This fiscal year (2010) we have approximately $13 trillion outstanding in debt (including "intergovernmental borrowing", that is, Social Security and Medicare.)
Our total debt service is projected (it's not quite over!) to be 4.63% of the budget, or about $165 billion. That's approximately 7% of revenues, incidentally.
That's an effective interest rate of about 1.27%.
Yes, 1.27%.
Now what happens if we take no more debt at all but rates normalize to 5%?
That would be $672 billion, or about $500 billion more than it is today. Incidentally, that's fifty-two percent of all (personal and corporate) income taxes, up from today's thirteen percent.
Of course the CBO says we will run about $1 trillion in deficits for the next ten years. Let's presume it's five years, and we'll give it the $1 trillion, although I think that's low - maybe by 25% or more.
So let's add $5 trillion to the total, for $18.5 trillion, and apply a 5% rate to it.
That comes to $925 billion, or dangerously close to all personal income taxes, which are $1.061 trillion.
Got it folks? All personal income taxes, or if you prefer all FICA and Medicare taxes, will go only to pay interest.
Please read more - in fact, forward this to your congressional representative perhaps.
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