Posted On: Saturday - August 19th 2023 11:42AM MST
In Topics:   Global Financial Stupidity  Economics  US Feral Government  The Future  Taxes
It's staaaartingggg! [points finger at the screen like little Heather O'Rourke in Poltergeist]
Peak Stupidity has pointed out the US budget financial doom coming as soon as interest rates rise out of the
The snapshot is above isn't in the pie chart form. I don't know what you call this kind of graph. It's easily interpretable, as was a similar type we showed in this post about having perspective on slavery, used to show spatial relationships too.
It was not me but one Daniel Horowitz of The Blaze who circled and pointed out that $67 Billion monthly net interest payment in his article Record Debt and Inflation from the Rich Men North of Richmond. This was the July US national budget picture.
What looks really horrible is the difference between tax receipts and outlays, with only 58% of the outlays being covered. I am not sure if that is a somewhat seasonal artifact though. Income tax withholding is very regular, and then there are quarterly payments made by the more well-off and by corporations - there are deadlines, but the payment periods cover the year evenly. The period of mid-January through mid-April is one in which there must be a lot of money going both directions as far as individual taxpayers (and taxeaters) are concerned.
That aside, one can calculate that July's net interest paid out was 13.5% of the monetary outlays. From the looks of the categories, special Ukraine payments due aside, the rest doesn't look very seasonal. July may not be anything special as far as interest payments go - they are going up as rates go up. Even so, that $67 Billion monthly payment on a debt of $32 Trillion is still at an average annual rate of only 2.5%! (I didn't count compounding.) As the article states among its many personal-level economic doom bullet points later on in the article*, home interest rates are averaging 7.5% now. Even low, low Treasury bond rates must be generally increasing from that 2.5%. I was just going to present this graph, but Mr. Horowitz is scarier than a poltergeist here:
According to the Treasury Department, for the first time ever, spending on interest on the debt not only surpassed military spending in July but tied the cost of our health care leviathan! At $67 billion, the cost of servicing our debt was eclipsed only by Social Security and education (because of student loans) and was 20% costlier than national defense. Put another way, more than 50% of all tax revenue collected from all payroll taxes of all U.S. workers went toward interest on the debt. Headed forward, assuming interest rates aren’t forced up even higher, we will pay an annualized rate of $1 trillion in interest on the debt of government programs and functions that shouldn’t exist even if they were free.That's what I've been saying was coming. It's here!
* ... which are probably a subject for another post.