U.S. National Debt Tops $17 Trillion!!!
Perhaps it’s divine providence that on the very same date the federal government was scheduled to default its debt, 10/17/2013, it instead set a single day debt growth record of $328 billion and the U.S. national debt leapfrogged over $17 trillion.
The previous record holder was August 2nd, 2011. That day jumped $238 billion. It was the day after the last debt deal was struck. Congress promised then to fix the long-term debt problem. Yet here we are!
Massive, out-of-control federal spending is the whole reason behind all these debt debates in the first place. Don’t ever forget that. They won’t stop until it’s fixed!
As always, the politicians once again argued back and forth, did nothing and then kicked the can down the road a few more months so this can be repeated all over again. What will it take to make politicians face reality?
It’s not here yet, but the day of reckoning is approaching. The United States is going broke under a mountain of unsustainable debt growth!
National Debt vs. Debt Ceiling Debates
The U.S. national debt is $17.077 trillion.
So far in 2013, debt has grown by $643B at $2.2 billion/day.
After the 2011 debt ceiling debate the ND was $14.6 trillion.
In 2011, by 10/17 debt grew by $902B at $3.1 billion/day.
Since the 2011 debt debacle two years ago the national debt has grown by $2.5 trillion.
The good news is that the debt growth rate has slowed to 2/3rds the pace it was back then. Don’t believe anyone that tells you it is less than that, especially the President!!
Where Does Money Come From and Where Does It Go??
Forbes came out with a new analysis of the national debt. They base their assessment on historical CBO data from 1973 through 2012. The data is in a short 11-page document published last August. It’s fascinating.
For example, since 2000 federal yearly revenues increased by about 50% from $2.02 trillion to $2.45 trillion in 2012. Expenditures, however, doubled from $1.79 trillion to $3.54 trillion.
In short, Forbes says entitlements (mandatory spending) are to blame for debt growth.
In trillions of dollars, here is a summary of federal revenue (taxes) and spending since 2000:
U.S. Federal Government Revenues/Outlays from 2000 to 2012
|Total||Individual Income Tax
|Total||Social Security||Medicare||Medicaid||Income Security/Other|
Since 2000, the federal government spent 125% more than it took in. The national debt tripled.
Individual Americans through income and payroll taxes fund the lion’s share of revenues collected by the federal government – $23 billion of the $28 billion total!
Entitlement spending (mandatory) is one and a half times more than everything else. Defense spending is less than the cost of Social Security alone.
The prescription drug program isn’t listed as a separate item, but was the fastest growing entitlement cost of all before Obamacare. Its cost must be exploding after Obamacare closed the “donut hole”.
Prescriptions are included under “Income Security/Other” which includes such things as unemployment benefits and other assistance spending like, for example, food stamps for low-income Americans.
The largest debt growth area to come will be Medicaid. It’ll tripled or more under Obamacare next year when 30+ million more Americans become qualified for Medicaid subsidies.
Medicaid will cost more than Social Security, but it doesn’t have a funding source! It’s cost is supposed to be paid by 7 million or so uninsured young people signing up for health care in the federal exchanges.
Note that discretionary spending is nearly evenly split between defense and non-defense. It’s the only area affected by the hated “sequestration” reductions that came out of the 2011 debt debate.
Especially take note that the “sequester” is not spending cuts, but rather a slight reduction of 5%-10% in the future growth rate of discretionary spending.
Mandatory entitlements remain untouched.
The torpedo that’ll sink the battleship USS Economy is innocently shown in the above table in “Outlays” listed as “ND Interest”. It’s the interest paid on the national debt (ND).
ND interest of $2.6 trillion paid since 2000 is just 7.5% of total federal spending.
But make no mistake… “ND Interest” should scare every American more than their worse Halloween nightmare!
You see, two overlapping events since 2000 have converged to create the greatest single threat to the U.S. national economy that it will ever face.
First… since 2000 the U.S. national debt tripled for these reasons:
- Unchecked federal spending
- The Great Recession
- Bush-Era tax cuts
- Iraq/Afghanistan wars
The ND exploded from $5.7 trillion in 2000 to $17.077 trillion today.
Second… the downturn of the global economy and specifically targeted Fed monetary policy have created historic low interest rates paid on federal borrowing.
Combined, these two things have kept interest paid on the national debt unrealistically low, often under 2%.
What goes down, must come up. Federal borrowing rates will eventually return to just under 5%, its historical average, as the U.S. and global economies recover.
Current federal spending puts a drunken sailor’s night out on the town to shame! It blows $2.2 billion every night after spending its entire paycheck!
When you mix that in with unbridled entitlement and Obamacare spending that’ll grow exponentially with time, then you’ve just mixed a cocktail called ‘economic holocaust’.
When interest rates to service the national debt return to normal then servicing the national debt will rise to 20%, 25%, 30% and more. Debt growth itself then snowballs its own growth.
By then more and more revenues go towards servicing the debt. Less and less goes to pay for all government services. That includes the ever faster pace of entitlement spending with Obamacare strapped onto it like a can of nitroglycerine!
If you think sequestration is tough, you ain’t seen nuthin’ yet!!!