National Debt To Hit $16,000,000,000,000 During Democratic Convention
The Republicans had to deal with Hurricane Isaac. The Democrats have to deal with the National Debt hitting another inauspicious milestone:
Bad timing for Democrats: The gross national debt is set to hit $16 trillion Tuesday as the party’s convention gets underway, and Republicans are pouncing.
“This is a grim landmark for the United States,” Sen. Jeff Sessions (R-Ala.), chairman of the Senate Budget Committee, said in a statement. “That’s more government debt per person than Portugal, Italy, Spain, or Greece. Yet the President seems strangely unconcerned.”
In an interview on Fox News Sunday, Obama senior campaign adviser David Axelrod said the president’s economic plan would lower the debt by $4 trillion over a decade. But moving too aggressively, he added, could backfire.
Well, that’s unfortunate.
Update: Well, it’s official. The Treasury Department’s Debt To The Penny calculator places the National Debt as of today at $16,015,769,788,215.80. That’s an increase of $5,388,892,739,302.72, or 50.71%, since President Obama took office.
(I assume it’s a “millionth customer” kind of thing.)
Well, there will be a balloons at some point
Only those who don’t understand economics view this milestone as being particularly inauspicious. During WW2, our national debt was just as high. Was that a time of American collapse?
At least in World War 2 there was a rational reason for our debt, there is no such reason now.
I agree Doug. There was absolutely nothing rational happening in the halls of govt’ from 2000-2006 and very little rationality in the years since.
“no such reason?”
Come on guys, throw the worst recession since 1930 a bone.
Excuse my misfunction of the quote bar!!!
The national debt is simply the sum total of private savings, dollar for dollar. When the private sector decides to save, budget deficits increase to make this possible. It’s perfectly normal for public debt to rise quickly when the non-government sector isn’t spending.
“There is no such reason now.”
Seriously? Without even talking about the GOP’s “starve the beast” pathology of the last 30 years (I guess that’s not “rational” anyway) –
1) 9/11 terror attacks lead to creation of TSA, additional security costs, Afghanistan and (unfortunately) Iraq.
2) Experimentation with deregulation of financial system leads to near-collapse and deep, extended recession, reducing tax revenues at the same time it demands temporary tax cuts and stimulus expenditures.
3) Demographic shift (aging of the baby Boomers) increases stress on Medicare and safety net programs.
Who’s savings? 😉
As of Feb. 28th, 2011, foreign entities held 47% of the debt held by the public.
Nice pie chart here.
@john personna: “Private sector” in this case includes the forign sector which saves dollars via our trade deficits. This changes nothing.
And the Republicans don’t?
Isn’t it funny how Republicans/conservatives trace many of our problems from the time that the Dems took control of Congress in 2006, and so everything wrong in the first decades of the 21st century is their fault…yet Bush and the Republican control of the House of Representatives in 2010, not to mention their use of the filbuster in the Senate, is barely, if ever, mentioned…yes, it is terribly unfortunate…
And,Mitt Romney’s plan is to add significantly to it.
In a world with multiple currencies, multiple central banks, and global transfers you assert that a single nations debt is a savings identity?
This is consistent with failed debt auctions in some countries how?
@john personna: The only reason to run a trade surplus with another nation is because you desire to save in that nation’s currency. The USD is the world’s reserve currency because it is in such high demand.
Nations controlling their own currencies do not suffer debt auction failures.
Who the heck up-votes something that is false on both the historic and theoretical level?
Of course history is rife with sovereign debt crises.
And even if it were not, the mental experiment to refute the guarantee is trivial. Global transfers are not limited to trade. Investors (private or public) can buy or sell currencies, as they buy or sell sovereign bonds.
If investors lose confidence in a nation they can buy alternate securities.
In terms of the guarantee that “national debt is simply the sum total of private savings, dollar for dollar” it’s also trivial to note that Americans own trillions in foreign bonds and equities.
(The rise in “emerging markets investment” in the 2000s was itself a loss in confidence by Americans in their own future.)
@john personna: When nations borrow in currencies they do not control they are not monetarily sovereign. Argentina had its currency pegged to the dollar and so also surrendered its sovereignty. Whether private sector actors own foreign financial assets is irrelevant.
It’s convienient for the Republicans to blame Obama…but like the rest of their campaign…not exactly factual.
Spending under Bush (and Ryan) expanded at twice the rate it has under Obama.
Yeah so, right now (8/31/2012 market close) long term rates (real) are between 0 basis points (20 year) and 44 basis points (30 year bonds)…. http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield
As commenter Ben Wolf noted, nations that borrow in their own currency that they control the issuance of can infinitely avoid debt funding problems. The process of avoiding debt funding problems has its own set of costs (inflation) but right now the US is evidencing absolutely no sign of inflation being an issue (2% inflation is not an issue, 20% may be, and 200% is).
If we had a rational economic policy management, the first chunk of the decade should have seen decent size deficits in 2001-2003 followed by large cyclical surpluses from 2004 to 2008 and massive deficits (2 or 3 trillion per year) from 2009 to present. Instead, we as a nation decided to party and blow shit up in Iraq and make sure that our rich and powerful got sloppy oral from everyone else.
Well said, sir. Well said.
Using that date (1/20/09) is very common and also very wrong.
I don’t know that it’s wrong, as much as not useful or misleading. As soon as the 2009 deficit was projected to be $1.4T, we should have expected similarly sized deficits through at least 2012. Lowering them significantly not only wasn’t possible, it wasn’t a good idea.
Complaining about the deficit size during Obama’s term like complaining the sun came up. Complaining about the debt during Obama’s term means the speaker disapproves of the previous GOP policies. Bush and the GOP chose to run a structural deficit, which wasn’t responsible and made responding properly to the economic downturn much more difficult.
The problem is described in the page I cited:
That is, the budget for the period 1/20/09 to 9/30/09 “was largely set in place while Bush was in the White House.” This issue of how to treat FY09 is critically important because it was the worst year ever. Assigning that debt to Obama shifts the analysis dramatically. That’s why it’s a big problem that this issue is very widely overlooked. I discussed this in more detail here.
When you say that none of the countries which suffered sovereign debt crises actually controlled their own debt, you seem to be finishing with a self-sealing tautology.
If some day, should America not be the cleanest shirt on the floor, and international funds flow to someone else’s bonds, you’ll just be right that “no nation, etc” because at that point we no longer are in control?
Is this believed in the mainstream world, or is this a back-thread religion?
I really am boggled that every past debt crisis is dismissed for some reason or other as “doesn’t count.” It seems cultish.
I don’t disagree that Bush is responsible for at least 95% of the FY2009 deficit. My point is that people who bring up the deficits following FY2009 as a problem aren’t really being serious, as they were pretty much guaranteed to be that size before Obama took office.
Whoever was sworn in as President in January 2009 was going to run deficits of $1T/yr, whether they were Republican or Democrat.
You sure as heck need them to remake the Sovereign Default page at wikipedia:
Fair enough, that’s all I was saying.
And I completely agree with the rest of what you said, which is something else that’s important and widely overlooked.
This is the ultimate accomplishment for Reid and Pelosi.
“No new deficit spending….pay as you go” N. Pelosi quote from the past
It doesn’t really matter what you think “seems” to be. Nations which control their own currencies and operate only in those currencies do not suffer auction failures because their central banks ensure the bonds always sell, every time.
Step 1: The Treasury announces an auction
Step 2: The central bank supplies reserves to the banking aystem.
Step 3: Private actors purchase the bonds
Step 4: The central bank announces it will purchase any and all bonds offered to it at a given price. Each and every bond sale is back-stopped by the central bank.
You may not like the implications of this, but it’s how the system in every monetarily sovereign nation works. They control the bond market because their central banks fund the bond markets. And no, central banks are currency issuers and can never run out of money. The Latin American central banks could not the foreign currencies which they borrowed in. Greece cannot issue euros. Argentina could not issue U.S. dollars which it pegged its own currency to. So-called sovereign debt crises are in reality always currency crises.
I asked for something from outside this thread, to confirm to me that this wasn’t cult thinking. Can you help me there? Big thinkers? Nobel Prize winners? Accepted domain experts?
If I puzzle it out myself, I come up with this …
Here is a sensible statement:
Here is an insensible statement:
Insensible because no nation in a globalized economy controls its own currency, esp. in times of national crisis.
it’s fitting, as gas nears the $4 mark again and bernanke is threatening to pour more of our money into some “stimulus” well that some of us actually have to pay for before we die. 2 more months…..yes.
There is no sensible economic analysis in that, bill.
The U.S. government has a monopoly on the USDs. It can create or destroy as many as it desires and does so every day. No other nation has a say on the USD, can produce USDs or can destroy USDs. Any individual who attempts to do so gets visited by men with sub-machine guns who drag them off to prison for counterfeiting or destroying the currency. The Federal Reserve has total authority to issue currency when it sees fit, and if you’d bother to just read the information freely available at the Fed’s website you’d understand that.
That was true for any number of other previous regimes who, failing to produce a full offering in their own currency, either defaulted, or resorted to borrowing in another currency as last resort.
Really, if your “recognition” of the power any currency provider was recognized elsewhere, I’d think you’d be able to fine a link directly to that.
Again, sensible argument:
This is your argument, not mine. Monetary sovereignty has nothing to do with being the reserve currency. That you refuse to even read the webpages of the Fed, that you have no answer to my description of how the bond market functions illustrates that you need to do more studying of high finance. Or you could just continue outsourcing your thinking to “nobel laureates” like Paul Krugman, I suppose, who in the last year has moved my direction and adopted the position that having one’s own currency makes a sovereign debt crisis much less likely.
Of course “I’ve read the web pages at the Fed” …. no where do I see the assertion you claim.
(That’s kind of a stupid request given that there are about 10 million web pages at the fed, with past reports, and completing papers by members and academics.)
And of course at you link Krugman takes my position, not yours:
Remember Ben, your position is “theoretically impossible”
That is the core distinction between all of my sensible/insensible comparisons above.
@john personna: So Krugman’s new position is closer to mine than yours, yet somehow he agrees with you. Got it. Continue your flirtation with the economic mainstream, john. After all, it’s only gotten every single call wrong over the last four years. Inflation, bond yields, QE, monetary stimulus, the U.S. debt downgrade, austerity, interest rates, the euro crisis, sovereign debt; the list goes on and on. I and my little “cult” have, on the other tentacle, gotten every single call right and will continue to do so because our model reflects how the system actually functions. That you’ve ducked and dodged, moved goalposts and repeatedly changed the subject throughout this thread demonstrates how closed you are to new information.
Economic call for 2013:
No recession assuming budget cuts are not forthcoming.
Inflation in line with the post-WWII average barring exogenous supply shocks.
Monetary stimulus, QE will be ineffective.
Deficits will sustain corporate profits
Interest rates will rise when the Fed announces they choose to raise them not before.
Bond yields will remain at record lows unless Fed increases Fed Funds Rate.
Unemployment will remain above 8%.
Ratings agencies will threaten to downgrade government debt, which once again will make absolutely no difference in the bond market.
The U.S. government will remain solvent regardless of national debt.
I called you on your absolute assurance.
Krugman agreed with me that there is no absolute assurance.
That is the bottom line.
Now in terms of my flirtation with “mainstream” economics, all I asked you for was one person outside this thread who would back you on this absolute statement:
I’ve shown you that Wikipedia’s entry for Sovereign Default disagrees, andyou’ve shown me that Paul Krugman disagrees.