Really, no kidding, it doesn't raise the debt!

[gunderwood]

Check out the debt clock time machine, the numbers are eye opening.
http://www.usdebtclock.org/

Every taxpayer owes nearly $150k, while the average income is about a third of that!

"Luckily" US corporations are "persons", too, and are on the hook for some of that. Well, those that actually pay taxes...

I understand legally they are "persons," but I do not know how the debt clock calculates it. Do you know for a fact that they include corporations or just assuming?

[WRW]

Every taxpayer owes nearly $150k, while the average income is about a third of that!

"Luckily" US corporations are "persons", too, and are on the hook for some of that. Well, those that actually pay taxes...

I understand legally they are "persons," but I do not know how the debt clock calculates it. Do you know for a fact that they include corporations or just assuming?

Just food for thought...unlike human "persons", corporations live and die on their own strength and the strength of the economy. If the economy goes south, corporations die, leaving humans to foot the bills accrued during flush times. That, and interdependance of corporations was the rationale for "too big to fail" as applied to the car makers bailout.

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[SpanishInquisition]

...and, the gop caved. Thanks for selling my kids out even more.

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[tursiops]

Current revenue of the government is many times as much as is required to fully fund all US debt service.

You've said this a couple of times, at least. What are the numbers?

[Swampman]

I did some quick research and this is what I found:

Current debt service for FY 2013 appears to be $415.7 billion.

http://www.treasurydirect.gov/govt/repo ... xpense.htm

Federal revenue for 2013 is estimated to be $2.7 trillion.

http://www.usgovernmentrevenue.com/current_revenue

I can't speak to the veracity of the two websites, but I have seen that figure for 2013 federal revenue in more than one place. The only problem I see with this is the deficit, that is, outlays exceed revenue, estimated for 2013 to be $973 billion.

http://www.taxpolicycenter.org/taxfacts ... ?Docid=200

Boehner is still correct when, last Sunday with George Stephanopolis, he said that we'll have more revenue for 2013 than we have ever had. There is some argument with that statement, but Boehner's premise that we have to reduce spending is spot on, and is required if we are going to service our debt and reduce it.

[tursiops]

I wonder if there is confusion over the terms used.....debt is what we owe, deficit is the difference between what we take in and what we spend, and service on the debt is the interest we owe to other countries/people on the debt. The debt grows because of the deficit. The debt includes all the things owed, including SS, Medicare, military salaries, etc, all the so-called mandatory spending. Discretionary spending (National Science Foundation, PBS, etc) is a small fraction of the total that is owed.

Yes, we can service the debt based on what we take in. That is Rand Paul's and Dormouse's argument. But it doesn't cover the debt.....who wants to volunteer to not get paid? How many folks on here are getting SS, or using Medicare?

Yes, we need to cut spending. At the very least we need to shrink the deficit to zero, so at leas we are taking in what we spend. Then we need to take in more/spend less so as to start shrinking the debt.

I don't think most citizen folks really argue about this....but there is surely disagreement on what path to take to get there.

Servicing the debt while having a deficit in the annual budget still allows the debt to grow....and thus the debt ceiling needs to be raised. So Rand Paul is right, but misses the point. He is happy to have the nation stop paying its bills. that is an experiment I would prefer not to run.

Sent from my ASUS Transformer Pad TF700T using Tapatalk 4

[Swampman]

No confusion here. I believe I used the two terms correctly. If not, please correct me.

[gunderwood]

No confusion here. I believe I used the two terms correctly. If not, please correct me.

I don't think he meant you, but rather the average American. In that, I think he is correct. FYI, your numbers seem correct to me.

Anyone claiming we will default (not be able to pay the interest payments on the debt) on the 17th is either ignorant or lying. Incoming revenue is larger than the outgoing interest payments. However, that doesn't mean there is enough money to continue spending as we were previously. That's what happens on the 17th. We can't barrow any more money, thus we must reduce the outgoing expenditures. It would take an illegal act of the President in order to purposefully not pay the debt payments.

[dorminWS]

What the House is doing (or has been attempting to do) is to fund programs one by one after an examination of their merit. That is EXACTLY what needs to BE done. There is no valid argument for postponing that until there is no crisis and therefore no leverage against the big spenders, because experience has shown that it will NEVER HAPPEN any other way. To pretend otherwise and just "kick the can" on down the road past the next election is just a big lie. Like it or not, A LOT OF PEOPLE are going to have to quit getting paid by the federal government if we are ever to get ourselves out of this mess. Might as well start now. I suggest we start with that 93% of the EPA staff that is "nonessential" and 100% of the Education Department.

[dorminWS]

Current revenue of the government is many times as much as is required to fully fund all US debt service.

You've said this a couple of times, at least. What are the numbers?

>>>>>>>>>>>>>>>>>>>>>>>>>>>
In 2011, federal tax receipts exceeded interest expense on the debt by 20-fold. I didn't spend the time looking for more current numbers (although I think I may have seen them, and these or similar numbers are floating around in a lot of places), but these in this article from 2011 demonstrate the general picture - even though the deficit (and therefore the cost of debt service) will have increased. I understand that revenue has also increased, though. 2013 will not be available yet anyway, so they are not all that out-of-date.

My point is not that we should go on forever in the present posture; just that all this hand-wringing about default is irresponsible demagoguery. There need not be a default. In fact, if the administration elects to pay other obligations and causes a default, I would argue that is clear dereliction of duty. Of course there will continue to be enormous pressure on Congress and the White House to deal with the deficit. But there SHOULD be; that is the only way they will ever do it. Each category of spending should be individually examined and funded or not funded. I am confident that some of those programs could be eliminated entirely and others could be cut back drastically with no discernible effect on the general public. I concede that it will play merry hell among the federal bureaucrats (and vendors to the feds as well), but that cannot be avoided. I'm sorry if it offends some, but the bald truth is that they are one of the primary elements of the problem. Government is unsustainably big and must be significantly contracted.

EDIT:
OH, AND BY THE WAY, NOTE THAT HE WAS RAISING THE SPECTER OF DEFAULT IF WE DIDN'T RAISE THE DEBT CEILING IN JULY OF 2011, TOO. JUST MAKES THE PONT MORE STARKLY THAT HE WILL NEVER ADDRESS DEFICIT SPENDING IF WE WILL KEEP ON INCREASING THE CREDIT LIMIT ON HIS CREDIT CARD.
.....................................
(CNSNews.com) - President Barack Obama said last Friday that the administration and Congress need to cut a deal by Aug. 2 to increase the legal limit on the federal debt “to make sure that America does not default.” Yet, the actual accounting done by the U.S. Treasury Department shows that federal tax revenues have exceeded interest payments on the federal debt by 20-fold since the Treasury announced on May 16 that the federal government had hit the current legal limit on the national debt. In fact, since the government hit the debt limit on May 16, the ongoing flow of federal tax revenue has been more than sufficient to cover the combined costs of federal spending on interest payments, Medicare, Medicaid, Social Security, the Veterans Affairs department and federal workers wages and insurance benefits (including wages and insurance benefits for military personnel). Specifically, according to the Daily Treasury Statements, as of the close of business on May 16, the federal government had taken in $1.333454 trillion in tax revenues since the beginning of fiscal 2011. By the close of business on July 7, tax revenues for fiscal 2011 had grown to $1.629630 trillion. Therefore, between May 16 and July 7 the federal government took in a total of $296.176 billion in new tax revenue. In that same time period, total interest payments on the national debt equaled $14.632 billion. Thus, the new tax revenue of $296.176 billion the federal government took in between May 16 and July 7 was enough to pay the federal government’s $14.632 billion in interest obligations during that period 20 times over. Also during that same period, the federal government’s combined expenditures for interest payments on the national debt, Medicare, Medicaid, Social Security, the Veterans Affairs department and federal workers wages and insurance benefits equaled $270.151 billion. Thus, since hitting the legal limit on the federal debt on May 16, the federal government could have spent its $296.176 billion in new tax revenues to pay for its combined $270.151 billion in expenses for interest, Medicare, Medicaid, Social Security, Veterans Affairs and federal workers wages and insurance benefits and still had $26.025 billion in additional tax revenue to spend on other government activities. For another $2.198 billion, for example, the government could have covered all Justice Department programs between May 16 and July 7—thus bringing its surplus revenue for the post-debt-limit period down to $23.827. For another $11.233 billion, the government could have covered all its Housing and Urban Development programs between May 16 and July 7—thus bringing its surplus revenue for the post-debt-limit period down to $12.594 billion. For another $6.988 billion, the government could have covered all its Federal Highway Administration programs between May 16 and July 7—thus bringing it surplus revenue for the post-debt-limit period down to $5.606 billion. What it could not have done between May 16 and July 7, using the tax revenue that came in during that period, was pay the interest on the debt, maintain all the big entitlement programs (Medicare, Medicaid, and Social Security), plus veterans benefits, plus all wages and insurance benefits for federal workers (including military personnel) AND paid all the money that the government planned to pay Defense Department vendors. During the period of May 16 to July 7, the government paid $56.734 billion to Defense vendors, according to the Treasury Department. So if, from May 16 to July 7, the government had added the $56.734 billion paid to Defense vendors to the $270.151 billion in combined costs for interest, Medicare, Medicaid, Social Security, Veterans Affairs and federal workers wages and insurance benefits, the government would have had total costs of $326.885 billion for the period. Given that it took in $296.176 billion in tax revenue for the period that would have put the government in the red by $30.709 billion. Still, $30.709 billion borrowed over a period of 52 days works out to a rate of $590.55 million in borrowing per day--or $188.992 billion in borrowing per year. That beats what the government is doing now by well over $1 trillion. According to the latest estimate of the Congressional Budget Office, this year’s deficit will reach $1.399 trillion. The calculations in this article are based on numbers reported in the U.S. Treasury Department’s Daily Treasury Statements for May 16, 2011 and July 7, 2011.
- See more at: http://cnsnews.com/news/article/federal ... gcmWx.dpuf

[tursiops]

these in this article from 2011 demonstrate the general picture - even though the deficit (and therefore the cost of debt service) will have increased.

There's some of the confusion. The deficit is just the difference in the budget between the income and the outgo. We are not taking in as much as we are spending, in the annual budget. It is the *debt* that is increasing daily, not the deficit. So the interest on the debt goes up because the debt is growing. A "balanced budget" means zero deficit.....but the debt is still huge, and has huge interest to pay, and needs to be reduced. You keep talking about how we can cut the future expenses down...fine, I think we all agree. But the issue right now is the debt that already exists, the growth in it, the interest on it, and the illegality of not paying what we owe. You wish we didn't owe it, so do we all, but we do. Which already-incurred bills are you not going to pay, and on what basis?

[dmharvey]

I tried a similar approach/argument to get a couple of pistols I want, just for the hell of it...my wife wasn't buying it.

[dorminWS]

these in this article from 2011 demonstrate the general picture - even though the deficit (and therefore the cost of debt service) will have increased.

There's some of the confusion. The deficit is just the difference in the budget between the income and the outgo. We are not taking in as much as we are spending, in the annual budget. It is the *debt* that is increasing daily, not the deficit. So the interest on the debt goes up because the debt is growing. A "balanced budget" means zero deficit.....but the debt is still huge, and has huge interest to pay, and needs to be reduced. You keep talking about how we can cut the future expenses down...fine, I think we all agree. But the issue right now is the debt that already exists, the growth in it, the interest on it, and the illegality of not paying what we owe. You wish we didn't owe it, so do we all, but we do. Which already-incurred bills are you not going to pay, and on what basis?

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

OK, in that particular sentence I should have said "debt" instead of "deficit". Doesn't change anything else I said. Federal Revenues are 20 times the interest on the debt. Failure to "open the government" with a "clean" CR will not cause a default. Failure to raise the debt ceiling will not cause a default. Failure to reduce the DEFICIT WILL cause the debt and therefore the interest on same to increase; therefore making things even worse. Before we can hope to decrease the DEBT, we must eliminate the DEFICIT; right? You can't get out of debt by borrowing more money; even a progressive ought to be able to see that. (I am not throwing rocks at you - I am referencing Mssrs. Obama, Reid, Schumer, etals)

Now; it seems to me that perhaps you are conflating the debt and the deficit when you say "Which already-incurred bills are you not going to pay, and on what basis?". The debt is "incurred bills" for previous accounting periods that have been paid with borrowed money and the interest on that is what we must pay to avoid default. Failure to pay interest on the debt is default, which raises what you refer to as "the illegality of not paying what we owe". Failure to pay current obligations is not default and it is not "illegal". Our government would be a deadbeat and perhaps subject to a civil suit to collect a past-due amount, but there is no "illegality" in the sense of criminal acts or dereliction of duty. Any "incurred bills" that have not yet been rolled into the debt are, I suppose, part of the current year's deficit in the form of what would be "accounts payable" for a business; and are a relatively insignificant amount of the total dollars involved. So pay them or don't - it is spitting in the ocean either way.

But the key certainly is to stop overspending prospectively. In other words, DON'T INCUR ANY BILLS WE CAN'T PAY. And bitter experience has shown us that the ONLY way to accomplish that is to NOT pass a clean CR; but to fund those function worthy of funding piecemeal and keep a stranglehold on the POTUS, the Senate and the federal bureaucracy.

[dorminWS]

Hmm... Reckon I didn't quite get it all spit out.

One of the current proposals the House has put is to raise the debt ceiling a small amount. I wouldn't choke on that as long as it won't carry more than about 2-3 months' worth of current additional deficit. Let the hand-wringers and the Chicken-Littles be placated to that extent; and it will give them time to slow down the runaway train. But there SHOULD NOT be a clean CR. Each item of federal funding should be exhaustively examined for savings or total elimination before a dime is authorized. Let them earn their salt in Congress. And keep them on a 2-3 month leash on the debt limit. If they don't make enough progress on the current deficit and rational federal budgeting, tighten the noose on 'em.

[dorminWS]

The July 2011 article I linked above said that as of then, the USA had 20 times as much revenue as was required to service the national debt. I said the numbers probably hadn't changed a whole lot since then. Maybe I was wrong.

Last night, I watched a discussion on a Fox News panel of talking heads where the consensus was pretty much what I have been saying on this thread; that all this scaremongering about likely default was just so much bullcookies.

But I picked up some numbers that threw a new scare into me. Two different people referenced the current US debt-service-to-revenue ratio with what I can only assume was more up-to-date information. I think it was George Will that said it was currently 10. Congressman Darrel Issa said the debt service required 8% of federal revenue. That means a multiple (or coverage ratio) of 12 (actually 12.5, but why split hairs?).

Assuming the 2011 multiple of 20 and the best-case-scenario 2013 multiple of 12 to be substantially correct, that means the multiple declined by 8 in two years. And that means that if things continue as they have for the last two years, we will be looking at a multiple of 1 in 2-3 more years; and that assumes that the interest rates the government pays do not increase and that tax revenues continue to increase modestly. Just to make sure that everyone is following here, a multiple of 1 means that it takes ALL of the revenue the government gets just to pay the interest on the debt; which in turn means that it will be impossible to pay off any of the principle without raising new revenue. Can we say “crushing taxes and reduced global competitiveness”, boys and girls?

So based on that extrapolation, if we don’t fix the deficit within the next few years, we never will; because after the multiple drops to 1, failure to increase the debt limit and borrow even more WILL force a US default. And there is NO doubt that as the debt coverage multiple continues to decline, the creditworthiness of the USA will decline and the cost of borrowing will increase; which will in turn drive the debt coverage multiple down even faster. For those of you who doubted that the current stand taken by the so-called “Tea Party minority” is unreasonable, perhaps you should consider these numbers and reassess. We may have as little as 2-3 years to fix this, and it will surely take decades to finish the job once we start. It certainly looks to me like it anything later than right now will pretty much be too late. No wonder the progressive are so hell-bent on continuing their profligate spending unabated. They are within spittin’ distance of the point of no return!

[Remek]

Tea Party Member here.

The analysis is exactly right by dormin. We have to reign this in NOW!

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[dorminWS]

Just occurred to me, I overlooked something:

If in three years (or 5 years, or 10 years) the debt service on the national debt has grown to consume 100% of the federal revenue, that means that in addition to increasing taxes to generate revenue to fund the 1/3 of the federal budget (around ¼ by Obama’s latest claims) that had been funded by borrowing (but could no longer be because there was no income to pay the interest out of), it would also be necessary to increase taxes to replace the 11/12ths of the revenues that used to fund federal spending but is now required to pay interest.

11/12ths = .91667%, so a tax increase of AT LEAST 25% (to fund the deficit) plus 92% (to fund the functions that used to be paid out of revenue), or 113%, would be required. So even the poor schmuck paying only 15% in taxes would wake up one day paying 32%. Anyone making between $36,626 and $88,725 (between $73,226 and $147.875 if married filing jointly) would find they were no longer in the 25% tax bracket but were now in a 53.25% tax bracket. They’d be keeping less than half their income after taxes (46.75%, to be exact). The ADDITIONAL tax bill to those folks would be between $10,347 and $25,065 (between $20,686 and $41,775 if married filing jointly). The people in the 33% bracket would go to 70%, the 35% bracket would go to 74.5%, and the 39.6% bracket would go to 84.3%. Personally, I don’t know why I’d bother to get out of bed in the morning if my marginal tax rate was 75% or 85%. I’d say a lot of folks would feel that way. The most successful and productive people in the country would be working 6 or 8 months and then just quitting.

And, oh, by the way, don't forget those multiple thousands of dollars per year that Obamacare will also be sucking out of your wallets.

Anyway, if you carry those numbers to their logical conclusion, that’s where they lead. We’d be so close to communism we might as well put a hammer and sickle on Old Glory instead of the stars. It might happen a little more slowly. It might happen by degrees. But it has to happen just as sure as God made little green apples.

Surely something so monstrous can’t be the PLAN, can it? Or could they all be as stupid as Joe Biden and Nancy Pelosi?

[Swampman]

"The problem with socialism is that you eventually run out of other people's money." Margaret Thatcher

I heard a discussion on Mike Church's radio show this morning that gets to the same place dormin's argument does.

We're on a fast track to running out of other people's money. We're getting ready to lose the state house to the Dems, and even worse, we are going to lost the Congress to the Dems. Obama will have no problem finishing the task at hand in two years. We're in big, big trouble.

[dorminWS]

Imagine that. CBS knowing the truth - - and actually telling it. Heads will roll.

http://www.ijreview.com/2013/10/88726-c ... lars-year/

[Swampman]

I hope you're right.