Oct. 29th, 2013
Why, you may ask, would anyone want to read about the national debt? For one thing, the numbers are too big to understand. What for example is a trillion? (I’m pretty sure it’s a million million, with twelve zeroes.) Most articles on the national debt focus on the $17 trillion US Treasury debt and ignore the present value of promised benefits of Social Security, Medicare and Federal employee retirement costs, for a total of $86 trillion.
One way to grasp the heft of that number is to compare it to the entire American economy. The total of every transaction done in America in a year is around $16 trillion, so that the US liability of $86 trillion is five times the size of the economy. There are about 155 million people employed, which works out to a burden of over a half million dollars for each worker.
The probability is zero that that the repayment money will be taxed away from earners of income and owners of assets. Taxation will probably be the source of less than half of the debt; the major portion will be dealt with by cheapening the dollar through an acceleration of inflation. This is a predictable pattern of human behavior because it enables spending now in return for a pretense of repayment later, similar to borrowing plums and repaying with prunes. One familiar observation is that at the time of the Civil War, you could buy a hand made suit of men’s clothing in New York City once of gold, then $25, and now, a century later, you still can, with gold at $1300. The price of suits did not change…only the dollar did.
In the table below, see the pattern of receipts as compared with federal spending;
Year Receipts(Portion of GDP) Expenditures (Portion of GDP)
1960 18% 18%
1970 18% 20%
1980 19% 22%
1990 19% 23%
2000 21% 19%
2009 16% 26%
2010 17% 27%
Now, see where YOUR tax dollars have been going.
Portion of Total Federal Spending (years)
Category 1960 1970 1980 1990 2000 2010
Social Spending 23% 35% 47% 45% 56% 61%
National Defense 56% 44% 28% 27% 20% 22%
General Gov't. &
Debt Service 14% 12% 16% 21% 18% 11%
& Infrastructure 7% 9% 8% 5% 6% 4%
Public Order &
Safety 0% 0% 1% 1% 1% 2%
John May spent the first half of his life in New York and the other half in California. He has worked in the finance industry for over 50 years as an analyst on Wall Street, pension fund manager, investment adviser and speechwriter.
He began writing for fun and performing at open mics in Long Beach, California in 2007. Favorite topics for the poet, known locally as “Jack,” include romance, war, economics, politics, philosophy and comedy.
Jack and wife Peggy have been married for over 50 years; they have two children, Jacqueline and John, who have a total of five more