Here's one way to express how catastrophically screwed the U.S. government's finances are: If the entire U.S budget were cut to zero, effective immediately—the military, all entitlements, the electricity bill for the Capitol—there still wouldn't be enough money to cover the payments on old debt that come due every day.
[UPDATE:] Some people have disputed Wilson's results. It's important to understand that the U.S. actually hit its debt limit back in May. Since then it has been paying its bills with cash on hand. Yes, there is money coming in, but it's not a steady flow. It comes in batches. You can see the spikes in Wilson's graph. In the aggregate there is enough money coming in to cover interest payments, but because of the way the timing works out, default is inevitable without at least some additional short-term borrowing. This is serious shit. On August 2 we really do hit the wall hard.
5 comments:
Aren't you exaggerating here?
The debt is big, but it's not THAT big.
It's not me, it's Slate (specifically Chris Wilson). I didn't fact-check him, but Slate has historically been a reliable source. But then again, so was Reuters and they got the Murdoch tax story wrong.
Yeah, that's wildly inaccurate. I mean, I suppose it would be true in the sense that the IRS would no longer have the budget necessary to function, but the interest payments on the debt were in the neighborhood of $400bil, and even after a decade of repeated tax cuts and recessions, government income is still in the neighborhood of $2tril.
https://secure.wikimedia.org/wikipedia/en/wiki/Us_debt#Interest_expense
https://secure.wikimedia.org/wikipedia/en/wiki/File:U.S.-income-taxes-out-of-total-taxes.JPG
I figured out what's going on. The U.S. actually hit its debt limit back in May. Since then we've been running on cash on hand. That cash runs out August 2. There is enough money coming in in the aggregate to cover debt payments, but inflows are not constant. You can see the spikes in the cash-on-hand graph. There will *eventually* be enough inflows to cover debt payments, but without a debt limit increase, a default is inevitable because of the timing. We are well and truly fucked.
Ron,
When (what year) have you personally become concerned about rising housing prices and the ease of getting mortgage for people with weak credit history?
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