November 04, 2004

If you could travel back in time to the birth of Christ, the beginning of the Gregorian calendar, and could set aside $1,350,000 ($1.35 million) every day of every week, every day of every month, and every day of every year right up to today – you still wouldn’t have enough to pay off the trillion dollars George W. Bush has run up the national debt in the last eighteen months.

Forget getting rid of the entire national debt. That would take more than seven million a day over the same time period. I’m just talking about the amount Bush has added to our future taxes during the last year and a half.

George W. Bush has been responsible for the largest tax increase in U.S. history, a rise of more than one trillion dollars to the national debt in the past year and a half. This debt is a tax just as certainly as a rise in your personal income tax; it’s just put on the backs of future taxpayers including yourself and your children. Only the American taxpayer is responsible for paying off any part of the national debt.

We are at the debt limit right now, as you read this, just days before the election. John Snow, the Secretary of the Treasury started cutting back during August when he went from borrowing two billion to one billion a day. Now, he’s holding at exactly $25 million under the ceiling.

The table above can be found on page two of the U.S. Treasury’s “Daily Report” that anyone with an Internet connection can browse. It has been holding at this figure for some time now and will continue to do so until at least November 15th when Congress comes back in session.

John Snow has already tried to put fear into the minds of Congress by telling them that the first thing they must do upon returning to Washington is to raise the debt limit.

This isn’t the first time that the Treasury has held borrowing at exactly $25 million below the limit. On February 22, 2003, when we hit the ceiling set at $6.4 trillion, the Treasury was able to suspend additions to the national debt for 92 days until on Friday, May 23rd, Congress raised the debt limit almost a trillion dollars ($984 billion) and then took the Memorial weekend off. On Tuesday, May 27th, President Bush immediately signed the new debt limit into effect.

I don’t know why $25 million seems to be the magic number to hold at, but then I don’t know why we even bother with a national debt ceiling when Congress always raises it anyway and it seems like a habitual meaningless joke. Neither do I know why our forefathers wrote voting on the first Tuesday of November into the Constitution or why we haven’t amended that to the first weekend. Seems like we could have at least made the first Tuesday a holiday so working people could more easily get to the polls to vote.

None of this means that the U.S. Treasury will stop holding “auctions” to sell Treasury securities. With investor holdings maturing at the rate of billions a day, the Treasury is able to borrow new money and have it in hand before investors can even cash their payoff checks, a “float” that works in favor of the government.

The major problem is that it’s becoming more and more difficult for the government to borrow and this is symptomatic of a major disaster we’re heading for when combined with a trade deficit of nearly $600 billion and a dollar falling in value against other currency like the Euro.

We've already borrowed hundreds of billions from countries like China, Japan, and others, and U.S. Treasury securities can be “cashed-in” anytime the lender wishes. With China coming off its loyalty to the Dollar in favor of its own Yuan and the Euro looking more and more attractive for investment, this could spell real trouble for us.

These much older societies might also just tire of our cowboy antics of Empire and decide that it’s time to put a stop to it by crippling us economically.

If Bush loses the election, he's just liable to throw one of his temper tantrums and refuse to raise the debt limit even if Congress passes one immediately on the fifteenth of November. Can't you just hear him saying; Let Kerry worry about it.

On Thursday, October 28th, as I was writing this article, From the Wilderness published an article by Stan Goff along with an editorial note that said India was threatening to sell $120 billion of its U.S. Treasury holdings. Such action could be the beginning of a financial Armageddon for us. Let's hope they can be intimidated or talked out of selling or that they can find a trade with someone, somplace, somehow. If they decide to cash these in with the U.S. Treasury, then we're in deep doo-doo.

Frankly, I don't believe that India has that much in U.S. Treasuries to sell and it's more like $12 billion they may be holding (see table), but it does serve the purpose of showing us what could happen if some of the larger holders decide to cash-in or foreclose on the money they've loaned us. Financially, we are at their mercy.

One more thing.

Another major reason for raising the debt limit in May of 2003 and doing it again in November of 2004 is that the interest payment to the Social Security trust funds (Federal Old Age & Survivors Insurance and the Disability Insurance trust funds) comes due half in December and the other half in June.

This interest (5.4 percent in 2004) was paid against the 2003 closing balance of $1.635 trillion in the trusts at the close of that fiscal year.

The Treasury figures this interest rate on the basis of a five year model of interest paid to investors who buy real bonds. They do not disclose what the elements of this model consider, but last year the amount handed the Social Security trust funds amounted to $80.1 billion – none of it in real money but raising the national debt nonetheless. They simply hand the trusts more bogus nonmarketable bonds in order to carry on their pretense of having “borrowed” the overpayments/surpluses we gave them ($71 billion from Social Security in 2004).

It’s all part of the rip-off of the American workers overpayment in payroll taxes and the double taxation, plus interest, that’s involved with cashing these bogus securities in when the time comes. (see Trust Fund List)

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