Posted on 10/17/2013 3:51:25 AM PDT by Positive
If a family were to purchase a home with a $200,000 mortgage at 2.5% to be paid off in 15 years, the monthly payment would be $1333.57, or $16,003 per year.
If a government owes a debt of $17 Trillion on which it pays principle and interest at a rate of 2.5% to be paid off in 15 years, the monthly payment would be $113.35 Billion, or $1.36 Trillion per year. So after 180 monthly payments the total payoff would be $20.4 Trillion, but lets not get too deep into the weeds.
The USA is averaging a deficit of about $1.3 Trillion a year over the last 5 years.
So in order to abolish the dept in 15 years the USA would have to balance its annual budget each and every year so as not to accumulate more debt AND cut spending by $1.36 Trillion per year that is, reduce outlays by over $2.6 Trillion per year.
The USA now takes in about $2.5 Trillion per year, and spends approximately $3.7 Trillion. So how can one reduce outlays by $2.6 Trillion if the income is only $2.5 Trillion? Oh! Take the difference out of savings oops got none of that stuff.
So please tell me how the USA can abolish its debt in 15 years.
Idea #1 - Raise the taxes. Well according to the US BLS the labor force is 154 Million. That includes everyone over 16 who is looking for work. In order to reach this arbitrary 15 year goal the average person in the labor force would have to pay an additional $16,883 per year in taxes. Remember that includes those who work at McDonalds and those who are unemployed (looking for work). Easy to see that this would lead to societal chaos and never succeed.
Idea #1a Raise the taxes so that the 1%ers pay it all off. Problem with that is that after year one there would no longer be any 1%ers. That would be complicated by the fact that the 95ish%ers work for the 1%ers So by year three there would be no tax revenues.
Idea #2 When Janice Yellen takes over, have her institute "Super Godzilla QE" have her create $17 Trillion out of thin air instead of Bens paltry $85 Billion per month.
You see creating $85 Billion per year would take almost 17 years to get to $17 Trillion and by then it would no longer be a $17 Trillion problem... it would be much bigger.
Another little problem would be that the money would be near worthless, (it is already, but the cat isnt completely out of the bag yet). Although yesterday the Chinese made some comments that they are thinking about it.
Idea #3 Default, declare bankruptcy tell them hey we have been putting forth our Full Faith and Credit for 200 years and see where it got us? Go fish.
Problem with that is that $7 Trillion of that debt is owed to Americans including $2.6 Trillion to Social Security. Severe depression for sure.
The Chinese have $1.3 Trillion, thats $1 for each and every one of them, hummm. Japan $1.1 Trillion, bye bye Toyota, Nissan, Honda, Sony trouble for all sides of the Pacific.
Well Freepers, Im open to additional Ideas, including prayer and prepping for societal break down.
Please tell me what to do.
Permission to copy, paste and distribute?
$17T....why not use the actual figures? Even low-balling it’s still, what, $90T+
Does paying off $17T suddenly make all those ‘unfunded liabilities’ moot?
Now wonder the (R)/(C) message never coalesces; it’s never on point.
You know how you do it? You send EVERY man, woman, child (especially those JUST entering the work-force), illegal, etc. a bill with the break-out over 30yrs+ in two columns. Then you give ‘em a choice: continue as we are and here’s your part of the bill (column 1) or we halt the whole she-bang and dump every penny into paying it off and NEVER again have a deficit (column 2). Let that sink into everyone’s brain re: Congress, stuffing every damn bill filled w/ pork. You want XYZ, well, here’s you portion of the same.
[I will note I am staunchly against ANYONE under 18 from any tally. And one’s own tally should start from their age of voting (if that should ever change). Since grandma/pa didn’t do due diligence on D.C., it is not up to the grandchildren to pay for their neglect.]
All corporation and individual wealth in this nation in cash is only $21 trillion, and that’s only if every financial instrument could be cashed for its face value.
Our national debt if $17 and much of that was since Zero’s took office. We don’t have the money to pay the debt much less anything else after that.
Be my guest.
Keep in mind that the debt is not that of the kids and grandkids. It is the debt of the US Government. If the kids don't pay taxes and there is no Government to get on their case, they're fine.
Have at it and pass it on, FRiend ;-)
Right. Good luck with THAT proposal; though we already have 47% in that category (though ‘slaves’ to the State/Fed...mostly voluntary). The 16th effectively makes your point moot.
I would argue that the debt, being extra-Constitutional, is null and void for payment.
What is "THAT" proposal to which you refer?
..though we already have 47% in that category
What category do we have 47% in?
...(though slaves to the State/Fed...mostly voluntary).
What does this fragment mean? I just don't understand it.
The 16th effectively makes your point moot.
I'm not sure which point you are referring to, let along whether it has been made moot by what "16th".
You say:"I would argue that the debt, being extra-Constitutional, is null and void for payment."
I say: "I argue that you should refer to Article I, Section 8 of the Constitution of the United States of America where the second paragraph reads: '[The Congress shall have the power]...To borrow Money on the credit of the United States;"
I do apologize though, because I sometimes use "tongue in cheek" irony to make points, and either I do a poor job of it or it escapes the comprehension of some readers.
I was trying to be "cute" about a travesty by clearly illustrating, using mathematics, that the US will not ever clear its debts...it just can't be done.
Sorry, in my reply I was referring to your ‘If the kids don’t pay taxes and there is no Government to get on their case, they’re fine.’ (THAT proposal, 47% NOT paying taxes and the slavery/moot re: 16th). I’m presuming yours was in jest.
Now, as to the debt. True A1S8, as well as the 14th (’...The validity of the public debt of the United States, authorized by law...’), but my content is the validity of the law (IE: SS, Medicare, OCare = Extra/Unconstitutional), as well as the 13th re: (economic) slavery.
I have a problem w/ conveying it sometimes myself. I do concur that the debt can never be paid off.
The main point I was trying to make in the Post was that we will not eliminate the debt. I remember this fellow from Arkansas who said repeatedly "we paid the debt down", and the consensus is that we had, I believe 3 budget surpluses during his tenure. Well the guy lived up to his reputation then, if one checks the Treasury's Bureau of the Public Debt, it will show that in no year between 1993 and 2000 did the debt decline or even remain the same it grew each year.
As far as "Budget Surpluses" go. If a Budget were passed this year committing to spend $20 Trillion and we only spent $19 Trillion, I suppose someone would say that is a Budget Surplus, but if the Government had to borrow $17 Trillion to spend that $19 Trillion that would make the "Budget Surplus" empty words.
As for as the 47% goes I would suggest a little semantic exercise... instead of "47% not paying taxes", try "47% not being taxed". There is small difference between the two assertions, but my first facetious "idea" computing how much each and every member of the "work force" pays would include those 47%ers.
Now as for as the "kids and grandkids" mantra is concerned, I already have grandkids paying taxes. Some Freepers are probably not being taxed. This begs the question; whose kids and grandkids are we speaking of? My grandkids' kids and grandkids?
We've been listening to all the hacks in the District of Corruption weeping and wailing about the "Debt Ceiling". That is so stupid and disingenuous that it makes me angry. The "Debt Ceiling" is set by the lenders not the borrowers... what if they gave a Treasury Auction and nobody came?
There was that short period of time that the Germans were burning huge quantities of currency in order to cook the small quantities of food they had.
In the long run we will face a modern day equivalent of that... How do you think we reached the debt ceiling months ago but continued to operate and did not "officially" pass the "ceiling"? Well Uncle Ben has been creating $85 Billion per month and put it into the banking system by buying their treasury debt and not counting it as new debt, thereby allowing the government to borrow more money without increasing the debt outstanding. They used to call that a "con", now they call it QE.
There is very little discussion about the tripling of the Fed's balance sheet, well that is all of the treasury debt they have sopped up with the QEs, the government will never pay the Fed.
We are going off a cliff, the only question is whether we will leave skid marks or not.
As Mark Steyn wrote recently "we are big enough to fail" you see no one is big enough to bail us out...
Please tell me what to do.
First, don't make simple math errors. You're deducting the $1.2 Trillion overspending twice. Once you cut spending to $2.5 Trillion, you only need to cut the annual $1.36 Trillion from the 15-year plan, leaving "just" $1.14 Trillion.
Secondly, nothing says that 15 years is required. Like a mortgage, you can make lower payment by paying over a longer term.
Thirdly, are you sure these numbers ("The USA now takes in about $2.5 Trillion per year, and spends approximately $3.7 Trillion") are correct? I thought both figures were higher.
Fourthly, the Federal government has vast vast resources that it refuses to utilize. It owns more than half of the Western US. Those lands alone are worth Trillions. Secondly, if the US would stop blocking natural resources by declaring every wooded lot a "protected national forest" (as Clinton did in Utah for the Indonesians who had the only other large deposit of super-clean coal discovered). There are several Trillion more dollars under the ground, and if the government would get out of the way, the taxes on those resources would add more Trillions. Further, if government would cut down on the red tape and bureaucratic obstacles, and let the engine of Capitalism free, the recession would end, business would thrive, unemployment would drop, and federal revenues would bloom without raising taxes at all.
So maybe this is still mathematically incorrect, but it was always a reduction ad absurdum to make the point... it ain't gonna happen.
As to the 15 years, I actually wrote that that number was arbitrary on my part. And yes if it were to be amortized over 30 years, the payments would be much smaller... but let me ask you, if you had what you consider a substantial part of your investable capital in 15 year US Treasury bonds right now would you swap them for 30 year Treasury bonds? Remember that the price volatility of a 30 year bond is 25% more than that of a 15 year bond. If 30 year yields were to rise to 7% from their current rate of around 4%, their value would drop by approximately 37.5%. During my personal professional career as a bond trader I saw 30 year treasury bonds at 14% (approximately 1981), if that were to reoccur those 30 year bonds would drop by 70% in market value.
A quick googling brought me to the Brookings Institution who says we spent $3.54T and took in $2.45T in 2012... I can't vouch for their accuracy, but I couldn't vouch for anyone else's either. About 3 days ago the President said "an increase in the debt ceiling does not mean more debt"...of course yesterday the US borrowed $328B, the most in history, I suppose he didn't have you to check his math... (joke).
The US is now a net exporter of Hydro Carbons, harken back to near the end of my post, what I intended to imply was that there is no one to buy all these $Trillions of underground assets.
We are "Big Enough to Fail." I truly believe this and at the same time I hope that my math and logic are deeply deeply flawed.
You took my closing inquiry correctly and told me what I should not do. In reality I misspoke with that plea...I should have typed: Please tell me what are we to do.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.