National Debt Clock Overflowed, Extended By a Digit

hackingbear writes "The National Debt Counter, erected in 1989 when the US debt was 'merely' a tiny $2.7 trillion, has been moving so much that it recently ran out of digits to display the ballooning figure: $10,150,603,734,720, or roughly $10.2 trillion, as of Saturday afternoon. To accommodate the extra '1,' the clock was hacked: the '1' from "$10.2" has been moved left to the LCD square once occupied solely by the digital dollar sign. A non-digital, improvised dollar sign has been pasted next to the '1.' It will be replaced in 2009 with a new clock able to track debt up to a quadrillion dollars, which is a '1' followed by 15 zeros. That should be good enough for a few more months at least, I believe." Adds reader MarkusQ, "I know Dick Cheney has assured us that 'Deficits don't matter' but I can't help wondering if we should be fixing the problem rather than the sign."

Comments

Clock can run in reverse.

[Animats]

This is the second debt clock. The first version could only count upward, and when the budget had a surplus back in the Clinton years, and the debt began to decrease, the debt clock was shut down. After a year or so, it was then replaced with the current version, which has the ability to count both upward and downward. The downward capability has not been used during the Bush years.

Re:Clock can run in reverse.

[falcon5768]

actually the assertions are not entirely accurate in that whole spiel. The debt DID go down, but it was the way it went down that was not readily visible. The persons agenda clouds the fact that our debt needs to be paid down in certain ways before it can be paid off completely. Corporate accounting is not the same as governmental accounting, I know this one for a fact working for a school district and the specific ways we have to work our books that would make a corporate accountant freak out.

Re:Clock can run in reverse.

[dachshund]

it was only a surplus if you include FICA contributions.

I already posted a reply to this, but it occurs to me that a lot of people may not be clear on what it means.

You see, most working Americans see two kinds of Federal tax on their paystub. The first is plain-old Income Tax, which is probably in the low 20% range for most people with a "decent" full time job. The second is "FICA", which rolls up your contribution to Social Security and Medicare. For most people that tax covers another 7.6% of your income (6.2% Social Security, 1.4% Medicare). However, this number is misleading since the government actually makes your employer pay an equal amount. This is money that could be going to you, so really 15.2% of your salary is going to the government. (If you happen to be self-employed you'll see this directly, since the government makes you pay both halves.)

An important thing to note, however: the Social Security portion of your paycheck only applies to the first $90k or so of your income. So if you make, say $1m/year, your effective Social Security tax will be only a fraction of a percent. Basically it's a tax on the working class.

Now clearly 15.2% of your income is a huge chunk. In fact, considering that most people are probably paying only 20-22% of their income in regular Income Tax, that means you're really giving the Federal government 35-37% of your income! So it's worth knowing where the tax came from and where the money is going.

A bit of history: in the mid 1980s, Ronald Reagan came into office with the idea to slash income taxes, particularly for people who were "important" to the economy, i.e., very wealthy. At the time there was some belief on the Republican side that cutting taxes would magically produce new economic activity that would pay for the reduced tax cuts. Unfortunately, that never really happened and the nation started to go deep into debt.

Coincidentally (or not), right around the same time, a Republican chairman of the Federal Reserve came up with the idea to massively increase the Social Security Payroll tax. Recall that this is a tax that only applies to the first $90k of your income (it was less then), so raising it isn't going to have a big impact on high earners. In theory the tax hike was designed to build up a big reserve of cash so that Social Security could operate in the 2020s when the baby boomers started to retire. However--- and this is the really important part of the story--- the same chairman insisted that all this cash should not be put away someplace safe, but should rather be made available as a kind of piggy bank for the government to borrow from.

You can probably figure out the rest of it. Free money. Tax cuts to give. Weapons systems to buy. Amazingly, even after eating up all of the Social Security funds, the government still had to borrow hundreds of billions from the outside throughout the Reagan and Bush years.

So far it's possible to cause this a bipartisan cheat, since Democrats were equally to blame. But then in 1992 a Democrat named Bill Clinton got elected and decided to get serious about reducing those deficits. And over his term he succeeded, through a combination of slightly higher taxes (mostly on the high end of the income scale) and reduced spending (particularly military). The economy also boomed--- many say as a direct result of all of this fiscal responsibility. And so balancing the checkbook begat revenue which meant an even more balanced checkbook.

By 2000, Clinton (and his VP Gore) had cut the deficit all the way back to a "surplus" which means we were still borrowing some from the SS funds, just not from the outside world anymore. Al Gore ran on a campaign of even further deficit reduction, basically saying: let's finish the job, take those SS taxes you're paying, and put them in a special fund ("lockbox") where the government can't spend them. Republicans scoffed, and promised an even bigger round of income tax cuts (focused at the very wea

Re:Clock can run in reverse.

[otatop]

Contrary to Internet folklore, Dr. Kamerschen is NOT the author of "Tax Cuts: A Simple Lesson in Economics." Additionally, he does NOT know who wrote it.

Absolute number tells us nothing

[fermion]

The reason the debt clock has this problem is because it is sensationalistic and does not give us any real information. What we should be looking at is not the debt, but the debt in relation to some other metric, such as multiple of median income, amount per person, percentage of GDP. Using this later metric, Reagan left us with a debt of about 70% of GDP, Bush will leave us with a debt of 80% of GDP, while Clinton left us with a debt of about 60% of GDP. It is interesting to think that Truman, Ike, Kennedy and even Nixon, all worked to help the US future by reducing the % debt. We even have to give carter so kudos for not increasing it as a % of GDP. The scary thing is that during the great depression GDP fell perhaps 20 or 25%. If this happened in the next few years, our GDP might fall to 9.5 trillion, and we might see a national debt of 110% of GDP. This would be like a family with the median of $50,000 having unsecured debt of $55,0000. How they would pay this off would be extremely unclear.

Re:non-digital dollar sign

[RuBLed]

about 1.3599 better

Re:Perfect Time

[ikkonoishi]

We use the decimal system. We just run off of short scale instead of long scale.

The debt did go down

[goombah99]

Actually the debt realtive to the GDP went down which is all that matters.

Re:Cheney is right....

[Skim123]

Seeing as we bought $25 BILLION more from China than China bought from the US just in August 2008, I'd say that we are a pretty integral customer of Chinese manufacturing.

Check out the stats: http://www.census.gov/foreign-trade/balance/c5700.html. We've already bought more than $167 billion of Chinese goods than we have sold the Chinese. That is not an insignificant number, and that figure only takes into account the first 3/4ths of the year.

Re:Cheney is right....

[BZ]

> Unlike the US, they have a massive manufacturing base

Actually, the two have approximately equally sized manufacturing bases in terms of production. The US has much higher productivity, so many fewer manufacturing _workers_, but the total production is pretty similar. Further, China's total exports are about the same as those of the US. It's just that the US imports so much more than China does that causes our current trade imbalance.

There's also the fact that China's manufacturing base has been growing recently while ours has been shrinking, so if current trends continue then eventually what you say will be true.

> They have the rest of the world (Europe, Asia, Africa, Russia, the list goes on).

The real problem is that they employ people by producing all sorts of stuff that their own people don't (can't, largely) buy. So they HAVE to export to keep the economy going. They've been managing it so far by keeping a currency peg against the dollar so that their production is cheap in the US. This works because the US doesn't impose tariffs much on manufactured goods, even in the face of blatant currency manipulation.

The situation with Europe, Asia, Africa, Russia is quite different. No qualms about tariffs there, especially if it will protect domestic industries. So attempts by China to shift their exports elsewhere might be met with strong protectionist measures, making the US rather hard to replace.

Of course all this is speculation. And really, China should be working on creating domestic demand for its products. The problem is that doing too much of that threatens the political stability of the current setup, so it's been a pretty slow process.

Re:i give it two years

[squiggleslash]

Now for the current crisis, most of it can come to blame upon groups like the Acorn group and other liberals putting pressure on congress and banks to extend low income loans to people who could never afford one

No, it can't. The result of the efforts to make home ownership more widespread was a set of anti-discrimination laws placed in the CRA. However, CRA regulated loans had virtually nothing to do with the current crisis. Despite CRA-regulated banks doing the bulk of regular loans, 50% of sub-prime loans - which make up the bulk the "toxic mortgages" - were issued by banks entirely free of CRA regulation, and a further 20-25% were issued by departments of CRA-regulated banks that were free of CRA regulations. The remaining 25-30%, while performed by regulated banks, were almost certainly illegal given the strict nature of the CRA and the requirements for collateral it imposes.

The problem here are not mortgages given to people on low incomes, but sub-prime mortgages given to everyone. People were using the sub-prime market to make excessive gambles that fell apart when the housing market collapsed. These varied from overly stretched ARM HELOCs to people buying multiple houses with the intent of either flipping them or renting them out. You can probably imagine that the largest gambles were not taken by the poor, but by those on median or higher than average incomes.

BTW, thanks for being one of the few people making this argument that didn't directly blame ethnic minorities for this mess, but remember that the key laws Democrats are being blamed for are not laws directed at low incomes, but at ending discrimination against ethnic minorities. Those that are promoting this meme are treading on very dangerous ground. The CRA didn't force banks to give loans to people who couldn't afford them (quite the opposite in fact), and CRA regulated loans had little or nothing to do with this crisis, which affects sub-prime loans of the type the CRA prevents. It did require banks end discrimination, but a person from an ethnic minority who entered a branch of Wachovia and asked for a 110% mortgage to help them buy a $500,000 home which they expected to pay back using their Burger King salary would have been rejected just as a white person in the same circumstances would have been. The CRA wouldn't have forced them to give the loan anyway, the CRA would have done the opposite.

Re:The national debt is completely inevitable

[Colin Smith]

LOANS DO NOT CREATE MONEY

Well, that rather depends on how and who's making the loan, doesn't it. If I lend you a fiver. I lose the use of the fiver and no money is created. But if I lent you a fiver but still had the use of half of it, then you have a fiver and I essentially have $2.50. Money is created.

"The bank hath benefit of interest on all moneys which it creates out of nothing." - William Paterson, founder of the Bank of England in 1694

"I am afraid the ordinary citizen will not like to be told that the banks can and do create money. And they who control the credit of the nation direct the policy of Governments and hold in the hollow of their hand the destiny of the people." Reginald McKenna, Chairman of the Midland Bank, 1924.

"The banks do create money. They have been doing it for a long time, but they didn't realise it, and they did not admit it. Very few did. You will find it in all sorts of documents, financial textbooks, etc. But in the intervening years, and we must be perfectly frank about these things, there has been a development of thought, until today I doubt very much whether you would get many prominent bankers to attempt to deny that banks create it." H W White, Chairman of the Associated Banks of New Zealand, 1955

"Banks lend by creating credit. They create the means of payment out of nothing. " Ralph M Hawtry, former Secretary to the Treasury.

http://en.wikipedia.org/wiki/Money_creation

etc etc.