WHY is the Increasing National Debt So Important?

Published on February 22, 2007 By COL Gene In Politics

I have spent a lot of my time documenting the consequences of the Fiscal policy we have been following. The reason is that in the world today without financial resources NOTHING can be accomplished. It takes resources to increase the military by 100,000. It takes money to hire the 10,000 border guards needed to help secure our border. It will take money to pay the Social Security and Medicare to the Baby Boomers as promised.

Our fiscal policy is pledging FUTURE tax revenues to pay the increasing interest on the skyrocketing National Debt. That means money we will need to pay our troops, border guards and to keep our promises to the retired will be paid to those that have purchased our debt. 40% of the interest on the publicly held debt is paid to foreign debt holders and that money leaves our economy. Interest on the debt will be an element of the budget that can not be cut and if the total debt continues to increase, the interest will go higher.

If a CEO were to manage the fiscal affairs of the company he headed the same as Bush is managing the fiscal affairs of the United States, they would be FIRED! Year after year we plan to spend more then we plan to tax. In addition, all other debt has a plan for repayment. There is no such plan to pay down the National Debt. When treasury obligations come due, we immediately sell new debt to repay the old debt. In addition, the continued annual budget deficit adds more every day to the amount we owe and the interest we MUST pay.

You can go to the Web and see how the national debt increases every second of every day. Go to: www.brillig.com/debt_clock/

Comments (Page 2)

COL Gene

on Feb 25, 2007

Paladin77

You are trying to change history. When Reagan proposed his tax cuts in 1981 he said if Congress Cut taxes as he wanted that by 1985 we would have a BALANCED BUDGET. He also claimed that the tax cuts would stimulate economic growth at a rate of 6% which is what was needed to fulfill his pledge that we would have a balanced budget. We did get growth but at only 3% and the result was that we NEVER saw anything close to a balanced budget from 1981 to 2000. We took the national debt during the 8 years of Reagan from less then $1 Trillion in December 1980 to $4 trillion in 1989-- an increase of just over $3 Trillion.

After Reagan came Bush 41 and Clinton. Thanks to reduced spending on the military and the Bush 41 tax increase the annual budget deficit dropped until 2000 when we had a Balanced Budget. During the 12 years of Bush 41 and Clinton, we added $1.7 Trillion to the National debt. The National Debt stood at $5.7 Trillion by the end of the Clinton Term.

Then GWB took over and immediately repeated what Reagan did-- Cut taxes and increased spending with the very same result. We did get some economic growth but not enough to offset the loss in tax revenue and to pay for the increased spending. From 2001 to today the national Debt went from $5.7 Trillion to just short of $9 Trillion.

Those are the facts you can verify by looking at the Bureau of Public Debt web site. The Growth in the Nation al debt had nothing to do with Carter. It is because of the policy of Reagan and Bush-- cut Taxes and increase spending. I have no idea where you get the BS you post on this web site but you are DEAD WRONG! This is the data from the Treasury dept:

FedInvest®
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Historical Debt Outstanding - Annual 1950 - 2005
* Rounded to Millions
Includes legal tender notes, gold and silver certificates, etc.

To find more historical information, visit The Public Debt Historical Information archives.

Date Amount
09/30/2005 $7,932,709,661,723.50
09/30/2004 $7,379,052,696,330.32
09/30/2003 $6,783,231,062,743.62
09/30/2002 $6,228,235,965,597.16
09/30/2001 $5,807,463,412,200.06
09/30/2000 $5,674,178,209,886.86
09/30/1999 5,656,270,901,615.43
09/30/1998 5,526,193,008,897.62
09/30/1997 5,413,146,011,397.34
09/30/1996 5,224,810,939,135.73
09/29/1995 4,973,982,900,709.39
09/30/1994 4,692,749,910,013.32
09/30/1993 4,411,488,883,139.38
09/30/1992 4,064,620,655,521.66
09/30/1991 3,665,303,351,697.03
09/28/1990 3,233,313,451,777.25
09/29/1989 2,857,430,960,187.32
09/30/1988 2,602,337,712,041.16
09/30/1987 2,350,276,890,953.00
09/30/1986 2,125,302,616,658.42
12/31/1985 1,945,941,616,459.88
12/31/1984 1,662,966,000,000.00 *
12/31/1983 1,410,702,000,000.00 *
12/31/1982 1,197,073,000,000.00 *
12/31/1981 1,028,729,000,000.00 *
12/31/1980 930,210,000,000.00

The Total of the National debt as of 02/22/2007 is $ 8,768,614,254,781. Bush projects that the national Debt by January 2009 will be just short of $10 Trillion!

Frogboy

on Feb 25, 2007

If we agree to spend $2.9 Trillion next year then we must TAX $2.9 Trillion.

Clearly we don't because we regularly spend more than we take in.

You keep saying "we must" as if you insisting on it will make it true.

I would like to see the government not have deficit spending. But because I know math, and you don't, I also recognize that the easiest, least painful way to do it is to simply decrease the rate we increase spending until we have a surplus.

Wheras you would raise taxes on people like me without really caring whether that would create a surplus because, after all, why should you care? It's not your money.

COL Gene

on Feb 26, 2007

Frogboy

I care about the impact on our country and the majority of people that will be stuck paying the higher interest caused by the fact we refuse to balance the budget. If you are among the top 20% of the income level, you can afford slightly higher taxes to help balance the budget without suffering from the higher taxes. Yes you may not have as much invested but you and your family will not suffer from paying a little more. It is time we let the MAJORITY be heard in this country! Passing the added debt to our children is WRONG!

Paladin77

on Feb 26, 2007

if Congress Cut taxes as he wanted that by 1985 we would have a BALANCED BUDGET.

You left out the little part about cutting spending as well. Both were required in ordder to bring the budget into balance.

COL Gene

on Feb 26, 2007

Paladin

That was NOT part of the Reagan plan. He was the one that insisted on increased spending on the military. The issue was his plan said the tax cuts would create growth in GDP of 6%. The rate of growth that was achieved from his tax cuts was just over 3%. That is why his plan did not work which is the same reason that it did not work when Bush did the same thing. The result of the Reagan policy which Bush repeated is the $ 9 Trillion of debt and an unbalanced annual budget! It is called Supply Side economics. It is what Bush 41 called Voodoo economics!

Draginol

on Feb 26, 2007

Again gene: The facts say otherwise:

Look at the 1980 to 1986 graph. The spending just kept going up and up.

I'm really trying to understand your point of view. You really think that if the government spends more than it is bringing in that the answer is to give it more money? When history shows that when they get more money, they simply spend it even faster?

Do you really think that if we raised taxes the budget would get balanced? Really? You don't think they'd just spend more on other things?

COL Gene

on Feb 26, 2007

Dragional

I do not know what you background is but when a non profit budgets it must end up with revenues that cover expenses. In a for profit company the budget includes both the expense budget and a sales budget that not only covers the expenses but the profit margin that is acceptable to that company. In no event does either type of business continually spend more then their revenue.

If you had a weekly income of $1,000 and every week spent $1,200 and put $200 every week on your card what would be the outcome? You would get to a point when the balance on your credit card became so great you could not afford the minimum payment. You would also still be in a situation where you needed that added $200 per week in my example. If you can not or choose not to cut your expenses by $200 per week you need to get a better paying job or a second job to bring your income up to $1,200 per week. In addition you owe the credit card balance and must pay the interest on that balance until you pay off the credit card.

The problem with much of the spending increases you show in the graph is that it is not controllable. Inflation, a growing population, ageing infrastructure and the increase to provide for both national and home land defense. In the years to come, the shortfall in Medicare and Social Security funding as the baby Boomers retire will require further increases in spending. We could cut $30-40 Billion in PORK and in the spending for individual politicians that earmarks have been used for and which have increases 10 Times under the GOP Controlled Congress. However, even if we had the political will to end PORK, we will not be close to a balanced budget. In addition, we are now faced with the problem of HOW to begin paying down the $9 Trillion in Debt. If we do not pay down that debt, the almost $500 Billion Dollars in interest every year will NEVER END. If we continue to add to that $ 9 trillion, the interest will go above that $500 Billion Dollar per year.

We must first balance the budget and then begin generating a substantial Surplus to be applied to repaying our debt!

Draginol

on Feb 26, 2007

We agree: People/companies shouldn't make a habit of spending more than they make.

But in reality, they do, all the time.

The typical American has more debt per their income than the government makes.

For example, it's normal for someone to have a mortage that is 4 or 5 times what they make in a given year. Throw in credit card debt and the typical American carries a much greater debt load per income than the federal government does.

Many companies are the same way. You may have heard that XM Radio and Sirius are trying to merge. They've got something like $14 billion in debt between them. That's far more than their income.

Personally, I don't like debt. But you can't say that the government is being run much differently than most citizens or many businesses.

It's not pork or other incidentals causing the deficits. It's increased spending on "entitlements". And I object to entitlements. You will never convince me that I should pay more in taxes so that someone else can have more free stuff.

I would rather have huge federal debt than pay higher taxes as long as the federal spending is mostly going to redistribution of wealth.

We must first balance the budget and then begin generating a substantial Surplus to be applied to repaying our debt!

Clearly we don't have to. You say "Must" and put it in bold as if there will be dire consequences if we don't. Unless the government controls its spending, interest on the debt will make up larger and larger percentages of the budget. But you assume that people like me care about that.

The people who produce stuff in this country don't need the federal government. My family doesn't need anything that the federal government is providing. Nothing whatsoever. Our roads, schools, police, you name it are all handled by the state which is doing just fine.

So that we understand each other: Even if the federal budget was 100% dedicated to paying off the debt, it would make relatively little difference in the daily lives of people who aren't mooching off the government. The only thing that it would affect that I care about is the military. Everything else could just go away for all I care. (that's an oversimplification, there's a tiny % used for maintaining the federal courts and the FBI and what not but you get the idea)

COL Gene

on Feb 27, 2007

Dragional

“My family doesn't need anything that the federal government is providing”

You do not need the protection of our military? You do not need the continuation of seniors spending by protecting Social Security? You do not need border protection? Most of the BIG ticket spending is for things like this. The only major spending that DOES not provide a service we all need, like National defense, is the almost $500 billion we pay in interest on the growing debt. What essential service is provided by paying interest for past years when we spent more then we taxed?

“I would rather have huge federal debt than pay higher taxes as long as the federal spending is mostly going to redistribution of wealth”.

The issue has nothing to do with redistributing wealth. It has to do with paying for our spending and ending the obligation of added debt to future generations. Add the fact that more and more of the interest is being paid to foreign debt holders and the situation gets worse and worse. Your position may benefit you personally because you may be wealthy. However, the long term impact on the country is very negative and we must balance the budget and begin repaying the debt! The money we will be obligated to pay in added interest will be needed to help pay the Boomers Medicare and Social Security for example. You paying a little higher tax will not cause you to want for anything if you are in fact among the top 10-20%. Greed may want you to keep the money you would pay in higher taxes but in the long run and for the welfare of the MAJORITY that is what needs to be done. Let's put it to a vote! We are a democracy and the will of the majority is what should be our policy. I know you will oppose any sort of referendum but what will most likely happen is that control of Congress and the White House will change so that the will of the majority will eventually be put into place. We have had 6 years of the minority calling the shots. It is time for a change! If we return to the tax rates on the wealthy that were in place in the 1990's, you will be just fine. Look at how well the wealthy did during that period even AFTER paying the higher tax rates!

COL Gene

on Feb 27, 2007

Dragional

The Bottom line is that that the increase in federal spending you and other conservatives complain about is the result of the Fiscal policy that you support which started with Reagan and that GWB Repeated. That policy has increased annual spending on interest by $400 BILLION Dollars per year since 1980. If we had not allowed the deficit to grow, we would be very close to9 a balanced budget today. Cliff Notes Version-- Conservative Fiscal Policies had increased government spending!

COL Gene

on Feb 27, 2007

Dragional

Another issue is the danger of foreign investors owning 40% of our public debt. China is the single biggest purchaser. If these investors or the government of CHINA WERE TO CHOOSE TO STOP BUYI NG OUR DEBT, we could be faced with a fiscal crises. We not only turn to them to refinance existing debt as it cones due but expect them to purchase the added debt our continuing annual deficit requires. Our fiscal policy is a Train wreck just waiting to happen.

COL Gene

on Feb 27, 2007

Here is some more data on the growth in the National Debt:

National debt

As of Balance in Annual Increase in Comments
Trillions Billions

02/22/2007 $8.769 $ 262 5 Months Increase
09/30/2006 8.507 574 *
09/30/2005 7.933 554
09/30/2004 7.379 596
09/30/2003 6.783 555
09/30/2002 6.228 421
09/30/2001 5.807 133
09/30/2000 5.674 18 Bush 43 Took Over
09/30/1999 5.656 130
09/30/1998 5.525 113
09/30/1997 5.413 188
09/30/1996 5.225 251
09/30/1995 4.974 281
09/30/1994 4.693 282
09/30/1993 4.411 346
09/30/1992 4.065 400 Clinton Took Over
09/30/1991 3.665 432
09/30/1990 3.233 376
09/30/1989 2.857 255
09/30/1988 2.602 252 Bush 41 Took Over
09/30/1987 2.350 225
09/30/1986 2.125 169
12/31/1985 1.946 283 Reporting changed to 12/31
12/31/1984 1.663 252
12/31/1983 1.411 214
12/31/1982 1.197 168
12/31/1981 1.029 49
12/31/1980 .930 Reagan Took Over

* The Bush administration reported the budget deficit for 2006 as $248 Billion. However the truth is that the National debt increased in FY 2006 by $574 Billion. That is because Bush subtracted $226 Billion from the Surplus produced by Social Security and Medicare in FY 2006 from the actual annual deficit to make it appear lower.

Draginol

on Feb 27, 2007

“My family doesn't need anything that the federal government is providing”

You do not need the protection of our military? You do not need the continuation of seniors spending by protecting Social Security? You do not need border protection? Most of the BIG ticket spending is for things like this. The only major spending that DOES not provide a service we all need, like National defense, is the almost $500 billion we pay in interest on the growing debt. What essential service is provided by paying interest for past years when we spent more then we taxed?

The Canadians are not going to be invading any time soon. I feel confident in saying that. I DO want a strong military, but I am not willing to pay more in taxes for it.

And no, I don't need seniors being "protected" by social security. The border protection is a trivial expense.

The "big ticket" spending goes to 5 sources: 1) Social security 2) Medicare 3) Medicaid 4) Military 5) Interest on the debt. The rest gets into triviality.

The issue has nothing to do with redistributing wealth. It has to do with paying for our spending and ending the obligation of added debt to future generations.

LOL. Gene, what exactly do you think that "spending" is? It's taking money from one person and giving it to another individual. that's where the top 3 spending items do.

Don't tell me we "NEED" to raise taxes as long as we have give away programs like medicare and medicaid.

Draginol

on Feb 27, 2007

The Bottom line is that that the increase in federal spending you and other conservatives complain about is the result of the Fiscal policy that you support which started with Reagan and that GWB Repeated. That policy has increased annual spending on interest by $400 BILLION Dollars per year since 1980. If we had not allowed the deficit to grow, we would be very close to9 a balanced budget today. Cliff Notes Version-- Conservative Fiscal Policies had increased government spending!

This is simply incorrect.

Conservatives do not support increased spending. Don't tell me what I believe and don't believe.

Eliminate social security, medicare, and medicaid and then come talk to me about fiscal needs.

COL Gene

on Feb 27, 2007

Draginol

You do not get military protection without paying for it. You might like to but it does not work that way.

Your position is clear-- The Hell with what the majority need so long as you can keep you wealth. As I said this is a democracy and I BET the VAST majority will opt to increase your taxes before giving up Social Security, Medicare, Medicaid, National Defense, Homeland Security, education, etc. You will just have to be unhappy or go live in some other country!!!!

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