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.

Real GDP growth (2024) = 2.8% of GDP

New debt + interest (2024) = 6.2% of GDP

S&P 500 index (2024) = +23%

Good luck.

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.

but were they winning as hard as the current administration?

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).

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.)

always been like that. GOP takes power then cuts taxes so they can yell about the deficit, which gives them leverage to cut spending.

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.

https://www.torched.la/why-this-convention-center-expert-is-...

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.

[1] - https://fred.stlouisfed.org/series/FYFSD

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

I believe there's a slight typo in your statement, where you use a double-negative where perhaps you meant only one 'NOT'.

> 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.

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.

[1] - https://wtfhappenedin1971.com/

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 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.

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.

Yes the treasury rate is the base of all interest rates.

Why the assumption that things are all exponential?

Oddly enough inflation makes money worth less, and that makes the debt easier to manage because inflation doesn't increase the dollar amount owned.

Is economic growth typically adjusted for inflation?

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.

> I understand the self-interested desire for the ultra wealthy to have lower taxes on an individual level,

I don't. It seems like mental illness to me

> 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.

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.

> 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?

Mostly to ourselves.

You don't owe anything. You're spending someone else's money!

The real answer is our children. Deficits are complicated and plenty of very smart people have very different opinions on it, however in the end it is similar to a mortgage. At some point, someone somewhere will have to pay some of it off. The people that created this massive debt will most likely be dead and gone by then.

anyone who is the bearer of a US Treasury bond that hasn't reached maturity

so if you have any investments even in your 401k, or hold any ETFs, much of it is invested in those

holders are individuals domestic and worldwide, retirement plans, foreign governments, banks, central banks like the Federal Reserve

the US government slowly pays people back with revenue and other people's money via newly issued bonds, over time, and does it very reliably, so people keep buying. The US government's revenue comes mostly from tax collection, followed and a few other sources, some private sector ownership in recent decades, and it pays the interest on all of the active bonds.

ourselves, each other, foreign bond holders, remember that anyone who wants to buy a government bond can do so pretty easily and they're basically unlimited in availability so the answer to your question is anyone who was willing to lend the government money before.

He already has.

Firing Jerome Powell and pushing rates lower, in spite of reality on the ground, is effectively a form of soft default. (That, plus the laundry list of other things, which is too long to fit into a single HN comment)

The US will never stop paying its obligations. But driving away investment by breaking promises abroad and eroding political stability at home very much will cause the trust in the USD as an ongoing institution to evaporate. Sure, the US still pays its bonds on time in USD, but what is USD worth when the US cannot honor its trade obligations, cannot honor its diplomatic obligations, cannot be relied on as a stable partner?

It will be very scary when the US stops being the dominant financial system. So much of the US political economy (and more fundamentally, our way of life) depends on it.

Defaulting on U.S. Treasury payments would cause a lot of economic stress around the globe. But so did the 2008 financial crisis and the 2020 COVID pandemic, and we held presidential elections both those years.

No one knows what would happen. That is unprecedented. There would be mayhem in financial systems as all types of collateral is vaporized. All types of on paper net worth would collapse towards zero

What? Can you explain how you are getting from a to.... z here? He defaults on debt, and then the election goes away in 3 years?

I will bite... What are you talking about?

As others said, U.S. Treasury bonds are widely held across the globe.

But the largest single holder is actually the U.S. federal government itself, which holds about 20% of the total debt as “intragovernmental” debt. These are real, legally binding financial obligations to federal agencies, most famously to Social Security.

US treasuries (bonds, notes and bills) are mostly considered as good as cash. They're used heavily in the international banking system (for payments, and as loan collateral themselves). They're also held to maturity by large institutional investors with predictable liabilities (ie payments) like pension and insurance funds. Banks will hold some of their assets (eg deposits) in treasuries too.

Also foreign governments and central banks will have holdings. Tether (the cryptocoin) is largely backed by US treasuries.

Bonds for the most part.

So who owns the obligations? Many individuals and foreign states.

So who's that, it doesn't give any sense of proportion.

It's complicated as one can never be sure how a bond get wrapped into another product sold in foreign, and often obscurely complex structures. But we do have some estimated data points.

Contrary to another comment pointing at China, this country accounts only for tiny fraction of the overall amount credited.

For example, the UK, Japan, individually own more U.S bonds than China.

Anyhow they each represent around 1 trillion, so where is the rest coming from?

The majority of creditors in value are U.S entities and U.S individuals.

Some may recall a bank in California that went bankrupt a year or two ago. Unveiling a financial gig certain institutions enjoy doing: accumulate bonds as it always pays.

A few references: https://www.nasdaq.com/articles/20-countries-holding-most-us...

https://www.crfb.org/papers/qa-gross-debt-versus-debt-held-p...

Edit: another comment nicely broke down list of which U.S entities own what.

The entire financial services industry. Even including some of the cryptocurrency parts: USDC is backed by a Blackrock account holding Treasury bills.

(a default on the debt, any of it, would be an extinction level event for the global financial services industry and then most real US industries in the following weeks)

In rough order of size of treasure holdings

- The Federal Reserve

- Intergovernmental holdings

- Mutual Funds

- state and local gov

- Pension funds

- Insurance companies

- Deposit insurance

- Foreign holdings of all types

Debt is just promises for future currency. One persons debt is another person asset. But what happens is when you "over promise" by accumulating too much debt then all those people with debt as their assets think they have X dollars, but if there's more debt than underlying resources can cover then it might end up all those people only end up getting like 0.65X or possibly even lower. Kind of like a bank run

This is the big misnomer - it's debt on the U.S. balance sheet, but is a credit on someone else's balance sheet. By itself, it's not necessarily bad; it really depends on who the debt is issued to, why, and on what terms.

Time would be better spent talking about other issues, but national debt is a simple number politicians can complain about rather than talking about the more complex issues that really impact the rest of us.

Anyone who has bought US treasuries/bonds, which includes regular people, but also most nation states.

Thank you for asking the question. I wondered about this in the back of my mind.

Anyone who owns US treasuries. That may be you. But I am sure many here own US debt. Institutions and sovereign entities own quite a bit. The US Social Security Trust Fund is a major holder as well.

raises hand

I buy Treasury products for my investment portfolio sometimes.

It's not a stupid question

Thank you all for the excellent answers, that's helped my brain model it somewhat.

Weirdly themselves. Makes my head hurt but the central bank, the social security fund and some other bits of US government basically own most of the national debt. Then it's the Japanese, British, Chinese and Warren Buffet. But less than you would guess.

About 450 billion of the national debt is held in the Cayman Islands, or a little more than 1% of the 38 trillion total. About the same as Belgium and Luxenberg, but significantly less than Japan, UK, and China.

https://ticdata.treasury.gov/resource-center/data-chart-cent...

it does matter when printers go brr, a lot. Printing/QE is the most likely way out and its really going to hurt main street

Is the site down? I wanted to visit based on the name alone.

Well taxation also. As the debt has exploded over the decades we've dramatically cut top tax brackets.

I thought the U.S. government was shutdown specifically because spending didn't have bipartisan support?

No, the issue is we stopped taxing the rich to pay for spending without stopping the spending.

We all grow old. Your situation today may not be the same as tomorrow and you may find your smug self needing social security.

You do realize that boomers have already paid way more into the system? The people who didn't pay in (old poors 100 years ago) are dead and gone.

Not to mention population growth. The debt per capita or debt to GDP could be improving (it's not) and we still see headlines like this. It's a fun milestone, but context matters.

Genuine question - why is taking benefits away from the poorest among us the only answer? Corporations and the wealthy upper crust have made record profits YoY for like a decade now. But we can only find the money by taking it away from people who are just trying to eat?

Or it'll be a real-world test of the whole "three missed meals away from violent revolution" quote of Lenin's.

Not sure why you're being down voted. SNAP was bleeding us on the front end by subsidizing sugar water mega corps and on the backend by subsidizing the collosal medical bills that come from the overweight, diabetic millions.

One day we'll look back and wish we had the self-control to both impose austerity measures to get the spending under control and the foresight to spend wisely on long term functions like infrastructure.

Until then it's business as usual from both political parties.

Or, instead of taking from the most vulnerable among us, we could restore higher taxes on high income earners.

Yes, the rich would whine about it and raise a fuss, but ultimately their lives would not actually change for the worse.

Whereas taking away SNAP and other entitlements would demonstrably make the lives of millions of people significantly worse.

Tax cuts for a few that raise taxes on millions was not a good idea and was a poison pill. And now we're poisoned.

Sorry, the entire political establishment learned that debt didn't really matter back during Bush and then Obama.

How different would the world have been if either of the two "grand bargins" that Boehner started, and then Obama torpedo'd last minute (in the first example) or the second one (which biden as VP torpedo'd) happened? No rise of the tea party, working bipartisan arrangement on spending?

Shit matters.

As always, “reforming entitlements” barely moves the needle on paying down the debt.

Even SNAP only cost 100 billion last year, and its net effect on revenue was probably positive, though these things are hard to measure in isolation: https://www.cbpp.org/blog/snap-food-assistance-is-a-sound-in...

(Because humans are bad at large numbers: 100 billion / 38 trillion is 0.2%, or alternatively 38T represents 380 years of SNAP at 2024 levels.)