We are Mortgaging Our Future, Again
The Federal Debt Clock eclipsed $22 trillion dollars during the middle of last night. This author has written a number of articles on the Federal Debt.
- “Federal Debt: Mortgaging Our Future – $117 Billion Monthly Mortgage Payment” (11/25/2014)
- “Inaction of the Debt has cost us $2.5T since November 2014“(1/14/16)
- “Uncle Sam : Trust Fund Baby Gone Bust” (3/1/2017)
- “Federal Debt: Debt Interest Exploding” (12/26/2017)
- “Federal Debt: Still Mortgaging Our Future” (12/27/2017)
“Off-Budget” revenue, which is used to offset “On-Budget” deficits, rose from $850 billion to $855 billion. If it is used to offset on-budget deficits then it isn’t “off-budget.” Unfortunately spending rose from $3.980 trillion to $4.171T. Interest on the debt rose from $456.9 billion to $521.5 billion or over $64 billion dollars.
What happened during December? Revenue dropped from $326 billion last January to 312.5 billion this year – a drop of 13.5 billion dollars. This is okay, spending dropped from 348.9 billion to 325.8 billion or 23.2 billion dollars. The treasury report can be found here.
Revenue is up year to date, so is spending. Revenue has increased from 769 billion to 771 billion dollars. Unfortunately, spending, or outlays, has risen from 0.994 trillion to 1.090 trillion dollars. This is deficit spending.
Where are we spending more this year than last year? Health and Human Services costs are up $32 billion, Social Security is up $27 billion, Interest on the debt is up $18 billion and Defense Spending is up $13 billion. The media will focus on the defense spending.
It would cost us over 12.5 billion dollars a month and 360 payments to pay off this debt. The ratio of 1 trillion to 100,000 is a factor of 10,000. If the monthly mortgage payment on a 220,000 mortgage, at 5% with 20% down, then the monthly payment would roughly be $1250 (Subtracting 80 dollars a month insurance and 200 a month from “real estate taxes.) Remember that we are adding over $500 billion a year to the debt in interest payments. a monthly nut of $1250 for a $275,000 home equals $12.5 billion for a $27.5 Trillion dollar “debt.” We do not owe $27.5 trillion – only $22.0 trillion. The point is that we have to run a surplus of at least $150 billion dollars a year AND use that to pay down the debt to balance the debt to zero by 2049. We will “repay” 22 trillion in debt plus spend another $20.5 trillion in interest. That is $42.5 trillion over 30 years
This is not a great report. We took in more revenue during FY 2017-18 than FY 2016-17. We are taking in more revenue during FY 2018-19 than we did last year. Spending is up. We have to start paying this debt down.
It’s the economy.
Categories: It's the Economy