First, let’s do a National Debt update. You’ll see why, in a minute.
As of this day, the U.S. national debt is $19.3 trillion. ($13.9 trillion held by the public; $5.4 trillion “intragovernmental”, for example, Treasury bonds held by Social Security.)
When President Obama took over from President Bush, it was $10.6 trillion. ($6.3 trillion held by the public; $4.3 intragovernmental)
So, Obama has already more-than-doubled the part of the U.S. national debt that everyone agrees is important (what’s “held by the public”). And he’s on track to double the total, by the time he leaves office.
But there’s more. On this day 3 years ago, the total was $16.7 trillion. So, over the past 3 years, the U.S. operating deficit – the money that the U.S. Treasury actually had to borrow to pay for stuff – has been $2.6 trillion, or roughly $865 billion per year.
That’s funny because the three most recent U.S. budget deficits are supposed to be much smaller. 2014 – $483 billion, 2015 – $438 billion, 2016 – $616 billion; for a total of $1.5 trillion. (September-ending fiscal year means a 2-3 month shift from the dates I used above; but that does not alter the story drastically.)
What does it mean? It means they’re lying to us about the size of the U.S. budget deficit. And they’ve been lying for years, as I’ve blogged previously.
Oh, you could say “Come now, the accounting numbers are accurate, they’re just using some budget/accounting tricks to hide a big chunk of their spending-and-borrowing.” But I consider tricks to be lies. Don’t you?
According to left-wingers like MSNBC and Rachel Maddow, or even the Dear Leader Himself, His Dear Leadership has reduced the U.S. annual budget deficit by 2/3. No, pumpkins. It hasn’t. You lie.
The US unfunded liabilities are larger than the GDP of the entire planet for a year. If we don’t go mad max in our lifetimes we will at least go Cyprus taking a portion of all accounts including retirement.
I have a theory (two, actually).
1. The pols and voters simply don’t care; spending is non-partisan (you should see the “news” letters I get from my GOP congress-critters hailing yet another pork project). By the time the screws turn, they’ll be gone. In the meantime, party on.
2. The deficit numbers are so high (who’d ever have thought that talking about US gov’t spending would require scientific notation?) that no one, rulers or ruled, believes they’re real. That’s easy enough to do having seen the Fed and banks conjure money from thin air as if it were a Harry Potter movie. Imagining a trillion dollars for most people is an abstraction – like a light year or a quark.
Two major liabilities are Social Security and Medicare. Given the economy of the last couple of decades, the credit bubble, and the consumer-driven economy, SS and Medicare are the only things most people have to hold on to when they get too old to work. They’re not going anywhere (or, if they do, hell will break loose).
Wasn’t it Keynes who said “in the long run, we’re all dead.”? Perhaps most people, assuming they even think about this stuff, believe that the waiter won’t bring the bill until after they’re gone.
So maybe it’s really just one theory.
KCRob, one of two things is true.
Either the Neo-Socialists are right and the rules of economics have changed in a way that permits profligate, deficit-driven spending forever without consequences (because the US dollar is magic, or something)… or they are wrong and the politicians and bankers are just trying to keep the metaphorical plates spinning as long as they can until the inevitable crash.
We will see.
V the K: My money’s on #2.
So…..all this time you’ve been commenting here BF, you have only been talking your book?
/kidding
Some of the Loonies in DC seem to think that ALL the Quantitative-Easing borrowing/lending by the Federal Reserve Board shouldn’t count in either deficit number. Apparently they also “..believe in magic.”
1. Lying about levels of deficit spending and the national debt == very, very bad.
2. Debt itself isn’t evil. Borrowing at low interest and living with debt but also with the goal of a declining ratio of debt to GDP is using debt as an instrument and good, basic economics.
3. Generally, the US is doing #1 and not #2.
I would agree with point 2 on the basis that debt is used for investment that generates more economic value than the debt (which would enable the debt eventually to be repaid).
I think we can all agree that government isn’t so good at that. Contrary to our leftie friends, government spending is consumption (not investment).
Err, …where are the wind farms, the shiny new schools, and the bold transportation infrastructure improvements promised in-exchange-for the massive debt incurred — and the sweetheart financial grants and zero-cost loans made with taxpayer dollars?
The other part of the “reduced the deficit” lie is that Obama exploded the deficit in his first term, and then has gradually cut back on it since then, but it is still much higher than it was during the George W. Bush years. The main year in question is fiscal 2009, but it is worth pointing out that: 1). because the Democrats who controlled congress expected to win the White House that November, they didn’t pass a budget for that year until after Obama came into office, only a series of continuing resolutions. The budge wasn’t actually passed until March 2009. 2). One of the largest expenditures that added to the deficit that year was TARP (which was eventually repaid by the banks)–TARP was passed while Bush was president, but Obama and McCain both voted for it. 3). The other key expenditure that added to the deficit was the Obama “stimulus” aka “porkulus.” The porkulus was passed by the Democrats; I think it may have gotten one or two Republican votes. The porkulus greatly expanded the deficit for fiscal 2009, but also for subsequent years, as it increased the baseline funding level for many agencies and programs, and as we know, the federal government uses baseline budgeting, which means spending almost never gets cut. Conclusion, Obama made the deficit double or triple (or was it quadruple? I’d look it up, but I’m too tired at the moment) during his first year in office so he could subsequently claim he reduced it later in his term, even though spending has not been cut in any significant way and the national debt has continued to grow at an alarming and unprecedented pace.
The big fail in their scheme was that inflation didn’t take off. Everyone knows the best way to pay if national debt is with inflation.
Am I the only one who sees the risks of increased interest rates on the debt? What will happen to interest due when 6 month to 7 year (and soon 10 year bonds) fed notes mature and are replaced with notes/bonds at double the rate (or even triple based on historical interest rates)?
Many, many years ago the CEO of one of the Big Three accounting firms was a guest on Wall Street Week with Louis Rukeyser. When discussing the accounting presented in annual reports the CEO had this to offer:
“Accounting is like a string bikini. What it reveals is interesting; what it conceals is vital.”
It is still true.
Kurt, that’s a point worth remembering. Obama owns (or should own) the FY2009 budget and $1+ trillion deficit.
Usually, it’s unfair to make the new President own the budget he’s coming into. The previous President’s signature is on it.
But in this case (Obama 2009), the Democrats had taken special steps to get Obama’s signature on some important, big-spending parts of it – TARP and Porkulus. I’d forgotten.
I’ve read somewhere that each 1% increase in the average rate the U.S. has to pay, will mean $250 billion added to the deficit. In other words, it will be a disaster if the Fed ever does raise interest rates noticeably. By doubling the U.S. national debt, Obama has given us a kind of “debt bomb” that didn’t exist before.
That’s another discussion. Briefly,
1) It did take off – in the financial markets. (No one can afford houses or retirement anymore, who isn’t there already.)
2) It did take off – in other countries. (The U.S. exports large numbers of excess dollars, via trade deficit. Other countries deal with their dollar surpluses by expanding their own money supply and inflation. Result: Food riots in other countries.)
3) It did take off a little, in U.S. consumer prices. (The government under-reports it.) And finally,
4) It’s still going to take off more, in U.S. consumer prices. “You ain’t seen nothing yet.”