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Is the United States on the road to bankruptcy?

By maxwell edison ·
For the past twenty years (ten, here at TR), I've been warning about the possibility - no, make that the inevitability - that the United States government will face the ultimate financial disgrace - financial bankruptcy.

I've been extremely critical of the Democratic Party for advancing policy positions - especially social policy positions - that will ultimately lead to such an outcome; and I've been even more critical of the Republican Party for capitulating to said Democrats and for failing to advance a more fiscally responsible and libertarian principled philosophy for the sake of bipartisanship and/or compromise.

Political party preference aside (if that's even possible), what's on the horizon for the financial stability of, what was once the most financially stable nation on the planet, the United States of America?

P.S. I expect most replies to be nothing but typical political rhetoric. Please prove me wrong.

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On savings and investment

by NickNielsen In reply to Yes

...as the populace has lost its will to save and invest.

The biggest problem I see here, Delbert, is a tax code that rewards consumption and penalizes saving and investing. It's not as bad as it used to be, when credit card interest was deductible, but it's still bad. What to do?

1. As a home-owner, I'm all in favor the the mortgage interest deduction. If government wants to encourage home ownership, this is a good way to do it. But if you can afford a "home" that covers tens of thousands of square feet and costs millions of dollars, you sure as **** don't need the government's encouragement to buy it. Reduce the limit on mortgage value from $1,000,000 to $500,000, or, better yet, give the deduction to the people who need it the most. Limit it to a certain threshold, say 125% of the median home price in the area at the time of purchase, as provided by the NAR and certified in the mortgage.

2. Most of us have all we can do to make payments on one home; limit the mortgage interest deduction to the primary dwelling. No second homes, vacation homes, etc.

3. If you want people to save, they need some encouragement. Exempt the first $1000 of interest or dividend income. This includes savings accounts, certificates of deposit, mutual funds/money market accounts, and stock dividends. Leave IRAs alone.

The other part of the issue is much more problematic. The stock market has changed over the past several decades from a way to capitalize corporations to a way to speculate on society. Don't know how to fix that.

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How to encourage savings

by DelbertPGH In reply to On savings and investment

1. The home mortgage tax deduction is so holy, you're not going to cut it, so forget it. We don't need to pump more money than we already have into housing, so no need to make the deduction even sweeter.

2. Tax deductions won't make people save.

3. Pay people more. With more money on hand, they won't take out second mortgages, and will have the cash to invest. And by people, I mean the bottom 98%. The years since Reagan have seen all the country's growth captured by the wealthiest few, while median (not average) income has scarcely budged.

We've had 30 years of trickle-up economics, in case you haven't noticed. And I haven't seen where the top crust have gotten so much better at their jobs, or have provided so well for the rest of the country, that one could say they deserve so much better from the economy.

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How to encourage savings

by boxfiddler Moderator In reply to How to encourage savings

It might be worth teaching people the pitfalls of covetousness, and the value of being content with less.

You can't save what you don't have.

edit
points for using covetousness in a sentence

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Points granted

by santeewelding In reply to How to encourage savings

Points subtracted from delbert for his hellashish contention that someone is in charge of this thing we call the, "econonmy".

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Mortgage interest deduction.

by CharlieSpencer In reply to On savings and investment

I've owned four homes. Not once has it been worth itemizing my return to take the mortgage interest deduction. Even in the first full year of each mortgage, when the interest paid is at its highest, I always came out ahead taking the standard deduction instead of itemizing.

Just one goober's opinion, but I wouldn't miss it. I wonder what percentage of home owners can deduct it, or itemize without comparing against the standard deduction.

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You need more deductions

by DelbertPGH In reply to Mortgage interest deducti ...

You have to be able to claim lots of stuff to beat the standard deduction. My wife has a ton of unreimbursed professional expenses, and we have a thoroughly unwanted condominium that we try to rent out, and the money we lose on that is also deductible. All this stuff, with the home mortgage interest, makes it possible to save a little on taxes.

Of course, along comes the Alternative Minimum Tax, and takes a lot of that away anyhow.

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No thanks.

by CharlieSpencer In reply to You need more deductions

I'm not going to spend more just to save a little. I was mostly wondering how many homeowners are able to take advantage of this deduction. I'm with Nick - cap the deduction and apply it to primary residences only.

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America has been greedy

by The 'G-Man.' In reply to Is the United States on t ...

time to diet or die...

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Define being greedy

by maxwell edison In reply to America has been greedy

Give examples, please.

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We need more Oil...

by The 'G-Man.' In reply to Define being greedy

Iraq has Oil

Cut a few corners here and there - major oil spill 2010

Add those up for starters...

Same Applies to the UK as well!

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