Why is the discussion limited to government finances? All private financial assets--stocks, bonds, derivatives, whatever--are claims on future economic activity. In order to achieve its expected performance, the DJIA will need to reach 84,000 in 10 years. Corporate revenues will need to support that. Apple will need to sell twice as many products. That will require further federal spending. No one is asking the banking system to destroy the $18 trillion bubble in outstanding credit it has created, and that individuals finance with monthly payments. If the gov't balanced its budget or erased the national debt, all private assets would deflate. The gov't in short is not an albatross around the neck of the private economy; its spending holds up the high asset values in the private economy. It would be great to deleverage the whole overpriced contraption... but who wants to be the first to sell his house at half price? Or take half his Social Security benefits.
Agree that all need to be addressed at the same time - the tax system, entitlements for the elderly and all other entitlements. The tax system needs to be simplified and it needs to use algebra to tie tax rates to spending, to produce balanced budgets absent national emergencies or significant recession or worse. Social Security needs to be gradually moved from a pure defined benefit (DB) to a DB/DC (defined contribution) system with reasonable match money. The retirement age for both SS and Medicare need to be gradually moved back, at least to 70. For other entitlements, we need to encourage traditional marriage and stop encouraging single parents and also stop encouraging single moms from having more kids while remaining single.
Why is the discussion limited to government finances? All private financial assets--stocks, bonds, derivatives, whatever--are claims on future economic activity. In order to achieve its expected performance, the DJIA will need to reach 84,000 in 10 years. Corporate revenues will need to support that. Apple will need to sell twice as many products. That will require further federal spending. No one is asking the banking system to destroy the $18 trillion bubble in outstanding credit it has created, and that individuals finance with monthly payments. If the gov't balanced its budget or erased the national debt, all private assets would deflate. The gov't in short is not an albatross around the neck of the private economy; its spending holds up the high asset values in the private economy. It would be great to deleverage the whole overpriced contraption... but who wants to be the first to sell his house at half price? Or take half his Social Security benefits.
So, what affect would a reconciliation bill (aka "one big beautiful bill") have on this...how much worse can it get?
Agree that all need to be addressed at the same time - the tax system, entitlements for the elderly and all other entitlements. The tax system needs to be simplified and it needs to use algebra to tie tax rates to spending, to produce balanced budgets absent national emergencies or significant recession or worse. Social Security needs to be gradually moved from a pure defined benefit (DB) to a DB/DC (defined contribution) system with reasonable match money. The retirement age for both SS and Medicare need to be gradually moved back, at least to 70. For other entitlements, we need to encourage traditional marriage and stop encouraging single parents and also stop encouraging single moms from having more kids while remaining single.