Obama’s debt and the future of the american people

Posted on February 25, 2010 by

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“Fiscally, we are in uncharted territory.”
— Warren Buffett, august 19, 2009 

Understanding the debt 

According to the budget summary tables published on the white house website (http://www.whitehouse.gov/omb/budget/fy2011/assets/tables.pdf) the American people paid 915 billion dollars to the federal government in 2009, will give the federal government 951 billion in 2010, and the current administration expects more out of the American people.  President Obama’s budget proposal is counting on 2.1 trillion dollars in yearly individual income tax receipts by the end of the decade. 

Despite the huge figures for receipts 2.1 trillion in 2009 from individual income taxes, corporation income taxes, social security taxes, Medicare payroll taxes, excise taxes, estate and gift taxes, custom duties, deposits of earnings (federal reserve system) and other miscellaneous receipts, the administration is running a budget deficit for 2009 of 1.4 trillion dollars simply adding to the enormous government debt.  The President Budget proposal is projecting a budget deficit of 1.5 trillion dollars in 2010, and the decade’s projected yearly deficits will amount to an additional 8.5 trillion dollars added to the existing debt.

It is very important to understand the difference between the budget deficit and the national debt.  When politicians talk about reducing the deficit or balancing the budget, all that really means is that our debt isn’t growing as fast. It does not mean we’re getting out of debt.  The deficit is the difference between the receipts and the outlays every year.  When our government spends more than it receives, it runs a deficit for that year, money that’s borrowed and consequently added to our national debt.  Our national debt in 2009 as reported by the white house website was 11.8 trillion dollars, more than the combined GDP of the top performing European economies, Germany, France, Russia, The United Kingdom and Italy.

The national debt currently stands at about $11.8 trillion, with much of that money owed to foreign nations and foreign investors. As reported by treasurydirect.gov, a website created by U.S. Department of the Treasury Bureau of the Public Debt to borrow money for the federal government and to account for the resulting debt, our interest payments on that debt are enormous, estimated at $164.2 billion in 2009 alone (http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm) . The largest foreign holders of US debt include countries with whom we have complex or even at times antagonistic relationships: China, Russia, Iran, Saudi Arabia, Venezuela, and Libya, among others.

What are the implications of running such a high debt?

to be continued…

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