How the U.S. Spent $1.4 Trillion in Debt Last Year | WSJ
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- Опубликовано: 5 июн 2024
- The United States relies on taxes and debt for much of its spending - but what would spending cuts look like? Just last year, the U.S. took on over a trillion dollars in debt.
WSJ explains how much the Treasury relies on debt, where it goes and what happens when the Treasury hits the debt ceiling.
0:00 The U.S. took on $1.4 trillion of debt last year
1:33 Where did the American government spend the money?
2:40 What happens when the U.S. debt ceiling is hit?
3:51 How to reduce the national deficit
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#Debt #Spending #WSJ
I dont know how trustworthy WSJ is like any media company these days, but this video is incredibly well made and explains this stuff as it should be explained to the people.
The WSJ is without par in the United States. If you want to become smarter read the WSJ for 30 minutes everyday.
Though not completely unbiased, I feel like WSJ is one of the more balanced and reputable publications still.
If only the person who did their visuals knew how a ball-and-urn works. Those pegs would make a binomial distribution, not a flat line
@@eriye92 for factual, business-focused news I'd say it still retains its previous reputation as a generally balanced publication, however their editorial staff has gone fully over the cliff. Unfortunately, with the statements we've seen from Rupert Murdoch that are detailed in Fox News' defamation lawsuit, this is not really surprising. News Corp owns the WSJ and Murdoch clearly has gone full bore into putting his thumb on the scale for the GOP, facts be damned.
I honestly feel like they are probably the least biased of the major American media outlets but that’s just my impression as a moderate European
Don't fret, the debt ceiling always goes up. I wonder if 2008 crisis survivors had it easier. I'm concerned about the stock market, I've lost $35,000 this month, and my income is down. Worried I won't save enough for retirement as I can't add to my savings.
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The US economy cannot survive without continuous credit and debt creation. The FED will print more money and the average American will go just that much further in debt. Meanwhile, foreigners lust for the greenback. Their economies are in worse condition than the US... if that's even possible. Someone is going to be left holding the bag...
Will anyone get elected in democracy, if the candidate says
- we will cut medicare
- we will cut social security
- we will increase taxes?
If no, isn't this a moot point to discuss?
And the important thing to note here kids, is it doesn't matter who the President is, this will continue to happen. There is no way out. Stop believing the clown show.
@@darnellcapricciosodid you forget what scam thread you were in?
Clearly OPis in scam team 2, not 1.
Brilliant. Thank you for your great communication skills and for putting it out there.
Thank you, finally one of these corporate journalist has said it -- the biggest spending categories are social security, medicare, medicaid, and defense.
These politicians who have endless debates about some NSF project that has a shrimp running on a treadmill or SBIR Programs, while they might have good intentions, don't even scratch the surface of the debt problem.
REALLY THE NEWS CORPORATION THAT GAVE US VOTER FRAUD , ACORN PIMP IS TO BELIEVED , I BET THEY DON'T TALK ABOUT THE 30 BILLION DOLLARS A YEAR TO 10K TROOPS IN AFGHANISTAN DO THEY !!! JOHN 8:44 CULT MEMBERS
US military budget is close to a trillion dollars per annum
NASA could have had permanent bases on mars and the moon and invented technology straight out of science fiction 20 years ago if they got the same funding as the military.
Hello sir
Totally. Even the entire Covid relief is not really a big deal compared to the total budget. It is just not worth it to risk the credit rating of the US government over those disputes.
US is spending that much money in medicare and still having the world's worst healthcare?
They need some radical change in that sector. It's insanity.
Because they don’t have the world’s worst healthcare? It’s among the best in the world, I don’t know where you get off saying it’s bad?
It is some of the best in the world, it's just really expensive.
It is not the worst, just the least affordable and most expensive (both for the patient and the tax payer)
@@iguessishouldntputmynamehe5503 Ok not the world but in OCED countries.
@@iguessishouldntputmynamehe5503 If you have to pay 600USD for simple visit to ENT doctor, it's worst system.
How do "politicians agree on the debt should go down" when everything they do is increase it every year? They only agree on saying it should go down. But they don't agree on keeping it actually down and reducing it. They are clearly increasing it. No matter which president.
There is no agreement that debt should go down, that is just a lie for the camera, clearly the actions are the opposite.
Because the fractional reserve fiat currency we use is a ponzi scheme which will collapse if they don't pump ever increasing amounts of counterfeited currency back into the system. They have no choice.
Politicians don't care about the national debt. Because the national debt is not a problem. Republicans want to cut taxes from the only group that can afford to pay taxes and increase defense spending. Democrats want to increase taxes on those who can afford it to offset social spending increases.
When President Trump was in office, he had both chambers of congress on his side, we saw massive deficits. Republicans want to force spending cuts because it would ensure the Democrats lose the next election because it would lead to recession. It is sad that conservative voters actually think Republicans care about being fiscally disciplined.
This is not true. Carter, Clinton & Obama all brought down their Republican predecessors' debts. Conservatives are not fiscally responsible.
There’s just no way any President or politician can significantly reduce their debts, all they do is kick it down the road. Eventually one day it will all come crashing down.
great presentation, thanks for the extra effort!
Love how these WSJ videos explain things in such an easy and clear way!
Thank you for the visual.
Good summary ! :)
Great video. Well done.
WSJ have set the bar on explainer video so high, and I’m so grateful they exist ❤
ok
Let do both. Reduce spending and increase on taxes. Meet on the middle on both sides.
If you think increase tax can increase income, think again. 😅
@@KiwiImpactSaint if you think cutting spending can reduce the deficit think again
@@milesdunstan-daams4855 Bro what 🤣
Good for times like this.
Such a great video
I like how every point of spending has some explanation except “The military”.
Those balloons aren't going to shoot themselves down. Obviously we need to spend $500k each time we do it. Imagine how many balloons there are. It soon adds up.
All your thousands of fighter-jets, several Aircraft carriers, submarines, artillery, missiles, tanks (& all their maintenance), drones, Air-defense systems, Ammunition, guns, bullet-proof vests salary for servicemen, clerks, and others. They aren't going to pay for themselves.
Moreover grants and aid for Ukraine (over a hundred billion dollars), aid for countries like Pakistan, and other allies as such.
@@samyakhp4353 manning military bases around the world and buying new equipment every year
@@Ausf first off I'm pretty sure those missiles were more like in the millions lol
Second off, it could have been cheaper but they wanted to get that fancy spy equipment as cheap as possible
@@samyakhp4353 interestingly for the Ukraine stuff
It actually tends to be more along the lines of sending equipment that's near the end of their shelf life and then sending Raytheon or whenever an order for brand new kit for themselves
And in some cases its cheaper to send stuff over than disposing of it
Great video!
I found a USA penny in dublin airport last week. my first US penny ❤️
If I managed my household's finances like this I would be divorced, broke and homeless
So true😂😂😂
You wish. That's the best possible scenario happening to you. Most likely you divorced, broke, homeless, on drug, and go rob your neighborhood or friend and get shot or go to prison, in some extreme situation probably committed suicide.
@@AnhNguyen-hn9vj LOL. True
you don't create dollars
@@grimaffiliations3671 Sure I can via debt
Awesome way of visualizing this information...but make an historical info graph on how many times they've raised the debt ceiling since 1980 lol, that would also put things into context.
The topic aside (these videos are always very well done and informative) -- I'm a data analyst & I just wanted to say kudos to the team that put this video together. The information was succinct & the presentation was captivating. Appreciate the random dose of inspiration for visual analytics!
☝ Yep from a simpleton at times like myself, it was real easy for me to understand the situation and the danger that we are officially in.
And that the videos are short! Don’t know why some channels put out 10,20,30 minute videos. Like who has that kind of time nowadays!! 😂
@@malakwright the only problem is that it is wrong. Taxes are destroyed as soon as they hit the treasuries account at the fed
Great video
Inefficiency is a major area where there is a massive waste of money, improving on that area alone could massively improve the budget.
great video
Imagine if civilians kept this same spending habits
Exactly. $250,000 in debt with a $50,000 income...
They do lol. It’s called credit card debt.
@@iguessishouldntputmynamehe5503 bro doesn’t know 😂
The entire us consumer economy is based on debt.. ever heard of a mortgage?
Civilians debt is different because the government is like the bank in the game monopoly, we as the users of the currency are in whole different position
Do your categories break the spending included in omnibus type bills? For instance, the Covid Relief and farming bills included lots of money for other things.
Cut spending AND raise taxes.
Unfortunately that'll never happen, because that doesn't get votes. And all politicians really care about is getting reelected long enough to make a name for themselves
One party don't want to raise taxes and one party don't want to cut spending
@@RealShaktimaan Can't we just cut at least a little bit on the military? American's red or blue WANT a good healthcare option. many republicans liked obamacare but believed trump was gunna give them something even better, not nothing at all.
@@RealShaktimaan neither party wants to cut spending
@@aenews132 Neither wants to raise tax on rich either
well explained
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Simplicity is genius. Very well explained
You are not getting your money back. Buy assets with your dollars, deleverage from debt, and diversify.
Is there any transfers to the states in the budget?
Pretty misleading title. The U.S. government did not spend $1.4 trillion in debt last year. Rather, the U.S. government incurred $1.4 trillion in debt through its spending and revenue activities during the 2020 fiscal year.
In 2020, the U.S. government spent $6.55 trillion on various programs and activities, such as defense, social security, Medicare, and infrastructure. However, it only collected $5.15 trillion in revenue, primarily from taxes. This resulted in a budget deficit of $1.4 trillion, which added to the existing national debt.
It is also worth noting that the pandemic significantly contributed to the increase in the U.S. government's spending and deficit in 2020. The government implemented several economic stimulus packages and relief measures to support individuals and businesses affected by the pandemic. These measures required significant spending, which added to the national debt.
The visualization with the pennies where the width of the bars changes but the height changes is deceptive. I am not sure if its purposeful but doing that goes against the basic rules of data visualization and gives a bad impression that lowers the large expenditures and inflates the lower expenditures.
Wow, corporate taxes are way lower!
Internationally speaking they're still too high.
yes, Increase the Payroll taxes.
corporate taxes is just a pocket change, Payroll taxes is where the Meat is.
so, be ready to pay 25% more for your payroll taxes.
you really like paying taxes right?, there you go,
pay more for your country
Trump lowered them from 35% to 21%.
Countries like Estonia doesn’t have Corporate tax. The tax policy is a competition.
The key figure we should be looking at is debt to Gdp ratio. We don't need budget surpluses to reduce this figure. We just need to slow down deficit growth such that Gdp grows outstrips it. Another way, which is what Japan is doing is QE in which the central bank buys up the debt from foreign holders like China and then in turn, either charge a super low interest rate over time or come up with some debt forgiveness programs
Japan proved that debt to gdp ratio's don't matter, countries with far lower debt to gdp ratios have defaulted and Japan is still standing. The real key is to have your debt in your own currency. You cannot default on your own currency,
Thanks fdr
$ 31 trillion of debt built by 21 straight years of deficits should give you a strong hint of where this is going.
Halving the military budget would result in a large positive balance and would reduce the overall debt over time.
Even like that the US would still have the (by far) largest military spending in the world.
What County should I move my money to before the default on the debt?
The US has the largest military budget out of any other country by far. Military expenditures are roughly the size of the next seven largest military budgets around the world, combined. We have room to move the military budget for sure.
So would suggest we stop spending so much money to defend Ukraine?
Listen to someone in the know- H.R. McMaster.
You could zero the entire military budget and Social Security and Medicare/caid are still the problem children. What then?
All to keep us powerful and our dollar be biggest international reserve currency . For that we can print money all the time but won't affect our economy that much
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A really easy way to see if someone is serious about cutting the debt is to ask them, “Whose checks get reduced first, grandma or Lockheed Martin?” If they say it’s a bad question and we can cut the debt by eliminating “waste, fraud, and abuse”, ignore them, they’re not a serious a person.
Great point. We have to reduce the governments size. There should be no education department. The military should be cut, there should be entire dept's eliminated.
@@artandarchitecture6399 As I said, not a serious person. Their budget is $175B. That's commonly referred to as a rounding error. Stop looking for ideological axes to grind and take a dispassionate look at the situation.
@@tira2145What's with you people and the
Dept of Ed? Lol. Thanks for acknowledging the need for substantive cost cuts.
The thing no one ever talks about is that "government debt" isn't really a thing. It's just the money that currently exists in the non-government economy in the form of US treasuries. US treasuries are just a different kind of dollar, they're both government instruments and they are directly convertible to one another. So when the government adds to the "debt", they just turn dollars into bonds. And when they pay off the "debt" they just turn those bonds back into dollars. The "national debt" represents the private sectors spending power and should really be called the national savings account
How much medicare and social security is funded through payroll taxes and how much is deficit spending. Redo your pennies to show all the unfunded spending which is through non dedicated taxes. So you can exclude things like FICA and the gasoline tax and then focus on the other items, like do we need to raise FICA or raise the gasoline tax to cover all their costs and then cut the rest of the budget to balance it.
I just visually realized how small the proportion of corporate tax really has been. Good job!
It's 21%, which is roughly the global average.
@@siegfriedfurtwanglerknappe6188 They are talking about the ratio of corp tax as a total of government revenues. Not the actual corp tax rate.
@@TyrionLannister1998 That's the case everywhere though
@@siegfriedfurtwanglerknappe6188 Next time, just take the L and move on.
@@TyrionLannister1998 that statement is incoherent
why not make the columns the same size. Cause it makes the miltary seem bigger than it actually is cause its higher by the column is narrow
what about compromising and cutting every department a little bit?
Many doctors now don't accept private insurance. Reason gov insurance don't question the cost implied as well for the extensive cost of medication.
Why is this visualized as a Plinko board, as if the money is being randomly allocated?
changing the width and height of each column of pennies can be misleading
I had the same observation. I like the visualization, but to your point, it is hard to compare the spending across the different ‘bins’.
Corporate tax is 6% of total US revenue, while individual tax made up 42%. That doesn’t even include sales/property tax people pays. But record corporate earnings… 🤯
Lower corporate taxes are good for:
1. Pension funds
2. Earnings are often reinvested into the American economy.
3. If they're paid out as dividends then those are taxed again.
4. Attracting foreign investors to invest in the US rather than other countries.
That makes sense. Most of the cost of running a business is payroll.
I would be surprised if most corporations made more than 14% profit.
If corporate earnings would drop first thing you will see is layoffs across the board. Careful with your wishes
Go watch Deus Ex cutscenes that talk about this lol. Was a literal talking point made by one of the characters that took an Ambrosia shipment that JC Denton has to locate. It's honestly kind of weird how prophetic the game is.
@@siegfriedfurtwanglerknappe6188
1. Pensions are not a thing anymore
2. Most of the earnings goes to executives compensation and stock buybacks
3. Dividends doesn’t change the difference/spread between individual vs corporate tax %
4. Foreign entities don’t invest in US because of low corporate tax rate. There are far better corporate tax havens already.
The only way to solve the problem is across the board cuts for every program....no is untouchable.....5% cut for all program....5% increase in corp. tax and high income.
I wish both sides could agree on common sense changes and just get this under control. Close corporate loopholes and not give out coronavirus money to people who don't really need it. Stop pretending like the rich are using their extra money to create jobs and stop pretending like everyone who is unemployed is actually unable to work. There are so many ways both parties can work together to get stuff done but every time there's a discussion, they just cherry pick talking points that appeal to their base.
good points :)
First they'd have to get rid of the usurious economic system that is like a malevolent tumor sucking all the life out of the world.
@T.J. Kong the rich do not spend their money, by and large. billionaires' net worth is basically 100% equity, stock in corporations. and corporations exist only to generate profit. meaning for every dollar a worker is paid, there is extra profit generated that goes towards other billionaires. so yes, in a way, billionaires' money goes towards making billionaires even more money.
@T.J. Kong You are right. But If the rich would really spend all their money they wouldn't be that filthy rich anymore....
@T.J. Kong Porches and Yachts are built in Europe Mate. Jeff Bezos dropped a cool $Half Billion on his Yacht from The Netherlands.
Not many Yankee jobs on that one. And it's not like Amazon paid ANY Taxes during the entire Trump Administration.
How much of that social security debt is borrowed vs payed by payroll taxes?
Just stop selling Treasury securities. Discretionary spending is created and taxes essentially destroy those dollars taxed.
Let’s have a friendly debate shall we? I’d say cut the funding for department of education & Snap benefits (EBT).
Depends where bond money investment is located if the American people hold the treasury bonds then the money spent in interest will be spent in America most likely. If it is sent to foreign investors then that’s different
We as a county seem to pay a lot of interest to the privately owned banking organization known as the 'Federal Reserve'.
Fed sends that money back to the Treasury or would if there was any left as the Fed is currently in the red.
93% of Fed profits is sent to the US Treasury. Odd considering the federal govt needs neither taxes nor actual borrowing to spend. MONETARY SOVEREIGNTY
Neither party cares about cutting spending. They've both had super majority multiple times, and both parties set record deficits without opposition.
How much was "invested", and what gains were forecast for when?
How much was legacy debt (incl decreased tax income)?
Hello beautiful how are you doing today?
I find it odd that the country would make a spending plan then negotiate how to pay for it.
Those two processes should be in the same plan.
republicans struggle to get their unpopular schemes into the plan, so they hold the economy hostage to force them through in the debt ceiling talks
Nothing should be off the table, this is a gunpoint situation. The target is not to increase the debt limit, the target is to decrease it.
The nominal debt is not a problem. The real problem is the debt to GDP ratio that keeps getting worst.
there’s no excuse for military spending being this high and they need to close corporate tax loopholes
What they need to do is I crease interest rates to recover some of the money. Increasing fed rates is the only way without cutting things or adding taxes.
what is the difference between Medicare and Medicaid?
Huh the corporate tax contribution is so low as compared to individual income tax and payroll taxes 🤔
Taxes are high and they're still stupid enough to not balance the budget get your house in order
It’s pathetic and disgusting how we got into this situation in the first place !
So disgusting. Such a grotesque spending problem. Playing a game we never have before and I am concerned how it ends.
They never consider inflation though. If the average interest paid is 3% and inflation is 10%, the people holding (bond holders) are effectively paying 7% of the total debt in just a year (in real terms).
Great summary. There’s a lot of nuance here especially with social security which has a specific set of taxes that _theoretically_ fund it specifically by law. Those funds can’t be used to pay down debt nor would cutting benefits do anything with regards to the national debt as it is _currently_ doesn’t add to it as it is funded via the aforementioned taxes and a trust fund of historical surpluses and interest those taxes generated.
So in short, while social security is not looking good in the long term as its trust fund runs out, technically the program is still self funded and isn’t contributing to the current debt.
Transition public school to online for core classes like mathematics, literature, and history. Increase the student body limit and save money on education.
I finally understand the debt ceiling 😮💨
Seems like the issue started around the 80s around the introduction of massive tax cuts, maybe we should just reimplement taxes on the rich and corporations and cut corporate bail outs and subsidies.. Instead of VA funding..
Veterans should be attributed to military spending as well.
I love that the us media fearmongers that the us is going to defaults on loans.
For a big economy like the us consumer debt is a lot more problematic than government debt.
Defunding ATF would be a big money saver. Nobody needs that infringement office.
I think we need both cut cost and raise taxes
Sovereign debt doesn't matter because as long as the US can convince the markets it can pay it back, the US doesn't have to pay it back. As long as it can lend more money from rich people who don't pay taxes than it has to pay back to them, it's fine.
I bought a 3 month treasury and got paid back at the end. How is there any debt?
Is 8.5% of the budget a lot though? How much is that as a proportion of GDP? How is that compared with other countries?
It’s awful. Greece is bashed for being irresponsible with money, yet it’s deficit is lower. Generally speaking US and UK sit in the company of third world countries with the amount of their annual budget deficits
I don't get why there can't be a combination of both tax increases AND spending cuts to address the national debt? Since both options will produce pain, just spread the pain around to all.
Republicans don't want tax increases, most Democrats don't want major spending cuts.
You can't label your second biggest category as other.
You can cut defense budget somewhat. Now's not a good time to cut operational budget, but some bloated programs (F-35, etc.) need to go despite the contractor jobs that depend on them to make way for more effective re-armament programs like Javelins / HIMARS.
Fed reserve has an unlimited money printing machine. It’s a futile exercise every time these debt ceiling fights come up.
really misleading model considering the widths and height
It's so dangerous, it makes the Great Depression a peanut compared to this amount of money.
The fact that US issues bonds in the same currency it prints out of thin air is biggest joke of a thousand years.
Social Security "payments" that go into the general fund are still in the black, so the Treasury borrows it back by issuing bonds to social security.
It looks like military, Medicare, social security, and Medicaid cuts need to happen
We are so completely f**ked
Social Security was required to deposit their money into the general fund from which our domestic debt is borrowed, so it's MISLEADING to imply that the Social Security Administration is CAUSING debt = to the amount they withdrawal to keep up on payments. Their spending is them being reimbursed.
social security is the peoples money , its absolute villainous that is part of DEBT, it is not DEBT
@@boogiewoogie450 Except those same people (Baby Boomers) then elected a bunch of politicians who gave them tax breaks for decades. Guess where that money came from?
Also, Boomers are expecting way more out of Social Security than they paid in, same with Medicare. That's why everyone else has to pay for them now.
overly complex penny drop chart that all it does is represent percentage values of the total debt
Raise taxes & cut spending. We need both to eliminate the debt!
The timing of this video released
Go figure, the Wall Street Journal has gone Austrian. FYI, we left the fractionalized gold standard in the seventies.
If you look at countries debt levels throughout history, the budget is completely balanced once you eliminate military spending. Once the people stop dying for their rulers games of land grabbing, our species will be much better off
The 9th word in that sentence sadly trumps you’re idealist approach. War and Peace, give it a read.
@@ARandomName9 I have read it, but there has never been a time in history(word again) where we have actually had peace. Peace is not using your military to colonize much weaker powers. Peace is pure capitalism without any militaries.
Whose to say a balanced budget is a good thing? That just means the government is taxing away everything it spends into the economy. That would drain money from regular people and business, the economy would never last. Hence why we've fallen into recession/depression every time in our history we've attempted to reduce the deficit. Government deficit = Private sector surplus.
Wall Street talking about debt when they engage in a debt economy. Priceless.
The US is actually under-taxed for what we expect to receive. There should be automatic triggers that increase the tax level when the spending level increases. There might be more restraint if the effects were immediate and obvious.
The bigger culprit is how badly the government spends money compared to private enterprise. But, if people want to propose a 70%-80% tax rate, go for it. What bothers me is that they only want to tax the rich. Sure let them pay a higher bracket, but if people really believe the government should do more, just raise taxes across the board, including on the middle class and poor.