Hi Greg,
Re: I don't know why the public debt increased, except for the fact that possibly much of the surplus was used to repay the Social Security Trust fund.
That is exactly correct. For the last several years, the Federal government has been collecting a surplus in FICA and related taxes and has used this pool of funds to supplement the general operations of the government. The entire discussion about surpluses and the extent of the national debt is a convenient fiction that most Washington insiders use to hide the true nature of Federal government accounting from the general public.
If you understand that the Federal government regards all the revenues it collects as fungible, and uses them to fund this and that entitlement or procurement as they see fit, all the while hiding the true nature of this shell game with smoke and mirrors, then you pretty well have a good basis for beginning to understand the nature of the public debt and how it is being manipulated.
An interesting example of what goes on is that the pols have been telling us that we are on the way to the elimination of the national debt by 2012 or so. Well, what they don't tell us, in the major media, is that it is only the publicly traded debt that is to be retired. By 2012, the obligations of the Social Security system will exceed revenues by many hundreds of billions of dollar per annum. This will be a debt that will not, as presently conceived, be publicly traded, but will be an obligation of the Social Security trust fund to the Treasury.
Here is something that I have found useful to try to understand this particular situation:
quote.bloomberg.com
To my mind, the key thing to remember is that the Federal government is running a set of books, that by any reasonable standard of practice, GAAP or otherwise, are simply phony at best and malevolently untruthful if one were to be of a moralistic persuasion. Personally, I think they're playing a decent game of wink and nod. <g>
Ms. Baum's conclusion, that the national debt will grow dramatically in the next several years is something that cannot be disputed by anyone examining all the pieces of the puzzle.
This next item is a bit long, but you might find it to be an interesting new way to view the American economy as it enters the neo-liberal free trade century:
foreignrelations.org
One of the authors, Richard Medley is a favorite thinker of mine of late. He's the fellow who famously called this Florida brouhaha the "Thrilla In Vanilla" on Nov. 8. I doubt even Mr. Medley was aware of just how prophetic that bit of wit was to prove. :)
Best, Ray |
