National debt?

[LeatherneckPA]

oldbabe, you are SCARING me! Unsupported pensions, no social security for people with other incomes, reductions in medicare. All I wanted to know was if "national debt" was something I should directly be worried about. I've come to the conclusion that I was right, I can't impact, so why worry. Now I'm questioning my planned Fed pension and it's security.

I was happier ignorant.

[ziggy29]

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Originally Posted by lthrnckpa Now I'm questioning my planned Fed pension and it's security.

I don't think a federal pension is in jeopardy. Unlike the U.S. automakers and other businesses who can't just raise prices in the face of competition to pay for retiree benefits, they can just raise taxes on those of us not fortunate enough to get a pension.

[jnojr]

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Originally Posted by lthrnckpa So, if i understand this right, we keep printing more paper without having the reserves in Ft Knox to back it?

None of our money is "backed" by anything in Fort Knox. The only thing that makes our fiat money "worth" anything is the belief that it can be exchanged for other valuable goods and services in the future.

[jnojr]

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Originally Posted by ERD50 Maybe not all of it. Just a simple example, i assume the govt went into debt to build Hoover Dam, but then it provides power for decades. Was that money 'spent' or a wise investment?

Much of our present debt, and almost all of our future debt, is for entitlement spending. There is zero return from writing checks to a bunch of people in the future.

We would need well over $50 trillion "in the bank" today to pay all of the Social Security and Medicare/Medicaid promises we;ve made for the next 75 years. Since we don't, varying degrees of two things will happen... higher taxes and reduced benefits. Higher taxes will drag our economy down. Lower benefits will turn millions of angry, voting people out into the streets looking for heads.

This country has a problem coming. It is so serious, there is no way to overstate it. And our elected representatives are doing nothing about it... they know that the symptoms of this problem will not manifest themselves until long after the current folks are out of office, so why should they expend their political capital today to solve some future guy's problem? especially when the voters and taxpayers of today are far more concerned with grabbing up more goodies for themselves now than with how those goodies are going to be paid for.

[jnojr]

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Originally Posted by Oldbabe Another perspective is that we must pay interest on our national debt. In 2007 interest cost us $233 billion, 8% of the federal budget. As our interest increases, because we must continue to borrow more, the less we can spend on other things that are national priorities.

...except spending never goes down. "Spending cuts" mean spending doesn't increase quite as much as it was projected or planned to. We simply keep borrowing and printing money, even while debt service and current financial obligations mount.

[Zoocat]

Quote:

Originally Posted by lthrnckpa oldbabe, you are SCARING me! Unsupported pensions, no social security for people with other incomes, reductions in medicare. All I wanted to know was if "national debt" was something I should directly be worried about. I've come to the conclusion that I was right, I can't impact, so why worry. Now I'm questioning my planned Fed pension and it's security. I was happier ignorant.

Well, good. I wish that everyone would look at the issue and get scared. We need to elect representatives who put fiscal responsibility at the forefront of their platforms.

But I doubt you need to worry about your Fed pension.

[Texas Proud]

Decided to do some looking....

WorldNetDaily: Real U.S. shortfall: $4.6 trillion in red

The real 2006 federal budget deficit was $4.6 trillion, not a previously reported $248.2 billion, according to the 2006 Financial Report of the United States Government as released by the Treasury Department Friday.


This is not the one I had seen as it was a TRUE balance sheet with all assets listed etc... this seems to only have the liabilities..

But, how much is the Hoover dam worth? Or the Grand Canyon?

[FinanceDude]

Quote:

Originally Posted by Texas Proud Decided to do some looking.... WorldNetDaily: Real U.S. shortfall: $4.6 trillion in red The real 2006 federal budget deficit was $4.6 trillion, not a previously reported $248.2 billion, according to the 2006 Financial Report of the United States Government as released by the Treasury Department Friday. This is not the one I had seen as it was a TRUE balance sheet with all assets listed etc... this seems to only have the liabilities.. But, how much is the Hoover dam worth? Or the Grand Canyon?

I think a foreign government would gladly pay billions for "naming rights" to our national landmarks. The last 2 times I went to the Grand Canyon, the only people speaking English were the gift shop folks and the rangers..................

[MasterBlaster]

Those real-world estimates make the erroneous assumption that SS, medicare, and future taxes will not change.

[Texas Proud]

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Originally Posted by MasterBlaster Those real-world estimates make the erroneous assumption that SS, medicare, and future taxes will not change.

But that is what GAAP is for... to put down what your future payments will be using current assumptions... GM, GE, Exxon have to put down what they think are their pension liabilities.. and they can change in the future if they decide to make changes to their programs... Look at the new contract, GM got rid of billions of dollars of liabilities by signing them over to the union.. then look at the steel companies who took a stroll through the bankruptcy courts and were able to get rid of theirs..

[Independent]

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Originally Posted by Texas Proud lthrnckpa Now, the other one that is mentioned is the 'trade deficit'... this is a tougher one in that it is debated by people who know a LOT more than me... but it is the difference between imports and exports... when we buy more things from other countries than we sell outside of ours we have a negative trade deficit... well, those dollars stack up overseas and they have to do something with them... so they usually invest them... right now, a lot of that is buying the fed debt... but also different companies... One of the problems is that it does not include services and there are people who say that this comes close to balancing out the deficit...

I'm not sure what the "it" is that doesn't include services. Here the numbers from the BEA for 2006 http://www.bea.gov/national/txt/dpga.txt

5,870 Total Exports
4,122 Goods
1,749 Services

8,919 Total Imports
7,522 Goods
1,397 Services

3,048 Total Imports minus Exports
3,400 Goods
- 352 Services

We run a surplus in services, but not nearly enough to outrun the deficit in goods.

The trade deficit has to be offset by an investment surplus, because foreigners have to do something with those dollars. So they are buying gov't bonds, private bonds, stocks, land, buildings, etc.

Some of this can be "good" for the US in the sense that it can be increasing US productivity and we can share the productivity gains with them. Some is just creating a stream of future payments from us to them. I have this gut feeling that too much of it is in the second category, but I don't have the statistics on that.

[Texas Proud]

My bad....

Maybe it was something else... I had heard that all the investment banking and other financing aspects (which are services) were not included...

Shows what you can remember after 20 years might not be right...