Thursday, February 4, 2010

National Debt on pace to triple in 10 years, now more than $100k per household, GOP claims

Courtesy of St. Petersburg Times PolitiFact -
The Truth-O-Meter Says:

"The amount of debt is on pace to double in five years and triple in 10. The federal debt is now over $100,000 per household."

Bob McDonnell on Wednesday, January 27th, 2010 in the Republican response to the State of the Union

National debt on pace to triple in 10 years, now more than $100k per household, GOP claims

Recently elected Virginia Gov. Bob McDonnell took up the flag for Republicans in response to President Barack Obama's State of the Union address on Jan. 27, 2010.

That meant talking about spending, deficits and debt.

"In the past year, more than 3 million people have lost their jobs, and yet the Democratic Congress continues deficit spending, adding to the bureaucracy, and increasing the national debt on our children and our grandchildren," McDonnell said in a speech from the floor of the Virginia House of Delegates. "The amount of debt is on pace to double in five years and triple in 10. The federal debt is now over $100,000 per household. This is simply unsustainable."

We wanted to check two things: Whether the debt is growing as fast as McDonnell says, and whether it now constitutes $100,000 per household.

First things first -- a quick but critical lesson on the federal debt. The debt clock you're use to seeing, the one that's ticking past $12.3 trillion these days, actually is the summation of two types of debt. The first part is the money the government borrowed to pay for things -- wars, roads, whatever. The second is debt held by government trust funds and government accounts that are internal transactions (government passing money from one fund to another). In these cases, there is no effect on the credit markets. (Read the Treasury Department's Q&A on debt here.)

The Congressional Budget Office, a nonpartisan arm of Congress, says the first form of debt is a more meaningful measure. It's the combination of both types of debt, however, that gets most noticed, surely because it's bigger but also because it's what the debt ceiling is based on.

McDonnell's claim that the debt is on pace to double in five years and triple in 10 is not a new talking point for Republicans. Judd Gregg (the Republican senator from New Hampshire who was almost Obama's commerce secretary) said the same thing about Obama's proposed 2010 budget last March.

To check Gregg, we relied on a Congressional Budget Office analysis from March 20, 2009. The CBO projected that the debt held by the public (the first part of the total debt) would rise from $5.8 trillion at the end of fiscal year 2008 -- which is Sept. 30, 2008 -- to $11.8 trillion by the end of fiscal year 2013; and to $17.3 trillion in 2019 under Obama's proposed FY 2010 budget. By that count, Gregg's claim of doubling the debt in five years, tripling it in 10 years, is correct.

But in Gregg's case we found it a little unfair to tie some of the debt to Obama and not President George W. Bush. We rated Gregg's claim Mostly True.

Now on to McDonnell.

Just hours ahead of McDonnell's response, the CBO released updated baseline debt projections that shrink the amount of debt predicted over the next 10 years. The CBO put the debt held by the public at the end of fiscal year 2008 at $5.8 trillion, $7.5 trillion at the end of fiscal year 2009, and estimates the debt will increase to $11.6 trillion by the end of fiscal year 2014 and to $14.3 trillion by the end of fiscal year 2019. Again, this is just the first part of the debt calculation.

That's a decrease from the projections the CBO put out in response to Obama's 2010 budget. In checking this claim, like when considering Gregg's claim, the truth depends on where you start counting the debt.

If you set your baseline as Sept. 30, 2008, the national debt is on pace to nearly triple by Sept. 30, 2019, as McDonnell suggests. If you recalculate for Sept. 30, 2009, the national debt doubles, not triples in 10 years.

Now, for argument's sake, we wanted to run the same calculation for the entire gross federal debt. (You will see why this matters in a second.) According to the CBO, the gross federal debt ended 2009 at $11.9 trillion, will hit $16.7 trillion by the end of 2014 and $20.6 trillion by the end of 2019. That's short of McDonnell's marks as well. The percentages don't improve much even if you roll back to 2008 -- we're talking again about doubling the debt after 10 years, not tripling.

So unlike comparing the debt held by the public, McDonnell's numbers are off whether you start counting Sept. 30, 2008, or Sept. 30, 2009. White House debt projections from August 2009 are a slightly worse, but not enough to make a change when considering McDonnell's claim.
As we try to digest all of that, let's turn to the second part of McDonnell's claim: "The federal debt is already over $100,000 per household."

The Census Bureau estimated in 2007 that there were nearly 116 million U.S. households. The current debt held by the public -- the money the government has borrowed -- is $7.8 trillion, according to the U.S. Department of the Treasury. The current gross debt is $12.3 trillion.

Presto, chango, carry the one, move the decimal point ... and you get two different debt per household figures.

The household share of the debt owed by the public is about $67,000. The household share of the gross federal debt is slightly more than $106,000.

McDonnell's press secretary, Stacey Johnson, did not return two phone calls or an e-mail asking for clarification on what debt figures the governor was using to make his calculations.

Why does it matter?

If he's using the gross debt figure -- the big one -- McDonnell is right about the per household number and wrong about the doubling and tripling.

If he's using the smaller debt held by the public number, he has a case to make about growth of the debt, but is wrong when it comes to the per household share.

Or he's mixing one form of debt to make one point, and another to make a second.

In his State of the Union response, McDonnell tried using both the macro and the micro to drive home a point that spending led by the Democrats in the White House and Congress is out of control. His claim that national debt is on pace to double in five years and triple in 10 isn't wildly off, but it ignores the fact that some of the responsibility falls on Bush's shoulders.

On his second claim, that the per household share of the national debt is more than $100,000, that's true if you measure the gross federal debt and false if you only count the money the government actually borrowed from somebody else. On the whole, we rate McDonnell's statement Half True.

Democrats Propose $1.9 Trillion Debt Limit Increase

by Shannon Bell

Last November Congress raised the debt limit for the United States bringing our National Debt to a whopping $12.3 Trillion dollars. Now, just two months later, democrats propose raising the debt limit $1.9 Trillion bringing the total debt incurred by the country to $14.3 trillion dollars. The move is being urged by the White House, of course, and will almost certainly pass.

Like every other piece of legislation making its way through congress right now, democrats are almost solely responsible, for good or ill. Democrats proposing $1.9 Trillion increase in the debt limit is ill timed legislation to say the least. They own it, and they know it. Considering the fact that racking up debt is one of the factors that led to the Scott Brown victory inMassachusetts.

A White House statement said that increasing the debt limit, “is critically important to make sure that financing of federalgovernment operations can continue without interruption and that the creditworthiness of the United States is not called into question.” I’m thinking that perhaps the creditworthiness of the United States has already been called into question by many. China for one, Russia for another.

The democrat proposal to raise the debt limit is just a quick fix to a much larger and growing problem. These clowns have borrowed and printed so much money that it will almost certainly never be paid off. The purpose of raising the debt limit is to be able to continue government programs which for the most part are entitlement programs which we went into debt to pay for in the first place. It’s like taking out a loan to pay the minimum on your credit card bill. It simply makes no fiscal sense.

Government itself has become a beast that needs to be fed constantly. Its food is money, and it never gets enough. The beast will constantly eat, the beast will never shrink, it will always increase its tolerance for more. And then it will meet and exceed that and continue wanting more. Never stopping until it explodes, gorging itself into oblivion.

Conservatism can tame the beast, conservatism can kill the beast. Democrats proposing $1.9 Trillion debt limit increase into a massive $14.3 Trillion debt is just another tool to be used by conservative members of congress, politicians, candidates and pundits to insure that the destruction of the beast which started on Tuesday continues right through November of this year.

Alexander Opposes Increase Of National Debt Limit

posted on January 28, 2010

Senator Lamar Alexander said he was opposed to increasing the nation's debt limit on Thursday. The legislation would increase the nation’s debt limit by $1.9 trillion – from $12.4 trillion to $14.3 trillion:

He said, “It took this country 230 years to reach $10 trillion in debt. Now, in just 15 months we’ve added more than $2 trillion more. The president was right last night when he said we should not leave Americans with a ‘mountain of debt.’ To hold Congress to that challenge, he should veto this debt increase, which is larger than the size of the entire federal budget in 1999. If this increase in the national debt becomes law, it will leave our children and grandchildren a country they cannot afford and a government they cannot control. Until Congress and the president take steps to bring this alarming debt under control, we should not increase the debt limit.”

National Debt Clock