Silver Lining on a Very Black Cloud

Nobody cares who told the most or biggest whoppers in Wednesday’s first presidential debate. Nobody cares which candidate won or lost. Most ordinary folks have already forgotten it.

Collectively, voters only care about jobs and the economy. Everything else candidates say is just noise.

Here is something real affecting job creation. Excessive Federal spending has reached crisis proportions. It’s benefits for stimulating economic growth are being stunted by a massive debt that will hang like an economic millstone around our descendent’s necks for generations to come.

The Federal budget year ended on September 30th. Budget year 2013 has just begun.

Now is a proper time to take stock of federal spending in fiscal year 2012 and contemplate its meaning.

Forget About Budget Deficits

Ignore the deficit. It doesn’t make much sense to talk about a budget deficit, anyway, when there wasn’t an official budget in the first place.

But more important than that, when cornered, Washington politicians limit talk to the budget deficit. They do so because the deficit doesn’t include interest payments made to service the national debt.

That is akin to you and I planning our yearly budget without including mortgage interest costs.

National debt interest payments have evolved into a BIG yearly expenditure.

2012 Interest Paid on the National Debt

Last fiscal year, the federal government spent $343,095,816,634.42 in interest costs to service the national debt. That is about 15% of total revenues taken in during 2012.

That is more than the amount spent on all these government departments… COMBINED!

  1. Department of Homeland Security
  2. Social Security Administration
  3. Department of Energy
  4. Department of Transportation
  5. Department of Justice
  6. Department of Agriculture
  7. Department of Labor
  8. Department of Commerce
  9. Department of the Treasury
  10. Department of the Interior
  11. Army Corps of Engineers
  12. Department of Housing and Urban Development (HUD)
  13. National Aeronautics and Space Administration (NASA)
  14. Environmental Protection Agency (EPA)
  15. National Science Foundation
  16. Small Business Administration

Think of how much more government could do to stimulate economic growth without that cost!

Here is the shocking news… this is the silver lining on the black cloud that is federal debt!!

Contrary to common belief, we are not borrowing more money from China to finance government anymore. China sold off -$165 billion of its $1.3 trillion holdings of U.S. debt last year.

Smart countries with stronger economies – like China, Germany and Sweden – can see the writing on the wall. They are getting rid of their U.S. debt holdings.

Countries in serious economic turmoil, on the other hand, are buying up U.S. debt like its candy. They are desperate. Buying U.S. debt hedges against their own depressed economies.Those countries include Japan, France, Spain, Italy and Ireland.

Japan bought +$232 billion in U.S. debt last year, increasing its holdings to $1.1 trillion. Japan is on the doorstep of replacing China as the United States’ largest creditor nation.


$343 billion spent on national debt interest last year was a bargain. It is only 2.1% interest paid on the entire $16 trillion debt. That is about the rate of inflation.

In essence, the federal government held our enormous debt and it didn’t cost taxpayers hardly anything. Mortgage holders would kill for an interest rate that low.

However, in fiscal year 2011, interest paid on the national debt was a whopping $454 billion. 2012’s interest cost was the lowest paid by the government since 2004! Back then the national debt was ‘only’ $7.4 trillion, less than half it is now.

The last three fiscal years, under Obama, the USA has averaged $1.1 trillion/year in debt growth. The CBO forecasts trillion dollar debt growth for as far as the eye can see.

Exceptionally low interest costs, due to a depressed economy, has masked a ticking, slow-motion thermonuclear debt bomb.

Ironically, as the economy sparks back to life, modest inflation will return. It will set off the debt bomb.

Soon enough, if ignored, interest paid on the national debt will exceed the total cost of ALL federal departments combined.


About azleader

Learning to see life more clearly... one image at a time!

Posted on Oct 7, 2012, in 2012 Elections, culture, Debt, economics, Life, National Debt, news, Opinion, Politics, Thoughts. Bookmark the permalink. 9 Comments.

  1. The debt is an extremely horrible issue, it’s the most important one to me because I’ll be inheriting it.

    You should check out my blog, I think you will appreciate my conservative view points.

    • The national debt is only one of a plethora of economic woes facing this country.

      Younger Americans have my sympathies. You will live in an entirely different, poorer nation than we have today. It is unavoidable.

      Politicians should be trying to mitigate the effects but, instead, they just bury their heads in the sand which will worsen the future.

  2. It will be a struggle with it. I am confident that Romney will balance the budget, and begin to chip away at this debt.

    Some of the things some politicians do and say is just ridiculous. #NancyPelosi

    • *It will be a struggle to deal with it

    • Ahhhh… the unbounded optimism of youthful exuberance!

      I think Romney’s best chance to get back into the race comes Thursday at the VP debate. The VP debate will be, by far, the most entertaining of the four.

      It is perhaps the most factually accurate and articulate politician in Washington DC vs. a walking gaff machine.

      That is not to say Ol’ Jumpin’ Joe can’t win… he can… he has 40 years experience in Congress… he had to have picked up something from that… but he will have to hit a home run with a Lloyd Bentsen type moment without to many blunders.

      Biden can only pull that off by accident or from savvy debate prep coaching that he listens to; he is incapable of doing that on purpose on his own.

      But if Biden tries to push off misinformation, like “I was there when the President save the economy” or “I have news, Yes… we want to raise taxes $8 trillion dollars” then Ryan will smash him like an ant and Romney will suddenly have a chance of winning again.

      Two bad debates in a row would put Obama on the defensive.

      • Ryan is a very skilled and knowledgeable politician, and I have no doubt that he won’t pull off a win, if not a landslide.

        Biden is a joke, and I cannot take him seriously. I think he is going to start off on some false liberal rhetoric, and Ryan will point out where Biden is wrong, and then say why we need Mitt.

        Romney moved the undecideds on the 3rd. He brought many Democrats into the middle, and Ryan is going to secure the undecideds and move the Democrats.

        It’s looking good. It’s going to be 2-0.

      • Ya got ‘ol Jumpin’ Joe pegged pretty good. I agree that he will probably gaff or try campaign misinformation on Ryan and Ryan will pounce.

        Paul Ryan understands the economic numbers better than Romney and doesn’t make mistakes. He has the ability to clearly articulate his positions and why he has them. And he can smell misinformation from a country mile away.

        Biden might score some points on foreign affairs, but I kinda even doubt that.

        If Biden thinks he can trip up Ryan and tries, it will be a fatal mistake.

  3. I agree conventional wisdom should have Ryan beating Biden. But, Ryan has made some strange statements around Wisconsin in his time.

    Biden is also smarter than the dolt he seems. In 2008 instead of going in for the kill against Palin, he just let her self destruct, quite deftly. He understood the deep down political dynamics, so a surprise is a possibility.

    My Delaware friends tell me that Biden every time when put on the ropes, has come surprisingly back because he has a way to connect to the “lunch bucket” crowd. Being a bit campy can also be a skill, showing folks he is no elitist like Obama nor richee like Romney. Biden also has that compelling personal story that folks go for time and time again. Biden can play I am a middle class average guy who gets in trouble with his mouth, and get away with it. Governor Thompson in Wisconsin would tell whoppers, but folks looked at it as a strength as if he were the average Joe.

    Personally, if I were Obama I would have dumped Biden to set the party up better for 2016, but Obama is only for himself, a narcissist, who cannot see matters that deeply. It was his arrogance that lead Romney to defeat him. I think the Dems are on the run given today’s Pew Trust poll showing Romney now ahead.

    Even though I do not believe the government civil servants cooked the job numbers, the oddity of it all which can statistically happen made people think again about Obama. The interesting thing is the betting markets still have Obama with about a 65% probability of winning because he is still strong in Ohio, and the Republicans need Ohio to win. Romney’s stand against the GM bailout is hurting him big time according to family relatives. Bailing out the auto companies with TARP money may be what gets Obama across the finish line.

    • Great points supported from folks who are where it matters. You are likely right.

      I kinda think of Ryan as sort of a blue collar type. Am I wrong?

      Biden’s open and honest, unfiltered self – despite bringing out all his flaws – is his best quality. He is a blue-collar politician and I like that.

      I think the VP one will be the funnest, liveliest debate of all. Biden has the best chance for memorable zingers, but also has the best chance for gigantic gaffs.

      Ryan won’t be nearly as interesting as Biden, but he will be razor sharp on the issues… sans foreign policy… and he can’t be intimidated. I think that will win the day for Ryan.

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