We are Mortgaging Our Future, Again
The Federal Debt Clock eclipsed $22 trillion dollars during the middle of last night. This column , and its sister site ""Reclaiming Common Sense" has written a number of articles on the Federal Debt.
This is a serious topic. Former President Obama was quoted as saying that doubling our federal debt from 5 trillion to 10 trillion dollars was unpatriotic and irresponsible. That same President saw the federal debt explode from $10 trillion to $19.875 trillion by the time he left office, even after TARP debt that was issued under former President George W Bush were repaid under his watch.
Last Year we saw we saw record levels of individual revenue collected . The October Treasury Report indicated that we had $1.683T in individual Income Taxes collected for the fiscal year ending September 30, 2018. The prior fiscal year we saw $1.587 trillion collected. Corporate revenue dropped from $297B to $205 billion. Total Revenue increased from $3.314T to $3.328T or an increase of 14 billion dollars.
"Off-Budget" revenue, which is used to offset "On-Budget" deficits, rose from $850 billion to $855 billion. If it is used to offset on-budget deficits then it isn't "off-budget." Unfortunately spending rose from $3.980 trillion to $4.171T. Interest on the debt rose from $456.9 billion to $521.5 billion or over $64 billion dollars.
What happened during December? Revenue dropped from $326 billion last January to 312.5 billion this year - a drop of 13.5 billion dollars. This is okay, spending dropped from 348.9 billion to 325.8 billion or 23.2 billion dollars. The treasury report can be found here.
Revenue is up year to date, so is spending. Revenue has increased from 769 billion to 771 billion dollars. Unfortunately, spending, or outlays, has risen from 0.994 trillion to 1.090 trillion dollars. This is deficit spending.
Where are we spending more this year than last year? Health and Human Services costs are up $32 billion, Social Security is up $27 billion, Interest on the debt is up $18 billion and Defense Spending is up $13 billion. The media will focus on the defense spending.
It would cost us over 12.5 billion dollars a month and 360 payments to pay off this debt. The ratio of 1 trillion to 100,000 is a factor of 10,000. If the monthly mortgage payment on a 220,000 mortgage, at 5% with 20% down, then the monthly payment would roughly be $1250 (Subtracting 80 dollars a month insurance and 200 a month from "real estate taxes.) Remember that we are adding over $500 billion a year to the debt in interest payments. a monthly nut of $1250 for a $275,000 home equals $12.5 billion for a $27.5 Trillion dollar "debt." We do not owe $27.5 trillion - only $22.0 trillion. The point is that we have to run a surplus of at least $150 billion dollars a year AND use that to pay down the debt to balance the debt to zero by 2049. We will "repay" 22 trillion in debt plus spend another $20.5 trillion in interest. That is $42.5 trillion over 30 years
This is not a great report. We took in more revenue during FY 2017-18 than FY 2016-17. We are taking in more revenue during FY 2018-19 than we did last year. Spending is up. We have to start paying this debt down.
It's the economy.
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