US governments can borrow much more.)

Almost all US government debt is denominated in US dollars - a currency controlled by the US Federal Reserve. Moreover, about 15% of US Federal debt is held by the Chinese government.

Edited by August1991
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The US is the only civilized society in the world without a federal (central) sales tax.

A US federal sales tax of 5% (we call it the GST in Canada and Australia. In Europe, it's called the VAT) would mean that the US federal government would ensure the sustainability of the United States.

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2 hours ago, August1991 said:

The US is the only civilized society in the world without a federal (central) sales tax.

A US federal sales tax of 5% (we call it the GST in Canada and Australia. In Europe, it's called the VAT) would mean that the US federal government would ensure the sustainability of the United States.

And the Republican Party would tell you that just eliminating Social Security would do the job even better and that's what they'd rather go with, thanks.

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2 hours ago, Argus said:

And the Republican Party would tell you that just eliminating Social Security would do the job even better and that's what they'd rather go with, thanks.

Argus,

Medicaid is better than our provincial health systems. (For Canadians that don't know, Medicaid is govt insurance that allows Americans over 65 years to choose their doctor, specialist.)

Social Security Max?

US $3100

https://www.investopedia.com/ask/answers/102814/what-maximum-i-can-receive-my-social-security-retirement-benefit.asp

CPP Max?

Cdn $ 1200

https://www.google.com/search?q=cpp+monthly+maximum+2021&rlz=1C1CHBF_enCA961CA961&oq=cpp+monthly+maximum&aqs=chrome.0.0i512j69i57j0i22i30l4j0i390l3.14330j0j15&sourceid=chrome&ie=UTF-8

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In Canada, we have the OAS which adds about $600 to the Cdn pension above - but Mulroney clawed it back for rich people.

In Canada, we also have the federal GAINS - this more or less less ensures that any impoverished person over 65 receives about Cdn $2000 per month.

My advice? Buy a place in Cyprus. Declare poverty. 

Edited by August1991
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