Does it matter anymore? I don't understand (literally, not emotionally) how we can sustain this.

From Wall Street Journal -

Federal debt now tops 100% of gross domestic product, a potent symbol of the gathering fiscal stresses on the U.S. that have been building for decades. It's on the way toward breaking the record set in the wake of World War II.

As of March 31, the country’s publicly held debt was $31.265 trillion, while GDP over the preceding year was $31.216 trillion, according to data released Thursday. That puts the ratio at 100.2%, compared with 99.5% when the last fiscal year ended Sept. 30.

That figure will likely climb for the foreseeable future because the federal government is running historically large annual deficits of nearly 6% of GDP, which add to the debt.

The government is spending $1.33 for every dollar it collects in revenue, and the budget deficit this year is projected at $1.9 trillion. That is little changed from 2025 as Republicans’ tax cuts kick in before their spending cuts take effect.

The final tally will depend on Iran war spending, tariff refunds and the strength of the economy.

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Does it matter anymore? I don't understand (literally, not emotionally) how we can sustain this.

What can't go on forever, won't.
I wish I knew when.

The question I have is: Who's debt is it?
Increasingly, young people are saying: "It's not my debt, I didn't incur it, why should I be burdened by it?"
Eventually, they will decide to default.

We have no real plan, so who knows. I guess the hyperinflation will erase the debt when the money printing becomes the only option. We have either painful austerity or runaway inflation in our future.

I don’t think there is any real intent to ever pay it back.

Inflation and quantitative easing (printing money) was a deliberate policy to make it easier to pay back debt, yet the dems outspent that to buy voting groups, kickbacks, and thus power.

We can only hope to have continued GDP growth which may keep the ratio to debt in check.

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Originally posted by chellim1:
Eventually, they will decide to default.

Eventually, they will have no choice in the matter.
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The 1:1 Debt:GDP sounds scary in a news article, but is it?

GDP is somewhere between Income & Net present worth. The US Gov shouldn't 'own' GDP on a balance sheet, but that's a different discussion.
1:1 Debt:Income isn't that bad for an entity. Greater than 1:1 isn't unheard of or a death sentence.
1:1 Debt:Net Present Worth isn't that bad.


The spending 1.33:1 of tax revenue is more important, and I'm too lazy (and frankly, scared) to look up debt:revenue.

It could not matter under certain circumstances, which do not, and never will, exist.

Map this into personal finances. Most every homeowner takes on a mortgage debt much higher than their annual income. Yet they don't financially collapse for two specific reasons. First, their annual spending is at or below their annual income. They can pay all the bills without rolling interest payments into the loan principal. Second, their incomes increase over time, either due to inflation or to increased productivity, making that fixed loan payment easier on their budget.

But the US budget has neither feature. Spending increases faster than any increase in revenues, and they roll over interest into increased "loan principal". It is even worse than that, though, because they are rolling long term debt into short term debt. Debt 10 yrs to 30 yrs out is being rolled into 1 yr or less debt. It's all playing with numbers that will hurt us even more.

The threshold of 100% GDP itself is not a death knell. The headlong rush to spend spend spend without any concern for the future will be what topples the dollar and our economy to 3rd world status.

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The headlong rush to spend spend spend without any concern for the future will be what topples the dollar and our economy to 3rd world status.

We could cut government spending in half if there was the political will to do so... but there's not so we won't.

This is what it's spent on:

1 out of 7 people in the US is on SNAP...

SNAP Is Beyond Broken

From millionaires to overseas foreigners, from NFL players to luxury car owners, our money is going to everyone but us.

Most Americans would think it strange that someone getting out of a Maserati or a Tesla is receiving SNAP benefits, because most Americans would realize that this person is playing by a different set of rules. While honest citizens are tightening their belts to pay taxes to support other people, thieving fraudsters are abusing and working the system.

https://www.americanthinker.co...s_beyond_broken.html

I read about this years ago and it's truer everyday.

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Not Yours to Give: Davy Crockett and Welfare

“Mr. Speaker — I have as much respect for the memory of the deceased, and as much sympathy for the suffering of the living, if suffering there be, as any man in this House, but we must not permit our respect for the dead or our sympathy for a part of the living to lead us into an act of injustice to the balance of the living.
“I will not go into an argument to prove that Congress has no power to appropriate this money as an act of charity. Every member upon this floor knows it. We have the right, as individuals, to give away as much of our own money as we please in charity; but as members of Congress we have no right to so appropriate a dollar of the public money.
“Some eloquent appeals have been made to us upon the grounds that it is a debt due the deceased. Mr. Speaker, the deceased lived long after the close of the war; he was in office to the day of his death, and I have never heard that the government was in arrears to him. This government can owe no debts but for services rendered, and at a stipulated price. If it is a debt, how much is it? Has it been audited, and the amount due ascertained? If it is a debt, this is not the place to present it for payment, or to have its merits examined. If it is a debt, we owe more than we can ever hope to pay, for we owe the widow of every soldier who fought in the War of 1812 precisely the same amount.
“There is a woman in my neighborhood, the widow of as gallant a man as ever shouldered a musket. He fell in battle. She is as good in every respect as this lady, and is as poor. She is earning her daily bread by her daily labor; and if I were to introduce a bill to appropriate five or ten thousand dollars for her benefit, I should be laughed at, and my bill would not get five votes in this House. There are thousands of widows in the country just such as the one I have spoken of, but we never hear of any of these large debts to them.
“Sir, this is no debt. The government did not owe it to the deceased when he was alive; it could not contract it after he died. I do not wish to be rude, but I must be plain. Every man in this House knows it is not a debt. We cannot, without the grossest corruption, appropriate this money as the payment of a debt. We have not the semblance of authority to appropriate it as a charity.
“Mr. Speaker, I have said we have the right to give as much money of our own as we please. I am the poorest man on this floor. I cannot vote for this bill, but I will give one week’s pay to the object, and if every member of Congress will do the same, it will amount to more than the bill asks.”

https://www.101bananas.com/library2/crockett.html

I don't expect anything to change until/unless there is political will on both sides of our divided political aisle to either:

a) cut spending enough below revenue to start retiring debt, or
b) (shudder) raise taxes to meet both spending and retiring of debt.

And I don't expect that political will to happen until enough voters of both persuasions see direct and obvious pain from the actual impacts on them. Those actual voter impacts might happen if/when:

* Mortgage rates were to spike if/when deficits were to start having a major impact on federal borrowing costs, and thus 'prime rate';

* Savings/retirement funds were to see plummeting bond values (US and corporate) caused by interest rate spikes, if/when that were to happen;

* Costs of imported materials/items were to rise if/when foreigners' currently-almost-insatiable appetite for US currency were to stop.

There are other effects of the deficit but most of them are not directly tied to consumers' (aka voters') actual experiences.

RE: the comparison of debt/obligation levels to GNP, GDP, etc. It matters to the extent that potential lenders to the USG care about it, but otherwise it's just a number. If/when investors start freaking out and not buying T-Bills, T-Bonds and T-Notes and thus funding the government, it would matter a lot. If/when the values of those USG obligations were to start plummeting due to deficit-induced interest rate spikes - deficits not being something that can be fixed quickly - ugly would be an understatement.

Financial markets' panic points are hard to predict, but if/when the 'risk-free rate' was to start showing risk.....Bob would stop being our uncle.

The issue is non-discretionary (entitlement) vs. discretionary spending. You could eliminate the entire federal gov't. and entitlement spending would still be our undoing.

There is not only no plan to repay the debt, there is no plan to stop deficit spending. The current crop of elected officials will be retired or dead by the time it all comes crashing down.

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The threshold of 100% GDP itself is not a death knell. The headlong rush to spend spend spend without any concern for the future will be what topples the dollar and our economy to 3rd world status.

I recall reading somewhere that when debt reaches somewhere around 125% of GDP is where nations fall from their position of major economic powers. Debt becomes so large that servicing it crowds out all other things that need government funding.

I have no faith that politicians will solve this. Half of those bastards are openly working to destroy the country and the other half can’t bring themselves to stop it. So all one needs to do is skip to the end. See what has happened historically and prepare for that.

It is sad but there will be a big blame game between the two parties as to who is mainly responsible and who will be able to best resolve it and who will be the biggest losers among the general population - debtors or savers? Many states cities are in a state of financial crisis too including my home state of Illinois. Pritzker and democrats almost doubled our state income tax rate when he was first elected 8 years but they did NOTHING to cut spending, just spent a lot more with the new tax revenue. Now we are seeing democrats eyeing unrealized gains for taxing as a "wealth tax".