Tick-Tock, Tick-Tock …
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.