Budgets, Deficits and the National Debt:

How government accounting is used to confuse.

Budgets, Deficits & National Debt

How government accounting is used to confuse.

Our founders ideas on the concept of a national debt

Hamilton believed debt would be good as long as it cost nothing. We must not let our rulers load us with perpetual debt.
Thomas Jefferson, letter to Samuel Kercheval, July 12, 1816

Where an excess of power prevails, property of no sort is duly respected. No man is safe in his opinions, his person, his faculties, or his possessions.
James Madison, National Gazette Essay, March 27, 1792

Where an excess of power prevails, property of no sort is duly respected. No man is safe in his opinions, his person, his faculties, or his possessions.
James Madison, National Gazette Essay, March 27, 1792

Budgets, Deficits & National Debt

How government accounting is used to confuse.

Understanding Deficits, the National Debt and Government Accounting

It's time we reduced the federal budget and left the family budget alone. Ronald Reagan

If I owe you a pound, I have a problem; but, if I owe you a million, the problem is yours.
John Maynard Keynes

Our national debt after all is an internal debt owed not only by the Nation but to the Nation. If our children have to pay interest on it they will pay that interest to themselves. A reasonable internal debt will not impoverish our children or put the Nation into bankruptcy.
Franklin D. Roosevelt speech on May 22, 1939

I found this national debt, doubled, wrapped in a big bow waiting for me as I stepped into the Oval Office.
Barack Obama

Budgets, Deficits & National Debt

How government accounting is used to confuse.

Milestones
We currently owe more than the rest of the world together
Major fiscal liabilities ..... $52,000,000,000,000 Total Household Net worth1..... $58,600,000,000,000 Liability/Net Worth Ratio 90% Burden2 Income Interest

PER PERSON 179,531 PER HOUSHOLD 683,000 Median Household Assets3 231,000 Debt per citizen 1,017,000

The GAO estimates, that to balance the budget by 2040, we may need to: Cut total federal spending by 60% Raising federal taxes 200% above todays levels The 1990s had very high GDP growth with an average of 3.2% Closing the current long-term fiscal gap based on reasonable assumptions would require real average annual economic growth in the double digit range every year for the next 75 years

Interest accrual per second .

60,000

Source: GAO analysis. Notes: (1) Federal Reserve Board, Flow of Funds Accounts, TableB.100, 2007:Q3 (December 6, 2007); (2) Burdens are calculated using estimated total U.S. population as of 10/1/2007, from the U.S. Census Bureau; ful-time workers reported by the Bureau of Economic Analysis, in NIPA table 6.5D (Aug. 1, 2007); and households reported by the U.S. Census Bureau, in Income, Poverty, and Health Insurance Coverage in the United States: 2006(Aug. 2007); (3) U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2006(Aug. 2007); and (4) Bureau of Economic Analysis, Personal Income and Outlays, table 2, (Nov. 29, 2007).

Budgets, Deficits & National Debt

How government accounting is used to confuse.

The Federal Budget & Off Budget Items

Fiscal Responsibility Summit

On-Budget (2008): deficit $638 billion Minus $183 billion Social Security surplus Reported budget deficit: $455 billion Off Budget (2008 billions) Includes Costs of the War on Terror, Post Office Revenue, Social Security Trust Funds Revenue, etc. Off Budget Income: $183 Off Budget Deficit $379

Budgets, Deficits & National Debt

How government accounting is used to confuse.

The Current Situation With Tom Tooker

The World GDP $58,141,498,000,000
$112,800,000,000,000

The total US Debt and Obligations:

194% world GDP 787% USA GDP 14.2 13 34.4 34 17.2

US Debt and Obligation Make-up ($ trillions)

Accumulated deficits (on and off budget) Social Security Medicare A Medicare B Medicare D

Budgets, Deficits & National Debt

How government accounting is used to confuse.

CBO: the National debt will be 9 trillion higher than we estimated last year?
Two trillion are tax cut extensions, seven trillion are new spending!

-$300 B -$900 B -$1,500 B

From 2010 to 2019, the cumulative deficit under the Presidents proposals would total $9.3 trillion, more than double the cumulative deficit projected under the current-law assumptions embodied in CBOs baseline.
Over the 10-year period, proposed tax policiessuch as extending some of the expiring provisions enacted in EGTRRA and JGTRRAwould reduce revenues relative to the baseline by an estimated $2.1 trillion, an average of 1.2 percent of GDP. In addition, under the Presidents proposals, spending other than interest outlays would be $1.7 trillion higher (about 1.0 percent of GDP). Discretionary spending would be $0.6 trillion above CBOs baseline projection; nondefense programs would receive more than 70 percent of that increase. Mandatory spending would be $1.1 trillion above the baseline total. The resulting higher deficits would require additional federal borrowing; net interest paid on that borrowing would add $1.0 trillion over the 10-year period relative to the baseline. Debt held by the public would rise, from 41 percent of GDP in 2008 to 57 percent in 2009 and to 82 percent of GDP by 2019.

Budgets, Deficits & National Debt

How government accounting is used to confuse.

Japan lost two decades in stagflation Greece missed bankruptcy through a world wide bailout
Our government uses % of GDP for the cost because it seems to reduce the fiscal impact.

Later CBO documents have increased the accumulated deficit estimate to 97% of GDP

Budgets, Deficits & National Debt

How government accounting is used to confuse.

Hold Their Feet To the Fire

Even Congressmen who seem very sympathetic, publicly support the notion that they couldnt do any different.

Two weeks ago, House Republicans considered more than 100 amendments to HR 1: then passed HR 115/44, the two week continuing resolution. The plan cut $61 billion and stripped federal funding for ObamaCare and Planned Parenthood. But when GOP leaders put forward their two-week compromise, those policy riders were gone. AYES 231 Democrats 104Republican 85 Indie 3 NOES 91 Democrats 85 Republican 6 Indie 3 All but 5 Republicans Voted YES to fund ObamaCare are our: Darrel Issa 49th Congressional District Brian Bilbray 50th Congressional District