The Dope on National Debt Revisited
Lisa | Aug 24, 2008 | Comments 6
In light of the gloom and doom IOUSA movie released last week, I thought it relevant to repeat my post from March on National Debt. Check out these statistics. You think you have debt problems.
The post:
Are you sitting down?
The US National Debt is 9.5 trillion dollars. If you divide that by the U.S. population, that means each American owes 31 thousand dollars. We are all paying interest on this money through our taxes.
The government adds to the national debt by not balancing the budget each year. Its current budget deficit is growing the national debt at a rate of 1.66 billion dollars per day. That’s about 1 million dollars a minute. Click this link if you’d like to see the history of how the national debt has gotten so high. National debt has increased during Republican administrations, and decreased during Democratic administrations. Financing the wars in Iraq is not cheap. Nancy Pelosi states that “right now we pay in interest four times the amount we spend on education and four times what it will cost to cover ten million children with health insurance for five years.”
Who do we owe this money to? 2.4 trillion dollars is currently owed to foreign countries. The major holders of this debt are Japan ($587 million) and China ($493 million). 40% is owed to the Federal Reserve. The Federal Reserve is actually privately as well as publicly owned. The remaining is owed to social security, individuals, corporations, and states through various bonds.
Will we actually ever pay back the national debt? There is controversy over whether or not we even want to. Many analysts argue that reducing this debt would create a bizarro deflation scenario so acute that the readjustment period would create havoc.
Some say it would be impossible to do. ” Stephen Moore wrote in the Wall Street Journal:
Here’s an experiment. What if we were to try to pay off the $4-plus trillion national debt by having Congress put one dollar every second into a special debt buy-down account? How many years would it take to pay off the debt? One million seconds is about 12 days. One billion is roughly 32 years. But one trillion seconds is almost 32,000 years. So to pay off the debt, Congress would have to put dollar bills into this account for about the next 130,000 years—roughly the amount of time that has passed since the Ice Age. Even if we were to require Congress to put $100 a second into this debt-buy-down account, it would still take well over 1,000 years to pay the debt down.
But much of the money is borrowed in the form of guaranteed loans, so it has to be paid back. And taxes will continue to increase as the interest increases. And what happens if we don’t pay back the money borrowed from Social Security?
It is a complicated problem, and we are in deep. Where is our current administration? They have let the deficit spiral out of control. In fact, the government is borrowing money for our upcoming tax rebate. What’s wrong with that picture?
Are you looking forward to November as much as I am?
For more information on the IOUSA movie, see the N.Y. Times article “Tackling Our Unsexy National Debt.”
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Filed Under: Commentary • Debt Reduction • Economy • The Dope On...
Linda
The Passive Dad
J. Money
Matt
Mr. GoTo
I read a transcript of an interview with Warren Buffett from CNBC on Friday and he is not as concerned with the national debt as the makers of IOUSA. He is also featured as an interviewee in the documentary. But he did say that if the current account deficit increase rapidly as a percentage of GDP, it could be troublesome.
And this is why money really has no value to me anymore. I laugh at it. I laugh at my debt while dutifully trying to pay more than my finance charges in order to keep the collectors at bay. Thing is they keep knocking, and I keep laughing.
Republicans are always the ones screaming that we need less government. Doesn’t it follow that if we have less government, that the government that exists would spend less money? Any parent that watched their child spend the way George Bush has spent would either send their kid to money management classes or cut off their allowance.
Congress, when ruled by Republicans has not only indulged that child but have been just as fiscally irresponsible. Spending, spending, spending in total oblivion to reality. My hope is that John Mc Cain will get in office that the congress will go back to being ruled by Republicans and let these silly children clean up their own messes, instead of having democarates to come in and clean up their messes all the time.
How in the heck can we tell our children to be responsible when our leaders are all credit abusers and dead beats running up debt then running away. If I owe the IRS $10,000 they can put me in jail if they think I intentionally avioded paying my debt to the government. But if a government leader shirks his debt they are rewarded with a lifetime pension. $9,000,000,000,000.00 dollars in debt…..? Talk about a likeness to Paris Hilton…. But at least her grandfather cut her off!
Bush is a dolt but his congressional airheads are equally responsible!
merediths last blog post..http://www.greenyourdecor.com
Ha, how else can we cut this debt down then by making the government smaller. The problem is the politicians get accused of doing nothing if they don’t create programs and spend money. So where is the balance?
Rick Vaughns last blog post..Debt Collections is Not Booming
Thanks you are my yesterday EC 1st dropper.
@ Meredith - Funny how the Democrats always get accused of overspending, when it’s the Republicans who are always cranking up the National Debt!
@Rick - good question. There’s none right now. I think if we stopped spending billions on this war we’d have less national debt, and more money for programs that would actually do some good.
Thank you both for your thoughts. Lisa