“43 Cents on the Dollar”

I wasn’t as informed as i should have concerning all the terms that were floating around as analytical tools during the latest congressional fiasco which was finally sorted it out on the next-to-last day before the government of the United States defaulted. I was following the new developments closely but was not schooled on all the terminology that was floating around. I was basically upset because of the fact that the great country I live in has to be in the futile position it is. So I started to investigate and learn more about the terminology. And since these adjustments that finally broke the stalemate between the House and the Senate will not really make much of a difference, then it would be beneficial for us all to make ourselves more familiar with the state of our financial future.

Federal Deficit (Federal Debt): An excess of federal government spending over tax collections. The federal deficit has been the subject of on-again, off-again debates among vote-seeking politicians and pointy-headed economists for a number of years. The main points of the debate are: (1) the potential crowding out of investment in capital goods, (2) the use of borrowed funds for either “consumption” or “investment” government purchases, and (3) the constraints imposed on fiscal policy. The jury of pointy-heads remains undecided on these issues…Link

National Deficit: The sum of all previously incurred annual federal deficits. Since the deficits are financed by government borrowing, national debt is equal to all government debt outstanding. also called National Debt….Link

The National Debt Clock

Government Debt (National Debt, Public Debt): Government debt (“public debt”, “national debt”) is money owed by government, at any level (central government, federal government, national government, municipal government, local government, regional government).

Gross Domestic Product (GDP): Economic growth is measured in terms of an increase in the size of a nation’s economy. A broad measure of an economy’s size is its output. The most widely-used measure of economic output is the Gross Domestic Product (abbreviated GDP).

GDP generally is defined as the market value of the goods and services produced by a country. One way to calculate a nation’s GDP is to sum all expenditures in the country. This method is known as the expenditure approach and is described below…….Link

Debt Ceiling: What is a “debt ceiling”? What is the current debt ceiling of the United States? What is the definition of a debt ceiling?

The concept is a debt ceiling is pretty simple.

A “debt ceiling” is the maximum amount of debt that a government can take on.

For instance, the United States currently has a debt ceiling of $12.1 trillion dollars.

Considering that the country currently owes $12.09 trillion dollars, this is obviously a problem.

In order to spend past this ceiling, Congress must agree to raise it.

Since 2002, Congress has had to raise the ceiling seven times, with an eighth expected sometime during the next month.

As it stands right now, Democrats are calling for a $1.8 trillion dollar hike in the debt ceiling, while Republicans are trying to freeze the ceiling.

The purpose of the debt ceiling is to try to limit out-of-control spending, but it certainly hasn’t had the desired effect over the past 6-7 years……Read More

This Yahoo Link (Daily Ticker) Explanation and Video from May 16, 2011 helps explain more:

What does this really mean anyway?

Well, first…let’s define debt ceiling: “It is the level of government borrowing allowed by Congress.” Think of the debt ceiling like the government’s credit card limit… and it’s maxed out. The current debt ceiling sits at $14.294 Trillion. This is the amount of money the government is legally allowed to borrow to fund all its functions – from defense to education to entitlement programs. But don’t worry just yet. Treasury Secretary Timothy Geithner says the government can continue to pay its debts until August 2nd thanks to higher-than-expected tax revenue and “extraordinary measures” such as stopping the issuance of State and Local Government Series bonds, which fund infrastructure and other projects. In addition, Geithner says he is going to stop making contributions to the pension plans of certain federal employees.

To put the debt ceiling in historical perspective: Congress has voted 10 times in past decade to raise the debt ceiling, typically without much fuss. But this year is different. Many House Republicans say they won’t vote to raise the debt ceiling unless the Obama administration agrees to big spending cuts, or at least tough restrictions on future spending. The White House says the debt ceiling vote should be separate from the budget debate, so an All-American standoff is occurring….More Here

Then you have Public Debt, Gross National Debt, The Federal Budget and it goes on and on……….

Click on Image to obtain Real-Time Numbers

Here you have the Real-Time Numbers which effect the US Deficit. By rolling the mouse over each title of the categories listed there, one could find out it’s significance. One can click on the World Debt Clock and the State Debt Clock (Top left-hand corner) to get more specific information. On the Bottom there are other places to click on, for example Auto Sales or Gold/Precious Metals. It can be very difficult to understand and further reading is necessary. I am providing the basics here but enough to continue on.

And what about the “43 Cents on the Dollar”

All Based on these White House numbers. If you divide the fiscal 2012 federal budget by spending one would get 57 cents of every dollar. The amount the government spends comes from revenue, which means the other 43 cents are borrowed. Go to the CBO website and find out more.

It could be very complicated but there are tutorials and guides available. Here’s one prepared by David Rosen (High School level). On How Stuff Works you can read their short and uncomplicated definition.