The Pardu

The Pardu
Watchful eyes and ears feed the brain, thus nourishing the brain cells.

Saturday, May 10, 2014

Connect The Dots USA: Debt Increase By President And The Holders of our Debt

 April 28 

Here we see all those deficits added together to form that long-term “credit card” debt. We were paying down the old WWII debt and only had less than $1 Trillion to go. Then Reagan came in with his wild tax cuts and kicked the doors off, leaving a $2.9 Trillion debt to Bush I, who quickly ran it up to $4.4 Trillion in just 4 years. Clinton was bringing it down as a % of GDP with higher taxes and more sane policies. 

Had “Dubya” done the fiscally responsible thing by consistently applying the then annual surplus toward the country’s credit card, we would have had the $5.7 Trillion debt paid off within a decade. Instead, Bush II ignored the debt, gave us more tax cuts, two wars, a Medicare drug benefit, a Wall Street bailout (all unfunded mind you), an economy on the brink, a $10.6 Trillion debt with the juice compounding, and a projected 2009 deficit of $1.2 Trillion there to greet Obama on day one. 

Republicans are fiscal conservatives? Hello! As I pointed out earlier, Republicans stopped actually caring about balanced budgets in the mid-1970s when they became obsessed with tax cuts. Brands change and American voters need to realize that the Republicans are no longer the party of fiscal responsibility just because they keep saying so.

Most folks who scream about the debt don’t realize that we owe most ($9.1 Trillion) of our $16.7 Trillion debt to OURSELVES — not to China. And as this chart shows, we owe about the same amount to Japan as China, so why does the propaganda machine always fixate on “borrowing from China.” Perhaps because they are the “Big Commie” enemy?

Also notice that Social Security — far from adding to the deficit or debt — is America’s largest creditor. Failure to grasp this distinction is like not understanding the difference between your home loan and the bank to whom you owe the money. 

For the last few decades, Social Security has generated a surplus every year (in anticipation of the Baby Boomers retiring), so the trustees invest the surplus in U.S. Treasuries that generate interest of about $100 Billion per year, which gets credited back to the Social Security Trust Fund. That makes more fiscal sense than sticking the surplus in the sock drawer (i.e. lock box) where it would earn nothing and get eaten up by inflation.

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