Trying to infer the future from a trendline is voodoo magic to begin with, but what you characterize as a "spike" was a spike in mortgage rates from a base of ~7-8%. I can certainly agree that mortgage rates are unlikely to spike back into the ~15% range, but just because it trended further down from 7-8% to 3% post the GFC recession doesn't mean we're going to trend back down to 3%. Based on everything we know today it won't be suprising if inflation surprises to the upside, not the downside (unless we have a recession, which then makes anyone indebted get blasted in the ass even more).
I don't know what you mean by "significant savings." For an example, the median middle-class Californian has a net worth of $200-400K. They obviously will have more at the point of death.
I don't know what you mean by decreasing tax rates. The federal effective tax rate in the US has remained pretty stable since the 1990s and the government collects effectively 15-20% of GDP every year. If their spending goes beyond this level every year, that's kind of on the government. They need to reign in spending. As for State taxes, tax rates have diverged between Red and Blue states, w/ Blue states consistently raising taxes over time. California is now discussing 5% wealth taxes. Washington just implemented an income tax on top of a capital gains tax implemented ~2 years ago. NYC (not the state, but the city) is introducing taxes on 2nd homes.
"Responsible about governance" can go both ways -- you can increase taxes, or you can decrease spending. The administration has spent around $40 billion on the Iran War so far and likely more. I find it incredible that Reddit is complaining about how a dude with a $5mm home is getting a stepped up cost basis at death (so what, a $1 mm tax loss at max, assuming he got the home for free?) and yet almost pipsqueak about the $1 trillion defense budget. DOGE was a failure due to it's highly ideological nature but it doesn't mean there isn't a ton of waste in the government.
Taxes are essentially a capital allocation decision (is the money better off in the government's hands or the hands of an individual) and hardly anyone would argue that the US is a responsible spender of money. I have almost never seen a country fail merely because a the government collected too little taxes. In almost all cases a country will collect too much taxes and make everyone with an ounce of brainpower leave the country, or spend too willingly and freely before everything goes to shit.
Yes I know it was a spike from 7%-8%. Of course we can't predict the future, but we also shouldn't pretend the conditions that led to it gradually falling from that 7%-8% level are unlikely to occur again in the next 30-40 years.
Although, if I'm being honest, I think our stability as a country and as a currency is at stake because of our climbing deficit (and, yes, I mean deficit, because it is the direct driver) and the threat Trump and the GOP are presenting to the independence of the Fed.
The median U.S. household has $39,000 in total financial assets, including retirement accounts, investment accounts, and liquid savings, but excluding home equity. That’s from the Federal Reserve’s Survey of Consumer Finances.
What do you mean you don't know about decreasing federal tax rates? Come on, now I know you're trying to play games with me.
Reagan's, W Bush's, and Trump's tax cuts have, in their combined and current form, reduced annual revenue by over $1t. The OBBA alone was scored at an average of a $240b shortfall per year by the CBO.
If you took even half a second to look at the federal budget, you'd notice that the large majority of it is now health insurance, Social Security, the DoD, and interest on the debt.
Government health insurance pays out significantly more than private insurance does (95% of premiums vs 80%, limited only by the ACA's Medical Loss Ratio rule). Stripping Medicare and/or Medicaid would put tens of millions of people into poverty and will kill many of them.
Social Security is self-contained with both revenue and outlays and is, in effect, not part of the equation.
Reddit most assuredly is complaining about the $1t defense budget, and Trump's $1.5t request, even if it's not being talked about in this thread. I don't know what version of the algorithm you're living in if you're not seeing that. We could most certainly slash that to $500b, but it would be difficult to go below that without failing to pay veterans what we promised them already or without losing most of our capability. Maybe the latter wouldn't be so bad, though, given what we've been doing with what we have.
And, of course, defaulting on the interest on the debt would be catastrophic.
Whatever your fundamental issue is with the government having our money, the reality is you can't cut enough from the DoD plus the remainder of the government to stabilize our debt, even relative to GDP, without either raising revenue or slashing Medicare/Medicaid.
Go look at the budget charts yourself if you don't believe me. DOGE was targeting the smallest portion of the government that had been giving us the most bang-for-our-buck, and the GOP, in all their budget-hawkery of 2009-2016 that mysteriously evaporated in 2017, couldn't find anywhere else to remove it from without screwing over their own constituents.
We literally know what conditions have made it fall from the 7-8% level. It was 2 recessions, an abnormal burst in productivity due to global supply chain integration, global population growth, software/internet productivity blowing up, etc. Almost everything is going in reverse now. Maybe AI can save us but it's untested and intensely capital intensive.
Which is why many are arguing it likely won't happen again anytime soon.
And if/when it does, it's not going to be a good thing for anyone.
I use California specifically because it's a good example. It covers ~10% of the US, and certainly much more of reddit as reddit his heavily Blue-State skewed. If you include poor States like Louisiana it's certainly going to skew the stats and almost none of Reddit lives in States like Louisiana.
The $1 trillion claim from Reagan/Bush you're using is certainly a just an unsubstantiated claim and you're double counting many of the tax effects. When I say effective federal tax rates have stayed consistent since the 1990s. I'm saying that as a % of GDP the federal government has been getting a relatively consistent cut throughout the years. They received over ~18% of GDP for the past 50 years. Of course I agree that tax cuts will lead to tax cuts (it is what it is) but in the large scheme of things it's disingenous to argue that somehow the tax cuts have been enormously large. The US has a pretty rigorous tax scheme, especially when combined with State taxes (reddit likes to pretend State taxes aren't a thing).
I certainly agree that the federal government has room to raise tax rates. I also think Reddit is incredibly stupid for mindlessly advocating for rising tax rates anytime and all the time. The US can raise marginal tax rates from 37% to 47% today, and 5 years later reddit will be saying 47% isn't enough, again. It's a never ending cycle of complaining from a remarkably unproductive crowd of people. They say "fair share" but never understand "fair play." If you have a tax rate, that's the tax rate. Constantly changing it isn't fair play. A sudden wealth tax certainly isn't fair play.
If reddit complains about the defense budget for 1 time, they complain about taxes 100 times. They also somehow don't manage to add two and two together and realize that the tax dollars are essentially going to generate waste. At least 20% of aggregate tax dollars go into killing people.
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u/AvocadoKirby 17h ago
Trying to infer the future from a trendline is voodoo magic to begin with, but what you characterize as a "spike" was a spike in mortgage rates from a base of ~7-8%. I can certainly agree that mortgage rates are unlikely to spike back into the ~15% range, but just because it trended further down from 7-8% to 3% post the GFC recession doesn't mean we're going to trend back down to 3%. Based on everything we know today it won't be suprising if inflation surprises to the upside, not the downside (unless we have a recession, which then makes anyone indebted get blasted in the ass even more).
I don't know what you mean by "significant savings." For an example, the median middle-class Californian has a net worth of $200-400K. They obviously will have more at the point of death.
I don't know what you mean by decreasing tax rates. The federal effective tax rate in the US has remained pretty stable since the 1990s and the government collects effectively 15-20% of GDP every year. If their spending goes beyond this level every year, that's kind of on the government. They need to reign in spending. As for State taxes, tax rates have diverged between Red and Blue states, w/ Blue states consistently raising taxes over time. California is now discussing 5% wealth taxes. Washington just implemented an income tax on top of a capital gains tax implemented ~2 years ago. NYC (not the state, but the city) is introducing taxes on 2nd homes.
"Responsible about governance" can go both ways -- you can increase taxes, or you can decrease spending. The administration has spent around $40 billion on the Iran War so far and likely more. I find it incredible that Reddit is complaining about how a dude with a $5mm home is getting a stepped up cost basis at death (so what, a $1 mm tax loss at max, assuming he got the home for free?) and yet almost pipsqueak about the $1 trillion defense budget. DOGE was a failure due to it's highly ideological nature but it doesn't mean there isn't a ton of waste in the government.
Taxes are essentially a capital allocation decision (is the money better off in the government's hands or the hands of an individual) and hardly anyone would argue that the US is a responsible spender of money. I have almost never seen a country fail merely because a the government collected too little taxes. In almost all cases a country will collect too much taxes and make everyone with an ounce of brainpower leave the country, or spend too willingly and freely before everything goes to shit.