Bell Curve The Law Talking Guy Raised by Republicans U.S. West
Well, he's kind of had it in for me ever since I accidentally ran over his dog. Actually, replace "accidentally" with "repeatedly," and replace "dog" with "son."

Thursday, November 17, 2005

Credit Card Conservatives

I've written about this before, but here is an update. As of November 16, 2005, the total amount of the Federal Debt now exceeds $8 Trillion ($8,063,591,365,642.68). The interest paid on this debt last year (FY05) was over $350 Billion ($352,350,252,507.90), while we addded over $550 Billion ($553,656,965,393.18) to bring the total up to its current value. We owe over $27,000 for every man, woman, and child in this country.

This means 63% of what we borrowed with our national credit card last year just went to pay interest on the old balance. (And this is at an interest rate of only about 4.5%--not the exorbitant rate credit cards charge.) For the same year, the government only took in $1.46 Trillion in regular revenue. So about 25% of the tax dollars we paid to the government just went to paying interest on the public debt! Furthermore, of the half of this debt owned by private investors (about half is owned by the Social Security trust fund) nearly two thirds of it--over $2 Trillion--is now owned by foreign and international investors.

Our public debt is snowballing out of control. At this rate, if we managed to cut half a trillion from the budget (25% of total expenditures!), we'd just break even. If we managed to cut our expenditures in half, we could apply half a trillion to the public debt each year--but it would still take 16 years to do it. Bush/Cheney say not to worry because the deficit is still only a small percent of our GDP. But the GDP is about $12 trillion. So while the annual deficit is only about 4.5% of GDP, the public debit is equal to 2/3 of GDP.

You can examine this nifty chart and see how much better a job Democrats have done in budgeting than Republicans. For at least 45 years, only Clinton managed to balance the budget. And now Schwarzenegger proposes to pay for massive new public works projects by raising $50 billion in new state bonds, thereby doubling California's current indebtedness.

Republicans need to learn that if you want something, you have to pay for it. That means taxes, not borrowing. Will the madness never end?


Anonymous said...

Wow! That is a great summary of what is going on! Thanks, Strangelove. I would note that Reagan's debt, which was outlandish at the time, was a mere $2.6 trillion (however he ramped it up at 168%) and we are still paying it down. And I thought my student loans were bad! Considering that China owns a fair portion of the $8 tril, is it really wise of our great President to be lecturing the Chinese about how they should be more like their little sister, Taiwan?

And reports tell us that consumer spending is slowing as interest rates rise. And in some markets, housing prices are starting to fall. In others, they are stable, but houses aren’t moving. So, the entire economy is liable to slow. That won't help neither the GDP or the national debit.

The news today is that California will have a balanced budget  in FY2006-2007. That said, we will still have a sizable deficit. It is worth noting that while balanced budgets are good, they don't necessarily alleviate deficits built up in previous years. The Legilsative Analyst, Elizabeth Hill said, face multi-billion-dollar deficits for many years".

Schwartzy is trying to say that his fiscal restraint is the reason we have a balanced budget. Nice try, bubba. Now there is $5.2 bil surplus to argue about. That should get interesting.

// posted by USWest

Anonymous said...

And where is the money going? From what Republicans say it goes to unneccesary social programs that benefit "fat cat" Demcorats and their lazy constituents. But wait! Check out this data !

The biggest recipients of federal money are not states with Democratic majorities or even states with large urban areas! NO! It is the so called "red states" that soak up all the federal money. Gernally speaking the redder they are the bigger mooches they are. Texas is the biggest exception to this rule.

From a political scientist's perspective this is no surprise. The Republican party controls all branches of government so of course federal spending goes overwhelmingly to their constituents.

Combined with the deficet information Dr. Strangelove kindly provided, this shows that Republicans are clearly not the small government, pro-market party anymore. They are balooning the deficit and debt with pork barrel projects and wasteful agricultural subsidies - oh, yeah, and that war they started but don't seem able to get clear of.

This is an issue that will play very well in swing states like Ohio and Florida. The Democrats should use it.


// posted by Raised By Republicans

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