Now Obama is playing this interest game again, and we will let Brandon Backlin explain how Obama plans to pull some accounting trickery over on the American people to convince them he has taken a dent out of the national debt.
Obama’s Answer to Reducing the Debt: Don’t Count the Interest
“I, however, place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared.”
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” – Both quotes by Thomas Jefferson.
Truer words have never, ever been spoken again, except maybe “You are a den of vipers!”; that would be Andrew Jackson referring to the First National Bank of America. Anyway, those two first quotes are as true today as they were back then, as the nature of banking and lending money has yet to change. But we’re not here to talk about banking. We’re here to talk about the national debt and how it accrues through the passage of time.
So the projected national debt for this year will top $15 trillion. Yes, with a T. Yes, that’s really close to or over the projected total GDP of America; or how much total wealth America will generate this year. This total debt is divided into two types of spending; discretionary and mandatory spending. Discretionary is what it sounds like, optional spending. This is often the category for “petty” items and funding for various departments and committees. As you may expect, this number of items in this category is decreasing. Mandatory spending, again; is what it sounds like. Mandatory spending items “must” have money allocated to them. Such glamorous items in this category include entitlement programs (Social Security, Medicare, Medicaid, etc), the unemployment insurance, and debts owed. So what’s the issue? Well, most mandatory spending is entitlement programs, and the spending allocated to each one is determined by a formula, factoring in the amount of American citizens meet the criteria of the entitlement in question. There’s another formula lurking in the background however; interest!
Yep! Believe it or not, the government borrows all of its money at interest. It drives our debt-based economy. Remember, if there is no debt, there is no currency. So, where does our government get its money from at interest? Well there’s China, the Federal Reserve, the IMF, World Bank, etc. So, how much in interest do we owe? Take a look here for that figure. Also, remember that Q1 of fiscal year 2011 is just about to end, we still have three more quarters to go! Also, here’s a chart for anticipated outgoing money for Social Security in 2011, which should be just over $175 billion:
Yeah, you’re reading that right. Interest on our national debt should be roughly 3x outgoing money from Social Security. Why did I bring that up? Because more money is going overseas in both the private and public sectors. Employing out-of-country in the private sector, and paying interest to our debtors in the public sector. Something is fundamentally wrong.
Anyway, the Bean-Counter-In-Chief has an answer to our growing public debt. Ready for this? I spoiled it in the title, but his answer is to cut the interest! That’s right! Ignore the interest! That’s how he was able to conveniently “not add to the debt by the middle of the decade.” It could also be marketed slickly as a budget cut, but the simple truth any time he says that is; he’s hiding it from you. It’s deliberate, not an accidental oversight. I know plenty of couples where the other person would smack the person that said, “Hey hun! I was able to save us $500 on our credit card by conveniently not paying interest! Huzzah!”
Now, please go back to the beginning of the article and re-read that second quote from Thomas Jefferson.
