US national debt surpasses $13 trillion

[bascule]

http://abcnews.go.com/Business/Politics/national-debt-soars-past-13-trillion/story?id=10748382

 

The National Debt has just surpassed $13,000,000,000,000, up from $10.7 trillion when Bush left office, increasing some $2.3 trillion under Obama. For comparison, the debt increased $4.97 trillion under Bush's 8 years in office.

 

The national debt is simply out of control and I really have no suggestions at this point. It seems at this point America will have an incomprehensibly large national debt for quite some time.

 

Personally I think the government should sue Wall Street financials who defrauded the entire country in order to recoup the TARP money the financials lined their pockets with. And I'm not talking about the money they "paid back". I'm talking about the money organizations like Goldman Sachs earned through the fraudulent sale of CDOs (something the government is going after them for already), assets which wound up in the hands of other financials we had to bail out.

Edited May 26, 2010 by bascule

[Pangloss]

Not sure where you're getting your 40% figure from. It's way off. The debt was $10.7 trillion when Bush left office and has increased $2.3 trillion under Obama, meaning the debt has increased approximately 21% under Obama.

 

You're right, it's not that much yet. I'm sure it'll be there soon, of course, but you're right in pointing out that it climbed even farther (percentage-wise) during the Bush administration.

 

Let's talk about some ways in which the problem could (theoretically be addressed). I'll throw some subjects out there and let's explore some options.

 

Link to 2010 Federal budget proposal:

http://en.wikipedia.org/wiki/2010_United_States_federal_budget

 

- Defense spending ($663.7 billion out of $3.55 trillion) (discretionary, and up 12.7% over last year) (Note: No other single department in the Executive branch draws >$80 billion/yr. (and only 3 depts draw >50), so Defense is the ONLY source of discretionary spending in which cuts can significantly reduce the deficit/debt over the short term -- but what to cut?)

 

- $695 billion (+4.9%) – Social Security

- $453 billion (+6.6%) – Medicare

- $290 billion (+12.0%) – Medicaid

- $571 billion (−15.2%) – Other mandatory programs (?)

[padren]

I don't know if this needs a new thread or not, but I really wonder how we are supposed to answer the question of "What can we afford?" in general. If people would tighten their belts at home then we wouldn't need social security right? But then what would happen to all the jobs that consumer spending supports?

 

Military spending does seem a little extreme considering just how much more we spend than anyone else. Slashing the military budget though, would again cause a fiasco for all the jobs it supports. We could justify redirecting those jobs into becoming leaders in exportable technology and improved infrastructure, but redirecting the money means spending it - not reducing debt.

 

Are there any suggestions on how to address this factor in a deliberate way? It may mean we have to be ready to cut $2 for every $1 we save due to the secondary economic impacts, or it could be $1.25 for every $1 or even $5 for every $1. I have no idea how that works. If it's especially high then we are basically a 3rd world nation in denial, if it's low enough it may be salvageable without some magic export to save us. The longer we fail to unravel the problem though, the worse it's going to be.

 

 

 

The frustrating part is I've never strategically gotten into debt, it's been accidental due to severe strain and a failure to hedge against bad times. I just want to know what I need to expect - what kind of income can afford me what kind of standard of living? Am I saving too much or too little, am I paying too much or two little in taxes? (Seems far too little, if that $14T is ever going to go away.) Most importantly, am I driving on roads that I think I'm paying for that are really a pipe-dream debt mounting nightmare?

 

Without some framework of how all this spending fits into how we as individuals budget and live, it's really hard to think about how to cut.

[tomgwyther]

Abolish the federal reserve; re-introduce the Greenback. Job done.

[insane_alien]

perhaps we(as a species) should switch to an energy based economy rather than some fictional number that we have now. we are obviously not responsible enough to deal with money as an abstract.

 

i mean with the current system you get all sorts of incomprehensible effects like inflation and crashes and booms and we're crap at dealing with them. with an anergy based system a joule is always going to be a joule and the only way its value can change is by introducing more efficient machinery to do work with that joule.

 

of course, a joule is far to small to be used as an everyday unit of currency, probably something along the lines of a kWh or even MWh would be the 'base' unit, however this can be arbitrary as long as it's proportionally tied to a joule.

 

seems to make more sense to me but then again, i'm an engineer, i'm used to dealing with energy.

[Cap'n Refsmmat]

Abolish the federal reserve; re-introduce the Greenback. Job done.

 

How would that pay off our debts?

[bascule]

Abolish the federal reserve; re-introduce the Greenback. Job done.

 

Do you mean the gold standard? If so, there isn't enough gold in the world to back all of the US currency presently in circulation.

[insane_alien]

never mind that, there isn't enough currency in the US to back your national debt

[ecoli]

Do you mean the gold standard? If so, there isn't enough gold in the world to back all of the US currency presently in circulation.

 

Forget about US currency... there's isn't enough gold to back all the gold certificates and futures being traded in the world

[padren]

So, are we Greece in denial then?

 

We are clearly living day to day. Some of that is subsidized by who we borrow money from, some is made off of nations with poor wages and work standards that will catch up to us as their standards rise, but we work and produce food, goods, infrastructure - it's not like that will all vanish over the amount of paper flying around.

 

The money system and debt is very important as it's how every component of our economy interacts, but it doesn't create/destroy/determine the infrastructure, skills, or labor force.

 

I'm pretty sure we can "fix it" within the terms of the monetary system we set up, and could still honor our debts even if we have to make changes to how the federal reserve operates etc.

 

But, what exactly do we need to do for us to head this time-bomb off?

[waitforufo]

With regard to entitlement programs, we need to tell people that they won’t be receiving the benefits that they paid for throughout their lives. The reason they won’t be receiving these benefits is because the people they elected into government already spent the money. By spending the money, those that paid already got all the benefits that they will ever get. At that point the people can be told your welcome.

 

Then you can tell them the good news. Well we can’t just pull the plug on things like Social Security. But since we can’t afford these programs, we can only pay out part, and only to people that are broke. So all you people that paid in all your lives and made sacrifices to save for retirement will get nothing. Now don’t go whining about that. If bad people like you would have spent all of your money and kept your credit card balances high we wouldn’t be in the tough economic times we are in now. This is all your fault. Besides you have money so quit your complaining. Oh, by the way we will let you know at what age you can retire. Perhaps we will make you get a physical first.

 

Also, we need to explain to people with IRA, 401k and such retirement savings programs that we have a great new program. This great new program will convert retirement savings programs into a government guaranteed annuity. This program will be backed by the full faith and credit of Uncle Sam, but this time he really means it. You will soon receive a friendly letter from your Uncle Sam that your retirement savings plan no longer exists and that now at an age determined by government you will be receiving a check based on your needs as soon as you have spent all the rest of your money.

 

Finally we can tell the people that hence forth and forever more entitlement programs will be forbidden. We can have civics lessons that explain to people that they are not entitled to the earnings, wealth, or property of others. Earnings, wealth, and property belong to the people that own them. It is their natural right to do with their property as they choose. We can also teach the people that if their fellow citizens are kind enough to help them in any way, and they choose to accept this help, that they should do so with humility. That humility should include obeying any rules and restrictions, regardless how arbitrary, their benefactors place on the generosity they are providing.

[padren]

With regard to entitlement programs, we need to tell people that they won’t be receiving the benefits that they paid for throughout their lives. The reason they won’t be receiving these benefits is because the people they elected into government already spent the money. By spending the money, those that paid already got all the benefits that they will ever get. At that point the people can be told your welcome.

 

Then you can tell them the good news. Well we can’t just pull the plug on things like Social Security. But since we can’t afford these programs, we can only pay out part, and only to people that are broke. So all you people that paid in all your lives and made sacrifices to save for retirement will get nothing. Now don’t go whining about that. If bad people like you would have spent all of your money and kept your credit card balances high we wouldn’t be in the tough economic times we are in now. This is all your fault. Besides you have money so quit your complaining. Oh, by the way we will let you know at what age you can retire. Perhaps we will make you get a physical first.

 

I know you are saying all this sarcastically, but how is it helpful at all? We are talking about a genuine crisis aren't we? We are getting crushed with debt, and if Social Security needs to be refactored then so be it. What's the alternative to helping people who are broke that expected Social Security to be there?

 

Abandon them to the streets? Hope they have family that can save them? Ignore the problem?

 

Either no one gets it, everyone gets it, or people get it in an emergency triage sort of way. It's not a proud moment but anything this messed up isn't bound to be.

 

Also, we need to explain to people with IRA, 401k and such retirement savings programs that we have a great new program. This great new program will convert retirement savings programs into a government guaranteed annuity. This program will be backed by the full faith and credit of Uncle Sam, but this time he really means it. You will soon receive a friendly letter from your Uncle Sam that your retirement savings plan no longer exists and that now at an age determined by government you will be receiving a check based on your needs as soon as you have spent all the rest of your money.

Where is this one coming from? Not exactly familiar with that.

Finally we can tell the people that hence forth and forever more entitlement programs will be forbidden. We can have civics lessons that explain to people that they are not entitled to the earnings, wealth, or property of others. Earnings, wealth, and property belong to the people that own them. It is their natural right to do with their property as they choose. We can also teach the people that if their fellow citizens are kind enough to help them in any way, and they choose to accept this help, that they should do so with humility. That humility should include obeying any rules and restrictions, regardless how arbitrary, their benefactors place on the generosity they are providing.

 

I'm somewhat lost on the sarcasm now - not quite following. There is nothing wrong with federal level pooling for certain services as long as it's solvent, and insolvency is addressed immediately as a real problem.

 

I still don't see how any of your comments address what needs to be done to actually help solve the national debt issue.

[jackson33]

Some idea's on how to turn things around;

 

The preferred way and keeping to some status quo, would be to increase the GDP (Economy) by the quickest means possible. Of course, most of any ideas are the reverse of 2008-2010 Federal policy;

 

A- At least a one year moratorium on all payroll taxes, on wages to 65K$, from for the employee and employer, preferable two years. I have no way of breaking down what percentages of incomes their are over 65k$, but the average American worker pay is around 35-40k$. The 2009 revenue was 891B$, so I suspect, for one year it would be far less than the 2009 Stimulus Bill, would guess 600B$ and would have saved countless millions of jobs and no telling how many created job.

 

B- Place a five year moratorium on Federal Mandates (regulations) and reverse anything in current practice, back to at least 2006. What auto's were required in 2006, to sell or similar product (lawn mower to big rig trucks) requirement would.

 

C- Place a 1 year moratorium on all Interstate Regulation of Trucking in the US. Major companies spend billions on permits, inspections and legal fees, passing on a portion of what everything cost the consumer.

 

D- Freeze all Federal Employees and Government Workers (2.2M) benefit packages at what ever they were in 2008. For instance the average Congress person receives around 1M$ for travel and incidental expense, per year as of 2010 and would be actually reduced to 800K$ or less.

 

I could dream up maybe 40 other items, that could reverse, especially in hind site would have (though did make these suggestions in Nov. 2008 in reference to what Obama could do if he wished), but I think you get the point.

 

The follow up program, simultaneously being worked out is Privatization of, SS and all Federal Medical Programs, since this would have to be grand fathered in over years. There are several potential way's this could be done....

 

To repeat from another thread think here; Remove the Federal Government from Federal Income Taxes, leaving it to the States by their population. This would prevent a Federal Mandating to the States and allow States to determine, what Government should cost. The big argument where anything like this is mention, States with Emergencies are liable for their own emergencies. I think you will find a whole lot less "SO CALLED" emergencies, as Tennessee has just experienced, with out assistance. What can today be called an emergency (declaring of one, for Federal Aid), most would not have been granted this status, just 30 years ago.

 

 

bascule; A good share of the TARP Money has been paid back with interest, now in some kind of slush fund. The derivatives didn't cause the Housing bubble, depreciation of real estate values (the bubble) caused to the devaluation of the derivatives. More than any amount of lost moneys by that Housing bubble alone, would be dwarfed by what devaluation has been and remains lost in the Worlds' loss in Equities Value by the investor, probably you being one holding a 401k...

 

On the Debt, it's bad and IMO the US should have paid off any debt before bringing in ANY social program. Having said that and having used this link before, note the CURRENT unfunded liabilities of the Federal (near 110T$, which in reality to a person would be REAL debt.

 

http://www.usdebtclock.org/

 

 

Who ever wanted to know how much US Cash is in circulation, it's less than -1- Trillion dollars and then for the most part spread out around the world. The Federal does own 30% of all land in the US and could sell off a portion alone, to pay off a 20T$ debt tomorrow, probably a good share to land owners adjacent to the Federal, most are leasing some already.

 

Who ever mentioned 'Gold Certificates' and a responder; We had a 'Silver Certificate' for a very long time which could be traded in to ANY bank for a silver dollar and prices were determined on that value.

 

Trying to determine the value of a held backing (gold/silver/other) for all the different currencies today and the 307B people they represent, would be worse than using the 'faith and trust' of the most stable societies.

[Pangloss]

never mind that, there isn't enough currency in the US to back your national debt

 

Incorrect. The debt is far less than the gross domestic product of a single year, so clearly there's plenty of 'currency' floating around.

[Cap'n Refsmmat]

Incorrect. The debt is far less than the gross domestic product of a single year, so clearly there's plenty of 'currency' floating around.

 

Money is reused. There's only $829b in circulation as of 2008:

 

http://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html

[Pangloss]

Well okay, but what I said is why the whole argument is moot. I don't think it's the national debt that stops the return to the gold standard, it's the GDP. ("Hi, your $60,000/yr salary is now 12 "gold-backs"/yr (or whatever). Have a nice day.")

 

But hey, maybe I'm wrong.

[Cap'n Refsmmat]

I don't think either matters. The national debt isn't important; since banks multiply money by loaning it out, there'll naturally be more money in the money supply than there is actual gold.

 

By the same token, there's more GDP than there is actual currency, so having less gold than GDP is not a problem.

 

What matters is having more currency than gold altogether. If there's not $829b of gold around, you can't back the dollar with gold.

[john5746]

I guess I'm just very pessimistic, but I don't see the west as being sustainable. Main street makes Wall street possible, not the other way round and we just continue to see wages for jobs that actually create something stagnate.

[bascule]

I guess I'm just very pessimistic, but I don't see the west as being sustainable. Main street makes Wall street possible, not the other way round and we just continue to see wages for jobs that actually create something stagnate.

 

Define "actually create something"...

 

When Apple, which now has the #2 highest market cap in America, "creates" the iPad, and then sends its design off to Foxconn in China for production, who is doing the actual "creating", Apple or Foxconn?

 

If you ask me China is doing the brunt work, and Apple is doing the "actual creating"

 

In that regard, jobs that "actually create something" are some of the highest paid in America.

 

Menial labor, not so much...

[Double K]

Interesting series of talks about

"Chimerica" simbiotic relationship between china and america...

[tomgwyther]

I like Insane Aliens energy based economy idea. The currency would still be potentially inflationary but all money in circulation would be proportional to work done. A sort of Greenback Kilowatt hour dollar.

As it is at the moment, the debt can never be paid of as the amount owing will always exceed the amount in circulation due to the application of interest and the way in which bank credit is created within a fractional reserve banking system.

If everyone paid off their debts today, the entire economy would cease to function as there would no longer be any money.

IMO, the control of the nations currency should rest souly with the democratically elected government.

I'm in the same camp as Insane Alien, Thomas Jefferson, Abraham Lincoln, Ron Paul, John F Kennedy and many others

 

Abolish the Fed, permit government to issue and control currency.. Job done.

[insane_alien]

I like Insane Aliens energy based economy idea. The currency would still be potentially inflationary but all money in circulation would be proportional to work done. A sort of Greenback Kilowatt hour dollar.

 

not the way i'm thinking of it. in order to get more currency, you need to put more energy into the system, either by producing more or by reducing losses.

 

this way you avoid the whole spiralling until it can no longer support itself phenomenon.

 

but the joule will always be worth a joule, the only way to squeeze more value out of it is to increase efficiency.

[waitforufo]

Where is this one coming from? Not exactly familiar with that.

 

With regard to converting IRA and 401k programs to government annuities read the following.

 

http://www.nuwireinvestor.com/articles/proposed-regulation-could-require-401k-investment-in-government-annuities-54520.aspx

 

http://affiliate.kickapps.com/_OBAMA-DEMOCRATS-LOOK-AT-TAKEOVER-OF-401K-IRA-ACCOUNTS-TO-FINANCE-GOVERNMENT/blog/1716156/78592.html?null

 

http://moneymorning.com/2010/01/27/retirement-plans/

 

http://www.businessweek.com/investor/content/jan2010/pi2010018_130737.htm

 

http://pajamasmedia.com/blog/coming-soon-substituting-government-annuities-for-your-401k/

 

I'm somewhat lost on the sarcasm now - not quite following. There is nothing wrong with federal level pooling for certain services as long as it's solvent, and insolvency is addressed immediately as a real problem.

 

A am making an argument about an individual’s right to their property. I’m not quite sure what ‘pool’ you are talking about but I’m sure I don’t want to be in it or pay for it. Why would I want to pay for something I get no benefit from?

 

I still don't see how any of your comments address what needs to be done to actually help solve the national debt issue.

 

Not paying what was promised eliminates debt. Stealing peoples savings can pay for debt. You need to come to understand that all these entitlement programs are simply Ponzi schemes.

[tomgwyther]

It would be a near perfect way to run a monetary supply IA. I like it.

It's socially empowering rather than socially parralizing. The supply of money could only inflate if more people did more work and wasted less, which in itself would benefit everyone.

How would specialisms be rewarded though.

i.e. an hour of toil in the fields earn you 1kWh; would an hour of highly skilled or dangerous work earn you more Kwh's per actual hour?

[insane_alien]

It would be a near perfect way to run a monetary supply IA. I like it.

It's socially empowering rather than socially parralizing. The supply of money could only inflate if more people did more work and wasted less, which in itself would benefit everyone.

How would specialisms be rewarded though.

i.e. an hour of toil in the fields earn you 1kWh; would an hour of highly skilled or dangerous work earn you more Kwh's per actual hour?

 

well, it would work exactly like it does now. working in a field, you'll not produce 1 kW otherwise we exceed one horse power, its possible to do this for short bursts, but not an hour.

 

how much you are paid would be dependant on the value of your work, if the job requires lots of skills then you would likely be paid more than someone doing a menial task.

 

it would really be up to the employer to decide how much the job is worth as it is now.

 

remember, a lot of the financial conventions could be transfered over as is or with very little modification from the current system. basically, the simpler ones that have been around for centuries. the only difference is that the currency follows different rules, it doesn't change value dependant on time, economic success or failure or which country you're in. a joule remains a joule regardless of what happens in the complicated world of humans.