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1 Expected Future: Security Implosion

Fiscal + Military + Economic

How much is too much Consumer Debt ?Total Consumer Debt: $2.6 trillion

All Financial Obligations Ratio

“Typical homeowner spends around $19.15 of each dollar of their after tax income on all “mandatory” financial obligations including car lease payments, rental properties, property taxes and homeowner’s insurance.”

Mortgages, car loans, credit cards & all other debt combined as of June 2008:

$112,043 average per US household  

Source: http://www.federalreserve.gov/Releases/housedebt/

How much is too much?

The Outstanding Public Debt as of 30 Nov 2008

$10,662,088,68,458.73 trillion

… or $34,936.04 per man, woman and child

The National Debt has continued to increase an average of $3.86 billion per day since September 28, 2007!

How much is too much National Debt ?

Source: http://www.brillig.com/debt_clock/

U.S. Real GDP + $11.5 trillion U.S. National Debt - $10.6 trillion [92% of GDP]

Real Median Income + $50,233 per Household Household Debt - $112,043 per Household [2.2* income]

Unfunded Government - $500,000 per Household [10* income] Financial Obligations

Source: “Taxpayers on the hook for $59 trillion” USA Today 5/29/2007

(2007 figures)

How much is too much Unfunded? Reality Check

The Trillion-Dollar Deterioration in the Budget(Based on CBO’s Jan 01 & Sept 08 Budget Projections)

  2009Cumulative:

2002-11

Jan. 2001 projection $710 Billion

surplus$5.6 Trillion

surplus

Sept. 2008 estimate $546 Billion

deficit (-)$3.8 Trillion

deficit (-)

Total deterioration$1,256 Billion

($1.3 T.)$9.4 Trillion

Deterioration solely from tax cuts and

budget increases in security-related

programs

$1.0 Trillion (-) $7.2 Trillion (-)

Source: http://www.cbpp.org/9-12-08bud.htm

For the 2002-2011 period tax cuts and increases in security programs account for more than four-fifths of the fiscal deterioration caused by policy actions.

Federal Budget One Trillion Dollar Deterioration

Federal Budget annual plan for spending tax

revenue

↑↑↑ Spending Increases in military and other

security programs account for another 40% of the $1 Trillion deterioration. 

↓↓↓ Tax RevenueDeterioration was NOT due to performance of the economy--tax cuts accounting for 42% of the $1 Trillion deterioration

Source: http://www.cbpp.org/9-12-08bud.htm

What would One Trillion Dollars buy?

This amount would allow us to repair all of our nations 77,000 deteriorated BRIDGES and still have $519 billion to spend.

If you spent $750,000 twice each day for 200 years, you’d be halfway to $1,000,000,000,000.

$700 billion > currently allocated for the U.S. war in Iraq.

This amount would allow us to rebuild all of our nations 33,000 deteriorating SCHOOLS and still have $664 billion to spend.

How much is too much?Recent Additions to U.S. Public Debt:

Fiscal Year (10/01) Value % of GDP2000-01 $144.5 billion 1.4%2001-02 $409.5 billion 3.9%2002-03 $589.0 billion 5.5%2003-04 $605.0 billion 5.3%2004-05 $523.0 billion 4.3%2005-06 $536.5 billion 4.1%2006-07 $459.5 billion 3.4%2007-08 $1,017.0 billion (est.) 7.4%

How much is too much National Debt ?

Source: http://en.wikipedia.org/wiki/United_States_public_debt#cite_note-46

The key differences between the “Reported” Budget Deficit and the Change in Public Debt:

1. Social Security surplus, which reduces the "off-budget" deficit often reported in the media

2. Non-Budgeted “Supplemental” spending such as for the Iraq and Afghanistan wars

Debt Financing quick fix for budget

shortfalls

Source: http://www.treas.gov/tic/mfh.txt

Foreign

26%

Federal

52%

Debt Financing

$652.9 b

$585.5 b

TOTAL (Oct 08)

$3042.7 b.

Debt Financing America's Overseas CreditorsMajor foreign holders of U.S. Treasury securities.

SOURCE: U.S. Treasury | The Washington Post - January 3, 2009

2018 Looking forward …. to the Great Meltdown

Permanent Tax Cuts Persistent Budgetary Deficits

Interest 2nd largest Budget Obligation

Boomer Tsunami overwhelms Retirement Obligations

2030 The last of 78 million retiring Baby Boomers: 1946+65 years = 2011 1964+66 years = 2030

Retirement Program “Solvency” Issues

Healthcare Unsustainable Trajectory

Buyers for National Debt Treasury Securities?

Source: http://www.cbpp.org/pubs/fedbud.htm

Less Tax Revenue

Source: http://www.gao.gov/financial/fy2007/guide.pdf

More Expenditures

Decade

1959-69

1969-79

1979-89

1989-99

1999-09

Interest Obligation

$# % Change

$ 12 b. +119

$ 42 b. +250

$169 b. +302

$229 b. +125

$260 b +014

More Interest on Debt

Retiring Boomers sell-off investment Assets to cover living expenses [ ↓ price of assets?]

KEY Dates For The Trust Fund EXHAUSTION OASI DI OASDI HIFirst year Outgo > Income - Interest . . . 2018 2005 2017 2008First year Outgo > Income + Interest . . .2028 2012 2027 2010Year Trust Fund Assets exhausted . . . . 2042 2025 2041 2019Assets end 2007 (in billions) . . . . . . . . . . .$2,023.6 $214.9 $42.9

Loss of Confidence in Solvency of US, fewer foreign buyers, higher required yield/interest

Fewer Buyers for National Debt ?

How much is too much?What does it all MEAN ?

Less tax revenue

More Spending

More Debt

More Interest dueMore Retirees obligations

Persistent deficits

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1 Expected Future: Security Implosion

Thank U for Listening! Kay E. Strong, PhD

10 Dec 08

Fiscal IN-Security

Economic NON-Growth

Military UN-Sustainability