Disaster: Only days and counting
No, I’m not talking about another “surprise” attack on the 4th of July. I’m talking about the national debt limit, again.
Where are the government shutdowns? When are the “nonessential” federal employees going to be sent home on another temporary paid-later vacation? Remember Newt and Bob, in December of 1995, being interviewed almost daily about their “Contract with America?”
We are only days away from Friday, June 28, when the month of June officially ends and it’s time for the government to close the books on another month of double bookkeeping.
That’s the deadline that the Secretary of the Treasury and the President told us we dare not pass without another raise to the national debt ceiling, the day when the country risks default. The day when disaster could strike at the government’s never ending silly game of pretending that they are going to do better next time if they just get permission to go deeper in debt one more time. The responsible thing to do, put our children and grandchildren further in the hole.
The only serious proposal that’s on the table is a $450 billion increase that the Senate has already passed and the House of Representatives, with its republican majority, would be nuts to pass. It would put the next crisis right in front of the 2004 Presidential elections. Ah, those crafty democratic senators.
Let’s look at what has really been happening in the last month or so. Instead of listening to politicians, as the Mayberry news services tend to do, let’s look at the bank. Let’s see what the Treasury has been doing.
Since May 16th, the national debt has been holding steadily at $25 million under the adjusted national debt limit. Adjusted to not include about $70 billion that somehow is not considered subject to the debt limit.
Now this may not seem like much to you, but it’s a phenomenal occurrence for a government that has been running up the national debt to the tune of about a billion per day, weekends and holidays included. Since the beginning of the government’s fiscal year, the Bush administration has run up the national debt more than $218 billion already. Until May 16th that is, when “borrowing” suddenly stopped.
Don’t take my word for it. Go to the Treasury’s own web pages. Go to the Treasury’s “Daily Treasury Statement” at http://www.fms.treas.gov/dts/index.html. It’s only a two page report. On the second page, you will find “Table III-C-Debt Subject to Limit” that will show the “Statutory Debt Limit” of $5.95 trillion, expressed in millions as $5,950,000, and the current “Total Public Debt Subject to Limit” standing at $5,949,975 again expressed in millions.
The same web page provides the daily reports for the last couple of months or so. You can open each day back to May 16 and find that the national debt has been holding at this level for more than a month.
How is this possible?
The only place where we can risk default is with investors who have contracted loans to the government guaranteed to provide a set annual interest payment and full pay off at maturity. There is no risk of default with the “Intragovernmental Holdings” side of the national debt since this is 92 percent entitlement money and 8 percent perks for government employees, departments, judges, and a few philanthropic donations that were pilfered long ago. (See: Trust Fund List)
The investor side of the national debt, what the government deceptively labels “Public Debt” in an attempt to make people feel they are not responsible for the “Intragovernmental” side, has securities maturing at the rate of about $5 billion a day. These are the investors that must be paid off immediately or the government’s reputation and “the bond market” will fall apart.
There’s also annual interest that must be paid these investors on a daily basis. Annual interest is related to the day these investors contracted with the government. And we’ve been at it so long that there isn’t a day in the calendar year when a substantial amount of interest payment is not due.
There is no way, absolutely no chance in the world, that the Secretary of the Treasury could maintain this $25 million under the ceiling for more than a month by robbing Peter to pay Paul. Peter simply doesn’t have that much money to take.
Needing more than $5 billion per day to pay off investors means that you need more than $150 billion to keep the ball rolling. And that’ not counting the interest.
The only substantial money that is truly available to play with comes from the federal employee’s own Thrift Savings Plan, and that’s only about $40 billion. Their own Civil Service Retirement Account, what is now called Federal Employees Retirement System (FERS), is in exactly the same position as the Social Security Trust Fund. No cash, just debt. They are both part of the entitlement side of the national debt.
When you hear news about the Secretary of the Treasury having to scurry about playing Peter-Paul games, you are hearing lies and disinformation. In fact, he was in Africa most of the last month. Maybe he was borrowing from the people of Rwanda.
What is really happening is that the US Treasury is issuing/selling new securities as fast or faster than old securities mature. This is all on the investor side of the national debt and it’s something that could go on forever. In fact, we didn’t borrow new money, add additional debt, to this side of the national debt for four years until this year. (See: Default, another chicken-little hoax)
You can also begin checking on these securities sales, the government calls them “auctions,” by going to the Bureau of Public Debt’s “something for everyone” Welcome web page where Mr. Van Zeck will tell you that his department keeps more than $2 trillion revolving annually to “borrow the money our government needs to operate.”
The crucial thing you need to understand today is that there is absolutely no need to raise the national debt ceiling except the crime of continually stealing Social Security and other entitlement surpluses.
The Social Security Trust Fund currently stands at 21.1 percent of the national debt. All entitlement distrusts account for almost 40 percent of the national debt. And more than $40 billion is due in semi-annual interest to these accounts this month—before the end of June. There is no money involved in this interest, the government simply hands the trusts more debt bonds, but it raises the national debt.
So much for honesty. It’s all what John Denton calls “crooking the books” and it’s worse than anything Enron or Arthur Andersen ever thought of doing.