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We've had another wave of "tax cuts pay for themselves" garbage from the supply deny-side crowd over the last few weeks. So now is a good time to take a look at the nation's finances.
Frankly, they still stink.
First, here's a list of the total debt outstanding at the end of the fiscal years 2000 - 2006. These are years when the "fiscally conservative party" ran the nation and had complete control of Congress and the White House.
09/30/2006 $8,506,973,899,215.23
09/30/2005 $7,932,709,661,723.50
09/30/2004 $7,379,052,696,330.32
09/30/2003 $6,783,231,062,743.62
09/30/2002 $6,228,235,965,597.16
09/30/2001 $5,807,463,412,200.06
09/30/2000 $5,674,178,209,886.86
The "fiscally conservative party" added almost three trillion in total debt outstanding over the course of 6 years.
But now the Dems are running Congress. And not enough has changed yet.
The latest statement from the Treasury places total debt outstanding at $8,840,168,000 -- an increase of about $330 billion since September 30, 2006. And we still have 5 months left in the Federal fiscal year.
Here's a quick "back of the envelope" calculation.
At an increase of about $330 billion in 7 months, monthly debt issuance comes out to an average of 47 billion. With 8 months left in the year we've got another $376 billion to add to our national debt total.
That means by the end of the year we're looking at $9.216 trillion in debt.
Here's a chart of total Federal Debt outstanding from the St. Louis Federal Reserve:
Here's the problem with issuing tons of debt. At some time creditors will start to wonder if they will ever get their loan back. When creditors start to get concerned about being repaid, they start to ask for a higher interest rate as compensation for the increased risk.
The US has benefited from record low interest rates for most of this expansion. Despite the Federal Reserve's policy of increasing interest rates until last summer, interest rates are still historically very low. Here's a chart of the 10-year Treasury's interest rate from the St. Louis Federal Reserve.
Because of these low interest rates, the actual interest expense is still low. Here's a chart of the total interest expense.
But the actual year-over-year percentage change in the interest expense is increasing again.
There is no magical number where we will know for certain that creditors will start to ask for a higher rate of interest. However, the more debt we issue, the higher the probability of higher interest rates occurring. And that is when we will start to run into trouble.
So so sum up, the US is still issuing tons of debt. This means the deficit is nowhere near under control. It also means the solution is going to be harder to implement the longer we wait. Of course, the market may start to make the decision for us, which is a solution nobody wants.