Congress, Politics

Report: United States Now Borrowing 46 Cents of Every Dollar It Spends

180px-United_States_one_dollar_bill,_obverseThe Congressional Budget Office has released its latest report and it contains this rather distressing fact: the federal government is now borrowing 46 cents of every dollar spent in fiscal year 2013. I have long been a critic of the fiscal policies of both parties, but it is astonishing that the American people have not thrown out the whole lot of these people — Democratic and Republican. We look like an utter ship of fools as politicians allow the country to drift toward an unprecedented financial collapse. In the meantime, the Administration is borrowing this money to simply give Israel a $100 million building complex and pour billions into corrupted governments in Iraq and Afghanistan.  China of course continues to hold much of our debt and is going on a buying spree in the U.S.

The government chalked up a $172 billion deficit in November alone — part of a $300 billion deficit for the first two months of the fiscal year. While both sides talk about the need to reduce spending, they have been spending like drunken sailors for years. For those of us who are skeptical about the use of tax increases in this economy, it is unnerving to think of giving more money to these same players. We need new revenue because of their horrible record over the last eight years. We must need however a third party to break the monopoly of power in this country — a monopoly that has left the entire country captive to these self-perpetuating parties.

It is clear that neither party wants to make hard choices and continue to hand out hundreds of millions of dollars to curry favor with different groups as with the $100 million gift of a building. There is also no serious accountability for the waste of billions under Bush and Obama as “stimulus” funds. I agree with the need to raise taxes but I have little faith in the Obama Administration or Congress in using such money responsibly. You do not get to a point of borrowing virtually half of every dollar spent without a complete lack of leadership and responsibility. Even if this figure falls, the point is that Congress still makes hundred million dollar gifts to wealth countries without a sound of objection or concern. Yes, all countries borrow money but we have a massive debt and continues to grow — an politicians who pledge to be more responsible in the future. The need for revenue is likely to change but not the need for responsibility in Washington.

Source: Washington Times

154 thoughts on “Report: United States Now Borrowing 46 Cents of Every Dollar It Spends”

  1. The USA will never default on its debt, ever. it can print money to pay the interest, and the bonds are organized as contracts that are NOT payable on demand, but upon maturity, so the rate of redemption is controlled, there cannot be a “run on the bank.”

    As I pointed out above, the additional interest is less than 1/2 of 1% of our budget; that will not lead to “hyper inflation.” At our current borrowing rate of 2%, the worst it can do is cause 2% inflation on top of the normal 3%. That will not drastically affect most people, it is (as economists have long known) the equivalent of a tax on the wealthy that have cash or near-cash assets and own debt, either directly or indirectly).

  2. “Moreover, despite years of warnings from the usual suspects about the dangers of deficits and debt, our government can borrow at incredibly low interest rates — interest rates on inflation-protected U.S. bonds are actually negative, so investors are paying our government to make use of their money. And don’t tell me that markets may suddenly turn on us. Remember, the U.S. government can’t run out of cash (it prints the stuff), so the worst that could happen would be a fall in the dollar, which wouldn’t be a terrible thing and might actually help the economy.

    Yet there is a whole industry built around the promotion of deficit panic. Lavishly funded corporate groups keep hyping the danger of government debt and the urgency of deficit reduction now now now — except that these same groups are suddenly warning against too much deficit reduction. No wonder the public is confused.

    Meanwhile, there is almost no organized pressure to deal with the terrible thing that is actually happening right now — namely, mass unemployment. Yes, we’ve made progress over the past year. But long-term unemployment remains at levels not seen since the Great Depression: as of October, 4.9 million Americans had been unemployed for more than six months, and 3.6 million had been out of work for more than a year.” Paul Krugman

  3. Mayor Karzai needs that money. Emperor Natanyahu needs that money. The Koch Brothers need that money. Our fabled Job Creators will simply sit on their hands ‘ala Ayn Rand if they don’t get the money. Baby Boom Americans will just have to work longer and do without.

  4. Why is everyone so quick to blame a President for the debt accrued in his office. If my knowledge of the Constitution is correct (which I’m pretty sure is and can be checked quite easily), Congress tells the President how much to spend. The President cannot spend on penny more, nor one penny less. Reagan tried to spend less than Congress told him to and the Supreme Court told him he had to spend every penny. The President is a single person with a loud bullhorn. 435 congressman each have one vote and wen 50%+1 pass a budget, that’s it. So let’s get real, Congress is the one spending all this money. And the blame goes to both sides. Each has their favorite group they want to spend money on but each spends money that makes drunken sailors look like infant babies.

  6. One sad truth is that many of the federal politicians know that a sizeable portion of the population does not care or wants to milk the federal cow dry regardless if it kills the cow. Many of the rest would rather punt the issue a few election cycles ahead.

    This idea of deficits and debt do not matter is lunacy, and living in denial. All one has to do is be even the most casual observer of economic history to know when a gov’t approaches a default on its debt it causes severe crisis in that nation. Some gov’ts have resorted to currency devaluation which leads to hyper-inflation that can run beyond the scope of what fundamentals of the currency dictate the value should be.

    If the deficit spending trend continues the US Government WILL face such a crisis. We don’t need to have a currency default like we did in 1779 or even risk the worst case scenario such as hyperinflation like happened in Hungary in 1946 (where in some days the Pengö devaluated by 50% in a matter of hours)

    I fully agree with our Professor in what he has said and in my view the federal elected officials, if they were instead employed as fund managers with fiscal and fiduciary responsibilities would have been jailed if they mismanaged a fund or corporation as reprehensibly as they have in their elected capacity.

    I also share the apprehension of providing these wanton spenders any extra tax money knowing they will blow 140% of everything they are given. I would not mind a reasonable tax increase but history has shown with many of these officials they cannot be trusted to pay down debt or anything that is fiscally responsible.

    I have also observed that it is a disturbing trend in the last 20 years that for the most part a problem that could have been prevented easily through slight course corrections is no allowed to mushroom into a full blown crisis before it is even considered seriously and often it is remedied with only a bandage, creating more and more problems for later. I believe the federal debt has gone so far beyond control, there will have to be a meltdown in society before congress will act and even then the repair will involve some draconian measures that everyone is going to hate and the damage will take 20 years to work its way out.

    But there are going to be endless lines of people here who will react the same way as those who are rising up in Greece to prevent any sort of responsible measures to stave off catastrophie because they want their entitlements and measures they have been placated and socialized into believing for generations is a sacred right they demand regardless of the cost to the stability of the nation.

    I have said for years that the entirety of congress should be voted out of office and new minds be put in that are both capable and willing to address this looming crisis seriously. But with each month I become more and more cynical that it will be repaired. These representatives are too entrenched to do anything reasonable or necessary.

  8. If Romney had been elected, the Bush tax cuts for the wealthy would remain in place and the shredding of SSI would have already begun.

  10. Now we can blame all since Nixon…… For the largest deficits ….. Carter left a little….. But nothing in comparison to any GOP operative …….with the exception of the current one…… Krugman has a great book out regarding this and how to handle it……

  11. The bad business model has just been enhanced at Doha, Qatar.

    Instead of agreeing to fix what is causing the global warming induced climate catastrophes, they think simply paying for the damage will do.

    That will involve borrowing more money than exists.

    Not such a good plan.

  12. Our National debt in 2012 is about $14T, the interest on that is $432B, or a 3% overall interest rate.

    But currently, we can borrow at about 2%. Adding $900B to that debt for 2013 will add $18B to the interest bill. In a $3.8T budget, that is an increase of 0.47%. Just to put it in context.

    Of course we cannot keep that up forever, but we can keep it up for a very long time. The pressure is real world economics; the baby boomers are aging, retiring, and slowing down in economic productivity. In order to care for them, we are going to need to borrow money.

    That is fair, through their taxes they cared for the young and old of their generation. We are not “burdening” our children with debt, children don’t pay taxes. They won’t be children in 20 years, they will be adults doing their part: caring for the young and old of their generation; which will include their kids and their parents and grand parents, the baby boomers.

  13. “But remember: Jobs must come first. Job creation must be our first priority.”

    http://robertreich.org/post/37405950628

    ——-

    http://robertreich.org/post/37268432235

    Cliff Notes on the Three Real Perils Ahead

    Wednesday, December 5, 2012

    The “fiscal cliff” is a a metaphor for a government that no longer responds to the biggest challenges we face because it’s paralyzed by intransigent Republicans, obsessed by the federal budget deficit, and overwhelmed by big money from corporations, Wall Street, and billionaires.

    If we had a functional government America would address three “cliffs” posing far larger dangers to us than the fiscal one:

    The child poverty cliff.

    Between 2007 and 2011, the percentage of American school-age children living in poor households grew from 17 to 21%. Last year, according to the Agriculture Department, nearly 1 in 4 young children lived in a family that had difficulty affording sufficient food at some point in the year.

    Yet federal programs to help children and lower-income families – food stamps, aid for poor school districts, Pell grants, child health care, child nutrition, pre- and post-natal care, and Medicaid – are being targeted by the Republican right. Over 60 percent of the cuts in the GOP’s most recent budget came out of these programs.

    Even if these programs are preserved, they don’t go nearly far enough. But the Obama Administration doesn’t talk about reducing poverty in America. It talks only about preserving the middle class.

    Yet unless we focus on better schools, better health, and improved conditions for these poor kids and their families, in a few years America will have a significant population of under-educated and desperate adults.

    The baby-boomer healthcare cliff.

    Healthcare costs are already 18% of GDP. Between now and 2030, when 76 million boomers join the ranks of the elderly, those costs will soar. This is the principal reason why the federal budget deficit is projected to grow.

    The Affordable Care Act offers a start but it isn’t nearly adequate to limit these rising costs. The President and the Democrats have to lead the way in using Medicare and Medicaid’s bargaining power over providers to get lower costs and to move from a fee-for-service system to a fee-for-healthy outcomes system of healthcare.

    But we can’t avoid the fact we have the most expensive and least effective system of health care in the world that’s spending 30 percent more on paperwork and administration than on keeping people healthy. The real healthcare cliff can only be avoided if we adopt a single-payer healthcare system.

    The environmental cliff.

    Global emissions of carbon dioxide jumped 3 percent in 2011 and are expected to jump another 2.6 percent this year according to scientists, putting the human race perilously close to the tipping point when ice caps irretrievably melt, sea-levels rise, and amount of available cropland in the world becomes dangerously small.

    Yet Republicans (and their patrons, such as Charles and David Koch) continue to deny climate change. And the Administration is no longer pushing for a cap-and-trade system or a carbon tax.

    Yet unless we act to reduce carbon emissions, other major emitters won’t do so. The only binding pact so far is the Kyoto Protocol, which the U.S. never joined. And we’re taking no leadership at the international climate talks now taking place in Qatar.

    Yes, America does face a cliff — not a fiscal cliff but a set of precipices we’ll tumble over because the GOP’s obsession over government’s size and spending has obscured them. And Democrats so far haven’t been able or willing to sound the real alarms.

  15. 70% of the US GDP is consumer spending. As long as wages are kept low and employment is haphazard the US economy will never be strong. You want to end the debt crisis & get things moving again? Simply put Americans back to work & start sharing the huge gains made via increased productivity with us.

    If our masters stopped shipping jobs overseas and didn’t compensate CEO at 436 times the average worker salary but closer to the 64 times of the EU the increased tax revenue would solve the budget “crisis” by itself.

  18. ” Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.

    This is, however, a really bad analogy in at least two ways.

    First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.

    Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.” Paul Krugman

  19. Here is the 2013 budget proposed by the Obama administration; it is set to borrow 23.7% of the entire year budget, not 47%. According to Obama’s proposal; the deficit will be a record, but $900B.

    I read the Washington Times article. They do not give overall numbers; but I think it is probably normal to be borrowing more at the end of the fiscal year.

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