From: Ron Kean (ronkean@juno.com)
Date: Fri Jan 22 1999 - 15:35:26 MST
On Fri, 22 Jan 1999 16:14:17 -0500 "Alexander 'Sasha' Chislenko"
<sasha1@netcom.com> writes:
>Why does the govt have to borrow then?
In the simplest terms, the government needs to borrow when it spends more
than it takes in, its cash balance being normally very small.
>Is debt interest not counted in the budget?,
>or is there something else?
Interest on the debt is counted as an outlay in the Federal budget. Look
at the page next to the back of the 1998 IRS Form 1040 instruction
booklet and you will see pie charts for Fiscal Year 1997. Net interest
is 15% of outlays. Those pie charts for FY97 are for the 'unified
budget' which includes Social Security.
Before 1965, Social Security was 'off-budget', and if it were still
off-budget the 'rest of the budget' budget today would show a deficit,
not a surplus. That is because SS today is taking in more money than it
is spending, so SS is showing a surplus which contributes on net to the
unified budget as net current income for the government. It's actually
hard to see that from the pie charts because they have mixed in some
other things with SS.
It does not make a whole lot of difference whether SS is reported
on-budget or off-budget as long as we understand the difference and take
it into account. It is important to realize that the government is
building up an 'internal' debt to SS, even as it begins to pay down the
'external' public debt with the unified budget surpluses. I hope this is
not too confusing.
Ron Kean
.
.
.
___________________________________________________________________
You don't need to buy Internet access to use free Internet e-mail.
Get completely free e-mail from Juno at http://www.juno.com/getjuno.html
or call Juno at (800) 654-JUNO [654-5866]
This archive was generated by hypermail 2.1.5 : Fri Nov 01 2002 - 15:02:54 MST