Comments on: Number of the day – $14,025,215,218,708.52

By: Ken Van Doren

Ken Van Doren — Tue, 11 Jan 2011 15:17:44 +0000

When Bush left office, the fed budget was something like $3 Trillion. Last year, it was more than $3.8. Yes, a real spending increase.

Now for some more frightening numbers.

4 years ago, Cost of government (COG)was 50% of GDP. COG=taxes, licenses, permits, fees to government, PLUS those expenditures paid to private firms in compliance with government mandates.

In the years since, it has gone to 54%, 61%, and last year, about 64.5%. In WI, COG is almost 66%. With the laws passed in the last session that will increase both the size of government and the cost to businesses and individuals, COG will almost certainly top 70%. Question regarding the private sector, how low can you go? Note that the share by the private, that is, the wealth producing sector has shrunk to about 35%, and is scheduled to decline further.

Now for the REAALLLY good news! The $14 Trillion debt? Just the tip of the iceberg. Unfunded liabilities are on the order of $112 TRILLION, or about $360,000 per man woman and child. and when these liabilities kick in due to our aging population and other factors, COG will exceed 100%. Of course, that is absurd, which to me means only one of 2 things. Either the size and cost of government must be cut drastically, or the proverbial printing presses will work overtime trying to conceal the fact that we are bankrupt. Raising taxes is futile, as this will further suck the live blood from our economy. The only good thing about that avenue is that the pain will be felt sooner, by us, and hopefully less later, by our kids and grandkids.

For more good news, go here: http://www.usdebtclock.org/

The day of reckoning is at hand, and to put it off is to ensure that the pain will be greater later.

By: J. Strupp

J. Strupp — Thu, 06 Jan 2011 04:31:22 +0000

“The Treasury has already had to increase the interest offered on new securities beyond what they anticipated because the major buyers are losing confidence in the ability of the US government to pay back the money.”

You lost me. What did the government “anticipate” paying on treasury yields? Currently, they’re paying 3.38% on 10 year treasuries. If you need historical prespective on this, you can go here:

http://research.stlouisfed.org/fred2/series/DGS10

If what you say is true and the bond market is “losing confidence”, then TIPS spreads should be blowing out right now. Of course, they aren’t. At all. Because the recent upward movement in the yield curve is more due to improved economic data and capital flowing out of bonds and into equities. This is actually good news although we’re still way below growth levels necessary to lower unemployment and stabilize the debt/GDP ratio in any meaningful way.

And the idea of hyperinflation doesn’t really need a response.

And like I said, the “spending” includes a shit load of emergency spending on UI and other measuures intended to sunset as soon as we feel like dealing with the 10% unemployment crisis in this country.

SS is a managable issue we can deal with in the future.

Medicare is the medium and long term nightmare.

By: steveegg

steveegg — Wed, 05 Jan 2011 13:06:50 +0000

In reply to J. Strupp.

The Treasury has already had to increase the interest offered on new securities beyond what they anticipated because the major buyers are losing confidence in the ability of the US government to pay back the mooney. It hasn’t quite reached the point which Britain has faced a couple of different times (a very-nearly-failed bond offering), but guess what; we’re not far behind. Otherwise, why would that Debt Commission have been formed in the first place.

The danger isn’t a classical default; hyperinflation of the money supply will make sure of that. The danger is that nobody will buy the bonds necessary to supply more cash than the government can tax into its coffers.

Regarding GDP, the Bureau of Economic Analysis does not do that to the penny, while the Bureau of Public Debt does release the daily debt to the penny.

As for the GDP and tax numbers, because you seem to have missed the entire Social Security Crater series, here they are (do bear in mind that, while the BEA reports by calendar year, the Treasury Department reports by fiscal year, which runs from October through September):

2007 – GDP $14.062 trillion, tax receipts $2.568 trillion, with total debt increasing by $0.604 trillion and publicly-held debt increasing $0.235 trillion from CY2006
2008 – GDP $14.369 trillion (+$0.304 trillion), tax receipts $2.524 trillion (-$0.044 trillion), total debt increasing $1.471 trillion and publicly-held debt increasing $1.233 trillion
2009 – GDP $14.119 trillion (-$0.350 trillion), tax receipts $2.105 trillion (-$0.419 trillion), total debt up $1.612 trillion, publicly-held debt up $1.442 trillion
2010 – GDP $14.739 trillion (estimated; +$0.620 trillion), tax recepits $2.162 trillion (+0.057 trillion), total debt up $1.714 trillion, pubicly-held debt up $1.580 trillion

It’s the spending, stupid.

By: J. Strupp

J. Strupp — Wed, 05 Jan 2011 06:24:01 +0000

It just absolutely baffles me as to how honest people like yourself can post a debt/GDP chart like the one your just posted and not mention ONCE the collapse in tax receipts following the aftermath of the 2008 financial crisis, sudden increase in UI/food stamp benefits directly related to the massive surge in unemployment and, most importantly, the fall in GDP (and stagnant growth since)during the first months following the crisis. The surge in debt/GDP over the last 3 years is almost ENTIRELY related to the fallout from the crisis of 2008 and has almost NOTHING to do with our long term debt obligations and/or increases in discretionary spending by the federal government. There is no data to support the direction you’re attempting to take your readers in. Zip. Complete garbage.

If you want to make the case that our long term debt structure is unsustainable then be my guest. It’s an easy case to make. But don’t simply throw up a debt/GDP ratio chart and then talk about Nancy Pelosi and issues that don’t effect our debt/GDP in any significant way until years from now. It just being dishonest about current economic reality.

P.S. if you’re going to write the full numerical figure for total debt, why don’t you write out the full numerical figure for GDP? It’s almost as if you’re not really interested in emphasizing that U.S. GDP is approx. $14,700,000,000,000.00. And I also noticed how you never once mentioned what interest rate Uncle Sam is paying on that great big long debt number you stated.

By: The National Debt Is Now More Than $14 Trillion! | The Lonely Conservative

The National Debt Is Now More Than $14 Trillion! | The Lonely Conservative — Tue, 04 Jan 2011 14:20:35 +0000

[…] Update: See the comment below by Steve clarifying what’s counted in the national debt. He has further clarification here. […]

By: No Runny Eggs » Blog Archive » NRE 2010 Awards – News Story of the Year

Tue, 04 Jan 2011 11:03:12 +0000

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