By Robert Willmann
Like Mother Nature, mathematics is impartial. The financial or fiscal year of the U.S. government starts on 1 October and ends on 30 September of the following year, with its name being the year of the last nine months. Fiscal year 2024 started on 1 October 2023 and ended on 30 September 2024. Two financial documents provide a small view into the massive federal organization — the Daily Treasury Statement and the Monthly Treasury Statement. These are available from the Internet website of the Department of the Treasury.
The Daily Treasury Statement starts off with a little joke, saying that it shows the “cash and debt operations of the United States Treasury”, but the “detail, rounded in millions, may not add to totals” [1]. So we have to add six zeroes to each number we see on there. The wonderful base 10 number system has one zero for the tens, two zeroes for the hundreds, three zeroes for the thousands, six zeroes for the millions, nine zeroes for the billions, and 12 zeroes for our new friends, the trillions.
On page three is Table IIIC, Debt Subject to Limit. Total public debt outstanding is $35,464,674,000,000. Total public debt subject to the “debt limit” (wink, wink) is $35,354,856,000,000. At the bottom of each column is “Susp-1”. This is the second little joke, in the form of a footnote, except that the joke is on you. On page 4, the footnote says: “Table IIIC — Debt Subject to Limit. Susp-1 — Statutory Debt Limit temporarily suspended from June 3, 2023 through January 1, 2025. Unamortized Discount represents the discount adj. on Treasury bills and zero-coupon bonds.”
A child might ask, “Mommy, how did the debt limit get suspended? And why was it suspended until 1 January 2025?” To answer these questions, a look at the footnote says that the debt limit disappeared on 3 June 2023, a year and five months ago. On 31 May 2023, I wrote an article here explaining what was about to happen in Congress with the proposed law H.R.3746, and its scripted professional wrestling show to raise the debt limit.
Sure enough, the bill was passed and became Public Law 118-5. It was approved by the House of Representatives at 9:25 p.m. on 31 May 2023 with a vote of 314-117, and by the Senate on 1 June 2023 with a vote of 63-36. On 3 June 2023 president Biden signed it [2]. Section 401 appears at the very end of the law. 401(a) removes the debt limit and the candy store is open through 1 January 2025, after the election for president, vice-president, and some members of Congress. Here is that roadside bomb, in the “Fiscal Responsibility Act of 2023”–
“Sec. 401. Temporary Extension of the Public Debt Limit
“(a) In General. — Section 3101(b) of title 31, United States Code, shall not apply for the period beginning on the date of the enactment of this Act and ending on January 1, 2025.
“(b) Special Rule Relating to Obligations Issued During Extension Period. — Effective on January 2, 2025, the limitation in effect under section 3101(b) of title 31, United States Code, shall be increased to the extent that–
“(1) the face amount of obligations issued under chapter 31 of such title and the face amount of obligations whose principal and interest are guaranteed by the United States Government (except guaranteed obligations held by the Secretary of the Treasury) outstanding on January 2, 2025, exceeds
“(2) the face amount of such obligations outstanding on the date of the enactment of this Act.
“(c) Restoring Congressional Authority Over the National Debt.–
“(1) Extension Limited to Necessary Obligations. — An obligation shall not be taken into account under subsection (b)(1) unless the issuance of such obligation was necessary to fund a commitment incurred pursuant to law by the Federal Government that required payment before January 2, 2025.
“(2) Prohibition on Creation of Cash Reserve During Extension Period. — The Secretary of the Treasury shall not issue obligations during the period specified in subsection (a) for the purpose of increasing the cash balance above normal operating balances in anticipation of the expiration of such period.”
Sections 401(b) and (c) want to say what happens on 2 January 2025, after the New Year’s Eve parties and New Year’s Day. A new debt ceiling is automatically created at however big the national debt is, as long as Congress appropriated money that is to be paid before 2 January 2025. And, the Treasury Secretary is not to issue a whole lot of new debt before then to create a giant cash reserve “above normal operating balances”. What is a normal operating balance? The Daily Treasury Statement of 30 September 2024 says it is $885.7 billion. The daily statement of 10 October says $783.3 billion.
The Monthly Treasury Statement for September 2024 is the final one for that financial year [3]. Lines 32-33 on page nine show “interest on debt securities (gross)” as $1,133,037,000,000. Lines 16-21 on page 19 give more of a breakdown on the interest on the public debt. The last two lines of page 35 state the gross interest paid as outlays for each month of the 2024 fiscal year. On page 38, “net interest” is given for the year as $881,651,000,000. Net outlays are $6,751,552,000,000 and receipts are $4,918,736,000,000, which give us the deficit for 2024 as $1,832,816,000,000.
A favorite con of Congress that has shown up in the last several years is that they are going to reduce the deficit, debt, or [fill in the blank] by some amount “over the next 10 years”. More than 20 years ago, a fad started in which laws were given the name of an advertising slogan, an acronym, or both. Such as, “The Fiscal Responsibility Act of 2023”.
The monstrous problem of debt described here applies only to the United States Government. It does not include the debt of state and local governments, or the oppressive problem of debt carried by individuals, companies, and corporations.
Rising prices (price inflation) and massive illegal immigration severely degrade and damage our society and way of life, and there has been some talk about them during the political campaigns this year.
But the debt bomb was tucked away and hidden one year and five months ago by politicians of both major political parties who knew exactly what they were doing when they eliminated the federal debt limit, which included protecting themselves through the elections of this year.
The second day of January 2025 is 59 days from now. What is Congress going to try to do?
It is time for situational awareness.
[1] The Daily Treasury Statement of Monday, September 30, 2024.
[2] Public Law 118-5. The Fiscal Responsibility Act of 2023.
http://www.congress.gov/bill/118th-congress/house-bill/3746/text
[3] The Monthly Treasury Statement for September 2024. You have to scroll down and click on the “Published Reports” button to download the 40-page report in the pdf computer format.
Cover of the September 2024 Monthly Treasury Statement.
Page 9 of the September 2024 Monthly Treasury Statement.
Page 19 of the September 2024 Monthly Treasury Statement.
Page 35 of the September 2024 Monthly Treasury Statement.
Page 38 of the September 2024 Monthly Treasury Statement.
There is no way US GDP total expected value can even pay for the Social Security total expected value (sum of all future obligations present value accounting for inflation). Let alone Medicare total expected value. And transfer payments will soon impinge on Federal discretionary budget, before we even talk about debt servicing. (And the looming pension bombs public and private.)
So there is no realistic hope of ever balancing the budget for the next 50 years, without leaving retirees to fend for themselves or laying off massive portions of all governments. The historical answer for this kind of currency crisis is always a new currency. Venezuela effectively dollar-ized on the down-low, just like Argentina of the 90s. The Dollar is going away.
After WWII, the national debt had grown rather large, but was paid down substantially until 1981. The marginal tax rate was 90% and that helped a lot. It would take a few decades of the same and high income earners would pay the most. As per Willie Sutton, that is where the money is. I am not so sure the US$ could be replaced, since that would seriously upend the international financial system. Of course, it would not happen today with our broken political system, but at some point it will be urgent and hopefully it will be solved then.
The candidates are silent?
Well, Harris sure is, but Trump and the people around him – several presumed to be in his administration in some compact when he takes office – have made big government and associated out of control spending a cornerstone of the campaign’s platform.
So this is yet another misrepresentation of Trump.
Eric Newhill,
Neither candidate has put forth a plan to reduce the deficit. Both plans will increase the deficit although Trump’s appears to increase it much more than Harris’. Trump’s deportation plan is a huge federal program with a huge price tag.
TTG,
Deporting the millions of third world MoFos that Biden/Harris subsidized with tax dollars, on behalf of crony capitalists seeking slave labor – and due to suicidal empathy virtue signaling – is a lot less expensive than keeping them here. Deportation is a one time expense made necessary by the democrats.
Anyhow, Trump has put forth various plans that will address the deficit. Tariffs and elimination of waste in govt. are a big part. Corporate tax cuts as economic stimulus result in higher tax revenues because more people making more money. People pay more taxes than corporate entities. Incentivizing US production will increase tax revenues.
Then there is always project 2025 – or elements of it – which makes you wail and gnash your teeth – but would reduce the deficit.
This has all been discussed by Trump and surrogates on a daily basis. How would you know though given your sources are hung up on “Orange Bad” level propaganda?
This is from the CBO. Of course, it includes all immigrants, legal and illegal. But it includes all those let in awaiting asylum hearings and all those Haitians, Venezuelans and others let in legally that Trump wants to deport.
“In 2022, immigrants generated $1.6 trillion in economic activity. The Immigrant Research Initiative estimates that immigrants account for 17% of the U.S. economic output, which is higher than their share of the population. Immigrants paid more than $579 billion in local, state, and federal taxes in 2022. They also pay into Social Security and Medicare benefits for U.S. citizens. Immigrants expand the labor force and ease labor shortages. They are especially important in the healthcare sector, where more than 18% of workers were born outside the U.S. The Congressional Budget Office (CBO) estimates that increased immigration could reduce the U.S. federal budget deficit by $897 billion over the next decade and boost the gross domestic product (GDP) by $8.9 trillion between 2024 and 2034.”
TTG,
“Immigrants” is a big camp. Yeah I hire H1Bs because the US educational system – run by democrats – sucks at preparing our youth for a productive life. Yes, the nursing aids from the Philippines, doctors from Pakistan, Elon Musk and Viveck’s parents. Yes, those H1Bs and the rest pay in. That is 180 degrees from millions of illegals getting flown around the country for free, health care, food stamps, cell phones, a $10,000 starter check, etc.
Nice try at obfuscation.
Willie Sutton said it best…”Go where the money is!” Not much point is taking away from seniors and the underclass. Eventually the way will be clear to institute an actual progressive tax system. We don’t have to pay “off” the debt but we sure do need to be making progress (discernible) at paying it down. Business benefits from stability—competent rule of law and sensible tax policies.
This is what a fair election looks like.
The cheat machine has been stopped. Trump will end up with about as many votes as he had in 2020 + won the popular vote on top of the electoral. The Democrats/Leftists/progressives lost 20 million votes (based on 2020 compared to 2024). Evaporated into thin air. Where oh where did they go? LOL. Progs stayed home this year? Sure they did. Sure they did….. Or the cheat machine was thwarted from using its algorithms to create 20 million fake mail-in ballots like it did in 2020.
Great days ahead for America.
Not so great for the Borg and wasteful government tax leeches.