By my numbers, we need almost twice that again.
Budget FY2011 - $3.7 trillion.
Projected revenue FY2011 - $2.5 trillion.
Current debt - $14 trillion @ 1.3%.
If we were to amortize the debt over the next 30 years (the longest term we sell bonds) at today's interest rate, it would cost $560 million per year.
Revenue $2.5 trillion minus debt payment $560 million leaves $1.94 trillion per year to spend. Very close to needing to cut $2 trillion per year just to break even.
And if we don't start now, it will just get harder to do it later.
You’re right of course. I try not to get overly chicken little-ish here on FR.
How realistic do you think 1.3% is over 30 years?
I found the bond due dates on ustreas.gov (IIRC) today. I’m running cash flow analysis on the debt for the coming showdown between congress and Obama. The due dates are scary (but manageable from a cash flow basis, I suspect). If you remember, in the 90’s The Maestro and Clinton decided to finance a greater portion of the debt with short term bonds making us particularly susceptible to a forced default if inflation kicks in, bond buyers flee or some combination of the two.