That’s how taxation works, but it doesn’t solve government finance by itself.
The US government has always paid interest on the debt. It’s never missed a payment. That makes it a very stable investment, and until recently it was considered the most stable, predictable investment that could be made.
That also means the US could have stupidly-low interest on its debts. And because the investment is so safe, it also creates a bottom for interest rates. No other investment is safer, so any time the fed rate goes up, all other loan rates go up as well - otherwise investors would just put their money in the US instead of on a home or business loan.
That and other factors result in inflation generally being higher than the interest on loans made to the US, which results in a situation where paying cash up front is actually more expensive than getting a loan and paying with future tax revenue, because future tax revenue grows with inflation that outpaces the interest on the loan.
That’s how taxation works, but it doesn’t solve government finance by itself.
The US government has always paid interest on the debt. It’s never missed a payment. That makes it a very stable investment, and until recently it was considered the most stable, predictable investment that could be made.
That also means the US could have stupidly-low interest on its debts. And because the investment is so safe, it also creates a bottom for interest rates. No other investment is safer, so any time the fed rate goes up, all other loan rates go up as well - otherwise investors would just put their money in the US instead of on a home or business loan.
That and other factors result in inflation generally being higher than the interest on loans made to the US, which results in a situation where paying cash up front is actually more expensive than getting a loan and paying with future tax revenue, because future tax revenue grows with inflation that outpaces the interest on the loan.
deleted by creator