National Debt

Two Months After Debt Limit Suspension, Borrowing Grows and Grows


On October 17, Congress suspended the statutory debt limit and let the U.S. government's spendthrift freak flag fly. As I wrote at the time, public debt outstanding jumped overnight by $328 billion. Woo hoo! Those credit card bonus miles are gonna be through the roof!

Since then, borrowing has slowed, but certainly not stopped (hey, we're talking about the U.S. government, here). Between October 17, 2013 and December 17, 2013, the total of public debt outstanding rose from $17.076 trillion to $17.269 trillion.

That's $17,268,587,651,056.23, if you're a big fan of commas.

Public debt
U.S. Department of the Treasury

If it makes you feel any better, the Congressional Budget Office expects, in its long-term budget outlook, public debt to start dropping a bit, soon, as a percentage of Gross Domestic Product. Unfortunately, that's just before it begins a long, steady metastasis that will devour the country's economy.

Public debt
Congressional Budget Office

The consequences of that rising debt, the CBO says, aren't pretty:

How long the nation could sustain such growth in federal debt is impossible to predict with any confidence. At some point, investors would begin to doubt the government's willingness or ability to pay U.S. debt obligations, making it more difficult or more expensive for the government to borrow money. Moreover, even before that point was reached, the high and rising amount of debt that CBO projects under the extended baseline would have significant negative consequences for both the economy and the federal budget:

  • Increased borrowing by the federal government would eventually reduce private investment in productive capital, because the portion of total savings used to buy government securities would not be available to finance private investment. The result would be a smaller stock of capital and lower output and income in the long run than would otherwise be the case. Despite those reductions, however, the continued growth of productivity would make real (inflation-adjusted) output and income per person higher in the future than they are now.
  • Federal spending on interest payments would rise, thus requiring larger changes in tax and spending policies to achieve any chosen targets for budget deficits and debt.
  • The government would have less flexibility to use tax and spending policies to respond to unexpected challenges, such as economic downturns or wars.
  • The risk of a fiscal crisis—in which investors demanded very high interest rates to finance the government's borrowing needs—would increase.

It's certainly reassuring that lawmakers are diligently hammering out a budget package that actually causes the federal government to spend more money in the future than it would absent the deal and totally ignores the very real fiscal problems that beset the leviathan in D.C.

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  1. Get what you can while you can, fuck the guy who is here when it all goes to shit.

    These politicians are basically playing a game of musical chairs, getting what they can before the music shuts off, hoping they aren’t the guy without a chair when it all comes crashing down.

    1. Well, all politicians do this and pretty much always have. It’s just that the degree to which they are fucking the people down the road that’s changed. It’s so much more.

      1. Well if we balance the budget now the economy will crash! Tea party nuts are trying to destroy the economy by balancing the budget!

        1. You are mistaken. Balancing the budget will require massive spending cuts as they cannot raise revenue without just confiscating people’s wealth. That means less government, and less of a government burden.

          I expect the economy would soar, just like it did when the government instituted massive spending cuts after WWII. The Keynesians predicted recession (don’t they always say that when it comes to spending cuts?), but were wrong as usual.

          Why do you continue to promote the fallacy that cutting spending will “destroy the economy”? It’s the spending that will destroy the economy and the government, simply because government promises (over $100 trillion) are worth more that everything we own in the US (both public and private property including investments and money in the bank, i.e. everything). And future tax revenues won’t be enough to pay for the promises, especially when the bond market quits lending to the US government. PIMCO already has stopped lending to the government.

    2. Question: would term limits make this worse? After all, a termed out politician has no reason at all not to kick the can down to the next guy to worry about, but those who plan to run against at least in theory have to face the voters.

      1. Question: would term limits make this worse?

        I’m willing to find out.

        One thing I’ve observed is that it generally takes time in office to really build up the corrupt crony network you need to bilk the public of serious money.

      2. a term-limited politician wouldn’t have the protective cocoon of DC.

        1. Instead, what if we ban all Congress Critters from coming within 10 miles of one another? They can conduct their business and cast their votes via telephone or email. But they may not physically gather together in a centralized location.

        2. Term limits would be a disaster without a way to keep politicians loyal to their constituents. Recurring votes of confidence where the politician is only running against their record would be required. Which I’m all for, BTW.

          1. I would love to see politician’s have to spend more time proving that he/she is helping his constituents and less time writing bills. Or even more time smoking crack and getting drunk. Anything other than writing more laws.

            1. I would love to see politician’s have to spend more time proving that he/she is helping his constituents

              Unfortunately, grifting off the American taxpayers to the benefit of the narrow group responsible for their election to office is generally what is meant by “helping one’s constituents”, both by the congressman and said constituents.

    3. hoping they aren’t the guy without a chair when it all comes crashing down.

      So what if they are? what’s the down side? They won’t get re elected to the Congress of a country that no longer exists?


      1. Good point. I guess the biggest downside is they won’t have as big a cash cow at their disposal if they manage to keep their positions of power.

  2. It’s the libertarian moment!

  3. Edward Snowden doesn’t show up once in Google’s list of top 2013 searches…..-searches/

    Even possible without them manipulating the data?

    1. Good question. I would think no.

    2. Edward Snowden is an un-search word.

      1. You can check your own Binghole, Paul.

        1. Why would I do that when I have the fine officers from the entire southwest proper?

      2. Not my field of expertise by a long shot, but if I have time later on, I’ll cross index the other search engine publicly available top searched items list. Searched items tend to follow the news cycle, that’s why I strongly doubt the validity here.

    3. It’s not a conspiracy. It’s that no one cares. Sure, a few civil liberty minded folks like us have been following this religiously. But the average american doesn’t give a shit. When they hear a report on the news about the latest leak they say to themselves “that’s terrible” and then they go online to read the latest Duck Dynasty news.

      1. and that reality is what has made the O-care cluster so delicious. A lot of people have been personally affected, others know someone who has, and the rest expect to be.

      2. There is a strong correlation to the news cycle. If it appears in headlines, people search it out even more so when the names are not familiar to them. That’s why Mandela tops the list, not because people give a rats ass in general, but they have a vague sense of connection to the word when they keep seeing it in stories. No conspiracy theory needed either, Google has a long record of manipulating data for petty reasons. It is what they are MOST known for.

        1. I mean, come on, other Silicon Valley companies ridicule them mercilessly for having their heads up this administration’s ass. Of course, they would filter Snowden just to show their buddy on speed dial up in the Oval Office the love.

  4. Sometimes I get the impression that fans of European style social democracies think that because European style social democracies have extremely high debt burdens that making sure America accumulates a European style debt burden will turn America into a European style social democracy.

  5. GDP is about 15.7 trillion

    US debt is $17.269 trillion

    Why does the CBO think that 17.269 trillion is only 70% of 15.7 trillion when in fact it is 109%?

  6. Hey its only money! No big deal!

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