Obama’s Government-Induced Inflation

The future cannot sustain America’s growing debt.

From April 1917 to November 1919, when Woodrow Wilson borrowed $30 billion to fight World War I, he was able to do so because of the promise he made to lenders that the commitment to repay them would be backed by the full faith and credit of the United States government. At the time, the government's total debt was about $14 billion; so Wilson's painful gambit trebled it.

In reality, it was not the full faith and credit of the federal government that promised to repay; it was not the credit worthiness of the federal government at stake; it was not the federal government that paid back the money that was borrowed. That's because the government has no credit or credit worthiness or disposable wealth. Only the taxpayers have that.

This is not an academic difference. Wilson knew his creditors could not seize government buildings if he or a successor could not repay the loans in a timely manner. But the IRS could seize private wealth if taxpayers didn't cough up. At the time, the federal income tax was new. In order to get it passed in Congress, Wilson promised that the tax rate on personal incomes would never exceed 3 percent of adjusted gross income, and that it would only be assessed on adjusted gross incomes north of $10,000 a year -- the rough equivalent of $250,000 today.

Wilson also had a brand-new bank with its own legal printing press at his disposal: the Federal Reserve. With its power, the Federal Reserve could print and lend all the cash it wanted, flood the economy with money, and cheapen the value of the dollar so that when Wilson's $30 billion debt was repaid, it would be done with dollars worth far less -- and thus less painful to extract from taxpayers -- than those he borrowed.

This is, of course, government-induced inflation. It was relatively new in Wilson's era, but it has been practiced by the Fed and accepted by every president from Wilson to Barack Obama. And it can be done without the consent of Congress because Congress already gave the Fed the unlimited power to print cash and lend it. Today, this is done without ink and paper; rather, by pressing a few computer keys.

So today, when the president wants to borrow more than the law allows, the Fed can provide the cash, but the president needs a change in the law so as to have the legal authority to commit as yet unborn taxpayers to repay the government's additional debt. While in office, Obama has borrowed about $1.2 trillion a year with the approval of Republicans as well as Democrats in Congress. The lenders are quick to make their loans, because the feds have never failed to extract the cash from taxpayers or borrow more in their names to pay the debt service. Presidents and Congresses don't worry about paying back the principal or paying the debt service, as long as they can continue to borrow more in order to do so.

As absurd as it sounds, the federal government borrows money in order to pay the debt service on money it has already borrowed and spent. Is it any wonder that today the government's debt has reached $17 trillion?

In his zeal to persuade Congress to let the government borrow another trillion dollars in the next nine months, Obama has stated that raising the debt ceiling will not add to the nation's debt. He is either willfully ignorant or Clintonesque in his use of misleading words. He knows the feds never have declined to borrow whatever they want, whenever they want it, up to the limit of their legal borrowing authority. And they have done so with their eyes on only immediate political needs, with disdain for the economic consequences and with contempt for the future.

But the future cannot sustain this much longer. The half-trillion dollars a year the feds now pay in debt service on present and ancient debt is equivalent to one-fifth of all the yearly revenue collected in taxes. And the $1.2 trillion the feds borrow and spend each year is the equivalent of half of all the yearly revenue collected in taxes. If the mindset of borrow and spend and damn the future persists, American society as we know it will collapse as taxpayers reach the tipping point beyond which it will no longer make sense to earn income.

Do you think this sounds apocalyptic? Think again. Nearly half of the taxpayers in America are there already. Why should they work, they no doubt reason, when the feds will continue to tax and borrow and transfer wealth to them.

The president and all congressional Democrats and most Senate Republicans and about half of the House Republicans want to continue this descent into an economic maelstrom, and they have demonized those brave House and Senate Republicans who have had enough of it. Many courageous congressional Republicans understand the harm the feds have done to the dollar, believe the government must stay within the confines of the Constitution and recognize that borrowing money in order to pay the interest on money already borrowed will lead to perdition -- and they are resisting it.

Obama says they are holding the Treasury hostage and demanding a ransom. He is wrong again. They are defending the dollar and the Constitution. He is saddling future generations with debt they will not be able to afford. He will turn the IRS into debt collectors for the Chinese government, which is the federal government's largest foreign creditor. The courageous House and Senate Republicans are standing athwart the progressive tidal wave and saying: STOP. I expect they will stand firm. When they do, they will be history's heroes.

As for Obama, I suspect he doesn't realize that since the principal of Wilson's $30 billion loan has yet to be repaid, the Treasury is still paying interest on it. Do you know anyone who consented to that?

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  • Pathogen||

    ♪ 1 is the loneliest number that you'll ever find ♫

  • Rich||

    Obama has stated that raising the debt ceiling will not add to the nation's debt.

    Well, to be fair, according to the Treasury, *nothing* adds to the debt.

    We are so screwed.

  • Justin S||

    Uh huh. Better to default on the debt and let the whole economy crash and burn, right? Just to score a few political points?

  • UnCivilServant||

    Not for political points - to wean the country off of easy credit. If you habitually spend more money than you take in, eventually it will come crashing down. It'd be better to take the hit sooner rather than later.

  • Ivan Pike||

    Not for political points - to wean the country off of easy credit.

    I thought it was about O'care?

  • NCFisher||

    Exactly. Being free to millions, increasing premiums & deductibles to the paying while fomenting a part-time nation will not increase spending, taxes & debt one red cent.

  • Ted S.||

    Annual income £20, annual expenses 19, 19, and 6, result: happiness.

    Annual income £20, annual expenses 20, 0 and 6, result: misery.

  • Scruffy Nerfherder||

    Well, if you think everything is simply politics then I guess so. However, there are some of us who are arguing in good faith that the government is spending beyond its means and beyond the means of the next generation to pay for it. We contend that it is irresponsible to continue down this path.

    I don't care about teams. Politics as sport has never interested me and should be quite offensive to any person with actual principles beyond #WINNING.

  • Restoras||

    There is something on the order of $50-$60 trillion of total debt that has to be paid back out of a $15 trillion economy that isn't growing, and Unfunded Liabilities are likely another $150-$200 trillion.

    Screwed doesn't even begin to describe how bad it is going to get.

  • Scruffy Nerfherder||

    We just need an alien invasion to stimulate our animal spirits, that's all.

  • Ketogenic Paleo||

  • trshmnstr||

    Just sit and stare at the national debt clock for 5 minutes. We'll be wishing for just being screwed once this comes home to roost.

    Semi-OT question for everybody:
    When the shit hits the fan, how low are we going?

    On one hand, it feels like the correction will be massive, making the Great Depression look like happy party times. On the other hand, we have a national output around $17T, with a global output around $75T. It seems like that would limit the abject destitution we would see from this collapse.

  • Mumu Bobby||

    That can't be right. Paul Krugtron the Magnificent said we can still spend another eleventy trillion dollars and it will all be fine and dandy.

    We're all going to be billionaires soon. How could that be a bad thing? Everybody flying first class and eating caviar and nobody drives a used car. Heck, nobody drives. Everybody has a chauffeur. And a personal trainer.

  • Restoras||

    There wouldn't have been a 'default'. The federal government recieves more than enough in taxes to pay interest and principle on the debt that was coming due.

  • NotAnotherSkippy||

    Don't confuse not having to default with not defaulting. Do you really think the most petulant president ever wouldn't take the opportunity to default knowing that all of the blame goes to Team Red? You think he needs to worry about borrowing when the Fed can "loan" us all of the money we need at any time? Inflation? Krugman has personally assured him that inflation is just a boogeyman invented by the Tea Party to scare starving grandmas.

  • sasob||

    Better to default on the debt and let the whole economy crash and burn, right?

    What default? The government has plenty of revenue to pay the interest on the debt. By law that has to be paid first, before any money is spent on anything else.

  • NCFisher||

    Yes, or alternately - as the opposition suggests - reducing spending not associated with debt service. Novel.

    Or we can continue borrowing to borrow. Outside of government, that'd either be bankruptcy or a Ponzi scheme conviction.

  • Free Society||

    Uh huh. Better to default on the debt grow the debt and let the whole economy crash and burn, right? Just to score a few political points?


    There we go. Now the statement makes logical sense.

  • ||

    Better to default on the debt and let the whole economy crash and burn, right?

    No reason for the government to default on its debt - current revenues more than cover our interest payments. You might just have to face the uncomfortable truth of budgeting and sacrifice something else in the federal budget in order to pay for it, but there's no reason for a default on the government's debt.

  • Rich||

    But the future cannot sustain this much longer.

    Would someone *kindly* cite *any* analysis that provides a time-stamped scenario for the collapse?

  • Scruffy Nerfherder||

    There isn't a schedule. The capability of the government and the banking system to drag this out is vastly underestimated. There is, however, a point of no return beyond which any attempt to correct course will incur significant economic pain and therefore be resisted by the majority of the populace. If we haven't passed that point already, we're close. Once past that point, it's politically untenable to cut the system back.

  • Restoras||

    Scruff, we have past that point. The only thing that will force a cutback to something sustainable is collapse.

    I wish I had an inkling of the timing so I could short treasuries.

  • datcv||

    See: Greece

  • Restoras||

    Nope. It goes on until it doesn't anymore.

  • NCFisher||

    Rich, consider the same kitchen table economics that keep your family out of the poor house is the baseline. Government has no fiscal magic to suspend these laws of economic gravity. Being the shiniest cow pie just means you're the last to be stepped on.

  • sarcasmic||

    Why should they work, they no doubt reason, when the feds will continue to tax and borrow and transfer wealth to them.

    In a free country with free enterprise and a free market, they could mow their neighbors' lawns or sell their favorite baked goods. Alas we do not live in a free country with free enterprise and a free market.

    Freedom means asking permission and obeying orders.

    Freedom is slavery.

  • Restoras||

    I wish Orwell were alive so he could re-write Animal Farm. Also, Jonathan Swift - he could do wonders to mock the state of things with Gulliver's Travels: Journey to America.

  • Heroic Mulatto||

    I wish Orwell were alive so he could re-write Animal Farm

    Orwell was a Fabian-style socialist. Would you really want to read that drivel? One could imagine the frothing at the mouth he would engage in against the "scary" Tea Party.

  • Restoras||

    Perhaps, but Animal Farm was a scathing indictment of socialism, right? That's what I'd like to see - is a scathing indcitment and mockery of the system now running everything into the ground in DC. That book came to mind as I read it in high school and it had a big impact on me as a young lad.

  • Heroic Mulatto||

    Perhaps, but Animal Farm was a scathing indictment of socialism, right?

    That's not how Orwell saw it. As a "democratic socialist" he was against the dictatorship of the proletariat and all that authoritarian Communist/Fascist stuff, but he wasn't against the redistribution of wealth at all. At times, he describe himself as a "Anarcho-syndicalist".

  • Restoras||

    Got it, thanks for the clarification.

  • Zeb||

    Well, at least he had the right sort of ideas about power and control. Anarcho-syndicalists are a bit silly, but as long as they really mean the anarcho part, I don't have a problem with them. If a bunch of people want to get together and try cooperating and sharing, good for them. It probably won't last, but it's worth a try, I suppose.

  • Free Society||

    Anarcho-syndicalists are a bit silly, but as long as they really mean the anarcho part, I don't have a problem with them.

    What they mean is irrelevent since intentions have no value. They advocate anarchy while simultaneously advocating redistributionism and political monopolies that can only be enforced by a state. They may be the most logically inconsistent of any ideology in existence. For that alone you should have a problem with them.

  • Ketogenic Paleo||

    I agree 110% with Free Society. I've read and even talked to some of these people and they seem like anti-capitalists that can't face up to reality. They know marxism doesn't work but they've been brainwashed for too long in the pinko anti-capitalist mindset. (I used to be a pinko in my teens; anti-capitalism is more dangerous today than socialism)

  • Ketogenic Paleo||

    Yes, but does the author's intent really matter?

  • NCFisher||

    Unlike the statists of the past century, Orwell wasn't a scorched earth zealot, unlike post body count apologists stating that wasn't really socialism/communism.

  • Restoras||

    OT: Kentucky Kickback? (courtesy of AoSHQ)
    http://www.nationalreview.com/.....rew-stiles
    http://www.washingtonpost.com/.....7ae85af94f

    There may or may not have been a kickback in the form of an earmark. I am sure Obama 'requested' it purely from the goodness of his heart and love for the state of Kentucky, as well as his love of commerce.

    grumblegrumbletreeoflibertygrumblegrumble

  • Alice Bowie||

    Judge Napolitano states time-and-time again that all taxation is theft. I don't have much respect for that. I'm all for taxing everyone fairly. That is, our current tax system is not fair. I feel that there should be ZERO Income Taxes for corporation, a FLAT tax for ALL (including the poor and those on private pensions and excluding the disabled, those on public pensions, and those not working). I would also like to eliminate the concept of Capital Gains/Earned Income. If you are going to have ZERO Income Taxes for Corps, the retained earnings of a corp (not distributed to share holders) should be taxes. And all income should be Earned Income tax at a fixed Flat Rate (No Progressive Tax).

    As far as inflation, inflation is a key component of growth in Fiat currency. It's why we use Fiat and not Gold.

  • Restoras||

    It is all theft, it's just a matter of how much you are willing to tolerate.

    BTW- all your tax ideas are wonderful. I hope we get some of them someday.

  • Alice Bowie||

    I'm a BIG fiscal Liberal, btw.

    It wasn't a bunch of factory workers that made the tax code so impossible to understand and so easy to scam. It was the factory owner's accountants in which the factory owner elected into congress.

  • Restoras||

    That's right. The tax code is used by Congress to dole out corporate favors (among other things). It needs to be vastly simplified.

  • Ted S.||

    Big Government has enormous power to muck up people's lives (as with the tax code). It's only logical that people will go to great lengths to ensure that Big Government is using that power to muck up somebody else's life.

    The obvious solution is to make certain Big Government doesn't have that power in the first place. It's astonishing and depressing, however, how many people think the solution is to give Big Government more power, and then put their preferred people in control.

  • burserker||

    and crony capitalism is the child of fiscal liberalism, own it

  • Heroic Mulatto||

    Judge Napolitano states time-and-time again that all taxation is theft. I don't have much respect for that. I'm all for taxing everyone fairly.

    Taxation depends on the threat, and sometimes use, of deadly force against peaceable people for the purposes of wealth confiscation and redistribution.

    I don't have much respect for that.

  • BardMetal||

    I think when some people state that taxation is theft that other people interpret that as being against all taxation.

  • FreeToFear||

    Please... That video is not realistic at all. There is no way that George's dog would have made it out of the house alive...

  • Rich||

    a FLAT tax for ALL (including the poor and those on private pensions and excluding the disabled, those on public pensions, and those not working)

    What are your rationales for the poor/disabled and private/public dichotomies?

    Also, what would you think of an *amount* rather than a *percentage* for your FLAT tax?

  • Restoras||

    If everyone has skin in the game they will care more about what use their money is being put to.

  • BardMetal||

    Which is why Obamacare is so unpopular, because unlike other government programs people get see how much money is being stolen from them to pay for it.

    Imagine the size of government if it was like that with every government program.

  • Alice Bowie||

    I do NOT want a FLAT Amount. It doesn't take into account inflation.

    I think that is the problem with a lot of tax issues we are having. For example and to name a few:

    - AMT is too low. Inflation has raised salary amount (without raising buy-power) and yet middle class people are now subjected to AMT in many cases. This was intended for the rich.

    - The FICA Cap. It should NOT be a #. It should be a %. And, infact, just getting rid of the cap would lower everyone's FICA rate and fairly tax the rich...who, in all fairness to the rich, would be paying more than they'd ever collect. And, the rich should not collect public pension. That should be for the middle or poor people or those that have no assets at retirment age.

    - The Gift Tax
    - The Mansion Tax -- In NYC, a two bedroom apartment (1000sf) is more than $1,000,000. Clearly not a mansion.

  • NCFisher||

    Why not dump altogether these taxes instead of tweaking, as themselves they are simply another layer of tax-tweaks? Are they not evidence enough of the utter unmanageability of the tax code until displaced by a simple flat, Fair, or POS system? The current system is inequitable because it violates so many precepts of our system, chief the right of equal protection and treatment. It is a smiley-face fascist emanation of unconstitutionality, regardless of its legality.

  • NotAnotherSkippy||

    I guess your meds wore off. Too bad. Try a higher dose next time.

    -AMT is stupid. Go to a progressive consumption tax (cf. FairTax) and be done with it.

    -FICA is already redistributionist. If you want welfare (and you do) then pay for it explicitly in the budget and evenly across the population. As for the "rich" not collecting anything in retirement congratulations on mirroring the Moral Hazard of TARP,Fannie,Freddie,AIG,GM, etc. So in your glorious system someone who saved and invested for 50 years enough to have $2MM in assets should be penalized while someone else who made exactly the same lifetime earnings but spent it all should be rewarded. Try thinking that one through again.

    -Gift Tax (see above)
    -"Mansion Tax" whatever that is. I presume you mean local real estate taxes which are irrelevant, but maybe you mean the mortgage interest exclusion. Well the answer to the latter is again to go to a consumption tax. Furthermore, you have no qualms taxing the rich so you shouldn't be bitching about paying higher taxes on living in a more expensive home. Don't like it? Leave NYC. The rest of the country doesn't exist to subsidize you.

  • Jordan||

    As far as inflation, inflation is a key component of growth in Fiat currency. It's why we use Fiat and not Gold.

    Garbage. Inflation is a key component of growth in government spending, not economic prosperity.

  • Protagoronus||

    Serious question: Does anyone have any recommendations for reading on how an economy can grow strongly without inflation?

    I keep trying to think about 0 inflation/deflationary economies (gold, bitcoin, etc). Where I get stuck is that lending seems impossible without some sort of fractional reserve banking (that causes inflation). There would be no reason to lend if the payback is worth less nominally than the initial bond. Wouldn't most innovation cease without lending? You could rely on an entirely equity based economy forming I guess, though returns (over all investments) would have to be close to 0% in nominal terms. So again you end up just buying a good safe.

    I am really interested in seeing if I am wrong.

  • Alice Bowie||

    You hit it RIGHT on the nose. It's the reason why we implemented FIAT Currency. There's infinite growth. You infinitely print money. You can control the volume of money via interest rates.

    The idea of Gold/Bitcoin is to have a finite amount of money. This sucks and is what we had for millennia.

    Clearly, the Fiat-based Free Market Capitalism we have in the US (With government intervention) has pushed mankind 1000 fold.

  • Protagoronus||

    Well, except that there was really strong growth in the 19th century. The money was market based, private, and still inflationary. You can make an economic argument without invoking the need for a central authority backed by violence.

  • Free Society||

    Clearly, the Fiat-based Free Market Capitalism we have in the US (With government intervention) has pushed mankind 1000 fold.

    Yeah if 'mankind' were the same thing as 'government' you'd be right. It has pushed government's power to oppress and steal 1000 fold. I'm not sure how a centrally planned finance industry that depletes the wealth of those who are forced to exchange within that medium, qualifies as a boon to humanity. But then again I'm not accustomed to the mental gymnastics that goes with Progressivism.

  • ||

    It's the reason why we implemented FIAT Currency.

    That's actually got absolutely nothing to do with the reason why we first abandoned metals-backed currency in the 30's and then finally dropped the gold peg altogether in 1968. Crack a fucking book for Christ's sake. Or at least drop by Wikipedia. Bank runs, fiscal crises, and gold hoarding made it impossible to maintain, not the inability to inflate.

    You can control the volume of money via interest rates.

    Yeah, it's worked awesome so far. It's not like the quantity of money is completely divorced from the quantity demanded and largely dependent on government policy or anything.

  • NotAnotherSkippy||

    And now you're just being stupid again. Don't confuse nominal growth with real growth. The only real growth comes from productivity gains, i.e. I can now grow twice as many apples or I can train three times as many Barrycare navigators. Oh wait, ignore that last one.

  • Wizard4169||

    I think you have something backwards there. Deflation means that a given unit of money is worth more, expressed in real purchasing power. Therefore, lending would be potentially profitable even at a nominal interest rate of zero, because the money you're receiving in payment is now worth more than when you leant it. Sudden, unexpected deflation can be disastrous, since it effectively increases the size of debts and potentially leaves borrowers unable to pay, but steady, predictable deflation would actually lower interest rates and encourage lending.

    Inflation means that money is worth less. Therefore, lending is only profitable if the nominal interest rate is greater than the rate of inflation. If the inflation rate increases over the life of the loan, the lender can effectively lose money even if the borrower repays every (nominal) cent right on time. Thus, inflation actually deters lending, or at the very least makes it more expensive as lenders demand ever-higher interest rates.

  • Protagoronus||

    Appreciate the comment. Still interested in any reading material on this.

    If interest rate is zero, or negative, I would rather keep my money than risk non-payment. Then it is worth more after appreciating in my mattress after a few years.

    If the market interest rate is positive, with any deflation, it seems that the economy would run out of money, so there would be lots of non-payment. With inflation, you almost need to lend to keep the value of your money.

  • trshmnstr||

    That's where risk/reward plays in. While you may be happy with the growth in value from 0.5% deflation, many won't be, and will try to get a greater return. Just like how currently i could stick all my earnings in a savings account at 0.5%, or stick it in a mutual fund returning 7%.

  • Protagoronus||

    I guess my point would be: in a zero inflation or deflationary economy, would you ever put your money in a savings account? Would all equity returns added accross the entire economy be close to zero % (so you could not expect 7%, but still better than lending to a bank)

  • NotAnotherSkippy||

    Averaged over the entire economy they should be close to the average productivity gains. There will be fits and stops around that as individual players try to win at the margins but on the whole that's what should happen.

  • NotAnotherSkippy||

    The only real risk of a deflationary economy is that everyone decides it's better to wait for prices to come down. The reality is that deflation through productivity gains is how you truly grow an economy. Evidence Moore's Law. The amount of capability you get for a dollar today in the world of silicon is far greater than 30 years ago. Costs have actually come down in nominal terms as well as real terms. You pay $0.03 per GB of harddrive storage today. RAMAC systems 60 years ago cost something like $30k per Megabyte

  • Bob Straub||

    Somewhat OT, but a favorite anecdote of mine:
    In the early 70s, I worked for the Computer Control Div. of Honeywell. One day, I arrived at work and the office was buzzing. The company had just announced a new (magnetic core!) memory module for its 316 series of minicomputers. You could hold it in your hand (it was maybe 3x3x7 inches). It contained 4,096 16-bit words of memory, plus parity. And it cost: only about $4,000, one dollar per word (two bytes in today's equivalent).

  • sarcasmic||

    I agree that it's unfair to say taxation is theft. It's not theft. It's extortion.

  • Free Society||

    Extortion is a form of theft if it involves stealing.

  • Free Society||

    I'm all for taxing everyone fairly.

    Ah so you're for not imposing involuntary payments to political monopolies? Anything else isn't "fair".

  • NCFisher||

    If a private group coerces your property from you to fund their high-minded interests, we call it robbery. For every dollar spent that is either unnecessary, unconstitutional, or of poor quality and value, it's reasonable to think of it in terms of theft. Certainly the consequential heirs might.

  • Ketogenic Paleo||

    Taxation is theft. It is also a necessary evil. The 'necessary' part can be debated but it's undeniable that it's evil and an imperfect way for the state to collect wealth. There are ways of making taxation "better" which we should support but it will always be evil.

    As far as inflation, inflation is a key component of growth in Fiat currency. It's why we use Fiat and not Gold.
    Which is why we need a Gold Standard or at least a preset printing limit based on something like total population.

  • NotAnotherSkippy||

    Wow. You DID take your meds today. Now just get to a consumption tax instead of an income tax and you'll finally have reached the promised land. Although I could live with your suburbs.

  • Palin's Buttplug||

    The half-trillion dollars a year the feds now pay in debt service on present and ancient debt is equivalent to one-fifth of all the yearly revenue collected in taxes.

    http://en.wikipedia.org/wiki/F.....Y_2011.png

    Way off, Judge. Stick to the law.

  • Heroic Mulatto||

  • Palin's Buttplug||

    Even though we borrow more today net interest paid is still in the $225 billion range due to lower rates. Your link backs this up.

    Anyway, the Judge is out in left field at $500 billion. Conservatives shouldn't play with facts.

  • Jordan||

    Still waiting for that list of quotes proving everyone here voted for Romney.

  • Palin's Buttplug||

    I didn't say "everyone". I listed the ones who did and you were not on it.

  • Restoras||

    Cite?

  • Palin's Buttplug||

    I don't recall my entire list of Romeny voters - John, Tulpa, Mike M, wareagle. SouthronBoy, a few others.

  • Jake W||

    Do you work for the NSA? Jeez

  • Bambino Martino||

    Nope, the judge is right on the money. Your first clue (right!) should have been the word "net" before the word "interest".

    "Net Interest" is equal to the interest the federal government pays minus the interest it receives. The outlays are in fact on the order of a half a trillion. My source is slightly better than Wikipedia:

    http://www.cbo.gov/publication/21960

  • Palin's Buttplug||

    You're still wrong. Using the formula from your link:

    Although the federal government has increased its net borrowing by more than $3 trillion in the past two years, net interest costs dropped from $253 billion in 2008 to $197 billion in 2010 because of remarkably low interest rates.

    Rates are the same and borrowing is up incrementally since 2010 resulting in $223 billion.

    Don't fuck with the Buttplug.

  • Bambino Martino||

    Still trying to wrap your mind around this really complicated net vs gross thing, eh?

  • Palin's Buttplug||

    Do the work and show your math.

    "Net" is smaller than gross. You have no chance of success.

  • KDN||

    That's his entire point, you retard. Gross outlays for debt were $413b, net was $197b. Just because half the debt service is redirected to Social Security doesn't mean it isn't being paid.

  • Palin's Buttplug||

    It is not even close to his point, asswipe.

    Nope, the judge is right on the money. Your first clue (right!) should have been the word "net" before the word "interest".

    Read again.

  • Brian||

    Really? You're commenting on this?

    I thought you'd be busy making sure no one things bad thoughts about the Obamacare roll out. Wonkblog's calling it a disaster. Shouldn't you be getting on top of that? It sounds like a job for you.

  • ||

    Your graph shows the entire budget, but not actual revenue. Actual FY 2011 revenue was 2.3 trillion. So the interest payments of 223 billion paid in FY 2011 would have represented about 10% of revenues. The judge may have gotten to a larger one of two ways: not all government revenue is tax revenue - tax revenues may have been lower than the total; or he may have included intra-governmental interest payments, which are "off budget".

  • The Late P Brooks||

    Barack Obama has stated that raising the debt ceiling will not add to the nation's debt.

    If true, raising the ceiling is unnecessary. Why are we wasting all this time and energy?

  • Ivan Pike||

    Barack Obama has stated that raising the debt ceiling will not add to the nation's debt.

    If true, raising the ceiling is unnecessary. Why are we wasting all this time and energy?

    Technically true. "Raising" the debt limit won't add to the debt. "Borrowing" up to that new limit will however.

    All the time and energy was to defund O'care, or at least that is what the Republicans were saying.

  • Zeb||

    And cutting your throat won't kill you. All of your blood coming out will though.

  • Ivan Pike||

    And?

  • ||

  • Jordan||

    Not all economists agree that the political circus in Washington is hurting the economy in a measurable sense.

    I'm guessing that group overlaps nicely with the group of economists who actually foresaw the housing bubble, unlike the government's clowns.

  • flashgordon||

    Sowell thinks the Republicans are doing a poor job of communicating and I agree. We are borrowing to pay expenses. It's ok to borrow money to buy an aircraft carrier, it's not ok to borrow money to year in/year out pay for food stamps or medicare. In some recent polls 60% of people said they would not vote to raise the debt limit. When you spend a dollar for every 65 cents you bring in in taxes you have to borrow money. But close to half the people in the country now receive a check or some kind of benefit from the federal gov't every month. A lot of these people vote and it seems unlikely they will vote for someone who might reduce their benefits by attempting a balanced budget. (This is what Romney was really trying to say (bad communication).) So that's the tipping point we have really hit. Somewhere in the past the progressives figured out they could spend money with no obvious bad consequences that would be attributed to them. Our only hope is that the electorate is ideologically inconsistent and they switch sides very reliably every 8 years.

  • juliajuli2734||

    my neighbor's aunt makes $86/hour on the computer. She has been unemployed for 5 months but last month her payment was $21941 just working on the computer for a few hours. go to the website
    ==========================
    http://www.works23.com
    ==========================

  • CatherineJLin||

    just as Carol responded I didn't know that people can make $6819 in 1 month on the computer. read this
    http://WWW.JOBS72.COM

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