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Consumer Bites: 04/25/08

  • Those economic stimulus checks we’ve all been waiting for will start shipping early, with the first set arriving on Monday. I’ve scoured the news sites and run across a couple of FAQs and still can’t figure out where exactly this money is coming from. I assume it will come from more loans, such as bonds sold to investors. If this is true, those loans will, of course, earn even more interest for the buyers, thus increasing our national debt.. It’s annoying that all of the reports of this stimulus plan are geared toward when we will receive the money instead of where the money is coming from and what implications that might have. Technically, the spending of your check is just perpetuating and ballooning the natrional debt. Hooray!(link)

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3 Responses to “Consumer Bites: 04/25/08”

  1. notshakespeare Says:

    Regardless of where they say the money is coming from, you are correct - it is just increasing the national debt.

  2. Jsar Says:

    One fascinating aspect of the federal budget is that they don’t use Generally Accepted Accounting Principles (GAAP).

    We include social security tax payments in the current year’s budget for government expenses without recognition of the fact that this money represents obligations owed by the government to taxpayers in the future. So the “balanced budget” and “surpluses” circa 1998-2001 were illusory after you subtract Soc.Sec. money (thank LBJ and the Vietnam War for that little accounting two-step).

    If you apply GAAP standards to the 2003 budget (or, chili con tax cut y Medicare part D in esperanto), you get a deficit of roughly $3.7 TRILLION about 10 times the $374 billion that was reported. That’s more money than 100% of American wages and salaries for that year.

    What is REALLY AWESOME about that? Those are government numbers. The treasury department reports on the budget using GAAP. The real national debt back in 2003 was $34.8 TRILLION dollars, and that is no typo:

    http://www.fms.treas.gov/fr/03frusg/03frusg.pdf

    see page 4.

  3. Jsar Says:

    Update: The numbers for 2007 are even rosier. We’ve almost hit $50 Trillion! Also notice the obfuscation in the new chart style for the executive summary.

    Another lovely stat is the difference between obligations to current social security benefit stakeholders and current + future beneficiaries. See how the number you’d think would be bigger is actually smaller? That’s because us future beneficiaries are paying way more into the system than we will ever receive.

    http://www.fms.treas.gov/fr/07frusg/07frusg.pdf

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