Trump's (and Biden's) Federal Pandemic Aid Has Cut Poverty nearly in half, Study Finds

@mattbbpl: @HoolaHoopMan: Hardly I’m conversing with two people that require a Debt-to-GDP definition. And can’t accept that the US government is perpetually overspending.

Nor do you seem to see the links between monetary easing and fiscal spending.

@kadin_kai: "Hardly I’m conversing with two people that require a Debt-to-GDP definition. "

Then define it for us as we requested.

@kadin_kai: I agree we have over spent during the pandemic. The us government printed 1/3 of all US dollars in 2020.. inflation is going to be a bitch and democrats want to keep printing as much as they can still. Republicans stop none of it, useless. All of them.

This entire conversation started with us exploring this statement and asking for proof that it's a spending problem, and is not in anyway, a revenue problem.

Perhaps you'd like to take a step back and address that issue again? Because you have certainly not answered it at this point.

the answer to the question of whether federal debt is a revenue or spending problem tends to just fall along ideological lines though and it is hard to agree on what metrics are most important.

debt to gdp is one measure for sure, but it is measuring debt, not spending.

spending vs. gdp is another to look at. with that metric the US lies pretty much in the middle vs. other g20 nations


from: https://data.oecd.org/gga/general-government-spending.htm

(2020 data removed since it was a crazy year )


now, what SHOULD a nation's spending / GDP ratio actually be? without that, there's not real way to say whether there is spendning or revenue problem.

@comp_atkins: And this is exactly why viewing numbers in a vacuum isn't a good idea (i.e. high debt=bad, grrrrrrr). The US doesn't spend wildly compared to the size of it's economy. Just switch to revenue as a % of GDP and we're towards the lower end as well.

However, as far as metrics go, comparisons to GDP is generally a good starting point.

@comp_atkins: Hoola knows, comp. We're both well aware.

@HoolaHoopMan: It’s obviously overspending, simply by listing other G20 nations is pointless because so many have failed to recover since the financial crisis and are indeed borrowing and spending.

As per the IMF and World Bank largely agree, a high debt-to-gdp ratio impedes economic growth.

If as you claim it’s a revenue problem then why has there been such a shortfall in government receipts for a decade? Well it hasn’t fallen has it? It has actually increased.

Do you really expect the US government will receive higher tax receipts to fill this debt void? No it’s not going to happen is it?

If it's so obvious then why are you having trouble backing it up? It must be convenient to hand waive comparisons to other G20 nations when it shows the US is in good standing amongst most developed nations when it comes to spending/revenues compared to their overall economic output. You're purposely ignoring evidence presented and burying your head in the sand.

As to the bolded, this is the same common misconception everyone usually lays out with tax cuts. 'They couldn't have increased the deficit, receipts actually went up!'

Tax receipts will scale with economic and GDP growth, sans all other factors. The answer your looking for is baseline comparisons of deficits based on a common variable, which undoubtedly show that tax cuts over the last couple of decades have been driving our deficit higher and higher. This is a very simple concept and is baked into any budget comparison, governmental, corporate, etc.

@kadin_kai: @HoolaHoopMan: Can we all at least agree that Debt-to-GDP ratio is a completely unrelated metric to be looking at regarding the "spending vs revenue problem" debate? I'm finding it hard to even take this conversation seriously when it seems that we're insisting that that metric shows that it's a spending problem.

@mattbbpl: 'Can we all at least agree that Debt-to-GDP ratio is a completely unrelated metric to be looking at regarding the "spending vs revenue problem" debate?'

Sure.

@HoolaHoopMan: No of course not, they’re related.

OK let’s take this bit by bit. We can agree the following.

The US government along with many others spends more money than it earns. So they typically issue bonds and sell them for cash. Yes? Therefore this is a debt, yes?

So spending = revenue plus debt/borrowing

So debt and spending are related, yes?

So the size of your debt relative to the size of your economy is related too (among other factors).

If the ratio gets too large as happened to (Greece, Spain, Ireland, Portugal and etc…) it couldn’t borrow more from the market due to the increasing risk of a default, therefore it was bailed out by the troika (EU, IMF and WB)…

*note Japan is a special case

So why is debt-to-GDP related and important, well it’s pretty close to the record high for the US. Hence this will affect how governments are willing to borrow and therefore affects a government’s spending patterns and therefore policy!

Additionally debt service in the US is close to 10% of the budget, that’s quite high and it’s expected to increase annually.

So no, you can’t isolate debt-to-GDP when you talk about spending.

Moreover, the IMF and WB both believe when you edge towards 100% more borrowing impedes economic growth (although personally I think the US might be an exception)…

@kadin_kai: I don't think you seem to grasp what Matt and I are saying. Debt itself is a combo of how revenue vs spending interplay over a period of time. You're focusing on a metric that is silent as to it's origins i.e. the result of over spending or under paying via tax receipts.

@HoolaHoopMan: True, I cannot comprehend why you claim that debt-to-gdp is unrelated to spending.

We don’t need a hadoken combo relationship, it’s dead simple:

Debt = spending - revenue, therefore Spending = debt + revenue.

Every penny spent that is not earned is therefore borrowed.

The ability to borrow depends on your ability to repay. You ability to repay depends on many things, one being the size of your current debt relative to your economy.

The market refused to lend Portugal, Ireland, Greece and Spain money because they’re debt-to-GDP levels were far too high. Lenders thought the chances of a default were too high. Hence they needed to be bailed out by the EU, IMF and WB.

The troika took control of their finances, limited their spending by cutting welfare, cutting pensions, raising pension age and etc… and put these nations on a orderly repayment plan.

Now the US is different, it’s the largest economy in the world, no one can imagine a default. But money is money and the US isn’t exactly what it used to be. Despite the high debt-to-gdp levels, I think many will continue to buy US bonds to a certain point.

So no, I cannot grasp why you cannot understand how this is interrelated.

Spending = Debut + Revenue? Wut?

Are you sure this isn't some form of sarcasm or joke that I'm too dull to pick up on? If you're approaching this topic with the strength of a child who just learned basic algebra I'd say this discussion is essentially over.

@HoolaHoopMan: He tried to be cute by taking the first equation and adding revenue to each side. But that just relies on the relationship between spending and revenue which is WHAT YOU AND I HAVE BEEN SAYING THE WHOLE TIME.

He's claiming it's isolated to spending, and then not isolating spending at all.

It's unbelievable.

And this statement as well, 'You ability to repay depends on many things, one being the size of your current debt relative to your economy.'

The US has control over it's money and can create credit out of thin air. It literally has the ability to NEVER default. He lists EURO countries as examples which means he probably doesn't understand the concept of monetary sovereignty.

@HoolaHoopMan: Yeah, I didn't want to get into monetary sovereignty. We're talking at a level so far below that I'm not sure going to that level would be productive. We're still talking about base debt equations.

@HoolaHoopMan: @mattbbpl: The US can create credit out of thin air. Ha!

You really don’t understand how QE works!

Can't the US treasury technically create trillion dollar coins to pay of the whole debt? I am sure John Oliver mentions it in one of his episodes but I don't remember which one atm.

@horgen: There are also additional ways to implement monetary policy other than QE. This conversation is disingenuous from it's foundations.

I haven't followed it. Just know that US has other ways of creating money than QE which is mostly used in my impression.

I'm tempted to ask for clarification on how YOU think QE works, but then again you can't even stay on track for other topics without deflection, as we weren't talking about QE. Then again you're probably unaware that QE is only one way for expanding credit or balance sheets.

@HoolaHoopMan: Well I’ve noticed you’ve never offered anything concrete but simply just disagree…

Do your research yourself.

I've offered quite a bit of explanation, you've simply decided to ignore or gloss over it. You're failing to grasp it as it's obvious you don't understand basic concepts and definitions you're throwing around.

@HoolaHoopMan: Really? You can’t even accept that debt-to-gdp affects spending for God’s sake and you think QE is limitless.