Header Image (book)

aowheader.3.2.gif

Tuesday, July 19, 2011

The Government Borrows To Spend

The chart below the fold says it all.

Click directly on the image to enlarge it:


Interpretation of the above chart:
...[A]s recently as 2007 only 5 cents of every dollar spent by the federal government was borrowed. In just four short years, that number has skyrocketed to 43 cents, about four times the rate we were borrowing in 1980.
Now, what happens to a household budget when it operates on that same principle?

38 comments:

  1. "The Government Borrows To Spend"

    So do I, and that's why I know raising the debt ceiling will never work.

    It just makes things worse in the long run.

    ReplyDelete
  2. We have plenty of history to show raising the debt limit does not work. It's been done 70 times in the past 65 years by both partys. Reagan did it, I think, 13 times. The country hasn't actually paid one single penny of our own money toward paying our debt since 1960, all payments have been made with borrowed money. Paying one credit card with another, newer credit card doesn't solve the problem.

    Obama and the Dems have successfully framed the Aug 2nd payment date as the date on which the total debt is due. It is not; it's only the due date for a partial payment, not the whole thing. We can totally afford that. It just doesn't allow Obama to spend more money on new programs. All obligations are met with the money we have now and will be without any tax increases.

    ReplyDelete
  3. Little Barry isn't our first big spending presindent, just the worst.

    ReplyDelete
  4. They are arguing in DC right now over a few trillion in spending over 10 years.

    We will rack up over 15 trillion in that same next ten years.

    This problem will only get worse

    ReplyDelete
  5. What is more troubling is the mindless chant of democrats/liberals/progressives to just raise the debt ceiling becuase after all Reagan raised it and Bush so what's the problem as thought the amount of debt now is the same as the past as though the economic growth now were the same as the past. Like you and I, we are able to borrow only what others think we can repay. The World has all but stopped loaning us money, we are fabricating it in computers and then giving it to another division of the government to spend....I believe this is called Enron economics

    ReplyDelete
  6. We - the government and the citizens - have lost a generational focus. I always look at a three-generational model when considering how my actions will impact my descendents. As of yet, I only have children, no grandchildren. But I imagine my grandchildren will end up as poor as my own grandparents, who weathered the Great Depression.

    Do we want to look like Greece?!

    Tammy Swofford

    ReplyDelete
  7. Tammy,
    I always look at a three-generational model when considering how my actions will impact my descendents.

    How many voters today actually consider the three-generational model? Very few, I fear.

    I imagine my grandchildren will end up as poor as my own grandparents, who weathered the Great Depression.

    Isn't that where America is headed?

    In my view, at the present rate of descent, it might not be as long as the arrival of your grandchildren.

    I can't, of course, define a timeline. That said, I believe that my generation (Boomers) will be the last generation to live into old age (I define "old age" as 70 and up) with any kind of decent standard of living.

    ReplyDelete
  8. If interest rates go up, our goose is cooked.

    ReplyDelete
  9. and the repubs keep buckling..why don't Conservatives fight back with a vengeance AOW!!! God bless you my friend.:)

    ReplyDelete
  10. The disinformation about raising the debt ceiling is rampant. The MSM is all too eager to propagate the lies of the Obama White House.

    Very frustrating when the administration doesn't listen to economists who have a better handle on the problem.

    ReplyDelete
  11. Let's go back to the Clinton days, wasn't too bad.

    1. Repeal the Bush tax cuts.

    2. End the Afghanistan and Iraq fiascoes.

    ... there's a good start. Then you start cutting health insurance costs by instituting a single payer option and forcing insurance companies to streamline.
    Now, if you can come up with an idea that will stimulate the housing market we should be on track.

    Of course the fringe right la-la land does none of this.

    ReplyDelete
  12. Nice that someone pointed out that Saint Ronnie Raygun (and Chucklenuts Bush) were big fans of raising the debt ceiling.

    ReplyDelete
  13. In the end, it will be the "borrowing" money from ourselves that will doom us. Demon inflation is only a moment away. There is no other way out of it. Soros will be proud.

    ReplyDelete
  14. While morons like Dana Milbank and Ducky claim the Communist Party as the “New Party of Reagan,” pea-brained persons will conveniently overlook the fact that the federal government has racked up $14 trillion dollars of debt, and for more than 800 days, the U. S. Senate, controlled by communist scum, has failed to pass a budget.

    Meanwhile, Obama continues to plague us with calls for compromise and shared sacrifice, while insisting on tax increases to fund more irresponsible and unconstitutional spending.

    These idiots have forgotten that the American people overwhelming rejected tax and spend during last November’s elections.

    Ronald Reagan? Hardly.

    ReplyDelete
  15. Once again, Ducky shows his tail feathers.

    End tax 'cuts'? A disaster in a downturned economy.

    End the wars? Isn't it your pResdient Obama that started another illegal military campaign in Libya?

    Perhaps Obama should start on ending THAT one before he gets on to dealing with Ducky's insanity.

    ReplyDelete
  16. Now, if you can come up with an idea that will stimulate the housing market we should be on track.

    Stop counting welfare payments as income for purposes of loan qualification?

    How about this one. Triple the home loan interest deduction.

    ReplyDelete
  17. Oh, wait... with the Federal reserve loan rate at 0%, how's THAT gonna stimulate home buying?

    ReplyDelete
  18. Okay, how about this one. Let the government DOUBLE it's Public Housing stock. After all, with all these job losses, there are bound to be millions more filing for Section 8 housing assistance.

    That way, the government will own all the actual houses, instead of just all the mortgages... and they won't have to PRETEND to sell them to low credit risks and crash the ENTIRE mortgage and bond industries in the process like they did in 2008.

    ReplyDelete
  19. We are having it hard right now. My husband is working three jobs to make ends meet. We live within our means,no credit cards or bills besides our house payment, utilities, and medical. Our president needs to do the same (not spend a penny more and budget what we have) and not whine about it. Once again Ducky shows his ignorance.

    ReplyDelete
  20. We need to cut government spending, strengthen the value of the dollar by tightening the money supply, and then lower taxes.

    The fastest way to do this would be to collect all the money from payroll taxes for Social Security, Medicare, and Medicaid that we presently do, for one year. But, instead of spending that money on those programs, stack it all up in a pile, pour gasoline on it, and burn it. Less money in circulation = stronger dollar value.

    Then eliminate the Social Security and Medicare / Medicaid payroll taxes because those programs would no longer exist. Less taxes = more money in your pocket, and the money is actually worth something.

    I'd add a fourth step... pass a balanced budget amendment to the US Constititution with a subsection that makes it a capital offense for Senators and Congressmen to propose tax increases and / or social spending in either House of Congress.

    ReplyDelete
  21. Duck said:

    start cutting health insurance costs by instituting a single payer option and forcing insurance companies to streamline

    The much-touted insurance pools (funded federally?) were supposed to help. They are a scam!

    I looked into those insurance pools. Only those who haven't had health insurance for six months can qualify for the plans that don't penalize the proposed insured for pre-existing conditions ($700/month for an individual with pre-existing conditions vs. $269/month for an individual without pre-existing conditions) are going begging. And, still, those of us with health insurance at rape-the-insured premiums are not allowed to sign up for those insurance pools that were supposed to bring down the cost of premiums across the board.

    Those of us who have "paid our dues" by having health insurance for decades are penalized, and the uninsured continue to remain uninsured.

    ReplyDelete
  22. The insanity and epic fail of Keynesian economics... GAG.

    ReplyDelete
  23. Beamish,
    Eliminating Medicare and Social Security might sound good in theory. But such an elimination could well tank the health-care folks, including nursing homes.

    I keep thinking of people like my mother-in-law, who is in the final stage of Alzheimer's, catatonic, and totally dependent upon others, including getting fed, diapered, etc. Social Security pays 1/2 of the cost of the facility where she is now; the facility is a private residence run by Mongolian immigrants and doesn't qualify for Medicaid. Medicare, of course, doesn't do her any good now -- she's beyond any kind of medical help, really, and is basically being "warehoused" until the final moment arrives.

    Now, my mother-in-law SHOULD have had enough savings to see her through all this. But her daughters stole her every red cent! And the courts would do nothing -- never mind that these loser daughters knew full well that they were stealing from an elderly woman who wasn't mentally competent.

    If we dump Medicare and Social Security, children and grandchildren will have to be legally forced to take care of their parents, who may then be unable to take care of their own children.

    Vicious cycle, vicious trap all the way around.

    ReplyDelete
  24. I recently read that some 40% of our national debt consists of money the federal government borrowed from the Social Security and Medicare Trust Funds -- for the day-to-day operation of our federal government.

    And, of course, last May, the federal government borrowed from the federal employee pension fund.

    The above funds were designated for other use. Still, the federal government raided the piggy bank. Why aren't we hearing about this on every news broadcast?

    ReplyDelete
  25. Jacqueline,
    The question about your situation is this: How long can you and your husband keep your heads about water? Expenses of all sorts are rising faster than the river in a deluge!

    ReplyDelete
  26. Duck,
    I'm all for bringing our military back home. We're not "winning hearts and minds" over there.

    The next problem should we do so: Where will these young men find jobs?

    I know of several who enlisted precisely because they couldn't find other employment.

    ReplyDelete
  27. Mark,
    Any lending institution knows that loaning money to people so that they can pay their bills is bad policy and leads to financial ruin for the lender.

    Yet, our government operates as if borrowing money to pay bills is sound policy.

    ReplyDelete
  28. Here in Virginia, it is the law that the state budget be balanced. And at the moment, Virginia has a substantial surplus -- with a growth rate greater than forecast.

    Yet, Brian Moran, chairman of the Democratic Party of Virginia, says this:

    "...We are falling behind other states, and that is nothing to celebrate.”

    ReplyDelete
  29. Indigo Red,
    The country hasn't actually paid one single penny of our own money toward paying our debt since 1960, all payments have been made with borrowed money. Paying one credit card with another, newer credit card doesn't solve the problem.

    Insane, isn't it?

    Well, the party is about to come to a screeching halt.

    Obama speaks of "shared sacrifices." I want to see him lead by example in that regard. Along with members of Congress too.

    ReplyDelete
  30. Mustang,
    I see that you have referred to this idiotic spewing by Dana Milbank.

    The sad thing is that certain people will swallow that swill and believe it.

    ReplyDelete
  31. I think the states as well as the feds should have a balanced budget. Families and individuals must list under a balanced budget or pay the consequences, governments should be no different.

    Debbie
    Right Truth
    http://www.righttruth.typepad.com

    ReplyDelete
  32. So do you. You pay cash for your house?

    Why should it be different at the government level. The fact that it wastes the money stupidly on depreciating assets like the military is more to the point.

    ReplyDelete
  33. And 2 and a half of those 4 years were under the guidance of the obama administration. That bastion of fiscal discipline. More like drunken sailor in reality.

    ReplyDelete
  34. Duck said:

    You pay cash for your house?

    Why should it be different at the government level.


    If one signs a mortgage contract, one should make sure that the payments are affordable -- and not count on continually-increasing income. In other words, one should not mortgage oneself to the hilt.

    Furthermore, one should not borrow for one's day-to-day operation of a household.

    Neither should a government.

    Today, the United States is facing decreased revenues, in part due to the masses of the underemployed and the unemployed. Surely, the "experts" in Washington saw this coming! Yet, what did these "experts" do? Spend more money. Makes zero sense to me. If a mortgage is based on two earners and one earner is unemployed, it makes no sense for that couple to go out and buy a Mercedes.

    ReplyDelete
  35. Let's take the Duckster's allegory literally here for a moment...

    When you borrow from a bank to buy a house, the bank has more money than you.

    Um some one tell me which country has more GDP than the US? Ok China in a couple of years so who is floating the world biggest economy---the world???

    Which sort of makes the claim we are sucking the resources of the rest of world to support our own luxurious lifestyles right so as a matter of principle and being a good global citizen we shoudl cut spening. Right?

    Ah ha you say but we are not borrowing in fact 70% of every new dollar of debt is in fact "created" using a computer like the one I am typing on (Bernake in his own words said we dont even have to print fake money any more).

    ReplyDelete
  36. Meanwhile, U.S. consumers are digging themselves in even more deeply:

    ...“Consumers, particularly in the lower-income end, are being forced to use their credit cards for everyday spending like gas and food,” said Tavares, who’s based in Atlanta. “That’s because there’s been no other positive catalyst, like an increase in wages, to offset higher prices. It’s a cash-flow problem.”

    Rising costs of food and gasoline are leaving Americans less money to spend discretionary items, slowing the pace of the recovery, Tavares said. Household spending accounts for about 70 percent of the world’s largest economy....

    ReplyDelete
  37. Fannie and Freddie caused the housing crisis. Trying to lend to the poor is a noble idea but forcing banks to lend when they know the poor cannot possible have a chance in heck to pay it back was utterly irresponsible of the Dems.

    I am okay with the "Cut, Cap and Balance" pledge along with the debt ceiling being raised. Although, I don't think that the debt ceiling should be raised as much as Obama is demanding that it be raised.

    ReplyDelete

We welcome civil dialogue at Always on Watch. Comments that include any of the following are subject to deletion:
1. Any use of profanity or abusive language
2. Off topic comments and spam
3. Use of personal invective