SOME IMPORTANT INFO ON THE REAL COST OF GOVERNMENT DEBT …
We wrote earlier about a U.S. House financial services committee hearing entitled “why debt matters,” but given the $17.5 trillion (and counting) expansiveness of that question it’s worth expending a little more ink to fully appreciate.
To that end we’d commend to your attention an excellent post from Simon Black of Sovereign Man, who dives into the federal government’s debt questions from both historical and practical perspectives.
Currently, U.S. taxpayers are shelling out $415 billion in interest on the debt annually – which accounts for 17 percent of total tax revenue. According to Black, that’s exactly where the Ottoman Empire was nine years before its collapse in 1877.
“It doesn’t take a rocket scientist to figure out that an unsustainable debt burden soundly tolls the death knell of a nation’s economy, and its government,” Black writes. “Unfortunately, it can sometimes take a rocket scientist to figure out what the real numbers are; governments have a vested interest in not being transparent about their debts and interest payments.”
Indeed they do …
For example, Black notes that $891 billion of the federal government’s $2.5 trillion FY 2013 tax haul came from the payroll tax – which Republicans and Democrats collaboratively increased last year.
“This amount is tied directly to funding Social Security and Medicare,” Black points out. “It is not to be used for interest payments.”
Re-crunching the numbers to account for these earmarked funds, Black calculates that 26 percent of the federal government’s available tax revenue last year went to pay interest on the national debt – or one out of every four dollars.
“This is an unbelievable figure,” he observes.
Um, ya think?
And that, friends … is why “debt matters.”
It isn’t just toxic because it “kicks the can down the road” for future generations of taxpayers. It’s toxic because it drains our economy of hundreds of millions of dollars annually.
11 comments
“Reagan proved deficits don’t matter.”
I believe it’s still an ongoing experiment.
Maybe they’re onto something!
Good Idea!
How do we know if it’s going to work, if we don’t try it?
The Republican strategy to fund wars on credit and reduce tax rates for the highest brackets was financially reckless. A deep worldwide recession made those decisions disastrous. The Republican party’s insistence that the former rates not be reinstated is dangerous for our republic. For the Republican party to deny responsibility for their contribution to the currently high levels of the national debt is reprehensible. The Republican party’s solution to address the national debt with plans like limiting food stamps to poor children is disgusting.
The Republican strategy to fund wars on credit and reduce tax rates for the highest brackets was financially reckless.
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ah… but that’s where Bush’s intelligence came to the rescue!
Speaking of crude graphics, has Nitwitandyahoo’s cardboard bomb gone off yet?
I seem to recall the Ottoman Empire hanging around longer than 1877.
Dayum….you must be old!
“It’s toxic because it drains our economy of hundreds of millions of dollars annually…” Really? No shit? How about the 26 billion our taxes payout for the unemployed, government pensioners, SSI, SS, S.N.A.P., HUD subsidies each month? How about the Federal Reserve spending 85 billion a month to buy toxic assets from banks here and overseas? You really seem distant to the realities that only a major war can reset the debt…and there will be no winners. If you want to make changes, takeover one of two US political establishments. This starts with clean criminal records, law degrees, and financial success from your generation to ever mount challenges at the ballot box. Truth is, if your generation can’t do it, maybe the next one? Best Gen X can do is blog about it cause on your draft free watch, you guys just indulged instead of engaging. The fucking Tea Party shook them all up…is a real movement for changing the numbers. Yet all we get from Gen X is, well, “I’m a libertarian” and “legalize pot” and “homosexuality is OK”. Wake up already.