Tag Archives: runaway spending

It’s Better To Owe Money To A Friend Than To Owe Money To Someone Who Is Not Your Friend

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America’s runaway spending is a problem. So far no one in Washington has either the power or the will to bring that spending to a screeching halt. But at least we are being a little wiser in our borrowing habits.

CNS News posted an article today with the following headline, “Japan Surpasses China as Top Foreign Holder of U.S. Debt.” It would be better if we had no debt, but at least the majority of our debt is held by a country that is not out to destroy us.

The article reports:

In May of this year, the Chinese owned $1,110,200,000,000 in U.S Treasury securities and the Japanese owned $1,101,000,000,000. In June, however, Chinese ownership of U.S. Treasury securities rose only to $1,112,500,000,000 and Japanese ownership climbed to $1,122,900,000,000.

That marked the first time since May 2017 that entities in Japan have owned more U.S. Treasury securities, as estimated by the U.S. Treasury, than entities in China.

In May 2017, the Japanese owned $1,111,500,000,000 in U.S. Treasury securities and the Chinese owned $1,102,200,000,000. In June 2017, Chinese ownership of U.S. Treasury securities increased to $1,146,500,000,000 and Japanese ownership declined to $1,090,300,000.000.

Chinese ownership of U.S. Treasury securities, according to the estimates, peaked in November 2013 at $1,316,700,000,000.

…The Federal Reserve owns more U.S. Treasury securities than either Japan or China. As of June 27, according to the Federal Reserve’s balance statement, the Federal Reserve owned $2,110,256,000,000 in Treasury securities.

U.S. Treasury securities held by entities in Hong Kong are counted separately from those in Mainland China. According to the Treasury’s estimate, entities in Hong Kong owned $215,600,000,000 in U.S. Treasury securities in June.

Entities in the United Kingdom were the third largest foreign holders of U.S. Treasury securities after Japan and China. In June, entities in the U.K. owned $341,100,000,000 in U.S. Treasury securities.

The article concludes:

In explaining its methodology for estimating foreign holdings of U.S. Treasury securities, the Treasury explained that some countries have higher numbers because owners of Treasury securities from third countries “entrust the safekeeping of their securities” to institutions in these countries.

“Imperfections caused by ‘custodial bias’remain in the current MFH [Major Foreign Holders of U.S. Treasury Securities] table,” said the methodology statement. “Some foreign owners entrust the safekeeping of their securities to institutions that are neither in the United States nor in the owner’s country of residence. For example, a German investor may buy a U.S. security and place it in the custody of a Swiss bank. In both the SLT and the periodic surveys of holdings of long-term securities, such a holding will typically be recorded vis-a-vis Switzerland rather than Germany. This ‘custodial bias’ contributes to the large recorded holdings in major custodial centers including Belgium, the Caribbean banking centers, Luxembourg, Switzerland, and the United Kingdom.”

It truly is time to cut our spending. We owe too many people too much money.

How Cutting Taxes Creates Revenue

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On November 16th, Hot Air posted an article about the impact of the Trump tax cuts on government revenue. As I am sure you remember, the Democrats called the tax cuts on individuals ‘crumbs’ and swore that the tax cuts would bankrupt the country. Well, that’s not exactly what happened.

The article reports:

Unemployment is at an historic low. Employment is at an all-time high. Wagers are growing after years of stagnation.

And now from all that increased economic activity, the federal government has just reported historic record tax revenues in October, the first month of the new fiscal year, of $252,692,000,000.

That’s more than $11.4 billion above revenue for October of last year, which was the previous record tax revenue for an October.

And it did this by collecting more than $3 billion less in personal income taxes, thanks to the tax cuts.

The new revenues were the result of increased business taxes because of increased business. Here’s how much different it was:

Corporation income tax receipts to the U.S. Treasury this year in October were a whopping $8,000,000,000. This compares to the previous October’s $3.8 billion.

Despite the record tax revenues in October, the federal government ran a deficit of $100.5 billion that month because, spending. That’s a problem that newly-elected members of Congress such as Indiana’s senator-elect Mike Braun, a businessman, said would be a major target in 2019.

The thing to remember here is that as unemployment decreases, government spending should also decrease. Unfortunately Congress did not get the message. Our problem is not the revenue–the problem is the spending. If either party were serious about curbing government spending, it would have been done by now. Obviously they are not. There are a few members of the Republican party who have been trying to put the brakes on runaway spending for years, but they are either not trying very hard or they are ineffective. At any rate, we need to elect Congressmen (regardless of party) who will pledge to bring the spending under control. It does no good to increase the revenue if the spending increases right along with it.

Another Cost Of Runaway Spending

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CNS News is reporting today that the amount of the U. S. Government debt held by the Federal Reserve has increased by 257 percent since President Barack Obama was first inaugurated on Jan. 20, 2009, and the Fed is currently the single largest holder of U.S. government debt.

The article reports:

Since Obama has been president, the publicly held portion of the U.S. government debt (as opposed to the “intragovernmental” debt the government has borrowed from federal trust funds such as the Social Security Trust Fund) has increased by  $5,264,245,866,257.40. The $.221369 in additional U.S. government debt the Fed has purchased during Obama’s presidency equals 23 percent of all the new publicly held debt the Treasury has issued during that time.

Please read that again. That paragraph refers to the fact that the government has borrowed from federal trust funds such as the Social Security Trust Fund. Remember, this is the government that is referring to Social Security as an entitlement. I don’t think I am too far off base when I say that the way the government has handled the Social Security Trust Fund should convince us that we should give the government as little of our money as possible–they did not handle money well.

Unless we elect people who are willing to curb Washington’s runaway spending, our nation will be bankrupt by the time the next president takes office.