What it will take to solve the debt crisis

[ISUBryce]

A Comprehensive Federal Budget Plan to Avert a Debt Crisis

Note: This report updates the author’s 2018 long-term debt-stabilization proposal and includes additional details and savings recommendations. Annual budget deficits doubled to $2 trillion over 2022–23 and are headed toward $3 trillion a decade from now. Social Security and Medicare face a...

manhattan.institute

Correcting the Top 10 Tax Myths

As Washington prepares for a 2025 dominated by tax policy—led by the issue of whether to extend the expiring 2017 tax cuts—the debate is likely to bring a fresh recirculation of the most common myths about the federal tax system from both the left and the right. On the one hand, the false...

manhattan.institute

The House Wants to Pass Trump’s Agenda in One Big Bill. Here’s What’s in It.

The G.O.P. bill would extend tax cuts and almost certainly make big reductions to programs serving the poor. Passing it may be hard, though.

www.nytimes.com

TL;DR: Everybody needs to pay more taxes, some big 3rd rail entitlements need means tested among other things. Trump's plan increases the deficit by 2.8 trillion.

My opinion - people need to stop blathering on about DOGE. It's unserious. You could cut the DOE 50 times and not pay for the tax cuts. I'm sick of hearing DOGE defenders say "We need to get serious about the debt". Nobody is serious about the debt. This isn't even being discussed, or it's being discussed in the context of DOGE cutting 1/35 of 1% of the budget... which is not nothing, but it might as well be in the context of the situation. The US debt is the equivalent of a 1,000 pound person. If that person lost the weight DOGE has cut, they would weight 999.72 pounds. Again, congrats, but like Winston Wolf said in Pulp Fiction, "Let's not start sucking each other's ****'s quite yet".

 

[hawkeyetraveler]

Yes!

Spending cuts are critical, but getting at non military discretionary spending alone is not going to get anywhere close. We need massive cuts in defense spending and we need to look at entitlements - raise the social security age, etc. And don’t get me started about the way DOGE is doing this. Ridiculously dumb implementation.

Finally we do have a revenue problem. Tariffs are not solving that - not even close. Taxes of one sort or another must go up.

In reality the good life that so many people try to protect with low taxes is just borrowed from their children’s future. We are the dumbass who bought the McMansion they could not afford, driving the souped up F150 they could afford who proceeds to fight the collection agency when the bill comes due.

 

[Huey Grey]

Tax the gd rich. That solves most of it. Stop coddling the billionaires.

 

[NorthernHawkeye]

Everybody needs to pay more taxes

Not going to happen. You know this, yet you persist.

 

[BioHawk]

Tax the gd rich. That solves most of it. Stop coddling the billionaires.

And eliminate the cap on Medicare.

 

[uihawk82]

Yes!

Spending cuts are critical, but getting at non military discretionary spending alone is not going to get anywhere close. We need massive cuts in defense spending and we need to look at entitlements - raise the social security age, etc. And don’t get me started about the way DOGE is doing this. Ridiculously dumb implementation.

Finally we do have a revenue problem. Tariffs are not solving that - not even close. Taxes of one sort or another must go up.

In reality the good life that so many people try to protect with low taxes is just borrowed from their children’s future. We are the dumbass who bought the McMansion they could not afford, driving the souped up F150 they could afford who proceeds to fight the collection agency when the bill comes due.

No, dont raise the social security age but raise the ceiling on which SS taxes are collected. I think the current ceiling is about $160 to $170 thousand dollars. For SSec, raise that ceiling as there are a whole lot of people that make way more than that and the millionairs and billionaires need to pay more into SS and Medicare. The rich and Big Bix just need to pay more taxes period because they use roads and all infrastructure more in their drive to make more money. Anyone who makes money or stocks etc that moves goods or digital info around is using infrastructure the govt helped finance and develop.

When you take into account the tax cuts to the rich and Big Biz in 2017 then that means we are taking in way less tax dollars.

 

[ISUBryce]

Not going to happen. You know this, yet you persist.

Okay. Well let’s just please stop pretending to care about the debt.

 

[ISUBryce]

Tax the gd rich. That solves most of it. Stop coddling the billionaires.

No, it doesn’t.

The middle classes pay WAY less in taxes than comparable countries.

There is no easy way out of this.

 

[hawkeyetraveler]

Not going to happen. You know this, yet you persist.

Well you can either pay taxes while cutting spending to fix the deficit problem or you can pay in the decline in your wealth when we print money to avoid a default. You can’t solve this by spending cuts alone. The math does not math.

America has a choice and we are very likely to choose hyperinflation at this rate. It’s so stupid.

 

[THE_DEVIL]

1) Pick a percentage number of the non personnel part of the DOD/Intelligence departments to cut. Implement the percentage number over a set number of years

2) Remove the SS cap gradually over a set number of years

3) Implement a .001 transaction fee on all stock trades.

4) Grandfather in all current citizens on disability, and do a bipartisan restructure of the program. ( for those who haven't looked lately this program has already gotten very strict on qualifying for it)

5) 25% decrease spending for legislative branch spending and restructure how money is spent. Eliminate duplications and streamline.

6) Put a percentage of the money saved into the infamous "lockbox" for 3-5 years. Use that money to upgrade all government software/computer systems.

7) Use the best AI available to give us a working baseline to best streamline government operations. Meaning combining,deleting, adding. Not saying to turn over to AI as the final word but to use as a starting point.

8) Pay THE_DEVIL one trillion dollars

 

[jamesvanderwulf]

Value added tax. Raise cap on SS. 500.00 tax on dogs. Raise fees and tolls on roads and bridges. Raise tax rates 4% across the board.

 

[Moral]

Tax the gd rich. That solves most of it. Stop coddling the billionaires.

It's really the only path forward in my opinion. They are the only ones we can tax that doesn't really damage the economy. Cuts to social programs would directly start to pull money out of the consumption economy as well as jobs from those social programs and the supporting industries. It would also switch large groups of people to switch their spending to survival mode instead of of consumer mode. The same could be said for lower and middle class tax increases, they will once again lower consumption and retirements are really tied up into non-stop consumption.

Tax cuts since 2000 account for around 7 trillion in debt before interest. The upcoming Trump cuts would look to add another 4.5 trillion to the deficit. Wars since 2000 at around 8 trillion before interest. Stimulus checks since 2000 is another trillion. The stimulus checks were because they need people to consume. COVID added 5 trillion to the deficit. Bank bailouts cost around 2 trillion. Since 2000 the oil industry has received hundreds of billions in subsidies. As has the the agriculture industry, and the tech industry.

All while the DoD can't account for trillions of missing assets and money.

1. Tax the rich to at least 90s levels of taxation
2. Account for missing DoD money and reduce the overall spending of the DoD

And reassess after that.

 

[THE_DEVIL]

On a lighter note

 

[Finance85]

We have a spending problem, not a revenue problem. Baseline spending has increased over $2T in the last 4 years. That's not due to so-called entitlement spending.

It's been shown many times that increasing GDP raises more revenue than raising tax rates. Republicans need to start recognizing where the limit of the Laffer Curve is. I disagree with the notion that it's over 50%, but most of the Trump tax cuts are well below whatever the actual Laffer Curve rate currently is, and those cuts do little to stimulate the economy.

Spending needs to be drastically cut, starting with the military. The GOP morons increased military spending in the latest CR. We have to stop the government grant slushfunds, especially for foreign countries. It's not just the expenditures, it's also the growing army of federal employees who administer the expenditures. In fact the GOP morons should have had a new baseline budget that eliminated all the spending DOGE is uncovering now, before DOGE even existed. Just like 2016, the GOP morons had months to craft a real budget before the GOP POTUS was sworn in and could sign a new budget.

Early retirement for Social Security needs to be changed from 62 to 65, and the penalty for early retirement needs to be adjusted accordingly. It's insane the full retirement age was moved to 67 but the early retirement age is still 62.

Social security should only be taxed for those drawing before full retirement age. That would incent people to wait until full retirement age to draw SS.

Tariffs aren't the answer, and especially punitive tariffs. Free trade is the answer, and that is more along the lines of reciprocal tariffs that Trump has evidently just discovered (as opposed to punitive tariffs). In reality, tariffs should only be used as an equalizer to foreign government subsidies that give their industries a trade advantage.

 

[Colonoscopy]

Not going to happen. You know this, yet you persist.

 

[seminole97]

We need massive cuts in defense spending

That’ll just get you accused of being a ‘Putin puppet’.

In 2024 federal taxes were estimated at 18% of GDP.
In 1999 the federal government spent 18% of GDP.

In 2024 the federal government spent over 24% of GDP. Before COVID you had to go back to 1943 - in the middle of WW2 - to find federal spending over 24% of GDP.

Bring back Clinton era spending levels.

In the last 100 years we’ve managed to collect more than 20% of GDP in taxes exactly once - 1944 (20.5%).

You’re not going to fix Congress’ spending problem by handing them larger and larger shares of the economy to consume. You will negatively affect economic growth by putting ever higher portions of production into consumption directed by politicians and bureaucrats.

 

[Colonoscopy]

 

[Moral]

We have a spending problem, not a revenue problem. Baseline spending has increased over $2T in the last 4 years. That's not due to so-called entitlement spending.

It's been shown many times that increasing GDP raises more revenue than raising tax rates. Republicans need to start recognizing where the limit of the Laffer Curve is. I disagree with the notion that it's over 50%, but most of the Trump tax cuts are well below whatever the actual Laffer Curve rate currently is, and those cuts do little to stimulate the economy.

Spending needs to be drastically cut, starting with the military. The GOP morons increased military spending in the latest CR. We have to stop the government grant slushfunds, especially for foreign countries. It's not just the expenditures, it's also the growing army of federal employees who administer the expenditures. In fact the GOP morons should have had a new baseline budget that eliminated all the spending DOGE is uncovering now, before DOGE even existed. Just like 2016, the GOP morons had months to craft a real budget before the GOP POTUS was sworn in and could sign a new budget.

Early retirement for Social Security needs to be changed from 62 to 65, and the penalty for early retirement needs to be adjusted accordingly. It's insane the full retirement age was moved to 67 but the early retirement age is still 62.

Social security should only be taxed for those drawing before full retirement age. That would incent people to wait until full retirement age to draw SS.

Tariffs aren't the answer, and especially punitive tariffs. Free trade is the answer, and that is more along the lines of reciprocal tariffs that Trump has evidently just discovered (as opposed to punitive tariffs). In reality, tariffs should only be used as an equalizer to foreign government subsidies that give their industries a trade advantage.

Homeboy up in here like trickle down works, look at this laffer curve that supports my premise even though most it isn't a wildly accepted theory, we need to raise retirement age, and we need to tax social security for those that retire early, 65 per his recommendation would be early retirement. Then some shit about free trade.

God I hate libertarians.

 

[Finance85]

Corporate taxes are a pass-thru, just as tariffs are. See the history of Ireland and corporate tax revenue.

 

[Finance85]

Homeboy up in here like trickle down works, look at this laffer curve that supports my premise even though most it isn't a wildly accepted theory, we need to raise retirement age, and we need to tax social security for those that retire early, 65 per his recommendation would be early retirement. Then some shit about free trade.

God I hate libertarians.

Your hate for Libertarians is expected. Anyone thinking that a large nanny state is the ultimate answer will naturally hate those who disagree. For the record, I'm probably more of a Federalist than a Libertarian. I believe in a safety net, but prefer it to be at the State/Local level. I also understand that Social Security is now considered retirement, though it was never intended for that. It was intended to be a supplement and basic safety net.

What I would really like is for the general population to become more educated on history and civics.

 

[bhawk24bob]

I’ve always maintained that the best way to fix any budget issue that may or may not exist is to remove the legal fiction that is estate planning and tax inheritances like income. Stop pretending that a piece of paper (trust) is a living being that somehow survives the death of an actual person

 

[Finance85]

I’ve always maintained that the best way to fix any budget issue that may or may not exist is to remove the legal fiction that is estate planning and tax inheritances like income. Stop pretending that a piece of paper (trust) is a living being that somehow survives the death of an actual person

So you want a tax on accumulated property that was acquired at some point with taxable income. Ultimately, you believe a person doesn't really own what they acquire, and shouldn't be able to give it away when they die.

 

[bhawk24bob]

So you want a tax on accumulated property that was acquired at some point with taxable income. Ultimately, you believe a person doesn't really own what they acquire, and shouldn't be able to give it away when they die.

This isn’t on the dead person acquiring or giving away anything, it is on the person to pay tax on unearned income

 

[Finance85]

This isn’t on the dead person acquiring or giving away anything, it is on the person to pay tax on unearned income

There's currently no tax on unearned income. Income is only recognized when an asset is sold. If you want to argue the basis of the asset, that's a different conversation.

 

[Phenomenally Frantastic]

Tax the gd rich. That solves most of it. Stop coddling the billionaires.

Start with the Democrats.

Why didn’t you and your party do anything about this from 2021-2024 while you were in power?

Face it, Biden was in 80+ billionaire’s back pocket. He never went against them.

 

[MichaelKeller99]

Sound familiar? 🤣🤣🤣

In the spring of 1981, conservative Republicans in the House of Representatives cried. They cried because, in the first flush of the Reagan Revolution that was supposed to bring drastic cuts in taxes and government spending, as well as a balanced budget, they were being asked by the White House and their own leadership to vote for an increase in the statutory limit on the federal public debt, which was then scraping the legal ceiling of $1 trillion. They cried because all of their lives they had voted against an increase in public debt, and now they were being asked, by their own party and their own movement, to violate their lifelong principles. The White House and its leadership assured them that this breach in principle would be their last: that it was necessary for one last increase in the debt limit to give President Reagan (Trump???) a chance to bring about a balanced budget and to begin to reduce the debt. Many of these Republicans tearfully announced that they were taking this fateful step because they deeply trusted their president, who would not let them down.
I propose, then, a seemingly drastic but actually far less destructive way of paying off the public debt at a single blow: outright debt repudiation. Although largely forgotten by historians and by the public, repudiation of public debt is a solid part of the American tradition. The first wave of repudiation of state debt came during the 1840s, after the panics of 1837 and 1839.
So what can be done now? The current federal debt is $3.5 trillion. Approximately $1.4 trillion, or 40 percent, is owned by one or another agency of the federal government. It is ridiculous for a citizen to be taxed by one arm of the federal government (the IRS) to pay interest and principal on debt owned by another agency of the federal government. It would save the taxpayer a great deal of money, and spare savings from further waste, to simply cancel that debt outright. The alleged debt is simply an accounting fiction that provides a mask over reality and furnishes a convenient means for mulcting the taxpayer.

Repudiating the National Debt | Mises Institute

Although largely forgotten today, repudiation of public debt is a solid part of the American tradition.

mises.org

 

[Finance85]

Sound familiar? 🤣🤣🤣

In the spring of 1981, conservative Republicans in the House of Representatives cried. They cried because, in the first flush of the Reagan Revolution that was supposed to bring drastic cuts in taxes and government spending, as well as a balanced budget, they were being asked by the White House and their own leadership to vote for an increase in the statutory limit on the federal public debt, which was then scraping the legal ceiling of $1 trillion. They cried because all of their lives they had voted against an increase in public debt, and now they were being asked, by their own party and their own movement, to violate their lifelong principles. The White House and its leadership assured them that this breach in principle would be their last: that it was necessary for one last increase in the debt limit to give President Reagan (Trump???) a chance to bring about a balanced budget and to begin to reduce the debt. Many of these Republicans tearfully announced that they were taking this fateful step because they deeply trusted their president, who would not let them down.
I propose, then, a seemingly drastic but actually far less destructive way of paying off the public debt at a single blow: outright debt repudiation. Although largely forgotten by historians and by the public, repudiation of public debt is a solid part of the American tradition. The first wave of repudiation of state debt came during the 1840s, after the panics of 1837 and 1839.
So what can be done now? The current federal debt is $3.5 trillion. Approximately $1.4 trillion, or 40 percent, is owned by one or another agency of the federal government. It is ridiculous for a citizen to be taxed by one arm of the federal government (the IRS) to pay interest and principal on debt owned by another agency of the federal government. It would save the taxpayer a great deal of money, and spare savings from further waste, to simply cancel that debt outright. The alleged debt is simply an accounting fiction that provides a mask over reality and furnishes a convenient means for mulcting the taxpayer.

Repudiating the National Debt | Mises Institute

Although largely forgotten today, repudiation of public debt is a solid part of the American tradition.

mises.org

The Reagan tax cuts based on stimulated business (i.e., MACRS depreciation) stimulated GDP and generated more federal revenue. The problem was Reagan made a deal with Tip to drastically increase spending, both domestic and military. Reagan was obsessed with outspending the Soviets to win the cold war.

 

[bhawk24bob]

There's currently no tax on unearned income. Income is only recognized when an asset is sold. If you want to argue the basis of the asset, that's a different conversation.

You can try and be obtuse and apply an subjectively-improper definition of unearned income or acknowledge that the recipient of an inheritance, or in this case the beneficiaries of the legal fiction that a document is a living being with a corpus, should pay taxes on what he hasn’t earned

 

[IACub]

Maybe a tax cut for billionaires and large corporations would work, though?

 

[N8dogg99]

The ultra wealthy find there way around taxes and they always will. They'll keep there money in investments or real estate. Taxing the rich really means the high earners: doctors, engineers, lawyers, small business. People that work hard and probably deserve all the money they make. Raising the SS ceiling only effects these as well. It won't touch millionaires or billionaires.

 

[IACub]

The ultra wealthy find there way around taxes and they always will. They'll keep there money in investments or real estate. Taxing the rich really means the high earners: doctors, engineers, lawyers, small business. People that work hard and probably deserve all the money they make. Raising the SS ceiling only effects these as well. It won't touch millionaires or billionaires.

"Their"

Tax capital gains at a higher rate. Boom.

 

[MichaelKeller99]

The Reagan tax cuts based on stimulated business (i.e., MACRS depreciation) stimulated GDP and generated more federal revenue. The problem was Reagan made a deal with Tip to drastically increase spending, both domestic and military. Reagan was obsessed with outspending the Soviets to win the cold war.

The names have changed but the hypocrisy remains for the GOP. 😙

 

[hawkeyetraveler]

There's currently no tax on unearned income. Income is only recognized when an asset is sold. If you want to argue the basis of the asset, that's a different conversation.

I think you and I have disagreed on this before, but my personal preference is to treat any inheritance as a gift with the cost basis set to what you paid for that gift - zero. Tax the capital gain like any other capital gain. This way people can work their family farm/business without having to go into debt at the point of inheritance. But if you want to sell? Yes then you pay tax on the income you realized from the sale.

We must find a way to increase tax revenues and this is the least impactful way I can see to do it. The other methods (VAT, flatter tax structure but with fewer loopholes for wealthy people, or increase in a progressive tax) all have pros and cons too. But they all create disincentives to incremental work, to consumption, etc. at least with inheritance you are not creating nearly the same type of disincentive.

 

[Moral]

The ultra wealthy find there way around taxes and they always will. They'll keep there money in investments or real estate. Taxing the rich really means the high earners: doctors, engineers, lawyers, small business. People that work hard and probably deserve all the money they make. Raising the SS ceiling only effects these as well. It won't touch millionaires or billionaires.

That is why other nations have started instituting wealth taxes. It would be a tax on assets, stashed away wealth, and other forms of wealth holdings. It lowers income inequality and also incentivizes business to invest their money into their business over wealth hoarding.

 

[scruffyhawk]

There's currently no tax on unearned income. Income is only recognized when an asset is sold. If you want to argue the basis of the asset, that's a different conversation.

Which is appropriate if an asset spikes in value, but subsequently crashes there is no tax liability. Having a carry forward tax loss after paying the government for money one didn't make is a silly argument. Hence why things have basis.

State governments play fast and loose with property tax caps. If a can of worms is opened on basis they would manipulate by asset class and taxpayer age/class.

Adding to your post, not debating any aspect of it.

 

[Phenomenally Frantastic]

You can try and be obtuse and apply an subjectively-improper definition of unearned income or acknowledge that the recipient of an inheritance, or in this case the beneficiaries of the legal fiction that a document is a living being with a corpus, should pay taxes on what he hasn’t earned

Those assets were already taxed two or three times over. To tax the dead is just full on greed.

Earn it, taxed.
Buy it, taxed.
Invest it, taxed.
Give it away, taxed.
Die, taxed.

 

[N8dogg99]

"Their"

Tax capital gains at a higher rate. Boom.

I'll just keep my money invested and take out huge loans that banks will be glad to give. Elon paid for twitter, I think, on a loan against his Tesla stock. Elon also paid 12 billion in taxes, more then any human in history. They're not going to tax unrealized gains. Hilarious Kamala was even floating that idea.

 

[Phenomenally Frantastic]

That is why other nations have started instituting wealth taxes. It would be a tax on assets, stashed away wealth, and other forms of wealth holdings. It lowers income inequality and also incentivizes business to invest their money into their business over wealth hoarding.

Socialism is a road to social destruction.

 

[scruffyhawk]

I think you and I have disagreed on this before, but my personal preference is to treat any inheritance as a gift with the cost basis set to what you paid for that gift - zero. Tax the capital gain like any other capital gain. This way people can work their family farm/business without having to go into debt at the point of inheritance. But if you want to sell? Yes then you pay tax on the income you realized from the sale.

We must find a way to increase tax revenues and this is the least impactful way I can see to do it. The other methods (VAT, flatter tax structure but with fewer loopholes for wealthy people, or increase in a progressive tax) all have pros and cons too. But they all create disincentives to incremental work, to consumption, etc. at least with inheritance you are not creating nearly the same type of disincentive.

Your example doesn’t allow an instance to cash flow any leverage of assets prior to death. Which creates an artificial inflation or deflation of the utility value of any asset to make money.

 

[Finance85]

You can try and be obtuse and apply an subjectively-improper definition of unearned income or acknowledge that the recipient of an inheritance, or in this case the beneficiaries of the legal fiction that a document is a living being with a corpus, should pay taxes on what he hasn’t earned

It's not being obtuse. There's a huge difference in concepts. I'm sorry you can't understand that. One is taxing wealth, the other is taxing income. One is about property that I acquire and own, the other is that government is the ultimate owner of the wealth.