US might reach $16.4 trillion debt limit close to Election Day

  • Posted by a hidden member.
    Log in to view his profile

    Feb 24, 2012 5:35 PM GMT
    When they refer to lawmakers who "took pains to avoid" the possibility of raising the debt limit before the election, they are referring to Democrats. It's ironic that the Democrats of whom many claim there is no debt problem, may be forced into reconciling US finances right before the election. This would not bode well for Obama.

    http://thehill.com/blogs/on-the-money/budget/212313-new-analysis-brings-debt-limit-fight-closer-to-election-day

    The $16.4 trillion debt ceiling could be reached just weeks after Election Day, according to a new report.

    The analysis raises the possibility that lawmakers might have to raise the nation's borrowing limit before the election, a scenario they took pains to avoid in the debt deal passed in August.

    Now, partially due to lower than expected tax receipts, the nation could reach the $16.4 trillion debt limit as early as late November, according to an analysis from the Bipartisan Policy Center (BPC) to be released Friday.


    Oh and there's this:

    Slopes.jpg
  • Posted by a hidden member.
    Log in to view his profile

    Feb 24, 2012 9:19 PM GMT
    Okay, it is a lot of money. It is important to keep a sense of proportion though. The US's annual GDP is $15.1 trillion. In other words, the US is in debt to the tune of just over one year's income.

    If you had a debt equivalent to just over one year's salary, would you consider that to be a calamity or a manageable debt?

  • Posted by a hidden member.
    Log in to view his profile

    Feb 24, 2012 9:22 PM GMT
    Ex_Mil8 saidOkay, it is a lot of money. It is important to keep a sense of proportion though. The US's annual GDP is $15.1 trillion. In other words, the US is in debt to the tune of one year's income.

    If you had a debt equivalent to one year's salary, would you consider that to be a calamity or a manageable debt?



    That might not be an issue except then if you're going to make that argument you must also add up the private debt from state to individual debt - otherwise you have severely undercounted. Let's also not forget the significantly underfunded social security - which is already being funded in part through taxpayer funds - and has lost its tie to social security taxes.

    Total private debt btw is approximately $34 trillion. This also doesn't include state debt or US unfunded entitlement spending like social security.

    Then add to the fact that there are now consistently deficits approximating $1 trillion annually for the US.
  • Posted by a hidden member.
    Log in to view his profile

    Feb 24, 2012 9:28 PM GMT
    riddler78 said
    That might not be an issue except then if you're going to make that argument you must also add up the private debt from state to individual debt - otherwise you have severely undercounted. Let's also not forget the significantly underfunded social security - which is already being funded in part through taxpayer funds - and has lost its tie to social security taxes.

    Total private debt btw is approximately $34 trillion. This also doesn't include state debt or US unfunded entitlement spending like social security.

    Then add to the fact that there are now consistently deficits approximating $1 trillion annually for the US.


    Fair point, but given that many individuals with a regular income can comfortably carry a significant debt burden (e.g. a mortgage) for, say, 25 years, why is a country any different?
  • Posted by a hidden member.
    Log in to view his profile

    Feb 24, 2012 9:49 PM GMT
    Ex_Mil8 said
    riddler78 said
    That might not be an issue except then if you're going to make that argument you must also add up the private debt from state to individual debt - otherwise you have severely undercounted. Let's also not forget the significantly underfunded social security - which is already being funded in part through taxpayer funds - and has lost its tie to social security taxes.

    Total private debt btw is approximately $34 trillion. This also doesn't include state debt or US unfunded entitlement spending like social security.

    Then add to the fact that there are now consistently deficits approximating $1 trillion annually for the US.


    Fair point, but given that many individuals with a regular income can comfortably carry a debt burden (e.g. a mortgage) for, say, 25 years, why is a country any different?


    But again, you're double counting the income in your case - so let's show a dollar income against actual debt.

    So US federal debt = $16.1 Trillion (soon to be).
    Estimated present value of unfunded entitlement spending according to the GAO = $45 Trillion (http://www.gao.gov/financial/fy2009financialreport.html)
    Total Private debt = $34 Trillion.
    Total (not including unfunded pensions of public employees at state of federal level) = 95 Trillion.

    Total Income = $15 Trillion.

    More than 6x total income - and that's on a conservative basis considering how underfunded most public pensions now are. Try finding a bank that would be willing to lend money to you on that basis.