The U.S. is indebted to itself

The Politico ^ | Jun 26, 2007 | Michael K. Farr

[gpapa]

There is an unsexy but very important issue being largely ignored by the 2008 presidential candidates: foreign ownership of U.S. government debt. As America continues to operate at a deficit, and as our debt held by foreign countries increases, we lose control over our economic destiny. The successful candidate in 2008 must reduce the deficit and regain control of the economic tiller. The candidate who can successfully and simply outline a workable plan will undoubtedly win friends at the polls and on the Hill.

[Dixie Yooper]

This was the most important topic of the 1980 election and has been ever since. Somewhere along the line, we lost our focus, our sense of direction and our way. If your out there David Stockman, we need you more today than ever before.

[Alberta's Child]

While it’s true that our massive budget deficit is a problem, I don’t think it makes any difference whether or not our government debt is held by foreign investors. If anything, there is a real advantage to having foreigners hold our debt instead of Americans.

[AzaleaCity5691]

It won’t be addressed, and I honestly believe this is just one of many issues that is going to lead to internal strife within the next half-century. I think the process began in the 1990’s.

[Uncle Miltie]

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[Paul Ross]

If your out there David Stockman, we need you more today than ever before.

David Stockman proved to be no supply-sider...and has been rather blatantly liberal since his eviction from the Reagan administration.

His betrayals resulted in political catastrophe. We lost House seats going into 1982. This shows the degree of danger from Fifth Columnists such as him.

That is why we need true troopers with lengthy track records and solid philosophy. Not so enamored of hearing themselves talk.

To wit, the best candidate for all these issues, is Duncan Hunter. 27 years of consistency in the arena. Fidelity.

[KarlInOhio]

If I demand at least 6% interest from the government in order to buy its bonds but someone from China comes in and says "I only need 5% interest", should the US government say "No, thanks, Chang. We'll just pay more interest in order to keep our debt at home."?

The government doesn't pick and choose who is buying its bonds. It just puts them up for auction and the highest price (lowest interest rate) bidders get to buy them.

[theBuckwheat]

Why cannot we be just as honest about the effects of debt on our liberty and prosperity as we can about the effects of second hand tobacco smoke?

We cannot become more prosperous by building up debt when we use the funds for something that does not either save us money or provide income. We have been borrowing to support non-capital spending for generations. **We have no intention of paying this debt off**, except by smartly defrauding the debt-holder by inflating the money we use to repay it to a lower and lower value.

Worse, we “fund” more social spending like Social “Security”, a drug benefit for the elderly, and guarantees for private pension funds, not by borrowing directly, but by promising to pay out of the general fund.

The fact that we have been able to kick this can down the road as far as we have does not in any way prove it is prudent management of our money. It only piles up interest obligations that are only growing and growing as a percent of the national tax burden.

[Toddsterpatriot]

Why cannot we be just as honest about the effects of debt on our liberty and prosperity as we can about the effects of second hand tobacco smoke?

Besides being ignorant of economics, you're an anti-smoking nut? That's funny.

[theBuckwheat]

You are wrong on both counts.

[theBuckwheat]

You are free to tell the group why I my post evidenced ignorance on either subject. Failing that, please stop making sport of chasing me from topic to topic or I will complain to FR and have you sanctioned.

[irish guard]

I hope I format this properly.....Federal Outlays per CBO, 1962 to 2001 (Interest Expense as a percentage of GDP)

1962 1.2

1965 1.2

1970 1.4

1975 1.5

1980 1.9

1985 3.1

1990 3.2

1995 3.2

2000 2.3

2001 2.0

2010 0.8 *

CBO forecast

I am not worried about the federal deficit, federal debt or interest expense and how it affects our lives. I bet your home mortgage is higher as a percent of income.

[Toddsterpatriot]

You are free to tell the group why I my post evidenced ignorance on either subject.

Anyone who has seen you post on money supply or the Fed knows your grasp of economics is tenuous at best. Now you think that second hand smoke is a big killer? I'm shocked! Are you an ex-smoker?

Failing that, please stop making sport of chasing me from topic to topic or

Pointing out your ignorance twice (maybe 3 times) this month means I'm chasing you? That's funny!

I will complain to FR and have you sanctioned.

Go right ahead. After you get done crying to your mommy.

[Dixie Yooper]

His betrayals resulted in political catastrophe

Stockman's blunder was the single most damaging blow to Reagan's presidency. Before that, his trips to Capital Hill with his calculator and briefcase were a sure sign that there was money to be cut from just about anything in his sights. Since Stockman's catastrophic interview, Clinton had been the only president to even talk seriously about the National Deficit or Debt. As one of the house Republicans for the last 27 years, From what I hear, Duncan Hunter's record on spending/sending money back home isn't exactly perfect. That along with the fact that he has never won any election outside of his congressional district makes his chances of winning about as good as Shirley Chisholm's chances every time she ran. He's a good running mate at best.

[theBuckwheat]

Please tell all of us, here on this live thread, not on some long-dead one, why piling up a mountain of federal debt is not a bad thing and why, exactly, it is showing ignorance of economics for me to state that fact.

[wizr]

The U.S. is in debt to its taxpayers and those retired, that helped to move this nation forward, who now try to survive while prices rise above their budgets.

The tax/spend and forever rising costs/wage cycles have got to stop. Our assets are not more valuable, the dollar is worth less (worthless). The government is soaking up the residuals.

[Toddsterpatriot]

Please tell all of us, here on this live thread, not on some long-dead one, why piling up a mountain of federal debt is not a bad thing

Don't change the subject. You said: "It only piles up interest obligations that are only growing and growing as a percent of the national tax burden"

See post #12

And if we were to discuss a "long-dead" thread ( June 20th 2007 ) could you explain further your theory that fear of inflation will cause a contraction in the money supply? LOL!

[irish guard]

This would suggest our budget and debt strucutre is relatively static, both historically and going forward, as a percent of GDP (OMB Data)

1995 Receipts = 18.5 Outlays = 20.7 Deficit = –2.2

1996 Receipts = 18.9 Outlays = 20.3 Deficit = –1.4

1997 Receipts = 19.3 Outlays = 19.6 Deficit = –0.3

1998 Receipts = 20.0 Outlays = 19.2 Surplus = +0.8

1999 Receipts = 20.0 Outlays = 18.7 Surplus = +1.4

2000 Receipts = 20.9 Outlays = 18.4 Surplus = +2.4

2001 Receipts = 19.8 Outlays = 18.5 Surplus = +1.3

2002 Receipts = 17.9 Outlays = 19.4 Deficit = –1.5

2003 Receipts = 16.5 Outlays = 20.0 Deficit = –3.5

2004 Receipts = 16.3 Outlays = 19.9 Deficit = –3.6

2005 Receipts = 17.6 Outlays = 20.2 Deficit = –2.6

2006 Receipts = 18.4 Outlays = 20.3 Deficit = –1.9

2007 est Receipts = 18.5 Outlays = 20.2 Deficit = –1.8

2008 est Receipts = 18.3 Outlays = 20.0 Deficit = –1.6

2009 est Receipts = 18.3 Outlays = 19.5 Deficit - –1.2

2010 est Receipts = 18.3 Outlays = 18.9 Deficit = –0.6

2011 est Receipts = 18.3 Outlays = 18.6 Deficit = –0.3

2012 est Receipts = 18.6 Outlays = 18.3 surplus = +0.3

Again, more proof that the deficit is a sustainable one and that we are not in real danger if you ask me.

[irish guard]

Permit me one last OMB data set. This is net interest expense as a percent of the federal budget

1997 = 15.2

1998 = 14.6

1999 = 13.5

2000 = 12.5

2001 = 11.1

2002 = 8.5

2003 = 7.1

2004 = 7.0

2005 = 7.4

2006 = 8.5

2007E= 8.6

2008E= 9.0

2009E= 9.2

2010E= 9.2

2011E= 9.0

2012E= 8.8

In the "for what its worth" column, interest expense in 1988 was 15% of the federal budget and was near that during the war in 1943. So the 7 - 9% range sure doesn't bother me at all. Not to rub anything in here, but I just don't see this as anything we should worry ourselves over right now.

[BfloGuy]

That foreigners hold 44% of our debt does not mean at all that we've lost control over our own destiny. How could it?

The foreign debt-holders are dependent on us to recover their investment -- not the other way around. People should really sit and think for a minute before they get all rattled about nonsensical claims such as this one.