Can we get out from under our debt?

Can we get out from under our debt?

Sure, the US has a lot of debt, but if we really worked at it, paying it off a little at a time, couldn’t we pay it off and be debt-free, avoiding a Dave Ramsey intervention? Actually, the answer is, “No”. It is mathematically impossible, given the size of the debt, how much money there is in the country, and how we can’t possibly get the budget under control. Confused? You won’t be after listening to this episode.

And charter school; we know what the political parties think of them, but what do parents think? Actually, they love them, or they want them. And if you’re Hispanic, Black, or poor, you really want them. Find out in this episode just how badly they want them.

Mentioned links:

It Is Mathematically Impossible To Pay Off All Of Our Debt

What are parents thinking about charter schools?

Charters Score in Cities

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Show transcript

I stumbled across a very interesting article that I want to bring to your attention. It is, of course, linked to in the show notes, but here’s the gist of it.

It is mathematically impossible to pay off all our debt. That’s the gist and, coincidentally enough, the title. But wait, you say, can’t we just pay down a little bit at a time and, eventually, pay it all off? Well, there are 2 reasons this won’t work.

The first is the size of the US debt. It’s currently 18 trillion dollars. How much is 18 trillion dollars? This article makes a very interesting comparison, and it’s worth considering. Let’s think about all the money there is in the US, that is, physical cash, and checking accounts. Investors refer to this kind of money as M1. It’s very liquid, in that it either is cash, or it can be converted into cash quickly. So how much M1 money is there in the entire country; every person’s and corporation’s? About 3 trillion dollars.

If we gathered it all up – took it all away completely – it would only amount to 17% of the debt. The debt now.

But wait, you say, what about savings accounts? OK, you want us to confiscate all that? Well, let’s do it! Investors refer to M2 money as everything in M1, plus savings deposits, money market mutual funds and other time deposits like CDs. They’re not as liquid – you can’t write a check against a savings account typically – but they can be easily enough converted to cash or moved into a checking account.

Let’s vacuum up all that cash, and what do we have? About 12 trillion dollars. Not bad! That’s two-thirds of our current debt, and now everyone has nothing! The debt we owe as a country is more than all the money the people have!

But wait, you say, isn’t there more money tied up in long term assets, you know, like those big banks invest in? Yup, there is, and guess what it’s called? If you guessed “M3”, then clearly you can count. M3 is all the M2 stuff plus the kinds of financial instruments that big investors put big sums of money into. So after we’ve soaked Wall Street (and every person and corporation in the country), where do we stand?

Still in the hole. M3 money comes to around 17 trillion dollars. Close, but no cigar. The entire country is bankrupt, literally, and we’re still not out of debt.

And that’s just the first problem. The second problem is something I’ve talked about here before, that mandatory spending by the government – promises that we’ve made like Medicare, Medicaid, ObamaCare and Social Security, money that is already spent before the military, roads and bridges, paying federal workers and such – is, by itself, more than we take in from taxes. And if we taxed all income above $1 million at 100%, we’d still run a deficit, and add to the debt.

And Democrats still think we have a revenue problem. It’s a spending problem, plain and simple.

Thus, it is, in fact, impossible to pay off the debt a little at a time, because it keeps growing a lot at a time, and we don’t have enough money in the country to pay it off anyway. And if that isn’t enough to make you worried, consider this. There is also consumer debt that we’re all busy paying off as well. That amounts to … are you sitting down? … 58 trillion dollars. Our government keeps borrowing because, as a nation, we seem pretty comfortable with it.

School choice. It’s something of a political football. Republicans think parents should be given more choices as to where to send their kids, while Democrats think that the public needs to support public education, and that drawing students away from that hurts the kids that are left there.

That’s what the politicians think. But how about we ask what the parents think? Well, someone did.

The National Alliance for Public Charter Schools released a new survey in April recording parental views on charter schools. It interviewed over one thousand parents who didn’t necessarily have children in charter schools, or even live in a state with charters, thus providing a broad overview of charter school opinion.

First, in case you’re not quite sure, charter schools are experimental public schools, so they’re still part of the public system. However, they are created and organized by teachers, parents and community leaders, and they operate independently of other schools or the local school board. In urban and poor areas, charter schools really come into their own, making the biggest gains over their local districts than those in suburban or rural areas. One would think Democrats would find this in line with their values.

In any event, here’s what the parents want. Over three-fourths of respondents either strongly or somewhat favored choosing the public school their student attends, regardless of location. Support was particularly strong in the Hispanic, black, and low-income communities, with over 80% in each of those demographics favoring public school choice. Also, most parents are in favor of expanding charter school, for both charter school openings in the neighborhood, and nationwide charter school expansion, with over 70% support for each of these. This sentiment was particularly strong with low-income parents, whose favorability on charter expansion was ten percentage points higher than the rest of the respondents’.

As I’ve noted here before, urban voters vote Democrat, for the most part, but that same party is against school choice, generally. It’s another case where voters keep voting the same folks into power but expecting something to change. It’s also another case where, for Democrats, it’s not about the people; instead it’s all about the politics.

Filed under: Budget & SpendingDebtEconomics & TaxesEducationGovernment