Intergenerational Debt

[AZRedhawk44]

…we shall all consider ourselves unauthorized to saddle posterity with our debts, and morally bound to pay them ourselves…
–Thomas Jefferson to J.W. Eppes, 11 Sept. 1813

I had me an idea.

Probably a bad idea, but tell me what you all think.

It was the Great Depression generation, the WWII generation, and the generations leading up to the end of the Cold War that created our tradition of debt spending, right?

What if, for perhaps the next 30 years, we prohibited inheritance and instead had all assets of the dead go towards the national debt?  Since it would have been those generations that created the debt in the first place?

I would stand to lose a lot from such a measure... my grandparents are worth at least a couple mil.  My mom and dad get 100% of that, and I only have 1 sibling.

Between that and a Constitutional Amendment to prohibit deficit spending... could we turn the debt curve?  Then lower taxes once the govt doesn't have to pay interest and principal payments on the debt?

[lupinus]

So, we should seize all assets once a person dies.  Ensuring that their decedents get nothing of it?

Yeah I'm sure that will go over well

[Fjolnirsson]

No.

Understand, I will inherit nothing, as my older sibling has leached off of my parents for the last 20 years or so, destroying any wealth they might have passed on. So it doesn't affect me personally. However, the government will not go away if we feed it. Like a stray cat on the porch, once you set down the food bowl, you have to keep it or shoot it. It won't go away on it's own.

My ancestors once raided up and down the English coastline. The anglos had a bright idea. If they paid the vikings, perhaps they would go away. It worked, until the next year. Every year, the longships would come back, and the Angles would pay a higher "Danegeld" to send the raiders away.

[Monkeyleg]

So, we should take money from people who didn't cause the debt (non-legislators) and give the money to people who didn't earn that money (future legislators)?

[AZRedhawk44]

So, we should take money from people who didn't cause the debt (non-legislators) and give the money to people who didn't earn that money (future legislators)?

Word it in such a way that the takings MUST be applied to the national debt, and that adding to the national debt by running up a deficit is illegal, voting for which in Congress is punishable by severe prison sentences.  Abolish voice vote and require roll call for all spending bills.

I know... it'll never work.

But, I started the post with the Jefferson quote because... the people who created the debt are starting to die.  They VOTED for the legislators that created the debt, and didn't hold those legislators accountable for that vote if they disagreed with it.

Who better to pay for it?  Them?  Or the next generation(s)?

[Hawkmoon]

How about we just skip the inheritance forfeiture bit and get to the sensible parts of your plan:

(a) No more deficit spending. PERIOD.

(b) The annual budget MUST include a line item (funded) for paying down the national debt.

That would do it, for me.

[Headless Thompson Gunner]

Yup.  Nevermind trying to get money back from past generations.  They stole our future and got away with it, and there's nothing we can do about it now.

What we can do is stop accumulating even more debt.  No more debt.  Period.  Constitutional amendment.  Eventually we'll get the old debt payed down, or the economy will outgrow it.

[Balog]

Word it in such a way that the takings MUST be applied to the national debt, and that adding to the national debt by running up a deficit is illegal, voting for which in Congress is punishable by severe prison sentences.  Abolish voice vote and require roll call for all spending bills.

I know... it'll never work.

But, I started the post with the Jefferson quote because... the people who created the debt are starting to die.  They VOTED for the legislators that created the debt, and didn't hold those legislators accountable for that vote if they disagreed with it.

Who better to pay for it?  Them?  Or the next generation(s)?

Explain to me how this in any way punishes those people? Aside from the massively tyrannical property confiscation issues, it hurts people who's parents did something stupid. Way to go, you.

That being said, what about the record debts Obama is running up? Shall we confiscate property from everyone currently of voting age? After all, we did elect these critters, right?

[Monkeyleg]

Hawkmoon, it would be interesting to figure out if the government could operate the way you've laid things out. If so, that would be a fine plan to push.

[Perd Hapley]

I propose an alternate plan, in which anyone who advocates such things has their computer taken from them.  Along with their vital organs. 

Present company excepted, of course.  

[Standing Wolf]

Probably a bad idea, but tell me what you all think.

Sounds like a Marxist's dream come true: free money for the state taken from serfs who are in no position to resist.

The obvious American solution is a constitutional amendment to limit the size and debts of the federal government. The founding fathers would fight for it.

[MicroBalrog]

A document to limit the scope of Federal government? It seems to me this has been tried before.

[RaspberrySurprise]

AZ if you think a lot of people would be shooting people if the government tried to take away their guns imagine just how many would be doing it if you tried to implement your plan. There would be people who don't even own or like guns right now going out to buy them.

[RevDisk]

Between that and a Constitutional Amendment to prohibit deficit spending... could we turn the debt curve?  Then lower taxes once the govt doesn't have to pay interest and principal payments on the debt?

Stealing from the dead wouldn't go over exactly too well.  And you could buy a lot of politicians for a fraction of the price of losing your inheretence.  For instance, if I was going to inheret $100k and the socialists wanted me to pay 100% tax on it to pay for their ill conceived socialist programs, I'd gladly bribe a politician or PAC with a healthy percentage to squash that.  Any capitalist would prefer to lose 10% semivoluntarily than 100% with a gun to your head. 

Best way to go would be a Constitutional amendment banning deficit spending, with no exemptions.  As treasury securities are redeemed, they are taken out of the pool.  Debt holders having priority before any govt spending for the budget (that currently is the case anyways).  That way you have a nice, gradual reduction of the national debt. 

I don't expect taxes to go down any significant amount.  They can't without cutting spending.  Taxes are already way too low for our current spending.  Tax revenue should be doubled, which means more than doubling the current taxes rates.  Sound stupid?  Not nearly as stupid as borrowing 50 cents (1.8t) for every dollar you spend (3.6t), as we are currently doing.  Tax and spend is cheaper in the long run than borrow and spend. 

I can very much say that we will NOT significantly cut spending, mandate balanced budgets, eliminate deficit spending, or pay down the national debt.  It will not happen.  We will continue until we hit a huge speed bump, which will consist of a treasury security audition failing.  That's not the end of the world, the interest rate of all treasury securities will increase until folks do buy the securities.  No, hitting the brick wall will be the first payment missed on any single security.  Then stuff crumples in very short order.  People will not buy any more securities, and the govt halts in place.

The only solutions at that point will be to cut spending drastically, jump up taxes dramatically, default on the debt, or cause hyperinflation.  Pretty much all banana republics have picked "jump up taxes" and (default OR hyperinflation).  At which point, they usually become failed states and start having internal stability problems.

That's our future too, I'm guessing.

[FTA84]

Frankly, few Americans will ever pay for our debt.  We will either have to hyper inflate it away or simply default, either way, it is other countries that will be paying for our elected officials mismanagement of funds.

The problem with national debt is that to pay it off, we first have to stop increasing it, and then cut programs to start paying back on the debt.  The problem is that it is currently career suicide for any politician, so instead, they are just playing a game of hot potato.

[taurusowner]

I'm not sure how the OP thinks massive government forced confiscation of personal property is a solution to anything.

[Headless Thompson Gunner]

I'm not sure how the OP thinks massive government forced confiscation of personal property is a solution to anything.

It's the closest we can come to making those responsible for those debts pay for them.  Not saying that's good or bad.

[Headless Thompson Gunner]

I wonder if people 2 or 3 generations from now are going to look back at us in the same way?  We're set to double the national debt over the next few years, and those future generations are going to have to repay it.

"But Grandpa, how could you do that to us?"

 :|

[RevDisk]

I wonder if people 2 or 3 generations from now are going to look back at us in the same way?  We're set to double the national debt over the next few years, and those future generations are going to have to repay it.

"But Grandpa, how could you do that to us?"

 :|

And they'd be right to ask that question.  Hopefully folks will be able to honestly say "I tried my best, but there were too many idiots" instead "eh, I figured I'd be dead by now so I wouldn't have to answer your pesky questions".

[GigaBuist]

Debt isn't all bad. As far as I know we've, as a country, only been debt free for one day: Jan 8, 1835 under Andrew Jackson. You just have to keep it proportional to your income.  Now, I'm quite certain that if you charted out debt vs. GDP you'd see some scary stuff since the '80's or so.  The OP pointed back to FDR as the start of it all but I'm not sure that's where we really went awry. 

Deficit spending by government entities isn't all bad either.  Michigan, my state, amended their constitution a few years back to prevent it.  Seems like a good idea but it forces one to make bad decisions.  We're currently tearing up paved roads and replacing them with gravel because it's not in our budget to maintain them this year.  We're also planning on shutting down prisons.  All bad things long term for us.  If I were to make an analogy that would apply to personal finances it'd be like refusing to borrow a few hundred dollars from a family member when you've lost your job to keep a car from being repossessed.  Or in the business world it'd be like closing the doors on your company because you wouldn't take a loan out to cover payroll for a bad quarter.  In some situations going a bit into debt just to keep things rolling makes sense because the cost of restarting would be incredibly higher than the interest on the loan.

The problem with our various government entities, generally speaking, is they never seem to skimp on new projects when they're trying to pay down that old debt.  Ideally we'd have some sort of well structured rules in place that determines what those limits are but that's an awfully complicated, and not even concrete, problem to solve.

You probably couldn't get much of a consensus out of people that know what they're doing with money to agree on a plan.  Getting the people as a whole to agree, and hold the legislatures accountable, is impossible.

And that's what makes the "No Debt. No Deficit" plan popular.  They're admirable goals, but not ideal.  However, everybody can understand them and you can get support for it because it's a heck of a lot better than the "More Debt.  What deficit?" plan that we seem to be operating under these days.

[makattak]

Deficit spending by government entities isn't all bad either.  Michigan, my state, amended their constitution a few years back to prevent it.  Seems like a good idea but it forces one to make bad decisions.  We're currently tearing up paved roads and replacing them with gravel because it's not in our budget to maintain them this year.  We're also planning on shutting down prisons.  All bad things long term for us.  If I were to make an analogy that would apply to personal finances it'd be like refusing to borrow a few hundred dollars from a family member when you've lost your job to keep a car from being repossessed.  Or in the business world it'd be like closing the doors on your company because you wouldn't take a loan out to cover payroll for a bad quarter.  In some situations going a bit into debt just to keep things rolling makes sense because the cost of restarting would be incredibly higher than the interest on the loan...

It does no such thing. Stupid politicians make bad decisions like that. Are you telling me they had NOTHING ELSE they could have cut but roads and prisons to avoid deficit spending?

Rather, it seems to me they decided "What's the two most egregious things we can cut to show the people how much it will hurt them if we cut spending!!!"

They could lay off a few bureaucrats? They couldn't cut back on grants for "studies"? They couldn't do ANYTHING ELSE but cut roads and prisons? Riiiiiiiight.

[HankB]

If .gov passed an estate confiscation law, you'd see the elderly purchasing a LOT of portable, tangible assets; both bullion and numismatic gold, jewels, jewelry, converting to cash, etc.

It's a LOT harder for .gov to confiscate things that are just handed over in a suitcase. 

Also . . . note that politicians - a LOT of politicians - have a lot of money that they'd like to pass on to their progeny.

[makattak]

Also . . . note that politicians - a LOT of politicians - have a lot of money that they'd like to pass on to their progeny.

I finally found something about this plan that I like. However, the politicians would exempt themselves from the law, I am sure. (Or, pass enough loopholes so they and their friends can get around it... like every other law they pass.)

[alex_trebek]

I am all for limiting government spending.  The problem with passing a no deficit, period, plan is the following:

WWIII breaks out and gov needs to borrow money to fight it.
Some other true emergency rises, and the gov needs to borrow money
Since cutting services is political suicide, the gov will simply raise taxes to cover the difference.

I think the deficit should be limited.  However, it is hard to limit.  If we limit the budget to a percentage of the GDP, they will change the way the GDP is calculated to allow increased borrowing.  If we say the gov can borrow no more than 500 billion per year, inflation will eventually restrict the budget too much.  If we say 500 billion per year and every year this increases by 4%, one of the 535 people who handle the bill will change the 4% to 400% somewhere along the line. I have a feeling this is one of the reasons why bills start exceeding hundreds of pages.

Even if the bill had a clause allowing exceeding the set deficit limit in time of emergencies, it wouldn't work.  Politicians now are so histrionic and panicky that every little thing is an "emergency."

[bk425]

The problem with national debt is that to pay it off, we first have to stop increasing it, and then cut programs to start paying back on the debt.  The problem is that it is currently career suicide for any politician, so instead, they are just playing a game of hot potato.

I think this is a shadow of the current reality. The problem is that it's a LOT more endemic then just a few politicians partying on the Potomac. They get elected by doing this, that dear friends means its you and I, or at the very least our neighbors* who CAUSE this to happen. WE want a "tax credit" for driving a fuel "efficient" hybrid. WE want to write or our mortgage interest. It's OUR pork, snuffle snuffle snort. And we keep voting these bastards in. All the talk of constitutional amendment this and term limit that doesn't deal with the issue that our society has found the government purse strings that Jefferson warned us about (and, remember; he was talking about a movement to help a little old widow whose husband died in the "great war"...). I think you all are being far to optimistic. bk425

*"our neighbors" reminds me of stats I've seen about opinions of lawyers... everybody thinks "that other guys" lawyer is bad just like everybody thinks that other guy votes for pork. Picture me making the patrol signs for "I'm watching -you-"