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How Much Each Taxpayer Owes Toward the Federal Debt

Forbes recently had a very good article which explores the US Federal Debt and how it affects economic growth. It also reviews government debt for the future, and its affect on the private sector and the debt-to-GDP ratio. Unfortunately, it doesn’t cover the entirety of US debt, which includes substantial entitlement obligations, but that’s probably fodder for another article entirely. If you want a decent primer on our federal debt — which translates into $154,161 each taxpayer owes towards it — read the article below.

The availability of credit in the U.S. was a major catalyst in the economic boom of the twentieth century. However, too much of a good thing can also be a problem. Is the U.S. too reliant on debt? Is the federal government mortgaging the future earnings of an entire generation? In this article, we’ll explore these and other issues as we take a look at the debt cycle in America.

The Impact of Debt on Economic Growth
In the early part of the twentieth century, if people didn’t have the money to purchase an item, they would save for it. With the introduction of credit terms, high-dollar items became much more affordable. It also changed the way we view debt. For example, rather than think of a new car in terms of its total price, we began to focus on the amount of the monthly payment. And, as the use of debt increased, the American standard of living rose with it. Excessive debt was also one of the primary catalysts for the economic boom of the 1980s, 1990s, and part of the 2000s. However, when debt is used in excess, it steals from the future since it must be repaid. This is because a dollar borrowed today necessitates that a dollar plus interest be repaid in the future. This reduces the amount of money available for future spending. If the amount of debt accumulated is significant and the period of accumulation is long, the required debt payments will negatively impact economic growth. What about government debt? How does it impact the future and the economy?

Government Debt and the Future
As I write this article, the federal government has accumulated $18.2 trillion of debt. In 2004, the federal debt was $7.3 trillion. This rose to $10 trillion when the housing bubble burst four years later. Today it exceeds $18 trillion and is projected to approach $21 trillion by 2019. When you break this down to an amount per taxpayer, the numbers are substantial. It has more than doubled over the past 11 years, rising from $72,051 per taxpayer in 2004 to $154,161 today. As the debt continues higher, the liability of every taxpayer is also rising. The change in the amount of the federal debt per taxpayer from 2004 to 2015 represents an average annual increase of 7.16%. This is much more than the average annual wage increase during the same period.

The Great Private Sector Extortion?
What problems might result from our fiscal failure? With the debt per taxpayer as high as it is, if the government continues to raise taxes on middle income earners and above, it will become increasingly difficult for many of these individuals to preserve their standard of living. This will result in a reduction of wealth that spans the entire income spectrum, excluding perhaps the super-rich. The difficulty will begin in the middle class and eventually creep toward the higher income earners if the debt problem persists. Why will this create difficulty? Because these individuals will be asked to pay higher taxes so the federal debt can be retired. It may be framed under a pretense of patriotism but will really be just another excuse to extract money from the private sector. As the private sector shrinks, economic activity will slow which will result in smaller wage increases. Therefore, these individuals will be squeezed from both ends (taxes and wages). This is one of the key reasons why the middle class is shrinking. It’s as if we’re all on the Titanic and people are continuing to sing and dance while the ship slowly sinks. Does the federal government have the ability to repay its debt? And, if it does today, what about in five or ten years? How difficult will it be then? Let’s address this question now.

The U.S. Debt-to-GDP Ratio
The debt-to GDP ratio compares the amount of the public debt to the size of the economy. For example, if GDP – which is the total of all goods and services produced in the U.S. – is $17.0 trillion and the debt is the same amount, the ratio would be 100%. As the debt rises beyond GDP, the ratio will exceed 100%. This indicates that the debt is greater than the total of what we produce. You might equate it to an individual’s debt-to-income ratio which helps lenders assess an individual’s ability to repay a loan. America’s debt-to-GDP ratio in 1980 was only 35.4%. Ten years later it was 57.7%. As you can see from the chart below, America’s debt-to-GDP ratio has continued to rise and today stands at 102.6%. Although this is not a staggering percentage, as an absolute number, $18.2 trillion in debt is very formidable.

Is the federal government getting in over its head? Will the mounting debt cause a financial hardship on Americans? As the debt continues to expand, the economy will continue to be sluggish, the tax burden will continue to grow, and the middle class will continue to shrink. If Washington doesn’t act soon, will the debt become an unmanageable burden? I believe the answer to this questions lies somewhere between “absolutely” and “very likely.” How bad could it get? It’s difficult to say. To change direction, however, we will need elected officials who are willing to put the needs of the country ahead of their own agenda. In other words, politics will have to take a back seat. You can be sure of this: You cannot circumvent the laws of economics. If we continue to accumulate debt, if we ignore the warning signs, if our officials maintain the status quo, there will be consequences. I only hope America realizes it before it’s too late.

Massive Federal Debt, Cost Per Full Time Worker Soars

Thank goodness for CNS News. They continuously number crunch federal numbers so that we can keep apace with the ever-growing national debt. The bottom line? Debt has increased $7.5 trillion since Obama took office.

“The federal government drove $789,473,350,613.20 deeper into debt in calendar year 2014, an increase that equaled $6,875 per household, $7,458 per full-time year-round worker, and $8,853 per full-time year-round private-sector worker.

According to the Treasury, the debt started calendar year 2014 at $17,351,970,784,950.10 and ended it at $18,141,444,135,563.30.

When Obama took office on Jan. 20, 2009, the debt was $10,626,877,048,913.08. Since then, it has increased $7,514,567,086,650.22–which is $65,443 per household, $70,985 per full-time worker and $84,266 per full-time private-sector worker.

In 2013, according to the Census Bureau there were 105,862,000 full-time year-round workers in the United States. The $789,473,350,613.20 increase in the federal debt during 2014 worked out to $7,457.57 for each of those full-time year-round workers.

Those 105,862,000 full-time year-round workers included 16,685,000 federal, state and local government workers and 89,177,000 private-sector workers.

The $789,473,350,613.20 in new federal debt in 2014 equaled $8,852.88 for each of the 89,177,000 full-time private-sector workers in the country.

As of December 2013, there were 114,826,000 households in the country, according to the Census Bureau. The $789,473,350,613.20 in new debt equaled $6,875.39 per household.

Ten years ago, at the end of 2004, the federal debt was $7,596,142,802,424.14. Since then, it has grown by $10,545,301,333,139.16—an average pace of $1,054,530,133,313.92 per year.”

Treasury Issues $1 Trillion in New Debt to Pay Off Old Debt, Despite Record Revenue

Even though the government is bringing in record revenue, its spending is still outpacing its intake. CNS News did an analysis of Treasury Statements, and revealed that the Department of Treasury is currently operating like a Ponzi scheme:

“The Daily Treasury Statement that was released Wednesday afternoon as Americans were preparing to celebrate Thanksgiving revealed that the U.S. Treasury has been forced to issue $1,040,965,000,000 in new debt since fiscal 2015 started just eight weeks ago in order to raise the money to pay off Treasury securities that were maturing and to cover new deficit spending by the government.

During those eight weeks, Treasury took in $341,591,000,000 in revenues. That was a record for the period between Oct. 1 and Nov. 25. But that record $341,591,000,000 in revenues was not enough to finance ongoing government spending let alone pay off old debt that matured.”

During the 8 weeks since the start of the fiscal year, the Treasury brought in revenue of $341,591,000,000. However, old debt was maturing. In order to cover the old debt plus finance the government, it was forced to issue new debt. There was $942,103,000,000 in old debt. To cover its obligations, the government had to “roll over the old debt into new debt and issue enough additional new debt to cover the new deficit spending”.

CNS News explains how the debt occurred so quickly. “The vast amount of debt that the Treasury must roll over in such a short time frame is driven by the fact the Treasury has put most of the debt into short-term “bills” and mid-term “notes”—on which it can pay lower interest rates—rather than into long-term bonds, which demand significantly higher interest rates….If the Treasury were forced to convert the $1.4 trillion in short-term bills (on which it now pays an average interest rate of 0.056 percent) into 30-year bonds at the average rate it is now paying on such bonds (4.919 percent) the interest on that $1.4 trillion in debt would increase 88-fold.”

If the private company operated in this manner, you can be sure the Securities and Exchange Commission would be after them for fraud. But when its the government, all bets are off.

Public Debt and Rate of Debt Rapidly Increasing Under Obama


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The folks over at CNSNews reported that, according to the US Treasury, Public Debt has increased $6.666 Trillion during Obama’s Presidency.

The amount of debt listed on January 20, 2009 was compared to the amount of debt held January 31, 2014 — the most current day available. Those figures are $10,626,877,048,913.08 and $17,293,019,654,983.61, respectively.

That means the total amount of debt has gone up $6,666,142,606,070.53 under President Obama.

To put it into perspective, public debt first reached $6.666 trillion in July, 2003. CNSNews notes that in slightly more than 5 years, “the U.S. has accumulated as much new debt as it did in it’s first 227 years”.

Now, to make an entirely different comparision:

The public debt held by George W. Bush on the first day of his inauguration (Jan 20, 2001) was $5,727,776,738,304.64. On his last day full day in office, Jan 19, 2009, the debt was $10,628,881,485,510.23.

Therefore, debt during his 8 years increased $4.901 Trillion. One could also argue that debt went up some 85% during his term.

On the other hand, so far, Obama’s debt so far has increased 63% over 5 years.

If one were to take 85% and divide it by 8 years , one would find the average rate of debt increase to be 10.625% a year under Bush. For Obama’s debt to only increase by the rate of Bush’s, Obama’s debt percentage increase would be 53.125%. But Obama’s is more, currently at 63% debt increase — more than a year ahead of the average pace of Bush.

Taking Obama’s current rate of debt increase, 63%, and dividing it by 5 years, the average rate of debt incrase by Obama is 12.5% per year. At that pace, by the time Obama’s Administration is complete after 8 years, the debt increase will be 100.8%.

That means we can expect our Public Debt to increase by at least $10.711 Trillion, or that our public debt will be roughly some $21.337 Trillion at the end of his term. (This is only at the current rate of spending and debt, without taking into account future programs, etc)

In other words, it will have only taken 233 years to spend the first $10 trillion and roughly 8 years to spend the second $10 trillion.

Why Does TreasuryDirect.gov Show That Our Total Public Debt is Higher Than the Debt Ceiling?

Treasurydirect.gov has a feature called, “The Debt to the Penny and Who Holds It”. It is a government website, typically dealing with items such as savings bonds, and is separate from Treasury.gov. It shows some interesting data regarding the current debt:

Current Debt
10/15/2013

Held by the Public
11,926,495,975,191.95

Intragovernmental Holdings
4,820,874,558,898.67

Total Public Debt Outstanding
16,747,370,534,090.62

Here we see that this history feature shows a public debt number that is different from the US Treasury daily reports (which haven’t moved in 150 days) The current amount of total public debt outstanding is a sum higher than the Statutory Debt Limit of $16,699,421,000,000.

Just to make sure that the history feature worked, I did a search from October 14, 2013 – October 15, 2013. It gave these results:

10/11/2013
16,747,411,584,091.53

10/15/2013
16,747,370,534,090.62

The search feature does work, and even shows the increased change from the two days.

To make sure the definitions were correct, TreasuryDirect.gov offers the following explanations:

What’s the difference between the Public Debt Outstanding and the Public Debt Subject to Limit?

The Public Debt Outstanding represents the face amount or principal amount of marketable and non-marketable securities currently outstanding. The Public Debt Subject to Limit is the maximum amount of money the Government is allowed to borrow without receiving additional authority from Congress. Furthermore, the Public Debt Subject to Limit is the Public Debt Outstanding adjusted for Unamortized Discount on Treasury Bills and Zero Coupon Treasury Bonds, Miscellaneous debt (very old debt), Debt held by the Federal Financing Bank and Guaranteed Debt.

So, we have a Public Debt Outstanding that is higher than the current Statutory Limit because it is “adjusted”?

At the same time, our Public Debt Subject to Limit has remained frozen at $25 million under the Debt Ceiling for 152 days.

Why can numbers be adjusted and frozen willy-nilly, so that taxpayers — who fund the government(!) — can’t get a true picture of their money? What numbers are true anymore? What numbers do Congress have to work with while they strut and fret their hour upon the stage over the “debt ceiling”? We the People have none.