Please help me understand.
I'm hearing about Federal debt going up and up every year. I know that government isn't free, and don't get me wrong, I'm plenty willing to do my part to help pay for it with taxes, right? But the deficit spending thing worries me a little bit.
At what point do we have to stop and say, "This is too much debt, and we cannot repay it"? At what point is Uncle Sam forced to default, and what would that mean for the economy?
My understanding of the government is that it behaves like a corporation. We, the citizens and residents of the USA, are its shareholders. Citizens are entitled to have a say in who manages the corporation. And the corporation takes its funding from us (through taxes) and spends that money producing goods (like public roads) and services (maintaining a currency, public education, a welfare system, market regulation, etc.).
Right? Is this accurate?
Well, when corporations declare themselves bankrupt and aren't bailed out, they have to find a way to pay their debts out of corporate assets. (Generally these don't include the contents of the pockets of management or shareholders, their houses, or their clothes, since the point of incorporation is to protect them from catastrophic loss in case the business fails.) Some companies sell off their physical assets, but that doesn't work too well for a country: what do we have to sell that isn't territory where citizens live? And those citizens would be pretty damn sore about things if their homes were suddenly ruled by the government of another country, or a privately-owned government. (Insert snark about USA's corruption problems here.)
But... what can a country do? I mean, the best way to solve or avoid problems with debt is to pay off what you owe, and do it as quickly as you can. But you have to have the money in order to pay the debt. The only way we can do that now, so it seems, is to raise taxes and, to ensure that money sticks around in your coffers long enough to be used to pay the debt, cut spending. But spending cuts are unpalatable at best, politically impossible at worst; the ones who are the worst off are always the poor, since well-funded lobbyists and various ideologues fight tooth and nail to preserve corporate subsidies of all kinds. Including stupid wars. And tax increases, well, those seem politically impossible at best.
I know that President Barack Obama (and I love the sound of those words) inherited eight years of fiscal instability from the Bush years, after Clinton managed to hammer out a budget surplus, by hook or by crook. But at this point, I don't think it matters so much who caused the problem as how they caused it, so we can use them as a negative role model. And I know that deficit spending (and debt in general) is a tool with benefits as well as risks, not an evil monster that we mustn't ever feed. But when our Federal debt is on order of ten to the twelfth dollars, and our state and local governments are also in deep fiscal trouble, it's hard to think of deficit spending as helpful.
So please, tell me: have I got this picture all wrong? Am I worried about nothing? Should I be worried about this, but worried less? Or is this an accurate portrayal? Please, help me understand.