What would America look like with a zero deficit/zero national debt?

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    Jul 02, 2011 7:30 PM GMT
    I am not a political or economics guru, but I'm curious to see what others on RJ think about a zero defict/national debt world. Would it be like when I grew up in the 1950's? Wages and salaries were low, but the dollar was worth quite a bit. Everyone paid cash except for cars and houses. Health insurance was almost non-existant for most people.

    This is not a liberal vs. conservative question. I'm just interested in your opinions.
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    Jul 02, 2011 7:41 PM GMT
    In 1955 the year I was born the US national debt was 280,768,553,188.96.

    I don't know accurate this is, but here:

    http://130.94.230.21/debt_history.htm
  • MSUBioNerd

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    Jul 02, 2011 7:42 PM GMT
    In 1950, the US national debt was roughly the same percentage of the gross domestic product as it is today, and far higher than it was in, say, the 1980s. Why would you think, though, that a lack of national debt would change the purchasing behavior of individuals? National debt is money that our government has borrowed from foreigners, primarily through things like treasury securities. Individual Americans carrying credit card debt and the like is not part of the calculation.
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    Jul 02, 2011 7:52 PM GMT
    MSUBioNerd saidIn 1950, the US national debt was roughly the same percentage of the gross domestic product as it is today, and far higher than it was in, say, the 1980s. Why would you think, though, that a lack of national debt would change the purchasing behavior of individuals? National debt is money that our government has borrowed from foreigners, primarily through things like treasury securities. Individual Americans carrying credit card debt and the like is not part of the calculation.


    My question is what do you think America would look like? Any ideas here? Isn't national debt money that we owe ourselves such as borrowing from Social Security?
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    Jul 02, 2011 7:52 PM GMT
    Canada's debt in 1955 was about 200 million.
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    Jul 02, 2011 8:36 PM GMT
    I think our country would look like a country out of the war business, after all its to a great degree our military complex warmongering that has gotten us in this debt. Before you cast off what I'm saying as crazy consider what Eisenhower warned us about the military complex and how far our military spreads our involvement and spending of money all over the world via the CIA, Pentagon, all the unnecessary bases, wars that help no one but the military suppliers and some mega business like big OIL concerns who need the US War Machine to forward and maintain its OIL interests in the Middle East. Yes our country's debt would be way down and we'd look very peacefull, if we didn't have to invent some enemies to blow money on as cover for what the wars are really about.
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    Jul 02, 2011 8:43 PM GMT
    I paid cash for my car. Car notes are evil.
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    Jul 02, 2011 8:44 PM GMT
    In order to get to that point, a whole bunch of things would have to change.

    - tax revenues would need to go up (a lot);
    - growth in expenditures would need to slow down, especially health care (a lot);
    - US military and the USA's role in the world would need to change.

    It is virtually impossible for any country not to have government debt. Demands on the government purse do not change much, but the ability to pay for them can due to economic slumps, etc..
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    Jul 02, 2011 8:48 PM GMT
    Realifedad, your comments make perfect sense and you have valid points. My view is if we had zero deficit/national debt with a lean, mean streamlined government and military we would all be paying fewer taxes. Such things as the Bush Tax Cuts would not be necesary, because the taxes would automatically be lower for all. The money borrowed from Social Security would be re-paid and would eliminate the need to dole out block grants to the states. Yes, I believe that Social Security, Medicare and Medicaid needs to be reformed, but it could be done without having to send the old folks, handicapped and poor to a Dr. Kevorkian-style solution.
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    Jul 02, 2011 8:54 PM GMT
    dekiruman saidI paid cash for my car. Car notes are evil.





    You are to be commended, you need to work for the government and get across to them that borrowing for war vehicles and machinery is evil.
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    Jul 02, 2011 9:05 PM GMT
    I imagine similar to the clinton years
  • rnch

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    Jul 02, 2011 9:06 PM GMT
    does anyone recall the balanced budget that President clinton left to his successor?
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    Jul 02, 2011 9:14 PM GMT
    It wouldn't happen. Deficits and debt are not BAD.

    I'm hoping that people here understand that the national debt and the budget deficit are two different things.

    Any nation that is growing has national debt. It represents investments in the country, and it's how we get things done.

    There comes a point when it is a problem - after the national debt reaches a certain percentage of GDP, it is destructive and counterproductive.
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    Jul 02, 2011 9:18 PM GMT
    rnch saiddoes anyone recall the balanced budget that President clinton left to his successor?


    No, because he didn't do that. He claimed to have left a budget surplus. And he could only claim that by playing a shell game with the social security trust fund, and by basing projections on a ten-year forecast of the stock market.

    Remember Al Gore's "Lockbox" bullshit? That made the country snicker.

    In any case, a large budget surplus is just as bad as a deficit. The government has no business running up either one.
  • roadbikeRob

    Posts: 14354

    Jul 02, 2011 9:18 PM GMT
    It would be awesome if the US didn't have this massive deficit but than the US is not alone, most other industrialized countries are having similar debt problems especially Greece, Ireland, Portugal, and Spain. The US is definitely not alone but that doesn't mean that we should not try to get our financial house in order. The same goes for the other four above referenced countries.
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    Jul 02, 2011 9:31 PM GMT
    roadbikeRob saidIt would be awesome if the US didn't have this massive deficit but than the US is not alone, most other industrialized countries are having similar debt problems especially Greece, Ireland, Portugal, and Spain. The US is definitely not alone but that doesn't mean that we should not try to get our financial house in order. The same goes for the other four above referenced countries.


    Again, you are conflating the budget deficit and the national debt. They are two different things.
  • rnch

    Posts: 11524

    Jul 02, 2011 9:37 PM GMT
    [quote][cite]JackNWNJ said... a large budget surplus is just as bad as a deficit. The government has no business running up either one. [/quote]



    on THIS you and I can agree.



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    Jul 02, 2011 9:38 PM GMT
    the streets would be paved with gold, duh.
  • rdberg1957

    Posts: 662

    Jul 02, 2011 9:42 PM GMT
    Many economists believe that it is undesirable to have a balanced budget under every circumstance. Our national debt is too high and does need to be reduced in the long term because lenders will lose faith in the US ability to pay its obligations. What is the price to pay for having a balanced budget? Infrastructure that is falling apart? Increased homelessness? Poor health care? An amendment mandating a balanced budget is rather dangerous because the legislature is blocked from setting national priorities. Certainly it can be argued that Congress doesn't have the right priorities, but individuals and families (whose budgets are not balanced) and states (whose budgets are not balanced with or without balanced budget amendments) are very different from national governments which need to borrow to continue operations. I would advocate for much lower debt as a percentage of GDP so that Medicare and Social Security can be adequately funded. Many will argue that government should operate more like a business--I think that is a large error. Governments and businesses have very different functions in a society. The fundamental reason for private enterprise to exist is to make profit. The fundamental reason for government to exist is to promote the general welfare and protect our liberty. Let's not confuse the two and expect business to do what government does or to expect government to do what business does. As long as governments have existed, they have incurred debts. They have run into problems when their debts have overrun their ability to repay them. Moderation of debt, rather than absolute prohibition of debt is what is called for.
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    Jul 02, 2011 9:56 PM GMT
    It would most likely look a lot like it did under Clinton
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    Jul 02, 2011 9:58 PM GMT
    rdberg1957 saidMany economists believe that it is undesirable to have a balanced budget under every circumstance. Our national debt is too high and does need to be reduced in the long term because lenders will lose faith in the US ability to pay its obligations. What is the price to pay for having a balanced budget? Infrastructure that is falling apart? Increased homelessness? Poor health care? An amendment mandating a balanced budget is rather dangerous because the legislature is blocked from setting national priorities. Certainly it can be argued that Congress doesn't have the right priorities, but individuals and families (whose budgets are not balanced) and states (whose budgets are not balanced with or without balanced budget amendments) are very different from national governments which need to borrow to continue operations. I would advocate for much lower debt as a percentage of GDP so that Medicare and Social Security can be adequately funded. Many will argue that government should operate more like a business--I think that is a large error. Governments and businesses have very different functions in a society. The fundamental reason for private enterprise to exist is to make profit. The fundamental reason for government to exist is to promote the general welfare and protect our liberty. Let's not confuse the two and expect business to do what government does or to expect government to do what business does. As long as governments have existed, they have incurred debts. They have run into problems when their debts have overrun their ability to repay them. Moderation of debt, rather than absolute prohibition of debt is what is called for.


    Thanks RD for your very informed comments. What do you think of a rainy day fund or budget surplus? Couldn't we just tap into something like that when a national emergency happens or war? Isn't that better than borrowing?
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    Jul 02, 2011 10:07 PM GMT
    JackNWNJ said

    In any case, a large budget surplus is just as bad as a deficit. The government has no business running up either one.


    Clinton's surplus was no more or less real than today's deficit predictions. And let's all remember that the surplus meant (per the right wing) that we were paying to much tax and was the rationale for the Bush tax cuts. And now that were have deficits and debt, those same people think cutting taxes further is he answer? Tell us how that makes sense.

    That said, while I don't think the government should run huge surpluses, I think putting aside money in a "lockbox" that Congress cannot fuck with, and keeping some money in a "rainy day" fund makes sense.
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    Jul 02, 2011 10:12 PM GMT
    Christian73 said
    JackNWNJ said

    In any case, a large budget surplus is just as bad as a deficit. The government has no business running up either one.


    Clinton's surplus was no more or less real than today's deficit predictions. And let's all remember that the surplus meant (per the right wing) that we were paying to much tax and was the rationale for the Bush tax cuts. And now that were have deficits and debt, those same people think cutting taxes further is he answer? Tell us how that makes sense.

    That said, while I don't think the government should run huge surpluses, I think putting aside money in a "lockbox" that Congress cannot fuck with, and keeping some money in a "rainy day" fund makes sense.


    It doesn't make sense for our bond rating. It's basic economics.

    The way out of the deficit and debt mess is economic growth. Unfortunately, this present administration is doing everything it can to stop growth.
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    Jul 02, 2011 10:39 PM GMT
    JackNWNJ said
    Christian73 said
    JackNWNJ said

    In any case, a large budget surplus is just as bad as a deficit. The government has no business running up either one.


    Clinton's surplus was no more or less real than today's deficit predictions. And let's all remember that the surplus meant (per the right wing) that we were paying to much tax and was the rationale for the Bush tax cuts. And now that were have deficits and debt, those same people think cutting taxes further is he answer? Tell us how that makes sense.

    That said, while I don't think the government should run huge surpluses, I think putting aside money in a "lockbox" that Congress cannot fuck with, and keeping some money in a "rainy day" fund makes sense.


    It doesn't make sense for our bond rating. It's basic economics.

    The way out of the deficit and debt mess is economic growth. Unfortunately, this present administration is doing everything it can to stop growth.


    Really? The much maligned stimulus enabled some growth but wasn't big enough. Now the Republicans are looking to reduce the deficit at the expense of jobs and, yes, growth.

    The people who are really hampering growth are businesses sitting on $2 trillion in profits and refusing to invest, hire or do anything to help the economy. In fact, Goldman Sachs, and other banks, who received trillions in tax payer money, are laying people off despite record profits.

    Why aren't you mad at them? icon_rolleyes.gif
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    Jul 02, 2011 10:41 PM GMT
    In the Reagan/Bush years I think the national debt had not reached 1 trillion yet. A yearly deficit of 300 million was considered high enough. In the Clinton years, the deficit was eliminated and for a short while, the national debt was being paid off.