Wednesday, November 18, 2009

The National Debt Hits New High


Judging by the race, beginning during the G.W. Bush years, to follow policies that drastically increase our National Debt and budget deficits, it would now seem to be an appropriate time to break out the champaign. Our National Debt just hit $12,031,299,186,290.07 officially at 3:00 p.m. EST November 17, 2009.


History has confirmed that American economic policies, followed by administration after administration, since FDR's beloved New Deal have  resulted over time in increasing federal deficits, the national debt, and our reliance on most everything foreign. Now that's not to say foreign competition is bad, but when our country is increasingly owned or controlled by overseas economic and political  interests we as a Nation are in serious trouble. The policies of the past 76 years ain't gonna get us out of trouble by continuing to do the same things and expecting different results. Isn't that one definition of insanity?


So, lets not really break out the champaign, rather let us send honest and capable men and women of real vision to Congress and the Presidency. People with the knowledge, character, strength, ethics, and morality that will guide them in the work of government. The honest and legitimate work of governing. Not running a national candy store where it is believed government must be Santa Claus to govern the nation and its people.


But I digress. Here are some things that all American might consider, and then resolve to take action on at the polls, and in any other way they may feel inclined:


1) The National Debt has increased 1 trillion dollars in eight months, or 125 billion per month.


2) The federal budget deficit for 2009 was 1.42 trillion dollars, or more than three times the previous years record breaker.


3) A large share of the increase in both the deficit and debt are the result of government intervention with its stimulus and bailout policies. The increased unemployment, resulting in a reduction in federal tax receipts was an added multiplier.


4) The National Debt has increased by 1.6 trillion dollars on Obama's 10 month watch, or 177.8 billion per month. By contrast the national debt increased 4.9 trillion dollars over the 8 years of the Bush administration, or  51 billion dollars per month.


5) The White House projects that by the end of the current fiscal year (2010) the National Debt may top 14 trillion dollars.


6) Projections (White House budget review) are the National Debt will hit 24.5 trillion dollars by the end of the decade. This will exceed the projected Gross Domestic Product projected at 22.8 trillion by 1.7 trillion dollars.


Of course with all this red ink the call to raise the National Debt Limit is being heard with urgency in Washington. It is worth noting that the cost to taxpayer was over 383 billion dollars just to maintain the National Debt.


What is even more frightening is the share of our Debt held by foreign countries. Of the 3.5 trillion dollars held by foreign countries, or 30% of the total, China holds almost  $800 billion in U.S. Government securities with Japan a close second at $731 billion. Several smaller nations lending money to the U. S. include Taiwan, Luxembourg, Ireland, and Singapore.


This crushing National Debt is affecting the security of individuals and businesses throughout this great nation. The cost of our current National Debt, broken out by every man, women, and child amounts to $32,974.34. It is becoming increasingly clear that something must be done or our nation may at some point in the not to distant future stand in default.


While the President, in his dream world, believe socialized national healthcare is part of the solution to this problem, it is but a fairy tale. One only need to look at the historical economic data to see that entitlements only serve to add to the burden of debt, as does war.


There are but three obvious, albeit difficult, ways to bring our National Debt and deficits under control. Cut spending, raise taxes, or a combination of the two. If common sense and rationality prevails  (in Washington it ain't likely) we would significantly reduce spending by 25 percent, increase taxes by 2.0 percent when the economy recovers,  and run the Government on a program of austerity until such time as we show annul budget surpluses. When stability and surpluses are reached and maintained, taxes should be reduced on both business and individuals to further encourage investment and savings.


In addition, the Federal Government by law, should be required to maintain a positive balance at the close of each and every month. Since the Government produces nothing, creates no wealth, and does not contribute to the growth of our economy, it is even more important that it be held to tight and stringent accounting practices as well as  laws to curb its appetite.


Having offered the above, if I were a betting man, the bet would go like thisgovernment increases taxes on suffering businesses and individuals alike, while at the same time increasing spending on entitlement programs and foreign aid to third world countries, extends its reach into the lives of each and every individual thereby further limiting liberty, and all the while saying it is good for the people and the nation.


I really hope that Obama and the current crop gets it right. I really do. I won't be holding my breath. 

Via: Memeorandum
Via: CBS News

8 comments:

  1. First off lets not forget that debt can be a very profitable endeavor; if you work on Wall Street.

    We have not had an economic policy since we started attracting folks from Wall Street to be treasury secretary...its all been finance policy.

    Bankers deal with debt, loans, and financing and that is why this country has no economic policy.

    We pay the Chinese 50 billion a year in interest on the treasury notes they own. Then we flood them with US dollars in exchange for what they produce for us and we have nothing in return of equal value to sell to them, so the only way we have to repatriate those dollars is government debt.

    Not one advocate of free markets will acknowledge that our government debt is directly related to our trade imbalances.

    Every country in the world protects and supports their national industries except the United States. The only people who benefit from free markets are investors and they only benefit when folks have enough money to have a demand for the products these companies produce.

    Over half the companies in the S&P 500 derive over 45% of their sales in foreign countries and they do not pay US taxes on those sales.

    Its real simple, you spend only the money you have in your pocket, which is what a balanced budget is all about, you raise taxes and cut spending, you reward savings, education, and hard work, not loopholes, political connections, or speculation.

    Then you take care of your own people and country first...

    Pretty simple unless you look at the world from window on Wall Street...

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  2. TAO - Thank you for you reasoned and rational response. And by the, for those liberals who may believe otherwise both reason and rational have meaning and the concept may be found in a dictionary.

    I believe you may just be a "classical liberal." And as a classical liberal you are a modern true independent conservative if you frame the definition in the sense of the enlightenment and our 1776 Declaration of Independence.

    Most of what you have said here I will not disagree with. In fact what you say is in part a direct result of the establishment of the Federal Reserve.

    It is also true that companies, the private sector through government subsidies became accustomed to corporate welfare from the state. Rather than allowing business to succeed on their merits, or failure as a result of their lack thereof, government gave them handouts which the taxpayer shouldered.

    As to the trade policies of the U.S. versus other countries I agree, however my solution may differ from yours.

    Why the U.S. sold off its industrial base is a question greater minds than mine will have to answer. The only thing that creates wealth is the production of durable products that are needed and required by a functioning society. We have farmed ours out.

    I, a ferocious advocate of free markets fully understand, and agree with you that our debt is in part related to our trade imbalance. Which is to say we gave away our ability to compete when we decided to outsource our productive capacity for the sake of a higher return on investment.

    The issue should not be about companies selling product in foreign countries not paying taxes. It should be about your point, well made, that we should be manufacturing products that create wealth and jobs in th U.S. and employee our people.

    And yes TAO, it is simple, you spend what you have in your pocket, you significantly reduce spending, you raise taxes slightly after a real recovery is in progress, and you institute policies (laws) that require the socialist/statist government to maintain balanced budgets.

    And by the way for the liberals that play the class warfare card, a law needs to be passed that sets the maximum ceiling for taxation on your beloved graduated tax scheme at 15 percent with no tax loopholes available. Either that or a national sales tax (consumption tax) where you pay for what you consume. And gues what, the rich boys and girls consuming in excess pay a hugely larger share.

    Check out the Ayn Rand Institute for more on sound economic policy and free market economics. As well as the concept of free choice and liberty.

    TAO, thanks so much for visiting this blog and leaving reasoned and valid comments. Rational Nation USA represents the " Classical Liberal - Modern Day Independent Conservative - Libertarian - Free Market - Blog."

    As they say, it takes all kinds, with multiple and often opposing views, to make the world go round. So lets make it work. For us.

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  3. I see the sense in most of what you say RN. It goes without saying I've been a disciple of TAO for almost a year now.

    A big problem we have is nobody in power has the ability or "kahunas" to say "no."


    Each politician has a constituency he'she has to serve. The Dems want to tax corporations and the rich. The R's want tax cuts but they can't seem to find it in their ideals to make the cuts in spending that support tax cuts.


    A real good friend of mine here in Quincy is also on the opposite side of the spectrum from me. But it is amazing how much we agree upon. I believe there is much we could agree upon that is easily reconcilable with our political affiliations and beliefs RN.

    Lower tax rates and less loopholes is one of these issues. If union "card check" legislation was modified a bit I think even the most ardent right leaner would become agreeable to it.
    Even the Stupak provision in the health insurance bill is easily reconcilable if everyone would shut up and think about it.


    I hope the civility can continue to reign at your blog RN. Thank you for inviting me to be your guest.

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  4. TRUTH - I agree with 95% of the points made in your comments. I guess the "card check legislation" with modification may be worth considering. In its present form it should be DOA.

    I believe there is much we would agree on as well. Your Blog, as well as TAO's, are daily visits for me as they both make sensible and thoughtful points.

    I have started to call myself a "true independent conservative and a classical liberal" for a reason. The tag most closely represents my politics and belief system.

    I admit the tendency to gravitate to "shock value" blogging is great. However, I see the greater value in maintaining civility, and will endeavor to maintain it.

    Thank you for visiting m site. Again, you are welcome anytime.

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  5. The Purpose of Government

    Is government at any level, invented, designed or fashioned for the purpose of providing justice or preventing injustice? For those who look to government as our nation’s highest authority, the dispensing of justice its highest duty, instead of a nation based on freedom principles, where the people are the highest authority and government’s highest duty is to prevent injustice, yours is a happy lot under the modern Democrat. There is a major difference between justice given and injustice prevented, just like equality and inequality. Justice and equality inspire admiration, but preventing injustice and encouraging inequality made America the great nation it became. It is easy to decide which is best when comparing America’s prosperity to almost 200 other nations in the world where most starve, are whipped, beaten and murdered by their prosperous elite rulers. Claysamerica.com

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  6. Clay - You are so right!

    Our nation, the great America experiment, was based on the rights of the individual first and foremost.

    Government was to be limited and to answer to the people, not as in most countries throughout the world where the people answer to the government.

    What we are witnessing more with each passing Administration since Theodore Roosevelt is the movement to a form of statism. Whether it be socialism or fascism the result is that the government is sovereign and not the people.

    Today we remain the freest nation on earth and the only super power. Whether we remain so depends on us. If we continue down the statist highway we will lose both.

    Thanks for stopping in at RN USA.

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  7. The best thing this selfish generation can do for future American generations, is pay off the debt we have built up in only one generation, before we pass on.
    The national debt clock now shows a 12 trillion dollar debt. It was less than 1 trillion when Reagan took office. Most of that debt was run up between two Republican Presidential administrations.
    Between 1948-1980 we built the greatest middle class and living standards the World has ever known, and we did it with tax rates twice as high as we have now.
    If cutting taxes was the answer, we should have experienced the good dividend of that ideology by now.
    It's simple math, but politicians pandering to voters turned it into what George Bush(41) called "Voodoo Economics."
    If President Obama thinks he can finance a new health care plan on the savings of waste from a government program, he is also dealing in "Voodoo Economics."
    If he can pull that off, he should just eliminate waste from all government programs and send a big check to pay off the national debt.
    Pay as we go, is the only sane fiscal policy for government operations. One has to wonder why the American people gave up on paying to be the best country in the World.
    Social programs do not necessarily lead to Socialist government. They are a means to help a large number of people, but of course, we have to pay for them.
    We hired (elected) these Representatives. It's our duty to supervise them and fire them (vote out) if necessary. We pretty much get the government we deserve (vote for).
    Government is the problem because of the corrupt, inept, inefficient way these represetatives do their jobs.
    Getting rid of the money involved (contributions, lobbyist payments, etc.) would help, but the Supreme Court has declared that money is, free speech.
    That puts it all on us, the citizens.
    To balance the books the government needs to be cut by 35%, right now, or raise taxes by 20%, right now. I doubt either of those things are going to happen.
    So the next time we vote for the politician that promises to not raise taxes, ask them how are we going to pay for government expenses?
    Gov. Pawlenty(MN) wants to be President. He signed and ran on a "No New Taxes" pledge and platform. Minnesota handed him a 600 million dollar surplus, and Minnesota now has a 5-1/2 billion dollar debt. He will run for President on his good(?) record as Gov. of Minnesota.

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  8. Tom - I think I essentially said much of what you are saying.

    Only a combination of spending reduction, running government as a business (austerity)when needed, increasing taxes modestly on business and individuals after economy starts to recover, when surplus is reached use ti pay down debt.

    During recessionary periods reduce taxes modestly, during periods of prosperity increase taxes modestly.

    Maintain limited government controlled government.

    Implement true campaign contribution reform and hold lobbyists and lawmakers to higher ethical standards to get bi money influence out of government.

    Consider term limits.

    Your right its real simple. That is likely why it won't happen. No matter what party is in power. Until we take the rewards out of corruption. Which by the way, neither party has a monopoly on.

    ReplyDelete

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