107 comments
They've been subject to EU Excessive Deficit Procedures for multiple years, must bring deficit-to-GDP ratio from ~5.8% down to 3% within 3 years despite virtually no GDP growth and complete political and societal paralysis about reducing any public benefit or welfare whatsoever.
ECB will most likely get involved after 2029 to start austerity measures. You can predict how that will go over with the French public especially if Le Pen takes the presidency, which looks likely.
Very tough times ahead and the EU is facing a critical point about its future.
If you can keep energy costs down and get out of the way there will be growth. It's a thing that happens when people do business and make new things.
We have seen abundantly clearly that telling the truth is the worst thing you can do for your political career. The correct move is to lie, lie, lie, lie. Reality is completely irrelevant. All you need to do is tell them what they want to hear. Nothing else matters. They will not hold it against you if you break every promise you make. They'll vote for you again and in greater numbers if you ramp up the promises to even bigger lies, nevermind your track record.
We have spent decades selling these billionaires government debt instead of just taxing them correctly.
Or what? (Seriously.)
Greece was forced to the table because the market wouldn’t lend to it. So long as France has lenders, why does this rule matter?
It is still a weak (but loud) political movement which lacks backbone and network.
That's before the military, foreign aid, and everything that starts with "Department of"
In 2025, federal gov revenues (total, not just tax) were $5.26T: https://fiscaldata.treasury.gov/americas-finance-guide/gover...
In 2026, entitlements plus interest is projected to cost $5.45T: https://fiscaldata.treasury.gov/americas-finance-guide/feder...
The reason the US is a comparably "low tax" country is because we're borrowing the difference.
What worries me the most is that this is at a high point in our economic cycle, when tax collection is arguably the highest. The deficit and debt will expand significantly in the next recession.
We used to have 94% top tax bracket rate at one point, and higher tax rates in general. We’ll find the will to raise taxes as soon as the bond market compels the spineless in Congress to find the will (as the cost of debt continues to rise into the future), because you cannot deceive the bond market.
https://taxfoundation.org/data/all/federal/historical-income...
https://www.axios.com/2026/09/27/rates-borrowing-yields-fisc...
- In projections that the Congressional Budget Office produced last February, net interest costs are already at $1 trillion this year and on track to reach $2 trillion by 2035, meaning that much of federal spending is needed just to service old bills.
- But those projections assumed 10-year Treasury yields were in the ballpark of 4.3%. They're now nearly a full percentage point higher than that.
- In startling numbers that CBO released this week, in a scenario in which interest rates were 1 percentage point higher than its baseline, debt held by the public would grow to 222% of GDP in 2056, 47 percentage points higher than the baseline.
Defence is only 12% of the US federal budget - what are you going to cut it to? It's not going to solve the issue even if it's abolished. Over the last 10 years health, Medicare and Social Security have grown 103%, 83% and 78% respectively for an increase of $1.64 trillion to $3.55t vs a $916b on defence. With an aging population it's only going to cost more and more over time, you can't continue to put higher taxes on a shrinking share of productive population to care for more and more unproductive retirees under any economic system.
Wild times. Maybe it's information overload, since it probably happened in the past as well. But being bombarded with implications of these changes left and right is kinda weird.
I don't have deep knowledge, other than a bunch of "pattern matchings" I've done throughout my readings, but as people get older, on average, their wants/needs change over time. Older people, especially as they get closer to retirement age, have more free time as well. Implicitly, these desires eventually bubble up into economic/political action, that's more or less unprecedented. It would be very cool to research this more in depth, but unfortunately i'm in the wrong field.
Well, it turns out that we did it with the COVID economic shocks, and for a while there was talk of a “soft landing” but that’s all but disappeared from the conversation.
Interest rates were kept at historic lows for a decade because the 2008 crisis caused available credit to absolutely implode, which destroyed a huge swath of the effective money supply. Leverage ratios at banks went from north of 40:1 to closer to 10:1. Without ZIRP and QE and all of the rest, we would have had outright deflation, kicking off the kind of deflationary debt spiral that made the Great Depression so bad.
That kind of dramatic destruction of credit did not happen during the pandemic. The banks were fine [0]. What happened was that the economic output of actual goods and services collapsed. So high levels of stimulus led to more money chasing fewer real resources, and you got inflation instead.
This should not have been a surprise.
[0] Modulo a few like SVB that blew up a couple of years later because they had forgotten that interest rates could also go up.
> everyone had seen Japan fail to pump up its economy
Agreed about this, but I feel like everyone is watching Japan right now again. And I fear people will make wrong assumptions, given how its "economy is growing right now".
- Most of the AI Companies are HQed in the US, and that's the 'hot thing' for the market overall
- Google and Apple have enough presence (i.e. some may be doing tax things but...) in the US and at least one of them has gotten 'too big to properly antitrust'.
- If we look deep enough, even some of the fanciest ASML tech is a result of IP sharing from US companies that are almost certainly government backed (i.e. ASML might be the ones working with other companies to help make it useful/scalable, but the tech is invented here.)
Ironically, something I would have listed at the top 10-15 years ago but is now last on the list...
- For the last (well, now) 80 years the US has been able to project an outward image of overall economic stability and relative growth; The closest it came to a crisis in the past was when the Bretton-Woods system collapsed and France came over and collected their gold.
On the flip side, there is the 'guard'.
- Any current bondholders have to choose between holding at the current rate, or selling at a discount. It becomes a 'Well do we really thing it will all fall apart before then or do we just hold?'. Because any new bonds, even at the current rate, would be carrying that risk on the open market if a sell-off occurred. IOW 'Is a bond I have now less the arbitrage cost going to be worth more than just holding it'.
What's important is what happens next. If we look at the Bretton-Woods collapse, there were a number of actions taken, many (most?) of them questionable, however it was pulling a bunch of levers at once and unpulling versus debating which lever to pull.
There is the confounding factor where parties are arguing that there is market manipulation going on, that changes the question of whether to hold onto existing bonds rather than making other options. After a certain maturity percentage one has to ask whether you hold or sell based on climate.
> There is the confounding factor where parties are arguing that there is market manipulation going on
My understanding is, it’s not even an argument anymore. Like the latest Yen intervention from the states was basically a state level manipulation, no? I mean there’s nothing really illegal. And it makes sense, and very much public. But one can assume there are just many more behind-the-scenes activity going on as well.
As for the people that will inevitably bleat about how this is just horrible and we need to lift the cap on taxable SS income, that wouldn’t solve the core problem either unless you pair it with spending caps or cuts.
Also an underdiscussed issue with such a policy is that while it increases social security fund revenue, it decreases the amount of federal revenue collected. The CBO estimates that about 15% of revenues gained by an uncapped SSA tax are offset (lost) by a reduction in federal revenues. Worsening the deficit problem.
No it's not. It's about 15% of the 2 trillion dollar defecit. Whoever told you that mislead you.
You forgot the huge one, which is uncapping the amount of income it is applied to.
It’s literally not a spending problem at all.
Read the full thread on Hacker News →
Related stories
- Hacker News · 2 points · 9 days ago
- Hacker News · 1 points · 3 days ago
- The Verge · 0 points · 1 day ago
- References don’t have top-level cv-qualifiersblog.knatten.orgLobsters · 2 points · over 3 years ago
- Gabor Fields: Orientation-Selective Level-of-Detail for Volume Renderingarcanous98.github.ioHacker News · 1 points · 10 days ago
- Hacker News · 2 points · 8 days ago