The Debt Ceiling – The Problem and the Solution

Debt Ceiling DebateThe debt ceiling is the maximum amount of money the US Government can borrow.

Let’s go through the current debate about raising the debt ceiling and get to a simple solution….

First, here is how much we’ve spent over the past several years:

2008 – $2.9 Trillion
2009 – $3.1 Trillion
2010 – $3.55 Trillion
2011 – $3.83 Trillion

(Here are the details.)

  • In 2008, we spent the $2.9 Trillion, but only took in about $2.66 Trillion. So we were left with around a $240 Billion deficit.
  • In 2009 it was more of the same. We spent $3.1 Trillion, but only took in abbot $2.7 Trillion. Result? $400 Billion deficit.
  • 2010 comes along and thanks to Obama’s fixation on spending, we had a $1.42 Trillion deficit.

In order to pay for these accumulated deficits, we have to borrow money. So the government issues Treasury Bonds. Investors, often countries, buy these bonds that come with a promise that they’ll be repaid, with interest.  This is the national debt.

To meet our obligations, we have to pay bond holders the interest they’re owed. This is called “servicing the debt.”

As long as we pay the interest on our debt, we will not default.

The interest on the debt is only a small portion of total receipts. For example, in 2009, interest on the debt was $260 Billion. The rest of the $2.8 Trillion dollars in the budget was spent on all the departments and programs in the US government.

The problem is that Obama refuses to cut back on any of the departments and programs.

We could easily pay the interest on the debt, preventing default. We would just have to take the money to do so out of the programs, agencies and departments of the government.

Obama refuses to do this.

Obama increased the budget deficit by almost $1 Trllion. IN ONE YEAR. And he doesn’t think he can find the cuts to pay the debt service.

Obama is the villain here. He wants to grow the government at all cost, and for the sole purpose of gaining and wielding power.

And here’s the kicker: The federal government is sitting on some $700 Billion. The government has doled out $700 Billion that agencies and departments have not spent. The money is sitting there, doing nothing.

The solution?

  1. Take the $700 Billion, use it solely to service the debt.
  2. Cut $1 Trillion from the budget THIS year.
  3. Leave the debt ceiling alone.

Problem solved.

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Comments

  1. And yet, just today I saw a video where Obama simply claimed that we the public was just too dumb to understand the debt crisis, unlike the “professional politicians”.

    Sometimes I get the feeling that martial law isn’t far behind.

  2. What I wouldn’t give for someone with some common sense in Washington to tackle these problems.

  3. Cuz I jus 2 dum to deel wif dis infomation.

    You know, I’ve seen the pictures of Obama in his college days…glazed, distant look in his eyes, unkempt mid-length afro. He looked just like any number of college pukes who walk around high, thinking they’re the be-all-end-all to philosophical wonder.

    What a boob.

    My barber, who I’ve written about in these pages, is a guy named Tin. He just became an American citizen after immigrating – legally – from Vietnam some 25 years ago. This guy has a sixth grade education from a third world country, but you should hear him talk about the problems our country faces. He can articulate common sense solutions to these complex problems with ease, even if it is in broken, heavily accented English.

    The point is that the American people are generally sharp as tacks. We have a built in sense of decency and street smarts that comes from being free.

    Talk to the guy who starts his own landscaping business. Or the woman who opens her own spa. Or the guy who becomes a doctor for the military. Talk to ANY run-of-the-mill American and you’ll find that we’re quite capable of understanding these issues.

    The only reason issues become complex is because the career bureaucrats and politicians write 2500 page bills the purposefully complicate them, so that the assault on freedom is cloaked in legal-speak.

    What a dirtbag. Not very sophisticated of me, I know. Still, what more is there to say?

  4. You just nailed it. There are a few simple things that can be done, right now, to help. Of course, the harder part is taking apart the federal bureaucracy, and they will resist that to the end.

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