Yes this is corporate welfare, and sadly it's probably necessary. We need to be able and willing to blow the TSMC fabs if China invades Taiwan, and being able to credibly make that threat decreases the chance that they will invade.
Why pissed off? Intel is the one with experience and the US is desperate de-risking TSMC and control more of the chip as chips is one of the most important resources now and in future. Would they give it to Y-combinator startups? If Yes they would be a fraction of it, Intel earned this by being American and being the cornerstone of American Chip business for past few decades
I'm opposed to it here as I am to it happening in China. Except that I felt Huawei phones were superior to everything else I had used from an OS perspective (They made lots of optimizations). I don't Intel as a company in good standing; they've committed personnel, product and corporate fouls. I'd rather see 20 million go to that kid that made his own CPU. I have faith he'd do more to better humanity than Intel.
The US is spinning $1T new public debt every 100 days and there's no credible path to return to a sustainable trajectory. Plus, the poster child for federal corporate welfare-- Boeing-- has not done so well with that largesse, Intel is a rather sad candidate to carry that torch forward.[1]
> The US is spinning $1T new public debt every 100 days and there's no credible path to return to a sustainable trajectory.
How are you calculating this? The full-year deficit is running at less than $1T... You aren't counting it when Treasury rolls maturing bonds over into new debt, are you? That's normal and irrelevant.
There's a few things worth mentioning, since after all that is still a big deficit.
1) Debt service costs are over $1T annually, as the end of many years of ZIRP finally starts to bite. There's no guarantee that we return to lower rates in the future, but it's likely, and that will reduce debt service burden over time.
2) Deficits are calculated inclusive of the costs of debt service, but do not include the impact of inflation on the public debt (which is substantial right now).
3) Deficits can absolutely be sustainable. The economy (i.e., GDP) grows over the long term, and the tax base grows with it. GDP is around $23.3T, and assuming long-run 3% growth, that would mean deficits of $700B are sustainable.
Overall the fiscal picture is not great, but anyone acting like there's an acute crisis is probably doing it for political reasons.
Your link indicates a $1.7T deficit for FY23 which is not "less than $1T". That's roughly twice the figure you offer as " sustainable" ($700B).
It's been widely reported [1] that the US debt reached $32T in June 2023, $33T in Sept 2023, $34T January 2024, achieving those milestones roughly every 100 days. The projections indicate an exponential increase, which doesn't help the case for sustainability.
Sovereign debt and fiat ultimately are confidence games. Being unable to offer credible long-term math is a problem.
You're right, I mistook the year-to-date figure for the full-year projection.
That said,
> It's been widely reported [1] that the US debt reached $32T in June 2023, $33T in Sept 2023, $34T January 2024, achieving those milestones roughly every 100 days. The projections indicate an exponential increase, which doesn't help the case for sustainability.
These figures aren't interesting because they include debt that the government owes to itself (intragovernmental debt). The debt held by the public is presently around $27T.
When actually considering long-run sustainability, you don't just consider the real GDP growth rate (as I did above). You really need to consider several factors:
1) Deficits
2) Nominal GDP (i.e., disregarding inflation)
3) Nominal interest rates
If you have a ton of inflation, you can effectively reduce the debt burden in terms of a % of GDP, since the GDP grows with inflation and the debt does not.
You'll note an explosive increase due to the extreme pandemic deficit spending (and during the financial crisis), but lately it's actually not an "exponential increase".
The bottom line is it's not as though these are uncharted heights, or that we're presently on an uncontrolled exponential trajectory -- but, we have "run out of room", and if we have another crisis, we're going to be unable to engage in the kind of deficit spending that we have in the past without serious consequences.
Nice smooth exponential curve, debt held by public as percentage of GDP through 2053.[1] During the GFC, the projections always flattened over the long term. There's no longer even a pretense of plans to normalize. We've lived for a long time in the "no serious consequences" regime; this set of projections seems different.
This seems to have more to do with population growth projections over the very long run rather than anything that's actually going on in Congress right now.
Bottom line, our taxes need to go up modestly in the coming decades... but only if these assumptions actually prove to be true:
> Inflation slows through 2026 to a rate that is consistent with the Federal Reserve’s long-term goal of 2 percent and then remains at rates that are consistent with that goal from 2026 to 2054.
> Interest rates generally rise over the next three decades, largely as a result of projected increases in federal borrowing and in capital income as a share of total income.
... I doubt it! Look what happens to interest rates in graying countries like Japan.
