Tariffs Are Way Up. Interest on Debt Tops $1t. and Doge Didn't Do Much
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The article discusses the US federal budget, highlighting increased tariffs and interest on debt, while commenters debate the effectiveness and implications of DOGE, a likely government program or policy.
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I mean... duh? This shouldn't be news to anyone paying attention. DOGE was shock-and-awe theater, and a means to shake up agencies and gain access to sensitive information. At best, they saved a few tens of millions of dollars, which at that level isn't really worth the effort.
The GOP always cries about spending and the deficit, but when they're in charge, they spend just as much as Democrats (if not more!), and, to make things worse, cut taxes (usually for the rich more than anyone else). The largest part of the federal budget isn't the discretionary spending, anyway.
And the effects of the tariffs have been obvious to anyone not drinking the MAGA Kool-Aid.
A space alien newly arrived on Earth and looking at just actions taken, GAO/CBO reports, and the actual historical data, would conclude that, at least since 1980, Democrats were the ones who cared (a lot) more about the budget deficit than Republicans. The notion that voting for Republicans is the best move for a voter whose major issue is the deficit, is just marketing.
Everything goes to the debt, the only way out is through cuts to entitlements or broadly raising taxes, both deeply unpopular.
IMHO, the GOP wants to reduce government spending for ideological reasons, but doesn't generally have any particular thing it wants to reduce spending on, and certainly doesn't want to take the blame for cutting any particular programs. So they do a tax cut, because voters like tax cuts; and chances are Democrats will be in power when the deficit / debt gets big enough that it needs to be addressed. Then Democrats will have to do the poor PR business of raising taxes or making specific cuts. If Democrats make specific cuts to reduce government spending in order to make the lower taxes work, the GOP furthered their ideology and got good vibes for lowering taxes, while the Democrats got bad vibes for cutting programs.
I don't like it, but it works for the GOP, so I'm sure we'll see it continue.
That's actually more than I expected.
> President Trump seeks to shift the government’s reliance on income taxes toward taxes on imported goods. Still, tariffs contribute a relatively small 3.7% of overall federal revenue, compared with 51% for the individual income tax.
We really need to close large ccorporate tax dodges as well. Too many smaller companies pay 35% rates while the Apples and NVIDIAs pay a fraction of that rate. There's apparently plenty enough corporation money sloshing around to spend trillions on GPUs for AI in the US.
Now normally this might be put to some sensible use, perhaps building infrastructure, but since this revenue is being used to offset huge tax cuts for a tiny group of people determined to turn around and use the capital for (let's be real here) speculation it's a net negative.
In the end we're going to look back at this chapter of 'Devil Take the Hindmost: A History of Financial Speculation' and say "Well obviously those idiots should've see that coming."
If your definitions are used, then literally nothing actually brings in money. It just moves it from one place to another.
20 billion ... gone.
Another 15 billion will go to soybean farmers to bail them out. And so on.
So in their own language, these tariffs are merely domestic transfers of capital and do not 'bring in money.'
You’re trying to make a political point by changing the definition of words.
I may agree with your point, but pretending like tariffs don’t generate income that bring down the deficit is not the way to argue it. It just convinces people you aren’t arguing in good faith, or don’t understand simple math.
[1] https://www.npr.org/2025/08/29/nx-s1-5522457/tariffs-trump-t...
So your argument seems to be “We have yet to see whether these new tariffs are legal and therefore whether the income will be able to be kept.”
That’s a far cry from saying tariffs don’t generate income for the government, which is what I understood you to be saying.
So instead of taxing our wealthier citizens and corporations more, we tax them less and instead tax everyone by raising the cost of imported goods.
Though I would prefer a 0% income and capital tax, and we move to a pure land value tax and rent tax system.
So I guess you want some level of corporate tax? (it's the same for why there are large sales tax in developing countries; sure they are less efficient than income taxes, but lots of people evade those)
That's why there are specific IRS regulations for this[1]. "Company cars" basically disappeared as a result. Moreover contrary to what you imply, corporate taxes don't really solve this issue either. Corporate taxes are paid on profit, not revenue, and expenses like "work vehicles" or private jets aren't taxed either way.
[1] https://www.irs.gov/publications/p15b
I believe almost the opposite. We should tax corporations more and individuals less. As long as we keep estate taxes to curtail dynasties.
We have far too much concentration in towards ever larger, more powerful corporations. By their nature corporations lack ethics and morals of normal people. Even when operated by well meaning people the system anonymizes individuals and increases group think, etc. That's not purely a bad thing as it also enables large scalable systems which profit humanity as a whole. However there should also be curtails on corporate power and control.
That's basically what tax on profits are supposed to cover, because a tax on dividends only doesn't cover buybacks.
>tax shares being sold
UK has this, and it's widely considered be economists to be anti-growth.
Most countries (including the US) have signed global minimum tax rates at this point. Effective tax rates (either directly or via clawbacks) are theoretically 25%.
Of course, I am not enough of an expert to know if that is happening in China. I somewhat doubt it.
Even the UAE has joined at this point.
You also seem to be conflating investment for profit (GPUs for AI, for example) with income. Capital outlays of this type are almost always financed (see recently Nvidia, OpenAI + AMD, etc. deals). None of the large players are self-funding AI on that scale right now. This is why OpenAI's burn rate is so catastrophically high.
The largest, most profitable international mega-corps always seem to pay much less because they can afford to game the system more.
It does look like my data is out of date concerning US corporate tax rates, which looks to be a flat 21% now from Trump's first term. Guess I'd only heard about the personal income tax breaks.
Spot checking Alphabet, it seems big corps might still be getting big tax breaks. A quick Google search on Alphabet Inc's effective tax rate AI summary of [1] gives:
> Alphabet's most recent effective tax rate was 16.91% for the quarter ending June 30, 2025, and 16.44% for the fiscal year ending December 31, 2024. The company's effective tax rate has varied, hitting a recent low of 13.9% in 2023 before increasing again in 2024.
That looks to be about 25% cut off their taxes.
Interesting tidbit: Averaging Alphabet's Q1&Q2 revenue and taxes and then calculating what they would pay at a 25%, 35%, or 21% corporate tax rate I get:
> est_annum_lost_vs_21 => $ 6,057 millions > est_annum_lost_vs_25 => $12,115 millions > est_annum_lost_vs_35 => $27,259 millions
So Google alone could be paying about 3.10% (or 6.21-13.97% with 25/35% rates) worth of the proceeds from tariffs just by itself.
Is that a big amount or not isn't clear to me. But it's an interesting perspective to consider.
> You also seem to be conflating investment for profit (GPUs for AI, for example) with income. Capital outlays of this type are almost always financed
True, and my comment over-simplifies all of that. Nevertheless those finance deals effect the debt markets raising the US government's interest rates. It also effects regular home buyers as well who will likely continue seeing higher mortgage rates.
Perhaps, if they were paying more of their fair share of taxes Nvidia, OpenAI + AMD, etc would have both less expected profits in the future and therefore less ability to finance such large amounts.
They're not shelling out the cash now. Given their general profitability and large cash reserves they can leverage even larger amounts of debt than they'd be able to otherwise.
1: https://csimarket.com/stocks/singleProfitabilityRatios.php?c...
This does not follow. The figures for "trillions" come from estimates for what will be spent in the next few years, not amount actually spent. Moreover while tech companies have initially funded their AI investments from their cash piles, they're now tapping debt markets to fund that growth, so the fact they're spending "trillions" doesn't imply they're evading taxes.
In 2023 it was something like 16 %, with variations due to moving money across country boundaries if i read that correctly.
https://www.sec.gov/Archives/edgar/data/320193/0000320193240...
That would envigorate the domestic economy and enrich our citizens.
Doesn't he also say tariffs are going to cause manufacturing to move to the US? That seems at odds with tariffs as a replacement for income taxes.
"That is largely because the main drivers of spending kept rising: social programs, including Social Security and Medicare, and interest on the public debt, which topped $1 trillion by one measure for the first time."
And how much money did DOGE spend on its quest to save nothing by trashing scientific research?
And maybe, just maybe, the answer is to both raise taxes and reduce spending?
On a dollar-by-dollar basis, regardless of economic station, _every_ American has seen a combined discretionary + non-discretionary increase in benefits since 1980. The group that is less advantaged is the upper-middle class, which has seen relative stagnation.
The new tariffs are projected to raise an additional $200B this year for the federal government.
https://www.reuters.com/world/us/us-could-collect-300-billio...
I don’t think the next administration, whichever party ends up winning, will be likely to reverse these tariffs just based on how much revenue they bring in for the federal government.
Reducing spending is of course another different problem altogether.
Do you not have some influence over your future morals? There's always a religious reference to say the same thing e.g "The heart of man plans his way, but the Lord establishes his steps"?
Mention of Social Security as a major driver of the budget deficit is a red flag you're reading something by someone who's ill-informed on the topic, or else they're deliberately bullshitting you.
> Intragovernmental debt holdings represent federal debt owed by Treasury to federal government accounts—primarily federal trust funds such as those established for Social Security and Medicare—that typically have an obligation to invest their excess annual receipts (including interest earnings) over disbursements in federal securities.
> Debt held by the public represents a claim on today’s taxpayers and absorbs resources from today’s economy, meaning that when an investor buys Treasury securities it is not investing that money elsewhere in the economy.
> Intragovernmental debt holdings reflect a claim on taxpayers and the economy in the future. Specifically, when federal government accounts redeem Treasury securities to obtain cash to fund expenditures, Treasury usually borrows from the public to finance these redemptions.
Or to put it simply the excess contributions are lent to the Treasury who uses it for general government expenditures. When it’s time to pay it back the Treasury can either pay it with tax revenue assuming it has excess or has cut spending elsewhere or it will be forced to borrow it. The latter is generally what happens.
I wouldn’t be so quick to call people ill-informed on this subject if I were you.
[1] https://www.gao.gov/assets/gao-25-107138.pdf
We halt all spending on Social Security tomorrow. Great, wonderful. Buuuuut... that debt still exists and nothing whatsoever changes for the budget deficit. [EDIT pedantic nuance: technically it might let us spread repaying that debt over a longer period, but the debt itself remains identical, unless we decide we're just gonna let it sit there and never pay anything against it, which is identical to nullifying it, which, see next paragraph]
Unless we're prepared to nullify debts we've already incurred, in which case, why single out the debt Social Security owns for that treatment?
> I wouldn’t be so quick to call people ill-informed on this subject if I were you.
Nah, gonna continue until I see any reason to stop.
Because it's the biggest slice of the federal budget pie, and currently it goes to the segment of the US population with the highest average net worth.
Whether you think it's right or wrong, it is a massive chunk of mandatory spending. Combined with Medicare, it's close to 40% of the entire budget, and it is ultimately unsustainable.
It's not spent out of the general fund. The only—only—effect Social Security spending has on the budget is that for part of its spending, it calls in debt the general budget already owes it when it spend its money (which is invested in government debt). That money came from a dedicated, separate source, and wasn't generated by deficit spending, but by actual income. That money bought US government debt, so we owe that back, and that repayment is the only part of any of this that affects the budget.
[EDIT] To boil this down for international readers or people who just haven't ever bothered to learn the super interesting (LOL) way Social Security is structured:
1) Social Security is funded by the majority of the money that comes out of workers' paychecks under the "FICA" heading (some goes to other benefits-related stuff, but most of it goes to Social Security). This is a static proportion of ~15%, not progressively bracketed like ordinary income tax. About half is paid separately by your employer, typically, but people filing as independent contractors (form 1099) pay the whole shebang. This tax also phases out abruptly at a certain level (I forget exactly where, something like $200k for an individual tax filer I think) which means it's actually not just not-progressive, but rather extremely regressive (i.e. it preferentially targets income dollars with the highest marginal utility, not the lowest)
2) Under certain circumstances, but mostly when you get sufficiently old, you can start to draw benefits (payments back to you) out of Social Security. These benefits are (basically) adjusted for how much you paid in. Paid in more? Get more back.
3) For a long time Social Security ran a surplus from their FICA income, so that money went into the Social Security "Trust Fund". This money is not available to the general budget. The law is structured such that the excess money couldn't just be spent on other stuff.
4) ... however, you don't really want money just sitting around inflating away, you want to invest it. Plus, sure would be nice for the rest of the budget to access that big tempting pile of money somehow, if you're a politician and kinda an asshole (but I repeat myself). So, the trust fund bought government debt.
5) Social Security is now deficit spending, because we have a fuckload of old people drawing benefits from it, and not enough young people funding it to balance that out. That means it's spending down the trust fund (ITS OWN MONEY that it ALREADY COLLECTED). This requires cashing in some of those IOUs.
6) "Well when it runs out of money it saved up, won't that mean that spending becomes deficit spending against the general budget?" Nope! Not without changing the law, anyway (which opens up practically infinite possibilities, so it's kinda pointless to introduce to a discussion of "how does this work?"). What'll happen is the SSA (Social Security Administration) has to cut benefits until payments balance with income (from the FICA tax).
How is the amount of money paid as interest dependent on the measure used? I can understand different interpretations of some expenses as capex vs opex, and similar other questions. But interest?
A bond with a face value of $1000 means the government has $1000 of debt regardless of what is paid for the bond.
The coupon payments represent the "interest" on that debt - the $20 coupon means the government is paying $20 of interest per year.
Paying below face value doesn’t make the difference "interest." It simply means investors are buying the bond at a discount, so the government receives less cash upfront in exchange for repaying the full $1,000 at maturity. Bonds differ from traditional loans in that their market price can fluctuate, but the debt obligation remains fixed at the face value.
In practice, the government's accounting labels the discount as an "interest expense", so it still gets captured as interest in the budget.
(And yes, coupons pay 2x yearly, but they are quoted on an annual basis; I would receive two $10 payments.)
Of course, in the 15 years since the fiscal situation has gotten worse, so any of the recommendations it made then would need to be more severe now.
https://en.wikipedia.org/wiki/National_Commission_on_Fiscal_...
Medicare is another story, and until the US has a come to Jesus moment on single payer healthcare and confronting the regulatory capture in healthcare it will only get worse.
I don't think this is true. During the surplus years the savings vehicle was US bonds. So social security lent the US government money.
Now that we are not in a surplus situation, we are using money from those bonds to pay benefits (we are also using SS revenue of course, only part of the payouts come from the bonds).
So if the program were cancelled, the bonds could revert back to the US government - in other words a bunch of debt would be forgiven and would not need to be paid out. Deficit (and debt) reduced.
That seems like a passive-voice way of saying "We could steal from millions of people, pocketing the retirement savings they worked for their entire lives."
Also, there's nothing stopping Social Security from upping the cap and thus returning to surplus, aside from the group of people who would absolutely love to steal from the fund.
For a lot of younger people the view is they promised themselves something unsustainable and expect young people to cover it.
If anything I would believe that younger voters would be in favor of more social safety net. Many would be comfortable with the government outright nationalizing most industries.
I guess "the children are our future" really was what they meant, we just misinterpreted it.
You brought up cancelling the program. I was just pointing out that your statement about it having no effect on the deficit was incorrect.
100% true, if you're operating in sane-world where anything makes sense.
Here in insane world, my pet theory is that, given another year (maybe two, they might wait until after the midterms, assuming they hold on to congress) we're going to see an attempt to nullify the government debt owned by Social Security by converting it into some convoluted scheme involving crypto-backed-by-the-stock-market or something. Ta-da, debt reduced, deficit reduced (by the amount of interest on the debt owned by the trust fund)! Plus sooooo many opportunities to steal.
This'll kill the program stone-dead, but it'll take a little while. Kinda like how they already killed Obamacare by removing the individual mandate, and they're just waiting for the death-spiral to hit bottom so they can declare the program a failure and proof that we should never try to fix healthcare in any kind of actually-decent way again.
Haha. Last time it took the great depression and intense economic pain for americans to snap out of it and actually build a slightly better world (New Deal). I wouldn't expect it to take anything less this time around. Europe required 2 world wars and over 100M dead.
But, I agree about the political suicide. I unfortunately don't believe anyone is even going to attempt reform after how successful the Republican party's attacks on Obamacare were. People will just conclude there's no reward for trying.
> elimination of over 100 programs, the elimination of over 250,000 federal jobs, the consolidation of over 800 agencies
Didn't solve all budget issues, but was a legitimate and meaningful effort to reduce waste. Polar opposite of DOGE.
>He had budget surpluses for fiscal years 1998–2001, the only such years from 1970 to 2023. Clinton's final four budgets were balanced budgets with surpluses, beginning with the 1997 budget
I don't really understand why they can't do something like that which was carefully thought out and worked, rather than the present mess. I realise carefully thought out doesn't really go with the current president but I actually had hopes Musk might do something sane.
https://fred.stlouisfed.org/series/W019RCQ027SBEA
Budgets were balanced by slightly higher tax rates, and a whole lot of capital gains to tax.
We've got a massive market bubble right now, and could potentially make a dent in the deficit by taxing it. The deficit has grown so much since the 90s that you couldn't come anywhere close to balancing it even with an aggressive tax regime, but it would be much more effective than haphazardly firing Federal employees.
We did actually raise taxes a bit -- or rather, tariffs. They've taken in about $150B, more than DOGE has done. But that comes mostly from the poor and middle class, and doesn't come anywhere close to balancing the tax cuts (which go primarily to the upper class).
To illustrate my point, last year the budget was $6.75 trillion and the deficit was $1.83 trillion. Discretionary spending only made up $1.72 trillion of the budget. This means that if Congress decided the federal government shouldn't do anything and cut 100% of discretionary spending, we would still have a slight deficit. It's possible to increase taxes to counteract this, but last year the government only brought in $4.92 trillion so the increase would be significant (and therefore unpopular). If we wanted to continue the surplus, we'd also have to keep increasing taxes through the late 2040s as the proportion of the population on Social Security and Medicare continues to increase. Given that we haven't fixed things for the past 45 years when they would have been a lot easier to fix, I don't see the political will for both spending cuts and massive tax increases to materialize anytime soon.
> Anything we can actually do we can afford
I find it increasingly paradoxical that supposedly, our collective economic capability routinely increases (implied by ever growing GDP), while our budget situation looks ever grimmer.
Here's a good explanation I found quickly via Google, I'm sure there are others: https://medium.com/mydex/we-can-afford-what-we-can-actually-...
No evidence is mentioned that there was enough available in the way of bricks, mortar, steel, cement or labour. The banker quite likely hadn't checked any statistics or made any estimates. There is no particular reason to consider his opinion even informed on the topic. Britain had just had suffered around a half-million war casualties drawn disproportionately from their able-bodied labourers and their factories for things like steel and cement had probably suffered a few hard blows and were likely being run ragged.
They could have forcefully reallocated resources away from something people thought was more important towards building houses; but the issue that is being glossed over is if someone thought that there were higher priorities than building houses ... what if they were right? The thing about economics is prices aren't arbitrary, they encode a combination of how easy a good is to produce and how much demand there is for a good. They can't just be overridden expecting a good result without factoring in those things.
If Britain had some magic ability to just build whatever they want and there were enough resources available to do whatever then the empire wouldn't have collapsed shortly afterwards. They were way over-extended in terms of what resources they needed vs what they had available.
Your second criticism performs the standard hijack. The natural follow on is "if we can do it, and we can afford it, should we do it"? Should we do it is the right question to ask. Just because we can and we can afford it, doesn't mean we should do it. But far too many people try to squelch the debate by asserting that we can't afford it. We can afford universal health care or a modest UBI or a green new deal or whatever expensive thing that the left wants. Whether we should is the question, not whether we can.
"You can afford what you can do" is a truism - if you can do something, the financial system will tell you that you can afford it except if something really weird is going on. If the resources were there to build the houses then the prices would shuffle around until it was also affordable.
I feel that in a sense, "we" (the collective society) can do a lot because of the productivity growth from technology "afford" (enable) us.
In another sense, what "we" (part of that society -- an individual, a group, a government) can do is limited by what we can "afford" (pay). We cannot command the bricks and mortar and steel and cement and labor and architects to build houses and infrastructure without some form of compensation -- money for the architects and builders and cement/steel/mortar/brick makers and movers to exchange for food, drink, and shelter.
And in this grim budget situation, "we" (the government) are running out of ways to ask for productivity (goods and services for healthcare, education, welfare, defense) because we are out of ways to compensate the providers.
What can a government do then?
- force them to offer productivity without equal compensation (communism, colonialism, slavery, forced labor, cheap labor, unequal trade agreements, etc.)
- promise to repay them later (government bonds)
- give them something that they think is valuable but is less so and decreasingly so (money printing)
- encourage giving without compensation (charitable work and donation)
- repay them with compensation collected from those who benefited the most from the economic productivity growth (taxing)
I think the quote "We can afford what we can actually do" encourages the audience to think more about what we (as a society) can do and less about how we (the individual) are compensated.
Yes, but Keynes also pointed out the result of that: "In the long term we are all dead" :)
Seriously, extraordinary claims require extraordinary evidence, and as much as the economics mainstream likes this to be true nobody ever presented convincing evidence in support of it.
> our collective economic capability routinely increases (implied by ever growing GDP)
Just in the last 3 days, there were several posts on HN that pointed out the inadequacy of the GDP as a measure of economic development, and they presented serious evidence.
It's a mix of a constantly churning "history rhymes it doesn't repeat" cycles (ex: stablecoins being rehypothecated/used as base level collateral with which to generate leverage is somewhat of a modern version of the late 1800s bank currency cycle), combined with what may be best described as technological development as theories and tools and ecosystems develop.
The zeitgeist is very much that it's about time for the Eurodollar (offshore dollars/Eurodollars bound by the 20 trillion dollar Eurodollar derivative market) to fade, but as of yet there haven't been any good alternatives.
It's a big burden to export your monetary policy and backstop global economic fragility, because it becomes your responsibility. Ex: that doesn't work with a system like China because they don't like putting their own people last in a loud and public way, while in the US the average person regularly and obviously comes away worse off during big interventions. It's also a bit of a trap to step into this, because central banks have mandates to protect systemic stability, yet by unwinding this sort of arrangement, capital flows reverse en-masse which is a clear threat to bond markets (and asset markets in the US's case, since it is so hyper financialized). That's something that is often missed in this conversation. It's a service that has to be provided, and it has costs.
Or perhaps we will attempt to give a system with no bank/regulator of last resort a go again. Probably a "history rhymes" style outcome, but you never know.
I'm can't see where you're going with that, can you explain?
The current iteration is almost certainly a phase, not an end point.
The system itself can be viewed through the lens of a sort of technology that is evolving like any other technology, and concepts like "paradigm shifts" can apply to the monetary system as well.
This particular system that we have is stable (perhaps only) within the context of a stable US centered world monetary order. Usually the conversation quickly veers into the decline of the US, etc, but that's not my point here to be clear. The current system is based on offshore dollars (eurodollars - confusing name, nothing to do with the euro currency) bound together in a 20 trillion dollar eurodollar derivatives market, which essentially takes Fed policy and propagates it through basis trades to the global Eurodollar system that is technically entirely outside of US jurisdiction. When the Fed does something like change interest rates, which is apparently quite important if you look at Bloomberg/Reuters etc, ask yourself what exactly is happening when interbank lending rates change. Map it out, it may be surprising. What's even more surprising is the lack of discussion about what things like rate changes actually mean technically, despite the vast mainstream discussion around these topics.
Since 2020 we have seen first hand that the world is actually quite isolated from the traditional banking space in many ways, on a first order basis. It's the higher order effects (such as policy propagation into global markets which are quite disconnected from Fed policy) that matter. The matter to note is that this is increasingly vestigial in nature, and evolution tends to eventually drop the vestigial remnants.
(I know these conversations tend to veer into doom and conspiracy, that isn't the intent at all. I think most would be surprised if the current system as it stands persists for another 100 years, if not 50, and that's a standard idea to have.)
Otherwise what is inflated away will be recouped by the interest rates when forced to keep borrowing.
Sometimes prophets have to revise the date of doomsday, but it doesn't seem to make them any less popular as prophets.
The gap between revenue, and debt only keeps growing, it's growing at a rate of 4% relative to GDP per year (revenues at ~18%, debt at ~22%), and the lines are diverging with debt growing faster than revenues.
This debt accruance will eat more and more of the budget, less money for all the expenses, diminished levels of public services, less money for infrastructure projects at a time when your infrastructure needs quite a lot of renovation; less money for education, so on and so forth.
At some point it has to give, without reigning in this increasing divergence between debt, and revenues the USA will have to print money to either service interests or basic public services... Inflation might not become hyperinflation but definitely won't be on the 2% target when the burden of interest payment gets really bad.
Ex: after 2020 debt to GDP went down in real terms despite the massive increase in liquidity.
Of course that just enables more deficit spending and shifts the world more towards a modern monetary policy model, where inflation is the limiting factor.
It's a plausible view. Just as governments that can print their own money will not default, they will print to pay, they will also generally avoid going into a crushing crisis due to interest payment burden. It's politically easier to use the currency as an outlet.
Interest rate payments are supposed to limit the extent of deficit spending (and government budgets getting squeezed by interest is arguably partly deflationary, in that it can spur deflationary crisis and bad real economic environments), but in practice increasing interest payments creates more of a phase shift where the system shifts to forced debt haircuts, and that flows in kind to extra pressure on the currency.
Just look at the current environment where Fed independence is being breached like never before, with the aim of forcing interest rates down without consideration for data driven risk analysis...
I haven't heard anyone predict hyperinflation, but high and under-reported inflation is here and it's not just government debt that is causing it.
The real end point is when no one will buy new debt, because it seems to risky. Either because the US has rapidly growing inflation from creating dollars to pay debts, or because a default seems likely.
Spending someone else's money is pretty fun, especially once you find a way to justify it as a moral good.
Welfare spending and public investment are about a shared sense of public good. That’s really what the US lacks, compared to European countries which support much higher levels of public spending with (historically at least) very broad public support.
>But this really isn’t about justifying spending as a moral good
hmm
Wasn't Clinton the last president to balance the budget?
It feels like everything is done along party lines now with no room for compromise or working together.
Republicans have been openly bragging about preventing the government from doing anything for decades. Specifically about Obama, they vowed to make him a one term president by preventing him from doing anything.
Since that time, the MAGA folk have taken over the party and edict #1 is to hate and obstruct and harm democrats, so anyone who has crossed the party line to get anything done, no matter how important, has been primaried out of the party.
If tariff revenue is rising, and the economy hasn’t shrunk (yet), and DOGE has returned money (recission later being authorized) then some money was clearly generated.
Alternatively, Doge could have been totally ineffectual and tariffs returning nothing, but this article seems to indicate otherwise.
This means that less money then planned was spent. Against a null hpothesis, that indicates that the situation is "better" then doing nothing at all (at which point, the rise in government lending costs, the out of control benefit costs, and all of the other stupid crap that has been festering out there since Bill Clinton won the white house for ridiculing Bush for raising taxes comes home to roost.
I'm solidly in the never-trump camp, and maybe there was an argument made after the paywall, but this feels like an ideology in search of a headline.
1. Doge isn't free. They have staff with expenses which haven't been accounted for in your argument.
2. Cancelation of forward facing contracts shouldn't affect the immediate numbers. But it's like laying off the entire company; you're going to record a record Q4 with all those sales but no expenses however come Q1 good luck for the company.
Although people have posted links so you can read the article [1] which largely points out that spending is up by $220 billion. Which is about 2.2 trillion worse than Doge promised.
[1]: https://news.ycombinator.com/item?id=45530994
Trust me. DOGE has done a great deal, just none of it is reasonable or sane from our perspective.
First, the goal of the tariffs was to reduce US deficit spending.
Then it was reducing debt. Isolating & containing China. Dissuading them from invading Taiwan. Replacing the income tax. Retaliating against Europe, Japan, & S. Korea for unfair trade practices. Compelling other countries to buy American. Onshoring manufacturing. Forcing foreigners to pay a premium to access American markets. Forcing Canada & Mexico to get illegal immigration & narcotics trafficking under control. Punishing Brazil for persecuting Bolsonaro. Compelling third countries to accept expelled immigrants.
Then they pivoted to: Art of the Deal! He's deliberately making unrealistic demands as an intro offer.
Which is it again?!
In this case, Doge's actions are to shrink government, especially any agencies that were opposing or investigating Musk in any way.
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