Wednesday, January 04, 2012

Debt now exceeds GDP - and the spending continues

"With devotion's visage and pious action we do sugar o'er the devil himself." ~ William Shakespeare

I thought this quote particularly appropriate to this Drudge Report headline:

US Closes 2011 With Record $15.22 Trillion In Debt, Officially At 100.3% Debt/GDP

From the article:

"...according to the US Treasury, America has closed the books on 2011 with debt at an all time record $15,222,940,045,451.09. And, as was observed here first in all of the press, US debt to GDP is now officially over 100%, or 100.3% to be specific, a fact which the US government decided to delay exposing until the very end of the calendar year. We wonder, rhetorically, just how prominent of a talking point this historic event will be in any upcoming GOP primary debates."

Interestingly, according to this chart, our government debt is now about the same as Italy's, which is running about 115%. Remember, too, that Pres. Barack Obama has asked for another debt ceiling increase of $1.2 trillion - though he did decide today to delay that request until both houses of Congress are back in session.

In case you're not really sure what this means, you can think of the problem in very simple terms: how much the government owes (debt) versus how much the country is producing (Gross Domestic Product). GDP is the market value of all goods and services we produce in our country within a single year.

So if the government taxed everything we make (EVERYTHING) in a single year at a 100% rate, it wouldn't be able to raise enough money to pay the debt. Of course, doing that would basically be the government confiscating everything, leaving nothing for us.

Now I realize that such a tax rate is not going to happen - at least, not overnight. And I also realize that much of what the government owes isn't yet due to be paid. But just like in a household budget, you know that, eventually, the bills come due.

Rick Santelli does a good comparison in this short video clip where he simplifies the national budget and debt problem using a family budget analogy:

As Santelli states, "We're not trying hard enough."

In fact, I'd say that our government officials aren't trying at all. They bicker over nickles and dimes all while voting in favor of stupid spending that is completely unnecessary and certainly not authorized by the Constitution. A quick look at Sen. Tom Coburn's Wastebook 2011 proves that, as these examples show:

• $75,000 to promote awareness about the role Michigan plays in producing Christmas trees & poinsettias.

• $15.3 million for one of the infamous Bridges to Nowhere in Alaska.

• $113,227 for video game preservation center in New York.

• $550,000 for a documentary about how rock music contributed to the collapse of the Soviet Union.

• $48,700 for 2nd annual Hawaii Chocolate Festival, to promote Hawaii’s chocolate industry.

• $350,000 to support an International Art Exhibition in Venice, Italy.

• $10 million for a remake of “Sesame Street” for Pakistan.

• $35 million allocated for political party conventions in 2012.

• $765,828 to subsidize “pancakes for yuppies” in the nation’s capital.

• $764,825 to study how college students use mobile devices for social networking.

Really??? We're actually spending money for such nonsense???

Wake up, America! This is insanity and certainly qualifies for 'stuck-on-stupid' designation. Unless we elect people who aren't afraid of the truth and are willing to actually STOP spending, we're going to end up worse that Greece.

1 comment:

skeeter1107 said...

As I said on one of your other posts, things can go on forever until they come to a sudden stop. That will be the case with our spending.

Is it unrealistic to believe that we can continuously finance deficits over a trillion dollars every year for another Obama term and perhaps past? No. Think about it. Whom would it be that would loan us the money. The Chinese? Certainly not the Europeans. There simply isn't enough money to be loaned to us.

Ahh, we will just print the money. There's the answer. No. That will eventually catch up in the form of inflation.

So Maggie, this spending will stop one way or another. We can either do it ourselves and do the right thing, or we will be forced to.

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