How much does the national debt cost us?

  1. I would like to know how much of my tax dollar goes towards paying interest on the national debt.

    Specifically, I suspect that my taxes would go down significantly if we had no debt or interest to pay on it and I would like to know how much.

    Everyone talks about lowering taxes yet not one person has mentioned this. If what I suspect is true why isn't every American screaming at our politicians to not just balance the budget but pay off the debt and remove that tax burden from us instead of making it worse every day? Balancing the budget is the tip of the iceberg and the Titanic is still heading towards it.
     
  2. jcsd
  3. Pengwuino

    Pengwuino 7,118
    Gold Member

    We have something like $15 trillion worth of debt, equal to the entire GDP of the country. Uhm... how do you propose we just pay it off like that?
     
  4. Are we counting unfunded liabilities - just saw a report we would need an additional $46Trillion invested at today's Treasury rate to cover the benefits in Social Security and Medicare that have been promised?
     
  5. I didn't propose 'paying it off like that'. I am proposing that we are NOT paying it down and nothing in the new debt deal is paying it down and nothing in any upcoming deal is going to pay it down. I am proposing that the best way to cut our taxes IS to pay it down, not cut social spending. Balancing the budget is putting a bandaid on a sucking wound.

    I personally like Ron Paul's ideas. I don't want to kill medicare or social security to do this. [OT moved]
     
    Last edited by a moderator: Aug 17, 2011
  6. I suspect the answer isn't nearly as simple as you make it sound. Just as a small business owner may borrow money to double the size of his plant, the U.S. may borrow money that ultimately increases production and puts more people to work, increasing revenue. Though it may be relatively easy to calculate how much we've paid in interest on the money we've borrowed, whether we'd be paying lower taxes now if we'd never borrowed the money is a much more difficult question.
     
  7. apeiron

    apeiron 2,432
    Gold Member

    Love it. When faced with thoughtful fact, thoughtless rhetoric always trumps.
     
  8. $412 bilion. http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

    Not a bad deal, really. You can run three major and several minor wars, promise everyone great retirement and medical benefits, and never have to pay for any of it. And the Fed has just announced it's going to keep real interest rates effectively at zero for the next two years. And they can print all the dollars the government needs. What's not to like?
     
  9. Ivan Seeking

    Ivan Seeking 12,539
    Staff Emeritus
    Science Advisor
    Gold Member

    Over what, the next fifty years?
     
  10. :rofl:Well now, if we can talk about spending cuts over 10 to 12 years - why shouldn't we talk about unfunded liabilities over the long term - the unfunded amount now is less than the unfunded amount later (if we don't address the issue currently).

    http://www.washingtontimes.com/news/2011/apr/28/coats-the-way-out-of-debt-and-to-tax-reform/
    "The federal government spent $1.7 trillion last year more than it brought in tax revenue. It had to borrow that amount. This increased the outstanding public debt to $14.2 trillion - or 96 percent of GDP. This includes that part owned by the Social Security trust fund and the Federal Reserve, but does not include the unfunded liabilities of Medicare, Medicaid and Social Security, which will add an additional $46 trillion to the deficit in present-value terms over the next 75 years.

    This is not sustainable. Without spending cuts and/or tax increases, this amount will not only continue growing without end but will increase as a share of GDP until bondholders no longer trust the governments ability to pay the interest required. At that point, they will dump U.S. Treasuries."


    --------------

    Another view:
    http://forwhatisright.com/2011/02/23/the-crucial-importance-of-entitlement-reform/
    "It is important to understand that the Federal government reports only a tiny portion of actual debt when evaluating its fiscal position. As it is, the government reports a measure known as Total Public Debt Outstanding, which consists of debt held by non-U.S. government actors (including other countries) and intra-governmental holdings (debt incurred by borrowing from the trust funds that provide for entitlements). This number stands at $14.13 trillion as of February 16, 2011.[2] Currently, the numbers break down to $9.5 trillion owed to individuals and foreign nations, and $4.6 trillion that the government owes itself to fund entitlements. Assuming Obamacare assumptions are valid, the debt is predicted to balloon to $18 trillion by 2021.[3]

    As noted, this is a small part of what is actually needed to meet Federal obligations. The various entitlement programs are all expected to exhaust their trust funds as obligations increase. In fact, total present value of these unfunded future social insurance obligations is approximately $46 trillion.[4] That is, this is the total amount that would have to be set aside now to pay for these programs in the future. This is in addition to the taxes currently used to fill the programs’ trust funds, such as the FICA tax and Medicare tax withheld from paychecks. This means that these programs would have to be funded with new taxes and borrowing. When added to the current debt explicitly held by the government, total liabilities approach $62 trillion.[5] Put in perspective, this is over $200,000 in debt owed by every American."
     
    Last edited: Aug 15, 2011
  11. apeiron

    apeiron 2,432
    Gold Member

    Talking about unfunded liabilities, what is the figure for US military commitments?

    I don't mean just the military pension schemes that are about 5.4% of Federal debt but the future cost of various invasions and adventures to be expected over the next decade or so?
     
  12. My personal crystal ball isn't working - can't even figure out how much President Obama is spending in Africa currently or the future cost of US "contractors" after the big troop pull-out?
     
  13. I hope that this is not too far off topic.

    Can anyone direct me to the actual text of the debt limit bill that was passed and signed earlier this month? I can't figure out exactly what they have done from news sources so I guess I am going to have to read it.

    Thanks, Skippy

    PS I tried http://en.wikipedia.org/wiki/Budget_Control_Act_of_2011 which had links to the bill that returned messages "document not available".

    PPS Nevermind. http://www.gpo.gov/fdsys/pkg/BILLS-112s365eah/pdf/BILLS-112s365eah.pdf
     
    Last edited: Aug 16, 2011
  14. Char. Limit

    Char. Limit 1,986
    Gold Member

    This thread makes me lol. It's strawman vs. ad hominem in an epic war to the death!
     
  15. mheslep

    mheslep 3,572
    Gold Member

    Maybe you don't but Paul does.
    Reject the Welfare/Warfare State
     
  16. I think it might be best if a veteran of one of these conflicts responds to you.
     
  17. russ_watters

    Staff: Mentor

    And for all the bickering, no one has yet answered the OP's question!
     
  18. Better hope not. Canada and the rest of the world economy will go down with the ship.
     
  19. mheslep

    mheslep 3,572
    Gold Member

    Good point.

    That is, the federal government pays itself $216B in interest and $197B of 'net' interest outside the government, i.e. to the US public, Chinese, etc.
    http://www.cbo.gov/doc.cfm?index=11999

    On the current spending plan the net interest will increase to ~$800B by 2020.
     
  20. I'll assume current interest rates are projected?
     
  21. mheslep

    mheslep 3,572
    Gold Member

    No,a slow return to historical.
     
    Last edited: Aug 17, 2011
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