VIEWPOINT: The Debt Everyone Is Freaking Out About Does Not Exist

[TruthOut10]

Between the new-and-improved Simpson-Bowles plan, Joe Scarborough’s feud with Paul Krugman, the relentless drumbeat of the entire Republican Party, and the media blitzkrieg launched by the billionaire-driven “Fix the Debt” campaign, one might think no serious and responsible American can ignore the unassailable truth: America faces a debt crisis, which we must act on immediately and decisively.

Well, not quite. The actual truth is that the debt everyone’s freaking out about does not exist.

Some of the debt certainly exists, like the roughly $11.6 trillion owed to foreign and private creditors. But that isn’t the debt anyone’s worried about. If we stopped adding to it tomorrow, the debt as it stands would pose essentially zero threat to the country’s fiscal health, as the ongoing growth of the economy would send our debt-to-GDP ratio dropping like a rock.

So the debt that’s got everyone worried is the part we haven’t yet incurred. And that debt, by definition, does not exist. It’s not a certainty, it’s merely a projection by the Congressional Budget Office. And trying to model how the federal budget, not to mention the entire American economy, will behave years or even decades in the future is a devilishly treacherous business.

For instance: one of Rep. Paul Ryan’s (R-WI) favorite talking points in 2011 was that the computer simulations CBO uses to model the economy crash when they attempt to account for the debt load in 2037. Imagine trying to model the 2011 economy in 1985. Things you’d never see coming include (among other things) the Internet, fracking, massive advances in computing power, the renewable energy boom, three wars, a massive recession, and Harry Potter. And predictions can be hard even over shorter time frames. In 1995, CBO predicted the deficit in 2000 would be well over $200 billion. We ran a surplus of $236 billion.

In fact, Ryan plastered dramatic graphs of debt going out 75 years onto everything in sight while stumping for his last budget. Forget predicting 2011 in 1985. That’s like predicting 2011 in 1940.

VIEWPOINT: The Debt Everyone Is Freaking Out About Does Not Exist | ThinkProgress

 

[EdwardBaiamonte]

If we stopped adding to it tomorrow, the debt as it stands would pose essentially zero threat to the country’s fiscal health, as the ongoing growth of the economy would send our debt-to-GDP ratio dropping like a rock.

too stupid but perfectly liberal:

debt isn't dropping like a rock its shooting up like a rocket and there is no end in sight

 

[waltky]

The true national debt could be triple the conventional estimate...

The true national debt
February 24 - How big is the national debt?

You’d think this would be an easy question. Surely we know how much the government owes. Unfortunately, it’s not that simple. The true national debt could be triple the conventional estimate, anywhere from $11 trillion to $31 trillion by my reckoning. The differences mostly reflect explicit and implicit “off-budget” federal loan guarantees. In another economic downturn, these could result in large losses that would be brought “on budget” and worsen already huge deficits. That’s the danger.

My purpose is not to scare or sensationalize. It’s simply to illuminate the problem. Broadly conceived, the national debt covers all debts for which the federal government assumes final responsibility. For politicians, the appeal of “off-budget” programs is that they allow the pleasure of spending without the pain of taxing. But they also create massive exposure for government. Let’s see why. Below are five estimates of the national debt. I compare each with our national income (gross domestic product), which is the economic base to service debts. In fiscal 2012, GDP was $15.5 trillion. Some economists say a debt ratio exceeding 90 percent slows economic growth. The United States already exceeds this threshold on four of my five measures.

(1) Treasury debt held by the public: $11.3 trillion, 73 percent of GDP for fiscal 2012. This is the most common measure of the national debt. Reflecting past annual deficits, it represents what must be borrowed through sales of Treasury bills, notes and bonds. In 2007, the figures were only $5 trillion and 36 percent of GDP. Today’s levels — as a share of GDP — are the highest since World War II’s immediate aftermath.

(2) Gross federal debt: $16 trillion for 2012, 103 percent of GDP. This definition includes the “debt held by the public” (above) plus the Treasury securities issued to government trust funds, the largest being Social Security. Economists dislike this debt concept, because the trust-fund Treasury securities represent one part of the government owing another. It’s comparable to lending yourself money. Congress could cancel these debts, though it almost certainly won’t. The trust-account Treasury securities represent political commitments more than financial obligations.

MORE

See also:

Sequestration: Expecting a tax refund? It may be delayed
2/25/13 : Law-abiding taxpayers could shoulder the brunt of the blow when the sequester hits the Internal Revenue Service Friday — and tax cheats might find it easier to rig the system.

It’s a little-discussed risk of the automatic budget cuts — and yet, another smack to the already battered 2012 tax filing season. Absent a last-minute deal, the 8.2 percent funding cut facing the cash-strapped IRS will most likely translate to fewer specialists on hand to help taxpayers with their returns and to root out fraud — two tasks that watchdog groups say need more, not fewer, hands. And while the sequester isn’t great for any federal agency, it amounts to particularly bad timing for the IRS. That’s because, depending on union negotiations, furloughs could come just as millions of Americans are trying to pay their income taxes. “At a minimum, it’s probably going to take longer for people to get through on the phone; it’s going to take longer for refunds to be processed,” said Floyd Williams, a senior tax counsel at Public Strategies Washington.

Williams, who worked for the IRS for nearly two decades and directed the agency’s legislative affairs office for 16 years, says the sequester could also be a boon to those who purposely commit fraud or accidentally fill out returns incorrectly. “Anytime there is a drop-off in enforcement, you’re going to see a growth in the so-called tax gap, which is the difference between what the government collects and what is rightfully owed,” he told POLITICO. Right now, that gap is close to $400 billion. Of course, this tax season has already been topsy-turvy. Last-minute tweaks in the fiscal cliff forced the agency to postpone the tax season start date and push back some types of returns, and a court decision in mid-January left tax preparers scratching their heads over return preparation rules.

In that vein, the cuts — a self-inflicted punishment crafted by the White House and Congress in hopes of spurring deficit reduction as part of the 2011 debt ceiling deal — are just another loop-de-loop on the 2012 filing season roller coaster. Acting Treasury Secretary Neal Wolin and acting IRS Commissioner Steven Miller have warned lawmakers and staff that the sequester cuts could mean IRS employee furloughs. Wolin told lawmakers in a letter Feb. 7 that sequester cuts to the IRS would be “particularly painful … reducing the agency’s ability to provide quality service to taxpayers.” The IRS has already shaved its 91,000-person workforce by 10,000 employees via attrition over the past two years. Like many agencies, it’s been operating on a reduced budget.

The Taxpayer Advocate Service, an office that strives to make the IRS more user-friendly, told Congress earlier this year that the agency needs more resources to be helpful to Americans. Now, the IRS is on the verge of operating with even less. Sequester furloughs would equate to fewer operators or reduced hours at IRS taxpayer call centers, experts say. Consequently, millions of Americans phoning for help with their returns might not get calls back. Last year, more than 115 million people called the IRS for help; only 68 percent of those who wanted to speak with tax experts actually got through — and only after holding for an average of 17 minutes on phone lines. One million of the 10 million written inquiries mailed to the IRS last year also did not get a response. Sequester furloughs during tax season will exacerbate that backlog, officials and experts have warned.

Read more: http://www.politico.com/story/2013/...nd-it-may-be-delayed-88008.html#ixzz2LvwIHBsI

 

[Avorysuds]

Debt was only bad under Bush, and it Romney won it would have been bad under Romney.... Under Obama everything is great, and when it sucks it's a Republicans fault.


Great debate.

 

[martybegan]

Between the new-and-improved Simpson-Bowles plan, Joe Scarborough’s feud with Paul Krugman, the relentless drumbeat of the entire Republican Party, and the media blitzkrieg launched by the billionaire-driven “Fix the Debt” campaign, one might think no serious and responsible American can ignore the unassailable truth: America faces a debt crisis, which we must act on immediately and decisively.

Well, not quite. The actual truth is that the debt everyone’s freaking out about does not exist.

Some of the debt certainly exists, like the roughly $11.6 trillion owed to foreign and private creditors. But that isn’t the debt anyone’s worried about. If we stopped adding to it tomorrow, the debt as it stands would pose essentially zero threat to the country’s fiscal health, as the ongoing growth of the economy would send our debt-to-GDP ratio dropping like a rock.

So the debt that’s got everyone worried is the part we haven’t yet incurred. And that debt, by definition, does not exist. It’s not a certainty, it’s merely a projection by the Congressional Budget Office. And trying to model how the federal budget, not to mention the entire American economy, will behave years or even decades in the future is a devilishly treacherous business.

For instance: one of Rep. Paul Ryan’s (R-WI) favorite talking points in 2011 was that the computer simulations CBO uses to model the economy crash when they attempt to account for the debt load in 2037. Imagine trying to model the 2011 economy in 1985. Things you’d never see coming include (among other things) the Internet, fracking, massive advances in computing power, the renewable energy boom, three wars, a massive recession, and Harry Potter. And predictions can be hard even over shorter time frames. In 1995, CBO predicted the deficit in 2000 would be well over $200 billion. We ran a surplus of $236 billion.

In fact, Ryan plastered dramatic graphs of debt going out 75 years onto everything in sight while stumping for his last budget. Forget predicting 2011 in 1985. That’s like predicting 2011 in 1940.

VIEWPOINT: The Debt Everyone Is Freaking Out About Does Not Exist | ThinkProgress

Just keep ignoring the ticking social security time bomb.....

 

[Staidhup]

Between the new-and-improved Simpson-Bowles plan, Joe Scarborough’s feud with Paul Krugman, the relentless drumbeat of the entire Republican Party, and the media blitzkrieg launched by the billionaire-driven “Fix the Debt” campaign, one might think no serious and responsible American can ignore the unassailable truth: America faces a debt crisis, which we must act on immediately and decisively.

Well, not quite. The actual truth is that the debt everyone’s freaking out about does not exist.

Some of the debt certainly exists, like the roughly $11.6 trillion owed to foreign and private creditors. But that isn’t the debt anyone’s worried about. If we stopped adding to it tomorrow, the debt as it stands would pose essentially zero threat to the country’s fiscal health, as the ongoing growth of the economy would send our debt-to-GDP ratio dropping like a rock.

So the debt that’s got everyone worried is the part we haven’t yet incurred. And that debt, by definition, does not exist. It’s not a certainty, it’s merely a projection by the Congressional Budget Office. And trying to model how the federal budget, not to mention the entire American economy, will behave years or even decades in the future is a devilishly treacherous business. Yes projections are hypothetical in nature based on current trends that if not addressed will result in X, however, to ignore current trends is rather naive.

For instance: one of Rep. Paul Ryan’s (R-WI) favorite talking points in 2011 was that the computer simulations CBO uses to model the economy crash when they attempt to account for the debt load in 2037. Imagine trying to model the 2011 economy in 1985. Things you’d never see coming include (among other things) the Internet, fracking, massive advances in computing power, the renewable energy boom, three wars, a massive recession, and Harry Potter. And predictions can be hard even over shorter time frames. In 1995, CBO predicted the deficit in 2000 would be well over $200 billion. We ran a surplus of $236 billion.

In fact, Ryan plastered dramatic graphs of debt going out 75 years onto everything in sight while stumping for his last budget. Forget predicting 2011 in 1985. That’s like predicting 2011 in 1940.

VIEWPOINT: The Debt Everyone Is Freaking Out About Does Not Exist | ThinkProgress

And now we know the mindset that justifies indenturing future generations. I guess this nonexistent debt should only apply to those that pay taxes? Given no one has a crystal ball, but thank God most people can still add and subtract and understand the definition of a liability.

 

[editec]

This debt is a fake as the money we use.

It has the same integrity as the Congress our masters own.

 

[EdwardBaiamonte]

This debt is a fake as the money we use.

too stupid by 100% of course. Our money is anything but fake which is why we are able to use it to buy real stuff that makes us the richest people in human history.

See why we are positive a liberal will be slow, so very very slow!!

 

[Rshermr]

If we stopped adding to it tomorrow, the debt as it stands would pose essentially zero threat to the country’s fiscal health, as the ongoing growth of the economy would send our debt-to-GDP ratio dropping like a rock.

too stupid but perfectly liberal:

debt isn't dropping like a rock its shooting up like a rocket and there is no end in sight

Not according to the cbo, me poor ignorant con tool. They see the deficit reducing to about 20% of this years over the next couple. So, now I know this is difficult, but the national debt nearly always increases year to year, as the population of the country grows and as production increases and as inflation occurs. What matters is deficit, and national debt, as a percentage of GNP. Or as a percentage of population. dipshit.
What really does not matter is your con dogma. Dipshit.

 

[EdwardBaiamonte]

If we stopped adding to it tomorrow, the debt as it stands would pose essentially zero threat to the country’s fiscal health, as the ongoing growth of the economy would send our debt-to-GDP ratio dropping like a rock.

too stupid but perfectly liberal:

debt isn't dropping like a rock its shooting up like a rocket and there is no end in sight

Not according to the cbo, me poor ignorant con tool. They see the deficit reducing to about 20% of this years over the next couple. .

actually dear our subject was debt. Why not reread?? See why we say slow, so very very slow??


Long-Term Budget Outlook( from CBO website)
Jun 2012 - The explosive path of federal debt under the fiscal scenario that many budget analysts believe is more representative of fiscal policies that are now or have recently been in effect underscores the need for large policy changes to put the federal government on a sustainable course.

 

[Rshermr]

too stupid but perfectly liberal:

debt isn't dropping like a rock its shooting up like a rocket and there is no end in sight

Not according to the cbo, me poor ignorant con tool. They see the deficit reducing to about 20% of this years over the next couple. .

actually dear our subject was debt. Why not reread?? See why we say slow, so very very slow??


Long-Term Budget Outlook( from CBO website)
Jun 2012 - The explosive path of federal debt under the fiscal scenario that many budget analysts believe is more representative of fiscal policies that are now or have recently been in effect underscores the need for large policy changes to put the federal government on a sustainable course.

So, me boy, you apparently do not believe that a deficit creates the national debt. Is that beyond you, also. You do not work on the national debt, but on the deficit. Because the deficit determines the change in the national debt. OOPS. Sorry, I thought I was talking to a rational, thinking person.
I notice you never provide links. As in your post here.
Here is the cbo data:
"If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $845 billion, or 5.3 percent of gross domestic product (GDP), its smallest size since 2008. In CBO’s baseline projections, deficits continue to shrink over the next few years, falling to 2.4 percent of GDP by 2015."
CBO | The Budget and Economic Outlook: Fiscal Years 2013 to 2023
That would bring the deficit down to around $200B in the next three or four years. Not over a trillion per year, as you have said. Not this year, or any year during the next several.

 

[Wiseacre]

In FY 2012, the US Treasury paid almost $360 billion just in interest payments on the debt. For the first 4 months of FY 2013, it's north of $151 billion and at that rate we'll exceed $450 billion for the whole FY. And that's at historically low interest rates. The average historical interest is up around 6%, what do you think is going to happen when those rates eventually do go up? And of course the debt continues to climb as well, can you imagine interest payments exceeding a trillion dollars a year?

And the liberals don't even see the problem. Hard to believe.




Government - Interest Expense on the Debt Outstanding

 

[Ernie S.]

snip If we stopped adding to it tomorrow, the debt as it stands would pose essentially zero threat to the country’s fiscal health, as the ongoing growth of the economy would send our debt-to-GDP ratio dropping like a rock. snip

Except that we use base line budgeting where expenditures go up 6%/year. When was the last time GDP rose at > 6%?

 

[Rshermr]

In FY 2012, the US Treasury paid almost $360 billion just in interest payments on the debt. For the first 4 months of FY 2013, it's north of $151 billion and at that rate we'll exceed $450 billion for the whole FY. And that's at historically low interest rates. The average historical interest is up around 6%, what do you think is going to happen when those rates eventually do go up? And of course the debt continues to climb as well, can you imagine interest payments exceeding a trillion dollars a year?

And the liberals don't even see the problem. Hard to believe.




Government - Interest Expense on the Debt Outstanding

I will start to worry, as soon as you are able to tell me when the deficit ever came down, and the national debt ever started to get under control, with high unemployment.
I wil also start to worry if the cbo proves to be wrong and you prove to be correct about soaring debt being under control over the next few years.
I will also start to worry if you can ever show me when the UE ever went down when the gov decreased spending, and taxes.
I will really start to worry, when con tools like you are able to say anything except lower taxes and slow spending.
And I will really be impressed if con tools like you are able to understand that when the gov does what you suggest, it is like flushing the toilet on the economy.
And I will be even more impressed when con tools like you keep saying that liberals can not see the problem, when they can not even show a time where their profound economic theory of LOWER TAXES has NEVER, EVER, worked in an economy with high unemployment.
And I will be even more impressed, yet, when con tools like you can admit that raising taxes on the wealthy does not have a major impact on the economy.
And yet, I will be perhaps most impressed when con tools like you actually admit that stimulus works.

But none of that will happen. Because con tools are incapable of anything but propoganda.

 

[Wiseacre]

People like you never start to worry, cuz you can always call for another tax hike on the rich. At some point in the next 10 years, we'll be paying a trillion dollars a year just in interest payments on the debt. I just don't understand how anybody with an ounce of compassion for future generations can refuse to reform the entitlement programs so they can be sustainable, or cap spending increases to avoid a debt overhang that has to eventually be faced.

 

[Rshermr]

People like you never start to worry, cuz you can always call for another tax hike on the rich. At some point in the next 10 years, we'll be paying a trillion dollars a year just in interest payments on the debt. I just don't understand how anybody with an ounce of compassion for future generations can refuse to reform the entitlement programs so they can be sustainable, or cap spending increases to avoid a debt overhang that has to eventually be faced.

That would be because you are a con tool. You are completely unwilling to look at economic history, or to consider economic theory. Instead, you simply post conservative dogma. So, want to take a crack at telling me why the UE rate went to 10.8% when reagan did his big income tax reduction in 1981?? Or why the very large tax decrease by W did not create a great economy, and stop the great republican recession of 2008?

Or, why when we saw tax rates raised by Clinton, the UE rate dropped and we had a great economy. Or, why when the UE rate went to 10.8% under reagan, he raised taxes 11 times and borrowed and spent like a drunken sailor.

Of course not. You just keep spitting out that con dogma.

If you want to see what is happening with the national debt, try the CBO instead of your favorite bat shit crazy con web sites. You will see that their projections are completely different that the drivel that you are posting.

So, tell me, my poor conservative tool. If you are concerned about the deficit and the national debt, how in hell do you justify the capital gains rates that allow the very wealthy to pay less taxes than their gardeners??? If you are in favor of the top income earners not paying taxes, forget the national debt. Say hello to austerity. And say how happy you will be as the economy tubes.
http://www.bloomberg.com/news/2012-10-02/top-1-got-93-of-income-growth-as-rich-poor-gap-widened.html

 

[Wiseacre]

My data comes from the US Treasury, maybe you should direct you bullshit nonsense to them. Apparently you are unaware that the US economy did very well after the 2003 tax cuts, which BTW had absolutely nothing to do with the 2008 recession. Seriously, take a look at the employment and growth numbers under Clinton's first term when he raised taxes and compare them to the numbers in his 2nd term after taxes were cut. Almost every economist credits the Reagan tax cuts with restoring the economy to robust growth that last for the better part of 30 years.

 

[Oldstyle]

Well, if it isn't my old buddy...Tommy Flanagan! How you doing, Rshermr? Taking time off from your executive's job at BP to chime in with all of your expert knowlege of economics I see. I guess your private secretary is still on vacation because your spelling and grammar is as bad as usual?

Hold on while I reset my "bullshit alarm", Tommy...for some reason it's been going off ever since you rejoined the board. (eye-roll)

 

[Dont Taz Me Bro]

VIEWPOINT: The Debt Everyone Is Freaking Out About Does Not Exist

You are beyond stupid. Do you ever think for yourself or do you have to be spoon fed all of your thoughts from a biased Marxist Web site?