Why does neither party care about the deficit?

[AGA]

The past two presidents have presided over deficits of over $1 trillion, resulting in the debt-to-GDP ratio well exceeding 100%. Do we really need to be borrowing this much when the economy is as good as it is?

Is it because the national debt is a long-term problem while spending benefits lawmakers in the short run?

[Associate Justice PiT]

     Cutting spending and raising taxes are both highly unattractive prospects to voters, so it's easier to just not worry.

[Benjamin Frank 2.0]

The Democrats used to care about the deficit, from Jimmy Carter to Bill Clinton and Nancy Pelosi (instituting paygo) to even Barack Obama.

As I've explained here previously, Joe Biden's enormous deficits are a problem (though won't be as bad if/when bond yields/interest rates come down) but political it isn't sustainable for only one party to care about the deficit.

Jimmy Carter ran relatively small deficits but Reagan criticized that and lied that he'd balance the budget but instead ran up deficits so enormous in order to cut taxes for the wealthiest that they brought back inflation to the point that they sunk his successors Presidency.

Bill Clinton (with George H W Bush's help) eliminated deficits and brought in 'surpluses as far as the eye can see' and then George W Bush got elected and cut taxes further for the 'haves and have mores' that he brought back 'deficits as far as the eye can see.'

Barack Obama after dealing with the Great Recession and the fiscal problems that led to didn't address the deficit enough, but still managed to reduce it to a somewhat sustainable sub $500 billion a year.

Donald Trump, with an even better economy than Obama had, passed even more tax cuts for the wealthiest and, even pre Covid, had a deficit of just under $1 trillion in fiscal year 2019.

At some point, it made sense that Democrats would say to themselves 'heck with trying to reduce the deficit if Republicans are simply going to take our hard work, for which we get punished for, and pass further tax cuts for their wealthy friends, donors and other benefactors. Let's deficit spend for our priorities.' Can anybody really fault the Democrats for doing that?

The technical economics answer beyond that though, is that the United States, due to the $ having the status of the world reserve currency/petrodollar has the ability to deficit spend that no other nation has. Other nations/currency have to buy U.S $s which obviously props up the U.S $ relative to other currencies. So, despite some conspiratorial types who want you to buy gold or now cryptocurrency, what happened to the U.K with its run on the Pound after Liz Truss' budget proposal simply can not happen to the U.S.

However, the deficits and debt are clearly so large now that the United States has abused its privileged position to the point where it's starting to lose it, and there are quite a number of mainstream economists and finance types, and not the conspiratorial types, who believe that over the next 20 years the U.S $ will no longer be the world reserve currency/petrodollar.

So, after that, the U.S will either need to get its fiscal house in order quickly or call in the IMF.*

*I'm being facetious on that. What would happen is the United States would need to steadily get its fiscal house in order as its $ steadily loses its world reserve currency/petrodollar status. (I'm not sure the process of how this would happen, ask a finance type person.)
For those who remember the 1990s, there would be a certain irony of the United States having to call in the IMF, but in reality, the U.S becoming an economic basket case would be a miserable situation for the entire world.

[Ferguson97]

Because it doesn't matter.

[Benjamin Frank 2.0]

Because it doesn't matter.

The $1 trillion in interest payments the U.S government is currently paying on its debt doesn't matter to you?

[Sumner 1868]

Because the national debt will never be paid off.

[Benjamin Frank 2.0]

To add to my last point. I supported both Biden's spending in general - CHIPS, infrastructure and the stimulus AKA The American Rescue Plan and the Inflation Reduction Act.

In hindsight it's easy to say that the stimulus checks were largely a waste of money, and we can all quibble about where the money went to and where it didn't, but, and I praised Manchin here as well for being consistent, and again, Manchin had his own opinions over where the money should go, but he ultimately said 'I'll go along with an additional $4 trillion in new spending (over 10 years) and my colleagues can decide where that money should go.' And, for all the legitimate criticisms of Manchin, he ultimately kept his word. If you add up the Biden spending packages, they are right around $4 trillion in new spending over 10 years. In raw numbers, they total to around $5 trillion, but they had nearly exactly $4 trillion in new spending.

Of course, as others here said at the time, there were likely at least a half a dozen other Democratic U.S Senators who were hiding behind Joe Manchin on this, realizing that with Manchin out front, they didn't need to offend the progressives.

However, I have no problem admitting I was wrong on some of these things. I've been surprised at how high inflation has remained and how that has forced interest rates to remain high, and I've been surprised at how high the deficit still is post Covid. I think everybody should be genuinely alarmed at how high the deficits still are. $1 trillion in interest payments is nearly 4% of GDP that is simply a loss to the U.S treasury.

[Benjamin Frank 2.0]

Because the national debt will never be paid off.

This is akin to saying that because anthropogenic global warming is going to be a problem no matter what, we shouldn't do anything.

[Amenhotep Bakari-Sellers]

Due to tax cuts for the rich and Spending, each party exploded the deficit on stimulus programs and now there is no extra revenue to pay for it

[Ferguson97]

Because it doesn't matter.

The $1 trillion in interest payments the U.S government is currently paying on its debt doesn't matter to you?

No, it doesn't.

We shouldn't endlessly spend money because it can cause inflation, but the deficit itself is not a problem. Nobody is coming to collect the bill. It's not like a credit card.

[No War, but the War on Christmas]

As Fergie said, for a nation state the relevance of debt is far overrated and used by fiscal conservatives to prioritize their ideal 'watchman' state over social obligations.

It's a matter of principals and priorities, not the wealthiest nation on earth spending too much.

[Benjamin Frank 2.0]

Because it doesn't matter.

The $1 trillion in interest payments the U.S government is currently paying on its debt doesn't matter to you?

No, it doesn't.

We shouldn't endlessly spend money because it can cause inflation, but the deficit itself is not a problem. Nobody is coming to collect the bill. It's not like a credit card.

As I said above, that's only true as long as the U.S $ remains the world reserve currency/petrodollar. There have been many nations that had to bring in the IMF due to their unsustainable debt/deficits, and the U.K under Liz Truss is an example of what can happen when the credit card bill gets too large, whether it actually has to be paid back or not.

But, whether the debt is like a credit card or not, what does that have to do with paying $1 trillion in interest payments? As I said, this is a full 4% of GDP, and it's based on an implicit interest rate of only around 3% You might simply say 'well we'll just add a trillion more to the deficit since we have to spend that trillion on interest payments, but, like Sanitation Commissioner Homer Simpson, it isn't too long before you run out of room.

[Born to Slay. Forced to Work.]

If the US we’re to somehow default on its loans the world economy would collapse.

[Crumpets]

The deficit is only remarkable in the sense that the US is a remarkably large and wealthy country that can afford to run deficits and borrow from other countries as long as we maintain good credit, which we basically always do, pending any further random threats to default amid petty political tantrums.

[Ferguson97]

As I said above, that's only true as long as the U.S $ remains the world reserve currency/petrodollar.

If we're ever in a situation where America stops being the world reserve currency, we're going to be killing each other over cans of beans, so it won't really matter anyway.

[Benjamin Frank 2.0]

As I said above, that's only true as long as the U.S $ remains the world reserve currency/petrodollar.

If we're ever in a situation where America stops being the world reserve currency, we're going to be killing each other over cans of beans, so it won't really matter anyway.

That's actually probably not true. That would only happen if the U.S lost that status immediately, but it would be more likely a process over 20 years or so, and it seems increasingly likely to happen.

[GP270watch]

 Nobody except Republicans in Congress wants to cut Social Security, it's the most popular and successful government program the United States has ever created.

 Cutting the bloated U.S. military never gains much political traction.

 Cutting Medicare and Medicaid would just make us spend more on expensive private healthcare that would inevitably crumble because a comprehensive private healthcare system is an impossibility.

 After that there isn't much to cut.

[Absentee Voting Ghost of Ruin]

Because the national debt will never be paid off.

This is akin to saying that because anthropogenic global warming is going to be a problem no matter what, we shouldn't do anything.

It's a game-theory problem, like the tragedy of the commons or Prisoners' Dilemma.

If you need collective action to fix something, and the other actors absolutely will not participate in fixing it, instead bettering their own position, you're left with the choice of doing the right-but-useless thing, and suffering for it, or doing what everyone else does.

Republicans will never do anything good regarding the deficit. So as long as Republicans are allowed to participate in American governance, no one can actually fix it. Now, I personally think the only way out is to stop playing games with Republicans, but there's no practical or moral way to do that so long as a sizable minority of the country is willing to play with them. So we just keep stumbling on until something breaks unfixably, and then a great many people die.

[TechbroMBA]

I’ve only ever seen governments slash budgets when they’re forced to. The bond market will dictate when the parties begin to care again about the deficit.

[BlueSwan]

Nobody except Republicans in Congress wants to cut Social Security, it's the most popular and successful government program the United States has ever created.

 Cutting the bloated U.S. military never gains much political traction.

 Cutting Medicare and Medicaid would just make us spend more on expensive private healthcare that would inevitably crumble because a comprehensive private healthcare system is an impossibility.

 After that there isn't much to cut.

Right. But the problem is that taxes are too low. Try telling THAT to the American public though.

[ingemann]

As I said above, that's only true as long as the U.S $ remains the world reserve currency/petrodollar.

If we're ever in a situation where America stops being the world reserve currency, we're going to be killing each other over cans of beans, so it won't really matter anyway.

Not really I could imagine realistic scenarios where USA stopped being the world’s reserve currency, and in most of them USA would still be functional and a first world country. But you’re right the existing deficit would be completely irrelevant.

A important point is that if the dollars stopped being the world reserve currency, the American existing  debt would still be in dollars, and as such it would fall together with value of the dollars.

[Open Source Intelligence]

The past two presidents have presided over deficits of over $1 trillion, resulting in the debt-to-GDP ratio well exceeding 100%. Do we really need to be borrowing this much when the economy is as good as it is?

Is it because the national debt is a long-term problem while spending benefits lawmakers in the short run?

It's Democratic Party par for the course. They don't care if the country in 20 years goes into Depression as long as they get their programs.

What's changed is the Republican Party and that's mostly due to Trump. Trump doesn't care if the country in 20 years goes into Depression.

[Open Source Intelligence]

As I said above, that's only true as long as the U.S $ remains the world reserve currency/petrodollar.

If we're ever in a situation where America stops being the world reserve currency, we're going to be killing each other over cans of beans, so it won't really matter anyway.

Not really I could imagine realistic scenarios where USA stopped being the world’s reserve currency, and in most of them USA would still be functional and a first world country. But you’re right the existing deficit would be completely irrelevant.

A important point is that if the dollars stopped being the world reserve currency, the American existing  debt would still be in dollars, and as such it would fall together with value of the dollars.

It was absolutely Jean-Claude Trichet's goal in my opinion when he ran the European Central Bank for the euro to become equal to and eventually displace the dollar as reserve currency.

[Open Source Intelligence]

Nobody except Republicans in Congress wants to cut Social Security, it's the most popular and successful government program the United States has ever created.

 Cutting the bloated U.S. military never gains much political traction.

 Cutting Medicare and Medicaid would just make us spend more on expensive private healthcare that would inevitably crumble because a comprehensive private healthcare system is an impossibility.

 After that there isn't much to cut.

Right. But the problem is that taxes are too low. Try telling THAT to the American public though.

My property taxes have gone up 50% in 3 years. That's not a federal thing either, I live in one of the most conservative states east of the Mississippi River.

[Devout Centrist]

The past two presidents have presided over deficits of over $1 trillion, resulting in the debt-to-GDP ratio well exceeding 100%. Do we really need to be borrowing this much when the economy is as good as it is?

Is it because the national debt is a long-term problem while spending benefits lawmakers in the short run?

It's Democratic Party par for the course. They don't care if the country in 20 years goes into Depression as long as they get their programs.

What's changed is the Republican Party and that's mostly due to Trump. Trump doesn't care if the country in 20 years goes into Depression.

Come now. Fiscal profligacy has been a Republican mainstay since the early 80’s.