Thursday, July 19, 2007

National Debt

For Mary Only
Good question Mary:

Discussing our national debt is like discussing the bible, but in a nut shell it's the accumulated debt we owe internally and externally.  The largest slug of debt (I'm guessing) is from the sale of bonds.  That U.S. Savings bond in your sock drawer is debt, so in effect, you owe yourself.  At any rate, think of it as credit card debt.  The best barometer then would be what percentage of your income does VISA have claim to?  Same with a nation's debt.  What is the percentage of our national debt compared to our nation's GDP?  Here's a chart covering the last four presidents.  Here's some more charts and attached discussions.
  1. USA - USA - Fiscal situation as a percentage of GDP, under the recent four Presidencies ( since 1980 )
  2. USA - Relationship between Total Debt ( data from 1929) and External debt as a % of the GDP (data from 1995)
  3. USA - Relationship between GDP and Savings rate ( Quarterly data since 1985 )
  4. USA - Manner in which the Deficit has been financed since 1995 ( Savings viz external debt)
Democrats have a very simplistic definition.  If we spend more money on defense than we do on Head Start, we're on the road to hell.  It's in their DNA.
7/19/2007 10:07:00 AM 8 Comments

"If the number of Islamic terror attacks continues at the current rate, candlelight vigils will soon be the number-one cause of global warming. "
Argus Hamilton


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8 comments:

Anonymous said...

A big chunk of our problem is not even on the books. We've got liabilities for Social Security that we don't even account for. LBJ broke into the cookie jar, as has every President since. We've GOT to spend less than we do now. Personally, I think we do without some government services, rather than starve the ones we really need. Foreign aid - gone, farm subsidies - dead meat, National Endowments and PBS - over and done with, many inefficient regulations need to get the ax, too. Etc. AND, we probably need to reduce our corporate tax rate. Laffer Curve analysis suggests we could reduce the rate and increase tax revenues.

RKV

7/19/07, 10:15 AM
Rodger the Real King of France said...

"Laffer Curve analysis suggests we could reduce the rate and increase tax revenues."

The Laffer curve is unassailable logic, and most recently demonstrated by the Bush tax cuts.

7/19/07, 11:02 AM
Anonymous said...

unless you are a democrat.

7/19/07, 11:21 AM
Anonymous said...

A national debt is a good thing. Every large corporation has debt. There is no doubt there is an unbelievable amount of wasteful spending, my Lord, the federal government is awash in a sea of revenue.

Our current deficit, historically, is running a bit below average as a percentage of GDP.

The alternative is running a surplus, in other words collecting more revenue than has been allocated for spending. Thar be whales.

And RKV is dead on. We have trillions in unfunded liabilities and Bush tried to do something about it and was pillored. Those chickens are going to come home and roost, oh in about 20-30 years. The tax rate increase necessary will be staggering. If I was in my 20s, I'd refuse to pay it. It is going to take someone with some thick skin and big pineapples to take the arrows and privatize a portion of SS. The more the dems can raise taxes, the more control they have.

Bet your last donut on this. The next fix for SS will be the removal of the ceiling on taxing earned income, just like it is now for Medicare. It will be presented as the rich being forced to pay their "fair share" Oh don't worry, our public schools will keep our kids from questioning this and the left dominated MSM will tow the dem's line.
MM

7/19/07, 11:43 AM
Anonymous said...

There is only one problem with higher revenues (for instance, with reduced corporate tax rates) and that is the money will get spent on something which buys votes, and not on what prudence would indicate we really need to get dealt with (unfunded liabilities). With respect to running some debt I have to agree that some is fine - as long as its used to buy assets that produce revenue to the government. That said, my personal sense is taht the US government has plenty of assets it could (should?) liquidate to pay for past sins. "What assets?" you say. Land. The feds own lots of it. Properly sold (slowly) it should cover the nut of the Great Society spendthrifts (i.e. Democratic Party poverty pimps).

7/19/07, 1:02 PM
Anonymous said...

Thank you, Rodger. I knew you could simplify it for me. Love the credit card bit.
Now, give me a short answer for whom we owe the external debt.

Thanks again.
mary

7/19/07, 7:11 PM
Rodger the Real King of France said...

U.S. Treasury securities. Japan is our biggest creditor.

7/19/07, 7:43 PM
Anonymous said...

Rodger's right. For a complete list of foreign creditors, click here.

The interest rate isn't very high, but there's one good thing: the US Gov't has never, ever, missed a payment. They just keep raising the debt to pay for it.

Sure, it's a Ponzi Scheme. But who's going to stop it? We have to pay for those vote-buying schemes-- er, I mean social projects-- somehow.

7/20/07, 7:37 PM

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