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1 Bob Dillon  Fri, Aug 5, 2011 5:31:10pm

Every law, regulation, and tax passed by Congress requires countless Federal employees to implement, monitor, and enforce. All this costs money.

America now owes over $14.5 Trillion. That’s over $46,000 per American (including children), or more accurately, over $130,000 per tax-paying American.

The Federal government’s revenue is just over $2.2 Trillion per year. It currently spends $3.6 Trillion per year. Those numbers are beyond normal human comprehension. So, let’s put them into perspective: The average American
household has an income of about $50,000 per year. If that average household ran like the Federal government it would spend $87,833 per year, and would already have credit card balances of $310,741.

Do you see the problem? The Chinese obviously do.

The debt ceiling deal is exactly like this hypothetical household running into its credit limit, but rather than bringing its spending below its income, it raises its credit limit. This has been Congress’ answer to the national debt
every time it has reached its credit limit. Rather than addressing the problem, Congress simply raises the credit limit. We all know where that ends.

America’s credit limit has a ceiling that cannot be raised by Congress, and we are about to bash our heads into it. Federal revenue is about $2.2 Trillion per year. (That amount changes depending upon the economy, inflation, and tax rates, but history shows that tax revenues never exceed a certain percentage of its gross national product.) We currently owe $14.5 Trillion.

That’s more than 6.6 times our annual revenue. If the Federal government stopped spending a dime, today, it would take more than six and a half years to pay off our debt, and that is assuming no interest. That is if we spent $0 on defense, $0 on infrastructure, $0 on social security, $0 on medicare, $0 on Federal employees and $0 on everything else, and paid no
interest on our debt. Do you see the problem yet?

Interest on the debt: Interest on the debt is what creates a credit limit that cannot be removed by legislation. In the near future the interest payments alone will exceed Federal revenue. Interest payments alone for this year will be $412 Billion. That’s just under 19% of the Fed gov’s revenue.

The Congressional Budget Office says that in about 30 years interest on the national debt will equal 100% of the Federal revenue. THIS is our absolute credit limit.

At this point 100% of the money collected from Americans will be needed to pay interest on debt alone. No defense, infrastructure, social security, medicare, education, welfare, unemployment, federal employees, or anything else will be
paid by the Federal government. This, of course means that the Federal government would no longer be able to collect its revenue, because the Federal government would no longer exist.

The real collapse would happen much sooner than this. Once the Federal government is forced to spend 50% or 60% to pay interest on the debt, it will seriously lose its ability to run the
country. This will also force it to borrow more money, accelerating the death spiral.

The CBO’s estimate assumes that Congress won’t raise spending (yeah, right) and that global interest rates will not increase. If either of these things happen, and they both will, then the absolute credit limit moves closer to the present.

This is why the debt debate is not a political debate. It's not really a debate at all. We are now dealing with hard economics that someday soon nobody will be able to deny.

2 (I Stand By What I Said Whatever It Was)  Fri, Aug 5, 2011 10:47:44pm

re: #1 Bobibutu

That's partially lifted from [Link: www.libertylegalfoundation.net...] isn't it?

3 Bob Dillon  Sat, Aug 6, 2011 5:20:55am

re: #2 000G

Yep ... and the math is correct.

4 Bob Dillon  Sat, Aug 6, 2011 5:53:52am

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