The National Debt turns 13 (trillion dollars)
As our debt passes $13 trillion (with a T), FoxNews has covered the national debt clock. The clock gives all sorts of measures of per capita indebtedness and they are all wrong. You can see the clock at http://www.usdebtclock.org/.
For individual personal debt, what you owe is just what you owe. If you have no mortgage, you don't worry about someone else's mortgage. It's not your problem unless you hold a mortgage backed security - and if you bought that kind of junk you deserve what you get. Other people's credit card debt also has nothing to do with you, unless you also have problems paying your balance and the credit card company needs the money to cover their losses.
National debt figures are even more remote from the average citizen. We don't have a head tax, so the correct assessment of debt liability is debt per income tax dollar, since the income tax is what allows us to run up debt. To find that ratio, divide the debt by the amount collected by the personal income tax. We take in roughly a trillion in income taxes and owe $13 trillion in debt - including obligations to retirees that must be redeemed with income taxes. To find what a particular individual owes, multiply the income tax/debt ratio (13) by the number of dollars actually paid during the tax year. Nothing else is an honest portrayal. Note that this number will go down to 11 if the tax cuts on the rich are allowed to expire.
40% of families, who pay no income taxes, also owe nothing on the national debt - and won't as long as no head tax is passed. The only concern they have is that the government will fail to raise taxes to back interest payments (taxation must be five times net interest before the financial markets care - because after that point ratings agencies start downgrading and printing presses get turned on - which means price inflation that always outstrips wage inflation).
People who pay taxes worry the most, since they know their taxes will eventually go up. Of course, part of the reason that taxes need to go up is that they were cut so sharply by George W. Bush. If Obama lets this tax bite on the rich come back, the bond markets will be fine and the debt will go down. If his staff convinces him to extend the cuts on the rich, all Hell could break loose. Let's hope he listens to some liberals.
Conservatives talk about how we are stealing from our children by running a deficit (unless they are cutting taxes - then deficits don't matter). They are only partly right. Most children will never be in the position of paying much in the way of income tax. If you increase their taxes, the economy will slow as they consume less. To pay back the debt, it is the rich kids who will eventually pay, so when conservatives call for tax cuts, or for not letting the Bush cuts expire, they are robbing from their own children, not everyone else's. The children of the top 10% of income earners will owe 2 times their parents tax bite more than if the cuts are allowed to expire. Rich people, look at your children and ask yourself if that extra Jag is worth the debt they will owe. Rich kids, tell your parents to quit raiding your future - since the tax man cometh eventually.
For individual personal debt, what you owe is just what you owe. If you have no mortgage, you don't worry about someone else's mortgage. It's not your problem unless you hold a mortgage backed security - and if you bought that kind of junk you deserve what you get. Other people's credit card debt also has nothing to do with you, unless you also have problems paying your balance and the credit card company needs the money to cover their losses.
National debt figures are even more remote from the average citizen. We don't have a head tax, so the correct assessment of debt liability is debt per income tax dollar, since the income tax is what allows us to run up debt. To find that ratio, divide the debt by the amount collected by the personal income tax. We take in roughly a trillion in income taxes and owe $13 trillion in debt - including obligations to retirees that must be redeemed with income taxes. To find what a particular individual owes, multiply the income tax/debt ratio (13) by the number of dollars actually paid during the tax year. Nothing else is an honest portrayal. Note that this number will go down to 11 if the tax cuts on the rich are allowed to expire.
40% of families, who pay no income taxes, also owe nothing on the national debt - and won't as long as no head tax is passed. The only concern they have is that the government will fail to raise taxes to back interest payments (taxation must be five times net interest before the financial markets care - because after that point ratings agencies start downgrading and printing presses get turned on - which means price inflation that always outstrips wage inflation).
People who pay taxes worry the most, since they know their taxes will eventually go up. Of course, part of the reason that taxes need to go up is that they were cut so sharply by George W. Bush. If Obama lets this tax bite on the rich come back, the bond markets will be fine and the debt will go down. If his staff convinces him to extend the cuts on the rich, all Hell could break loose. Let's hope he listens to some liberals.
Conservatives talk about how we are stealing from our children by running a deficit (unless they are cutting taxes - then deficits don't matter). They are only partly right. Most children will never be in the position of paying much in the way of income tax. If you increase their taxes, the economy will slow as they consume less. To pay back the debt, it is the rich kids who will eventually pay, so when conservatives call for tax cuts, or for not letting the Bush cuts expire, they are robbing from their own children, not everyone else's. The children of the top 10% of income earners will owe 2 times their parents tax bite more than if the cuts are allowed to expire. Rich people, look at your children and ask yourself if that extra Jag is worth the debt they will owe. Rich kids, tell your parents to quit raiding your future - since the tax man cometh eventually.
posted by Michael Bindner at 10:09 AM
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