National Debt

socal78

socal78

Well-known member
"President Ronald Reagan once famously said that a stack of $1,000 bills equivalent to the U.S. government's debt would be about 67 miles high.
That was 1981. Since then, the national debt has climbed to $14.3 trillion. In $1,000 bills, it would now be more than 900 miles tall.
In $5 bills, the pile would reach three-quarters of the way to the moon.
The United States hit its legal borrowing limit today and the Treasury Department has said the U.S. Congress must raise the debt ceiling by August 2 to avoid a default."http://www.dailymail.co.uk/news/art...al-deficit-reach-moon-piled-high-5-bills.html

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Actually the August 2nd doomsday is a very misleading piece of liberal propaganda.  In round numbers, the US is taking in around $2 trillion dollars a year in various taxes.  The problem is that we are spending about $3.6 trillion which leaves a deficit of about $1.6 trillion a year.  That deficit spending is financed by borrowing money and increasing the national debt.

While it is true that we hit the $14.3 trillion debt ceiling in early May and that the Treasury is playing games with disbursement of funds so that it can avoid exceeding the debt ceiling, it is not true that on August 2nd or on any other "magical date" that we will be forced to default on our debt.

According tohttp://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm, the interest expense for Fiscal Year 2010 was $275 billion.  With $2 trillion in annual revenues, we are taking in $170 billion a month.  It takes less than 2 months of revenue to pay the entire years interest expense and avoid default.

Make no mistake about it, if we do default it August, it is not because we have to, but rather because we have chosen to.

Without the ability to borrow any more money the Federal government would have to go on a massive diet and eliminate that $1.6 trillion overnight.  But as Rand Paul showed in his budget proposal, if you limit spending to activities that the Federal government is actually Constitutionally allowed to engage in, it's no so hard eliminating a budget deficit like that.

I don't know how everyone else feels, but I think it's well past time to reign in the Federal government.
 
test said:
winex said:
According tohttp://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm, the interest expense for Fiscal Year 2010 was $275 billion. 
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It says $414 billion.
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I'm sorry.  You are correct.  I was looking at the total for the fiscal year to date for 2011, not the last complete fiscal year.

But the point still remains, it's possible to service the debt through current revenue streams.  What not expanding the debt limit would do is force the government to live within its means.  I find it hard to think of that as a bad thing.
 
Now that Republicans control the House they will hard ball with Obama for these debt negotiations. They just need to wait out the clock and at the last minute agree to raise the debt ceiling but only after attaching significant budget cuts to the bill. Obama will be faced with vetoing the legislation and face economic armageddon or suck it up and let the cuts through.

Long term there is no question--we need both cuts in spending and increase in revenue. Republicans and Tea party folk seem to only focus only on spending. But realistically we need to raise revenue as well. We need to reform the tax code. Make it simple and eliminate the many special interest loop holes. We can probably decrease marginal rates while still achieving higher revenue.
 
iacrenter said:
Now that Republicans control the House they will hard ball with Obama for these debt negotiations. They just need to wait out the clock and at the last minute agree to raise the debt ceiling but only after attaching significant budget cuts to the bill. Obama will be faced with vetoing the legislation and face economic armageddon or suck it up and let the cuts through.

Long term there is no question--we need both cuts in spending and increase in revenue. Republicans and Tea party folk seem to only focus only on spending. But realistically we need to raise revenue as well. We need to reform the tax code. Make it simple and eliminate the many special interest loop holes. We can probably decrease marginal rates while still achieving higher revenue.
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Actually the path forward isn't so clear.  In typical Washington DC fashion, the first resort the Feds are planning on involves defaulting on the national debt.  Even though the debt could easily be serviced by current revenue streams, there is no desire to act responsibly because the powers that be won't get things their way if they behave in a responsible manner.  So if the government isn't allowed to continue to spend money on things it isn't constitutionally authorized to do, they will react by defaulting on the debt, stop paying men and women in the military, and stop payment to unconstitutional but politically popular things like sending out Social Security checks.  Meanwhile stupid programs like teaching uncircumcised African men to wash their genitals after unprotected sex (http://www.cnsnews.com/node/75198) will go forward unscathed.

Also it's very clear that the government does not have a revenue problem, it has a spending problem.

Here is a link to an article by George Will from last November - http://www.newsweek.com/2010/11/20/will-a-senator-looks-back-to-the-future.html  While everyone should read the entire article, here is a key quote:

If LeMieux does run, his slogan might be: ?On to 2007!? That was, he says, ?the last good year,? and he asks: Would it result in grinding austerity for government to live for a while as it did then? He says that if federal spending were held at the 2007 level for 10 years, the budget would be balanced in 2013 and the national debt, currently $13.7 trillion, would be less than $7 trillion in 2020, with annual savings of hundreds of billions in debt-service costs. Absent action, he says, interest payments in 2020 on a debt of $26 trillion will be $900 billion.


In my opinion spending was WAY too high in 2007, but it shows the impact of self restraint on the fiscal situation in Washington.  Personally I would rather see something like what Rand Paul has in mind implemented, but even a return to a level of spending by the Feds to the historic averages since World War II would result in a return to fiscal sanity.  We can't afford the 25% increase in government spending that has occurred under Obama, and we don't need to increase taxes in an attempt to try to sustain the unsustainable.
 
Well this spending problem started well before Obama took office. It just hasn't got any better. Short term we need to get the economy going and stimulate job creation. Long term we need to cut spending and have sustainable growth in the economy. The trick is to balance the long and short without killing the patient.
 
Since less than 50% of working people pay federal taxes the easiest way to increase revenue is to tax more people.
 
iacrenter said:
Well this spending problem started well before Obama took office. It just hasn't got any better. Short term we need to get the economy going and stimulate job creation. Long term we need to cut spending and have sustainable growth in the economy. The trick is to balance the long and short without killing the patient.
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The Federal budget in 2007 was about $2.7 trillion dollars.  The Federal budget in 2011 was $3.6 trillion dollars.  That's a 33% increase in spending.  If the Feds want to stimulate the economy, they need to get off the backs of productive members of society.  The government is not capable of creating jobs, only of redistributing wealth.
 
Before the clock strikes midnight tonight, the national debt will be $33 trillion. It hit $32 trillion June 16th (less than 2 months ago). There is a "time machine" on the upper left so you can look mostly back in time but also forward 4 years if spending were the same as today.


Note how today the interest on the debt is less than defense/war but in four years it is more than social security AND defense/war combined.

Towards the bottom you can see M2 money supply dropping. Least we're trying something.
 
From 1997 to 2001, President Bill Clinton had a balanced budget and generate surpluses.

in 2001, the Federal Government spent $1.835 Trillion. The population was 285 Million.

inflation from 2001 to today is 72.7%. The population is 332 Million.

The equivalent budget would be $1.835 * (332/285]* 1.727 = $3.69 Trillion.

The FY 2024 plan is $6.1 Trillion.

it’s lower than the last two years of Trump, 50% higher than the first two years of Trump which were already 50% higher than inflation and population adjusted Clinton’s balanced budget.

It’s a spending problem.

and before you blame social security, in 2001: SocSec was 23% of the outlays, today it is under 20%.
 
It’s clearly a spending problem. The problem is, as it always has been, the government rarely reduces spending and their first reaction is to ask for people to pay their fair share. California removed the SDI cap starting in 2024 to enhance family leave. That will be a sizable hit and if democrats had their way they would remove the wage cap for social security.
 
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