The ability for the government to spend money it doesn’t have doesn’t cease to amaze. The deficit was $1.6T last year (over 5% of the GDP) but 2024 is starting strong.
This is a different issue. This is a fix for the borrowers who were scammed by the Public Service Loan Forgiveness program, which although enshrined in law, was implemented as a massive fraud.
A not-insignificant part of that deficit though was programs and tax cuts from the previous administration. I agree, our government probably shouldn't be allowed to spend money it doesn't have, but the obvious solution (higher taxes, especially on the wealthy) isn't politically palatable, so every president is locked into the same pattern: start a bunch of spending, but back-load the actual expenses so the next administration has to deal with it. The deficit has gone down over the last few years, which means that we're getting more revenue and saving some money, but because deficit is an easier number to digest than change-in-deficit, we keep whinging about it rather than changing anything. And then the next administration comes in and points fingers at the previous while continuing the cycle of overspending.
FWIW the current administration and Congress have done a historically slightly-above-average job of reducing the deficit, I won't call it good but it's at least not terrible. The current spending isn't the problem, it's stuff from a few years ago coming to bite us in the ass.
Looking at the graphs for US Budget deficit since 1980 there's a clear pattern to it, Republican administrations tend to increase it (or maintain in percentage-to-GDP), Democrats tend to lower it:
I think when they made that comment they were talking about the rate of change, ie, whether % of GDP is trending upwards or downwards, not specifically looking at the Clinton administration.
If you want to dig further into it GDP is adjusted by the GDP deflator and that is lower than CPI.
Due to (intentional) methodological flaws like hedonic quality adjustment, owner imputed rent and a basket of good arrived at by a team of economists rather than surveys of what households are actually buying, CPI is lower than what a household needs to increase its budget by in order to stay afloat, it's lower than inflation.
Therefore if the government engaged in deficit spending and that spending resulted inflation that would result in a better percentage of GDP than expected as a lot of the "growth" is just dollars becoming less valuable.
> The rest of the time is occupied by bipartisan wars that we couldn't afford and lost anyway.
Started by Bush I and Bush II.
> There was what? 5 years in the past 50 that there wasn't a deficit?
My observation was in the rate of change of the deficit, generally since the 80s Democrats seem to work for lowering the budget deficit while Republicans increase it. Which is quite absurd given the demagogy coming from the GOP about public spending, "welfare queens", austerity and so on, they are mostly the ones responsible for pushing future administrations (and generations) the burdens of their overspending.
Bush started Syria, Libya, Yemen, Somalia and Pakistan?
And, better yet, then kept the wars up, for decades, despite several democratic majorities and no longer being in power himself?
Let me guess he also made them abandon the Bagram air base without any planning as well? Bush made them leave the humvees for the Taliban to use.
> GOP about public spending, "welfare queens", austerity and so on,
The only time the Democrats balanced the budget was the time they ended welfare queens and were tough on illegal immigration. Clinton from the 90's would be considered conservative today.
> Bush started Syria, Libya, Yemen, Somalia and Pakistan?
I thought you were talking about prolonged wars that drained the coffers like Afghanistan and Iraq requiring massive deployments of personnel and equipment. Your examples are not even in the same order of magnitude of spending (and probably not even if all are combined but it's hard to find figures on spending related to them directly). Also not comparable on the amount of human suffering caused by the US government compared to Iraq/Afghanistan.
> The only time the Democrats balanced the budget was the time they ended welfare queens and were tough on illegal immigration. Clinton from the 90's would be considered conservative today.
I don't think this is a point to what I said, if it worked for the Democrats then why the GOP with an even stronger rhetoric against welfare and immigrants cannot achieve lowering the deficit and, as the facts show, increase it every single time? Something about their policies and ideology doesn't help the budget, it's empirical.
> Let me guess he also made them abandon the Bagram air base without any planning as well? Bush made them leave the humvees for the Taliban to use.
Well, not Bush but definitely another Republican president:
> In February 2020, the Trump administration and the Taliban signed the United States–Taliban deal in Doha, Qatar, which stipulated fighting restrictions for both the US and the Taliban, and provided for the withdrawal of all NATO forces from Afghanistan in return for the Taliban's counter-terrorism commitments. The deal, and then the Biden administration's final decision in April 2021 to pull out all US troops by September 2021 without leaving a residual force, were the two critical events that triggered the start of the collapse of the Afghan National Security Forces (ANSF).
Obama was in Afghanistan longer than W. All 8 years vs what 6.5 for Bush? War is bipartisan. Who do you vote for if you object to the current wars for example? Who should you of voted for if you objected to any of the previous ones? The majority of the duration of these wars they lacked popular support, the vote to end them wasn't provided as an option.[0]
> GOP with an even stronger rhetoric...
I look at action over words.
Under Bush illegal immigration was higher than Obama. Understanding Bush and Republicans of the time "pro business" mantra of the era that makes sense, businesses wanted to pay lower wages. Bush helped them out.
Obama needed to show economic recovery, particularly among the working poor, similar to how Clinton wanted to. So he built the 'kid cages'/youth detention facilities (name changes depending on who is in office) and enforced the immigration laws. This decreased the supply of labor available and allowed workers to catch up after 2008. As workers catch up they buy goods and services, this expands the economy and thus lowers deficit to GDP ratios.
[0] until Trump apparently. I'd credit Biden for the Afgan withdrawal but he refuses to accept it (like you have done in your comment here). Overall a disaster of a pull out is better than continuing a disaster of a war, for me whoever takes blame for one also deserves the credit for the other. He also is the first guy in my adult life to not start any new wars. I'd put together a version of the above deficit chart but with wars started by administration but I think you agree this comment has gone on long enough.
> Under Bush illegal immigration was higher than Obama. Understanding Bush and Republicans of the time "pro business" mantra of the era that makes sense, businesses wanted to pay lower wages. Bush helped them out.
I don't see either of the parties in the USA having much difference in ideology about being pro-business, one is just more corrupt about it but both are pretty right-wing in the pro-business ideology. One just tries to pay lip service to the idea of being more socially-conscious but in the business arena it's just that, lip service.
> Obama was in Afghanistan longer than W. All 8 years vs what 6.5 for Bush? War is bipartisan. Who do you vote for if you object to the current wars for example? Who should you of voted for if you objected to any of the previous ones? The majority of the duration of these wars they lacked popular support, the vote to end them wasn't provided as an option.[0]
Completely agree, war is just another business for the USA.
Overall as an outsider the political landscape of the USA is a mess and pretty much undemocratic, two parties cannot ever represent the different interests of 340+ million citizens across a landmass spanning a continent. Since both parties are in cahoots with the military industry it doesn't really matter what citizens want or think about it, there's no other option, both will support it.
Amaze isn't the word I'd use, but Keynes did say something rather profound - "anything we can actually do we can afford". I think of the economy a bit like the power grid; it's really a just-in-time system that can only deliver productive capacity in real-time (though this analogy is changing with grid-scale power storage). In some sense, money is just an abstraction on top of that. Or I have no idea what I'm talking about, but also I don't think economists really have that good of a handle on things either.
From the perspective of a household (a cell), or a company (an organ), money (blood) are a limited resource, which constraints what you can do. If you don't have that resource, you will die.
But from the perspective of the state (the organism) or the government (CNS), money (blood) is just an accounting and distribution mechanism for real resources, which are things like energy, raw materials and labor (oxygen, minerals and sugar). From this perspective, amount of money/blood can be adapted to conditions (for example in emergency, money/blood can be redirected to vital industries/organs), and it is created or destroyed internally, in any amount required. So the amount of money (blood) is not a constraint, resources (oxygen, food) are.
The government isn’t spending money it doesn’t have. It does spend money it borrows from lenders. The lenders think it is a relatively safe investment since they keep lending money to the U.S. government.
I’ve been hearing doom and gloom about the deficit for 50 years. It primarily occurs when a Democrat is President and subsides when a Republican is President. This not a reference to OP. I state this to try to give some perspective to those who read this.
The debt to gdp ratio in Japan has been well over 100% for decades. In fact it is over 200%. What matters is the ability to service the debt. Those buying U.S. government securities are not as alarmed as you. Do you have reason to believe that they are lacking in knowledge/understanding of the situation and are wrong? They could be making huge mistakes with their willingness to lend but I don’t know enough about this stuff to decide if that is the case.
You don’t understand how these things work. The FED conducts auctions for securities that entities purchase. Without entities buying the securities there would be no money for the government to borrow.
Biggest single buyer. It’s an investment that SS makes. They could instead buy securities of other governments but U.S. securities have been the safest to purchase. Without SS do you think the U.S. would not be able to borrow as much as it does?
As long as $ is the global reserve currency, these number are pretty much meaningless. Not to say it will be this way forever. We already can see other countries are doing everything they can to trade commodities in their own respective currencies (Russia, India, Japan, etc).
It is actually a great effort to forgive student loans. In US it is one of most debilitating factor for people who went to college (especially the private ones).
Why not do this earlier but wait for an election year? This just looks like a election campaign stunt to me.
Your final point feels poorly researched. I believe this administration has consistently focused on the student loan crisis outside of election years also.
> The Biden administration has worked to fix those issues.
> Prior to Biden’s fixes to PSLF, just around 7,000 borrowers had received debt relief through the over 15-year-old program, according to the administration. Since 2021, it said, 871,000 borrowers have now had their debt canceled under the program.
This is a weird comparison that overlooks that the 10-year period begins at repayment, which is typically at graduation. If you entered college in 2007, graduated in 2011, and made 10 years of payments to become eligible for forgiveness, your first year of eligibility would’ve been 2021.
Also, Obama federalized student loans in 2010, vastly increasing the number of loans eligible for PLSF. Lots of people who got masters degrees or JDs starting in 2010 became eligible for PLSF since 2021.
Your analysis is missing two major things. PSLF started in 2007 but wasn’t just for new borrowers. The first year people could have qualified for forgiveness was in 2017. The vast majority of people who applied for forgiveness between 2017 and 2021 were denied.
The reason so few people were qualifying before the program and rules were streamlined was because the rules were confusing and obtuse. Also servicers misled people by telling them they were in the program when they weren’t.
The Dept of Ed under Trump’s secretary went out of the way to block loan forgiveness under another program. I say this to give an example of how bad things were run for some programs. Prior to the current secretary of Ed these things were a shitshow. They still are to some extent but much less so.
As a non-American, the "loan forgiveness" seems crazy if you don't address the root issue, which is giving large loans for people who will never be able to repay them. By forgiving the loans you have basically the worst of both worlds; you have an unbounded education cost that just keeps rising like crazy (vs a gvmt-funded university where the gvmt sets the budget), a lot of people who won't qualify and have their lives ruined, AND crazy amounts of taxpayers money to pay those off (which is inflated, see first point). Feels a lot like the Cobra Effect [1].
All of this to avoid... free education for all with taxpayers money? Because that's socialism?
PSLF is the only thing that makes it economically viable to pursue several critical careers, such as teaching. From time to time, people call for its demise, but this would be a very bad idea.
The only way we should ever get rid of it is if we return higher education to affordability.
44 comments
[ 25.9 ms ] story [ 1166 ms ] threadFWIW the current administration and Congress have done a historically slightly-above-average job of reducing the deficit, I won't call it good but it's at least not terrible. The current spending isn't the problem, it's stuff from a few years ago coming to bite us in the ass.
That's like saying the deficit is down post WW2 and taking credit for it.
Carter:
Reagan + Bush Sr.: Clinton: Bush Jr.: Obama: Trump:Those 5 years were when the internet went mainstream and lifetime welfare was ended.
The rest of the time is occupied by bipartisan wars that we couldn't afford and lost anyway.
Due to (intentional) methodological flaws like hedonic quality adjustment, owner imputed rent and a basket of good arrived at by a team of economists rather than surveys of what households are actually buying, CPI is lower than what a household needs to increase its budget by in order to stay afloat, it's lower than inflation.
Therefore if the government engaged in deficit spending and that spending resulted inflation that would result in a better percentage of GDP than expected as a lot of the "growth" is just dollars becoming less valuable.
Started by Bush I and Bush II.
> There was what? 5 years in the past 50 that there wasn't a deficit?
My observation was in the rate of change of the deficit, generally since the 80s Democrats seem to work for lowering the budget deficit while Republicans increase it. Which is quite absurd given the demagogy coming from the GOP about public spending, "welfare queens", austerity and so on, they are mostly the ones responsible for pushing future administrations (and generations) the burdens of their overspending.
Bush started Syria, Libya, Yemen, Somalia and Pakistan?
And, better yet, then kept the wars up, for decades, despite several democratic majorities and no longer being in power himself?
Let me guess he also made them abandon the Bagram air base without any planning as well? Bush made them leave the humvees for the Taliban to use.
> GOP about public spending, "welfare queens", austerity and so on,
The only time the Democrats balanced the budget was the time they ended welfare queens and were tough on illegal immigration. Clinton from the 90's would be considered conservative today.
I thought you were talking about prolonged wars that drained the coffers like Afghanistan and Iraq requiring massive deployments of personnel and equipment. Your examples are not even in the same order of magnitude of spending (and probably not even if all are combined but it's hard to find figures on spending related to them directly). Also not comparable on the amount of human suffering caused by the US government compared to Iraq/Afghanistan.
> The only time the Democrats balanced the budget was the time they ended welfare queens and were tough on illegal immigration. Clinton from the 90's would be considered conservative today.
I don't think this is a point to what I said, if it worked for the Democrats then why the GOP with an even stronger rhetoric against welfare and immigrants cannot achieve lowering the deficit and, as the facts show, increase it every single time? Something about their policies and ideology doesn't help the budget, it's empirical.
> Let me guess he also made them abandon the Bagram air base without any planning as well? Bush made them leave the humvees for the Taliban to use.
Well, not Bush but definitely another Republican president:
> In February 2020, the Trump administration and the Taliban signed the United States–Taliban deal in Doha, Qatar, which stipulated fighting restrictions for both the US and the Taliban, and provided for the withdrawal of all NATO forces from Afghanistan in return for the Taliban's counter-terrorism commitments. The deal, and then the Biden administration's final decision in April 2021 to pull out all US troops by September 2021 without leaving a residual force, were the two critical events that triggered the start of the collapse of the Afghan National Security Forces (ANSF).
> GOP with an even stronger rhetoric...
I look at action over words.
Under Bush illegal immigration was higher than Obama. Understanding Bush and Republicans of the time "pro business" mantra of the era that makes sense, businesses wanted to pay lower wages. Bush helped them out.
Obama needed to show economic recovery, particularly among the working poor, similar to how Clinton wanted to. So he built the 'kid cages'/youth detention facilities (name changes depending on who is in office) and enforced the immigration laws. This decreased the supply of labor available and allowed workers to catch up after 2008. As workers catch up they buy goods and services, this expands the economy and thus lowers deficit to GDP ratios.
[0] until Trump apparently. I'd credit Biden for the Afgan withdrawal but he refuses to accept it (like you have done in your comment here). Overall a disaster of a pull out is better than continuing a disaster of a war, for me whoever takes blame for one also deserves the credit for the other. He also is the first guy in my adult life to not start any new wars. I'd put together a version of the above deficit chart but with wars started by administration but I think you agree this comment has gone on long enough.
I don't see either of the parties in the USA having much difference in ideology about being pro-business, one is just more corrupt about it but both are pretty right-wing in the pro-business ideology. One just tries to pay lip service to the idea of being more socially-conscious but in the business arena it's just that, lip service.
> Obama was in Afghanistan longer than W. All 8 years vs what 6.5 for Bush? War is bipartisan. Who do you vote for if you object to the current wars for example? Who should you of voted for if you objected to any of the previous ones? The majority of the duration of these wars they lacked popular support, the vote to end them wasn't provided as an option.[0]
Completely agree, war is just another business for the USA.
Overall as an outsider the political landscape of the USA is a mess and pretty much undemocratic, two parties cannot ever represent the different interests of 340+ million citizens across a landmass spanning a continent. Since both parties are in cahoots with the military industry it doesn't really matter what citizens want or think about it, there's no other option, both will support it.
It's a sophisticated game of monopoly where select few players can coopt the productive capacity of the labor class.
From the perspective of a household (a cell), or a company (an organ), money (blood) are a limited resource, which constraints what you can do. If you don't have that resource, you will die.
But from the perspective of the state (the organism) or the government (CNS), money (blood) is just an accounting and distribution mechanism for real resources, which are things like energy, raw materials and labor (oxygen, minerals and sugar). From this perspective, amount of money/blood can be adapted to conditions (for example in emergency, money/blood can be redirected to vital industries/organs), and it is created or destroyed internally, in any amount required. So the amount of money (blood) is not a constraint, resources (oxygen, food) are.
I’ve been hearing doom and gloom about the deficit for 50 years. It primarily occurs when a Democrat is President and subsides when a Republican is President. This not a reference to OP. I state this to try to give some perspective to those who read this.
https://en.wikipedia.org/wiki/National_debt_of_Japan
It is actually a great effort to forgive student loans. In US it is one of most debilitating factor for people who went to college (especially the private ones).
Why not do this earlier but wait for an election year? This just looks like a election campaign stunt to me.
https://twitter.com/BrianCDeese/status/1768337427570061737
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
> Prior to Biden’s fixes to PSLF, just around 7,000 borrowers had received debt relief through the over 15-year-old program, according to the administration. Since 2021, it said, 871,000 borrowers have now had their debt canceled under the program.
This is a weird comparison that overlooks that the 10-year period begins at repayment, which is typically at graduation. If you entered college in 2007, graduated in 2011, and made 10 years of payments to become eligible for forgiveness, your first year of eligibility would’ve been 2021.
Also, Obama federalized student loans in 2010, vastly increasing the number of loans eligible for PLSF. Lots of people who got masters degrees or JDs starting in 2010 became eligible for PLSF since 2021.
The reason so few people were qualifying before the program and rules were streamlined was because the rules were confusing and obtuse. Also servicers misled people by telling them they were in the program when they weren’t.
The Dept of Ed under Trump’s secretary went out of the way to block loan forgiveness under another program. I say this to give an example of how bad things were run for some programs. Prior to the current secretary of Ed these things were a shitshow. They still are to some extent but much less so.
All of this to avoid... free education for all with taxpayers money? Because that's socialism?
[1] https://en.wikipedia.org/wiki/Perverse_incentive#The_origina...
The only way we should ever get rid of it is if we return higher education to affordability.