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This article has a few interesting facts which I am pointing out.
Other then that it seems to be written by a reporter who wants
more government regardless of what the Constitution says on the issues.
Or probably a reporter who is blindly repeating what a government bureaucrat
told him during the interview.
The U.S. government took in about $7,000 in revenue for every man, woman and child in America last year [Thru taxes and fees]. It spent more than $11,000. The gap between those numbers, about $4,000, is the deficit and it was covered by borrowing money. [Well they PRETEND to borrow the money. In reality BORROWING money means PRINTING money in government double talk! A book that will open your eyes on this subject is "The Creature from Jeckyl Island"] You could have a bare-bones government of a libertarian's fantasy that spends only $7,000 per person [Sorry a Federal government that every year spends $7,000 per person or $14,000 for every adult is NOT a Libertarian's fantasy!!! Knock that down to $7 per person and $14 per adult and you might have a Libertarians fantasy] The national debt works out to about $46,000 per American. [Which is about $92,000 for every adult, or $184,000 for that mythical family of 4. Sadly many American families owe more towards the national debt then they owe on their home mortgages! If you include other programs which the Feds will have to spend money on in the future, like Social Security and Medicare this figure increases by a factor of about 4 to $184,000 for every person in the USA and $368,000 for every adult and $736,000 for that mythical family of 4] The good news is that there's really no need to eliminate the debt entirely. [Sorry, many Constitutional experts will tell you the National Debt which has been created by the Federal Reserve is 100 percent UNCONSTITUTIONAL because in reality it is not borrowed money, but an excuse to run the printing presses printing worthless money that isn't backed by anything!] Indeed, having no debt could be problematic: Government debt, in the form of U.S. Treasury bonds, plays a crucial role in the inner workings of the financial system, offering a place for investors to put their money that is considered safe. [Again many Constitutional experts will tell you the Constitution doesn't give the Feds the power to do this] Concepts of U.S. deficit, debt summarized Fiscal issues put in focus as deadline looms by Neil Irwin - Jul. 16, 2011 12:00 AM Washington Post WASHINGTON - In the American political conversation, the national debt has become something almost mythical. It has become a metaphor for all that ails the United States, a scary monster under the bed. It isn't. It's an accounting concept. The debate over deficits and debt is frequently clouded with sloppy language and sloppy thinking. Here, as something of a primer, are some basic concepts every American - and every member of Congress - should understand about the U.S. fiscal situation. 1. Deficits are the gap between revenue and spending. The U.S. government took in about $7,000 in revenue for every man, woman and child in America last year. It spent more than $11,000. The gap between those numbers, about $4,000, is the deficit and it was covered by borrowing money. Some politicians speak as if high levels of government spending and a large budget deficit are the same thing. This isn't so. You could have a government that spends $11,000 per person - but with taxes to match it - and no deficit. Or you could have a bare-bones government of a libertarian's fantasy that spends only $7,000 per person but that runs a large deficit, if the government only raises $3,000 in taxes. Inevitably, the debates over the proper size of government and the proper level of the deficit are intertwined in each other. But they're separate questions. [ The webmaster pretty much disagrees with EVERYTHING that follows. ] 2. The debt is the accumulation of deficits over time. Looming over Sixth Avenue in Midtown Manhattan is a clock ticking ever upward, showing the accumulated national debt. Let's change that $14 trillion plus figure into a more manageable number: The national debt works out to about $46,000 per American. That level of debt has been accumulated over two centuries, rising rapidly in times of war and depression, rising slowly most of the time, and occasionally falling in times of prosperity and fiscal restraint. But even if Congress and the Obama administration agreed to a budget for next year with zero deficit, the national debt would still be with us. The good news is that there's really no need to eliminate the debt entirely. Indeed, having no debt could be problematic: Government debt, in the form of U.S. Treasury bonds, plays a crucial role in the inner workings of the financial system, offering a place for investors to put their money that is considered safe. 3. There's good debt and bad debt. There's no doubt that debt can be dangerous. But used correctly, it can be beneficial. For example, a family might borrow to buy a house or for a child's education. So long as the family is careful about the amount of debt it takes on, it could pay off handsomely - giving them a comfortable place to live for many years and ensuring their child has higher future earnings. But if the same family used borrowed money to pay for lavish vacations, a new boat or even just routine day-to-day expenses, then it would probably lead to trouble. The analogy is straightforward: If the government borrows money to pay for things that have a long-term payoff, such as a highway between two major cities or education for its citizens, deficit financing can make a lot of sense. Liberals and conservatives tend to have different views of what sorts of government functions have a high enough long-term payoff to warrant deficit spending. For example, when the steep recession came, the government enacted $800 billion in spending and tax cuts paid for with borrowed money. Back to the household metaphor, it would be the equivalent of a family, with one of its earners unemployed, using the credit card to stay afloat during a difficult period, hoping to pay off the balance when conditions improve. Is that a good use of debt or a bad one? The answer depends on your ideology. 4. Economic growth matters. The diligent economists at the Congressional Budget Office prepare 10-year forecasts for the federal deficit and debt, under a wide range of policies that Congress might or might not enact. But to make those forecasts, they have to make guesses about how the economy will do. The reality is that economic growth has a massive impact on both the scale of deficits and how sustainable a given debt level might be. When the economy is stronger - when there is more economic activity, fewer unemployed and higher incomes - income taxes are higher. Simultaneously, there is less need for unemployment insurance, Medicaid and other social-welfare programs. 5. Interest rates matter. Here's a phrase that most Americans have never heard but will be really, really important over the coming decade: debt dynamics. That's the concept that deficits and debt have a built-in feedback loop. So when debt levels rise too high, interest rates can rise, making the debt problem all the more onerous. Debt dynamics are the reason that, even though interest rates are very low now, it is worth worrying about current U.S. debt levels. A debt level that is manageable when interest rates are 3 percent can become onerous when rates are 6 percent. Every rise in interest rates by a percentage point increases the annual cost to service that debt by about $140 billion, or $450 for every American. What that means is that with debt levels high relative to the size of the economy, a country loses control of its own destiny in terms of public finances. If global lenders lose faith that the U.S. government is the safest entity on earth to lend money to, suddenly the fiscal situation would go from being a long-term challenge to a near-term crisis. |