Friday, February 3, 2012

How the national debt increased by $1.6 trillion in 2011

In 2011, the national debt increased by $1.6 trillion.  This was amassed by the government's spending $3.8 trillion while only receiving $2.2 trillion in revenues.

Bill Whittle (BillWhittleChannel) has prepared and published a comprehensive video detailing the sources of all U.S. income and spending for fiscal year 2011. From it, we learn that of the $3.8 trillion spent, $2.2 trillion was used for entitlement spending (social security, medicare, unemployment, food stamps, etc). This is the same number received in revenues. This means that all the money we taxpayers paid was given directly to entitlement recipients. Since there isn't any money left over, the government must borrow the difference for it to operate (paying salaries, retirement, funding all agencies, NASA, the armed forces, cost of war, etc).

 While Whittle's message is intended to inform us how the massive entitlement spending could positively influence the re-election of the president, we believe the message more importantly highlights our economic vulnerability to potential collapse. The national debt is now at $15 trillion, and Mr. Obama will ask to raise the debt ceiling to $16.6 trillion. By adding this amount each year, the national debt will double in 10 years. And, if interest rates rise, the interest we pay for this debt will further compound the problem.

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