U.S. debt-to-GDP ratio reaches 123%(fred.stlouisfed.org) |
U.S. debt-to-GDP ratio reaches 123%(fred.stlouisfed.org) |
The hypothesis is that lowering taxes rates will actually increase government revenues.
The Trump cuts don't feel like they're laffer optimal. Instead they feel like political capture by the wealthy class. A cumulative of left of laffer optimal tax strategies over the past years have resulted in a deficit growing at rates which now exceed what a laffer peak rate would now support.
- the rich got their tax breaks, and have contributed to deficits for decades. Now they complain that social security entitlements must be cut to keep within our means.
Iran War Cost Tracker - https://news.ycombinator.com/item?id=47237080 - March 2026 (446 comments)
Pentagon Tells Congress First Week of Iran War Cost More Than $11.3 Billion - https://www.nytimes.com/2026/03/11/world/middleeast/iran-war... | https://archive.today/Q4oDX - March 11th, 2026
Consumer energy excess cost burden is ~$76B as of this comment (indirect regressive consumer tax):
https://iranwarcost.watson.brown.edu/
> Meanwhile, Medicare, Medicaid, and Social Security each grew around $100 billion in the last year.
While we should be efficient with these programs, that's what government is for, and what I pay US federal taxes for: to take care of my fellow citizens. Not to bomb innocent people with overpriced military industrial complex hardware on the other side of the world for illegitimate reasons (F-35 program costs now exceed $2T, for example).
https://usafacts.org/government-spending/
Pentagon Fails Eighth Audit, Eyes 2028 Turnaround - https://www.military.com/feature/2025/12/24/pentagon-fails-e... - December 24th, 2025
Annual net interest on debt is ~$900B/year, as of this comment; we could replace Medicare and Medicaid with Medicare for All for ~$2T/year, which would contribute to constraining healthcare spending increases: https://news.ycombinator.com/item?id=48666290. It is an active choice to continue to operate the entire system inefficiently; we could make other, better choices. The inefficiency and debt growth is a result of operating the system for entrenched interests to profit off of the dysfunction.
Which is an intentional strategy to repeal social programs that they’d never get the votes to do so via legislation
It could be a very messy bubble if/when it collapses, and I think our way out at this point would have to be AI-driven productivity gains. Hopefully Altman's little wish-granting machine ends up being accurate.
> Basically, America has an economy that is buoyed by AI development and infrastructure spending right now but is poised to pop and the national debt has been ballooned by two to three generations of political leadership failing to properly address underlying issues and instead printing money.
Maybe we shouldn't have spent five decades giving the wealthy tax break after tax break while hollowing out the middle class and suppressing wages with union busting and globalization. Productivity is up ~90% over this time frame, and most of the gains have gone to the top 1%. But here we are. The bill has come due for strip mining the country economically, and taxes will go up to pay down this debt (because only the top ~40% of income earners have enough income to have a federal tax liability). We will fix this eventually through demographic compression (economic growth comes, broadly speaking, from population growth and the US has reached peak population; forward growth will be substantially lower than the past when the population was growing rapidly), politics, and the bond market forcing the US government to raise taxes (“bond vigilantes”).
That is, suppose two countries both have $100B in debt. One of them is a small island nation; the other is a global superpower. Obviously the global superpower will be better able to handle that - dividing by GDP helps make that clear.
However, this simple division doesn't tell you some important things. How much of the debt comes due very soon? It's worse if the answer is "most of it." How was it incurred? "Winning a war" is much better than "losing a war."
The United States has lots of debt, and personally I'm worried about the long term serviceability of it. But the ratio to GDP isn't why!
You guys are too powerful.
And I say that as an absolute hater of how the pols run the place (yes both sides. One for having no sense of how to manage money and the other having some sense but ignoring it; one of these is objectively worse than the other (yep, I said it, objectively!)).
Seems like the end goal is not to have a country left but instead a bunch of factions more likely to be at war fighting over cash, resources and culture issues. Depressing as fuck for those of us not excited about that end goal.
This bad boy can hold a LOT of debt.
On the contrary, trivial amounts of money with usury can ruin you financially.
Sounds like a great idea, right? But what if something out of your control[1] happens, and average interest rates on the debt burden go up from 2% to 14%? The USA can't afford to just pay off all of its debts. It must continuallly roll over it's old debts to new debts, and could easily find itself in a situation where debt servicing costs go up by an order of magnitude if the fiscal situation changes for long enough.
[1] Or in the case of the United States, you do something very stupid and very inside of your control
Applies only if you are the reserve currency, label everyone else who don't use your currency the way you want it as currency manipulators and you can take whatever debt you want because well the printer can pay everything back in the future.
It is the ultimate tragedy of the commons.
None of this will get solved until a crisis
Countries put up with it because the US "provided protection" and insured maritime freedom of navigation. Oh wait ...
123% comparatively speaking isn't great, but it's not shockingly terrible.
> US 30-year Treasury yields just hit 5.2% — the highest level since July 2007. UK gilt yields are at levels not seen since 1998. Japanese bond yields are at record highs. Something is happening in global bond markets, and it's not just about inflation. In this video I explain what's driving the global rise in long-term borrowing costs, why the era of free money is probably over, and what fiscal dominance means for central bank independence. I cover the history of US presidents fighting with the Federal Reserve — including LBJ shoving his Fed Chair against a wall — the 1970s UK economic collapse, the Liz Truss mini-budget crisis, the role of private credit and off-balance-sheet SPVs in financing the AI boom, and what all of this means for the new Federal Reserve Chair Kevin Warsh.
And that's excluding the huge amount of multi tiered private credit.
While this is not an indication of anything bad on its own it definitely creates the conditions for cataclysms.
It's like being on a very very dry hay field, it does not mean that you're bound to die on fire, it just means that the risks of a fire being extremely destructive are high.
It appeared to drop from the 2020 highs, yes.
But it's definitely trending upward.
If you're not - this is the 10th worst ratio in the world. The only countries worse are: Venezuela, Japan, Sudan, Singapore, Eritrea, Bahrain, Greece, Lebanon, and Italy. The difference has historically been that we've been able to exploit the dollar, export our inflation, and so on - but those times are fading.
...Actually I have an NFT of some beachfront property.
The "masses" are well aware of crypto at this point and BTC is down 47% over this past year. It's just not that useful unless you're trying to skirt laws/regulations[1] or LARPing as a sovereign citizen.
1: Yes, I know, BTC is not even good pick for financial crimes either.
It's too late for my kids but if i'm ever lucky enough to have grandkids part of their bday and Christmas gifts will be deposits.
Past performance is not a predictor of future returns.
It's the old saying, if you owe the bank $1,000 then you have a problem. But if you owe the bank a trillion dollars then the bank has a problem.
Especially when that trillion dollars was spent on an insane fleet of aircraft carriers.
The reality is that purposefully inflating your currency to reduce your debt burden is going to upset your creditors just as much as if you just defaulted on your debts, but will have the added affect of crippling your economy with inflation. Look at how much Americans freaked out over a year or two of 6% yearly inflation. How do you think Americans would respond to 30% *monthly* inflation like in Argentina or Turkey?
It's not like lenders won't notice if the USA tried to print its way out of debt.
It makes more sense to conceptualise it as the total size of a giant savings account run by the government.
We are walking further out on the ice but that is measured more in other ways - with harder metrics like inflation, access to cheap energy, resources, industrial density and capabilities and access to technology - not this headline number.
There's a LOT of reasons for them to not want to do that, and the status quo benefits a lot of other powerful players as well, but screwing up treasuries would be a quick way to change that math.
One can get away with being an asshole only so long.
And that's not a problem that's solvable with military might! "Investors around the world are declining to buy US government bonds" can't be bombed the way an oil refinery can be.
And what about the American public? Look at how much Americans freaked out over a year or two of 6% yearly inflation. How do you think Americans would respond to 30% monthly inflation like in Argentina or Turkey?
The problem is if nobody wants to buy new bonds, of course.
no, sometimes they literally do exactly that.
google for quantitative easing. that's what it is and it's a tool that can always be used by monetarily sovereign countries to bring bond interest rates down by as much as they want.
insolvency thus isnt possible.
it won't be the wealthy or cash-under-the-table classes paying these taxes, the increases will be in the income brackets. Which means paycheck receiving working stiffs ( middle and upper-middle class ) and retierees drawing from a 401k/IRA are the ones who will pay just like always.
Hell, between PPP and the OBBB tax cuts, rich people are getting $2T over from the YS Governemnt from 2020-2030. It’ll keep happening too, this country is an oligarchy now. Wish it wouldn’t but I don’t see a sea change coming, just further concentration of wealth and power.
Regardless, the federal government's job is, in fact, to bomb hostile countries that threaten shipping lanes. That's the federal government's actual job, not social welfare. I agree that we mistakenly precipitated the situation that now threatens the shipping lanes, but we are where we are. And it's not like that dry firewood wasn't already there.
I also don't understand the emotionalism of "fellow citizens." "American" is a label for a group of consumers living within a defined border, who want to get their oil and foreign goods shipped to that location. It's even more clear today that keeping shipping lanes open is the federal government's core responsibility than it was in 1789.
> "American" is a label for a group of consumers living within a defined border, who want to get their oil and foreign goods shipped to that location.
Holy shit.
For you to deny that social spending is problem (especially for what it does buy) totally denigrates you and your position.
For historical context, this is exactly what happened when the US was on the brink of leaving the gold standard.
> From 1963 to 1966, France secretly implemented Operation Vide-Gousset to repatriate 3,313 tons of gold reserves from the Bank of England and the New York Federal Reserve. It took over 44 boat trips and 129 flights to export the gold back to the Banque de France. Since France converted its dollar holdings into gold, the French made out well when the dollar fell during the Bretton Woods period and lost 96% of its value against gold. France then withdrew from the London Gold Pool in 1966 after recovering its gold holdings to force the US to endure heavier losses.
https://www.armstrongeconomics.com/markets-by-sector/preciou...
the scale of problem is much worse when Haiti was forced to pay France a debt for freeing itself of slavery. Having to produce physical goods and sell them is much harder than giving out paper or adjusting numbers
Inflating away your currency has the same effect with the added downside of destroying your economy simultaneously.
________
In fact, the only time I can really see the argument for wanting the ability to inflate away currency to escape debt is if the country is weak and in a precarious enough position that they are legitimately worried that actually formally defaulting would lead to an invasion.
1. Extremely painful to Americans, and became one of the main pillars of their election.
2. Nowhere near high enough to cause any reduction in the USA's debt burden.
I think modern Americans are way too soft to even imagine the sort of inflation that'd be required to erase their debts. Things have been too good and too stable for too long to understand what country-wide economic hardship would be like, and even if they somehow decided to choose that path, they'd panic quit it long before it was done long enough to have any effect.
2. Do you think Americans would tolerate having a government that purposefully suppresses their purchasing power through structurally low wages, and buying up foreign assets to supress the value of their own currency?
3. The part where China spends all their cash to buy US Treasuries to supress the value of their currency wouldn't really work as well for the USA when international trade is dollar denominated anyways, and the bulk of their GDP comes from domestic consumption.
4. The USA has a deficit. It'd need to borrow even more in order to finance the suppression of their currency, whereas China just redirects the money they earn from export surpluses.
In practice though tax cuts usually make rich richer without helping the economy to grow (because of lobbying/corruption).
This is being generous. It's much simpler.
The poor don't pay any federal taxes at all so you can't give them a tax cut because they don't pay any. You can give them a credit at best.
Edit:
Some data
> Another 60.3 million returns showed AGIs of less than $30,000. The average effective tax rate for those taxpayers was 1.5%, even before refundable tax credits were applied.
From: https://www.pewresearch.org/short-reads/2023/04/18/who-pays-...
Even if we exclude poor there are many options how to split taxes between different income brackets, how to tax salaries vs capital gain, how to split taxes between individuals and businesses, how to avoid loopholes e. t. c. (e. g. in the UK I see small business struggling because of rising taxes while multinationals pay little taxes by moving profits offshore and reporting no profits in the UK).
And the other half thinks you can pay for a European-style welfare state without European-style middle class taxes. Americans are Disney adults.
Republicans are the only party that in the 21st century acts as though we can simultaneously cut taxes and increase spending and everything will be fine.
What does change(and is more important) is Debt/Revenue:
https://fred.stlouisfed.org/graph/?g=TZfm
The ratio is looking like it is trending in the right direction. If GDP decreases while nominal tax receipts increase, GDP does not change the debt, while the debt/Revenue ratio looks good for paying bills, while not boding well for economic health.
What is this "real world" you are referring to? There has to be a balance between current and future expenditures and economic health to facilitate these. Nothing exists in a vacuum.
Republicans may generally prefer creating money over destroying money, but that doesn't mean they aren't applying taxation. "Tax cuts" in normal speak just means a reduction in how much money is being destroyed. It does not refer to a reduction in your tax burden.
Here is some absurd garbage your US taxes paid for:
•$1.5 Million studying the effects of yoga on goats
•$1.7 billion maintaining empty buildings
•$5 million on a campaign to promote an alternative music scene to get hipsters to stop smoking
•$2 million to create an internship program that resulted in the hiring of one full-time employee at the Department of agriculture
•In 2021 alone, the government managed to misplace $281 billion in payments
•$1 million studying the effects of music on dairy cows
•$1.7 million to study the effects of alcohol on fish
Some grad student studies the effects of alcohol on fish, learns something new about biology, publishes it so that other students and researchers learn about it, and a few years later after some new studies based on that initial research we get a new cancer drug.
Somebody spends $1 million studying the effects of music on dairy cows, learns that they produce more milk if calming music is played and farmers increase revenues by $10 million per year by adding speakers to their milking rooms.
The billions of dollars spent blowing up infrastructure in the middle east is just a loss, but money spent on research is how we've cured diseases, increased crop yields, launched satellites, and made it so that everyone can have a supercomputer in their pocket that can stream HD video through the air.
Because the private sector doesn't spend any money on things that don't work out.
Sometimes you win, sometimes you lose.
You talk about millions, that's not even a rounding error. Look around you in any private entity, you don't see them spending any tiny fraction on things you don't think are worthwhile?
> $1.7 billion maintaining empty buildings
Assuming they at some point become occupied again, I don't see the issue. The vacancy rate in the private sector isn't anywhere near 0% either.
> In 2021 alone, the government managed to misplace $281 billion in payments
You'll need to be way more specific than 'misplaced'
A few others I can think of:
Government insurance/funding for homes destroyed by natural disasters - why am I bailing out Florida homeowners when their home is destroyed by a hurricane? At best you get the first one free and then you're on your own after that.
Billions for highway construction that is not needed, which then costs more to maintain and results in more spending on cars, more deaths, higher costs for insurance, &c.
Various improper payments, billions in subsidies handed out, COVID-19 bailouts and forgiveness
That said, 1.5 million on goats, 1 on cows, 1.7 million on fish, these are all perfectly reasonable research costs compared to the potential benefit to agriculture on the scale of the USA, well within the "throw it at the wall and see what sticks" kind of territory; likewise 5 on an anti-smoking campaign and th health burden of smoking in a nation as big as the USA.
$859 billion to DoD
$339 billion Veterans benefits
Then when we look at the $952 billion in interest, a good chunk of that is due to past military spending.
Plus even more - tens of billions of the military nuclear budget is done via the DoE, not the DoD in the budget line.
There's always a hand waving that previous debts accumulated like veteran's benefits and military related debt interest are not military spending, but they obviously are.
There's room to debate military spending, but if you view the world as a dangerous place and that the US should not become isolationist, we have to spend the money and have equipment ready and capable whether that's in Europe or in Asia. Alternatively we can disband much of the military, stop paying for this stuff, withdraw from NATO, remove overseas bases in countries like Japan and South Korea, and leave the world to deal with its own problems.
I agree but i wouldn't be that upset if that money was spent on soldier's pay and buying things or R/D from US companies built in the United States while employing US citizens. To me, that's a decent tax/spend jobs program. Now, military money flowing overseas and propping up some other economy? There could be valid reasons but that deserves to go under a microscope.
Making fun of science that politicians, wanna be politicians, and conservative media don’t remotely understand in order to deflect and hide actual economic problems they cause is a favorite pastime, but is almost always misleading.
The goat yoga thing isn’t true, it’s pure viral talking point made up nonsense. (And none of the points are made in good faith.) Don’t believe everything you read on the internet, especially if Elon Musk retweets it.
the people who came up with these spends thought hard about what to do and how
Exactly. Also known as a tax. You can make someone poorer by taking their money and destroying it, or you can make someone poorer by letting them keep their money and devalue it by creating more. Same coin no matter which side you want to look at it. There is no such thing as a free lunch. The taxes are always going to get paid in the end. The only choice is in exactly how you want to pay it. Each method has its own set of tradeoffs, so, like with everything, different groups understandably believe in different methods. In practice, both methods will be used. Nobody, apart from the previous commenter, is ever completely hardline "money must only be destroyed" or "money must only be created", but groups will still debate over what is the optimal ratio.
and so far it does not appear that reducing waste would properly fund the government? a couple patriot missiles worth is not the debt, and would not allow for much more efficient single payer health care - the single biggest opportunity the US government has to reduce waste in american society
But let's not make some bullshit up about a million dollars wasted on some non-sense, when we have real problems with the DoW, which can't even audit itself, sucking up almost a trillion dollars.
Hi former active duty soldier here - I'm all for generally increasing pay, but you're just making claims here without any basis for them. It cost a lot of money to maintain the industries capable of producing weapons. We can stop the spending, but then they go out of business and now that capability is lost. Look at Europe. Depends on the details. What specific waste are you talking about? Here's [1] an article that came out recently highlighting how much of our explosives and munitions manufacturing is reliant on just a few locations - cut the DoD budget, and then these are the kinds of things that happen.
Secondly, you have no expertise or authority to make claims as to whether we're spending the right amount of money - whether that's too little or too much, without additional specific logic or factual claims. When you say the DoD is sucking up a trillion dollars you're implying that it's all waste - sorry don't think that's true. And when you look at the performance of equipment that other countries provide versus the US, you know our stuff actually works as advertised. Maybe the US is actually spending too little, and other countries are spending proportionally much less on vaporware?
[1] https://www.wsj.com/world/europe/western-powers-race-to-brin...
> you have no expertise or authority to make claims as to whether we're spending the right amount of money
To
> Maybe the US is actually spending too little, and other countries are spending proportionally much less on vaporware?
But more on topic, the real question is if this is spending that is worth going into debt for. No family anywhere in the world can sustain a long period of overspending relative to income.
You talk about weapons and stuff but just understand that you're handing over your bargaining power because the rest of the world controls your debt. And at these ratios thats significant leverage.
By now you can win a war without a single shot being fired.
Most of that money ends up being spent in communities (grocery stores etc) and hospitals. So at least that money flows back into a local community.
There's plenty wrong with the US healthcare system, but since the vast majority gets their healthcare through their employer you'll have to come up with something for when they retire or unable to work. That's just an outcome of how the system was set up.
No, snide and wrong is extremely different!
Social Security spending is already funded by a separate tax and currently running a surplus. It's what our legislators are are debt to when use the discretionary budget to let the President start a game of Battleship in the straight of Hormuz.
Snide and wrong! You must be talking about the OP then and not me.
> Social Security spending is already funded by a separate tax and currently running a surplus.
If someone doesn't want to pay in to it, what difference does whether it's fully-funded or not make?
> It's what our legislators are are debt to when use the discretionary budget to let the President start a game of Battleship in the straight of Hormuz.
Or when they enact a pet project you agree with and others disagree with.
You made a general, pedestrian claim about spending, I questioned your claim based on what you wrote. That's all. I wouldn't read in to it more than that.
> But more on topic, the real question is if this is spending that is worth going into debt for. No family anywhere in the world can sustain a long period of overspending relative to income.
Sure but then we can just cut in other areas that aren't the military, if that's what we decide to do. You're not making a serious claim that we're overspending.
> You talk about weapons and stuff but just understand that you're handing over your bargaining power because the rest of the world controls your debt. And at these ratios thats significant leverage.
Not really. Most US debt is owed to Americans, and in the circumstances in which we're worried about some other country amassing so much debt that they can leverage us, well, it's a good thing we bought all those ships, planes, and tanks and whatnot so we can fix the issue with kinetic force.
> By now you can win a war without a single shot being fired.
Yea true enough in some cases. I'm not sure I'd disband the US military, withdraw from NATO, relocate US personnel from overseas bases supporting allies in the Philippines, Japan, Korea, and elsewhere under the assumption that maybe we can win a war without any weapons. But I'm certainly interested in your view here.
I didn't do anything, that wasn't me.
> You're not making a serious claim that we're overspending.
This is the thread about debt to GDP ratio hitting 123%. I don't claim anything, but if this isn't overspending then I think we agree to disagree.
> Not really. Most US debt is owed to Americans, and in the circumstances in which we're worried about some other country amassing so much debt that they can leverage us, well, it's a good thing we bought all those ships, planes, and tanks and whatnot so we can fix the issue with kinetic force.
According to [1], 23.5% is owned by foreign investors. That's a minority of the total, but you don't need a majority to cause a big problem because trust is all that matters (see 2008).
You want to solve that with weapons?? That'll only make everyone drop the dollar, as simple as that.
> But I'm certainly interested in your view here.
The US military is there in all of those countries for influence, more so than for actual defense. The US can defend every NATO country simply by reaffirming article 5, you don't have to be present.
Not even Russia would attempt an attack, they've been in a war of attrition for years now with a non NATO country with no end in sight for limited gains in territory.
They've done this for the past 70 years, starting from 1945. Whether this is something the US has benefitted from can be debated, I think they certainly have.
The Russia vs Ukraine war and the Iran conflict show that super powers can try to use their military power but 'winning' is hard. No matter how superior you are based on the numbers. Iran isn't winning on the battlefield, their most potent weapon is economic, that has turned out to be more powerful than all their weapons combined.
1: https://www.us-debt-clock.com/blog/who-owns-us-debt-breakdow...
Ok you're defending it.
> I don't claim anything, but if this isn't overspending then I think we agree to disagree.
Ok if it's over-spending then let's cut the programs that align with my ideology instead of cutting military spending.
> You want to solve that with weapons?? That'll only make everyone drop the dollar, as simple as that.
Not worried at all - those dollars become worthless in a fire sale. The strength of the dollar is because of the actual physical reality and capabilities of the United States.
> The Russia vs Ukraine war and the Iran conflict show that super powers can try to use their military power but 'winning' is hard. No matter how superior you are based on the numbers. Iran isn't winning on the battlefield, their most potent weapon is economic, that has turned out to be more powerful than all their weapons combined.
You're directionally right but also wrong w.r.t America. What you've shown here isn't a weakness of the US, but a strength of the US. Unlike Russia we spend and that spending (overspending according to some) ensures that our equipment works. That's why when Iran went and bought Russian and Chinese air defense for example, we blew it up with impunity.
Iran is of course hard because we have some political considerations which would only get worse over time as we would have continued to do nothing, Iran would build more missiles and drones and then seize control of the Strait of Hormuz and then it would be too costly to do anything to stop them from doing that or continuing their nuclear weapons program.
Specifically in the case of economic warfare, Iran is losing badly. The worst outcome is some MAGA coal rollers have to pay more for gas. Iran's economy literally doesn't function due to our blockade (which means we also control the Strait of Hormuz). I'd rather pay extra at the pump (well I drive an EV but w/e) then have like 80% of my economy held hostage.
But this also reinforces the need for a higher military budget and the need to spend more to acquire more arms and capabilities. By the way, the military budget isn't actually that high as a percentage of GDP. You're welcome to do that comparison yourself.