Kevin Colby: News, culture, political blog

I think that every American should be educated on this matter. So let’s take a look at our national debt and the causes of it.

As of April 2008, the total U.S. federal debt was approximately $9.5 trillion, about $31,100 per U.S. resident. Of this amount, debt held by the public was roughly $5.3 trillion. If, in addition, unfunded Medicaid, Social Security, Medicare, etc. promises are added, this figure rises to a total of $59.1 trillion. In 2007 the public debt was 36.8 percent of GDP ranking 26th in the world. As of 2007, the total debt was 65% of GDP

Our government has what is called an “implicit” debt which is the “promise” by a government of future payments from the state. Usually long term promises of social payments such as pensions and health expenditure are what is referred to by this term; not promises of other expenditure such as education or defense (which are largely paid on a something for something basis to government employees and contractors, rather than as “social welfare”, including welfare, to the general population).

The problem with the implicit government insurance liabilities is that it’s very hard to make any accurate assumptions about these liabilities, since the scale of future payments depends on so many factors. First of all, the social security claims are not any “open” bonds or debt papers with a stated time frame, “time to maturity”, “nominal value”, or “net present value”. In the United States there is not enough tax revenue for social insurance payments, or for any payments, more than what’s required to run day-to-day business. This insurance system is called PAYGO (pay-as-you-go) as opposed to save and invest. The fear is that when the “baby boomers” start to retire the working population in the United States will be a smaller percentage of the population than it is now and no one knows how long into the future that will last. This will make the government expenditures a “burden” on the country - larger than the 35% of GDP that it is now. Remember that the “burden” of the government is what it spends, since it can only pay its bills through taxes, debt, and inflation of the currency (government spending = tax revenues + change in government debt held by public + change in monetary base held by the public). “Government social benefits” paid by the United States government during 2006 totaled 1.7 trillion dollars.

This debt is kind of similar to debt that you would have with credit cards, home loans and car loans. First of all, Americans don’t save, we spend. Just think about it for a second. You spend more than you make, so what happens? Well, your budget is blown up. You can’t afford to go out and have fun, buy new clothes, struggling to buy food or maybe new tires for the car. So what happens? You keep using the credit cards to pay for your essentials and entertainment. Then you keep increasing your debt and now you are even in more trouble. So what do you do next? You have to find how you are going to pay for these bills. You are going to have to get a second job. So now you’re debt has completely strangled you to death. You can’t do or buy the things you want because you can’t afford it and now you have to bust your ass with a part time job. And this is exactly what our national debt is doing to our nation. We have to many entitlement programs and irresponsible Congressional spending that is strangling the hell out of our economy and making the dollar worthless. So the answer to the question is: you’re damn right national debt does matter and it is a major concern that we all need to be thinking about.

The main cause of government debt is overspending. Some types of overspending are in:

* new construction
* expensive repair of government buildings
* pet projects
* too much money paid in social security, disability, welfare, subsidies, grants, or disaster relief
* more self serving government jobs
* bureaucratic middle-men
* payback through overly-expensive contracts of businesses that have donated to political campaigns of elected officials
* expensive wars
* expensive private services that supply the military with food, transportation of weapons and products
* new expensive construction products for entertainment to attract tourists, such as government-paid resorts, parks, airports, hotels, etc.
* too many government bonds sold at high interest

For more information on the U.S. national debt. Click here.

If you would like to see some really excellent charts on the debt. Click here.

Related Posts

• 2008 U.S. Federal Budget
• 2009 U.S. Federal Budget
• Would you like to know what the national debt is doing to our country?
• 2010 U.S. projected Federal Budget
• Government spending has increased by more than 55% since 2000

Tags: congressional spending, government spending, implicit debt, national debt, ross perot, u.s. national debt