The party of fiscal responsibility
My ass. Some Republicans are fond of saying that deficits don’t matter. And, generally, they’re correct. The government’s books contain many non-cash items (such as social security liabilities and environmental clean up estimates) that may or may not reflect the true potential costs and that may or may not actually be paid (such as those environmental clean up items – they’ve not cleaned up for years and who thinks they’ll start now?). But it still doesn’t look good for a party that touted fiscal responsibility and accountability (and all those other bilities) to spend like drunken sailors.
October 13th, 2006 at 10:24 am
Because hey, the amount of money you need to pay yearly to service those debts doesn’t really matter when you can just borrow and unliminted amound to cover it.
Besides, if the debt ever goes from pretty bad to insanely bad we can just manupulate up a bit of inflation to make that debt pale in significance.
So where are my “bread and circuses”?
October 13th, 2006 at 10:30 am
Deficits aren’t debts. The borrowing to cover is substantially less because of the non-cash items that comprise the deficit number. In other words, a deficit of a billion doesn’t = borrowing of a billion. There would be some borrowing, of course, but the deficit doesn’t yeild a dollar for dollar borrowing.
October 13th, 2006 at 10:59 am
Uncle, I know you make a living at this kinda stuff so help me out here.
Wikipedia:
Say Uncle:
Wikipedia:
Say Uncle:
Okay, if I borrow a thousand dollars on my credit card, I have to pay back the thousand dollars, plus any interest accrued. I can pay that debt at a later date by getting another loan. But it does not follow that even though I have excellent credit, I should not be concerned about how much I spend.
Explain to me how the fedgov can borrow a billion to cover a shortfall between its income and its spending and not eventually have to pay that billion back plus interest (besides defaulting, of course). Granted, I understand how the debt might be paid back with inflation shrunk dollars or be shifted onto our grandkids’ shoulders (or paid back with even more loans).
October 13th, 2006 at 11:00 am
actually, I think this is the key phrase I don’t understand.
October 13th, 2006 at 11:09 am
That statement is false. It should be An accumulated deficit over several years (or centuries) can cause or can lead to or definitely influences the government debt.
Debt is borrowing and requires a transaction. In other words, someone has to either buy a security instrument (savings bond) or must borrow money (get a loan). Generally, there’s no magic debt faeries that automatically borrow money when you spend too much. The exception would be a line of credit and I don’t know that the .gov has one.
I didn’t mean to imply otherwise. But I can see how you got that impression.
Well, someone is always lending them money. So, new borrowings can pay off old debt. So, they’re like college kids who use one credit card to pay another.
Here’s the deal: they don’t pay lots of it back. I buy their bonds all the time. They don’t pay me anything until I redeem that bond. They don’t pay me one cent in interest for the 12 years it takes to mature. But they accrue that interest over the life of that bond. Hence, they have reported interest expense on that bond for 12 years but have expended no cash. When I redeem it, they expend the cash but there’s no expense as that expense has been, err, expensed already over the life of the bond.
Ultimately, they do have to pay back debt but you don’t pay back deficit.
And, of course, they can just print money 😉
Now, for the love of the children, don’t make me talk accounting anymore.
October 13th, 2006 at 1:07 pm
No, the party of people like Tom Delay has been an embarrassment.
If they lose in a few weeks, they certainly deserve it.