Let’s dream: Let’s imagine that the American political leadership decides to get serious about U.S. Federal government debt reduction—crazy as it may sound.
Actually, that’s too crazy. The American political leadership willnever “do the right thing” with regards the deficit. After all, last spring, the American political leadership couldn’t agree on a measly billion worth of cuts—a mere 1.4% of the total Federal government budget.
Okay, so in order to give our daydream a veneer of verisimilitude, let’s pretend instead that the members of Congress and the president are the victims of a cunning biological terrorist attack—they are infected with truly massive doses of both the Responsibility Bug and the Austerity Virus.
And then—under the unnatural effects of these sneaky terrorist pathogens—the American political leadership decides to cut the deficit outright, and start retiring the national debt.
Yeah: That’s much more realistic.
How much would they have to cut, in order to pay off the national debt? And how long would it take, to retire that national debt in its entirety?
Well, in order to figure this out, first they’d have to get honest about exactly how much is the U.S. Federal government’s debt. (Honesty is a perverse side-effect of the Responsibility Bug and the Austerity Virus. Scientists are working feverishly to try to stop this honesty stuff.)
Total outstanding Treasury debt is .7 trillion—but that’s not the entire Federal government debt. To those .7 trillion, you have to add another .6 trillion, which corresponds to “intragovernmental holdings”—basically IOU’s or markers the Federal government has put in the famed “Social Security lockbox”.
Thus the total Federal government debt: .35 trillion.
That’s the number the Congress and President of our dreams has to close: .35 trillion. Or to be more precise: ,344,491,791,132.71.
The current deficit is .65 trillion per year—but that bald number doesn’t help up much.
A better factoid would be knowing, How much revenue does the U.S. Federal government bring in per year, via taxes, fees and so on?
That would be .173 trillion, according to the OMB.
So let’s imagine that the Capitol Hill and the White House of our dreams agree to immediately cut all deficit-expenditures—that is, cut .65 trillion right off the top—and then they also agree to pay down the national debt on an “accelerated” schedule: Let’s say they set aside a third of all Federal revenue to pay down the Federal government debt. In other words, for every of revenue the Federal government brings in, will be for government services and operations, and another will be for paying down the debt.
