NATIONAL DEBT - The National Debt. On June 7, 2011, the national debt reached $ 14.3 billion (according to the clock on the large debt.) As I tried to capture that number and get an understanding of it, could not. I then decided to reduce the numbers to something I could understand. The average family income for 2009 was $ 49,477, so I decided to see what an average household would be economically compared with the U.S. Government.
If the government were the average household earning $ 50,000 a year, it would be like a family living above their means and spending $ 83,000 a year with a debt of $ 265,000. It is possible that some families only earn $ 50,000 to a homeowner with a mortgage of $ 265,000, but I do not know any. Spending $ 83,000 a year believe it is quite common for someone who lives at the home of quarter of a million U.S. dollars. If one partner lost his job, then I could see where they might be in this situation. On the other hand someone to live year after year, spending more than they earn, the accumulation of debt $ 33,000 or more a year seems unlikely.
A family finds itself in this mess, do not increase their spending, but look for ways to cut and sell whatever they can to reduce debt.
The other alternative would be to get a better paying job or a second job. For the average American, this may not be possible with current levels of unemployment. The Government, however, can and more than likely raise taxes to increase the level of income. Cap and trade is a good example, and the government is expected to produce 73 billion a year from 2012. This appears in the draft budget by income warming.
Corporate taxes are also projected revenue more than doubled in 2012 from 2010 levels. But with everything else increasing the deficit is expected to remain well over $ 600 billion a year, adding to the national debt.
Our family in the example would not be able to extend credit and would have to take drastic measures to survive. I'm not so sure that our government is willing to do the same.
On February 6, 2007, the OMB Director Robert Portman told the House of Representatives on current trends in the national debt is not sustainable.
He predicted that by 2040 interest in discretionary spending and mandatory spending to surpass all other expenses for the defense, homeland security and education. He emphasized a balanced budget and reduce spending growth by $ 96 billion in five years.
Now, four years later, our 2011 national debt is $ 14.3 trillion vs. $ 8.7 billion at the time of his testimony.
Tips for families and governments of the debt.
First, cut spending, sell any asset that is costing you money you do not need to survive. The government should leave the mortgage market and sell Freddie and Fanny to private corporations or public. Medicare and Medicaid together take in $ 189 million and pay $ 736 billion, turning to private insurance companies would reduce the deficit by $ 547 billion alone. Make major cuts in defense spending for non-discretionary. The government is currently over budget by the year 2010 in the amount of $ 110 billion more than estimated each year. Government as well as families must learn to stay within their budgets.
The government has lots of rights to land and minerals, much of this could be sold and put into productive use and the proceeds used to reduce debt.
Second, do not bite the hand that feeds you. Taxes on corporate and individual income (including Social Security taxes payroll and unemployment insurance), up 84% of revenues. Enact any law that can damage or reduce the work force must be avoided. On the other hand passing laws that encourage corporate growth to more jobs.
Thirdly, in turn Social Security into private investment firms willing to bid for the high rates of return. Investment with a return of only 6.5% would eliminate the deficit in 2010 of the Social Security fund and revaluation in the coming years. Or allow people to invest their own Social Security funds.
Social Security Trust Fund, (Old Age and Survivors Insurance Trust Fund), is currently invested in Treasury authorized "special obligations" bought exclusively by the trust fund. The interest rate on the special duties is the average market yield long-term U.S. obligations. The problem with this is that we are paying for this through the interests of the national debt rather than private investment.
The gross federal debt includes amounts owed to federal trust funds, including trust funds of Social Security. New Treasury obligations can not be issued to the trust funds if doing so would cause the debt limit is exceeded. This limit is about to be reached, it is time to start investing the trust fund for private investment.
The national debt changes daily and may increase or decrease based on values that may come due. The debt to the penny at 07/07/2011 is $ 14,343,021,925,343.11. The Treasury also has to keep debt to the current limit of $ 14.294 billion until Congress approves a higher debt level. They will be able to hold the debt for a while with the sale of securities and funds moving around. However, as increasing pressure from Congress will be forced to raise the limit again.
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