The $15 Trillion Dollar Barrier Smashed!
November 15th, 2011 – a day that will live in infamy – the U.S. national debt obliterated the $15 trillion dollar barrier.
Like shattering the sound barrier for the first time, it leaped $56 billion from the day before to an astounding $15,033,607,255,920 and 32 cents.
That infamous economic accomplishment was reported today by the U.S. Treasury Department.
The national media will overlook the significance of this milestone and its relationship to the task at hand for the super committee charged with cutting excessive government debt.
That connection needs to be shouted from the rooftops. It is critically important to underscore the need for the super committee to solve our debt problem with a serious solution NOW.
Our future well being hangs in the balance.
Instead, the media will report many hours coverage of the Occupy Movement’s behavior during their “Day of Action” and the Penn State sex scandal. That gets higher ratings.
Most disturbing of all is that $49 billion of the $56 billion went into “Debt Held by the Public”. Only $7 billion went to “Intragovernment Holdings”.
Intragovernmental Debt vs. Public Debt
There are two types of federal debt.
“Intragovernmental Holdings” is debt owed by the federal government to itself. It is sorta like robbing Peter to pay Paul.
For example, for decades excess Social Security payroll tax collections were borrowed and spent on other government programs. Those excess collections were intended to pay Social Security benefits for the aging baby boomer population as they reach retirement.
By borrowing and spending the extra money on other programs the money got added to the national debt as “Intragovernment Holdings”.
Social Security is, by far, the single largest source for intragovernmental borrowing.
“Debt Held by the Public” is money the government borrows from outside investors, like China, that must be paid back with interest.
This debt, far more than intragovernment holdings, affects the credit rating of a country. We can default intragovernment debt without a credit penalty but we can’t default public debt.
Heck, we could announce today that we are defaulting the entire $2.6 trillion in the Social Security Trust Fund and it would change absolutely nothing, except political rhetoric.
Federal Government Debt is Going Viral
The national debt has been growing $4.2 billion a day over the last 3 years.
In and of itself that is bad enough. But as of 2010 Social Security revenues dropped below expenses for the first time ever and spending will remain above revenues for at least 75 years. We can’t borrow from Security Security to pay for other government programs anymore.
That huge change is evidenced by the fact that on the 15th the public debt grew 8 times more than intragovernmental borrowing did. That is what catapulted us above the $15 trillion barrier.
We’ve run out of places inside government to borrow from. Debt held by the public is now growing at an unprecedented rate.
The credit rating of the United States has already been downgraded once for the first time in its history.
Left unchecked the next United States government downgrade will happen again soon.
While writing this I’ve been listening on C-SPAN to the U.S. House of Representatives debating a balanced budget amendment.
In speech after speech Congressmen repeat the same old talking points over and over and over again, blaming the other party for everything. We heard them all before. There is nothing new. The same things are repeated. Only the person saying them changes.
They talk and talk, but nobody listens. They talk and talk, but nobody agrees or even tries to agree.
This country is in deep fiscal do-do.