debtchart.png

Great News! The Fiscal Crisis Is Over!

The D.C. press corps was giddy last night, declaring that the fiscal crisis had ended. Senators praised “honorable friends” from “great states,” congressmembers gave standing O’s to their stalwart leaders, and the president saluted bipartisanship while ridiculing Republicans, bloggers, activists and pretty much anyone else who dared oppose him.

If the whole thing seemed a bit surreal, it’s because the whole thi…

  1. DocJay

    We are a nation of fools. Our politicians should all be thrown in debtor’s prison(or a wood chipper). We may get the chance as reality will hit us when we stop being the world’s reserve currency. 3 years or 20 years, whatever the time line, our demise is coming.

  2. Blame The Innocent

    Weimar America.

  3. Jimmy Carter

    Charts are no weapon against a tyrannical government. 

    Ask Perot. 

  4. Hang On

    The problem isn’t debt. The problem is the imbalance between growth — or lack of it — and debt. You can spend more than you earn this year if next year you’re going to earn more relative to the debt you’ve accumulated this year.  It also helps if  the things you spend your money on help you earn more next year. Is that so difficult to understand? Obama isn’t doing that and his policies make things worse. For all the debt we’ve racked up under Obama, what do we have to show for it? Nothing.

    As for Paul Ryan’s  idea of paying back debt, are we to be a non-ongoing enterprise as a nation? (And that is what is different between the US and your family — the US is ongoing and you have a finite lifespan.) That’s the only reason paying back debt makes sense. I hope we will be an on-going enterprise and that we do grow the economy, so paying back debt does not make sense.

  5. John Davey

    Now that this horrible crisis has been averted, I’m waiting for the President’s supporters to suggest: “You know, we could inflate our way out of this debt…” while continuing to spend more than we collect.

  6. Jon Gabriel, Ed.

    The chart also shows why Tea Party types aren’t terribly motivated by the advice to keep their powder dry and work for GOP victories in 2014 and 2016. The debt rose under Reagan, Bush, Clinton, the other Bush and Obama, with Dem and GOP congresses. It’s understandable to develop a “pox on both their houses” mentality.

  7. Richard Fulmer

    Hey, as long as I’ve got checks in my checkbook, I can spend, spend, spend!

  8. Richard Fulmer
    John Davey: Now that this horrible crisis has been averted, I’m waiting for the President’s supporters to suggest: “You know, we could inflate our way out of this debt…” while continuing to spend more than we collect.

    I think that that’s what we’ve been doing.  It’s just that we call it “QE” rather than “inflating our way out of debt.”

  9. Western Chauvinist

    Just so long as we never, ever shut down 20% of the government again!!! That was just hell on wheels for, like, over two whole weeks!

    Thank you, Senators McCain and Graham! Thanks for saving our bacon!

  10. George Savage

    The Black Swan here is the potential for sudden economic collapse.   

    The Obama administration today is benefiting from record low interest rates.  At the current 2.43% average, financing US sovereign debt in FY2013 cost $416B; chicken feed by federal standards.  Apply the more typical 6% Clinton-era interest rate and existing debt service totals $1.03 trillion annually, 27 percent of total FY2013 outlays. 

    The average maturity of US debt is currently just over five years.  So once interest rates begin rising the government will very quickly need to refinance trillions of dollars of paper at higher rates, even without an annual budget deficit.

    But so what.  The Fed can just continue with “quantitative easing,” buying up US debt and keeping interest rates low, right?  Well, only until people tire of holding depreciating US dollars.  Right now, the US dollar is the global reserve currency.  The Fed is, in effect, spreading new dollars around the globe.  If foreigners lose confidence in the dollar, inflation will spike as dollars flow back into the country, interest rates will soar and the federal budget will hit the wall.  

    That’s when we learn what real default looks like.

  11. Z in MT

    A big part of the problem is growth, or rather the lack of growth.  An important part of supply-side economics is removing the barriers to growth (e.g. high marginal tax rates, regulations, government disincentives to work).  The one area where conservatives have largely won the ideological battle is taxes.  Federal taxes on most Americans are lower than anytime after WWII. 

    While it would be nice to lower the top marginal tax rates, I think there is much more to be gained by going after regulations.  The business environment (in terms of ease of starting and conducting business) in the US is much worse than in Canada or even Sweden. 

    There is also much to be gained by reforming our entitlement programs to encourage work.  One of the first things that could be done is eliminate payroll taxes for anyone older than the minimum social security retirement age (62.5).   

  12. MisterSirius
    Jon Gabriel, Ed.:

    It seems the only way to make the press notice the real fiscal crisis is to elect another Republican president. · · 1 hour ago

    Ouch! That’s the zinger…probably holds true for all the other figures, too, like unemployment, etc.

  13. Goldgeller

    Great post Jon!

    “It’s as if I had $250K in credit card debt and I told my wife, “Great news, honey — our fiscal crisis is over! I just got a new Visa!” If she didn’t hit me over the head with a rolling pin, she would most assuredly tell me where I should place it.” That’s great. My issue is this– we don’t even have a plan for increasing economic growth and dealing with the debt. Obamacare is not a serious debt control measure. Obama is fine governing by crisis and standoff because he made the calculation that no matter how bad he looks, Republicans will look worse. Unfortunately we are proving him right. 

    George Savage: … If foreigners lose confidence in the dollar, inflation will spike as dollars flow back into the country, interest rates will soar and the federal budget will hit the wall…  . · 24 minutes ago

    Great point! If one thinks the arguments in Congress are heated now, just wait until those interest payments start going up. 

  14. Chris Grindstaff
    Jon Gabriel, Ed.:

    Irrational situations provoke irrational responses.· 2 hours ago

    This is possibly the best, most concise summary of our recent unpleasantness.

  15. SteveSc

    Wait, wait!!  Just because there is no debt ceiling right now and we are 17 trillion in debt is no need to concerned, citizen…

    http://dailycaller.com/2013/10/17/theres-no-actual-debt-ceiling-right-now/

  16. Western Chauvinist
    Jimmy Carter: Charts are no weapon against a tyrannical government. 

    Ask Perot. 

    Or a more recent example: Paul Ryan.

    Apparently the American people are more convinced by Obama’s “the deficit has been decreasing during my administration” words (just words) than by actual numbers graphically displayed. Math is hard.

  17. BrentB67

    Nothing to see here! Eminent Ricochet economist James Pethokoukis says this is all bunk, let the borrowing and spending continue apace.

  18. Whiskey Sam
    Richard Fulmer: Hey, as long as I’ve got checks in my checkbook, I can spend, spend, spend! · 3 hours ago

    When my brother was about five, he wanted something my parents couldn’t afford.  He was puzzled and told them, “What do you mean you can’t afford it?  You have checks!”  Congress has the financial responsibility of a five-year old.

  19. BrentB67
    Hang On: The problem isn’t debt. The problem is the imbalance between growth — or lack of it — and debt. You can spend more than you earn this year if next year you’re going to earn more relative to the debt you’ve accumulated this year.  It also helps if  the things you spend your money on help you earn more next year. Is that so difficult to understand? Obama isn’t doing that and his policies make things worse. For all the debt we’ve racked up under Obama, what do we have to show for it? Nothing.

    As for Paul Ryan’s  idea of paying back debt, are we to be a non-ongoing enterprise as a nation? (And that is what is different between the US and your family — the US is ongoing and you have a finite lifespan.) That’s the only reason paying back debt makes sense. I hope we will be an on-going enterprise and that we do grow the economy, so paying back debt does not make sense. · 15 hours ago

    Does it matter that a 1/3 of that debt is financed <3 years?

  20. Western Chauvinist
    BrentB67: Nothing to see here! Eminent Ricochet economist James Pethokoukis says this is all bunk, let the borrowing and spending continue apace. 

    Hey, we have a fall-back position. There’s always the printing! We’re really good at that, and it provides the appearance of legitimacy to the federal government as it’s something the states can’t do.

    Gives new meaning to “creative destruction.”

    I’m 100% confident conservatives will win this argument in the end, because it’s simply axiomatic that whatever can’t continue, won’t.

Want to comment on stories like these? Become a member today!

You'll have access to:

  • All Ricochet articles, posts and podcasts.
  • The conversation amongst our members.
  • The opportunity share your Ricochet experiences.

Join Today!

Already a Member? Sign In