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Study: "Debt Problem Began Four Decades Ago"

Chris2189 Wrote: Jan 22, 2013 7:03 AM
Medicaid could be altered politically, but that's less than $300bn, so even a 50% cut would only dent the deficit by 10%. That leaves defense (and discretionary spending ($646bn in '11)) as the biggest possible place to cut. A cut of $140bn to defense would be significant, but would still leave the US as the strongest military in the world. Couple that with some significant cuts in discretionary spending and some reforms to Medicare/Medicaid and SS and problems aren't solved, but things look better. Then the reality is that revenue is going to have to increase unless you can get people to vote for giving up their SS and Medicare entirely (or at least in large part). I'm guessing that isn't even sort of going to happen.
Chris2189 Wrote: Jan 22, 2013 7:07 AM
By the way Phillup, current debt service is at $227bn (in '11). There's no way to calculate that a 1% increase in the interest rate will cause that $227bn to suddenly become more than $700bn. Defense spending is 3.5x the interest cost. Not saying that the interest cost is to be ignored, just that the idea of a 1% rate increase causing the interest cost to outstrip defense spending is a bit off.
A new report from the Federal Reserve Bank of St. Louis reminds Americans that, contrary to the narrative that huge deficits and debt are merely a recent product of the Great Recession, the problem began over forty years ago.

Daniel Thornton, the St. Louis Fed's Vice President and economic adviser, finds what conservatives have been saying all along is true: it's steadily increasing government spending, not a lack of tax revenues, that's causing all of this.

[A]fter 1970, both revenues and expenditures increased on average relative to the previous two decades; however, revenue increased marginally while...
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