Wednesday, September 28, 2011

Made my 21st payment to pay down the public debt of the U.S. government

I just made my 21st monthly payment to pay down the public debt of the U.S. government. It wasn't a large payment, just another $25, but it is a matter of principle, albeit mostly symbolic. It may take me another 49 billion years to pay it all down all by myself at this rate (and assuming the deficit went to zero immediately), but, as I said, it is a matter of principle and a sense of personal responsibility. It is our debt, not somebody else's.
 
According to the U.S. Treasury web site, the total public debt outstanding was $14,707,406,820,591.87, as of September 27, 2011, an increase of about $87 billion over 40 days or $2.1 billion a day which is an annualized deficit of $796 billion. That's about $1.27 trillion over a year ago and $948 billion annualized over the past six months, our current "running" deficit. So, the bad news is that the deficit is still "sky high", but the good news is that it is trending downwards.
 
Here is what I wrote back in January 2010 when I made my first donation/gift/contribution/payment:
Everybody is whining and complaining about the ballooning debt of the U.S. government, but who is actually doing anything about it? Well, for starters, ME! Yes, that's right, I, Jack Krupansky, just did something to reduce the U.S. government debt. Really. No kidding. I actually paid down a small slice of this debt. Granted, it was a rather small slice, but a slice nonetheless. Okay, sure, it was only $20, but the point is that at least I am one of the very few people willing to stand up and DO something about the problem, rather than be one of the whiners and complainers who refuse to acknowledge that it is their debt and their problem, not just the fault of mindless politicians in Washington, D.C. After all, every politician ultimately answers to voters and most of the so-called wasteful spending of the U.S. government is simply politicians responding to the demands of their constituents (voters.) Maybe my one small contribution to paying down the debt won't really make any difference to any of those whiners and complainers, but for me it is a matter of principle. I consciously choose action rather than the inaction and lack of responsibility of the whiners and complainers.
If you have any sense of principle, you too can pay down a slice of the U.S. government debt yourself at Pay.gov. You can pay via credit card or debit transfer from a bank account.
 
So do the right thing and show all those whiners and complainers (including so-called "tax protesters") how mindless and spineless they really are. PAY DOWN THE DEBT! And that has to start at the grass roots with us individuals before politicians will ever pick up the lead.
 
For the record, the only real way out of the deficit is not to merely cut expenditures or raise taxes or some combination of the two, but through economic growth, which includes a healthy amount of immigration in addition to unemployed workers going back to work and young people entering the work force. Sure, we need to manage the federal budget more carefully as well and make difficult choices about the size of government and tax rates, but the big focus has to be on achieving sustainable economic growth. In truth, nobody, including all of the Nobel laureate economists, knows what that sustainable rate really is or how to get there. We'll stumble our way in that general direction. That's the way we do things in America.
 
Another note: A significant part of the deficit is businesses writing off losses from the financial crisis and recession as tax deductions. That may continue for awhile longer, but will gradually wind down and tax receipts from businesses will begin to pick up in the coming years.
 
 

1 Comments:

At 10:58 AM EDT , Blogger Tschäff said...

Hey Jack, just stumbled across your blog while Googling for "repos vs commercial paper" It seems repos are being used for all kinds of fraud in the corporate world so are preferred to commercial paper.

Thought I'd pay it back by commenting on this post.

I just made my 21st monthly payment to pay down the public debt of the U.S. government. It wasn't a large payment, just another $25, but it is a matter of principle, albeit mostly symbolic.

I admire your patriotism already.

According to the U.S. Treasury web site, the total public debt outstanding was $14,707,406,820,591.87, as of September 27, 2011, an increase of about $87 billion over 40 days or $2.1 billion a day which is an annualized deficit of $796 billion.

For every debt there is a credit, double entry book keeping ensures this. So who own's the government's (defined as the fed+treasury) liabilities? Those in the non-govt sectors. So what do these liabilities look like?
total deficit spending = all cash in circulation + checking account balances at the fed (reserves) + savings account balances at the fed (treasury securities). If the debt were to be paid off, all these things would have to be taxed away, or in some cases, as you can attest, donated away. Government debt = non-govt savings to the penny.

I consciously choose action rather than the inaction and lack of responsibility of the whiners and complainers.

Admirable.

For the record, the only real way out of the deficit is not to merely cut expenditures or raise taxes or some combination of the two, but through economic growth, which includes a healthy amount of immigration in addition to unemployed workers going back to work and young people entering the work force.

Right, the deficit shrinks automatically as social spending decreases as people become gainfully employed and tax revenues of all sorts rise with increased economic activity. Austerity tends to grow the debt/GDP raio everywhere tried because the denominator shrinks faster than the numerator. This is because the fiscal drag needs to be compensated by either increased exports or more consumer spending or GDP drops. If the debt/GDP ratio is your concern it is best to focus on jobs.

In truth, nobody, including all of the Nobel laureate economists, knows what that sustainable rate really is or how to get there. We'll stumble our way in that general direction.

Agreed, that the Nobel laureates don't know what fiscal sustainability is, but there are others that have some idea. The federal govt can't run out of money. Greenspan and Bernanke have both said this. There are some risks that too much govt debt could frighten China or lots of smaller players who will respond by dumping dollars for euros or buying assets with their dollars which if done fast enough can be highly disruptive. However I think the risk of this is low, more likely the US will be seen as a good place to invest if we get forecasts of strong growth and improve our infrastructure to cope with the challenges of the future. It is more likely they'll panic if they see crumbling infrastructure and social/political unrest.

For more info some smart kind folks have put up the fiscal-sustainability teach-in videos: http://www.netrootsmass.net/fiscal-sustainability-teach-in-and-counter-conference/

 

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