Posted on 07/27/2011 10:25:08 AM PDT by Nachum
Yes, indeed it is. While everyone and their grandmother is foaming at the mouth how both republicans and democrats hiked the debt ceiling for umpteen times over the past x years, the truth is that never before has the ratio of the proposed debt ceiling to the tax receipt ratio been as high as it is now. At nearly 6 times, this means that the top line (forget bottom line) cash inflows into the Treasury are 6 times lower than the current debt ceiling. And following the upcoming $2.5 trillion this number will surge to almost 8 times. So please ignore the next "pundit" who is complaining about the hypocrisy of not agreeing to an outright debt ceiling hike this time around - as usual they have no idea what they are talking about.
(Excerpt) Read more at zerohedge.com ...
Way, way back, there used to be a mortgage lending standard (remember those???) that the loan couldn’t be more than “x” multiple of the borrower’s annual income.....
Anybody remember what that multiple was??
>>cash inflows into the Treasury are 6 times lower than the current debt ceiling. <<
That’s what the article says, but it would make a lot more sense if it said “cash inflows are 1/6th of the current debt ceiling.” “Six times lower” has no meaning in this usage.
About 2.5 : 1
Still willing to call conservative GOPers “idiots”, for resisting the raising of the debt ceiling?
The biggest thing effecting the ratio is the economic recession/depression we are in. I’m not trying to excuse the grotesque spending that is also a cause.
The biggest thing effecting the ratio is the economic recession/depression we are in. I’m not trying to excuse the grotesque spending that is also a cause.
Great chart!
1980-1988: During the Reagan years, his tax cuts increased the number from 2X to 3X, but prepared the ground for an expanding economy.
1988-1992: Bush I took us to war, plus reversing some of Reagan’s tax policies and we ended up at 4X.
1992-2000: Clinton left the economy alone after his drubbing over HillaryCare, jacked taxes a bit, stayed out of war, and took us back to 3X (owing thanks to Reagan for setting it all up, in my opinion.)
2000-2006: Bush II, following 9/11, took us to war and back to 4X, but it had dropped back to 3.5X as the economy grew.
2007-Present: Five years of Democrats controlling the purse after Pelosi and Reid took the reins and now we’re at 6.5X with no prospect of a reversal as long as Obama is President.
Great chart!
1980-1988: During the Reagan years, his tax cuts increased the number from 2X to 3X, but prepared the ground for an expanding economy.
1988-1992: Bush I took us to war, plus reversing some of Reagan’s tax policies and we ended up at 4X.
1992-2000: Clinton left the economy alone after his drubbing over HillaryCare, jacked taxes a bit, stayed out of war, and took us back to 3X (owing thanks to Reagan for setting it all up, in my opinion.)
2000-2006: Bush II, following 9/11, took us to war and back to 4X, but it had dropped back to 3.5X as the economy grew.
2007-Present: Five years of Democrats controlling the purse after Pelosi and Reid took the reins and now we’re at 6.5X with no prospect of a reversal as long as Obama is President.
Duh? When you have only 49% paying taxes what do you expect? You need 95-98% of American Workers paying taxes. Not to increase the taxes for upper economic producers!
>>The biggest thing effecting the ratio is the economic recession/depression we are in. <<
You can make a pretty good case that the current state of the economy has a lot to do with the stupidity of some of the spending (Cash for Clunkers, green subsidies, all the money that goes to the EPA to write onerous regulations, money poured down RAT holes across the country, etc.) We shouldn’t be in a recession right now, but it’s possible to do in an economy with idiotic management, and that’s exactly what we are currently witnessing.
Economic growth should have been running 5-6% for the past few quarters, given the magnitude of the recession. Instead, entirely due to Obama and his many Czars, it’s an anemic 1.5-2.5%. The difference is huge.
When we bought our first house in 99 the ratio was 3:1, and I thought that was outrageous then.
25% of gross monthly and 33% of gross monthly with debt. Like a car payment. So if you made a thousand a month you could afford a $250.00 house payment. Say you had a $100.00 car payment you can afford $230.00
What, exactly, do you expect to happen to interest rates if we ever pull out of this depression? Up, up and away, that's what'll happen. With our $15 trillion debt, every 1% increase in rates will add $150 billion to the deficit - will the increased economic activity that causes a 1% rise in rates lead to more than $150 billion of revenue? I don't think so. Oh, and that's $150 billion each year, except those years in which the cumulative debt is higher than now (which would be, uh, EVERY year). By 2020, under even the rosiest scenarios, we're looking at a cumulative total of $24 trillon of debt - and then every 1% increase in rates from our present one will result in $240 of increased spending.
We are well and truly phocked unless we dramatically reduce the projected deficits NOW, so that the ratings agencies don't cut our rating and cause rates to rise even without an increase in economic activity. Because if that happens, the effect would be as if the slope downward went vertical and the sides of the toilet bowl were coated in Teflon.
The otherwise temporary revenue cut because of a recession or depression would be of little effect if it weren't for the huge debt we have. Meanwhile, the huge debt (and the need to not only roll it over but to finance additional annual deficits) has already crowded out most private investment...and that will only get worse as the debt grows.
“...and then every 1% increase in rates from our present one will result in $240 of increased spending.”
$240 billion.
Is phocked like fracked but with a different viscosity lubricant?
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