Is the "national debt" important?

[kentuck]

The present debt is approximately $20 trillion dollars.

Does anyone think we will ever pay off this debt?

Ninety-five percent of this debt has accumulated since the Ronald Reagan Presidency. The national debt was less than $1 trillion dollars when Jimmy Carter left office. After all those wars and New Deal and Great Society, less than $1 trillion dollars.

Why is this important? They used to say that it was no big deal because we owed the money to ourselves. Anymore, that is not the case. Much of this debt is owed to other countries and foreign entities.

Will there come a time when we will need to simply write off all the debt and start over? After all, most of it is just printed paper. There is nothing standing behind it.

Nowadays, a trillion dollars is talked about as if it is nothing. Senator Everett Dirksen used to say that "a billion here and a billion there, and you're talking about real money". Now it is, a trillion here and a trillion there...

[mcar]

1. Only when Democrats are in charge

When Rs rule, it's never mentioned.

[Sancho]

2. The real keys to reducing the debt...not that any of this would happen.

-Cut MIC spending in half. Since WWII, spending on defense has been insane. Close half those bases.

-Tax the wealthy at much higher rates. 50%, 70%, 90% as you get into the millions and billions of income.

-Tax money moving overseas. There's more money in island banks than in NYC now.

-Pay much less for health care with a single-payer or public-option system (which would mean that hospitals and doctors get 1/3 to 1/2 what they are making now).

The debt could go to zero in 20 years (?) or so if real changes were made, and none of the above would affect the American people except positively.

[DanTex]

3. It's moderately important in the long run.

It's not important in the short term. The key thing is, anytime we wanted, we could balance the budget and start reducing the debt by modestly raising taxes on the top few percent. The reason we don't do that is purely political. So basically, the situation is that the debt isn't a big problem in itself, the big problem is the GOP.

Also, the current level of debt, even though it sounds big, isn't near any critical level. Long-term Treasury rates are still very low, which means that for all the talk among pundits about the debt being unsustainable, investors (who judge things with their money and not just their words) have a very high confidence in US debt.

Also, the debt outstanding to the public is actually only about $14T. The rest is held by the government itself, for example in the Social Security Trust Fund. As a percentage of GDP, the public debt is about 75%, maybe higher than ideal but certainly not any kind of disaster level.

[exboyfil]

4. Yes it is

and I don't think there is a ready pool of taxable income/wealth necessary to address it. People and corporations have a choice on where they reside. Ultimately the only hold that allows taxation or real property in this country and the goods and services that are provided in this country.

Roughly $3T of that debt is in Social Security obligations that will have to be paid back over the next 20 years (roughly $150B/yr).

The Debt to GDP number is the one to watch. It gets much beyond 1x, then we are falling off the fiscal cliff.

When Ronnie and Bush 1 was in office that number went from 30.1% to 62.7%. When Clinton was in office that number went from 62.7% to 54.9% (yea). When Bush II was in there it went from 62.7% to 77.4%. When Obama was in there it went from 77.4% to 105.9%.

[zipplewrath]

5. Sorta

What's important is the debt service, i.e. the payments we have to make every year. What concerns most folks is that the percentage of the budget servicing debt tends to growing every year. The reasons for this are many, some having to do with the variations in tax revenue because of things like tax cuts. It's also been a concern for a while now that some of this was covered up for years by "borrowing" against Social Security.

But the real problem is that we aren't "taxing" enough. Too much income is exempt from social security taxes. Too much income is taxed at lowered rates, or not at all. And, yes, we should be doing more "pay as you go" but that means collecting the taxes to do so.

We probably will never "pay off the debt". There really is no reason to. What we will, and should, do is to "manage" the debt so that we manage the debt service.