When will the national debt reach a tipping point?
So assume that there is some sort of tipping point for the US, even if it is not actually 80% of GDP. That raises a question that I haven’t seen well-answered: how close should we be willing to get to that crucial point?
On the one hand, any threshold will have some give in it; it’s not as if every single country that hits a debt-to-gdp ratio of 80% suddenly, almost mechanically, tips into the abyss. (Japan still borrows at attractive interest rate with a ratio that is somewhere between 50-150% higher than that, depending on how you calculate.)
On the other hand, getting too close to the threshold dramatically raises your risk and narrows your choices. Countries in deep contractions have grave difficulty balancing their budgets even when they’re trying pretty hard. (Imagine, if you will, trying to cut the US budget in half overnight. No, stop cheering, conservatives: going to shut down border patrol and leave all those soldiers and tanks and thinks stranded in Iraq? Or does your mother suddenly stop getting her social security and medicare? Even if you think the budget should be cut in half, “overnight” is not the correct time frame.) So if they run too close to the edge, they may find themselves pushed over the threshhold when things go south–or be forced to do ham-fisted and destructive austerity to avoid going there. So you probably want to leave a pretty big buffer between yourself and the dangerous debt levels, just in case.
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Lol. What is this “border” you speak of?
Kataklysmic on February 23, 2013 at 8:58 AM
Five years ago….
ProfShadow on February 23, 2013 at 9:01 AM
How about we just cut it by 1/3 overnight then Megan. The $800 BILLION so-called “stimulus” that most Americans thought was a one time expense has been added to the baseline and is now part f the budget every year. So we ad a nearly 1/3 I crease in federal debt and spending in a single year. Why not cut the budget back, overnight, to where it would have been had there never been a stimulus.
Where is all that money going Megan? Aren’t you curious?
Charlemagne on February 23, 2013 at 9:03 AM
She should have asked herself that before she voted for Obama.
Blake on February 23, 2013 at 9:04 AM
It makes you wonder what Obama could possibly propose that would engender the slightest bit of liberal opposition. You have to give him credit where it’s due–who else could get Code Pink to embrace civilian drone strikes, millenial college grads to torpedo the job market, or black congregations to drop decades long opposition to SSM overnight? The man is truly an insidious pied piper.
Kataklysmic on February 23, 2013 at 9:13 AM
Liberalism is their religion. It has replaced Christianity for so many of them. As their religion it’s possible for them to accept so much that is wrong and contradictory as long as it allows them to maintain their faith.
Only a total economic and societal collapse will, possibly, shake their faith.
Charlemagne on February 23, 2013 at 9:20 AM
I’m getting pretty annoyed with liberals like McArdle pushing the idea that there isn’t a HUGE amount of waste going on. How is it possible that the federal government is spending so much more money than it has ever spent in American history, vastly more than it did even under the Bush administration — but cutting the amount being spent in half means that essential services will have to be scaled back?
Oh wait — it’s that old political trick. Spend over 90% of revenues on bullsh_t, and when the citizens complain, scale back on the services that take up the remaining 10% or less, like garbage collection (locally) or border defense (nationally).
Aitch748 on February 23, 2013 at 9:26 AM
My thoughts excatly.
BigGator5 on February 23, 2013 at 9:28 AM
Many of them are in denial right now. They’re nervous, which leads them to the next stage of dangerous.
The way I see it, they have too much invested to ever admit they’ve lost faith, even after collapse. That is the point when they will see value in the military, giving them the tools necessary to force labor, capital, and society to finally cooperate with their vision…for the greater good of course.
Saltysam on February 23, 2013 at 9:42 AM
McArdle is a self professed “libertarian” who voted for Obama in 2008. I don’t know if she voted for him again in 2012. I wonder how many libertariantards voted for him in 2008 and in 2012? We’ve certainly seen enough of them on hotair who admitted that they did.
Blake on February 23, 2013 at 9:44 AM
2022 is the end, does not matter what we do in the mean time. There is a infinitesimally small number greater than 0 that this nation will vote into power a legislature and a president in the meantime that will take the actions needed to secure the nation’s future prosperity. After that point, it will not matter what happens, the interest on the debt will be beyond recoverable.
astonerii on February 23, 2013 at 9:45 AM
It’s called the “Washington Monument” trick, and it’s something Obama and all other Leftist leaders do constantly. It’s squarely aimed at their base: the low-information voters and rabid Leftists.
If we had a media that did its job he would be constantly ridiculed for spewing these pathetic lies but alas, we don’t.
visions on February 23, 2013 at 9:51 AM
Indeed. Once we understand that the Progressive ideology is actually their religion a lot of what they do, especially when it comes to economic policy, makes sense. They’re trying things that failed in the 1940′s and are failing now. These people are religious zealots. It’s that simple.
visions on February 23, 2013 at 9:54 AM
I’m a conservative that considers “libertarian” a strong part of my philosophical makeup.
I can’t explain how painful the rational dissonance inside my head is when I try to make the connection between libertarian and “voting for Obama”.
Saltysam on February 23, 2013 at 9:55 AM
If you had told me 10 years ago that we would be having $1 trillion deficits for 4-5+ years I would have been shocked. I’d bet that we would be having enormous interest rates and inflation and a disastrous private sector as the government crowded out borrowing.
But none of that is taking place right now. These deficits haven’t manifested themselves yet. We’re getting used to them (we in the sense of most of the public). Defining deficits down, so to speak.
And that’s the problem (or a major part of it): the public is against spending cuts because, right now, they don’t see any of the consequences of these deficits and debt.
In any case, I don’t think we’ll reach a tipping point. Instead, we’ll have what Japan is having: lost decades of very small growth, deflation and high unemployment.
SteveMG on February 23, 2013 at 10:23 AM
Can’t remember the year, but it was first time the Congress thought deficit spending was a valid financial tool.
That is when we went over the fiscal cliff. All that is happening now is we can see the bottom approaching, and we haven’t hit terminal velocity yet.
BobMbx on February 23, 2013 at 10:32 AM
This is a mystery to me as well. I wonder if they really understand the overriding libertarian philosophy. And if they did, how do they square it with what Obama was saying in 2007-08?
When I listen to many self-identifing libertarians, they want to talk about the drug war or gay marriage, but they don’t seem at all worried about our government’s fiscal irresponsibility. They seemed to have been raised on the idea, and fully accepted the idea that governmnet is supposed take care of us and fix our problems.
LilyBart on February 23, 2013 at 10:35 AM
This editorial is joke, right?
bgibbs1000 on February 23, 2013 at 11:28 AM