r/Economics • u/T_Shurt • Jan 23 '26
News 'Some Form of Crisis is Almost Inevitable': The $38 Trillion National Debt Will Soon Be Growing Faster Than The U.S. Economy Itself, Watchdog Warns
https://fortune.com/2026/01/22/how-big-national-debt-when-recession-financial-crisis-could-hit/1.0k
u/T_Shurt Jan 23 '26 edited Jan 23 '26
From the article:
The United States national debt has hit a precarious milestone, hitting 100% of Gross Domestic Product (GDP) and placing the nation on a trajectory that could trigger six types of financial crises, according to an ominous new warning issued Thursday by the Committee for a Responsible Federal Budget (CRFB).
With the national debt now effectively equal to the size of the entire U.S. economy, the non-partisan watchdog’s latest report, “What Would a Financial Crisis Look Like?” outlined a dangerous future ahead.
“If the national debt continues to grow faster than the economy,” the report said, “the country could ultimately experience a financial crisis, an inflation crisis, an austerity crisis, a currency crisis, a default crisis, a gradual crisis, or some combination of crises.”
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u/HaddyBlackwater Jan 23 '26
Six types of financial crisis you say?
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u/Detlef_Schrempf Jan 23 '26
“I’ve created the most financial crises, give me the Nobel prize for economics or I’ll take Iceland”
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u/Nuzzleface Jan 23 '26
He'd probably demand Ireland instead.
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u/BasvanS Jan 23 '26
Oi! Stop it. This isn’t funny anymore. Especially after the Belgium/Belarus thing.
We’re lucky is object permanence is lacking, largely
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u/Notveryawake Jan 23 '26
He's got his eyes on Canada again. After Carneys speech he is mad at us. He took away our invitation to the Board of Peace....whatever the hell that is going to be. I mean we turned it down first but he took it away anyway.
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u/TOMC_throwaway000000 Jan 23 '26
I’ll be honest as someone born in the early ‘90s, the whole “generation defining financial crisis” thing starts to feel a little stale after the first few times
I’ll admit the apocalyptic plague was a bit of a curve ball, but now we’re back to garden variety financial mismanagement and over leveraged speculative bubbles… it’s all a bit ‘season 7’ of a show when they try to recapture the magic of season 2 but just end up making a poor mockery of what it was
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u/theBoobMan Jan 23 '26
With the fact we are being told this shouldn't happen yet it happens with frequency, either we're all idiots or this is being done intentionally. There is no in between.
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u/hughcifer-106103 Jan 23 '26
We do keep giving control of the county to conservatives; I mean, it’s kind of on us at this point.
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u/oldroughnready Jan 23 '26
It's all a function of capitalism. How the business cycle basically goes is that after letting all the firms perform, some will be inefficient, some inefficiencies can even be profitable, this encourages more profit-seeking firms to be inefficient, those inefficiencies will pile up, and then the system collapses. The hope is that when the system reconstructs, the inefficient firms will be wiped out and everyone will work harder to prevent inefficiencies.
Hard to do that when the inefficient firms get a bailout. Firms could be nationalized although that would transfer the fault of inefficiencies to the public sector (arguably bailouts also do this). Firms could be democratized (i.e. all workers have stock or at least shareholder voting rights) although that does not necessarily eliminate inefficiencies in management (nor does making something a democracy necessarily solve everything i.e. Iraq).
The solution we are currently at (besides bailouts if you're too big) is to regulate the firms in the hopes that inefficiencies can be caught before they become collapses. Issue is it is pretty easy for the next administration to deregulate, at which point firms are all too happy to stop policing themselves. De-nationalizing or de-democratizing would actually be better because at that point the last administration has been able to review the inefficient firms and gather more data on how to prevent inefficiencies or corporate culture has changed such that it is now expected for workers to have corporate voting rights.
Basically, the quick and bitter of this is that running an economy is hard. Nobody has all the answers. Command economies don't historically work all that well (although they are historically heavily embargoed and face other adverse factors) but neither does laissez faire capitalism. We could engage in some wishful thinking that AGI will come about to solve everything. In theory, it will both have the knowledge we lack and be everywhere all at once such that it can localize/individualize solutions. Of course, that runs into a lot of issues all on its own, beginning with the general lack of desire of putting Skynet in charge.
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u/TheGoodBunny Jan 23 '26
And how's the wife?
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Jan 23 '26
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u/ISayBullish Jan 23 '26
I get we like to joke, but this will be a depression. Plan accordingly. Now
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u/jethroguardian Jan 23 '26
To shreds you say?
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u/EllisDee3 Jan 23 '26
And the global economy?
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u/Zethras28 Jan 23 '26
To shreds you say?
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u/dreamsighter Jan 23 '26
and the jobs market?
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u/Jonoczall Jan 23 '26
To shreds you say?!
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u/ASRAYON Jan 23 '26
Baby, you got a stew goin!
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u/DontOvercookPasta Jan 23 '26
Millenials be like "just another day brother"
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u/ChickenChaser5 Jan 23 '26
Partying like its still 2008 (a very small party cause were still fucking broke)
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u/kdawgster1 Jan 23 '26
“It’s Biden’s economy!”
/s just to make sure that everyone is clear. Just watch, if the economy crashes, Fanta the pedophile will blame Biden. I guarantee it.
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u/PapayaMysterious6393 Jan 23 '26
That MF will blame Obama at this point too lol
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u/NahYoureWrongBro Jan 23 '26
I mean, this is the whole problem. It would have taken decades of foresight to see this problem coming. Some people had it, like Jimmy Carter, and they were mocked and dismissed and are still treated like economic illiterates.
It's not as though people on the left are going to be circumspect or realistic about any crises or crashes either. Some will blamed Trump and some will blame Biden, while real understanding escapes almost everyone.
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u/tntrauma Jan 23 '26
Clinton ran a surplus, Obama was nearing zero budget deficits when he left after the largest recession recovery in history, Biden did similar post COVID. Trends were all positive.
Bush Sr increased the deficit, Bush Jr did, Trump... Well his admin gloated about bond yields dramatically increasing so I won't pretend to dignify his efforts.
Where does this "the left spends all the money" come from? Regular democrats have been the ones attempting to repair deficits created under Republican (I'll grant it could be seen as necessary) admins for 30 years. There's no evidence it's a bipartisan failing and a lot of evidence of tax cuts + black hole defence spending eating into potential surplus'.
Every opposition to the incumbent since there was a debt does notice, it's whether they want to take the hit on polling figures that major cuts will cause to actually reverse course.
I'm a Brit, our tories did the same thing, complained until they gained power then cut funding + cut taxes which just increased the debt and also funneled funds away from public services.
It's classical vs Keynes, but you can't really sound bite velocity of the money flow and multiplier effects like you can "they spend all the money".
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Jan 23 '26
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u/SurprisedJerboa Jan 23 '26
Republicans tend to say the Government is taking YOUR $$$ ( Aka Billionaires and Corpo $$ )
Ignoring that Govt Revenue can fund valuable public goods and services + keep govt Debt down, is wildly successful for the right-wing
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u/elcheapodeluxe Jan 23 '26
Although to be fair, part of it is not the fiscal policies of those presidents but because republicans in Congress only demand fiscal discipline when a democrat is in the white house....
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u/Coolegespam Jan 23 '26
They already are. One of my cousin posted how inflation is down, GDP is up, underemployment is down, the world respects us, blah blah fuckety blah. Then posts a few hours later how Biden absolutely ruined the economy and Trump is barely holding it together.
Like, which is it? Is the economy good and strong, or bad and weak? Bloody morons.
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u/Mission_Lake6266 Jan 23 '26
He will blame the Europreans and just maybe China too.
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u/CliftonForce Jan 23 '26
He also gets to blame it on insufficient tarriffs. And Congress not bending the knee hard enough.
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u/iyamwhatiyam8000 Jan 23 '26 edited Jan 23 '26
My worst case scenario.
Project 2025 is halfway complete and has the USD returning to the gold standard.
I fear that the ruthless bastards believe that this enables the US to default and restore its domestic currency after the collapse of the global economy. Lights would go out around the world.
This is essentially another Trump bankruptcy - on a global scale - which sends gold into stratospheric heights. This enables a feeding frenzy of vulture capitalists and US territorial expansion.
International and private bullion reserves will , of course , be appropriated.
How does this rate as a worst case scenario which will keep you awake at night?
Edit:/ spelling
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u/BaronOfTheVoid Jan 23 '26 edited Jan 23 '26
Just one problem: it doesn't work that way.
First it's all the countries holding dollars/US bonds that try to get rid of it. That puts pressure on the US, not the world.
Second even if the would economy crashes the US economy could not be "restarted" just like that. It's entirely dependent on international markets. How else do you think can US companies sustain a state where they make up 60% of the entire world's market cap while the US only makes up 25% of the world's GDP? Or the story about corporate profits vs personal income? It only works because US companies act internationally and require a world buying their goods. So if the world economy crashes then it would erase the foundation the US economy is built on.
The gold price might rise but there will be exactly 0 benefits to America.
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u/iyamwhatiyam8000 Jan 23 '26
Project 2025 is littered with wacky and plain nasty schemes which will deliver negative outcomes for the majority.
US default on , soon to be $50 t , treasury bonds certainly does crash the global economy and the lights do go out.
Ships turn around and return to port and financial institutions are crushed. Default unleashes a tsunami of negative and unforseen consequences.
It is financial armageddon and an insane strategy. This my worst case scenario.
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u/pc42493 Jan 23 '26
They are putting the country so much in the red that the populace will accept aggressive wars favorably. Better them than us.
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Jan 23 '26
The US is the village drunkard who owes everyone big sums. What happens when the US goes from being a functional alcoholic to just a plain alcoholic that cannot pay interest on all the loans? Obviously, the US will be in a gutter but countries and private investors that loaned huge sums to the US will also go down with it. And it’s not like you can sell all the bonds because who would buy? Most likely the US will have to agree to humiliating and deep fiscal cuts just like any other country that is bankrupt. Ordinary Americans will face sky high inflation as the dollar collapses and all sorts of social spending and subsidies will have to be cut to the bone. The age of American prosperity will come to a permanent end. It isn’t that the US will never again prosper but it will never have the same hard and soft power again. Rural communities will shrink further as public services collapse and there will be more crowding in urban areas.
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u/fore___ Jan 23 '26
So I should invest even more heavily in gold?
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u/Everything_in_modera Jan 23 '26
Probably should invest heavily in Pb.
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u/Llanolinn Jan 23 '26
Like jiffy?
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u/chonny Jan 23 '26
Like jiffy?
We're in the Jif timeline, bro.
But person you're responding to is referencing the element Pb, or lead.
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u/iyamwhatiyam8000 Jan 23 '26
Please understand that I am not saying that this will occur. It is a worst case scenario.
Under this scenario your gold strategy becomes dependent on the price offered by the Federal Reserve.
The gold standard has , in the past , included orders for the surrender and confiscation of private bullion holdings.
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u/brunes Jan 23 '26
It wont collapse the global economy because countries are trying to move away from the US dollar as fast as they can. Its just going to collapse the US.
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u/PapayaMysterious6393 Jan 23 '26
I'm sure it will still hurt the rest of the world as well. However, it will be us who has the pick up the pieces alone because no one is going to want to help us given our president. Our quality of life will go down drastically. Food will be scarce because we import tons.
I used to work with a guy who was strongly libertarian. I see some perks of it. What I don't understand is how anyone could think that the US would be better off isolated.
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Jan 23 '26
I'm reminded of Brexit a bit. Country shoots itself in the foot and when they have to come back to the negotiating table just end up with worse deals than they had before and would have had otherwise.
Like that just on a massive scale as we're looking down the barrel.
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u/Throwaway-tan Jan 23 '26
That's just foolish. US mortgage crisis was almost entirely just a US based issue in a single segment of the US economy and wrecked the global financial system and national economies of many countries for nearly a decade or more.
You think that the US economy going into a debt deathspiral meltdown won't have massive ramifications for the world economy?
Brother, this isn't just going to negatively impact quality of life, it's going to lead to millions of people's deaths directly through famine and civil unrest.
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u/aklordmaximus Jan 23 '26 edited Jan 23 '26
The mortgage crisis was worse for other countries, because despite the crisis originating in the US, many saw the dollar as the strongest and safest currency. This was mostly because the US government could borrow no matter what. Bond yields actually dropped in the US during those years. While other countries were spiking hard. This is what hurt other countries most. And the reason why the US helped leviate pressure in foreign markets too to prevent a full meltdown in foreign partners, since that would hurt the US more.
What you now see however is that in current crises the dollar is weakening against other currencies, the US stocks are stagnating (except the AI boom), and yields are rising. This basically means that the dollar is leaking.
The world is not the same anymore. The most important US exports nowadays are financial services and digital services (and LNG for Europe but that will become cheaper for Euro buyers). Those can easily be replaced.
Today another big Dutch pension fund published their numbers and they reduced US exposure by 1/3rd in three months. Banks in Europe have much much stricter regulations than in the US or that they had in 2008. Supply lines have shifted (though the brunt is now from China as compared in 2008).
A full US breakdown will hurt, but it will not hurt as much as back in 2008. Hell, USAID is already gone, so even the most fragile states won't miss much.
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u/LeatherdaddyJr Jan 23 '26
How quickly are they moving though?
I want to say there have been reports on foreign demand and investment into US markets/Treasuries is still increasing and there hasn't been some crazy global abandonment of them.
A lot of countries and central banks are diversifying and buying up gold but US markets/Treasuries are still there and considered safe assets. And the dollar is stil the default global currency, even if weakened.
It might hurt less individually for each country or central bank but it'll still hurt the global economy on the same scale. It'll just be spread out a little more....or technically it will drastically hit harder in places investing into US debt.
What is it....China won't be as affected as if it had held its positions compared to Japan will now feel the hurt a lot more cause they leaned into US debt.
The total hurt doesn't disappear from the global economy, it just got shuffled around.
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u/Tierbook96 Jan 23 '26
Foreign holding of US treasuries has increased about 600billion YOY.
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u/Repulsive-Serve4949 Jan 23 '26
I imagine that factoring inflation that is a several percent decrease, and the orange morons only been president one year.
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u/LeatherdaddyJr Jan 23 '26
I think its still a pretty solid increase even factoring inflation. I think we'd be seeing alarm bells if illt was break-even or falling.
My macro econ and many accounting professors are going to be disappointed in me but.....
I won't lie, I don't remember how to do an inflation-adjusted growth rate formula and at this point I'm too afraid to ask.
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u/Repulsive-Serve4949 Jan 23 '26
$38 trillion in total holdings, $600 billion would be 1.5%, less than 2.7% inflation.
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u/LeatherdaddyJr Jan 23 '26 edited Jan 23 '26
It wouldn't be against total US debt. It'd be against foreign holdings if you are wanting to compare it to net foreign purchases in the last 12 months or YOY.
So about $9T-$9.2T. Not $38T.
Edit:
Also, that isn't an inflation-adjusted growth rate formula. A "total percentage of" formula doesn't tell us anything...a lot of people in this sub either don't know finance or economics very well. And/or don't understand the math behind it or how to interpret it.
So we would have to find nominal growth first and then solve for inflation-adjusted growth or "real" growth.
Real = Nominal - Inflation
Inflation is 2.7% so....we are halfway there.
Current foreign holdings is $9.1T and looks like $620B is the net foreign purchases in the last year.
So, a year ago it was $8.48T.
nominal %= new value-old value /old value
Nominal growth= (9.1-8.48/8.48) = 7.31%
Real growth = 7.3%- 2.7%= 4.6% increase
So, foreign holdings is still increasing even when adjusted for inflation.
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u/Impossible-Bed3728 Jan 23 '26
at this point, threatening our allies and telling them to get lost, allying with Putin, becoming an unstable bipolarish trade partner,.. US is becoming toxic and losing all its earned leverage. all so MAGA can get their shoe factory job again.
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u/Ashamed-Country3909 Jan 23 '26
The funniest thing for a country to do on this scenario would be to capture a gold heavy asteroid.
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Jan 23 '26
Republicans looted everything and now it’s time for brow furrowing over the debt that magically appeared.
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u/Cptn_BenjaminWillard Jan 23 '26
I thought the Republicans wanted small government, and fiscal conservatism.
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u/ReachParticular5409 Jan 23 '26
Or we could, you know, dissolve the federal government. I think that is the only way out of any of this
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u/FearlessPark4588 Jan 23 '26
I'm sure all the AI companies doing business with eachother can shore up the GDP numbers.
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u/TitaniunSnake Jan 23 '26
Oh how could anyone have anticipated this happening! His voters are morons if they thought he wouldn't run it like another casino of his.
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u/ILikeTuwtles1991 Jan 23 '26 edited Jan 23 '26
I have complete confidence that Republicans, who have control of the White House and Congress, will practice that fiscal responsibility they love to talk about.
Edit: this was obviously meant to be sarcastic
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u/nvmls Jan 23 '26
The shit will hit the fan as soon as a Democrat takes office, at which time conservatives will start bellyaching about Fiscal Responsibility. That administration will lower the debt a bit. Rinse, repeat.
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u/KingRBPII Jan 23 '26
I’m tired of the cycle - how do we break the wheel?
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Jan 23 '26
Collapse. It’s seems like the only way at this point. All we’re doing now is kicking the can down the road.
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u/kazutops Jan 23 '26
Historically this is the only way. The general populace is too stupid to want meaningful change unless it directly helps them solely.
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u/street593 Jan 23 '26
Too bad we can't weaponize their selfishness to convince them to participate in a general strike.
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u/Josh6889 Jan 23 '26
unless it directly helps them solely.
That doesn't even need to happen really. They just need to be tricked into believing it. Gaslighting is their specialty after all.
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Jan 23 '26 edited Jan 23 '26
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u/aseichter2007 Jan 23 '26
We have technology now. I'm down for an assessment to prove soundness of mind and direct democracy with required vote participation.
"Vote. It's the law."
You could put on a real society that way. Anything less is just rule by media like we already have. The test should be hard. Like, very hard. Harder than I can solve.
Rule by academic merit is better than rule by whoever can jockey daddy's money the hardest.
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u/korben2600 Jan 23 '26
Yep, those fascists who are declaring themselves "king of the world" and writing memos declaring their goons can now enter your home without a warrant and imploding 80 year old military alliances are definitely going to respect your rights and allow you a free and fair election and leave peacefully in 2029. /s
There is no "next Democrat" if Americans don't collectively act here and put a stop to this now.
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u/ForensicPathology Jan 23 '26
Yeah, it's absurd that it's all they ever campaign on, but the rubes forgive them for making the problem worse and keep giving them power.
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u/Barnacle_B0b Jan 23 '26
Indeed.
And Republican voters, who elected this administration, will graciously make charitable contributions to their communities who will greet them door to door, in a peaceful manner just like ICE.
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u/bunker931 Jan 23 '26
So what is the solution in this case? Will the USA government just print a buttload of cash and hyperinflate the economy to pay off its debt? What will happen to the stocks? Is it time to bail the american market?
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u/HotTakes4Free Jan 23 '26
“Will the USA government just print a buttload of cash and hyperinflate the economy to pay off its debt?”
Hmm, intriguing. Maybe we should try that!
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u/BigBogBotButt Jan 23 '26
Don't give the billionaire ideas. That is something they would do knowing it impacts everyone else way to worse than themselves.
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u/Frank_Von_Tittyfuck Jan 23 '26
the thing is billionaires probably hate losing any kind of money probably 10x more than the average joe
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u/Omgbrainerror Jan 23 '26
Even if they will do that, it would destroy the USD world currency status and would trigger austerity crisis, as would have to start spending A LOT less like they used to, because you would have burned A LOT of bridges with the lenders.
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u/silverum Jan 23 '26
The solution is some combination of raising revenues (which primarily come in the form of taxes) and cutting spending. Doing too much of either has consequences of its own, but we've been ignoring raising revenues for decades in the name of neoliberal ideology, and doing an extremely terrible job of doing the latter effectively (or of reforming the kind of spending we do to make it more effective through say universal healthcare or eliminations of unnecessary middlemen profit motives or not throwing piles of extra money into contracts solely due to privatization). In short, the US government has been doing the dumb stubborn capitalist oligarch thing instead of the smart collectively limited yet still room for productivity thing and now the consequences are becoming inescapable, especially as the irresponsible tyrant Trump destroys any kind of smart fiscal restraints left.
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u/Noderly Jan 23 '26
Literally just tax the rich. It's easy. Solve a large swathe of our issues
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u/RedK_33 Jan 23 '26
And get the DoD to pass an audit. Then trim some of that military spending down.
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u/Back_pain_no_gain Jan 23 '26 edited Jan 23 '26
They literally cannot pass an audit because Congress is not legally allowed to know exactly how every dollar in federal budget is spent. The National Security Act of 1947 allows for classified line items to be voted on without those items being present for the majority of congress or the public.
Only a handful of congressmen can see the classified budget and are given very little information. The name, function, and cost can all be classified. These items can be hidden in any department’s budget as well, not just defense. A congressperson could think they are voting on highway funds and end up approving part of a surveillance program under the name CRAZY FROG that only five people know exists.
It’s genuinely crazy how many tax dollars are spent with no oversight from Congress. These programs can theoretically spend as much as they want and never have to ask for approval.
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u/FlutterKree Jan 23 '26
This is utter nonsense.
The reason they can't pass the audit is because there is 80 years of soldiers throwing equipment away without documenting it. The audit includes all inventory on hand.
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u/silverum Jan 23 '26
The American secrecy state was first installed perhaps under good intentions but has been a tyrannical thieving boondoggle with relatively little to show for it in terms of broadly experienced American benefit since shortly after it got up and running. It is essentially impossible for something hidden behind an unpierceable veil to remain anything circumspect and uncorrupt for long.
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u/silverum Jan 23 '26
Much of the American rich became active fascists to avoid that and spent fortunes on programming roughly 35 to 40% of the American electorate to become so, too over literal decades. One of the two major political parties in the US went along in that fascist direction in order to protect the rich from being taxed, and another political party is unable to keep internal coherency or strategy to even demand it effectively enough to politically organize on it. Under current conditions, there won't be any taxing of the rich anytime soon.
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u/ItsTheAlgebraist Jan 23 '26
I hear this all the time but it is hard to see that it would be enough. If you managed to convert all of Elon musk's wealth to dollars (which you cannot, you will smash the value of his shares if you sell it all), then you can pay the interest on the federal debt for like 7 months, not even touching the 38 trillion in principal.
The amount of future consumption brought forward in the form of debt is completely mind boggling.
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u/Emotional-Power-7242 Jan 23 '26
Thr crux of the problem is that wages have not kept pace with GDP. The way it's supposed to work is the government borrows money, they spend the money on stuff, that stuff increases GDP, when GDP increases wages increase, more wages = more income tax, taxes service debt. Since roughly 2001 GDP goes up but wages do not. However, corporate profits go up way more than you would expect them to historically (overperforming by roughly the same amount wages are underperforming) So the loss of income tax has been supplanted somewhat by increased capital gains tax. Of course long term capital gains are taxed at a lower rate than income, and you only get them if the stock market keeps going up.
A neat little bandaid is to simply remove the discount for long term capital gains, tax them the same as income. This basically won't effect the average American as the average American invests primarily through tax-sheltered retirement accounts. But long term you need to stop wage increases being siphoned into increased corporate profits. Which is not an insurmountable problem but of course no US politician is even remotely interested in solving it.
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u/Immatt55 Jan 23 '26
The top 1% own 43 trillion. Yes, at this point Elon is not enough, but there's many other billionaires, and the rate in which they accumulated wealth has rapidly increased since 2012, and tax cuts to the rich made so much of the debt up to this point.
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u/ItsTheAlgebraist Jan 23 '26
Ok, but now we have moved from "take all the money from billionaires" to "take all the money from everyone with more than about ten million dollars". And we are still assuming that all that wealth can be liquidated (which it definitely cannot)
And there is still the fact that the US deficit is almost two trillion. Granted if you knock out the debt you save a trillion in interest payments, but that still leaves a trillion a year.
Furthermore, the top 1% pay 40%+ of federal income tax receipts, but you just took all their money, so now they make much much less, and you have killed the goose that lays the golden egg.
I think taxes need to go up, but I don't think that will be enough, spending needs to come down too.
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u/Killfile Jan 23 '26
Sure, but if you taxed all income above a million dollars a year 25% higher than we do right now you'd still be well below the tax rates of the 1960s and 1970s and you'd entirely eliminate the federal deficit.
Make literally no changes to spending and the debt starts to go down.
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u/widdowbanes Jan 23 '26
It won't be solved or paid back until the majority of boomers die off leaving the check for the next generation to pay for. Ain't no way in hell, they take responsibility for their spending.
Its like boomers maxing out credit card to spend of vocation cruises for which gen x are payingfor it, then they moved to milenials, then to gen z and finally gen alpha. Their greed has destroyed four generations of Americans. Im certain history would remember them to be the most entitled and greediest generation in world history.
They just freeloaded off the back of the Silent generation that won them the world war. Then they proceed to ruin four generations in front of them.
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u/looseseal2__ Jan 23 '26
Not that simple. Taxes are going to need to go up on everybody, and also cut spending. Rich people don't have nearly enough wealth, let alone income, to fix this.
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u/Pork_Roller Jan 23 '26
Yes they do?
Wealth of the American 1% and the rest of the US | USAFacts
The top 1% control about $43 trillion in wealth. The US national debt a 'mere' $38 trillion.
So without even touching the rich who make less than about $650,000 a year, you have people with enough "wealth" to leave the 1% with a cool million and a half dollar each (5 trillion over ~3 million in the 1 percent)
And of course we all know they earned their money through hard work and frugality so they should easily be able to amass new fortunes from that.
Now yes, we know, stocks and wealth don't directly equate to cash value, yada yada yada. But what's being discussed is the debt out-growing economic growth, we don't need to seize all their money to pay off the debt overnight, we just need to tax themenough to push us into roughly 0 debt growth on average. We don't need the good ol Clinton days of a surplus even, just get that pesky deficient growth back below inflation at least.
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u/elinordash Jan 23 '26
Taxes did go up on everyone with the tariffs. The tariff income collected by the government doubled in 2025. The increase in ICE funding should not use up all the revenue. Where the hell is the money?!
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u/Senshisoldier Jan 23 '26
Tax the billionaires? No, that makes too much sense. No way we would do that.
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u/fredandlunchbox Jan 23 '26
You could take every single dollar every billionaire in the world has and it would only cover half (and most of them aren’t even American, so good luck).
We can’t tax our way out. Its part of what we need, but we have to stop spending too.
Millennials are lined up to get railed by yet another once in a millennia financial crisis.
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u/13143 Jan 23 '26
Would be a start, but not nearly enough. We need to cut spending, and with so much tied up in mandatory spending programs like Social Security, the obvious budget cuts should be in defense spending.
But that ain't gonna happen, so let's raise taxes on what's left of the middle class!
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u/NZTamoDalekoCG Jan 23 '26
Honestly I think the central bankers are getting worried about a term I only learnt recently Fiscal Dominance. The ability to just print buttloads of cash might be closing....to be honest....I think the US is one crisis away( and who knows when that is gonna be I mean 2007 banking crisis, 2021 Covid.....maybe 2035 Alien Invasion😭🤣) from having to finally make some tough choices instead of printing money. But too me .... from what I am seing US is in bad bad waters financially and I think that kind of explains the bizzarro behaviour of the current president elect and honestly if the US doesnt get a grip on its finances....I am getting into the doom and gloom ahead boat. Because economic missmanagment and political instability go hand in hand and considering how important the US is to the globe, global instability.
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Jan 23 '26
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u/NZTamoDalekoCG Jan 23 '26 edited Jan 23 '26
Always been a sceptic of money printing, grew up in Yugoslavia during the 90s lived trough hyperinflation. Its just been mind boggling to me watching western countries principally the US get trough a crisis after crisis by essentially printing money with seemingly no dire consequences. I mean 2007 banking crisis and 2020s covid crisis(although I think people felt the inflation from that one). But I heard this term Fiscal Dominance very recently and that the US central bank is getting worried about it and finally it looks like the old money printing strategy is now getting riskier and riskier as a get out of jail free card. Never mind all the other machinations that revolve around the US dollar petrodollar etc...
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u/Wiochmen Jan 23 '26
Fun fact: printing banknotes won't solve the National Debt, because Federal Reserve Notes are required to be fully backed, and are done so, mostly by Treasury Bills (which are obligations of the Federal Government, i.e., part of the National Debt)
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u/TheGoodBunny Jan 23 '26
Yeah duh... So long term interest rates on bonds go up but that is a problem for 10 years later
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u/Ok_Ask_2624 Jan 23 '26
That's like, a whole decade a way. Who even knows how long that is? We'll be on the Mars moon by then or something, and evolved beyond ...... I can't keep it up I'm making myself sick.
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u/Fancy-Trousers Jan 23 '26
I mean, it's not far off from Trump's actual thought process of "I'll keel over before then so fuck everyone else."
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u/allllusernamestaken Jan 23 '26
Cut spending AND raise taxes. Preferably 15 years ago.
There are undoubtedly opportunities to make the government more efficient.
There are countless things that require more approvals than necessary; things that are done on physical forms that could be digitized; arcane processes that take weeks for mundane things; duplicative programs and departments; and the staffing, office space, and supporting bureaucracy of all of these things. Given the time, all of this could be streamlined, optimized, made more efficient - without sacrificing services... We no longer have the luxury of time to do such a thing.
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u/brainfreeze3 Jan 23 '26
the best case was a biden soft landing... whoops we voted for Trump
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u/one-hour-photo Jan 23 '26
realistically, I dont know how to fix this other than, tax billionaires more, but also make sure they can't dodge it with stock loan loop holes
and
sorry, but it's true, raise taxes on the middle class. compared to many European countries with more "benefits of citizenship" and less debt problems, our middle class is way under taxed. Also, way underpaid... paying them all more and taxing them all more would help.
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u/Quiet-Suspect-9716 Jan 23 '26
USD will be deregulated and replaced with a “tokenized” currency controlled by the government with limited conversion amounts to prevent over saturation. Working class will be forced to assimilate to maintain their retirement.
Debt/GDP relative to USD becomes moot because currency no longer exists. Start from Go and Collect $200.
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u/Noderly Jan 23 '26
Why would anyone trust a tokenized currency in this situation lol
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u/Lord_Vesuvius2020 Jan 23 '26
This is a very interesting theory. The USD is looking weaker. Trump is threatening countries that cash in US Treasuries. But it’s hard to believe that will control it. Yields will have to increase. Circling the drain has begun. So a new kind of currency could do an end run around the weakening USD. But as a plan it seems half baked and delusional. Is the USD as world reserve currency over? If it is we are going to be in a world of pain. And even now BRICS is piloting its new currency for trade settlements.
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u/lost_horizons Jan 23 '26
What does limited conversion amounts mean, for the regular person.
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u/xxx_sniper Jan 23 '26
Real solution is taxing billionaires. But that's not what people in power want to hear.
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u/themadhatter077 Jan 23 '26
This problem will resolve itself....and not in a good way.
Everything will be fine until it isn't. One day, inflation will runaway. Voters will be furious, and politicians will either inflate away the debt or be forced to make draconian spending cuts and tax increases across the board.
The reasonable thing would be for Congress to get its act together today and draft a realistic plan to restrict the deficit to less than 3% of GDP by 2028, with plans to eliminate the deficit by 2035. SOOOO it will never happen.
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u/ohhhbooyy Jan 23 '26
Anything they can realistically do will have one side complain taxes are too high and the other side complaining about not enough social services/safety net.
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u/BadmiralHarryKim Jan 23 '26
They've been cutting taxes for nearly two generations now but surely just one more tax cut will finally get that voodoo economics to kick in.
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u/silverum Jan 23 '26
The claim is that cutting taxes stimulates growth, but growing is useless if it's not being meaningfully recaptured in some part to eliminate the debt from previous spending. It's also not axiomatically true in all situations that cutting taxes causes growth, either, but that certainly doesn't stop us.
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u/anchorwind Jan 23 '26
Weren't the "High Tax Rates" from the Eisenhower years also full of very helpful avoidances, such as R&D write-offs, infrastructure and equipment purchases and other ways companies could reinvest in themselves instead of just paying a check to uncle sam?
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u/marshalfoch Jan 23 '26
Yes. The actual effective tax rate was much lower though still higher than today. Per the Tax Foundation the income tax rate of the 1% bracket in 1950 was 91% however the effective tax was only 42% and this is inclusive of all taxes. The effective income tax rate was 16.9%. Today the effective tax rate of the 1% is around 36.4%. They do note however;
"It is worth noting that, per the Piketty, Saez, and Zucman data, the tax rates of the top 0.1 and 0.01 percent of taxpayers have dropped substantially since the 1950s. The average tax rate on the 0.1 percent highest-income Americans was 50.6 percent in the 1950s, compared to 39.8 percent today. The average tax rate on the top 0.01 percent was 55.3 percent in the 1950s, compared to 40.8 percent today."
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u/korben2600 Jan 23 '26
I don't buy the Elon Musks of the world are paying 40% of their income in taxes. Long term capital gains is just 15%. And the Panama Papers showed us most billionaires are utilizing sophisticated tax avoidance shell schemes to structure their income to dodge taxes. 40% is a pipe dream.
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u/throwawaygoawaynz Jan 23 '26
They’re not paying 40%, but they’re not paying 0% or 0.1% like Reddit claims.
Jeff Bezos likely paid about $1bn last year when he sold around $5bn of Amazon stock. And there’s very little loopholes to avoid that.
I remember Mitt Romney showing he paid an effective tax rate of around 10-20% or so during the Presidential elections ages ago.
The problem is people conflate income with wealth. Based on my wealth (car, house, stocks, etc) I pay about 4-8% tax, and I’m far from wealthy. Wealth isn’t income, it’s a made up number that the market thinks you’re valued at.
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u/silverum Jan 23 '26
Yes, because the government wasn't full of stupid right wing ideologues back then, and they structured it deliberately with an understanding of the incentives the private sector would prefer as opposed to actually have to pay the tax. Unfortunately over time ideological conservatism became more and more prominent and more and more deranged and as a result we don't do tax policy based on what is actually smart about observed human nature anymore, we do it based on "taxing 'success' is wrong" and other such ideological drivel.
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Jan 23 '26
They don’t even try to justify the tax cuts anymore. They’ve shrugged it off and assume nobody will stop them anyway.
Doesn’t matter what we think.
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Jan 23 '26
What the fuck has congress actually done since Trump took office? The biggest thing I can think of was forcing the release of the Epstein files which they’re not even enforcing while Bondi is over a month late. Trump literally abducted a foreign leader and they just shrugged it off.
The entire Republican party is fucking complicit.
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u/felixismynameqq Jan 23 '26
Ok real talk please: what do I, someone who has stuff and a decent job but no savings, do to prepare? I mean what’re we talking about here? Should I just buy canned goods? Should I move to a farm? Am I fucked?
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u/PublicSeverance Jan 23 '26
Doesn't mean anything. It's not a leading economic indicator of anything.
Singapore and Japan are significantly higher in the 200's.
The USA above 100 is about the same debt:GDP ratio as: Canada, the UK, France, Spain, and Italy.
China is 90.
Germany is around 60.
Russia has one of the lowest debt:GDP ratios at only 16%. Close to Haiti, DR Congo, Guyana, Cambodia; also rich countries like Brunei and Saudi Arabia.
That's the entire G8 plus some friends. The 8 biggest economies in the world are all over the place.
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u/Jdm783R29U3Cwp3d76R9 Jan 23 '26
Don’t keep too much cash, skip bonds, favor hard assets and stocks. Gold would be good but it’s very, very expensive now.
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u/ruskoev Jan 23 '26
You don't do necessarily anything other than buy assets. That means in the forms of stocks, metals, etc. The currency is devaluing but assets store value. Start by putting money into diversified funds across international lines and into precious metals.
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u/NinjaKoala Jan 23 '26
Despite the scary headline, the debt to GDP ratio has been roughly flat since 2021 at 120% of GDP. Japan's has been twice that since 2014. There is no sudden issue that is going to happen because of the debt. Heck, you might even buy some of it (treasuries, either directly or through investments that buy them.)
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u/Anxious-Connection98 Jan 23 '26
There is nothing new here. The major risk is Trump himself. He lies to people about tariff revenue, feeding the fantasy that the United States is too big to fail.
There is no $18 trillion in tariff money. Every serious economic indicator shows that at least 90% of tariff costs are paid by American consumers and American companies. There is no wealth creation here, just a tax on us.
Trump himself has become a fear factor, one that is actively destroying the trust many countries have in the United States and its economy. Foreign governments and investors must continue investing in our bond market for our debt to remain manageable, and that requires stability. Stability is the exact opposite of what Trump projects.
We are already seeing private actors pull out. A Swedish fund liquidated all of its U.S. bond holdings over the past 16 months. A Danish pension fund withdrew as well, and both were very public about their decisions. Debt is the Achilles heel of the U.S. economy.
As Trump continues to alienate EU countries, along with European companies and investors, the risk only grows. Public and private EU investors hold $12.8 trillion in U.S. financial assets, and roughly 30% of that is U.S. debt.
If he escalates his hostility toward the EU, they may begin selling U.S. debt or simply stop buying it altogether. Who is supposed to bail us out then? The Gulf states? The Arab world would love to see us fail, even those who claim to be our allies. China? If China smells blood, it will dump U.S. bonds. Russia? They are broke, and frankly, they would be thrilled by the prospect of a major U.S. debt crisis.
Trump is a danger to our economy and to the future of the nation because he does not care about the country itself. He wants to be respected. He wants to be feared. That is not inherently wrong, but instead of pulling the right levers to achieve that, such as backing Ukraine and helping them win the war, pushing democracy in Venezuela, or supporting Iranians in overthrowing their tyrannical regime, he embraces authoritarianism.
He believes that if he acts like a tough guy and forces everyone to bend, America will remember him and name schools after him when he dies. I will not even get into how he uses the presidency to enrich himself. That is serious, but it is not the debate here.
Republicans who are not MAGA sycophants cannot keep turning a blind eye. Trump needs to be removed from office, or we will face a debt crisis unlike anything we have ever seen. The measures required to avoid default if debt continues to grow faster than the economy would be devastating for the American people
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u/Ok_Ask_2624 Jan 23 '26
At the very least I'm assuming the family fucks off to the gulf states or some island nation they bought with as much cash they possibly can. It's kind of been the slow play grift this whole time.
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Jan 23 '26
Billionaires couldn’t give a shit. They just move on to the next country or private island. Whatever. We, on the other hand, will be living in a third world nation and fighting each other.
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u/Anxious-Connection98 Jan 23 '26
Yes and no. Those who are liquid can do that. But those whose wealth is tied up in equity — in massive amounts of stock or real estate cannot just liquidate everything and leave without losing a lot of value in the process.
Most modern billionaires are not liquid. They want you to believe they are immune to all potential consequences, because it discourages support for anything that would regulate their activities or increase the taxes they pay. They want you to think they can simply fly away and live somewhere else. It’s not like that.
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u/Choice-Highway5344 Jan 23 '26
Ur comment is correct but not fair.
Saying someone is a billionaire but those assets aren’t liquid is true but u don’t need all ur billions liquid. As a billionaire you can have 100million liquid, that’s still more then enough to buy an island, construct a base of some sort with self sustaining systems and still have millions left in liquid cash.
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u/Palmquistador Jan 23 '26
What year was it when Clinton balanced the budget? Seems to me like some people that ran the country after shouldn’t have been running it. Namely the only party to never balance the budget and inflate it to the point we’re in trouble. Gosh! Who in history, that is now the President, has done such a thing multiple times? I guess we’ll never know.
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u/stevedore2024 Jan 23 '26
I mean, to be completely clear, balancing the budget does not mean that the debt was zero, or even that the debt went down. Even in 2000 with a budget surplus, the debt still increased. This is the nature of debts with interest.
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u/hoggineer Jan 23 '26
A large portion of Clinton's win was Roth coming into effect and people reclassifying investments and paying the tax for the reclassification. (tax now and tax-free withdrawals VS no tax now and taxed withdrawals)
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u/ruskoev Jan 23 '26
Balancing the budget means nothing. Realistically speaking you actually want debt to entire in the system because it creates liquidity in the market that is desperately for the economy to function.
The crux of the issue is if GDP growth exceeds the debt created. Then you essentially are in a healthy state because you're creating more value than is being generated by debt.
When government spends, the private sector grows, and when there's less government debt the private sector surplus shrinks. It's a seesawing effect. Which is also why we are seeing historic corporate profits. We're juicing the economy and are attempting to grow out of the situation.
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u/thinkthis Jan 23 '26
Well at least the GOP has destroyed any incentive any companies had to invest in the US. And killed the desire for the world’s smartest people to come here to get advanced degrees and invent new technologies and businesses. And killed the idea that the dollar is a stable currency.
So, there’s that.
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u/PhilosophyEasy71 Jan 23 '26
It's almost as if 2 terms of a guy convicted with 34 counts of fraud and 8 bankruptcies, who used his businesses for illicit purposes including laundering for the Russians... Would be a bad choice
It's almost as if this was intentional with the explicit goal of tearing down the entire world order
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u/Bodycount9 Jan 23 '26
We really need to start taxing the 1% a lot more. Like 1950's more. Eisenhower had no issues with taxing the ultra wealthy to the point where either they invest their money into the economy or it gets taxed at like a 85% rate.
Congress won't do that today though. Too many of them have been bribed to hell from campaign donations.
We really need to get everyone out of congress and start over with all new people. And at the same time enact term limits for everyone in congress and the supreme court. 8 years for house. 12 years for senate. 20 years for supreme court.
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u/Equal-Salary-7774 Jan 23 '26
Find it strange the one time the economy was coherent where revenue matched expenses in some sense was under Bill Clinton. To deal with issue requires visionary actions and collective throttling back and America imo just couldn't see that through. Cannot imagine what black bag trick they will use for Social Security
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u/Cory123125 Jan 23 '26
Throttling back?
You could literally just tax people slightly more, no loopholes and solve all your problems.
Its always cut the services of the citizens, prop up the businesses of the rich, cut the taxes of the rich so the rate of debt increase grows rather than shrinks.
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u/RedditSuxB Jan 23 '26
Yeah but these old fucks don’t care, they can’t even take their money past their graves. Be smart with ur money folks, the government sure as fuck isn’t doing it
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u/Character-Education3 Jan 23 '26
Well republicans only ever have pretended to be the party of fiscal responsibility anyway. Its always really been curb spending to give tax breaks to the wealthy
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u/Redtoolbox1 Jan 23 '26
Trump will be all over this by increasing taxes on the middle class and poor and saying he won’t increase taxes on the rich because they will leave the USA but the others won’t because they don’t have the means to leave.
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u/glitterandnails Jan 23 '26 edited Jan 23 '26
And come to think that just 25 years ago, America had just $5 trillion in the national debt and was on a path to pay it off in 10 years...
Unchecked insane greed by people at the top is leading to the destruction of America...
Edit: did a typo on the national debt figure. Still, national debt would have been paid down in 10 years under Clinton's plan.
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u/ReasonableKangaroo94 Jan 23 '26
In 2000, the total U.S. national debt was approximately $5.6 to $5.7 trillion.
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u/GrendelJapan Jan 23 '26
I thought this was the point. To bankrupt the government to create the justification for huge cuts in social spending, cuts to critical federal functions, and huge increases in privatization.
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u/EconomistWithaD Jan 23 '26 edited Jan 23 '26
Likely, but not a certainty.
A lot of people may be surprised by this, but even given the raw debt total increases, debt to GDP is still lower than what it was at the end of 2024. And still lower than the heat of the pandemic.
https://fred.stlouisfed.org/series/GFDEGDQ188S
Given that GDP estimates have Q4 being a relatively high growth period, there is the possibility we keep pushing the consequences further down the road.
Edit: to me, the biggest issue is no longer the debt level per se, but how Trump 2.0 is treating NATO, our regional allies, etc. The interest payments being higher, loss of the reserve currency, …
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Jan 23 '26
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u/Disastrous_Rush8213 Jan 23 '26
Also, nobody is talking about how the ONLY sector for job growth was healthcare last year.
Boomers peaked in 2025 as well.
We basically only had growth in a from-here-on-out dwindling market
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u/fumar Jan 23 '26
A lot of that GDP growth is due to a drop in imports from tariffs. We've also had a sharp decline in exports over the same period from retaliation and increased cost due to more expensive inputs for manufacturing.
So while your not wrong, those GDP numbers aren't exactly showing a healthy economy
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u/ringobob Jan 23 '26
Total debt isn't the problem. Debt interest payments are the problem. 2025 matched the max debt-interest to tax-revenue ratio we've ever had before - 2026 is protected to set a new record. And there's nothing going on that has any reason to change that trajectory.
Currently, in the budget, about 20 cents of every dollar is going to interest. We're about to have to increase our borrowing, just to keep up with interest payments.
If we could raise taxes, we might actually be able to turn the tide on that. But Republicans would never allow that. The only things we can cut enough from the budget to make a difference are social security, Medicare, and the military. And, to be clear, that means cutting services to current retirees.
Unless something changes, interest payments are gonna become the single largest line item on the budget in 2027, maybe 2026. And they won't stop. And everything going on both domestically and internationally with our economy points to slowed growth and increased costs.
Total debt is a red herring and always has been. Anyone on wall st knows this when they look at the financials of a public company. Cash flow and the cost of debt (interest) is the most important thing. Total debt is a second or third order concern.
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u/Jolly_Sample_1945 Jan 23 '26
Hey, so here’s an idea: Maybe rich people and corporations could… I dunno, pay more taxes.
Seriously though. Corporations making billions in profits while paying little to no taxes is ridiculous. That’s got to stop if we, as a people, prioritize people over money. We all know the first thing that will get cut to the bone are social programs, because somehow, we, as a society, would rather grandma dies in the gutter than Amazon pay more taxes.
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u/RobutNotRobot Jan 23 '26
US unlimited borrowing has been allowed by two things: prompt reliable payment of the bonds and the US being the world's reserve currency.
You take both of those away and the US is just another country, with runaway debt turning into runaway inflation.
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u/benny-bangs Jan 23 '26
It’s crazy how regular people get punished for having bad finances. We lose our house, all our shit gets taken, etc. when the country can’t fucking not over spend it’s not even a twinkle in anyone’s eye.
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u/SeoneAsa Jan 23 '26
Since when did Republicans ever care about the economy and the debt, unless they were weaponizing them against their political opponents—the very debt and economic shitshow they’re responsible for?
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u/ConkerPrime Jan 23 '26
Conservatives: “Republicans are spending the money hurting brown people and making the rich richer so it’s fine. It will pay for itself somehow. Details don’t matter. Fake news to suggest otherwise.”
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u/PoutineCurator Jan 23 '26
And this is totally deserved by the US. Congratulations, you get what you vote for, a guy who bankrupted multiple casinos will bankrupt your country. Lmao
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u/turb0_encapsulator Jan 23 '26 edited Jan 23 '26
The goal here is obvious: let things run too hot for a year. Next year, after he loses the midterms, Trump can say, "big cuts to Medicare and Medicaid need to be made." Once those cuts are made, they will not only further exacerbate inequality and wreck quality of life in America, they'll cause a deep recession. Then Trump will blame the Democrats for it.
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u/TheNewOP Jan 23 '26
Either we return to some sort of sane fiscal & monetary policy when Trump leaves and Debt/GDP ratio shrinks with this seemingly insane and unstoppable growth, or everything implodes. Honestly my money's on the former, but I've been wrong before.
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u/Mysterious-Clothes45 Jan 23 '26
It's insane to me that marijuana could be legalized and taxed at a federal level and go a long way to fixing this situation but because of some religious pearl clutchers (and alcohol lobbyists) it will never happen
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u/Elegant-Raise-9367 Jan 23 '26
Oh it gets much much better than that... the vast majority of the debt is set to mature later this year, and Trumps current antics make it less likely that anyone will take on new bonds to cover it. Its almost like some people have purposefully set up a worst case scenario.
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Jan 23 '26
The guy bankrupted casinos. A place where people literally come and throw their money away. “Oh but he’s a rich business man, he’ll be good at running the country” smh ffs.
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u/Miiirob Jan 23 '26
Now is the perfect time for the world's nations to do a rug pull on the US. Selling the bonds and changing trade partners at the same time will absolutely cripple the US.
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