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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (46727)	12/6/2005 6:21:57 PM
From: GraceZ	Read Replies (1) \| Respond to of 110194

That sheet shows actual budgets, it isn't spin as you are so quick to label it, it's history. Those are the budget figures created by the OBM. They represent the actual (and estimated projected) Federal outlays historically. The difference here is that you are talking about interest on the national debt and I'm talking about debt service. Debt service is something that ends up on an income statement and accrued interest is a balance sheet item. These are two very different figures. Debt service is what actually has to come out of Federal revenues in real dollars, not some figure that is simply a book keeping entry moving from one government agency to the next. If you dig into the figures you can see why people see that the various social programs operated by the government on our behalf presents a much larger future liability than what one can gather looking at the balance sheets and reports from the agencies themselves. They count that debt you are so angry about as their primary asset! Historically, before the sixties, the National Debt was something that grew in times of economic duress and war. Now it grows along with the nation in good times and bad, along with the GDP. We still have debt in there from WWI and WWII if not the Civil War. The nation never pays it off, they simply pay the interest due because the principle is simply rolled over, the note never comes due. Not so with the money that was loaned to the Federal government out of the SS surplus and other pension plans. These programs depend not only on the interest eventually being paid out of current revenues when the surplus disappears, but they also depend on the principle being repaid at a very specific future date. The "note" has a due date and one that is fast approaching with the aging of the Boomers. This is unlike any public debt that came before it. The White House claims that interest doesn't count until it is paid to the military retirees! WRONG. That is BS accounting I didn't say the accrued interest didn't count, it's accounted for quite clearly as a future liability. It isn't included in the figure for debt service simply because it doesn't represent a current expense to be paid out of either current revenues or borrowing. You wouldn't make it past accounting 101 without separating out current debt payments due in the period from long term liabilities. Look, I'm just an indignant as you are about the size of the national debt. I've been against giving the government a low interest, no doc, neg am loan in the form of our SS payments for almost twenty years! Think how well off most would be if 12.5 % of their lifetime earnings had been actually invested from day one in some form of savings that incorporated the time value of money instead of a national Ponzi scheme. We don't even have a note in our names to show for the money we lent them. Even if I lend money to a deadbeat nephew that I never expect to be repaid I get a GD note in exchange. We have less claim on that principle and interest than someone who owns US Treasury bonds in China.