How will the U.S. be able to get rid of its debt without hurting the economy?
Answers
3127 points
EthanR answered 3 months ago …
One great way would be to cut out all of the pork spending that our congress is so eager to approve in order to get re-elected, and really tighten up the budget. Reagan did it and it worked, and so did Clinton to some degree. I really think the economy IS hurt by our ongoing debt, and am not sure that it would hurt the economy to get rid of the debt.
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103 points
ttseim answered 3 months ago …
Cut spending, reduce taxes, tax income will go up and payment on the debt will rise accordingly if the elected officials will be leaders instead of poll followers worried about reelection
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SPaM007 answered 3 months ago …
I agree with both EthanR and ttseim. Not to get political, especially in an election year, but we have way too many career politicians. Once in office, most of our politicians are way too eager to spend money on programs that they feel will get them reelected, instead of what would truly be best for the country and the economy. Cutting spending and lowering taxes has always ultimately increased tax revenues. The problem has been that our politicians have always been way to eager to spend the increased revenues on programs instead of paying down the debt. We need to hold the line on spending as the tax revenue increases and pay down the debt, which will in turn increase tax revenue further. Additionally, when cutting taxes, it needs to be done across the board, not to specific segments, based on income level, and no new taxes on capital gains. Raising taxes on any of these would stifle the economy and be counter productive in raising tax revenue.
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152 points
Prudent answered 3 months ago …
All the above are good pointers on how to cut spending and improve economy. In addition ...
1. Cut down military misadventures - cost estimated for iraq war alone estimated at 5 trillion including health expenses for army personnel rehabilitation due to war injuries and trauma. Thats more than what oil in iraq is worth assuming they give it all for free! you can understand why this war is absurd. And now bush wants to train his guns on russia over ossetia and abkhazia province which wants to secede from georgia.
2 . cut down agriculture subsidies
3. outsourced jobs need to be replaced to provide employment
4 . Cut down on oil imports - close to $1 trillion outgo a year, use fuel efficient vehicles , exploit available gas reserves and renewables , can retain large part of revenues within country instead of giving it out to middle eastern countries
Can U.S ever be debt free ?! Never. It has a growing debt burden from social security , health coverage etc.
If it acts in a financially responsible way it can improve or it will be a bigger mess with high inflation and collapsing dollar.
Save and invest prudently in value stocks , you have a better future than the country.
Hope this was not too frightening scenario, but this is the kind of mess individuals and countries can get into due to overspending and sinking into non productive debt. A country like U.S has been lucky to raise funds so far but the question is how long ?
And at what cost to the economy.
102 points
EncReader answered 3 months ago …
Although these answers are good, they are only the tip of the iceberg. The real elephant hiding in the closet is the cost of Medicare and associated programs. The total unfunded liability of this program today is 6 times the total annual output of the US economy. Richard Fisher (President and CEO of the Federal Reserve Bank of Dallas) addressed this in an excellent speech, at http://www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm. Frankly, this problem is so huge I don't see a way out. The entire spending on all other government programs (Defense, pork, education, you-name-it) could be cut to zero and the liability to every family of 4 (including infants, elderly, everyone) in the US is still about $1.3 million dollars. Even though Fisher pointed out the problem, he didn't give a solution. Ideas anyone?
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583 points
jillybeansisme answered 3 months ago …
It will take a long time to dig out of this mess, but I have to agree with all of the above. In addition, let's downsize our government. Let's rethink how we disburse our revenues -- I gave an answer to another question regarding social security and, briefly, it was have the Government act like a big corporate 401K. For every $1 you save, the gov't. will give you 50 cents up to a certain $ amount. Does't matter who you are. If you have a social security number, you get the subsidy and it is tax free (the subsidy and dividends and growth, etc) until retirement. If Mama wants to start an account for Junior, that's fine. Junior gets the subsidy. You can take it out according to the current standards (or whatever is set) at which time it carries a 5% maximum tax if you are the correct age or medically disabled. Pay for it by downsizing gov't., subsidies to corporations, etc. as mentioned by other Hounds.
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160 points
whiteshadow204 answered 3 months ago …
I heard I.O.U.S.A. is a good watch. Haven't seen it yet... though I intend to.
http://www.iousathemovie.com/
951 points
Grudun answered 3 months ago …
One topic that was missed is to reform medicare. Medicare spends movey on stupid things and with at little reform could easily cut a significant amount of its expenses. The easiest way to do this is to enlist the people already in the program. Offer them a cut of any simple change to how they get their services or the services requested and watch the costs drop, and give a little to the administrators so they don't squash every idea. This would help get rid of stupidity like renting equipment for years at the rate it would cost to buy it in 6 months. I have heard stories of other waste from seniors who see it every day but have no incentive to help change the system.
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2703 points
MNSL answered 3 months ago …
Mainly there should be reduction in the energy expenses. I think it will gradually happen due to slower world growth and recession worldwide including USA. They shoud go for energy efficiency methods.
World third biggest oil producer in the world. But import more than 50% of oil need.
Commodity prices should come down. More industries should prosper.
The biggest oil consumer in the world. In addition USA consume more products and they imports more products. They should do more exports as well.
Finally inflaiton should come down.
408 points
SallyG answered 3 months ago …
Prudent, you/ve got it right.
Whiteshadow204, run don't walk. I saw the opening night, and the film is excellent. And for the full "thriftville vs. squanderville" story, there's a link at www.berkshirehathaway.com.
See Physicians for a National Health Plan (www.pnhp.org) regarding Medicare expenses: Medicare's administrative cost is 4% compared with private insurance administrative expense of 31%. And just think if Medicare Part D (prescription coverage) had been passed with the same drug-price negotiating ability that the VA already has (drug lobby saw that it didn't; legislators who worked on that bill are almost all working for drug companies today, according to one source I saw [Sicko?])
The Founding Fathers envisioned elective office as a part-time job, with legislators returning to their full-time careers after service. I would certainly like to see a more varied makeup of the legislature than the ever-increasing number of career politicians and lawyers, but don't know quite how to achieve it . . .
Cap and trade on carbon emisions, as supported by the Environemntal Defense Fund (I highly recomment Krupp's book, "Earth: the Sequel" for a look at up-and-coming technologies, both current and speculative) would be a way to encourage alternative energy without forcing legislators to be scientists and "bet" with subsidies as to which technology would work, and would reward the most successful innovators (who could sell more carbon credits as they further reduced their carbon output). It would also allow companiues to plan without considering the effect of subsidies on their funding or competitive position.
408 points
SallyG answered 3 months ago …
P.S.: Re: my previous answer, on the Berkshire Hathaway page, look for Fortune article from 2003: it has an interesting suggestion of Import Credits as well. Sorry for any misspellings.
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dustbusterz answered 2 months ago …
"How will the us get rid of its debt ,without hurting the US Economy?" Thats a bit like saying to your neighbor (after you cut down the tree) how can I get this tree out of the middle of my roof, with the least amount of damage.
The damage should be evident to you at this point. Unemployment at more than 6% this year.More than 2.2 million people out of work. Homes sitting there rotting ,cause they can't be sold. Banks too afraid to lend money.And our lovely Government making us pay for the bank's stupidity.I'd say its a bit late for that question. But ,we can ask how do we clean up this mess and get back on track?
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