Re: The Real U.S. deficit and Debt

From: Charlie Thorne (thorne.2_at_osu.edu)
Date: 11/04/04 

Date: Thu, 04 Nov 2004 21:36:13 GMT

On Thu, 04 Nov 2004 17:46:35 GMT, William F Hummel
<wfhummel@comcast.net> wrote:

>On Thu, 04 Nov 2004 17:12:42 GMT, thorne.2@osu.edu (Charlie Thorne)
>wrote:
>
>>On Thu, 04 Nov 2004 16:12:22 GMT, William F Hummel
>><wfhummel@comcast.net> wrote:
>>
>>>On Thu, 04 Nov 2004 14:21:42 GMT, thorne.2@osu.edu (Charlie Thorne)
>>>wrote:
>>>
>>>>Now that the election is over, treasury is announcing the problems of
>>>>the current Federal Debt. Treasury will be selling $51 billion of
>>>>bonds (3, 5 and 10 yr) to cover the deficit for the next two weeks.
>>>
>>>In spite of the large Bush deficit, only about 12% of Treasury
>>>securities sold add to the debt. The rest are sold simply to redeem
>>>maturing securities, known as rolling the debt over -- a basically
>>>even exchange.
>>
>>Also, according to the Treasury, the $51 billion is the limit treasury
>>can sell and will hold the government till Congress can increase the
>>debt limit by $690 billion to hold over till the end of the fiscal
>>year.
>>
>>That's an increase to $8.074 trillion that doesn't count the "funny
>>money" of other agency debt. Fannie Mae and Freddie Mac along have
>>$1.7 trillion in debt. There's also the huge debt owed to Social
>>Security that is not counted as part of the debt, but it is spent by
>>the Federal Government.
>>
>No, the $8 trillion being authorized does include intragovernment debt
>like Social Security. Intragovernment debt is what one pocket owes to
>another within the government, a basically meaningless accounting
>game. The debt that counts is what is owed to the public on which
>real interest payments are made and which must be redeemed as it
>matures. That totals about $4 trillion.
>
The Social security debt is in fact owed to the public as well as
being an intergovernmental debt. That assumes that the government will
in fact honor the debt it owes those people who have contributed to
the fund. In your theory, the fund doesn't exist and will never be
paid. Unfortunately, Bush's program is that it won't be paid.

Also, although the mortgage lenders are private, they debt is
guaranteed by the government. If people default on their loans, the
government must pay them, so that it is an obligation of the
government. Again, the Bush theory of debt is similar to yours and
most of these items will never be paid.

Charlie

Charlie

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