RE: Debt

[National Dialogue Moderator <moderator>]

> From: WFord72238@aol.com 
> Date: Wed, 5 May 1999 02:29:34 EDT
> Subject: suggestions
> To: info@network-democracy.org 
> 
> William J. Ford
> Austin, TX 78750-1052
> Email wford72238@aol.com 
> 
> I suggest that the first thing needed is an agreement on terms to be used in
> any discussions.  For example, what is the national debt?  What is the
> federal debt? What is the debt held by the public?  Why does Reuters not even
> mention the Public Debt?  Why does Senator Helms use public debt numbers in
> whar he calls the federal debt.  Then there is the gross federal debt that is
> slightly different from the public debt.  Is the budget surplus  going to be
> the Congressional budget version or the CBO or the OMB version?  What is the
> interest on the debt.  Is it the net interest or is it the billion dollar a
> day interest?  The talks are going to get nowhere without getting the numbers
> straightened out.  Thank You   Bill Ford
> 
> 
> U.S. Treasury sees record Q2 debt paydown
>   Reuters
> Monday, May 3 1999 04:49 PM EDT
> 
> WASHINGTON (Reuters) - A booming economy that is flooding government coffers
> with tax revenues will permit the U.S. Treasury to pay down the national
> debt by a record amount during the current quarter, Treasury announced on
> Monday...............
> 
> While the quarterly paydowns are significant, they represent a small inroad
> into reducing accumulated government debts that total about $5.5 trillion, 
> of which approximately $3.4 trillion trades publicly..........
> 
> Still, the longer term trend of the government's debt is downward. Congress
> has adopted a budget plan that foresees reducing the government's debt by
> $1.8 trillion between 2000 and 2009........
> 
> After completing the second-quarter paydown of debt, Treasury said it
> expected to have a cash balance on June 30 of $55 billion..........
> 
> During the first quarter, which ended on April 30, Treasury borrowed a total
> of $5.8 billion. It had $21.6 billion in cash on hand on March 31.........
> 
> Around 2010, analysts predict spending will swell again as a rising
> proportion of ``baby boomers'' born after World War Two begin retiring and
> placing strain on the Social Security payments system.
> 
> THE VERY BAD DEBT BOXSCORE (Senate - May 03, 1999)
> Mr. HELMS. Mr. President, at the close of business, Friday, April 30, 1999,
> the federal debt stood at $5,585,839,850,171.61 (Five trillion, five hundred
> eighty-five billion, eight hundred thirty-nine million, eight hundred fifty
> thousand, one hundred seventy-one dollars and sixty-one cents).
> 
> One year ago, April 30, 1998, the federal debt stood at $5,499,895,000,000
> (Five trillion, four hundred ninety-nine billion, eight hundred ninety-five
> million).


Mr. Ford,

I was asked to respond to your questions below. As you probably
know:

Public Debt is the amount the federal government owes the Public
(It's in publically traded Treasury bonds and bills, etc).  This
is the $3.4 trillion amount you saw in the Reuters article.  They
also noted that CBO projections based on current law could decrease
this by $1.8 trillion over the next 10 years. OMB's numbers are
pretty close to that too.

Gross Federal Debt also includes the debt the Federal govt owes
itself - i.e., agencies such as Social Security, Medicare,
Highway/Airway Funds, the Federal Retirement Plans, Unemployment
Insurance Funds, etc.  Those agencies have collected more in taxes
(e.g. Social Security has collected more in taxes than they have
paid out) and their extra funds must by law be invested in federal
government bonds (debt that the feds - really us - owe the funds).
This amount is the $5.5 trillion you see in the article.

Net Interest is the interest that the government pays on the Public
Debt and is a bit over $200 billion per year.  That's about 6% or
so on the Public Debt.  It is "net", because they originally figured
out the interest on the Gross Debt and then noticed that the
government agencies get some of those interest payments on the
agency funds (see list above).  This interest that the agencies
receive is netted out of the interest on the Gross Debt, so that
it becomes just the interest on the Public Debt.  Clear as mud huh?
Please let me know if I just made this more difficult.

Your Helm's quote:  I could not see all of the Helm's quote, but
here is what I think he was implying, based on as much of the quote
as I can see.  The Gross Debt went up last year, even though the
Public Debt went down last year.  (That's because the feds owe
Social Security more than last year, and that's in Gross Debt, not
Public debt.)

Ron Gebhardtsbauer
Senior Pension Fellow
American Academy of Actuaries
1100  17th Street,  NW  (7th floor)
Washington, DC  20036
gebhardtsbauer@actuary.org
202-785-7868