America For Purchase

The National Debt grows $1 million a minute, that is $1.4 billion dollars a DAY, as reported by MSNBC

Government borrowing averages $30,000 for every American – each child born in America today gets a $30,000 debt bill for a birthday present. All total, the US owes everybody (including its own taxpayers) as Social Security vault, along with other US government agencies, is filled with $4 trillion in IOUs. It is a ticking time bomb that the U.S. debt expands $1.4 billion a day, almost $1 million a minute.The national debt, the total accumulation of annual budget deficits, is up from $5.7 trillion when President George W Bush took off in January 2001 and will top $10 trillion sometime in January 2009.

It gets worse, much worse.  Over the next 25 years, the number of Americans aged 65 and up is expected to almost double. The work population will shrink and more and more baby boomers will be drawing Social Security and Medicare benefits, putting new demands on the government’s resources.

These guaranteed retirement and health benefit programs now make up the largest component of federal spending. Defense is next. And moving up fast in third place is interest on the national debt, which totaled $430 billion last year.

Aggravating the debt picture: the wars in Iraq and Afghanistan, which the nonpartisan Congressional Budget Office estimates could cost $2.4 trillion over the next decade.

 

 

 

 

Despite vows in both parties to restrain federal spending, the national debt as a percentage of the U.S. Gross Domestic Product has grown from about 35 percent in 1975 to around 65 percent today. By historical standards, it’s not proportionately as high as during World War II _ when it briefly rose to 120 percent of GDP, but it’s a big chunk of liability.

For now, large U.S. trade deficits with much of the rest of the world work in favor of continued foreign investment in Treasuries and dollar-denominated securities. After all, the vast sums Americans pay – in dollars – for imported goods has to go somewhere. But that dynamic could change.

“The first day the Chinese or the Japanese or the Saudis say, ‘we’ve bought enough of your paper,’ then the debt – whatever level it is at that point – becomes unmanageable.”

Foreign governments and investors now hold some $2.23 trillion – or about 44 percent – of all publicly held U.S. debt. That’s up 9.5 percent from a year earlier.

Japan is first with $586 billion, followed by China ($400 billion) and Britain ($244 billion). Saudi Arabia and other oil-exporting countries account for $123 billion, according to the Treasury.

“Borrowing hundreds of billions of dollars from China and OPEC puts not only our future economy, but also our national security, at risk. It is critical that we ensure that countries that control our debt do not control our future,” said Sen. George Voinovich of Ohio, a Republican budget hawk.

Of all federal budget categories, interest on the national debt is the one the president and Congress have the least control over. Cutting payments would amount to default, something Washington has never done.

Congress must from time to time raise the debt limit – sort of like a credit card maximum – or the government would be unable to borrow any further to keep it operating and to pay additional debt obligations.

The Democratic-led Congress recently did just that, raising the ceiling to $9.82 trillion as the former $8.97 trillion maximum was about to be exceeded. It was the fifth debt-ceiling increase since Bush became president in 2001.

Democrats are blaming the run-up in deficit spending on Bush and his Republican allies who controlled Congress for the first six years of his presidency. They criticize him for resisting improvements in health care, education and other vital areas while seeking nearly $200 billion in new Iraq and Afghanistan war spending.

“We pay in interest four times more than we spend on education and four times what it will cost to cover 10 million children with health insurance for five years,” said House Speaker Nancy Pelosi, D-Calif. “That’s fiscal irresponsibility.”

There’s little dispute that current fiscal policies are unsustainable, he said. “Yet too few of our elected leaders in Washington are willing to acknowledge the seriousness of the long-term fiscal problem and even fewer are willing to put it on the political agenda.”

Polls show people don’t like the idea of saddling future generations with debt, but proposing to pay down the national debt itself doesn’t move the needle much.

Not long ago, it actually looked like the national debt could be paid off – in full. In the late 1990s, the bipartisan Congressional Budget Office projected a surplus of a $5.6 trillion over ten years – and calculated the debt would be paid off as early as 2006.

Former Fed chairman Alan Greenspan recently wrote that he was “stunned” and even troubled by such a prospect.

Not to worry. That surplus quickly evaporated.

Tags blogging Blogging Articles foreign debt national debt political news U S Deficit

Filed under: U S Government