Presidential Administrations and their percentage of the National Debt - Part II

The last time the National Debt went down was in 1960, the last year of the Eisenhower administration. My previous post yesterday on the matter was incorrect when I stated 1959. In 1960, the debt went down by $580,956,475.95. Since then, it has never gone down - only up. Part of the problem is the fact that the interest payments are off-ledger.

While it is conceivable to have a "budget surplus" like we did in the 1990s, this is negated from the mandatory interest payments that are not considered part of the budget. At the lowest rate of increase, 1999, the debt still went up $17,907,308,271.43. The next year, 2000 and President Clinton's last year in office, the debt rose by $133,285,202,313.20 - which was hardly leaving office under the economic conditions the American left claim.

How do the Presidential Administrations compare?

President George Washington through President Gerald Ford, Presidents 1-38, 1791-1976
Debt Increase: $707,142,528,417.78

President James Earl Carter, 39th President, 1977-1980
Debt Increase: $276,666,000,000.00

President Ronald Wilson Reagan, 40th President, 1981-1988
Debt Increase: $1,672,127,712,041.16

President George Herbert Walker Bush, 41st President, 1989-1992
Debt Increase: $1,462,282,943,480.50

President William Jefferson Blythe Clinton, 42nd Presidnet, 1993-2000
Debt Increase: $1,609,557,554,365.20

President George Walker Bush, 43rd President, 2001-2008
Debt Increase: $4,899,100,310,608.44

President Barack Hussein Obama, 44th President, 2009-present
Debt Increase: $3,031,935,408,476.43 (as of 10/28/2010 report on TreasuryDirect.gov)

The current size of the Debt, on Oct. 28, 2010 as we head into the mid-term elections is:
$13,658,812,457,389.51

The percentage of debt by Administration is as follows:
President George W. Bush (35.87%)
President Barack H. Obama (22.20%)
President Ronald W. Reagan (12.24%)
President William J.B. Clinton (11.78%)
President George H.W. Bush (10.71%)
Presidents Washington - Ford (5.18%)
President James E. Carter (2.02%)

 In 1835, the total debt was $33,733.05 and the debt was considered to be paid off, as the sum was inconsequential even for that time period. In 1836, it grew to $37,513.05 - only a $3,780.00 increase. That was before President Andrew Jackson issued his famous "Specie Circular" which mandated all payments to the Federal Land Office to be in gold and silver payments only, barred the highly speculative "greenbacks" as a form of payment.  This caused a panic. The debt grew by $299,444.78 in 1837 to $336,957.83. A year later, it grew by $2,971,169.24 to $3,308,127.07. It has never been at that level since.

In the modern era (Carter to present), Presidents Reagan and Clinton each served two terms and the National Debt increased by comparable amounts. In those 16 years of Reagan and Clinton, the increase totaled $3,281,685,266,406.36. In less than two years, the Obama increase is just $249,749,857,930.00 shy of that figure.

 President George W. Bush had an almost $5 trillion increase during his eight years, yet President Obama's increase is already 62% of the total of that amount in only 616 days. That's 2,306 fewer days than President George W. Bush.

At current spending levels, Obama's Debt will match George W. Bush's Debt in 51 more days - approximately Saturday December 18, 2010 (in 2255 fewer days). If the $4,991,064,525.20 daily average continues, the total increase in the 1457 days of the Obama administration will come to $7,271,981,013,216.40.

Presidential Administrations and their percentage of the National Debt - Part I

Last night I was asked by a nationally-syndicated radio talkshow host to calculate the percentage of the National Debt growth by each administration. Since the National Debt first crossed the $1 trillion mark under President Ronald Reagan, but the economy suffered greatly under his predecessor, President Jimmy Carter, I will be making those calculations later today from January 20, 1977 when Carter took office to the present, and post them when complete.

For the record, the National Debt, despite erroneous claims by Democrat activists, has not gone down since 1959 under President Dwight Eisenhower. Even at the height of the economic boom in the 1990s, the Debt still grew $17 Billion at it's slowest rate of growth. Under the Kennedy, Johnson, Nixon, Ford, Carter, Reagan, George H.W. Bush, Clinton, George W. Bush and Barack Obama administrations, the debt grew. There was no single year since 1959 when the net size of the Debt actually went DOWN, though periods of governmental spending restraint coupled with a fast growing economy slowed the rate of growth.

I'll post those figures later today.

Newest National Debt Statistics Now Posted - September 2010 (End FY 2010)

Here are the newest National Debt Statistics for the period ending September 30, 2010 - per www.treasurydirect.gov - the official website of the U.S. Treasury Department's Bureau of the Public Debt. September 30, 2010 is the end of Fiscal Year 2010 for the United States Government.

National Debt (Sept. 30, 2010)
Publicly Held
$9,022,808,423,453.08

Intragovernmental Holdings
$4,538,814,607,438.71

Total Debt:
$13,561,623,030,891.79

Amount of Debt on Sept. 30, 2009:
$11,909,829,003,511.75

Increase in Fiscal Year 2010:
$1,651,794,027,380.04

Debt on Inauguration Day 2009:
$10,626,877,048,913.08

Debt increase in 588 days of President Obama's administration:
$2,934,745,981,978.71
($4,991,064,525.20/day)

Total Debt increase in President George W. Bush's administration:
$4,899,100,310,608.44
($1,676,625,705.20/day - 2922 days)

Difference between Bush/Obama administrations:
$1,964,354,328,629.73
(Bush larger than Obama)

Interest payments
September 2010
$18,186,175,433.65

Fiscal Year 2010
$413,954,825,362.17

Gifts to reduce the Public Debt
August 2010
$81,444.76

Fiscal Year 2010 (one month to report)
$2,824,256.11

Just the Facts: Deficit Commission member Jan Schakowsky

Posted at www.bankruptingamerica.org

REP. JAN SCHAKOWSKY (D-IL)
Member

Rep. Jan Schakowsky was elected in 1998 to represent Illinois’ 9th congressional district. Prior to that, she served in the Illinois State Assembly. Rep. Schakowsky serves on the House Select Intelligence Committee, and on the House Energy and Commerce Committee where she worked to pass the recent health care reform bill. Rep. Schakowsky also serves as the Democrats’ chief deputy whip.

In an April column in The Huffington Post, Rep. Schakowsky outlined her ideas and hopes for the fiscal commission. She said, “Much will be said about what we can and cannot afford. These questions must be considered in the broadest possible context. For example, I believe that we can’t afford to skimp on educating our children … Bottom line, while we are committed to freeing our children and grandchildren from crippling debt, we must be just as committed to assuring that they are not ignorant, sick and unemployed.”

Rep. Schakowsky says the current budget deficit is not only a result of tax and spending policy, but also the recession, which she blames on Wall Street. Schakowsky has outlined cuts she would advocate, include eliminating tax loopholes, improving the government contracting system, and cutting outdated weapons systems.

In June, Rep. Schakowsky said it was unlikely the commission would come to an agreement on how to tackle the deficit because conservatives are unwilling to consider tax increases.

Mullen: National Debt is a Security Threat

By Michael Cheek

ExecutiveGov.com

August 27, 2010

The national debt is the single biggest threat to national security, according to Adm. Mike Mullen, chairman of the Joint Chiefs of Staff.

Tax payers will be paying around $600 billion in interest on the national debt by 2012, the chairman told students and local leaders in Detroit.

“That’s one year’s worth of defense budget,” he said, adding that the Pentagon needs to cut back on spending.

“We’re going to have to do that if it’s going to survive at all,” Mullen said, “and do it in a way that is predictable.”

He also called on the defense industry to hire veterans and become more robust in the future.

“I need the defense industry, in particular, to be robust,” he said. “My procurement budget is over $100 billion, [and] I need to be able to leverage that as much as possible with those [companies] who reach out [to veterans].”

Mullen highlighted the unity of purpose between the government and industry as well, in working to solve national security issues.

“I have found that universally, [private-sector workers] care every bit as much about our country, are every bit as patriotic and wanting to make a difference … as those who wear the uniform and are in harm’s way,” he said.

National debt soars to highest level since WWII

The following article appeared in the June 30, 2010 issue of USA Today.

The federal debt will represent 62% of the nation's economy by the end of this year, the highest percentage since just after World War II, according to a long-term budget outlook released today by the non-partisan Congressional Budget Office.


Republicans, who have been talking a lot about the debt in recent months, pounced on the report. "The driver of this debt is spending," said New Hampshire Sen. Judd Gregg, the top Republican on the Senate Budget Committee. "Our existing debt will be worsened by the president's new health care entitlement programs...as well as an explosion in existing health care and retirement entitlement spending as the Baby Boomers retire."


At the end of 2008, the debt equaled about 40% of the nation's annual economic output, according to the CBO.


The report comes as the National Commission on Fiscal Responsibility and Reform meets today. The group, created by President Obama, is expected to issue recommendations in December to curb the debt - a point Democrats raised today.


The CBO report "reinforces the importance of the work being done right now by the president's fiscal commisson," said Sen. Kent Conrad, D-N.D., who chairs the Senate Budget Committee. "We simply cannot allow the federal debt to explode as envisioned under CBO's projections. The economic security of the country and the quality of life for our children and grandchildren are at stake."


(Posted by John Fritze)

Is a Mortgage Refinance Right for You?

By Dave Ramsey

www.daveramsey.com

There’s a lot of hype about refinancing mortgages. You’ll hear, “Rates have never been lower!” or, “Refinance now to lock in your savings!” There are even special products like “streamlined” refinancing.

Like anything else, you need to determine if a refinance is right for you based on the specifics of your mortgage. Here are some guidelines to get you started:

The Break-Even Analysis

A refinance makes sense when you can lower your interest rate enough to pay for the closing costs before you plan to sell your home.

Here’s a simple example. If you have a $100,000 mortgage and you can lower your interest rate by 1% in a refinance, you’ll save $1,000 a year. If your closing costs are $3,000, it will take three years to break even on your refinance.

In general, a refinance is worth it if you can lower your rate by at least 2%. At that point, you’ll see real savings on your monthly payment.

Points, ARMs and Seconds

When you’re gathering quotes for a refinance, ask for a par quote or zero quote. That means the closing cost estimates will not include points or origination fees. Don’t pay these fees, which are simply pre-paid interest. The savings, if any, don’t justify the up-front expense.

If you have an Adjustable Rate Mortgage (ARM), Dave will almost always recommend you refinance into a fixed-rate mortgage. Even if you have to write a check to pay for the closing costs, it’s worth it to avoid the risk that your payments could go up when the rate adjusts.

A lot of homeowners with second mortgages want to roll it into their first mortgage with a refinance. Not so fast! If the balance on your second mortgage is less than half of your annual income, pay it off in Baby Step 2. If not, go ahead and refinance it with the first mortgage and pay it off in Baby Step 6.

Going from 30 to 15

When you buy a home, if you’re not paying cash, you should get no more than a 15-year mortgage. However, if you already have a 30-year mortgage and a good rate, you don’t have to go to the expense of refinancing just to get the shorter term. Just calculate what your monthly payment would be on a 15-year term and be disciplined about paying that amount.

What to do if you face vehicle repossession

By Andrew Housser Reposted from mysuncoast.com Over the past few years, the rate of auto repossessions has increased as the auto loan market has undergone its own subprime lending crisis, similar to the one that crippled the U.S. mortgage industry. As with mortgages, auto lenders frequently provided large loans to people with lower credit scores. In turn, American consumers, who became accustomed to borrowing rather than saving, purchased as much car as possible for a low monthly payment. That practice meant that loan repayment terms often extended to 60 months and beyond. For example, among borrowers with good credit, 41 percent of auto loans were longer than 60 months in 2007, up from 12 percent in 2002. Among subprime borrowers (people who paid higher interest rates because of poor credit), 67 percent of loans were for more than 60 months in 2007. Many vehicle loan contracts specify that if a borrower stops paying the loan, the lender can repossess, or take back, the vehicle. Lenders typically repossess cars once owners are behind on payments by about 90 days. After a vehicle is repossessed, the car will be sold at auction, typically within 41 days. The repossession has serious costs for the vehicle owner: The owner must pay the difference between the amount left on the loan and the profit brought in from the sale, minus costs for cleaning, repossession, transport and the sale. This amount is known as the deficiency. Some owners are stuck paying for years after they lose the vehicle. A repossession severely damages the credit score. One of the largest credit reporting agencies, Experian, reports that an auto repossession will remain on a credit report for seven years from the original delinquency date, or the date you missed your first payment. Even one late auto loan payment can knock a credit score down by as much as 100 points. As a result, buying a replacement vehicle costs more, with a higher interest rate on a vehicle loan. What to do if you face repossession 1. Cut costs where you can In many places, a vehicle is essential to take people to work or school. If this is the case for you, take a hard look at your budget to see if you can cut out expenses, which may range from eating out to entertainment to cigarettes, to free up more money to stay current with car payments. 2. Remove personal items from the vehicle If you are late on payments, do not keep any personal items in the vehicle in case it is repossessed. 3. Know your rights You can learn about local laws from the office of your state's attorneys general. For example, in every state, you have the right to try to redeem your vehicle, even after it has been repossessed, by paying all late payments and related costs. Service members on active military duty who bought the car before they went on active duty cannot have a vehicle repossessed without a court order. 4. Communicate with the lender If you are late on a payment, or worried you cannot pay, contact the lender and explain the situation. Get all promises from the lender in writing. At worst, you can voluntarily surrender the vehicle. This "voluntary repossession" still damages credit, but it will save you the repossession costs of about $700. 5. Sell the vehicle If you owe less than the vehicle is worth, consider selling it to pay off the loan, then purchasing a vehicle that is within your means. 6. Get help If you need help in managing your other debts (such as credit card debt) to help reduce your overall debt burden -- and possibly help prevent vehicle repossession -- seek out a reputable debt settlement company. An experienced advisor can help you manage your financial problems and make debt repayment affordable. Having a vehicle repossessed is second only to a mortgage foreclosure in the damage it can do to your credit and your lifestyle. Before you get into financial trouble with a car, try to remedy the situation -- but if you do face repossession, know how to minimize the damage.

Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC and its wholly owned subsidiary, Freedom Debt Relief, a national consumer debt resolution firm that has served more than 40,000 clients and manages more than $1 billion in consumer debt. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.

What was the National Debt in January 2009?

Courtesy of the U.S. Treasury Department (www.treasurydirect.gov).

The National Debt on January 1, 2009 was:
$10,669,804,864,612.13

When President Barack Obama was inaugurated on January 20, 2009, the National Debt was:
$10,626,877,048,913.08

In 1959, the interest paid on the National Debt was $7,592,769,000 (The total debt was $290,797,771,717.63 that year)

In Fiscal Year 2009, the interest paid on the National debt was:
$383,071,060,815.42 (greater than the total debt in 1959)

Newest National Debt Statistics Now Posted - August 2010

Here are the newest National Debt Statistics for August 25, 2010 - courtesy of the U.S. Treasury Department at www.treasurydirect.gov

Amount held by the Public:
$8,834,183,612,860.18

Intragovernmental Holdings:
$4,527,170,829,387.77

Total Debt:
$13,361,354,442,247.95

The National Debt 365 days ago (Aug. 25, 2009) was:
$11,730,400,622,450.31

Increase in the last 365 days:
$1,630,953,819,797.64

Size of the debt on Inauguration Day - Jan. 20, 2009:
$10,626,877,048,913.08

Increase in Debt since President Obama was Inaugurated:
$2,734,477,393,334.87
[$4,682,324,303.65 per day increase in the 584 days of the Obama Administration]

Interest paid July 2010:
$20,386,125,152.13

Interest paid - Fiscal Year 2010 (2 months left to report):
$375,247,863,222.70

Gifts to reduce the public debt:
June 2010: $197,532.43
FY2010: $2,703,107.90

Economy Caught in Depression, Not Recession: Rosenberg

By: Jeff Cox
CNBC.com Staff Writer

Positive gross domestic product readings and other mildly hopeful signs are masking an ugly truth: The US economy is in a 1930s-style Depression, Gluskin Sheff economist David Rosenberg said Tuesday.

Writing in his daily briefing to investors, Rosenberg said the Great Depression also had its high points, with a series of positive GDP reports and sharp stock market gains.

But then as now, those signs of recovery were unsustainable and only provided a false sense of stability, said Rosenberg.

Rosenberg calls current economic conditions "a depression, and not just some garden-variety recession," and notes that any good news both during the initial 1929-33 recession and the one that began in 2008 triggered "euphoric response."

"Such is human nature and nobody can be blamed for trying to be optimistic; however, in the money management business, we have a fiduciary responsibility to be as realistic as possible about the outlook for the economy and the market at all times," he said.

The 1929-33 recession saw six quarterly bounces in GDP with an average gain of 8 percent, sending the stock market to a 50 percent rally in early 1930 as investors thought the worst had passed.

"False premise," Rosenberg said. "And guess what? We may well be reliving history here. If you're keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3%."

Rosenberg's warning comes as a slew of major analysts—Goldman Sachs andJPMorgan among them—have slashed GDP projections for 2010 to the 1.5 to 2 percent range.

Chicago Federal Reserve President Charles Evans said in a speech Tuesday that the risk of a double-dip recession has escalated. He said government programs to help distressed homeowners have been ineffective and aren't helping the pivotal housing sector recover.

The dour outlooks come on the same day that the National Association of Realtors said home sales reached a 15-year low in June, dousing hopes that the industry had reached a bottoming point.

Rosenberg points out that the "overall economic malaise" has come despite aggressive efforts by the Federal Reserve to stimulate the economy through rate cuts. The central bank itself has scaled back its economic projections, has held steady on its balance sheet, and could be announcing another round of quantitative easing measures at its Jackson Hole summit this week.

"How's that for a reality check," Rosenberg said. "It's not too late, by the way, to shift course if you have stayed long this market."

The Next Generation's Debt Burden

"Addressing the challenge of our national debt requires bold leadership and tough choices from members of both parties.  Our children and grandchildren are counting on us to chart an effective course toward responsible stewardship of the public purse."                                                 -Speaker Nancy Pelosi, March 24, 2010

As the Wall Street Journal recently reported, out-of-control spending by the Democrat controlled Congress has added an astounding $4.4 trillion in deficits to the Congressional Budget Office’s (CBO) ten year budget projection.  And despite claims of fiscal responsibility from the Democrats, nothing changes.  The harmful effects of the Democrats’ runaway spending on growth and prosperity are vast.  Crowding out of private investment, growing interest payments, and dependence on foreign competitors are all consequences of the federal government’s profligate spending and debt.  Additionally, the debt explosion created to fuel Washington’s recklessness has a personal impact on every American: it is ultimately borne by every man, woman and child in the nation.  According to CBO and Census Bureau long-term estimates, the amount of debt placed on the backs of children born today is about to explode.  If nothing is done, our generation will have the sad legacy of being the first to lower the standard of living of the next generation. 

A TIMELINE OF THE PERSONAL PUBLIC DEBT BURDEN FOR A CHILD BORN IN 2010

 
2010:  By the end of 2010, CBO predicts that the total U.S. debt held by the public (as opposed to the gross national debt which includes inter-governmental holdings) will be $9.05 trillion.  That means that children born in 2010 will start life with a personal share of the public debt equaling $29,178.
 

2020:  When children born today celebrate their tenth birthday, their share of the nation’s public debt will have already increased by 70 percent to reach $49,694 per child. 

2023: By the time they are 13 years old, their share of public debt will have doubled to $58,971. This is also the first year that per capita Gross Domestic Product (GDP) will be surpassed by the per capita share of the public debt for every American.

2028: When those children born in 2010 reach their 18th birthdays, they will have inherited an individual debt responsibility of $80,650.

2032: As children born in 2010 begin to graduate from college and enter the work force, their public debt responsibility will have tripled.  As they begin their adult lives, the next generation will already be saddled with $103,826 of the government’s debt. And, unfortunately, as interest payments and entitlement spending increase more rapidly, their share of the nation’s debt will begin to grow at an accelerated rate.

2040: At the age of 30, their public debt responsibility will be approximately $166,500—an increase of 471 percent from the time that they were born. 

2050: If government spending is not immediately restrained, our nation’s public debt is projected to increase from $9.1 trillion in 2010 to $122.8 trillion by 2050.  As a result, when children born today reach 40 years old, their share of the U.S. public debt will be $279,738—an increase of 859 percent above what it is today.  For a family of four, the total household debt share would be approximately $1.119 million.

THE OUTLOOK FOR THE NEXT GENERATION: DEBT EXPLODES AND PROSPERITY STAGNATES

• According to estimates from CBO and the Census Bureau, per capita GDP in the U.S. is approximately $47,000 in 2010, which is $17,883 more than the current level of public debt per person ($29,178).  Reckless Washington spending will soon send the individual public debt burden skyrocketing past per capita GDP as spending and debt replace private economic growth.
• In 2023, the amount of U.S. public debt shared by every man, woman, and child in the nation will exceed their share of our nation’s GDP as debt rapidly out paces growth.
• While the individual public debt burden is projected to increase by $250,560 over the next 40 years, the GDP per American is only estimated to grow by $34,258.
• Over the next 40 years, estimates predict that spending will cause the debt held by the public to increase by 859 percent for every U.S. citizen.  By comparison, per capita GDP is projected to grow by only 73 percent over the same period.
• Unless drastic actions are taken to reduce spending now and in the future, debt will dwarf growth and future generations will be less prosperous than those that preceded them.

We, the People, deserve better! - Part II

The problem is so much larger than Republican vs Democrat, and China is only part of the problem.

However, as the following document from the Treasury Department will show, China may be the largest holder of treasuries, but they are not the only ones. http://www.ustreas.gov/tic/mfh.txt Is it cause for concern? Absolutely.

A point that many Republicans and Democrats disagree on is tax cuts. Tax cuts spurred the economy and created growth. In fact, the Dow Jones hit it's all time high of over 14,000 in 2006. Unemployment was at all time lows.

Jack Kemp, Bob Doles' 1996 vice presidential nominee, once told me that if the government taxes at 0% the government will receive no revenue (obviously). If the government taxes at 100%, the government will also receive no revenue. The reason - nobody wants to work for free. The question isn't whether someone is willing to pay taxes. There are a few who, wrongfully, insist that the government shouldn't tax anyone - yada yada, but they are a very small minority. The question should be what is the tax rate that garnishes the most benefit for the people, businesses and the government. What is the maximum rate that will allow the economy to grow and employ more people, while at the same time maximizing revenues to the government and simultaneously allow people to keep a good sized portion of their revenue? He said this because when the tax rate is too low, the government doesn't receive enough revenue to provide for the common defense and the welfare (not the welfare programs, mind you) of the people. If the tax rate is too high, government revenues go down because people start moving their capital overseas or placing them in tax shelters. He estimated (in 1997) that the maximum tax rate should be around 18%.

However, there is still another factor to be considered - the monetary policy of the Federal Reserve. I'm not one of those who wants to End the Fed, and don't believe there is this vast conspiracy of the Federal Reserve. Yet we have since learned that when the Fed doesn't do it's job properly, it severely impacts the economy by creating inflationary bubbles - aka Alan Greenspan keeping the interest rates artificially low. This was a contributing factor into the recent housing crash, which bled into other sectors of the economy.

Ultimately, if we are to continue to exist as a nation, we need to get our spending under control. We need to insist that the budget be balanced. Prior to the Obama administration, the largest yearly deficit was $465 billion dollars. Out of a then $3 trillion budget, I'm sure we could have found ways to cut $465 billion in a given year through eliminating waste, fraud and abuse; streamlining government by eliminating duplication of services among Federal agencies, ended antiquated programs and departments - and then, if there is still a need to trim, start cutting programs and services.

If we were to eliminate our National Debt by paying it off, we would then be bargaining with China out of a position of strength instead of economic weakness. Ask any Congressman what he/she would do with an extra $500 billion each year and I'm sure you would find a wishlist a mile long. If we were to eliminate the National Debt, our economy would grow and we could then take that extra $500B and invest it into more social programs, better military equipment, save social security, expand the S-CHIPS program and still have money left over.

Until We, the People, see this, nothing will change regardless of what party is in power. 

We, the People, deserve better!

As more Americans discuss the economic State of the Union, I've heard a lot more people offer comments like "G.W.B. put our Country in a huge amount of debt to one nation we should never be in debt to...China." 

After studying the National Debt quite in-depthly for the past six years, it's time to take a look at not only the accuracy of statements like this, but what "We, the People" as a whole fail to understand about the National Debt.

The people who put our country in a huge amount of debt is Congress. The National Debt was established in 1791 as a way of paying off all of our war debt from the Revolutionary War (side note: Since some states had already paid off their share of the debt, and others hadn't, there was a lot of bargaining going back and forth between Alexander Hamilton and the representatives of Pennsylvania and Virginia, primarily. In exchange for these hold out states financially uniting with their geographical brethren, the U.S. Capitol was moved from New York to Philadelphia temporarily until a new national capitol was built from land previously owned by Virginia and Maryland on the banks of the Potomac river. Washington D.C. would never been established where it is except for the war debt agreement, but I digress.)

The national debt rose and fell from 1791 to 1959. It was nearly paid off in two consecutive years - 1835 and 1836 - before the Specie Circular was released by Andrew Jackson, demanding all land grant payments to be made in gold or silver only - no greenbacks. In fact, in 1830 Jackson vetoed the "Mayville Road" project in Kentucky because it would have required federal funds going into a road - something that was unheard of at that time. Our country was on the course to eliminate the debt and our leadership wanted to accomplish that goal. (For more on the "Mayville Road" click here)

   

The last year that the debt was paid down was 1959, when President Dwight Eisenhower was still President. It has risen every year since then - at astronomical proportions. Even during the Clinton years the debt still grew, despite the rhetoric out of ill-informed Democrats who insist that the debt went down during the Clinton era. It grew by a "paltry" (and I use that term lightly) $17 billion in 1999 - it's smallest growth since 1959.

The reason behind this is compound interest and the refunding of the debt. Neither party takes this problem seriously.

We don't understand the fact that when you print money, every time a bond is issued on the market, the value of the dollar goes down in relation to other currencies. We don't understand that when bills, bonds and notes mature, new bills, bonds and notes are taken out to pay the principle and interest on the old ones. We don't understand the fact that in the month of June 2010 alone (per www.treasurydirect.gov), we taxpayers paid over $106 billion in interest payments. In the entire fiscal year to-date (Oct. 1, 2009 - July 31, 2010) we paid over $375 billion in interest payments with two months left to go. The entire debt in 1969 was $368 billion.

If we, the people, would actually get serious about shedding debt and making government live within its means, then the "deficits" would be eliminated almost immediately. One could argue about earmarks, percentage of debt to GDP, money accounted for in the "out" years, lack of double entry bookkeeping and GAAP standards - but the truth is - WE, the PEOPLE, don't understand the debt. (I've studied it in-depthly for the last six years)

Since President Obama was inaugurated, the national debt has increased over $3 TRILLION. This is a combination of excess government spending, not enough income plus the interest payments that are off-budget. This is the same amount of increase in 18 months that it increased in the entire 8 years of GWB.

The problem, again, is not Republican or Democrat. It's an AMERICAN problem. Neither party wants to admit their fault. Both parties want to blame the other guy. Personally, I blame Congress because they are the ones that are constitutionally mandated to have the power of the purse. All revenue bills originate in the U.S. House of Representatives. And, my friend, they have all let us down.

We, the People of the United States of America (including those living abroad) deserve better!

- Jeffrey S. Williams

  Founder, National Debtbusters

Japan sets targets to rein in national debt

The following appeared on the BBC News website on June 27, 2010.


Japan has set targets to rein in its national debt, the biggest in the industrialised world.


New Prime Minister Naoto Kan has made fiscal reform a top priority, saying that without it the country could face the risk of a Greece-style crisis.


However, the government has given no specific ideas of how it will reach its long-term goal of balancing its budget.


Japan also raised its growth forecast for the year to March to 2.6%, compared with an earlier 1.4% estimate.


That would be the first time the country's GDP had expanded by more than 2% since 2006.

Growth in the year to March 2012 is predicted to be 2%.

"Thanks to the government's stimulus packages, strengthening in business profitability and improvements in employment and household income are spreading to an increase in private demand," the Cabinet Office said.

"If this cycle continues, Japan's economy is expected to go on a track towards an autonomous recovery."

However, it warned that deflation was still a problem - with prices not expected to to stop falling until at least next year.

Confidence

Japan has been borrowing money for two decades, trying to bring its economy out of stagnation.

But although its debt is now estimated at about twice the size of its GDP, some economists believe the fiscal situation is not as bad as it appears.

This is largely because Japan has a trade surplus, and it is still able to borrow money at some of the lowest interest rates in the world.

But the government has acknowledged that if Japan has to borrow more from abroad, the higher interest rates demanded could tip the country into the abyss.

"We must prevent a situation like Greece, where Japan loses the confidence of the bond markets, pushing interest rates higher and leading its finances into a state of collapse," it said in its debt-tackling plan.

The plan states it will bring the budget back into surplus by the end of the decade.

To achieve it, the government has put a cap on the amount of money it spends and borrows.

Raising consumption tax is also under consideration - but probably not for several years.

The BBC's Roland Buerk in Tokyo said that it was Japan's ageing population that most threatened the country's long term future.

"Much of the government's debt is held by the Japanese themselves, but as workers become pensioners they may start spending their nest eggs," he said.

Important Message About Your Federal Income Taxes

Grover Norquist

President, Americans for Tax Reform

April 15, 2010

Dear Friend,

 

Over the next several hours, millions of Americans will pack into the local post office or flood the IRS website to file last minute tax returns. Perhaps you are one of them. 

 

No other day throughout the year is a starker reminder of the financial abuses you and I suffer everyday at the hands of a bloated federal government …

 

…And it’s about to get a whole lot worse!

 

From business-crippling “cap-and-trade” to the recent government health care takeover –President Obama and his liberal friends in Congress are always working overtime to discover new ways to tax us. 

 

Despite his campaign promise to not raise taxes on families making less than $250,000, the Obama Administration’s newest scheme is a national “value-added tax” (VAT).  

 

A “popular” method of tax collection in Europe, the VAT tax is a national sales tax imposed on goods ranging from food to medicine. 

 

Certainly families making less than $250,000 use these goods!

 

My friend, I have a plan to stop President Obama’s tax-and-spend schemes. But I need your help. 

 

First, we must do what Americans for Tax Reform has always done: identify and publicize common-sense citizen legislators on the federal and state level that will stand up for taxpayers, small government and the Constitution.

 

The way we do that is through our much-vaunted Taxpayer Protection Pledge. 

Candidates who sign the Pledge promise not to raise our taxes by even a single dime.

 

And we hold those who break the Pledge accountable. 

 

The second plank of ATR’s efforts is the “Flat Tax.” Unlike the current “progressive” system that punishes success and rewards failure, the Flat Tax is a low rate consumption tax…

 

…That means that after a large personal exemption a dollar earned by a businessman in New York or a janitor in California is taxed at the same low rate!

 

Economists across the political spectrum agree this system greatly decreases the complexity of the current tax-code, reduces the individual tax burden (especially on savings), and gives every American the same simple tax rules with one low tax rate.

 

Ending the “progressive” tax and replacing liberal Washington with fiscally responsible citizen-legislators won’t be easy or done overnight. 

 

That’s why I need to ask a very important favor of you today. 

 

My friend, won’t you aid our efforts with your immediate, generous gift of $500, $250, $100, $50, $35 or whatever amount you can sendto Americans for Tax Reform today?

 

Together, we can succeed. 

 

Sincerely,

 

 

Grover Norquist

President

 

P.S.     In the age of Obama, Americans for Tax Reform’s efforts to change the tax code and support taxpayer-friendly citizen legislators couldn’t be more vital. Please follow this link to give the most generous gift you can to ATR right away. Thanks in advance

Debt Dangers - When Warren Buffett looks safer than Uncle Sam

Chicago Tribune
March 29, 2010

For many decades, U.S. government securities have been the epitome of safe, dull investments. If you wanted to be absolutely positive you'd get your money back and then some, Treasury bills were the way to go. Right now, lots of Americans who put their money into big mortgages or stocks a decade ago wish they had gone the more mundane route.

But it's mundane no more. With federal budget deficits running wild, investors are growing uneasy at the idea of lending money to an institution that seems unable to stop spending beyond its means. Last month, something extraordinary happened: Two-year bonds offered by Berkshire Hathaway Inc. commanded lower yields than those offered by the U.S. government. As Bloomberg.com put it, "The bond market is saying that it's safer to lend to Warren Buffett than Barack Obama."

That may sound common-sensical — Buffett has experience at meeting payrolls, while Obama does not — but it's actually a surprising perception. Berkshire Hathaway, after all, conceivably could make so many mistakes that it runs out of money and closes down. But the U.S. government is not about to run out of money, even if it keeps overspending.

Why not? First, it can appropriate more of its citizens' earnings through the tax system. Second, and more important, it can print money to pay its bills. Warren Buffett doesn't have those options.

So it's hard to see why investors would be leery. Well, actually, it's not so hard: The federal government is digging itself deeper into debt every month and intends to keep doing so indefinitely.

The nonpartisan Congressional Budget Office offers a prognosis: "Under the president's budget, debt held by the public would grow from $7.5 trillion (53 percent of GDP) at the end of 2009 to $20.3 trillion (90 percent of GDP) at the end of 2020." Interest payments would quadruple.

The long-term problem here is not that the government eventually would default on its obligations. The danger is that it would create money to make those debts payable, a course that would lead to much higher inflation. Then, yields on even impeccable corporate bonds would climb with those of T-bills.

The economy would also suffer as businesses and households scrambled to cope with the disruptive effects of soaring prices. It would suffer again if and when the government decided to curb inflation by driving up interest rates — a step that virtually guarantees a sharp downturn.

Frightened investors may be wrong to think they're less likely to get their money back from the government than from Buffett's Berkshire.

But they're not wrong to be frightened.

Boehner says federal debt will equal GDP in two years

"Our national debt ... is on track to exceed the size of our entire economy ... in just two more years."

John Boehner on Wednesday, March 24th, 2010 in an op-ed in the Des Moines Register

St. Petersburg Times PoliFact
March 26, 2010


Ever since Barack Obama became president and began advocating such big-dollar federal programs as an economic stimulus and health care reform, Republicans have gained increasing political traction with warnings to voters about the growing national debt.

On March 24, 2010, House Minority Leader John Boehner, R-Ohio, published an op-ed in the Des Moines Register that was timed to coincide with a March 25 visit by Obama to Iowa City, Iowa. Obama visited Iowa City to tout the health care bill two days after signing it into law.

Boehner's column -- titled, "Why Republicans will fight to repeal health-care takeover" -- was a broadside against the newly signed bill, featuring a wide range of statistics. In it, he asserted that the health care bill "is a recipe for further fiscal disaster at a time when our national debt ($12.7 trillion today) is on track to exceed the size of our entire economy (about $15 trillion) in just two more years."

That struck us as a huge amount, so we decided to take a closer look.

First, we'll offer a reminder that the debt is different from a deficit. A deficit refers to the amount by which expenses exceed revenues in a single year. The debt -- which is what Boehner was referring to -- refers to the cumulative total of past deficits, minus any intervening surpluses.

To sort out whether Boehner's numbers are right, we turned to the extensive historical tables in the president's fiscal year 2011 budget proposal.

According to these figures, which come from the Office of Management and Budget, the gross federal debt by the end of fiscal year 2010 is projected to be almost $13.8 trillion. That's actually a bit more than Boehner had suggested.

Two years later -- by the end of fiscal year 2012 -- the debt is projected to rise to $16.3 trillion, also higher than Boehner had indicated.

But Boehner is correct that, measured by the share of gross domestic product, gross federal debt will reach a significant milestone in two years. By 2012, gross federal debt is projected to be 100.8 percent of gross domestic product, up from 99.0 percent for fiscal year 2011.

These numbers, we'll add, have been growing for decades, roughly tripling since Jimmy Carter left the presidency. Under Ronald Reagan, debt as a percentage of GDP grew from 33.4 percent to 51.9 percent, and under George H.W. Bush, it grew from 51.9 percent to 64.1 percent. It declined under Bill Clinton, from 64.1 percent to 57.3 percent, before rising from 57.3 percent to 69.2 percent under George W. Bush. It's expected to soar during Obama's first four years from 69.2 percent to 100.8 percent.

It's worth noting that there is an alternative measure of debt known as "public debt," which does not include money in the Social Security trust fund or other amounts that the government owes itself. Measured this way, the debt-to-GDP comparisons are much smaller. By the end of 2010, public debt is projected to be 60.3 percent of GDP, and by the end of 2012, it's projected to be 66.6 percent.

Some economists prefer to use public debt rather than gross federal debt, but one measure "isn’t more 'right' than the other – they are just looking at different things," said Marc Goldwein, policy director for the Committee for a Responsible Federal Budget, a middle-of-the-road budget-hawk group. "Boehner may be cherry-picking, but I don’t think he’s misrepresenting in any way."

It's also worth noting that these numbers are only estimates. They could change over the course of the next two years, depending on economic conditions and policy choices. Still, we consider Boehner's statistics valid. While he underestimates the size of the projected debt in 2010 and 2012, his assertion that "our national debt ... is on track to exceed the size of our entire economy ... in just two more years" is on target, according to the president's own Office of Management and Budget. So we rate his statement True.