Day 317…
We are in debt.
I can’t say that I really know what that means. The little I know is probably worse than knowing nothing at all.
From a very early age, I have had an accountant do my taxes just so that I didn’t have to know. About a decade ago I decided that I should learn how to take care of myself, financially, and resolved to start doing it myself. That resolve lasted for just under an hour. In that short time, I learned that to truly understand how to follow it all, I would basically need to go back to school.
As the treasurer on our co-op board, I can follow our finances well enough. The building has expenses like taxes and heating oil, and it has revenue from things like the fees that each co-op member pays every month. Those numbers need to balance.
It is relatively straight forward. We have a management company that does most of the heavy lifting and can explain the bumps in the road.
Last year, in consultation with the accountant who oversees our building, I had to suggest to the board that we all temporarily pay somewhat more maintenance in our building. We needed to cover the Local Law 11 mandated upgrades and repairs that were required by the city. The only other option would be to take out a loan.
The assessment, while a fairly significant increase for all of us on a monthly basis, ensured that we, as a building, did not go into debt. In fact, it also ensured that we did not dig into our reserve. In essence, we raised our taxes for a few months.
I freely admit that my understanding of our current national economic position is somewhat sketchy so please feel free to jump in and correct me.
By next year, our debt will surpass our GDP (Gross Domestic Product). That means that more money will be going out that will be coming in. The last time that that happened was in 1946 after World War II.
About $7 trillion of that debt, about a quarter of it, is held by other countries. The five countries that hold most of it are, in order from the top, Japan, China, the United Kingdom, Ireland and Brazil.
It is in those countries best interest to lend us money. The stronger the dollar, the cheaper their goods are for us. Their economies need us to import their goods. We are only going to do that if it’s less expensive for us to do that rather than just make or produce those things ourselves.
The higher the debt, though, the more uncertainty there is over whether we will be able to repay it. That can affect the markets and the confidence of investors. A certain amount of debt is, however, seemingly good for everybody. How much, though, is too much? That is one of the endless debates that have been discussed since time immemorial.
The United States, as a country, has been in debt since 1790.
In recent times, we have seen an almost predictable cycle of Republican administrations raising it and Democratic administrations lowering it or at least trying to. Republicans tend to cut taxes and then increase spending leaving it to the Democrats to have to re-raise those taxes to pay for what they’ve done.
Under Reagan the debt which had largely stabilized in the mid 70’s in terms of its relative percentage of the GDP, rose sharply to over 48%. Clinton got it back down to about 31%. It then went back up again under the second George Bush, who, of course, had cut taxes and then had the 2008 economic crisis hit at the end of his term. To combat that, the Obama administration was somewhat forced into raising the debt. It was at 43.8% when he entered office and at 75.9% when he left.
Then came the last President. His Tax Cuts and Jobs Act diminished revenue by easing the tax burden on the rich. As a result, our debt rose 4% in the first three years of his term and then when the pandemic hit and the economy shut down, it ballooned up to where it is now at just about 100%.
There are four ways that the government can pay down this debt. They can cut government spending, they can raise taxes, they can speed up economic growth or they can shift spending to areas of the economy that will create more jobs.
There is, of course, a fifth way, the country can default. Nobody wants the fifth way. Some combination of the other four is where the magic number lies.
The current push for the $1.9 trillion stimulus bill, while further raising the debt in the short term will hopefully lead to its lowering in the long term. It is designed to put more money into individual American’s pockets which will allow them to spend it on goods and services which will then allow the providers of those goods and services to pay their employees who will then, in turn, use that money to buy more goods and services. And so on.
At some point, the Biden administration is probably going to have to raise taxes. In a way, they’ve been set up to have to do this by the previous administration. Presidents Clinton and Obama were put in the same position.
Republican legislators are already hilariously starting to squawk about the ballooning debt. Last week apparently it was all fine, but this week…? Typical.
It looks like that the only way out of our current debt spiral is to dive further into it.
A friend of mine posted something online about how President Biden’s Executive Order revoking the Keystone XL pipeline was a disaster because of the thousands of jobs that will be lost.
The reasons to quash the pipeline are good ones. Environmentally, pipelines are brutally destructive. Potential spills are a constant threat and are a danger to both wildlife and to the people who live near them. Add to that that the availability of extra crude oil from Canada will only increases our reliance on fossil fuels and further slowdown our transition to alternate greener sources of energy.
There is, indeed, a cost to the President’s decision and my friend is not wrong when he says that jobs will be lost both here and in Canada. In addition to jobs lost, one of the first things that our new President has done is take away a potential market from our neighbors to the north who need it badly. That is going to have a negative effect on their economy.
President Biden is due to make his first call to a foreign leader today. That call is actually going to be to Prime Minister Trudeau of Canada. You can bet that this pipeline is going to be a major topic of conversation. There is a price to be paid for getting rid of Keystone XL and we are going to have to figure out a way to pay it.
I am fully on the side of not letting this pipeline happen. We have got to move away from fossil fuels for the good of our entire planet. We cannot rejoin the Paris accord with one hand and then build a new pipeline with the other. We do have to find a way to bankroll that decision, however. It doesn’t come for free.
The Senate leaders from both parties are now fighting for position like kids on a playground. Whatever balance of power is finally established will dictate how we move forward. Chuck Schumer is, unfortunately, not nearly as ruthless or cold blooded as his Republican counterpart. He needs to stand firm or nothing will happen.
Avril Haines has been confirmed by the Senate as the Director of National Intelligence. Lloyd Austin was also just confirmed as Secretary of Defense. Janet Yellin as Treasury Secretary is up for her confirmation vote today.
Speaker Pelosi has indicated that the article of Impeachment will be delivered to the Senate on Monday so that the President’s impeachment trial could start as early as Tuesday.
Until his Cabinet is fully in place, President Biden is essentially governing through Executive Order. As we saw on the first day, he was able to overturn many of his predecessor’s Executive Orders easily. Actual legislation is needed to create lasting rulings and for that to happen he needs a fully staffed government.
It is so much better to be watching our government work, albeit in its usual slow and somewhat plodding way, than it was worrying that we were going to be overrun by radical right terrorists and shot on sight in the streets.
We have lived with an overriding sense of that fear for so long that I feel somewhat adrift in its absence. While I know it isn’t actually gone, and those people have not magically seen the light and converted to a less virulent form of thinking, it does seem that they have been somewhat sidelined - if only for the moment.
QAnon supporters who were all counting on the “storm” that was promised would unfold on January 20th are reeling.
Q had told them that the former President was going to rain down his might and expose and bring down the deep state ring of child-trafficking Democrats. A new state was going to be born from the ashes and they would all rule.
Well, Q, remained silent. Instead of raining down anything, the former President just slunk away down to Florida where he has been spotted playing golf. Quietly. Hundreds of insurgents from the January 6 uprising have either been arrested or are under investigation. Friends, family and neighbors are turning them all in. The militias have been banished from popular social media sites and are trying to reach out to each other on other fringe sites.
The founder of a message board called 8chan who many suspect as possibly being the infamous Q told believers to keep their chins up and get back to their lives.
The Proud Boys, the white supremacist misogynist militia who were among the staunchest supporters of the ex-President have now turned on him. Calling him, “extraordinarily weak,” and saying that, “Trump will go down as a total failure,” they seem uncertain of where to go next. Other militia groups, the Oath Keepers, America First and the Three Percenters have also risen against him on the far-right message platforms.
We haven’t seen the last of these groups by a long shot. We need to remain vigilant against the rise of another charismatic leader who could emerge to re-unite them. For the moment, though, they’ve at least been stunned.
The former President is now facing a seemingly insurmountable wall of lawsuits ahead of him. As he starts trying to get past them all, his former followers are going to be on the lookout for a new leader.
I don’t mind paying income taxes any more than I mind paying the maintenance on our apartment. Sure, it would be nice to get everything for free, but it doesn’t work that way.
It is much easier paying taxes when the people in charge are spending our money in a way that I agree with, so that’s why I go out to vote. Even when my party is not in office, there are extremely worthy programs that need funding and I try to think of our money going to support them.
After breakfast, I am going to go out and mail some stuff at the Post Office. I am then going to take a walk and probably pick up a few things as I go. All of the money that I am going to use to do these things will be from the money going into my account every week from state and federal relief programs.
The money that we are getting from the government to live on during this crisis is not a gift. It’s actually our money being paid back to us from the money that we have paid in. They are paying it out to us so that we can go out and spend it and keep the machinery of our economy moving forward.
We will then pay taxes on that money. It seems utterly ridiculous that money that we paid to the government in taxes in the first place is being paid back to us and then we will be taxed on it again.
It all, apparently, makes sense when you look at it on a spreadsheet. It seems that if one goes to school to learn about finance that you can follow the reasoning.
Whatever. At the moment we need more coffee and some dishwashing liquid, so I am going to go out and get some.
We’ve elected a whole government’s worth of people to deal with our debt, so I am going to choose not to worry about it. Too much. Hopefully, Janet Yellin will be confirmed later today as Secretary of the Treasury, and she can start to worry about it for us.
We should all send her something to thank her for her service in advance. She has a lot of work ahead of her. It’s going to be brutal.
The gift would help out a small business and the postage would help out the Post Office.
It’s a perfect win-win.
❤️Win Win.... I get God’s got this one