US Debt


#1

"Now, the final critical step in winning the future is to make sure we aren’t buried under a mountain of debt.

We are living with a legacy of deficit spending that began almost a decade ago. And in the wake of the financial crisis, some of that was necessary to keep credit flowing, save jobs, and put money in people’s pockets.

But now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in. That is not sustainable. Every day, families sacrifice to live within their means. They deserve a government that does the same.

So tonight, I am proposing that starting this year, we freeze annual domestic spending for the next five years. Now, this would reduce the deficit by more than $400 billion over the next decade, and will bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was President."

– President Barack Obama

"We face a crushing burden of debt. The debt will soon eclipse our entire economy, and grow to catastrophic levels in the years ahead.

On this current path, when my three children — who are now 6, 7, and 8 years old — are raising their own children, the federal government will double in size, and so will the taxes they pay.

No economy can sustain such high levels of debt and taxation. The next generation will inherit a stagnant economy and a diminished country.

Frankly, it’s one of my greatest concerns as a parent — and I know many of you feel the same way.

Our debt is the product of acts by many presidents and many Congresses over many years. No one person or party is responsible for it.

There is no doubt the President came into office facing a severe fiscal and economic situation.

Unfortunately, instead of restoring the fundamentals of economic growth, he engaged in a stimulus spending spree that not only failed to deliver on its promise to create jobs, but also plunged us even deeper into debt.

The facts are clear: Since taking office, President Obama has signed into law spending increases of nearly 25 percent for domestic government agencies — an 84 percent increase when you include the failed stimulus.

All of this new government spending was sold as “investment.” Yet after two years, the unemployment rate remains above 9% and government has added over $3 trillion to our debt."

– US Representative Paul Ryan (R-WI)

US Debt is effectively perpetuities and ever-increasing; thus, pay the most attention to the percentages. If debt is increasing too fast, it is problematic. If the interest-receipts ratio is too high, it is also problematic. I am of the mind that US debt is best managed if it is increasing at less than 8% per annum and if the interest-receipts ratio is less than 20%.


#2

I agree that if debt was maintained at the numbers you cited we could be prosperous indefinitely. But I also think that the existence of sustained debt will make maintenance of our existing public infrastructure very difficult.

Also, we gain nothing from sustained debt even if we can prosper to a degree with its presence. All public debt should be for specific things (winning a war, building a road, dam, bridge or building…) that the future taxpayers can point to as justification for the debt burden they are shouldering.

Incurring 1 Trillion dollars of debt last year that did nothing but help bloated state governments make payroll for one more year is a travesty. My children’s grandchildren will still be paying that money back and nothing was gleaned for their benefit.

All debt is not equal in its moral defensibility.


#3

We are getting no benefit from this monstrous debt. The only reason to go into debt is if there is some pressing need or there is some good chance of coming out of the other side better then we were to begin with. If we can ever get this country back into production mode and out of the consumption rut we’re stuck in, there would be no real reason to carry a National debt for any length of time.


#4

Thomas Jefferson:
“We must not let our rulers load us with perpetual debt.
We must make our election between economy and liberty
or profusion and servitude.
If we run into such debt, as that we must be taxed in our meat and
in our drink, in our necessaries and our comforts, in our labors and
our amusements, for our calling and our creeds…
[we will] have no time to think,
no means of calling our miss-managers to account
but be glad to obtain subsistence by hiring ourselves
to rivet their chains on the necks of our fellow-sufferers…
And this is the tendency of all human governments.
A departure from principle in one instance
becomes a precedent for [another ]…
till the bulk of society is reduced to be mere automatons of misery…
And the fore-horse of this frightful team is public debt.
Taxation follows that, and in its train wretchedness and oppression.”

I think that speaks volumes.


#5

Wasn’t it his first inaugural address where he basically told congress to shove it. Something along the lines of Adams and you guys got carried away and I’m cutting out departments. Also I dare you to send me anything with any pork in it. I’ve got to re-read Jefferson.


#6

The debt is not in terrible condition but its current trajectory (rate of increase) requires downward adjustment.

In 1939, US Debt was $48.2-billion and increased an annually compounded rate of 8.23% to $14.3-trillion.

If US Debt increased at an annual compounded rate of 8.25%, it would be at $14.5-trillion now.

FRED, FYGFD


#7

Ah, more government issued charts. Keep spreading the propaganda comrade.


#8

Let me see the debt has tripled under Obama and I am to believe that it is not serious? That explains why this administration will not product a budget and wants to raise the debt ceiling.

Party on Obama


#9

I fret too many have no understanding of the financial principle of leverage. No entity is better equipped to take full advantage of this principle than the federal government. I also worry few comprehend what “effectively perpetuities” means.

US Treasuries are not technically or actually perpetuities but they can be managed in such a way that they are effectively perpetuities. You never pay off perpetuities. Rather, you pay the required interest payments.

3% Interest Notes and Bonds paying interest semi-annually.

3% / 2 = 1.5%

14,294-Billion = 214.41-Billion / 1.5%

428.82-Billion Interest Outlays per annum

You are not asking future generations to do anything you are not doing. In fact, the interest payments will be less substantial to them than they are to you. A balanced budget amendment to the Constitution is an awful financial idea.