Ask an expert: Why won't US debt woes fade?

MSN Money's Anthony Mirhaydari explains why the nation's fiscal problems are so hard to solve.

By MSN Money Partner Feb 4, 2013 5:00PM
The dreaded fiscal cliff has been avoided, and the debt ceiling was just raised. But have the country's problems really gone away?

In the video below, MSN Money's Anthony Mirhaydari explains why there are no easy fixes to America's debt woes and why the budget mess will be back to punish investors sooner than you might think.
Just like any other debt, America's growing fiscal imbalances have been caused by years of overspending. That is, the government has been spending more than it has been taking in.

Dollar bills floating over US Capitol CorbisPut simply, the government collects money through taxes and fees and spends it on defense, health, education, infrastructure and more. If the revenue the government brings in is not enough to pay its bills, it has to borrow money, usually by issuing bonds. And yes, many of those bonds are foreign owned. In each of the last four years, the government overspent by more than $1 trillion to bring the debt to a total of about $16.4 trillion.

How do we solve this problem? As Mirhaydari explains in the video, it's far from being a simple task. One way is to strengthen the economy so the government can collect more in taxes and spend less in unemployment and other benefits to those who have been hurt by the weak economy.

The other side of the equation is the spending, such as on social security and healthcare, Mirhaydari says. He explains how healthcare spending especially in the U.S. has ballooned and continues to inflate and recommends an investment strategy that fits the current climate.

The discussion about the growing debt and its effect on the economy as well as the current trading environment continues over at MSN Money's Facebook community.
Feb 4, 2013 8:53PM
We could start with a budget and end with a budget that balances.
Feb 4, 2013 9:51PM

It baffles me that the simplest of math hasnt caused a revolt  this country. I think part of it is a large segment of the population doesnt pay attention, gets freebies, and cant wrap their heads around what trillions and trillions really is. It is an abstract. Some times I am able to get family members to relate when I reduce it to a per person basis My younger family members are just starting t get it now that they are starting families of their own.

Over the weekend I outlined how Obamacare will affect them in 2014 and beyond. The were schocked. They thought it meant FREE MEDICAL CARE.Unfortunately, they are like many americans thinking all this debt,taxes, entitlemen programs have little or nothing to do with them. Theyre in for a lof more unpleasant surprises.



Feb 4, 2013 5:52PM
The Fiscal Cliff was always a Fiscal Slope and it's occurring as we muse on our surroundings.  Tax for some have gone up but others will too. Spending cuts for some, defense, are occurring but will speed up in March.  And yes, GDP growth will have to be between 1% and 2% because we are out of other people's monies including China, Europe and the rest of the world. Europe? Yep, we screwed them along with everybody else during OUR housing bubble mortgage securitization. So citizens, hedge funds and Wall Street get use to 2% growth and quit blaming Washington for you being the pigs that feed at the trough.
Feb 5, 2013 7:40AM
lets just leave the gov. alone.  we elected them to do as we desire.  examples....more welfare for illegal, that buys votes., more food stamps for the unemployed (due to cheap, illegal labor),  that also buys votes,  and last but not least education, medical and etc., etc., etc., for more votes for the elected (by us)  do not worry, everything is great and obama says so.  if they do not get better in the next 20 years we must keep in mind it was all the fault of bush. 
Feb 4, 2013 10:31PM
There are just too many people living in the United States and the population is increasing at a faster rate than China. We are the third most populous country in the world.  We will never be able to create jobs fast enough for the population increase so we will force poverty on more and more people.  This is a really simple math problem yet no one wants to acknowledge the only possible answer.  We have no solutions, and bandaids can't stop a major wound.
Feb 4, 2013 11:03PM
Here is a reality. The costs will continue to rise for healthcare as long as we keep fixating on things that don't help drive down costs....

Attorneys, hospitals and doctor's....stop the frivolous lawsuits and the courts will slow down... lawyers are just carp sucking scum. They do nothing but create crap to  write laws about then turn around and sue people against the very laws they wrote. Change our system to one in which attorneys pay all defendants costs if they lose and pay the same amount to the defendants if they lose the case. If the doctors no longer have to pay 20% for malpractice insurance then the hospitals can drop the fee rates. Overall, if we just got rid of attorneys or their ability to corrupt our system was bogus lawsuits we would recognize an immediate reduction of our fees and costs for healthcare by 73%. That would change the our country quickly. In short, ALL attorneys are scum.
Feb 5, 2013 10:41AM
Healthcare costs were 6% of GDP for 5 decades before government became involved in the process.   Now they are 17% of GDP and growing.   Medicare and Medicaid have clearly lowered the quality of healthcare, and driven up the costs 300%.  

It has become like the youth indoctrination centers, err, the 'public option' in education.    Another case of failed government involvement.   Chicago is a great example...  13,200 per student per year, spent.  After 12 years you have a 59% graduation rate, and the read and write at less than 9th grade level...   A bad product at an insane cost.   

Government is not the answer, it is the problem.
Feb 4, 2013 6:21PM
inflation reduces the deficit. It why Sequester works. we need be put place in 2012 but dem complained so we delayed them and waste time. congress needs get some courage and in act the sequester before world stop buying our debt.   
Feb 5, 2013 10:49AM

And on Social Security  and Medicare....

Today, according to the SSA, the average retiree exhausts all their contributions at age 72.33.  This means that after that date they are living on someone else's dime.  Clearly we need to raise the SS tax to cover longevity.  What did the imbecile Obama do?  He slashed the tax for 2 years.  

The average Medicare  patient exhausts their tax contributions by  age 68.  This tax needs to be raised to cover the cost.  Congress does nothing....

Here is the solution plain and simple.  Increase Social Security  taxes another 3.2% and leave the retirement ages alone.    Increase the medicare tax by the same amount.   Now both programs should have enough tax revenue to fund them.   The only problem democrats see with this is that the people that DEMAND these benefits will now have to PAY for those benefits.  

They prefer someone else pay for them.  Of course the someone else doesn't want to work extra hard for someone else.   

There is the crux of the problem.   Democrats are greedy.  They want someone else to pay their way...

Pretty much the USA is doomed -- which was the whole idea behind the Federal Reserve after all to crush the US government


They almost did it in the 1920's and 1930's but realized that they needed the government and American people to be strong and defeat Nazi Germany. Since WWII they have gone back on track to destroying the USA and this is the year they will do the USA in.


Already China and the rest fo the world has abandoned the US dollar and when our imported food which is 40 percent of what we have imported becomes more than people can spend their paychecks on we will strave to death.


Pretty much it's game over. The super rich have pushed the price of farm land north of $50,000 an acre and farmers to make money need it at $100 or less an acre.


As more and more farmers are forced out of farming and it being impossible to get into farming because of the cost of the land and seed stock and fertilizer costs we are going to have to import more and more food when once we feed the world.


And with the collapse of the dollar a hamburger at McDonalds is going to hit $50 bucks very fast and people are going to only be making $7.25 an hour so you figure out what is going to happen.

Feb 5, 2013 1:55AM
The huge debt the Gov is creating year after year, is money borrowed from the Federal reserve.
A privately owed company. The securities of this debt is covered by the  American taxpayer.
So this realization of debt to the taxpayer, is NOT what he owes monthly on the credit cards or utilities but the burden of debt applied to every citizen through consumerism. This debt is extended for the next few generations. The "quality of life" so enjoyed by Billionaires in America, is not provided by Wall St or the government or the Federal reserve. It's provided by "YOU" the American Taxpayer. 
Feb 5, 2013 12:52AM

LIMO....I don't "cash" div checks, I re-invest them, maybe I'm fortunate ??

Gold is doing just fine....A little bit low and stagnating..Get Ready."there's a new day a coming."%%


Healthcare is the most "over bloated beaucracy(sp)" on/or in the face of the American Public..

We have put up with bullshidt for years and paid through the azz...

Healthcare and HEALTH are not free...But, we need to blame the ROOT CAUSE...

And not someone trying to change it....

They have talked and given lip-service for 3-4 decades....And we have all bought it..

If the AMA and big Pharma don't like it;...Let's start importing from somewhere else..

We have been screwed too long.. 

Feb 4, 2013 11:14PM
This debt is from two unpaid for wars for over a decade !! Bush tax cuts that was to create jobs, in the same decade ??? WELL still looking for them jobs ? Wall street socialized bailout of big banks ! Them pesky non union bank tellers made them go broke ! LMFAO. The FEDs pumping now 85 billion a month into the toxic bond market from them homes to wal-mart workers that the wall street banks made . Ceo's run companies into the ground , not workers.. America losing 70% of the value of our homes , because wall street was greedy.200,000 dollar mortgage to wal -mart workers real fiscal responsible  LOL .. Ya the list is long America and look i see republicans ranting about it NOW??? Where were they when they were in control of everything ! Oh ya working three days a week that's where , and building this debt . If Democrats are tax and spend the Republicans are borrow and spend .. < The US Congress the most useless place in the World next to wall street..Oh ya healthcare running at 150% above inflation per year.. Simple Hmmm....
Feb 5, 2013 1:39AM

Okay now, those may or may not be on the right blog....Damn you guys get sidetracked easily..?


Lookee, lookee; There's a fat guy standing in the corner...He's wearing a funny hat..Lookee.

Feb 5, 2013 12:55AM
Taking the "fraud" out of Medicare, and the "profit" out of NON-Profits(hospitals), will take care of the Nation's Healthcare...With slight contributions from "all of us."
Feb 4, 2013 7:25PM
While gold lovers are worried about the price of gold I`m cashing dividend checks.
Feb 4, 2013 8:30PM

For 8 years the far right said "the budget doesn`t matter".Bush didn`t put the wars on the

budget.Our mostly far right media these days don`t tell us that.

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