WHY is the Increasing National Debt So Important?

Most corporations do the same thing when their bonds mature. If you're going to claim that this is bad practice, then most of the banking industry should be shot.

I'm not singling this out to be nit picky, I just don't think there's much to which I ought respond in the rest of the post as it's either obvious facts, or faulty conclusions.

Corporations borrow money generally for capital expenditures that are used over time in the production of the goods or services provided. I have used debt to build schools and there was a repayment schedule to repay that debt over a 20 year period. Your Mortgage is repaid over a fixed period of time. That is NOT how the Fed is using debt. They are financing about 20% of the ongoing operations of the government by borrowing. In general, debt is expected to be repaid at some point. Since 1981, we have continued to add not repay the debt with the exception of 2000 which is the ONLY year we had a small surplus not counting the Surplus from Social Security and Medicare. In addition to the cumulative debt increasing so is the interest we must pay to service that debt each year.

The way the Fiscal affairs of the U.S. are being run is DEAD WRONG and as I stated in my Blog, The interest will take the money from the annual budget that will be needed for defense, homeland security, Social Security, Medicare etc.

col you are a lying political hack. The man will be leaving office in two years and you are still working hard to un-elect him. If you are truly interested in this country you would be rooting for the next leader of the nation instead of crying about losing twice in a row.

The Christian Science Monitor reports today that the tax cuts of Mr. Bush If trends continue the treasury would show a surplus within a year. I guess col Gene and the liberals were wrong.

Paladin77

First you do not know what you are talking about. The analysis I pointed to was from the Comptroller General (Head of the GAO if you do not know who that is). His data clearly shows that the added revenue produced by the tax cuts does NOT equal the LOST revenue from the tax cuts.

The consequences of Bush and his policies will NOT END on January 20, 2009. For example, the added debt will not go away when Bush leaves office but will remain for future Presidents and Congresses to fix. It is more likely then not the next President will be handed a continuing war in Iraq. Every time you submit a post you demonstrate your ignorance. We need to remove Bush and Cheney from office NOW so the solutions to the problems they and the GOP in Congress created over the past 6 years can be corrected!

Here is a sample of the discourse:

Comptroller General David Walker Dislikes GWB
Just received in my inbox, a press advisory from the GAO:



The U.S. Government Accountability Office today is releasing a report from a forum of experts that sought to address ways to improve public understanding of the nation's growing fiscal imbalance. The report is available on the GAO website at www.gao.gov/cgi-bin/getrpt?GAO-05-282SP.

The forum, convened by Comptroller General David M. Walker on December 2, 2004, included 63 representatives of think tanks, government agencies, key private sector players, the media, and public opinion experts. Under the ground rules of the forum, individual speakers are not identified in the report unless they made a formal presentation before the group, but the report reflects the discussion during the day-long gathering.

Commenting on the report, Walker states: "Simply put, our nation's fiscal policy is on an unsustainable course. As long-term budget simulations by GAO, the Congressional Budget Office (CBO), and others show, over the long term we face a large and growing structural deficit due primarily to known demographic trends, rising health care costs, and relatively low levels of federal revenues as a percent of GDP.

Continuing on our present path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our national security. It will also increasingly constrain our ability to address emerging and unexpected budgetary needs.

"Regardless of the assumptions used, all reasonable simulations indicate that the problem is too big to be solved by economic growth alone or by making modest changes to existing spending and tax policies. Nothing less than a fundamental reexamination of all major federal spending and tax policies and priorities is needed. This reexamination should also involve a national discussion about what Americans want from their government and how much they are willing to pay for those things. This discussion will not be easy, but it must take place because time is
working against us.

"As with any major public policy challenge, effective and sustained leadership will be critical. But leadership cannot succeed without public understanding and support."

Walker also will address the impact of the government's fiscal imbalance on Wednesday, February 2, at a conference for state and local government officials at the National Press Club. Walker is the keynote speaker at lunch; the conference is sponsored by Governing magazine and the NCSL Foundation.

For more information, contact Paul Anderson, GAO managing director of public affairs, at 202-512-4800.There is a crisis, and it's George W. Bush's misplaced priorities, fiscal mismanagement, expensive wars, and tax cuts for the rich. Bush will talk tomorrow night about how he's on track to halve the deficit - but it's lies, smoke and mirrors.

I guess you do not like the comments from GAO about the Bush policies!

I wouldn't talk col.  You fail to respond to most posts that directly refute your nonsense.

I don't have a problem with what he said. He stated his opinion based on what those experts told him. on the other hand did he list the other experts that disagreed with his point of view?

Paladin77

First his opinion is that of the foremost expert on the fiscal operations of this country. He also heads the agency that evaluates government operations and it is non political. Please read

There is a crisis, and it's George W. Bush's misplaced priorities, fiscal mismanagement, expensive wars, and tax cuts for the rich. Bush will talk tomorrow night about how he's on track to halve the deficit - but it's lies, smoke and mirrors

For someone like the Comptroller General to say this about the president is significant and he has the data to prove what he says. SHOW me any comparable evidence that refutes what he said or the evidence I have provided such as the growth in the debt and interest that we will pay because of the irresponsible way GWB has conducted the fiscal policy of this country?

Read my post on how the deficit is shrinking. You see not everyone involved in the process agrees with your guy.

Gene uses only evidence he likes. Ignores anything that doesn't jive with his agenda & rejects any conflicting opinions out of hand. Guilty of doing exactly what he alleges Bush did on the pre-war intelligence - only telling half the story.

Paaladin77

The ANNUAL Budget Deficit is lower. That is the amount we will ADD to the TOTAL National Debt that we have amassed. The TIOTAL continues to increase at a slower rate. The issue is that when Bush took over the TOTAL debt was $5.7 Trillion and is now just short of $9 Trillion and CONTINUES to increase. Bush NEVER balances the budget just says he will lower the amount of debt we add each year. The issue is simple and even you should be able to grasp it. If we agree to spend $2.9 Trillion next year then we must TAX $2.9 Trillion.

Daiwa

I give you evidence from the most knowledgeable and authoritative sources that clearly shows that the policies we are following are not solving the countries’ problems and are taking us into a very difficult future. We are financing about 20% of every dollar we spend to operate the federal Government with debt. If you as an individual did that you would be bankrupt in a short time. Since 1981, without offsetting the Surplus from Social Security and Medicare ($ 200 Billion per year) the ONLY year we had a balanced budget was 2000. What I am saying and what the Comptroller General is saying is that our fiscal policy is wrong and dangerous. At some point our children will be saddled with all the debt we are creating by refusing to pay for what we are spending. NOTHING anyone has posted refutes that fact!!!!!

Daiwa

The other issue that you have all ignored is that 40 % of the Interest the Federal Government pays on the publicly held debt goes to foreign investors. China is the biggest of those investors. That % has been increasing. All that interest paid to foreign investors leaves the economy of the U.S. In addition, the interest we pay to China is being used by China to build a military that will be a future problem for America.

The problem with that is when it was tried by President Carter the nation went into a tail spin. In four years of his mismanagement we became a debtor nation for the first time since the Civil war. What saved us was Ronald Reagan with his tax cuts that he got the Democrat controlled congress to allow. The lower rates allowed people to invest more money into their business and invest in other businesses, this caused a growth spirt that brought the nation back on its feet. Later we raised taxes twice and the economy began to sink again. History proves each time we have lowered taxes the treasury gets more money and when we raise taxes teh treasury takes in less money. FDR did it, JFK did it, Ronald Reagan did it, and GWB did it. Each time the nation prospered. LBJ raised taxes, so did Jimmy Carter.

Show me where in our history raising taxes helped the nation.

Paladin77

You are trying to change history. When Reagan proposed his tax cuts in 1981 he said if Congress Cut taxes as he wanted that by 1985 we would have a BALANCED BUDGET. He also claimed that the tax cuts would stimulate economic growth at a rate of 6% which is what was needed to fulfill his pledge that we would have a balanced budget. We did get growth but at only 3% and the result was that we NEVER saw anything close to a balanced budget from 1981 to 2000. We took the national debt during the 8 years of Reagan from less then $1 Trillion in December 1980 to $4 trillion in 1989-- an increase of just over $3 Trillion.

After Reagan came Bush 41 and Clinton. Thanks to reduced spending on the military and the Bush 41 tax increase the annual budget deficit dropped until 2000 when we had a Balanced Budget. During the 12 years of Bush 41 and Clinton, we added $1.7 Trillion to the National debt. The National Debt stood at $5.7 Trillion by the end of the Clinton Term.

Then GWB took over and immediately repeated what Reagan did-- Cut taxes and increased spending with the very same result. We did get some economic growth but not enough to offset the loss in tax revenue and to pay for the increased spending. From 2001 to today the national Debt went from $5.7 Trillion to just short of $9 Trillion.

Those are the facts you can verify by looking at the Bureau of Public Debt web site. The Growth in the Nation al debt had nothing to do with Carter. It is because of the policy of Reagan and Bush-- cut Taxes and increase spending. I have no idea where you get the BS you post on this web site but you are DEAD WRONG! This is the data from the Treasury dept:


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Historical Debt Outstanding - Annual 1950 - 2005
* Rounded to Millions
Includes legal tender notes, gold and silver certificates, etc.

To find more historical information, visit The Public Debt Historical Information archives.

Date Amount
09/30/2005 $7,932,709,661,723.50
09/30/2004 $7,379,052,696,330.32
09/30/2003 $6,783,231,062,743.62
09/30/2002 $6,228,235,965,597.16
09/30/2001 $5,807,463,412,200.06
09/30/2000 $5,674,178,209,886.86
09/30/1999 5,656,270,901,615.43
09/30/1998 5,526,193,008,897.62
09/30/1997 5,413,146,011,397.34
09/30/1996 5,224,810,939,135.73
09/29/1995 4,973,982,900,709.39
09/30/1994 4,692,749,910,013.32
09/30/1993 4,411,488,883,139.38
09/30/1992 4,064,620,655,521.66
09/30/1991 3,665,303,351,697.03
09/28/1990 3,233,313,451,777.25
09/29/1989 2,857,430,960,187.32
09/30/1988 2,602,337,712,041.16
09/30/1987 2,350,276,890,953.00
09/30/1986 2,125,302,616,658.42
12/31/1985 1,945,941,616,459.88
12/31/1984 1,662,966,000,000.00 *
12/31/1983 1,410,702,000,000.00 *
12/31/1982 1,197,073,000,000.00 *
12/31/1981 1,028,729,000,000.00 *
12/31/1980 930,210,000,000.00

The Total of the National debt as of 02/22/2007 is $ 8,768,614,254,781. Bush projects that the national Debt by January 2009 will be just short of $10 Trillion!

Clearly we don't because we regularly spend more than we take in.

You keep saying "we must" as if you insisting on it will make it true.

I would like to see the government not have deficit spending. But because I know math, and you don't, I also recognize that the easiest, least painful way to do it is to simply decrease the rate we increase spending until we have a surplus. 

Wheras you would raise taxes on people like me without really caring whether that would create a surplus because, after all, why should you care? It's not your money.

Frogboy

I care about the impact on our country and the majority of people that will be stuck paying the higher interest caused by the fact we refuse to balance the budget. If you are among the top 20% of the income level, you can afford slightly higher taxes to help balance the budget without suffering from the higher taxes. Yes you may not have as much invested but you and your family will not suffer from paying a little more. It is time we let the MAJORITY be heard in this country! Passing the added debt to our children is WRONG!

You left out the little part about cutting spending as well. Both were required in ordder to bring the budget into balance.

Paladin

That was NOT part of the Reagan plan. He was the one that insisted on increased spending on the military. The issue was his plan said the tax cuts would create growth in GDP of 6%. The rate of growth that was achieved from his tax cuts was just over 3%. That is why his plan did not work which is the same reason that it did not work when Bush did the same thing. The result of the Reagan policy which Bush repeated is the $ 9 Trillion of debt and an unbalanced annual budget! It is called Supply Side economics. It is what Bush 41 called Voodoo economics!

Again gene: The facts say otherwise:

Look at the 1980 to 1986 graph. The spending just kept going up and up.

I'm really trying to understand your point of view.  You really think that if the government spends more than it is bringing in that the answer is to give it more money? When history shows that when they get more money, they simply spend it even faster?

Do you really think that if we raised taxes the budget would get balanced? Really? You don't think they'd just spend more on other things?

Dragional

I do not know what you background is but when a non profit budgets it must end up with revenues that cover expenses. In a for profit company the budget includes both the expense budget and a sales budget that not only covers the expenses but the profit margin that is acceptable to that company. In no event does either type of business continually spend more then their revenue.

If you had a weekly income of $1,000 and every week spent $1,200 and put $200 every week on your card what would be the outcome? You would get to a point when the balance on your credit card became so great you could not afford the minimum payment. You would also still be in a situation where you needed that added $200 per week in my example. If you can not or choose not to cut your expenses by $200 per week you need to get a better paying job or a second job to bring your income up to $1,200 per week. In addition you owe the credit card balance and must pay the interest on that balance until you pay off the credit card.

The problem with much of the spending increases you show in the graph is that it is not controllable. Inflation, a growing population, ageing infrastructure and the increase to provide for both national and home land defense. In the years to come, the shortfall in Medicare and Social Security funding as the baby Boomers retire will require further increases in spending. We could cut $30-40 Billion in PORK and in the spending for individual politicians that earmarks have been used for and which have increases 10 Times under the GOP Controlled Congress. However, even if we had the political will to end PORK, we will not be close to a balanced budget. In addition, we are now faced with the problem of HOW to begin paying down the $9 Trillion in Debt. If we do not pay down that debt, the almost $500 Billion Dollars in interest every year will NEVER END. If we continue to add to that $ 9 trillion, the interest will go above that $500 Billion Dollar per year.

We must first balance the budget and then begin generating a substantial Surplus to be applied to repaying our debt!

We agree: People/companies shouldn't make a habit of spending more than they make.

But in reality, they do, all the time.

The typical American has more debt per their income than the government makes.

For example, it's normal for someone to have a mortage that is 4 or 5 times what they make in a given year.  Throw in credit card debt and the typical American carries a much greater debt load per income than the federal government does.

Many companies are the same way.  You may have heard that XM Radio and Sirius are trying to merge. They've got something like $14 billion in debt between them. That's far more than their income.

Personally, I don't like debt.  But you can't say that the government is being run much differently than most citizens or many businesses.

It's not pork or other incidentals causing the deficits. It's increased spending on "entitlements". And I object to entitlements.  You will never convince me that I should pay more in taxes so that someone else can have more free stuff. 

I would rather have huge federal debt than pay higher taxes as long as the federal spending is mostly going to redistribution of wealth.

Clearly we don't have to.  You say "Must" and put it in bold as if there will be dire consequences if we don't.   Unless the government controls its spending, interest on the debt will make up larger and larger percentages of the budget.  But you assume that people like me care about that. 

The people who produce stuff in this country don't need the federal government.  My family doesn't need anything that the federal government is providing. Nothing whatsoever.  Our roads, schools, police, you name it are all handled by the state which is doing just fine.  

So that we understand each other: Even if the federal budget was 100% dedicated to paying off the debt, it would make relatively little difference in the daily lives of people who aren't mooching off the government.  The only thing that it would affect that I care about is the military. Everything else could just go away for all I care. (that's an oversimplification, there's a tiny % used for maintaining the federal courts and the FBI and what not but you get the idea)

Dragional

“My family doesn't need anything that the federal government is providing”

You do not need the protection of our military? You do not need the continuation of seniors spending by protecting Social Security? You do not need border protection? Most of the BIG ticket spending is for things like this. The only major spending that DOES not provide a service we all need, like National defense, is the almost $500 billion we pay in interest on the growing debt. What essential service is provided by paying interest for past years when we spent more then we taxed?

“I would rather have huge federal debt than pay higher taxes as long as the federal spending is mostly going to redistribution of wealth”.

The issue has nothing to do with redistributing wealth. It has to do with paying for our spending and ending the obligation of added debt to future generations. Add the fact that more and more of the interest is being paid to foreign debt holders and the situation gets worse and worse. Your position may benefit you personally because you may be wealthy. However, the long term impact on the country is very negative and we must balance the budget and begin repaying the debt! The money we will be obligated to pay in added interest will be needed to help pay the Boomers Medicare and Social Security for example. You paying a little higher tax will not cause you to want for anything if you are in fact among the top 10-20%. Greed may want you to keep the money you would pay in higher taxes but in the long run and for the welfare of the MAJORITY that is what needs to be done. Let's put it to a vote! We are a democracy and the will of the majority is what should be our policy. I know you will oppose any sort of referendum but what will most likely happen is that control of Congress and the White House will change so that the will of the majority will eventually be put into place. We have had 6 years of the minority calling the shots. It is time for a change! If we return to the tax rates on the wealthy that were in place in the 1990's, you will be just fine. Look at how well the wealthy did during that period even AFTER paying the higher tax rates!

Dragional

The Bottom line is that that the increase in federal spending you and other conservatives complain about is the result of the Fiscal policy that you support which started with Reagan and that GWB Repeated. That policy has increased annual spending on interest by $400 BILLION Dollars per year since 1980. If we had not allowed the deficit to grow, we would be very close to9 a balanced budget today. Cliff Notes Version-- Conservative Fiscal Policies had increased government spending!