> It lets America print as many dollars as it wants... its own citizens enjoy "exorbitant privilege" and have the costs spread amongst the billions of people who don't live here.

This is a popular and tearful story of privilege but it's untrue today. In order for the "privilege" to exist, the foreign holdings of US debt must increase every year by amounts equal to the yearly US shortfalls... however, since around 2015, foreign holdings of US debt have been falling to flat. Nowadays, not only there isn't any "exorbitant" privilege, there isn't any privilege at all.

The shortfalls are funded by the US population at large via internal debt and inflation.

There's a slight uptick of foreign holdings this year due to instability but any public benefit from that is dwarfed by the losses caused by inflation and tariffs.

The yearly data for foreign holdings of US debt are easily found online.

Ah your comment finally makes me understand the premise of MMT[1], which seems to presuppose that the US will always have this special status. Makes the current administration's geopolitical recklessness even more terrifying.

[1]https://en.wikipedia.org/wiki/Modern_Monetary_Theory

What’s the basis is for claiming that only finance and tech are profitable sectors in the US economy. Energy? Healthcare? Manufacturing?

[dead]

Fantastic share. I've heard this explained in pieces from people a few times now but this just finally made it click for me. Thank you!

Check out:

https://freakonomics.com/podcast-tag/jessica-riedl/

and other work / appearances by Riedl

> The government needs to shrink dramatically

Most (but not all) other developed countries have both a larger government and a smaller deficit per capita. A smaller government is not the only solution.

> The top 1% of earners already pay roughly half of all tax revenue, top 10% is roughly 75%.

Do you have sources for this? I was looking for reliable sources on this.

Just stumbled across this: https://www.latimes.com/opinion/story/2026-04-16/debunking-a...

Put another way if your tax rate is 33% and you had to pay the government first.

Then every dollar you earn goes to the government until May 1.

In this scenario if you have to pay govt interest expense first then almost every dollar earned in January would go to paying the debt.

We are spending almost an entire month of everyone’s salary, not on providing anything of value but merely on paying for previous overspending.

>Only 60% of US households earn enough to pay federal income tax.

That's the problem. It's not a spending problem per se, but the market's misallocation of resources. Too many resources are concentrated in too few hands.

That's not to say we should abandon capitalism, but rather we should change the incentives to support higher incomes more broadly, as we did in the 1950s and 1960s. It's not a coincidence that deficit spending/public debt skyrocketed when we cut the top tax brackets. That changed the incentives from encouraging paying good wages and investing in business growth to hoarding capital and the financialization of everything.

Feel free to disagree, but the historical numbers support that.

tl;dr: change the incentives to broaden the distribution of resources across the economy, strengthening the economy (70% of which is consumer spending) and increasing, in a broad-based way, tax revenues.

>We developed chronic overspending habits when interest rates were historically low

Weird, they were historically low because the money printers went brr. So the "We" you're talking about is both Republicans and Democrats, and not much else.

So basically, the interest rate is meaningless, so everything that follows is probably just as meanginless.

>The government needs to shrink

Just because the government makes bad choices doesnt mean whatever fills the vacuum with make good choices.

This has already been the case since the creation of the Federal Reserve and moving away from the golf standard. The federal reserve gets to print money and the US government gets the first dibs on that, and the middle and lower class then get screwed shortly later by the inflation of the printing.

At one point there was an article or podcast (freakanomics?) that said most Americans are proud of paying taxes, and have a higher pay rate than most countries. I thought that was interesting. Curious where that’s trending.

>there is a strong case to be made that waste and corruption is quite low (as a %),

This is even worse, not better. If what we see around us were due to corruption and waste, then the corruption might be rooted out and the waste might be curtailed. But if instead what we see is unavoidable as some intrinsic characteristic of bureaucracy and overhead, then your opponents won't be satisfied until they burn it all down and dance naked in the ashes. And I'd be inclined to celebrate with them.

The issue is that it’s actually very difficult to make that pro-taxation argument, because that position doesn’t have much merit. Pretty much everyone’s experience with things ran by the government is purely negative. They waste billions (trillions?) and then print even more money and inflate the currency. And then you end up with completely subpar services at best.

Fun fact, Americans pay more in healthcare taxes than most Canadians. Our healthcare is free. Well, kinda, about ~75% is free, for Americans it’s more like %40.

But there is absolutely no argument that can be made that if we just raise taxes a little bit we can solve all our problems. The math just doesn’t work out.

Personally I favour the thinking of Adam Smith, John Locke, Rothbard and Friedman, the classical liberal tradition, and as governments balloon across the west, more and more people are coming to that same conclusion. Give us a small efficient government, stay out of the market as much as possible with little to no interference, stop printing money and trying to control the economy it from the top down, stop being technocrats, let people live their lives the way they wish.

> Most of what people value in public life is supported by taxes

Citation needed. If you value something paid for by taxes you should pay for yourself. Feel free to pool your money with all the other people of value the same thing - should be easy if it's most people.

The tax cuts are fine, the only issue is funding them by deficit spending. The government services/entitlement should be cut instead.

Unfortunately the slopulist wing of the Democratic party now mostly favors magical tax-cut-and-programs electoral platforms. For example, all but two of the candidates for governor of California from the Democratic party have tax platforms similar or identical to those of the two Republicans in the race.

You naively assume that there would be nothing else to fill the gap that would be created if the federal/state government just stopped existing tomorrow.

It's same argument as "who would build the roads if the government didn't exist??". Which is also quite naive, because the government doesn't actually build the roads. It forcefully takes tax payer money and then hires a contractor like any other business would to build the roads. If the government stopped existing businesses and individuals would still need a way to transport their goods, so they would just get together and hire contractors to pave roads so they can deliver goods to customers.

Same goes for just about every government program in existence. Before government welfare people would go to their local church or their community for assistance.

Government run schools have had dropping reading scores for decades even though they have more money being shoveled into them then ever before.

College Tuition costs are through the roof because the government got involved with giving out student loans.

Etc. Etc. Etc.

> (e.g. roads, emergency response/firefighters, schools, parks, libraries, etc).

The very rich don't use a lot of that.

But what they do use a lot of is a reliance on educated employees, a wealthy customer base, a peaceful business environment, courts that enforce contracts, a stable currency, regulated and policed financial system, et cetera.

All of the above is highly under-rated and acknowledged IMO.

Roads and schools have been a net negative for American society. Massive amounts of public money are spent on making problems worse for no gain while simultaneously bloating spending further. (e.g. Smokey Bear, road build-out, bailouts).

Citizens shouldn't have to care about the efficiency of the Government, it should be allowed to fail like any other company. The economy wants off Uncle Sam's lap.

The non-college educated working class was greatly reduced (in size and wealth), but mostly by trade and automation. In its place we have a smaller white-collar (college educated) middle class.

> There is no middle class anymore.

There is a middle class, but it is the worst place to be. The best two places to be are rich or poor. The middle class are all suckers, they are making the rich richer and are supporting the poor.

(I am poor.)

This is very silly. College attendance is at record highs, far above 1980.

This would have barely any actual effect since the number of people with such high income is nearly zero.

All it means is they would spend more on tax avoidance schemes which is wasteful.

I guess you think this high marginal tax rate would hold for unrealized capital gains? Otherwise your conclusion don't really hold.

Personally I prefer a wealth tax.

> 90% tax on all income over $100 million.

That's an income tax, not a wealth tax?

What the US needs is constitution amendments and safeguards, so that what is happening does not happen again.

Ah sorry looks like they limit the number of accesses per gift link

Agreed. It's not conducive to discourse.

Oh, for goodness' sake. There are other websites. And his Randite goldbug nonsense is, quite frankly, overrepresented in American political discourse already.

Your not speaking on behalf of the majority if Americans.

There’s a bit of a double edged sword here. Removal of taxes leads to more coupled private/government relationships. Where external interests fund politicians to protect their own monopolistic interests. That money needs to come from somewhere. Wealthy people don’t want to pay taxes. But they sure do like to pay money to members of the government to further their own interests. Remember it was about taxation without representation. Wealthy people pay a lobbying ‘tax’ and get representation. In this way they are just paying a tax in a different way, where they get benefits and you get very little to nothing.

You're speaking on behalf of a minority of nutjobs who don't want to pay any taxes at all and wrap that in whatever logic suits them at the moment... bringing up the American Revolution and world wars in response to your desire to have more money and imagining that you'd be wealthier if you didn't have to pay taxes instead of everything being more expensive and everybody being worse off.

You don’t speak for the majority.

Lol what majority do you represent there, Bender?

I don't think that would stay true as soon as voters were faced with a detailed explanation of what a balanced budget (achieved by tax cuts alone) would look like. People say they don't like government. They say most of the spending is wasted. But when you point out specific spending programs (and what they actually do), they like them.

Ross Perot comes to mind, but I think he wanted to balance the budget mostly be cutting spending.

> I still think the American people want the government to pay their bills.

Not a comment on you, as I don't know you, but in my life experience all of the conservative-minded people I've known who bought into and parroted variations of the "welfare queen" myth were always the first in line for corporate welfare like subsidies, PPP/EIDL loans, and ZIRP benefits.

And actual American people I know who are not part of the top 10% work extremely hard and just want essential safety nets (of the type that nearly all other first-world countries manage to offer) so they don't have to worry about being homeless if they get an unexpected medical bill.

So I've always seen the idea that the non-well-off are just looking for handouts to do nothing as pure projection of the well-off as to what their mindset would be if they were less fortunate in their life circumstances.

Is there some small set of people who abuse the system (any system)? Yes, but I'm absolutely convinced a lot more people abuse the system at the high-end (for far greater overall cost) than at the low-end. And only people on one side of the scale are likely to ever face legal consequences for systemic abuse.

It's not fixable with taxes alone though; the government also has to spend less than it brings in by cutting programs and budgets

There are really 4 possible positions on deficit spending:

- it does not matter at all, as long as inflation is under control (MMT)

- it's fine, as long as the long run average is ~zero (a cyclic argument)

- it's fine, as long as the long run average is a small stable % of GDP

- we have to balance the budget every year, no matter what

I don't think any serious person holds the last position.

AIUI, most EU nations (the ones with the great social benefits the left says it wants for America), have a flatter tax burden, where the middle class pays a higher percentage of the total.

Most people suggesting taxing the rich more aren't saying that the middle class should pay very little tax

Exactly. The tax platform that we need the most is that dentists are not paying their share. Penny-ante local landlords are not paying their fair share. There is too much focus on the ultra rich, you can and should take all their stuff but it doesn't amount to a whole lot.

how much of the revenue is necessary?

"The government shouldn't help people" is such a bizarrely popular American attitude, that so many people take as gospel. Therefore "The government can't help people" emerges as reality. It doesn't have to be this way, but we make it this way due to the majority's stubborn choices.

You look at a lot of places and between unions, procurement rules, or an obsession with certain classes of contractors, government capacity is badly hobbled from the start.