Excerpt Of The Day: Tom Coburn On The National Debt

by John Hawkins | September 29, 2008 6:16 am

“Our nation faces an economic challenge today equal to any challenge we have previously faced and now requires our full attention.

The following snapshot of our economy should impress upon everyone the seriousness of the job ahead. The national debt currently stands at over $9.58 trillion, the largest in World history.

This year’s deficit, in real accounting terms, stands above $600 billion.

This year alone, taxpayers will spend more than $230 billion just to pay the interest on the national debt.

…According to Reuters news service, the total tab for government rescues and special loan facilities this year is more than $900 billion, not including the proposed $700 (billion) rescue of the financial markets in the Paulson Plan.

Already this year, the federal government has taken drastic steps to stabilize the economy, all using taxpayer dollars. While several of these amounts may be fully repaid to taxpayers, they involve huge liabilities and expenditures:

:· $200 billion was authorized for use in rescuing Fannie Mae and Freddie Mac. The Treasury will inject up to $100 billion into each institution by purchasing preferred stock to shore up their capital as needed.

:· $300 billion for the Federal Housing Administration to refinance failing mortgage into new reduced-principal loans with a federal guarantee.

:· $4 billion in HUD grants to banks to help them buy and repair homes abandoned due to mortgage foreclosures.

:· $85 billion loan from the Fed for AIG, which would give the federal government a 79.9 percent stake and avoid a bankruptcy filing for the embattled insurer.

:· At least $87 billion in repayments to JPMorgan Chase & Co for providing financing to underpin trades with units of bankrupt investment bank Lehman Brothers.

:· $29 billion in financing from the Fed for JPMorgan Chases’ government-brokered buyout of Bear Stearns & Co in March.

:· At least $200 billion of currently outstanding loans to banks issued through the Federal Reserve’s Term Auction Facility, which was recently expanded to allow for longer loans of 84 days alongside the previous 28-day credits.

Starting last year, Social Security and Medicare projected expenditures exceed revenues. Over the next 75 years, this will cost $41 trillion in present value terms.

Of that amount, $34 trillion is related to Medicare and $7 trillion to Social Security.

By one account, the current unfunded liabilities of Medicare and Social Security are above $100 trillion.

If we think that the current economic troubles are a concern, wait until the bill comes due for all of the reckless spending Congress is engaging in today.” — Tom Coburn[1]

  1. Tom Coburn: http://coburn.senate.gov/public/index.cfm?FuseAction=RightNow.Home&ContentRecord_id=a48c3c8d-802a-23ad-4f57-69e4b334cd07

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