Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: National Debt

Fiscal Cliff Funny Numbers: Taxpayers Pay More Yet Deficits Rise

Uncle Sam is Broke

Uncle Sam is Broke (Photo credit: Infrogmation)

Now that the House of Representatives has virtually rubber-stamped the Senate bill to avoid going over the fiscal cliff – the so-called American Taxpayer Relief Act of 2012 (ATRA) – which President Obama is expected to sign shortly, commentators have been working feverishly to determine exactly what is in the 157-page bill that no one had time to read before being rushed to completion at the very last minute.

The analysis by the Congressional Budget Office (CBO) measured the impact of ATRA against its baseline assumption that the congress would do nothing and let all the pieces and parts of the fiscal cliff occur automatically. In that baseline, annual government deficits would have been cut in half, from $1.1 trillion to about $640 trillion. But under the new law, the national debt will increase by

Keep Reading…

Where Are the Spending Cuts?

Cutting your Spending

Cutting your Spending (Photo credit: Tax Credits)

The fiscal cliff “deal” about to be signed into law by President Obama is all about tax increases. This is what The One has wanted since he got into office. He wanted to overload the system so much that taxpayers would be forced to pay more. It’s more of the “leveling” required to push the US down relative to other deadbeat nations who also can’t pay their bills. The easier to be “absorbed” into the new world order run by non-elected elites. But I digress…

According to the Congressional Budget Office (CBO), the “deal” consists of $15 billion in spending cuts (over the next ten years, mind you) compared to $620 billion in new taxes - a ratio of 41:1. What a deal!

“We’ll address spending cuts later” is now the cry from sycophants like Grover Norquist. “We got a deal we can live with,” they say. “Now let’s get down to business.”

Sorry. Business is already done. That window of opportunity to hold the government accountable is closed. Obama got what he wanted. Boehner caved in. End of discussion.

I’m biased (!). But I think the fiscal cliff turned out to be a speed bump on the road to more

Keep Reading…

Debt Ceiling Debate Now Set for February 2013

The debt ceiling is expected to be reached, officially, on Monday, December 31st, when the national debt reaches $16.4 trillion. Unofficially, with various “extraordinary measures” employed, the Treasury won’t bump into the real limit until early February.

Those measures will give the Treasury some $200 billion in “headroom” and since the government is borrowing $100 billion every month, the math is easy. The question then becomes:

Keep Reading…

College students preparing for what?

The Bureau of Labor Statistics (BLS) has done us another favor: it has blown the cover off the perception that a college degree is worth the money. Their listing of the top 30 occupations in job growth for the next 8 years shows that only five of them need a college degree!  They are

Keep Reading…

More of America’s National Debt Being Bought by Foreign Governments

On Monday, December 17th, the US Treasury Department announced that China and Japan have increased their purchases of United States government securities despite concerns over the continuing negotiations about the fiscal cliff. Foreign holdings rose to $5.5 trillion in October, or about one-third of the country’s $16 trillion national debt. The increased interest in owning US government debt by foreign governments is welcome as the government’s monthly deficits continue growing at about $150 million every month. 

Although China is often referred to as the primary financier of America’s continuing profligacy, that country’s total holdings, some $1.16 trillion, represents just a little over 7 percent of the US’s national debt. Japan comes in at second place, owning $1.13 trillion, with Brazil holding $255 billion.

In contrast, two-thirds of the country’s national debt is owed by individual American investors and by Social Security and civil service and military pension plans. The balance of $1.6 trillion is owned by the Federal Reserve.

How much longer can such profligacy with its resulting trillion-dollar annual deficits continue? Back in 1995, Harry Figgie wrote Bankruptcy 1995 and predicted the end would occur within five years:

The good news and the bad is that neither we nor any other nation can continue the sin of deficit spending indefinitely. The laws of economics eventually exact their punishment, and we are dangerously close to getting ours.

Just as interest compounds in a savings account, it compounds on our debt. The $4 trillion debt we owed in 1992 becomes $6.56 trillion in 1995 and $13 trillion by the year 2000 just from the accumulation of deficits and interest alone.

Only a fool would contend that this insanity doesn’t have to end.

That was 13 years ago and yet that “day of reckoning” hasn’t arrived. Part of the reason is those “laws of economics” that resulted when interest rates were forced down by the Federal Reserve following the bursting of the dot.com bubble and have remained historically low ever since. That brought the cost of borrowing to record lows as well. For instance, the percentage of taxes that were devoted to interest payments on the national debt in 1991 was nearly 20%, but by 2003, it had declined to just over 8 percent. When compared to the country’s gross domestic product, interest was eating up just 1.4% of it. As Bill Sardi noted, “America was saved by cheap money.”

But with interest rates at near zero, how much longer will investors, foreign and domestic, continue to put up with such low returns in the face of an ever-increasing risk of default? Following the debt ceiling crisis during the summer of 2011, the rating agency Standard and Poor’s downgraded its rating on U.S. Government debt for the first time in history. And unless something positive comes out of the fiscal cliff negotiations, Fitch Ratings is likely to follow.

The Tax Policy Center, using rosy economic assumptions, projected that deficits would continue at least out to the year 2017, and would average $700 billion a year. As Sardi noted, “There is no substantiation for this scenario.” And so something’s got to give.

Indeed, if the average monthly deficits of $150 billion were simply extended in a straight line into the future, deficits over the next five years would add $9 trillion to the national debt, bringing the total to over $24 trillion by 2017.

There are several reasons why that “day of reckoning” may in fact be years away. For one thing, where else would China and Japan invest their surpluses? Name one country that boasts, at least on paper, a better credit rating than the US. With Germany and Japan in recession, and the Eurozone countries struggling to stay afloat, options for “safe” places to invest are limited.

Second, because at present the US dollar is the world’s reserve currency, there continues to be a demand for them no matter what they might be worth. Since Saudi Arabia must deal in dollars when selling the West their oil, there is a floor under that demand. And the recent drop in the price of oil shows, for the moment at least, that Saudi Arabia is happy with the arrangement.

And then there’s the Federal Reserve offering itself as the lender of last resort, announcing last week that it will continue to buy at least half of the government’s deficit for the foreseeable future.

The “day of reckoning” may instead occur in baby steps as the value of the American dollar continues its slow decay in purchasing power.

Despite the cries of worthies like Figgie and Sardi that the end is near, it may not be. The cross-currents of forces demanding further deficit spending are increasingly being met by demands for fiscal sanity will likely put off that “day of reckoning” for a long time, perhaps years into the future. That may indeed be enough time for those demands for sanity to be heard by enough in Washington to begin the sensible rebuilding of the country’s fiscal integrity, in which case the “day of reckoning” would happily never arrive.

 

 

 

 

The Fiscal Cliff’s not the Real Problem

In Sunday’s article in the New York Post, Cato scholar Dan Mitchell made an excellent point: it’s not the fiscal cliff that’s the problem. It’s what comes afterwards.

If we go over the fiscal cliff, not much is likely to happen, he says:

If we go over the cliff, it simply means the economy will grow a bit slower and politicians will spend a bit more money. And the sequester actually would be (modest) good news, since it means the burden of government spending would be “only” $2 trillion higher 10 years from now, rather than $2.1 trillion higher.

In other words, nothing much will change. But that also means that no matter how things are sorted out come the first of the year, the real problem underlying today’s crisis won’t been touched:

The real crisis is the ticking time bomb of entitlement programs and the welfare state.

Unfortunately he thinks that things will appear to be normal for a long time, thus putting off for that same long time any chance that any substantive will be done until it’s too late:

This bomb won’t explode this year or next year. It may not even explode for another 20 years. But at some point America will experience a Greek-style fiscal collapse if these programs are not reformed.

It’s a simple matter of math due to an aging population. According to both the Bank for International Settlements and the Organization for Economic Cooperation and Development, the future burden of US spending will climb so high that we’ll be in worse shape than Europe’s welfare states.

He warns that the problem is vastly larger than just a national debt of some $16 trillion.

A lot of people get upset about the national debt, which is somewhere between $11 trillion and $16 trillion, depending on whether you include money the government owes itself.

Those are big numbers — but if you add up the amount of money that the government is promising to spend for entitlement programs in the future and compare that figure to the amount of revenue that the government projects it will collect for those programs, the cumulative shortfall is more than $100 trillion.

I think the number is even larger, but no matter. It’s so vastly beyond anything even being admitted to in Washington that it might as well be a quadrillion. Those promises won’t be paid. They will be broken. And people depending on them will have to make major painful readjustments to the new reality. But not just yet:

When the status quo [becomes] unsustainable, the “bond vigilantes” will be the ones in charge. And when they cut up Washington’s credit card, it won’t be a pretty situation — especially since there won’t be anybody left to bail us out.

Compared to that scenario, the fiscal cliff is a walk in the park.

The Fiscal Cliff: What Really Needs to Be Done

Piggy Bank

(Photo credit: Images_of_Money)

Now that the national elections are history, attention in Washington is firmly focused on the “fiscal cliff”: the day of reckoning created by the congress during the budget ceiling debate in the summer of 2011. When the Super Committee failed in its mandate to create a plan to address the deficits and the national debt, the result was the misnamed Budget Control Act of 2011 which, in current parlance, kicked the can to December 31, 2012. All that act did was to raise the debt limit immediately by $400 billion, thus averting a government shutdown, while allowing further increases in the debt limit without another congressional confrontation with the White House. The tradeoff was the promise of spending cuts in the future.

That future is now.

If nothing is done, and the economy runs off the so-called fiscal cliff, the impact will be a combination of $7 trillion worth of tax increases and spending cuts over the next decade.

There will be automatic spending cuts of $120 billion annually in both defense and non-defense spending, there will be increases in income and capital gains tax rates, the reestablishment of the so-called “death tax” (the estate tax), 27 million households will now be subject to the “wealth tax” under the Alternative Minimum Tax (AMT), while those enjoying the payroll tax “holiday” will see their Social Security withholding taxes return to the 6.2% rate from the current temporary 4.2% rate. There would be the confluence of another flurry of other tax increases and spending cuts as well, including 27% cuts to Medicare providers and at least four other tax increases imbedded in Obamacare.

According to the Heritage Foundation, the fiscal cliff will cost families making $70,000 a year more than

Keep Reading…

Marching Towards the Fiscal Cliff

John Boehner - Caricature

John Boehner (Photo credit: DonkeyHotey)

This article from the Washington Times perfectly illustrates how Washington is going to deal with the “fiscal cliff,” which means that nothing much will happen to bend the trajectory away from inevitable bankruptcy.

First, the inevitable warnings from the Congressional Budget Office (CBO) which focuses only on the immediate:

Even if all of the fiscal tightening was eliminated, the economy would remain below its potential and the unemployment rate would remain higher than usual for some time.

If the fiscal tightening was removed, and the policies that are currently in effect were kept in place indefinitely, a continued surge in federal debt during the rest of this decade and beyond would raise the risk of a fiscal crisis … and would eventually reduce the nation’s output and income below what would [otherwise] occur.

This certainly isn’t the galvanizing language that would motivate congress to do something significant about the real debt: the $222 trillion debt the government currently owes.

House Speaker Boehner is holding firm against tax increases, for the moment. While Obama is giving indications that he might soften a little about

Keep Reading…

Debt Ceiling Likely to be Raised Without Fanfare This Time

English: at CPAC in .

Grover Norquist (Photo credit: Wikipedia)

Near the end of the Treasury Department’s Quarterly Refunding Statement, issued on Wednesday, October 31st, Assistant Secretary Matthew Rutherford included the following ominous paragraph:

Treasury continues to expect the debt limit to be reached near the end of 2012.  However, Treasury has the authority to take certain extraordinary measures to give Congress more time to act to ensure we are able to meet the legal obligations of the United States of America. We continue to expect that these extraordinary measures would provide sufficient “headroom” under the debt limit to allow the government to continue to meet its obligations until early in 2013.

These are the words that triggered the debt ceiling crisis in the summer of 2011 when recalcitrant House members, honoring their Taxpayer Protection Pledge, drew a line in the sand and threatened a shutdown of the government unless the White House caved in and permitted spending cuts in the future in exchange for an immediate raise in the ceiling. Those “spending cuts in the future” are part of the “fiscal cliff” facing the lame duck congress following the election on Tuesday.

Since August 2nd, when the Budget Control Act of 2011 was signed into law, the debt ceiling has been incrementally raised to its current level, $16.4 trillion. With October’s deficit of $195 billion pushing the national debt to $16.2 trillion, the clock is ticking on the inevitable limit being reached well before

Keep Reading…

One Last Look at the Polls

George Horace Gallup, founder of the Gallup polls.

George Horace Gallup, founder of the Gallup polls. (Photo credit: Wikipedia)

I promise: this is the last time I’ll comment on the election. But Russ Robert’s analysis of what’s likely to happen on Tuesday is worth reviewing. He starts with a little necessary history and the purpose of polling:

Quick summary: dating back roughly to George Gallup’s introduction of modern political polling in the 1936 election, a pollster seeks to extrapolate the voting behavior of many millions of people (130 million people voted in the 2008 presidential election) from a poll of several hundred or a few thousand people.

But political polling is different:

Not all adults are registered voters, and not all registered voters show up to vote every time there’s an election.

And this is where “scientific” polling becomes a lot less

Keep Reading…

Fiscal Cliff, Fiscal Gap, Lame Duck Congress

Lame Duck

Lame Duck (Photo credit: Thomas Hawk)

Private congressional conversations about how to keep the country from racing off the fiscal cliff in January are already taking place in Washington, but few are willing to give many details. With the promise of anonymity, congressional staffers from both sides of the aisle are working feverishly to come up with solutions to the onrushing fiscal train wreck.

Investigator Richard Rubin, writing for Bloomberg, said the Republicans are building a “toolbox” of options — including raising taxes — that could be used during the lame duck session following Election Day. Which tools will be used depends on how the elections turn out. Likewise, Democrat staffers are developing their game plans as well, but tax cuts are not in their “toolbox” according to unnamed parties familiar with the discussions.

Which tools each side will be using depends upon if the Democrats retain control of the Senate and the White House, but fail to gain control of the House. If Romney wins, and the Senate goes Republican, then

Keep Reading…

Senator Coburn’s 2012 Wastebook Names Biggest Waste: Congress

Dollars down the Drain

Dollars down the Drain (Photo credit: Images_of_Money)

For each of the past three years, Senator Tom Coburn (R-Okla.) has published his annual Wastebook, and each year the press has had a field day digging into the 200-page report to expose the most outrageous, wasteful, and annoying projects Congress is funding with taxpayer monies. In 2010, for instance, Coburn’s report noted that $200,000 went to research that studied why political candidates “make vague statements,” while his 2011 report exposed squandering of $700,000 to study cow burps, robot dragons, and “bridges to nowhere.”

Fox News considered these to be “highlights” in the 2012 edition:

  • Free cellphone service to 16.5 million Americans;
  • $325,000 to create a “Robosquirrel” to test the interaction between a fake squirrel and a real snake;
  • Pennies that cost two cents each to make; and
  • Waste in the food stamp program, including an exotic dancer who collected $1,000 a month in food stamps while earning $85,000 a year as a stripper (while writing off on her taxes “cosmetic enhancements” somehow related to her profession)

Stephen Dinan, in the Washington Times, couldn’t resist citing other “highlights” from Coburn’s report:

  • $1.5 million for a study on how to build a better computer gaming stick
  • $100,000 to send a comedy troupe on a tour of India, and
  • Nearly $1 million to see if a male fruit fly would be more attracted to an older female fruit fly than a younger one, or vice versa.

Coburn appears to be the right man for the job, as he seems to have steered clear of supporting any obvious “highlights” of his own. He is known in the Senate as 

Keep Reading…

Another Go at How Much We Owe

Have you ever wondered how much we as taxpayers actually owe because of commitments politicians have made on our behalf? Turns out, the answer is not as simple as you might think.

I.O.U.S.A.

I.O.U.S.A. (Photo credit: Wikipedia)

John C. Goodman has discovered how hard it is to make sense of the (often) nonsense parading as government statistics, especially concerning who owes how much to whom:

The place to start is with a report put out annually by the U.S. Treasury. There I learned that the federal government officially recognizes an outstanding debt of $17.5 trillion.

Ah, but that’s just the starting point, as bad as it is:

What about Social Security? It’s not on the list. What about Medicare? It’s not there either.

On further investigation, I found out why. “Social Security promises are part of current law and can be changed by Congress at any time,” I was told. Ditto for Medicare. And disability insurance. And survivors insurance. Etc. Etc. That’s a bureaucratic way of saying, “We can break those promises any time we want to.”

So there’s the accounting fiction. Thanks Mr. Goodman for ferreting it out for us. Because the promise can be broken at any time, it really isn’t

Keep Reading…

Reagan Budget Director Blasts Paul Ryan Budget

David Stockman

David Stockman (Photo credit: The Aspen Institute)

Calling potential Republican vice-presidential candidate Paul Ryan’s “Path to Prosperity” budget plan a “fairy tale,” David Stockman, President Ronald Reagan’s budget director from 1981 to 1985, took Ryan’s plan to task for not recognizing reality and for leaving behind the legacy of the GOP’s glory days when it reveled in touting small government.

Stockman said that Ryan’s plan to give tax cuts to “job creators” will do nothing to help create jobs, but instead will only put additional pressure on the middle class to come up with more revenues to fund the yawning federal deficit. Stockman conjured the images of “the true conservatives of modern times” like Herbert Hoover and Dwight Eisenhower who, if they were here, would decry the present GOP’s infatuation with what he calls “neoconservative imperialism” and the spending that goes along with it.

Ryan’s plan to push more of the Medicaid responsibility back onto the states through a voucher system is “hypocrisy,” according to Stockman, and merely postpones the reality of

Keep Reading…

Paul Ryan’s Political Football

Washington Times: Democrats slam Ryan as threat to social safety net

Democrats said Sunday that Mitt Romney, by picking Rep. Paul Ryan to fill out his presidential ticket, has set up this year’s election as a referendum on the deep cuts to the social safety net that the GOP’s top budget man says are needed to fix federal finances.

Rep. Paul Ryan

Rep. Paul Ryan (Photo credit: urbiefoto)

There are so many flaws and logical inconsistencies in this opening paragraph that I scarcely know where to begin! “Deep cuts?” What exactly is being cut? As I remember it, Paul Ryan’s plan was to let the states take more of a role in handling the financing of Medicare.

Paul Ryan’s plan is just “nibbling at the edges” of the massive yawning federal deficit. Remember that fedgov is only collecting about 60 percent of what it is spending, and borrowing the rest. And nearly all that phony borrowing is by the Fed, to cover up the fact that international investors (i.e., Japan and China) already have more US government debt than they want.

The other flaw is that the American people really care of the matter at all. I don’t think so: as long as the checks keep coming, what’s to worry? But the Romney campaign wants to take the “moral high ground” in the debate:

“We’re making a bet that Americans are more interested in a campaign that’s waged on real ideas, including entitlement reform, and that a campaign, a substantive campaign, conducted on the high ground, is going to trump the type of petty, negative politics that we’re hearing from Barack Obama,” Eric Fehrnstrom, a Romney campaign senior adviser, said on CBS‘ “Face the Nation.”

That isn’t likely. At least it doesn’t ring my chimes.

And I can’t leave without mentioning that Paul Ryan is no conservative—not in my book. He’s the one who, you remember, voted for the Patriot Act and Bush’s prescription drug plan—the one that promised benefits without bothering with the niceties of how to pay for it. To have him now suggest ways to pay for his profligacy is just a little too much for me. Sorry.

A Second Amendment Refresher

Michael Scheuer: To President Obama: The 2nd Amendment is about fighting tyranny, not hunting deer

At day’s end, then, the 2nd Amendment exists to permit American citizens to perform the “duty” Jefferson describes by resisting and defeating with arms a federal government that knowingly produces a “train of abuses and usurpations” that is designed “to reduce them under absolute Despotism.”

Tree Of Liberty

“The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.” -Thomas Jefferson (Photo credit: CmdrGravy)

I’d never heard of Michael Scheuer, the author of this fine article, until today. His Wikipedia entry is seven printed pages long and tells us that he is a former CIA officer (who obviously decided to “come in from the cold”) and is currently an adjunct professor at Georgetown University’s Center for Peace and Security. Normally that would make me nervous, but here it reinforces my belief that this guy knows what he’s talking about. Not everyone who teaches at Georgetown is a traitor, thankfully.

He posits a series of “what ifs” in his article, and then asks rhetorically, what would you do?

[What if] multiple U.S. presidents take the United States to war without the formal declaration of war irrefutably demanded by the U.S. Constitution, and then intentionally fail to win the wars they start and so kill thousands of America‘s soldier-children for nothing?

[What if] senior elected officials in both parties, as well as senior federal bureaucrats constantly leak highly classified intelligence information to advance their partisan interests and thereby knowingly undermine U.S. national security?

[What it] presidents and attorney generals from both parties pick and choose what laws they will enforce, in direct and flagrant violation of the oath to execute all laws that the Constitution mandates they swear on taking office?

[What if] the federal government so overspends the public treasury that the national debt can never be repaid, and that in funding the debt it also compromises U.S. independence and citizens’ economic well-being via massive borrowing from malign foreign powers and by exacting half-a-year’s wages from each American taxpayer?

Well, you get the idea. After exploring rhetorically several other “what ifs,” Scheuer gets to the point:

If the sorry day ever dawns when one or more of the above depredations occur, I would suggest Americans might well think about taking recourse to the arms guaranteed them by the 2nd Amendment, arms with which to defend their liberty, economic welfare, national independence, and their Constitution’s viability.

Thanks for the reminder, Mr. Scheuer. The Second Amendment, as they say, “ain’t about duck huntin’.”

Taxing the Rich Would Not Slow Economy, Says White House

Logo of the United States White House, especia...

Logo of the United States White House (Photo credit: Wikipedia)

When President Obama’s tax plan was revealed, international accounting giant Ernst & Young (E&Y) was asked to analyze it by the National Federation of Independent Business and the U.S. Chamber of Commerce. When the firm announced its conclusions that his plan would slow the weak economy even further, the White House attacked the study as containing “major flaws, errors and misleading statements.”

Obama’s tax plan is more than just “taxing the rich”—it contains a mixture of tax credits for hiring new employees, a mortgage credit, an “American Opportunity Tax Credit” to entice more young people to get into debt to fund their college educations, an increase in the child and dependent care tax credits, and an extension of and increase in the earned income tax credit.

It would also eliminate all income taxes for seniors with incomes less than $50,000 per year, and would temporarily eliminate income tax on unemployment insurance benefits—both clear political plays for the senior and unemployed vote in the November elections.

It also reinstates the estate tax and would eliminate “loopholes” for oil and gas firms, while providing tax credits for green “renewable” investments. It would create a watch list of international tax havens in order to force “greater financial disclosure” to discourage the use of tax shelters by the wealthy trying to avoid taxes.

But the centerpiece of Obama’s plan is allowing the Bush tax cuts on incomes, capital gains, and dividends for those making over $250,000 a year to expire—essentially a huge tax increase on those with capital. And that’s what the report’s authors, Drs. Robert Carroll and Gerald Prante, focused on: What impact would the imposition of those new taxes have on

Keep Reading…

Latest ADP Jobs Report Confirms Slowing Economy

Christine Lagarde

On Thursday, accounting firm ADP issued its National Employment Report noting that jobs in the non-farm private business sector increased by 176,000 in June. ADP’s CEO, Carlos Rodriguez, said, “It is encouraging to see companies creating jobs, particularly in the goods-producing sector where we see positive growth following two months of job loss.” Reuters jumped on the alleged positive news, calling it a “hopeful sign.”

Unfortunately, one month does not make a trend. When June’s numbers are compared to January’s, ADP’s total nonfarm private jobs growth has increased from 110 million to 110.9 million, a gain of 77-100ths of one percent, or about 142,000 new jobs each month. A closer look reveals that most of those jobs were in the highly volatile service sector, in small businesses, usually fast-food or similar businesses, known for their high turnover. In fact, the goods-producing sector gained just one half of one percent employment since January, translating into less than 16,000 job gains each month. These numbers are hardly a “hopeful sign,” but more reflective of an economy that has flat-lined.

Another report from the Department of Labor showed that new claims for unemployment insurance dropped by 14,000 last week to 374,000, the lowest level in six weeks. But that was offset by an upward revision from

Keep Reading…

Deficit to Top $1 Trillion for Fourth Straight Year

U.S. Total Deficits vs. National Debt Increase...

On Tuesday the Treasury Department announced that in May the federal government received tax revenues of $180.7 billion, the second highest for the month of May in history. Unfortunately, the government spent $305.3 billion, leaving a deficit of $124.6 billion. So far this year, deficits are at $844.5 billion and are on track to exceed $1 trillion for the fiscal year, the fourth year in a row.

Doing the math, the national debt is growing at a rate of more than $3 billion per day, or about $565 per household every month. At that rate the national debt will hit the debt ceiling of $16.4 trillion just a few days after the November election.

But the debt crisis is even larger than people think, according to a study by accounting giant Deloitte LLP. As the U.S. government sinks further into the sea of red ink, it’s going to get more expensive not only to sell its debt to fund those deficits, it’s going to cost more to refinance the debt it already has. In fiscal year 2011, interest payments on its debt cost the government $454 billion and so far, through May those payments have totaled $271 billion. Any slight increase in interest rates could result in

Keep Reading…

CBO Director: U.S. Accelerating Toward Economic Cliff

Congressional Budget Office Director Doug Elmendorf testified on Wednesday before the House Budget Committee about the federal government’s “Long Term Budget Outlook.” His office just released its latest study which showed two scenarios: one bad, the other worse.

Said Elmendorf:

It is not possible to keep taxes at their [present level] and keep the laws unchanged for Social Security, Medicare and Medicaid…

It is possible to keep taxes at their [present level] but only by making substantial cuts…in [those] large entitlement programs…

Alternatively, it is possible to keep…[those] large entitlement programs unchanged but only by raising taxes substantially on a broad group of Americans…

Even if spending on…other programs [outside the entitlement programs] fell to a smaller share of GDP than we’ve seen at any point since World War II, debt would still be on an unsustainable upward trajectory…

That’s what is facing Congress as 34 Senators and 435 members of the House are deep into their reelection campaigns. And all that Congress is likely to do is use Elmendorf’s comments and his office’s analysis as fodder for their constituents to help them keep their jobs.

A spokesman for likely Republican presidential nominee Mitt Romney said,

Keep Reading…

Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.

Site Search

Tweet Us

Latest Comments