In fiscal 2024 the US federal government brought in revenues of $4.9T and spent $6.8T (https://www.cbo.gov/publication/61185). Of that $6.8T, mandatory spending accounted for $4.1T (https://www.cbo.gov/publication/61182). Mandatory spending is automatic, the laws are already in place and the money is spent based on the situation and natural demand.
Of the $2.7T of not-mandatory spending, $0.9T was servicing existing debt. Of the remaining $1.8T of actual spending, defense accounted for $0.85T. The final remaining $0.96T is what's actually voted on in any budget, which is about 15% of all government spending (https://www.cbo.gov/publication/61184).
Is "mandatory" spending actually fundamentally mandatory? Characterizing it as such feels like a sleight of hand that prevents us from discussing whether that spend is truly necessary.
In an overspending crisis of such magnitude I wish there was more urgency in the culture to cut spending across every budget segment regardless of whether it's "mandatory" or not.
As my sibling comment states, mandatory spending is spending which is required by existing laws which have already been passed. But a secondary point is that mandatory spending means no one knows how much it'll be ahead of time. You can only find out how much actual mandatory spending happened after the fact. Contrast this with discretionary spending, where the budget says how much can be spent on a given set of things (like airplanes, or road improvements, or new toilets for all the Navy submarines) so you know ahead of time the spending amount.
Debating changing mandatory spending laws in order to hopefully reduce mandatory spending is totally allowed, it's just very hard to know exactly how much you'd save with any change. The CBO will make estimates for you, but those are going to be based on assumptions which may or may not turn out to reflect reality in the future.
“Mandatory spending” is a term of art that means something very specific in this very specific context (congressional budgeting). The common meaning of the words is not particularly relevant.
If you have ever seen the phrase “act of God” in a contract, this is similar. In contract law, “act of God” means something and it doesn’t require either party to subscribe to any religious beliefs.
> Is "mandatory" spending actually fundamentally mandatory? Characterizing it as such feels like a sleight of hand that prevents us from discussing whether that spend is truly necessary.
> In an overspending crisis of such magnitude I wish there was more urgency in the culture to cut spending across every budget segment regardless of whether it's "mandatory" or not.
I'm betting it includes stuff like Social Security payments, Medicare, etc. So it's fundamentally mandatory as real people's lives were planned around its availability.
So 0.9T of interest and 1.9T of new debt overlap. You can't add them together to get 6.2% of GDP because interest is a subset of new debt - you're double counting.
In general I am a deficit owl, not hawk...but I don't believe the recent tax law, which barely does anything for middle class downwards, is a productive use of debt. Debt accumulated for productive means is usually okay, but not this upwards accumulation of wealth.
Also upwards accumulation of wealth can sometimes mean less tax revenue. Middle class salary workers pay a lot of tax, so with more upwards accumulation of wealth (maybe accelerating due to AI) then what will happen to tax revenue? People getting laid off don't pay tax, and shifting that money to corporate, tax havens, and cap gains types of taxes will probably end up lower overall
Do you not see this as inevitable? It may be the case that money does 'trickle down' but it most certainly gushes upward. And so when the government prints massive sums of money, that's effectively just indirect handouts that end up going to the wealthiest, enabling them to gobble up even more of the overall economy and, in turn, enabling them to grow even wealthier.
The year that the US gained the ability to start 'printing' arbitrary amounts of money is 1971, prior to that we were externally constrained by Bretton Woods. This [1] site is nothing but a bunch of various graphs of all sorts of data. That point is a massive inflection point in just about everything awful that's happened to the country.
It’s complicated. The gold standard in general is an awful system outside of stagnant economies (you end up with deflation + endless boom and bust cycles).
Banning everyone domestically from owning gold and then Bretton Woods massively propping up the US monetary system helped. But eventually West Europeans caught up with it and what happened was hardly avoidable.
We essentially need to increase taxes to pre-trump levels (we've demonstrably seen that these cuts did not "pay for themselves", they're paid with debt), collect the taxes that are already owed (fund the IRS), and fix healthcare spending (which everyone knows is broken in at least half a dozen different ways).
Fixing healthcare is essentially PBM reform, price transparency, drug negotiation, deregulation to increase supply, and subsidized GLP-1s since metabolic illness/chronic disease is like 90%+ of costs.
If we increase revenue and decrease healthcare costs, we could get to within 3% of GDP.
It is important to keep in mind that the treasury rate drives the rate of most consumer credit. If it gets more expensive for the US to borrow due to debt load, consumer credit will stay or get more expensive. This will, very likely, slow the economy due to increased cost of mortgages, auto loans, and unsecured credit.
Americans can get a preview of what happens when fiscal irresponsibility spooks markets and forces a rate rise by looking at the short-lived Liz Truss administration.
Definitely, if we could refinance at a 1-2% lower rate it would save us up to $1k/mo which we could spend or save (likely we’d just take that money and pay down the loan faster or invest it though, but most people would probably spend it on making their lives better).
> If it gets more expensive for the US to borrow due to debt load, consumer credit will stay or get more expensive. This will, very likely, slow the economy due to increased cost of mortgages, auto loans, and unsecured credit.
Probably, but for sobering reasons, maybe less so than in the past, because because 50% of US consumer spending is by the top 10%, and the top 10% is far less dependent on credit for their spending.
A society where there is a more balanced distribution of spending power would be more affected by a consumer credit collapse, but the treasuries of such a society might be more desirable anyways.
The top 10% don't hold their money in liquid assets. Most of the time they get loans and use their non-liquid assets as collateral. They just don't have money laying around.
The rate that most directly affects consumer-facing debt rates is the Fed’s target rate, which is manually set. To some extent it even influences short-term Treasury rates. This rate is managed to deliver the Fed’s dual mandate of full employment and low inflation.
Day gig is at a firm that extends consumer credit, so I keep an eye on cost of capital tracking, monitoring the spread, etc. Any debt packaged and sold into debt markets (asset backed securities) competes against treasuries from a yield (and risk premium pricing) spread perspective. Mortgages, auto loans, some credit card books, etc.
When the Fed cuts rates, your deposit account provider is going to start cutting your interest rate paid right away, but they’re going to maintain their credit rate pricing as long as possible (considering competition from other lenders) to maintain their spread and profit as long as possible. You see this with credit card interest rates, for example.
TLDR 10Y treasury sets the rate floor, broadly speaking.
Cutting out many of the already shaky social safety nets, still accumulating massive debt. This should end well.
I understand the self-interested desire for the ultra wealthy to have lower taxes on an individual level, but yet I still don't understand how they are perpetually blind to the fact that whatever the release valve for the historic and still growing massive wealth inequality we have takes, it won't be great for them either in the long term.
Sure its nice for them to make asset grabs during economic downturns, but eventually there's always a tipping point where things go upside down chaotic and I don't feel like we are that far away from it now.
Well some of the new rich, tech guys are clearly insane. Peter Thiel cannot stop talking about the Antichrist, for example. I don't understand what was so different about the robber barons of the past, who at least had some obsession with their legacy enough to go around building schools and libraries to name after themselves.
> Well some of the new rich, tech guys are clearly insane. Peter Thiel cannot stop talking about the Antichrist, for example.
Agreed on the insanity and it seems to be getting worse over time.
I personally think its due to malignant narcissism bumping up into the (subconscious) midlife realization that there is no chance their theoretical singularity god will arrive in time to make them immortal.
Sorry bro(ligarch)s, you're all going to end up as worm food just like the rest of us. There isn't any amount of underground concrete bunker wall thickness that is going to change that.
What is so hard about understanding their desire? They want to keep more money for themselves so they can buy more yachts, invest in more things, whatever. This is just how humans are.
It's up to policy makers (i.e. government when it comes to taxation) to structure the system to mitigate the inherent self-interest that people have. Obviously that's easier said than done when the ultra-rich buy off the politicians, but human nature just is what it is.
I meant I understand it in the sense that to get that wealthy in the first place you have to have a special kind of self-interested sociopathy, so in that regard I understand their desire. Not that I agree with it.
I'm imagining these things happen on scales greater than many people's lifetimes. The Roman empire took hundreds of years to fall, there is so much time for these pathological wealth hoarders to enrich themselves and profit while there's still wine and grapes to be fed.
> but eventually there's always a tipping point where things go upside down chaotic and I don't feel like we are that far away from it now.
The members of the billionaire class with any foresight are making a calculated bet that they will be in control of sufficient technological measures to suppress any kind of mass uprising by the populace. Look at all the resources going to Anduril and Palantir. Foucault's boomerang is on its way back towards the US populace right now.
That said, even that cadre far overestimates what technology can do. Adaptation is a fundamental pillar of the human condition.
> understand the self-interested desire for the ultra wealthy to have lower taxes on an individual level
I don’t. They have tens of millions to billions. What more do they want? Three yachts instead of two? A higher score than some other rich douchebag destroying lives for fun?
"Business is a good game—lots of competition and a minimum of rules. You keep score with money" -- Nolan Bushnell
Once you get that wealthy the money is more of a disk measuring contest. There is no productive way for one person to really use money of that magnitude, the best they can do is dump it into stocks, bonds, real-estate, etc..., but nothing that really moves the economy. It's a big failure from an economic standpoint. Lots of "dead" money not being productively used.
Conservatives want to cut taxes to force liberals to cut spending. Liberals want to increase spending to force the conservatives to increase taxes. But voters don't like increased taxes (on themselves) or decreased spending. So we end up with the worst of both worlds--higher spending without the tax revenue to afford it. Then we get to watch each side win the war of opinion on cable news. They throw each other under the bus, eventually come to a deal, and both sides claim victory. Rinse. Repeat.
> Conservatives want to cut taxes to force liberals to cut spending. Liberals want to increase spending to force the conservatives to increase taxes.
This is straight propaganda. Both parties increase spending. One party cuts taxes for the rich, the other increases taxes on the rich.
Conservatives haven't been "small government" and haven't cut taxes for folks other than the rich in a long, long time. Even calling them "small government" is a misnomer, because that propaganda is about privatization, not reducing costs (private services are less efficient and more costly than the government service they replace!)
Let's stop calling the problem "both-sides". One side is considerably worse for the economy, and you and I know it's the conservatives.
A 'cost' paid for by a private service directly translates into prices and salaries. Whereas a government wealth transfer program appears as taxation and handouts. Everyone likes the former. No one likes the latter. Why this is still confusing in 2025 is beyond me
More specifically, Congress, which doesn't always align with the Executive. Congress largely sets the spending (or not) agenda. The Executive can ask nicely but Congress mostly does what it does.
Outside of retirees, much of the social safety net is funded at the State level. There is a wide variance in the benefits and quality of the social safety net across States.
So what actually happened is that Clinton said we had to get serious about the deficit, and then passed a budget that pushed the real cuts until after the end of Clinton's second term (that is, more than six years down the road).
Then Republicans took over the House in the midterms. They passed the budget (and Clinton signed it) that actually led to surplus for the first time since Andrew Jackson.
So, yes, it happened under a Democratic president. It only happened because of a Republican House, though.
(But let the president also be a Republican, and Republicans in Congress lose all fiscal discipline.)
Often a surplus? 1 time ever more like. I think its pretty low-brow to act like a presidential administration can be the single biggest cause of a major turnaround within its own administration. One administration is facing knock-on from several previous (plus all the tech advancement, trade deals, congress, SC).
They don't care about the spending. They yammer about it as a way of shifting funds towards things they care about, like the military or their new gestapo or buying votes from their disaffected constituents, but they've never given a shit about the deficit, and have never done anything to stop it.
The closest they ever came to actually caring about government was with Musk who went in and actually started (illegally) ripping shit out. But the things he ripped out were inconsequential things that conservatives didn't like, and he didn't even make a dent in the actual budget. All of the things that Musk got rid of were congressionally appropriated and could have easily been congressionally (i.e. legally) de-appropriated accordingly and it supposedly would be easy for them to do with majority control over the house, senate, executive, and judiciary...but they didn't do it, because they don't actually want to cut the budget.
Are you serious? California has an $180 billion annual obligation just for Medicaid (Cal-Aid). Los Angeles borrowed $1 billion to fund DWP operations this year, and borrowed $3 billion to borrow another $3 billion to fund a $6 billion renovation for the LA convention center that no one wants. Denver wants to borrow $1 billion to basically fund operations.
Neither party has any intention of repaying any of the $38 trillion, or care what it is spent on.
I think Democrats have a logic for not paying it. This is an investment in people. If you want to start a business you raise money first thing and deliver in future. Government raised money, they'll invest it in development which will pay back in the future. Whether the process is efficient is a different debate.
I do not understand though, why Republicans talk about cutting spending, and then blow through the ceiling when they have the power.
> Neither party has any intention of repaying any of the $38 trillion
What are you talking about here? Federal debt is repaid on bond schedules fixed by statute. You can look it all up. You can argue about whether the debt load is too high, too low, whatever. But you can't just pretend they ran away with the money like a thief. People loaned the government that money because they know the government is good for it.
And this is why politics is broken in the US, and in most of the Western world for that matter. What you just said is completely false, but it's being rewarded because people want it to be true. Here [1] is data on the annual deficit. [1] We've only run a "surplus" four times since 1970. Twice under George W Bush, twice under Clinton. Since then it's been going mostly into loony land.
The reason for the quotes is because that's an incomplete picture since various things can affect the debt without being noted in the annual deficit. For instance some programs are considered off-budget, there's various accounting restructuring, and so on. If you simply look at the total debt it has increased every year (again since at least 1970) with the only exception being 1999 to 2000 depending on when you measure it. If you look end of year vs end of year (as opposed to fiscal year), it decreased by a few billion dollars, and that was the only time.
Well I agree than Gold will have the ultimate endurance but for now the Dollar is backed by US Military. As long as the Military is Strong the US economy is guaranteed to at least be better than the median of developed nations there has not been real economic reasons for war yet but as soon as there is the economic reasons become politicized and that will serve as a pretext for taking the resources.
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Of the $2.7T of not-mandatory spending, $0.9T was servicing existing debt. Of the remaining $1.8T of actual spending, defense accounted for $0.85T. The final remaining $0.96T is what's actually voted on in any budget, which is about 15% of all government spending (https://www.cbo.gov/publication/61184).
In an overspending crisis of such magnitude I wish there was more urgency in the culture to cut spending across every budget segment regardless of whether it's "mandatory" or not.
Debating changing mandatory spending laws in order to hopefully reduce mandatory spending is totally allowed, it's just very hard to know exactly how much you'd save with any change. The CBO will make estimates for you, but those are going to be based on assumptions which may or may not turn out to reflect reality in the future.
If you have ever seen the phrase “act of God” in a contract, this is similar. In contract law, “act of God” means something and it doesn’t require either party to subscribe to any religious beliefs.
Sure, Medicare or Social Security can be cut, but see how that flies in the polls.
> In an overspending crisis of such magnitude I wish there was more urgency in the culture to cut spending across every budget segment regardless of whether it's "mandatory" or not.
I'm betting it includes stuff like Social Security payments, Medicare, etc. So it's fundamentally mandatory as real people's lives were planned around its availability.
New debt + interest (2024) = 6.2% of GDP
S&P 500 index (2024) = +23%
Good luck.
No they don't. If we're talking about federal income tax, the vast majority of is paid by the wealthy.
> I don't believe the .. is not a ...
Instead, just tell us what you do believe. It's generally clearer to use "positive" language rather than stacking negations.
The year that the US gained the ability to start 'printing' arbitrary amounts of money is 1971, prior to that we were externally constrained by Bretton Woods. This [1] site is nothing but a bunch of various graphs of all sorts of data. That point is a massive inflection point in just about everything awful that's happened to the country.
[1] - https://wtfhappenedin1971.com/
Banning everyone domestically from owning gold and then Bretton Woods massively propping up the US monetary system helped. But eventually West Europeans caught up with it and what happened was hardly avoidable.
Fixing healthcare is essentially PBM reform, price transparency, drug negotiation, deregulation to increase supply, and subsidized GLP-1s since metabolic illness/chronic disease is like 90%+ of costs.
If we increase revenue and decrease healthcare costs, we could get to within 3% of GDP.
Probably, but for sobering reasons, maybe less so than in the past, because because 50% of US consumer spending is by the top 10%, and the top 10% is far less dependent on credit for their spending.
A society where there is a more balanced distribution of spending power would be more affected by a consumer credit collapse, but the treasuries of such a society might be more desirable anyways.
Deleted Comment
Day gig is at a firm that extends consumer credit, so I keep an eye on cost of capital tracking, monitoring the spread, etc. Any debt packaged and sold into debt markets (asset backed securities) competes against treasuries from a yield (and risk premium pricing) spread perspective. Mortgages, auto loans, some credit card books, etc.
When the Fed cuts rates, your deposit account provider is going to start cutting your interest rate paid right away, but they’re going to maintain their credit rate pricing as long as possible (considering competition from other lenders) to maintain their spread and profit as long as possible. You see this with credit card interest rates, for example.
TLDR 10Y treasury sets the rate floor, broadly speaking.
I understand the self-interested desire for the ultra wealthy to have lower taxes on an individual level, but yet I still don't understand how they are perpetually blind to the fact that whatever the release valve for the historic and still growing massive wealth inequality we have takes, it won't be great for them either in the long term.
Sure its nice for them to make asset grabs during economic downturns, but eventually there's always a tipping point where things go upside down chaotic and I don't feel like we are that far away from it now.
Agreed on the insanity and it seems to be getting worse over time.
I personally think its due to malignant narcissism bumping up into the (subconscious) midlife realization that there is no chance their theoretical singularity god will arrive in time to make them immortal.
Sorry bro(ligarch)s, you're all going to end up as worm food just like the rest of us. There isn't any amount of underground concrete bunker wall thickness that is going to change that.
I don't. It seems like mental illness to me
It's up to policy makers (i.e. government when it comes to taxation) to structure the system to mitigate the inherent self-interest that people have. Obviously that's easier said than done when the ultra-rich buy off the politicians, but human nature just is what it is.
I meant I understand it in the sense that to get that wealthy in the first place you have to have a special kind of self-interested sociopathy, so in that regard I understand their desire. Not that I agree with it.
The members of the billionaire class with any foresight are making a calculated bet that they will be in control of sufficient technological measures to suppress any kind of mass uprising by the populace. Look at all the resources going to Anduril and Palantir. Foucault's boomerang is on its way back towards the US populace right now.
That said, even that cadre far overestimates what technology can do. Adaptation is a fundamental pillar of the human condition.
[0] https://www.bbc.com/news/articles/cly17834524o
I don’t. They have tens of millions to billions. What more do they want? Three yachts instead of two? A higher score than some other rich douchebag destroying lives for fun?
Once you get that wealthy the money is more of a disk measuring contest. There is no productive way for one person to really use money of that magnitude, the best they can do is dump it into stocks, bonds, real-estate, etc..., but nothing that really moves the economy. It's a big failure from an economic standpoint. Lots of "dead" money not being productively used.
No, the thing is to have a yacht with a yacht for a dinghy. And that comes with a helicopter.
I mean, yeah, I think this is mostly it. Its gamification.
At the top level they all have more wealth than they could ever possibly use, even accounting for many generations of offspring.
This is straight propaganda. Both parties increase spending. One party cuts taxes for the rich, the other increases taxes on the rich.
Conservatives haven't been "small government" and haven't cut taxes for folks other than the rich in a long, long time. Even calling them "small government" is a misnomer, because that propaganda is about privatization, not reducing costs (private services are less efficient and more costly than the government service they replace!)
Let's stop calling the problem "both-sides". One side is considerably worse for the economy, and you and I know it's the conservatives.
This is a lie:
https://www.nytimes.com/2019/04/14/business/economy/income-t...
> private services are less efficient and more costly than the government service they replace!
Yes, this is why capitalism famously collapsed in the 90s, and all of the formerly capitalist countries socialized their economies!
Now America is exceptional for many reasons, but if we don't fix our debt we will meet the same unexceptional fate as many empires before us.
That should pretty much tell you everything.
Outside of retirees, much of the social safety net is funded at the State level. There is a wide variance in the benefits and quality of the social safety net across States.
Oof
Dead Comment
Then Republicans took over the House in the midterms. They passed the budget (and Clinton signed it) that actually led to surplus for the first time since Andrew Jackson.
So, yes, it happened under a Democratic president. It only happened because of a Republican House, though.
(But let the president also be a Republican, and Republicans in Congress lose all fiscal discipline.)
Dead Comment
Dead Comment
The closest they ever came to actually caring about government was with Musk who went in and actually started (illegally) ripping shit out. But the things he ripped out were inconsequential things that conservatives didn't like, and he didn't even make a dent in the actual budget. All of the things that Musk got rid of were congressionally appropriated and could have easily been congressionally (i.e. legally) de-appropriated accordingly and it supposedly would be easy for them to do with majority control over the house, senate, executive, and judiciary...but they didn't do it, because they don't actually want to cut the budget.
Neither party has any intention of repaying any of the $38 trillion, or care what it is spent on.
https://www.torched.la/why-this-convention-center-expert-is-...
I do not understand though, why Republicans talk about cutting spending, and then blow through the ceiling when they have the power.
What are you talking about here? Federal debt is repaid on bond schedules fixed by statute. You can look it all up. You can argue about whether the debt load is too high, too low, whatever. But you can't just pretend they ran away with the money like a thief. People loaned the government that money because they know the government is good for it.
The reason for the quotes is because that's an incomplete picture since various things can affect the debt without being noted in the annual deficit. For instance some programs are considered off-budget, there's various accounting restructuring, and so on. If you simply look at the total debt it has increased every year (again since at least 1970) with the only exception being 1999 to 2000 depending on when you measure it. If you look end of year vs end of year (as opposed to fiscal year), it decreased by a few billion dollars, and that was the only time.
[1] - https://fred.stlouisfed.org/series/FYFSD
https://fiscaldata.treasury.gov/americas-finance-guide/natio...
And the graph clearly shows we trend towards less spending under Democrats and then Republicans spend more again.
Think the dollar may soon find itself as not only game in town for trade sooner than initially thought