Thread by @jameslavish

If you’ve never heard of a *debt spiral*, it’s time you did,

and ask the question, "is the US already in one?"

Let’s dig in and answer that.

A debt 🧵👇

🏛 The government as a business

Before we get into any debt specifics, let’s first cover the basics of how a government operates financially

And while it’s an absolute beast of an operation, it can be boiled down into some pretty simple parts that mirror a typical company.

First, like any business, a gov't has revenues and expenses and often borrows money using debt

~95% of US gov't revenues come from taxes: individual and corporate income, payroll, and excise taxes

~5% comes from estate taxes, customs, Fed earnings, penalties, and other fees.

Just like a business, there must be enough revenue to cover all expenses for it to keep operating

A budget

And in the business of running a country, taxes should cover all gov't expenses: infrastructure, defense, entitlements, etc., as well as interest payments on its debt.