Nov 23 2009
My Math Curse
Anybody ever read this book? Written by Jon Scieszka and illustrated by Lane Smith, it’s the story of a boy caught up in a “math curse,” where he begins to see math problems in everything.
Personally, looking at the numbers for the United States budget feels like a “Math Curse” nightmare to me.
Here are the fiscal year’s figures on government spending and debt (the
government’s fiscal year runs Oct. 1 through Sept. 30).
. . .
Total public debt subject to limit Nov. 20 — $11,953,740,000,000
Statutory debt limit — $12,104,000,000,000
Total public debt outstanding Nov. 20 — $12,010,562,000,000
Operating balance Nov. 20 — $45,510,000,000
Interest fiscal year 2009 — $383,365,000,000
Interest fiscal year 2008 — $451,154,000,000
Deficit fiscal year 2009 — $1,417,121,000,000
Deficit fiscal year 2008 — $454,798,000,000
Receipts fiscal year 2009 — $2,104,613,000,000
Receipts fiscal year 2008 — $2,523,642,000,000
Outlays fiscal year 2009 — $3,521,734,000,000
Outlays fiscal year 2008 — $2,978,440,000,000
. . .
Okay, so what do these massive figures all mean?
The public debt, or national debt, is comprised of by two things - securities held by the public, and securities held by government accounts. We’re currently sitting around $12 trillion in the red. Around 60% of that $12 trillion (over $7 trillion) is considered “owned by the public,” and was spent on your behalf by your government.
The $12 trillion national debt figure doesn’t even tell the full story though, as some intra-governmental debt obligations (like the Social Security Trust Fund) are not included in the budget. A more accurate figure would be our gross debt, which will likely be 90.4% of our entire GDP for 2009. That figure is slated to go up over 100% of our GDP by 2011.
The Statutory Debt Limit is how high Congress has approved our national debt to go — currently $12,104,000,000,000 thanks to a measure in the American Recovery and Reinvestment Act of 2009.
Obviously, our deficit is how much money we lost that year.
Now I want to take a special look at the interest portion of government spending, as this has been a hot topic in the news lately. For decades the United States has increased its borrowing and we’ve now reached trillion-dollar-a-year rates.
According to the White House, by 2019 the cost of paying off our interest will be more than the combined federal budgets this year for energy, homeland security, education and both the Iraq and Afghanistan war.
This is some pretty scary stuff. From Edmund Andrews, New York Times:
“Americans now have to climb out of two deep holes: as debt-loaded consumers, whose personal wealth sank along with housing and stock prices; and as taxpayers, whose government debt has almost doubled in the last two years alone, just as costs tied to benefits for retiring baby boomers are set to explode.”
One thing that is really at stake here is our dollar. There are three main hazards coming our way in the next couple of months. The first will be dealing with all of the new debt we’ve acquired. The next will be $1.6 trillion of marketable debt that the Treasury must work to refinance (pretty please with sugar on top, China?). Finally, eventually the Fed will have to normalize interest rates, which could cost the Americans quite a lot of money (According to the New York Times, an increase of one percentage point in the Treasury’s average cost of borrowing would cost American taxpayers an extra $80 billion this year).
Even as the government looks at these looming budgetary numbers, they are preparing to borrow $3.5 trillion over the next three years.
“What a good country or a good squirrel should be doing is stashing away nuts for the winter,” said William H. Gross, managing director of the Pimco Group. “The United States is not only not saving nuts, it’s eating the ones left over from the last winter.”
Sources:
http://www.nytimes.com/2009/11/23/business/23rates.html?partner=rss&emc=rss
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/11/20/financial/f141157S11.DTL
http://zfacts.com/p/461.html
