question about the national debt

[gridfaniker]

I'll admit I don't know a whole lot about the national debt, how it impacts our economy or the well-being of future generations of Americans.

According to a Reuters "breaking news" story, (http://news.moneycentral.msn.com/breaking/breakingnewsarticle.asp?feed=OBR&Date=20040218&ID=3408316) the debt has exceeded $7 trillion for the first time ever and it's some pretty bad shit.

Democratic congressman Rep. Baron Hill of Indiana is quoted as saying this: ``It is simply immoral to run a national debt exceeding $7 trillion, every penny of which our children and grandchildren will be responsible for paying back.''

Sounds pretty gloomy. Sounds like Dubya has fucked up but good on this one. I got thinking, if this is the first time ever that the debt has exceeded $7 trillion, there must have been a first time ever that it exceeded other benchmark figures. Here's the amount of debt for each fiscal year during Bill Clinton's presidency.

09/29/2000 $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

It looks as though he presided over the "first time ever" that the debt exceeded $ 5 trillion. Pretty immoral of him, wasn't it? I'm sure Rep. Hill said as much back in 1996.

I'm not trying to be a wise-ass here. But it looks as though the debt will go up no matter what. Can anyone explain the significance of these figures?

[magnus]

I think the biggest problem is that no one's ever come up with a solution for it. There will undoubtedly be issues with it, even if we had a balanced budget, because (ignorance of the full scope of the budget) I don't know that the budget takes care of interest, and that it would be impossible to balance the budget as well as take away any amount of national debt in worthwhile chunks.

That's certainly to exclude your other point, which is a very valid one about the partisan bickering, and without allowing any space for people to come in and gripe that the sky is falling when they don't agree with who's in power.

[crazydave]

Good point. I don't think I've ever heard of the national debt going down. So what's the point?

[crazydave]

But the debt has gone up twice as much with bush in office for 4 years as it did with Clinton in office for 8.

[Boo]

But the debt has gone up twice as much with bush in office for 4 years as it did with Clinton in office for 8.

afghanistan and iraq.

[crazydave]

afghanistan and iraq.
Exactly.

[magnus]

afghanistan and iraq.

And inflation, and a recession, and tax cuts.
It's not like the man is lighting his cigars with it.

[kshead]

Monitors. It's all in big, flat screen monitors.

[Christina]

I don't think it's a Democrat or Republican thing. Like you guys said, it keeps going up, regardless. But something needs to be done. Just think of the interest payments every year with that much debt. We can't keep borrowing forever. It's just not sustainable.

The problem is most people don't know anything about the economy or how it works. They think the government can keep giving forever. Everyone has a program that needs funded. The government can't pay for everything. A lot of those programs are great, but we need someone in office who has some balls to get stuff under control. The problem is, he (or she) will never make it past the voters.

Debt isn't a bad thing- it can fuel growth. In a recession, borrow, get things going, but then we the economy starts booming, take that extra money and PAY IT BACK. That's what we never do. If you or I did what the government does, we'd have been in bankruptcy court long ago.

[gridfaniker]

But the debt has gone up twice as much with bush in office for 4 years as it did with Clinton in office for 8.


that explains nothing, other than the fact that you can do simple math.

[Boo]

Monitors. It's all in big, flat screen monitors.

the space elevator wasn't exactly cheap either.

[magnus]

the space elevator wasn't exactly cheap either.

Upkeep on the stargate

[crazydave]

that explains nothing, other than the fact that you can do simple math.
Thanks Grin. 5th grade was kinda tough. My point was that everyone is raising hell about the 7 trillion mark. It was inevitable no matter who was in office. The Democrats are just trying to get as much crap started as they possibly can. I'm sure the Republicans started the same crap when Clinton blew past the 5 trillion mark.

[DaveW]

who gives a shit about national debt. why is it even kept up with? its never going away

[Chief Tony]

I think the biggest problem is that no one's ever come up with a solution for it. There will undoubtedly be issues with it, even if we had a balanced budget, because (ignorance of the full scope of the budget) I don't know that the budget takes care of interest, and that it would be impossible to balance the budget as well as take away any amount of national debt in worthwhile chunks.

That's certainly to exclude your other point, which is a very valid one about the partisan bickering, and without allowing any space for people to come in and gripe that the sky is falling when they don't agree with who's in power.
I think it's really quite simple.They way I do my budget.Cut spending until you're under budget and keep it there.We damn sure can't spend what we don't have.But I know that is way to easy for the Feds.

[slydevl]

The Constitution clearly outlines the things that the Federal Govt should pay for. We got fucked when the voting masses realized they could vote money into their pockets. It is now too late. As Christina says, anyone willing to make the changes neccessary and demanded in the Constitution will never get elected. The ignorant, unwashed public (VOR) wants to have their cake and eat it too.

The solution? Do what GWII is doing and bankrupt the whole damned country. Hard to pay for social programs when there is no money to do it. What we need is a Constitutional crisis on a grand scale to force the immediate closure of these out of control social programs. I don't see how anyone can Constitutionally defend social security when we cannot pay our military.

Its funny how the Pubs were roundly lambasted for shutting down the government when they were trying to cut spending. Now they are lambasted for doing the opposite. You simply cannot have it both ways.

[kshead]

The solution? Do what GWII is doing and bankrupt the whole damned country. Hard to pay for social programs when there is no money to do it. What we need is a Constitutional crisis on a grand scale to force the immediate closure of these out of control social programs. I don't see how anyone can Constitutionally defend social security when we cannot pay our military.


Most Pubs will tell you that the "conspiracy theory" about bankrupting the country is just that - a crackpot :D theory. We'll see. It's a theory that's been around for about 20 years now so it doesn't seem to want to die. Norquist will crap his pants in glee if a major state has to do it.

[gridfaniker]

The ignorant, unwashed public (VOR)

:roflmao:

[builder]

:roflmao:
I was thinking the same thing. :seuss:

[TimTam]

We should sell the country back to the indians for 7 trillion dollars. Then steal it back from them and start all over.

[hanger4]

Seems to me the national dept in relation to the GDP would be more telling. Anybody got those # ??

[builder]

Seems to me the national dept in relation to the GDP would be more telling. Anybody got those # ??


GDP is $11 trillion I think I read. I might be wrong.

[Superfluous_Nut]

yeah, nobody ever accused clinton of spending a lot of money... :rolleyes:

what ever happened to that GOP favorite, the balanced budget ammendment? surely with the GOP in control of both houses and the executive branch, such a measure would have no problems passing today, right?

[gridfaniker]

yeah, nobody ever accused clinton of spending a lot of money... :rolleyes:

what ever happened to that GOP favorite, the balanced budget ammendment? surely with the GOP in control of both houses and the executive branch, such a measure would have no problems passing today, right?


this explains nothing about the national debt. please don't answer questions with more questions. thanks, and don't call me shirley.

[Superfluous_Nut]

about 4 trillion of the national debt is publically held debt. i presume this means gov't bonds, tbills, and the like. we could simply not pay this money back. that seems to be the solution some people offer for fixing social security -- just don't pay it. i'm guessing the two pools of money are probably there to serve the same purpose -- ie, investing for retirement.

not sure where the other 3 trillion goes.


each year we're spending over 300 billion in interest payments. oddly, while our debt has risen, our payments have gotten smaller. in 1999, 2000 and 2001, the payments were in the range of 360 billion and in 2002 and 2003, they're 332 and 318 respectively. i would guess this is because clinton was more aggressive about paying down the debt, tho i'm not sure how you pay down a debt by borrowing more money...

the last time we paid as little interest as we did in 2002 it was 1995.

14.5% of the budget went to paying down the debt in 2003. and we borrowed an additional 450 billion that year.

[ezy ryder]

Seems to me the national dept in relation to the GDP would be more telling. Anybody got those # ??

Why would you want to do something smart like that when you can scare everyone with a number like $7 Trillion?

If you are evaluating the debt of a company, you don't look at the absolute value, you look at ratios like debt/equity, debt/assets, debt/cash flow. The question to ask after seeing debt/gdp is, am I looking at the right ratio? What is the difference between debt held by the public and intra-gov't debt?

Here is a site for debt FAQs from the Bureau of Public Debt
http://www.publicdebt.treas.gov/opd/opdfaq.htm

Here is a chart that paints too rosy of a picture. Makes me suspicious.
http://www.whitehouse.gov/news/usbudget/blueprint/bud01.html

Here is a chart similar to the last one, but also includes debt held by the gov't. Paints a much different picture. However, Economists consider Net Debt to be the proper measure of Federal Debt Which makes this chart misleading - net debt is the red portion on the bottom.
http://www.aaas.org/spp/rd/debt04b.pdf

The best source I've found with explanations is this report here:
http://www.house.gov/jec/fiscal/debt.pdf

[ezy ryder]

Those reports make me more comfortable about the debt numbers. But other issues are still spiraling out of control like Social Security.

If you ever need to do any research on debt, employment, economy or any of these things, www.firstgov.gov is the place to look. If it can be measured, you'll find it on this site.

But if you're scared of numbers and facts like VOR and Reb, you'll just keep calling it all bullshit instead of making a real argument.

[Superfluous_Nut]

so in simple terms, what is the intra-gov't debt? social security and other trusts that have been pilfered? does that mean no interest is paid on this money?

so the best debt comparison would be debt to assets or net worth, right? how do you calculate these? or is there a good estimate for the US?

[ezy ryder]

http://www.house.gov/jec/fiscal/debt.pdf

This report was made in 2001 when Clinton was drastically reducing the amount of Federal debt. The report addresses the negative impacts of debt reduction on the way our financial system works. It raises more questions than answers.

VII. Conclusion
Since 1776, the United States has been borrowing from global financial markets. After
the Continental Congress failed to service U.S. Revolutionary War debts fully and promptly, the
first Secretary of the Treasury Alexander Hamilton restored U.S. credibility by establishing
sound goals and principles for the management of U.S. government debt that made U.S. Treasury
securities the safest and most liquid investment in the world.
Treasuries do far more than finance federal budget deficits. Unique characteristics allow
Treasuries and Treasury derivatives to perform many other economic functions. These include: a medium for the Federal Reserve System to conduct monetary policy, collateral for foreign
currency boards, reserves for foreign central banks and governments, a pricing benchmark for
other debt securities and loans, collateral for repo transactions, a hedge against interest rate risk,
a vehicle for speculation on interest rate changes, a means to achieve the appropriate risk-return
profile on investors’ portfolios, and a regulatory tool.
The U.S. government is running substantial fiscal surpluses and is paying down federal
net debt. As a result, the supply of Treasuries is expected to decline significantly. This
momentous development is already having ramifications in financial markets.
Over the next decade, the sharp decline in the supply of Treasury may compel the Federal
Reserve System, international official entities, and market participants to find substitutes for
Treasuries. Given the importance of Treasuries to the U.S. economy and the projected reduction
of federal net debt during the next decade, the following questions will face U.S. policymakers:
• What are the opportunity costs for federal debt reduction? Will a rapid reduction of
federal net debt lower real interest rates sufficiently to stimulate more economic
growth or would a properly structured federal tax reduction be more likely to quicken
the pace of economic growth? What is the most economically advantageous balance
of debt and tax reduction?
• Could excessive federal debt reduction decrease the efficiency of the American
financial markets and increase systemic risk?
• Could excessive federal debt reduction affect the ability of the Federal Reserve
System to execute monetary policy? Will conducting open market operations with
financial instruments other than Treasuries have unintended negative economic
consequences?
Federal debt reduction raises important economic policy questions that require further
examination. This study demonstrates that current trends in the level of federal net debt raise
important issues related to tax and budget policy, monetary policy, and the efficient operation of
financial markets.
Robert P. O’Quinn
Economist

[Miss tery]

Raise taxes AND cut spending with specified amounts to be used paying down the debt. I think Americans are more rational than the politicians give them credit for.

Oh yeah, and quit spending hundreds of billions of dollars killing brown people.

[barry49s]

Yeah whatever.

It's really very simple. You can not, I repeat, you can not, increase spending, while cutting revenue (taxes). It doesn't make fiscal sense. I don't give a shit if you are talking about a corporation, a single person or the federal government. Eventually this money will have to be paid back. How? By raising taxes. These tax cuts are loans.

[ezy ryder]

Nut, this short article has the best explanation of what intragovernmental debt covers.

http://cox.house.gov/html/columns.cfm?id=514

Seems like we'd want intra-gov't debt to be as high as possible to cover the social security benefits of baby boomers. Unfortunately we'll know if that's right in just a few years when SS outlays are greater than revenues. Pretty confusing.

[ezy ryder]

Yeah whatever.



Good point Barry :handjob: but we're trying to dig a little deeper here. Try to keep up, you might learn something...

[Miss tery]

Remember back a few years ago when we had a surplus? I wonder how the economy would have went if we used that to pay down the debt instead of cutting taxes?

Oh yeah, and ezy read your own post more carefully. It does advocate reduction, just questions the rate at which one does so.

[ezy ryder]

Remember back a few years ago when we had a surplus? I wonder how the economy would have went if we used that to pay down the debt instead of cutting taxes?

We did use it to pay down debt. From 1998-2001 almost a half trillion dollars was used to pay down public debt. The economy had very obvious signs that we were heading for a recession in 2000. The tax cuts didn't cause the recession.

[ezy ryder]

Oh yeah, and ezy read your own post more carefully. It does advocate reduction, just questions the rate at which one does so.

You're right. I never said debt reduction was bad. I just pointed out some consequenses to our overall financial system.

[Miss tery]

We did use it to pay down debt. From 1998-2001 almost a half trillion dollars was used to pay down public debt. The economy had very obvious signs that we were heading for a recession in 2000. The tax cuts didn't cause the recession.

IMHO that was because the Fed was raising interest rates, scared of an inflationary trend that did not appear due to the silicon valley bubble bust.

[Superfluous_Nut]

[QUOTE=Miss tery]Remember back a few years ago when we had a surplus? I wonder how the economy would have went if we used that to pay down the debt instead of cutting taxes?
[QUOTE]

interestingly, that surplus was really only the unspent social security money. or at least, the dollar amounts were about the same. george bush decided it would be a good idea to give away the social security money. and people wonder why it's not going to be around when they want to retire?

it seems like the rationale for keeping debt is the industries that have grown to make money by servicing that debt. if there was no debt, then people would lose their jobs and a whole industry would go kaput. or maybe i'm misinterpretting things. macro economics is not my thing.

[ezy ryder]

IMHO that was because the Fed was raising interest rates, scared of an inflationary trend that did not appear due to the silicon valley bubble bust.

I think you're right that it started with the rate hikes when we weren't seeing any inflation. (but you can hardly blame the fed) The market downturn was way past due and that incredible loss of wealth caused a decrease in spending across the entire economy. At the same time corporations reduced inventory levels and cut capital spending in anticipation of a down economy. Everything compounded on top of eachother and then 9-11 happened. Overall, we were due a recession.

[Superfluous_Nut]

Nut, this short article has the best explanation of what intragovernmental debt covers.

http://cox.house.gov/html/columns.cfm?id=514

Seems like we'd want intra-gov't debt to be as high as possible to cover the social security benefits of baby boomers. Unfortunately we'll know if that's right in just a few years when SS outlays are greater than revenues. Pretty confusing.

interesting. one more reason why social security needs to be pulled out of the general revenue.

that article makes a good point. he argues that since more SS money comes in than goes out (currently) and that money is required to be invested in gov't holdings, then the gov't is sorta forced to borrow that money from the SS trust. he says it's not really debt. i would agree if that cash is actually around somewhere.

i think he glosses over the fact that if you really did pull SS money off the table and put it in a safe place, then the gov't would just borrow from the public instead.

i don't see how you can get around the fact that the gov't spent about half a trillion more dollars than it brought in for the 2003 fiscal year. regardless of where the money was supposed to go and what agency is really in control of it.

[Christina]

http://www.house.gov/jec/fiscal/debt.pdf

This report was made in 2001 when Clinton was drastically reducing the amount of Federal debt. The report addresses the negative impacts of debt reduction on the way our financial system works. It raises more questions than answers.

That was very informative. I hadn't thought about the consequences of debt reduction on Treasuries and the financial system. So I wonder what the optimal level of government debt would be?

The European Union has a Stability and Growth Pact which requires member countries and potential member countries to maintain a public debt to GDP ratio of less then 60% and yearly deficits are not to exceed 3%. Obviously a lot of work went into this and the Europeans must believe that 60% is where things start to go wrong and get unstable. With a public debt of 4.1 trillion and nominal GDP close to 11 trillion, that puts us at 37%. It's something to think about, but the ramifications of the EU's system won't be clear until it's been around for a lot longer.

[barry49s]

Good point Barry :handjob: but we're trying to dig a little deeper here. Try to keep up, you might learn something...

You can dig as deep as you want around the septic tank but all you will find underneath is shit.

The only thing I am learning is that you are a W ass kisser.

[ezy ryder]

:bump:

[vpkozel]

interestingly, that surplus was really only the unspent social security money.

I don't think that is right. In a thread in NOTD I researched all of that quite a bit, and the surplus did not happen until 2 years after the budget had been submitted and was caused by much larger revenues coming in than were expected.

[gridfaniker]

:bump:


:gaga:

[elcid89]

I don't think that is right. In a thread in NOTD I researched all of that quite a bit, and the surplus did not happen until 2 years after the budget had been submitted and was caused by much larger revenues coming in than were expected.

From what I'm reading, they count the Social Security surplus as part fo the general Surplus. So if SS collects an extra 50 billion, and taxes generate an extra 10, they call the surplus 60 billion, even though theoretically they arent supposed to be spending that 50. They take the 50 billion, replace it with Treasury Bills, and presto Whammo, it shifts from the "debt" column to the "intragovernment debt" column, which strangely, doesnt get reported when some government apparatchik quotes the debt figure.

Note: this makes about as much sense as government spending estimates. If they spend 40 billion this year on item A, and next project to spend 60 billion, but in fact only spend 50 billion, to the goverment, they have cut spending by 10 billion dollars. (neat trick huh? :))

[ezy ryder]

I don't think that is right. In a thread in NOTD I researched all of that quite a bit, and the surplus did not happen until 2 years after the budget had been submitted and was caused by much larger revenues coming in than were expected.

I agree about the surplus being different. But I was looking for info on what is included in the national debt, and figuring out what intra-gov't debt was. Have any ideas on it?

[vpkozel]

From what I'm reading, they count the Social Security surplus as part fo the general Surplus. So if SS collects an extra 50 billion, and taxes generate an extra 10, they call the surplus 60 billion, even though theoretically they arent supposed to be spending that 50. They take the 50 billion, replace it with Treasury Bills, and presto Whammo, it shifts from the "debt" column to the "intragovernment debt" column, which strangely, doesnt get reported when some government apparatchik quotes the debt figure.

Note: this makes about as much sense as government spending estimates. If they spend 40 billion this year on item A, and next project to spend 60 billion, but in fact only spend 50 billion, to the goverment, they have cut spending by 10 billion dollars. (neat trick huh? :))

Right, but the "balanced budget" that Clinton submitted was not balanced when he submitted it. It was balanced by the US gov't receiving like 12% more revenue than it had been expecting. SS would not have been part of that extra revenue.

[elcid89]

I agree about the surplus being different. But I was looking for info on what is included in the national debt, and figuring out what intra-gov't debt was. Have any ideas on it?

Debt the government is holding that it owes to itself and considers extremely long term (ie they never intend to pay it back. ) From what I'm reading it's a parking place for items they intend to carry over year to year, and so segregate to focus the "debt" numbers on what they think will come due in the current fiscal. Think of it as long term debt and short term debt.

[elcid89]

Right, but the "balanced budget" that Clinton submitted was not balanced when he submitted it. It was balanced by the US gov't receiving like 12% more revenue than it had been expecting. SS would not have been part of that extra revenue.

Because they had already taken the SS funds, replaced them with T bills, added those funds to the budget, spent all of that and further into a deficit. The "debt" ran a surplus because they collected 12 billion more than they thought they would, but they made it look like a surplus by injecting dollars, a balance sheet manoever. The debt didn't do away, it got shifter to a place where it doesn't regularly get reported. It ran that because when they report debt, they dont include intragovernment, which they seem to think they can roll over indefinitely. Borrowing Peter to pay Paul.

[Superfluous_Nut]

I don't think that is right. In a thread in NOTD I researched all of that quite a bit, and the surplus did not happen until 2 years after the budget had been submitted and was caused by much larger revenues coming in than were expected.

but there was no surplus if you took out the social security revenues. (actually, i think there was one BARELY in 2000).

it's the typical GOP double speak:

lefty: under clinton, we had surpluses.
righty: not if you pull out the social security revenue from the general revenue.

lefty: we can't afford a tax cut.
righty: but the government is over-taxing us -- look at this huge surplus!

[vpkozel]

but there was no surplus if you took out the social security revenues. (actually, i think there was one BARELY in 2000).

I am pretty sure that there was. I'll check when we get NOTD back.

LARRRRRRRRRRRRRRYYYYYYYYYYYYYYYYYYYY!!!!!!!!!!!!!! !!!

[elcid89]

I am pretty sure that there was. I'll check when we get NOTD back.

LARRRRRRRRRRRRRRYYYYYYYYYYYYYYYYYYYY!!!!!!!!!!!!!! !!!


There was a surplus only if you don't include the SS surplus quota of new debt they took on to finance the budget and shofted to long term debt. They in effect refinance their mortage every year, so their cash flow looks great, but they aren't making any house payments, so their debt never drops. Since they have the ability to float that debt indefinitely, as well as avoid reporting that it actually exists, they can say they ran a surplus, when the last true surplus I believe we had was in the 70's (I think. I'll have to check)

[vpkozel]

There was a surplus only if you don't include the SS surplus quota of new debt they took on to finance the budget and shofted to long term debt. They in effect refinance their mortage every year, so their cash flow looks great, but they aren't making any house payments, so their debt never drops. Since they have the ability to float that debt indefinitely, as well as avoid reporting that it actually exists, they can say they ran a surplus, when the last true surplus I believe we had was in the 70's (I think. I'll have to check)

It was everything. The whole ball of wax. Expenses were less than receipts. We took in more than we paid out. We turned a profit. We were in the black. Credits were more than debits.

[elcid89]

It was everything. The whole ball of wax. Expenses were less than receipts. We took in more than we paid out. We turned a profit. We were in the black. Credits were more than debits.

Then why did accumulated debt - Total rise year to year for that period?

[vpkozel]

Then why did accumulated debt - Total rise year to year for that period?

When I get the thread I can answer that question. I am thinking that it was 1998 though. And you could run a surplus for the year and have the debt go up - because of rising interest rates.

I think......

[elcid89]

When I get the thread I can answer that question. I am thinking that it was 1998 though. And you could run a surplus for the year and have the debt go up - because of rising interest rates.

I think......

Check to be sure. From how I read the formulas at GAO, when they report "debt" and "surplus" numbers, they refer to fiscal year numbers. Since they consider "intra" to in effect be long term debt, it was my understanding that they do not include it in the fiscal year numbers they report, so unless you look at total debt numbers, you don't get the whole picture. If they are good at nothing else, they have shell game down pat.

[ezy ryder]

Check to be sure. From how I read the formulas at GAO, when they report "debt" and "surplus" numbers, they refer to fiscal year numbers. Since they consider "intra" to in effect be long term debt, it was my understanding that they do not include it in the fiscal year numbers they report, so unless you look at total debt numbers, you don't get the whole picture. If they are good at nothing else, they have shell game down pat.

Intra-gov't debt actually isn't even debt at all. I'm not sure about the intra-gov't debt being long term or not. But I know that economists widely consider "net debt" to be the correct measure of the country's debt burden, which doesn't include the intra number. Economists don't conveniently ignore the long term debt.

[Isaac OddVelvet]

Another thing to keep in mind is that with such a large portion of it being private debt, that someone has that debt. Currently the largest purchaser of U.S. debt is... Communist China. So put that in your pipe and smoke it. So, what happens if we default, do have to hand shit over to them?

I would also think that as your debt increases, or at least your debt to GDP ratio increases, your curreny would falter. With the current state of our currency, coupled with the current rock-bottom interest rates (stifling foreign investment in the U.S.) this could be a big problem if there is ever a run on the dollar.