Government borrowing explained in 15 points or,
Government Borrowing for Dummies (like me). If I’m wrong please correct me.
Government has no “inherent” right to taxation and no “inherent” right to borrow.
Government borrowing is done every year that the government spends more money than it collects in taxes.
Government borrowing is a promise to pay the borrowers principal and interest from the proceeds of future taxation.
“The deficit” is the negative difference between income and spending every year. No deficit with no surplus only means that they spent everything taxed – that year.
Who does the government borrow from? 1/3 is borrowed from itself, which is still from us (ex., surplus social security funds), 1/4 from foreign nations, the rest from the public at large (all approximate).
The government has been borrowing almost every year for a long time.
Every year that the government borrows without paying its matured debt obligations, it must keep paying interest on said matured debt, and also on the new debt.
From the previous sentence it is obvious that the both debt and interest payments increase over time in a snowball effect.
In 2014 the government collected 3.02 trillion in taxes, and it still borrowed money.
In 2015 government debt (it’s ours through taxation) surpassed 18 trillion.
In 2014 the government’s interest payments were 431 billion.
Total interest paid on the debt now exceeds total “corporate” taxation. Corporations are being taxed to the hilt and more and more are fleeing the country, leaving individual taxpayers the lion’s share of the debt.
The debt (tax) burden for every single American is now 18,000,000,000.000 / 320,000,000 = $56,250.
If all the borrowing stopped today, and the government (we) were able to pay back $500,000,000,000 (500 billion) every year (including interest), it would take more than 50 years to pay all of it back (didn’t do the interest math on that).
Therefore, government has borrowed on future taxation, not only from our children, but also from our grandchildren and great grandchildren. This unless one of two things happen, much higher tax rates and/or much more taxable income, assuming of course zero borrowing.
Our questions to every politician should be: How are we going to pay the debt?, and How long is it going to take? They wont answer you.
If you owed 180,000 and you made 30,000/yr, would a bank lend you money?
And finally a wild theory of mine. Why all the push for more immigration? Maybe, it’s because American born citizens are reaching retirement age in greater and greater numbers, and the powers that be have decided that a larger population is needed in the hope for larger tax revenues so that they can perpetuate a Ponzi scheme.
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