Tag Archives: U S national debt

This Could Be The Start Of Something Big!

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On Friday, CNBC reported the following:

  • With government red ink swelling throughout the year, June saw a surplus of just over $27 billion, following a $316 billion deficit in May.
  • Customs duties totaled about $27 billion for the month, up from $23 billion in May and a 301% gain from June 2024.

CNBC notes:

That brought the fiscal year-to-date deficit to $1.34 trillion, up 5% from a year ago. However, with calendar adjustment, the deficit actually edged lower by 1%. There are three months left in the current fiscal year, which ends Sept. 30.

A 13% increase in receipts from the same month a year ago helped bridge the gap, with outlays down 7%. For the year, receipts are up 7% while spending has risen 6%.

The government last posted a June surplus in 2017, during President Donald Trump’s first term.

Increasing tariff collections are helping shore up the government finances.

Customs duties totaled about $27 billion for the month, up from $23 billion in May and 301% higher than June 2024. On an annual basis, tariff collections have totaled $113 billion, or 86% more than a year ago.

The article notes that the interest on the debt is a major budget item:

Net interest on the $36 trillion national debt totaled $84 billion in June, down slightly from May but still higher than any other category with the exception of Social Security. For the year, net interest — what Treasury pays on the debt it issues minus what it earns on investments — is at $749 billion. Total interest payments are projected at $1.2 trillion for the full fiscal year.

Lowering interest rates would bring down that cost.

Is the National Debt Reducible?

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Author:  R. Alan Harrop, Ph.D  

The current national debt is currently $36.2 trillion and will have gone up by $8.5 billion per day by the time you read this. The debt amounts to $106,000 for every man, woman, and child in America. The national debt has been growing at rates never before seen in America and, in fact, no other country on earth. The question becomes whether this expansion of the debt is sustainable, and if not, what will happen if it continues?

Just to put things in perspective, the national debt was $17 billion in 1929 the year of the stock market crash that brought on the Great Depression. Notice we are talking billions not trillions. A trillion is 1,000 billion. If you stacked 36 trillion-dollar bills on top of each other, they would reach 2.2 million miles high. It may be a good thing that artificial intelligence is taking over, since the human mind cannot comprehend such figures. By the end of World War II in 1945, the national debt had jumped to $259 billion. The debt dropped slightly by 1950 to $257 billion, and then it continued to increase steadily until 1980 when it doubled. It has been going up about 75% each five-year period until now, when the debt is expected to reach $37.6 trillion by the end of this year.

Now the only thing that has saved us from going completely bankrupt has been the growth of the overall economy as measured by the Gross Domestic Product (GDP), which is the value of all goods and services. Compared to your personal finances, this would be like taking on more debt, which you can manage only as long as your income keeps up with the debt increase. The World Bank estimates that a country can manage its debt as long as the debt does not exceed 77% of its GDP. The percentage of U.S. debt is now 124% of its GDP. This would be like your personal indebtedness being 24% higher than your total annual income. There are only nine other countries whose debt to GDP ratio is higher than the U.S. Japan leads that list with a ratio of 240%, and many of the others are failing states you probably never heard of like Eritrea and Maldives. Since we are dependent on others financing our debt by purchasing federal treasury bonds and other government securities, this only can continue as long as those lending us money are confident we can pay the interest and return the principle of the bond/security.

This is where President Trump’s strategy comes in. The national debt will never be paid off. We must accept that reality. The only president to succeed in paying off the national debt was Andrew Jackson in 1835. The game is to balance the increase in national debt caused by increased government spending with the growth of the economy. President Trump appears to be trying to address both spending and growth, but realizes that while some cuts in federal spending may be possible (if the courts, Democrats, and people getting free stuff permit it), the growth of the economy is the critical strategy. That is the reason he is pressing so hard to return manufacturing back to the United States through tariffs, reducing burdensome regulations, and utilizing our abundant sources of energy.

Unfortunately, as we are seeing in his effort to pass the “One Beautiful Bill,” he is meeting with the usual opposition. The reality is that once people get used to free stuff from the government, it is almost impossible to end it. The expansion of Medicaid is a prime example. When Medicaid was first introduced and signed into law by Democrat President Johnson in 1965, it was intended to provide healthcare to low-income children deprived of parental support, their caretaker relatives, the elderly, the blind, and individuals with disabilities. Over the years the program has expanded to include younger, healthy individuals who should be able to work for and afford their own medical services, which of course has greatly expanded the cost of the program. Since a politician’s primary objective is to get re-elected, most are opposed to reducing the eligibility of their voters to access free stuff. The so-called SALT (State and Local Taxes) deduction that allows the deduction of state taxes from federal taxes is another example. The maximum amount of local taxes that can be deducted when itemizing federal tax deductions has been $10,000 since 2017; the new budget bill raises that limit to $40,000. This change was a concession to those Republicans who represent the highest taxing states such as New York, California, New Jersey, Illinois, etc. This may help Republicans from those states get re-elected, but it transfers the tax burden to the rest of us. Similarly, the bill does not eliminate all funding for green new deal subsidies as it should; but just reduces them.

What all this shows is the fatal flaw of democratic governments that implement social programs that they never reduce, but always expand. Then the politicians, in order to continue getting elected, choose their own interests over the best interests of the country. This is one of the better arguments that can be made for term limits. The best we can hope for is that the impact of the ”Big Beautiful Bill,” will produce an expansion of the economy that will make it easier to afford the interest burden of carrying such a high national debt. Time will tell.

The Numbers Are Staggering

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On Sunday The Washington Times reported that with the signing of the new budget deal reached with Congress, by the time he leaves office President Obama will have increased to national debt to $20 trillion.

The article reports:

Mr. Obama’s spending agreement with Congress will suspend the nation’s debt limit and allow the Treasury to borrow another $1.5 trillion or so by the end of his presidency in 2017. Added to the current total national debt of more than $18.15 trillion, the red ink will likely be crowding the $20 trillion mark right around the time Mr. Obama leaves the White House.

When Mr. Obama took over in January 2009, the total national debt stood at $10.6 trillion. That means the debt will have very nearly doubled during his eight years in office, and there is much more debt ahead with the abandonment of “sequestration” spending caps enacted in 2011.

“Congress and the president have just agreed to undo one of the only successful fiscal restraint mechanisms in a generation,” said Pete Sepp, president of the National Taxpayers Union. “The progress on reducing spending and the deficit has just become much more problematic.”

Some budget analysts scoff at the claim made by the administration and by House Speaker John A. Boehner, Ohio Republican, that the budget agreement’s $112 billion in spending increases is fully funded by cuts elsewhere. Mr. Boehner left Congress last week.

This amount of debt is unsustainable.

I would also like to mention that the budget deal included taking $150 billion dollars from the Social Security Trust Fund (as if that ever existed) that working people continually pay into. (see rightwinggranny.com).

We need to elect people who will cut government spending–not increase it. Remember as you vote in your state’s primary election and next November that the debt we are incurring will be laid on your children and grandchildren. For their sake (as well as the sake of not becoming a third-world country), we need to rein in government spending as quickly as possible.

Trying To Win The Media War Instead Of Governing

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The basis of the American republic is the U. S. Constitution. It serves as a guide to governing the nation.. We ask the President and Congress to swear an oath to support and defend the Constitution when they take office. It is a little disconcerting when our elected officials seem to forget or ignore this oath.

Yesterday John Hinderaker at Power Line posted an article which illustrates an apparent lack of knowledge of the Constitution by some of the leaders of the Democrat party. Senators Harry Reid, Dick Durbin, Patty Murray and Chuck Schumer have written a letter to President Obama asking him to take all “lawful steps” to increase the debt ceiling–with or without the Republicans. They are fully entitled to write that letter, and they are fully entitled to their opinion, but do they have any idea what the U. S. Constitution says?

This is the letter (from the website Scribd):

This letter is political theater. Either the Senators who wrote it have not read the U. S. Constitution or they don’t understand it.

John Hinderaker at Power Line takes a closer look at the letter. Some of his comments:

Why are they talking about default? Default is constitutionally prohibited by the 14th Amendment. The federal government’s cash flow is more than ample to pay all interest on the national debt and to retire bonds as they mature. Other spending would have to be cut, to be sure; but default will not, and cannot, happen.

The senators telegraph here what they are really afraid of: the House may pass legislation that extends the debt limit along with spending cuts–cuts that will no doubt seem reasonable, not “unreasonable” or “unbalanced,” to voters. I believed that the Republicans wouldn’t be able to get much in exchange for increasing the debt limit because the threat not to do so lacks credibility, but this letter suggests that the Democrats are more worried than I thought.

…What “lawful steps” could Obama take “without Congressional approval” that would permit racking up more debt? Article I of the Constitution gives Congress the exclusive “Power…To borrow Money on the credit of the United States.” Obama has no such authority. Are the senators urging Obama to violate the Constitution? Or perhaps to pursue the trillion-dollar platinum coin gambit? It is impossible to say.

Sure. They want it for nothing, just like Obama wanted tax increases for nothing. The Dems say they are willing to negotiate, they just don’t want the GOP to have any bargaining power.

But wait! Didn’t Obama just get higher income and investment taxes on everyone earning over $250,000, precisely the higher taxes on the “rich” he has always said he wanted? The Democrats’ greed is never satisfied.

It would be a wonderful thing if the entire budget were on the table, but that isn’t what the Democrats have in mind. Still, the Democrats’ evident concern about the debt limit, manifested not just by this letter but by the trillion-dollar coin and other half-baked ideas that are being taken seriously by Democrats, suggests that more of the budget might be on the table than we once thought possible.

Does anyone remember what President Obama said about the national debt? RedState reminds us:

On July 3, 2008, Presidential candidate Obama said that adding $4 trillion in debt was “irresponsible” and “unpatriotic.” Obama was referring to the $3.764 trillion that had been added to the national debt during the seven and one-half years Bush had been president. Obama of course got his facts wrong when he falsely claimed President Bush increased the national debt by $4 trillion “by his lonesome.” When Speaker Pelosi took over Congress on January 3, 2007, the national debt was $8.7 trillion. So the Democrats must get some of the credit for one of the four trillion dollars candidate Obama tried to blame on Bush.

I guess debt is only good when the Democrats are in the White House.

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