Daily Topics - Wednesday July 20th, 2011
The Big Picture "On Air" Questions or Comments for Thom?
Hour Two: "Alec Exposed: The Koch Connection" - Lisa Graves, Center for Media and Democracy
Hour Three: Rupert Murdoch...media megalomaniac or victim? Seton Motley
Comments
Since we reached the debt limit last spring we haven't been able to increase the net amount of t-bills we sell. We can sell new ones as old ones are paid off (that is a null transaction - we really only have to come up with the money to pay the interest on the old bills) - typically this is just called "paying interest on the national debt".
Revenues are still coming in - we receive about 12 billion every day, and spend about 20 billion. For the last several months we have been making up the difference by using money from the Federal Employee's pension trust - that runs out on August 2.
On August 3 there is a big batch of SS checks going out, an amount far exceeding that day's $12 billion in revenue income - SS payments don't come out of the federal budget, but treasury has to have the funds on hand for the payments to clear.
On about the 15th, there will be a big interest payment due on maturing T-bills. We won't be able to pay that without borrowing and will enter default.
Those who say we have enough revenue to pay SS and Debt interest are assuming Treasury has access to the whole year's revenues, not just day by day income - but we can only do that if we borrow, which we can't do.
If the Social Security Trust Fund isn't real, then neither is the National Debt. Problem solved.
Here's the deal - the Social Security Trust Fund is made up of Treasury bills, and if they aren't real, then neither are the T-Bills that make up ALL of the rest of the national debt. Therefore the debt isn't real. No problem, no need to cut spending or balance the budget! There is no debt
Thom's Blog Is On the Move
Hello All
Thom's blog in this space and moving to a new home.
Please follow us across to hartmannreport.com - this will be the only place going forward to read Thom's blog posts and articles.
Images of Thom
With His Holiness The Dalai Lama, at His home in Dharamsala, India (Synthesis Dialogues - made into a movie narrated by Harrison Ford)
Okay, I've managed to become confused about what the debt ceiling is. If the debt ceiling is a restriction on increasing the national debt (which is what it sounds like, of course), then that wouldn't mean the Treasury couldn't pay off the bonds that come due, that would mean it couldn't sell more bonds until an equal value of other bonds were paid off, meaning that the debt could stay the same but not increase. That makes sense. The effect, then, of not raising the debt ceiling is that the rate of expenditure of the Federal Government could not increase, which is exactly how the Republicans are portraying it.
Some left-winger on the radio (I forget who, it might have been an interview guest) has said it would mean no money is coming in to the Treasury to pay off the bonds, which doesn't make any sense. That's not a limit on debt, that's a limit on revenue. It would actually keep the debt high--by not paying it off. But it's a better explanation than saying the debt limit would simply not allow the Treasury to pay off the bonds.