You guys are kidding, right? Who cares how much they owe? If their debt gets too high, maybe people will stop lending them money. Without a credit line, they would have to learn how to budget. Better yet, maybe their creditors could foreclose on their assets. The debt could be settled pretty fast if every federal employee's homes, cars, and belongings were auctioned off.

Um..no.

I think the main issue here is the problem of the U.S. Government's debt. This is because we (the U.S. Govt.) are spending too much money on government institutions and programs than what is brought in via tax dollars. The big problem behind this is that we end up having to borrow money from other countries or from ourselves. This weakens the amount the common U.S. dollar is worth as certain interest rates climb. This leads to inflation. Inflation occurs when the cost of goods far outweighs the money it takes to buy them. Anyone want to try to buy a carrot for ten bucks? No. That is why it is so important to take care of the national debt.

"we"? YOU are the U.S. Govt.? You use the word "we" a lot, so I assume you are a US federal employee. You cannot borrow money from yourself. You have to find others willing to lend to you. In the US, that usually means foreign investors buying US bonds. A weakening dollar tends to wipe out profits on dollar-based investments, which lowers those people's incentive to lend to you spending addicts. If you can't borrow money, you can't spend it. Problem solved. Eventually, you fed guys will have to sell your limos and interns and get a real job.

Dear Zack ~

Thank you for the personal attack. It was so uninformed, presumptous, and juvenile, I almost laughed hard enough to fall out of my chair. No, I'm not a fed. employee, you rabid idiot. I'm a dirt poor college student. Do me a favour, get out all the dollar bills in your wallet, look at them carefully, then apply them, with one good shove, up your anus.

I hope you get paper cuts.

Sincerely,

Deference

CWarsh:

As far as business "income" goes, I think you have to look at some accounting practices pretty close to understand how money by corporations (especially s-corporations which are single person entities) to see how you can hide income. Under the current law you use your family as employees, establish IRA like plans for them and shelter as much as $100,000 under the business envelope.

The truth is that if you look at the law (currently in place) you will see that the lawyers and accountants have established a very lucrative trade in making sure that rich people can shelter their money. If you institituted a flat tax (which I favor, by the way) I wonder how they would do the shelter game. It would still be done either in off-shore trusts or even like one guy I know who established a charitable trust that extends his assets through the trust over the course of his life as well as his daughter's (she is currently 15). Tax bill on the money: $0 per year for as long as either of them is alive.

Dearest Deference...
Glad you had a good laugh. "Personal attack?" No, I thought I had valid points. I believe financial markets are self-fixing in the long run. If anything, your post seemed rather hostile (none intended by me). I'm uninformed, juvenile, an idiot? I don't see any counterpoints in your post, only insults and hostility (I liked that last line- though rather hostile, it was rather funny).

Dearest Deference...
Glad you had a good laugh. "Personal attack?" No, I thought I had valid points. I believe financial markets are self-fixing in the long run. If anything, your post seemed rather hostile (none intended by me). I'm uninformed, juvenile, an idiot? I don't see any counterpoints in your post, only insults and hostility (I liked that last line- though rather hostile, it was rather funny).

What a good sport. Perhaps I was a bit defense(offense?)-ive, but I really do not like to be called a fed. employee. I've known too many of them who aren't earning their pay and I think that perhaps you may have been misreading my post and / or been uninformed by trying to say the national debt could be taken care of by having those guys give up their perc.s.

My bad.

Americans don't need to worry about their national debt. If it becomes too large and too draining, the US will simply declare it's not going to pay it back, and just take the repercussions of such a move. After all, there's nobody to stop them.

OMG! That is so ignorant! Do you have any idea of the "repercussions" this would cause?

Let me ask you two more questions:

What is a dollar "worth" if people think the American government does not back it?

What has happened to the currencies of other countries who have reneged on their debt?

We would experience hyperinflation and that is a death spiral only the backing of other countries can arrest. And how willing would other countries be to come to our rescue if we have the cavalier attitude about our responsibilities you ascribe to?

Some of the idea's users have posted on this are absurd. First and formost, the government can not default on their loans. Second, YOU... THE PEOPLE OF THE UNITED STATES own the debt not the government. Third, YOU ARE THE GOVERNMENT. Fourth, the debt is mostly to the public of this country and Japan anyways so the money given back through loan buybacks would re-enter the economy and raise tax revenue. Fifth-

OMG! That is so ignorant! Do you have any idea of the "repercussions" this would cause?

I guess many are ignorant. Sixth, paying back the loans would raise the vaule of the dollar vastly making it all worthwhile.

Some of the idea's users have posted on this are absurd. First and formost, the government can not default on their loans.

Sandy2,

I disagree your assertion that governments cannot default on their loans. Third world nations have done this before. It could happen to the US. Let me give you a simple example: Let's say we made $100 per year, but we owed $2000 @ 10% interest. We come up with the great idea that we'll sell more treasury bills and essentially just borrow enough money to pay our interest. But no one wants to buy the treasury bills because they say to themselves, "These jokers only made $100 this year, but the interest they owe is $200! If we loan them more money, we'll just be throwing good money after bad!" This has happened to other governments. They barely manage to make their interest payments and when a bad year comes along (natural disaster, poor harvest, etc) they ask to borrow a little more. No one wants to loan them even more money and then their currency collapses. So it is NOT absurd to discuss such a scenario happening in our country. Alan Greenspan has warned we cannot continue down our present path. I urge you to not write him off as absurd.

Defaulting on the national debt is NOT a serious option for the US. It would totally destroy the dollar as an international currency and it would never recover. Look at any other country which has defaulted. Therefore the suggestion of just saying 'lets not pay it back' is absurd. The US can pay back it's loans. It may have to reign in it's spending or increase taxes to do so, but it is not in the situation where it cannot meet it's debt repayments. Alan Greenspan knows this and is urging that the spending spiral be brought under control before a more serious state is reached.


paul.

Paul,

I totally agree with you. Defaulting on our national debt is indeed a potential option, but an absurd one. We have to reign in spending and this is why we need Kerry in office. G.W. Bush, unlike his father who had the courage to raise taxes when it was politically unpopular, doesn't have the gonads our country requires in this situation. His father fought in WWII and had guts. G.W. was a coward in Viet Nam and he is being a coward on the issue of fiscal responsibility.

I see that my message was misinterpreted. My statement was meant to be very much pro-reducing our debt, as I started this thread. I was suggesting that the USA can't do it in that if they did it would be catostrophic.

! Whoops! This makes a lot more sense. You meant it would be totally unacceptable, not that it is not possible.

: )

BTW, when the gov't spends billions on defense I know companies like Haliburton (sp?) and Boeing get most of that money. So, although that's a lot of money, that money also represents a lot of jobs.

Ok, when the US spends billions on Soc Sec I know that money is going to seniors who buy medicine (employing chemists) and pay rent (employing nurses, and other assisted living personnel).

Who is the recipient of those $300B we spend annually in interest? It's the US banks. The vast, vast majority of our debt is money lent to the gov't by US banks...so when we pay interest on that debt we are, in fact, employing bankers and others in the finance industry.

I am not endorsing having a large national debt...or any national debt for that matter. But I think we should keep things in perspective. Debt is not the worse thing in the world...it's not even a terrible thing for an economy. (Defaulting on a loan would be terrible since I imagine it would absolutely cripple the financial infastructure of this country.)

I think we need to get rid of the national debt...but let's not make a mountain out of a mole hill. Line items in our national budget represent American jobs.

The vast, vast majority of our debt is money lent to the gov't by US banks

Actually the vast majority of the money is lent by japanese business men who buy our government bonds. Banks are very profitable without the help of the government.

The national debt needs to be cut asap, of course behind certain priorities such as defense and the well being of the people, but ahead of a tax cut or invasion of Iraq or wastefull spending. I agree that many things can not be cut, though I also agree with those who bring up items that need to be cut. The act of cutting the budget has to be a baancing act of controlling and decreasing spending, creating a temporary sales tax to pay back the loan (which will in time be repayed through temporary tax cuts when the entire debt is paid back and we have a 500 billion - 1 trillion dollar emergency funds and we are saving 300 billion from not paying any intrest) and making sure that the gov. is not allowed to opperate with a deficit.

Actually the vast majority of the money is lent by japanese business men who buy our government bonds.

I don't want to sound like a prick, but you dismissed my statement rather rudely, sandy2.

Where'd you get that from? If you're going to refute someone in such an off-hand manner, please either be obviously correct or support your statement with some proof.

The latest statistics I've heard is that about 45% of our debt is to U.S. banks, 40% to US citizens (bonds), and about 15% to foriegners (that's a 6-1 ratio of domestic to foriegn lenders).

Unfortunately, a quick Google search didn't come up with that latest statistics, but the enclycopedia at the Library of Economics and Liberty said that "the foreign share of the total gross public debt in 1992 was 12.1 percent." I realize that is old, but order for your assertion to be correct, sandy2, the U.S would have spent the past decade borrowing like mad from the Japanese (who, by the way have had a horrible economy for much of that time and probably wouldn't be in a place to lend $5trillion+).

Now, I could be wrong (and welcome a source that proves that we do, in fact, borrow "the vast majority of the money" from Japanese businessmen), but until that citation appears, I think my assertion still stands.

Here's my source:
Link

I apologize that my comment seemed rude, that is not at all how it was meant. Also, I seem to have misspoke, when I said owned by Japanese Businessmen. In fact, I also misspoke when I said that the vast majority was owned by the japanese at all. The japanese however do own almost 1/3 of the debt now Link. Also, I beg to differ on the fact that 45% is owned by banks. It is true that 42% is owned by intragovernment holdings (which automatically voids your comment)
Link. More than 3 trillion dollars of the debt is owned by private investors Link (of which aprox. 1/2 is owned by foreign investors and companies) and that leaves a little less than 1 trillion dollars for public us corporations, including banks. So again, I apologize for both my misstatment and my grufness which was unintended. Is it possible that the statistic you were refering to was talking about US reserve banks, which do own a significant portion of the debt?