Read more at https://www.channelnewsasia.com/news/business/five-key-numbers-in-republican-us-tax-revamp-9511910
(Updated: )
Ricky Lim ·
US$1.456 TRILLION
The amount that the bill will add to the national debt between 2018 and 2027.
Even accounting for increased economic growth brought about by the tax overhaul, an approach known as dynamic scoring, the Joint Committee on Taxation projects the bill will cost about US$1 trillion over the next decade.
--
But US Treasury say :-
US Treasury says Senate tax plan would boost revenue US$1.8 trillion
Read more at https://www.channelnewsasia.com/.../us-treasury-says...
12 Dec 2017 01:14AM (Updated: 12 Dec 2017 01:20AM)
--
Is there a serious trust deficit - on what White House say & what Joint Committee on Taxation says.
More incline to believe what Joint Committee on Taxation say is true.
The amount that the bill will add to the national debt between 2018 and 2027.
Even accounting for increased economic growth brought about by the tax overhaul, an approach known as dynamic scoring, the Joint Committee on Taxation projects the bill will cost about US$1 trillion over the next decade.
--
But US Treasury say :-
US Treasury says Senate tax plan would boost revenue US$1.8 trillion
Read more at https://www.channelnewsasia.com/.../us-treasury-says...
12 Dec 2017 01:14AM (Updated: 12 Dec 2017 01:20AM)
--
Is there a serious trust deficit - on what White House say & what Joint Committee on Taxation says.
More incline to believe what Joint Committee on Taxation say is true.
Like · Reply · 1m
Ricky Lim ·
The World has to be careful toxic funds and toxic assets like those minibonds, Lehman Brothers etc that will be coming out few years down the road.
Banks must be careful not to carry such funds and assets, otherwise :-
(1) Ignorant public
(2) town councils
-- will get burnt by such funds like 10 years ago --- in which Obama has came out with banking regulations to stop.
But look like such banking regulations will be dismantle.
Banks must be careful not to carry such funds and assets, otherwise :-
(1) Ignorant public
(2) town councils
-- will get burnt by such funds like 10 years ago --- in which Obama has came out with banking regulations to stop.
But look like such banking regulations will be dismantle.
Like · Reply · 1m
Ricky Lim ·
The investment into BOA, Citibanks by Sovereign Funds also get hit 10 years ago.
Like · Reply · 1m
Ricky Lim ·
Otherwise how the debt is funded?
Like · Reply · 1m
Borrowing and the Federal Debt
Federal Budget 101
Deficit and Debt: What are they?
Why Does the Federal Government Borrow?
How Does the Federal Government Borrow?
Who Does the Federal Government Owe Money To?
Debt Held by the Public
The Debt Ceiling
Why Is There a Debt Ceiling?
The Great Federal Debt Debate
Endnotes
Borrowing and the Federal Debt
Federal Budget 101
If federal revenues and government spending are equal in a
given fiscal year, then the government has a balanced budget.
If revenues are greater than spending, the result is a surplus.
But if government spending is greater than tax collections, the result is a deficit.
The federal government then must borrow money to fund its deficit spending.
Deficit and Debt: What are they?
While
a deficit describes the relationship between spending and revenues in a single
year, the federal debt - also referred to as the national
debt - is the sum of all past deficits, minus the amount the federal government
has since repaid. Every year in which the government runs a deficit, the money
it borrows is added to the federal debt. If the government runs a surplus, it
can use the extra money to pay down some of its debt. And each year, the
government pays interest on the national debt as part of its overall spending.
As
of June 4, 2015, total U.S. debt stood at $18.153 trillion.
Why Does the Federal Government Borrow?
The
federal government has run a deficit in 45 out of the last 50 years. Usually
that deficit is around three percent of the economy, as measured by Gross
Domestic Product (GDP).
The
size of a budget deficit in any given year is determined by two
factors: the amount of money the government spends that year and the amount of revenues the government collects in taxes. Both
of these factors are affected by the state of the economy, as well as by the
tax and spending policies enacted by Congress.
For
example, during tough economic times like the Great Recession, many types of
government spending automatically increase because more people become eligible
for need-based programs like food stamps and unemployment benefits. At the same
time, tax revenues tend to decrease for a couple of reasons: people are working
less, and paying less in taxes; and corporations also earn less profit, and
they too pay less in taxes. What's more, lawmakers may intentionally increase
government spending during a recession in order to stimulate the economy, even
though they know that one short-term result will be a deficit. During the Great
Recession, the federal deficit in 2009 reached 9.8 percent of the economy, but
in 2015 is about average again, at 3.2 percent of the economy.
The
deficit can also reflect temporary spikes in spending that are not matched by
equal spikes in revenue (through increasing taxes, for instance). For example,
the deficit in 1943 at the height of war spending on World War II reached nearly
30 percent of the economy.
Finally,
tax policy plays a major role in determining whether we run surpluses or
deficits. Many factors probably contributed to the budget surpluses of the
1990s, but one of them was tax increases, which took the form of tax rate
increases for the highest income taxpayers (although rates stayed well below
what they had been prior to the 1980s). Likewise, major tax cuts in 2001 and
2003 were a major contributor to deficits over the last decade, and to today's
debt - by some measures, even more so than the economic downturn.
This
line chart shows the size of the deficit or surplus in each fiscal year over much of the
last century.
% of GDPAnnual Budget Deficit or
Surplus(1930-2015)193019401950196019701980199020002010-30%-20%-10%0%10%-40%
Source: OMB, National Priorities Project
How Does the Federal Government Borrow?
To
finance the debt,
the U.S. Treasury sells bonds and other types of securities (Securities is a
term for a variety of financial assets). Anyone can buy a bond or other
Treasury security directly from the Treasury through its website,
treasurydirect.gov, or from banks or brokers. When a person buys a Treasury
bond, she effectively loans money to the federal government in exchange for
repayment with interest at a later date.
Most
Treasury bonds give the investor - the person who buys the bond - a pre-determined
fixed interest rate. Generally, if you buy a bond, the price you pay is less
than what the bond is worth. That means you hold onto the bond until it
"matures." A bond is mature on the date at which it is worth its face
value. For example, you may buy a five-year $100 bond today and pay only $90.
Then you hold it for five years, at which time it is worth $100. You also can
sell the bond before it matures.
There
are actually many different kinds of Treasury bonds, but the common thread
between them is that they represent a loan to the Treasury, and therefore to
the U.S. government.
Who Does the Federal Government Owe Money To?
The
federal debt is the sum of the debt held by the
public - that's the money borrowed from regular people like you and from
foreign countries - plus the debt held by federal accounts.
Debt
held by federal accounts is the amount of money that the Treasury has borrowed
from itself. That may sound funny, but recall from Where the Money
Comes From that trust funds are federal tax revenues that can only be used for certain
programs. When trust fund accounts run a surplus,
the Treasury takes some of that surplus and uses it to pay for other kinds of
federal spending. But that means the Treasury must pay that borrowed money back
to the trust fund at a later date. That borrowed money is called "debt
held by federal accounts;" that's the money the Treasury effectively lends
between different federal government accounts. Almost one-third of the federal
debt is held by federal accounts, while the remaining two-thirds of the federal
debt is held by the public.
Federal AccountsInternational
InvestorsDomestic Private InvestorsFederal ReserveState and Local
GovernmentsOtherWho Does the U.S. Government Owe Money To?($18.1 trillion in
debt, December 2014)
Source: U.S. Treasury, National Priorities Project
Debt Held by the Public
Debt held by the public is the total amount
the government owes to all of its creditors in the general public, not
including its own federal government accounts. It includes debt held by
American citizens, banks and financial institutions as well as people in
foreign countries, foreign institutions and foreign governments.
As
you can see in the pie chart above, about one third of the total federal debt,
and nearly half of debt held by the public, is held internationally by foreign
investors and central banks of other countries who buy our Treasury bonds as
investments. These countries include China ($1.3 trillion), Japan ($1.2
trillion) and Brazil ($262 billion), the three countries that currently hold
the most U.S. debt. Treasury also groups foreign holders of national debt by
oil exporting nations (including Iran, Iraq, Kuwait, Ecuador, Nigeria and
others, $297 billion) and Caribbean banking centers (Bermuda, Cayman Islands,
and others, $293 billion).3
The
next largest portion of debt held by the public is held by private domestic
investors, which includes regular Americans as well as institutions like
private banks.
The
U.S. Federal Reserve Bank and state and local governments also hold substantial
shares of federal debt held by the public. The Federal Reserve's share of the
federal debt is not counted as debt held by federal accounts, because the
Federal Reserve is considered independent of the federal government. The
Federal Reserve buys and sells Treasury bonds as part of its work to control
the money supply and set interest rates in the U.S. economy.
The Debt Ceiling
The debt ceiling is the legal limit set by Congress on
the total amount that the U.S. Treasury can borrow. If the level of federal
debt hits the debt ceiling, the government cannot legally borrow additional
funds until Congress raising the debt ceiling, and could be left with no way to
pay its bills. If this happens, it could result in sudden interruptions of
government services and unintended consequences.
Congress
has the legal authority to raise the debt ceiling as needed. Doing so does not
authorize new spending, but rather allows the Treasury to pay the bills for
spending that has already been authorized by Congress.
Why Is There a Debt Ceiling?
The debt ceiling evolved from restrictions that
Congress placed on federal debt nearly from the founding of the
country. Legislation that laid the groundwork for the current debt ceiling was
passed in 1917, and the first overall debt ceiling was passed in 1939. Since
then, the debt ceiling has been raised or otherwise amended more than 140
times, including more than a dozen times since 2000.
Debt Ceiling Increases, 2002-2014Trillions
of
Dollars2002200320042005200620072008200920102011201220132014$5$7.5$10$12.5$15$17.5$20
On February 10, 2014, the debt limit was suspended until March
15, 2015. The national debt is expected to reach the current debt ceiling
in the summer or fall of 2015 unless Congress acts to raise it.
Often,
the decision by Congress to raise the debt ceiling has not been controversial.
Since 2011, however, due to political partisanship as well as debates about the
size of the federal budget and deficit spending, the debt ceiling has become a
highly contentious issue. Some members of Congress have pledged to allow the
federal government to default on its debt payments rather than raise the debt
ceiling again.
The Great Federal Debt Debate
There
is an ongoing debate as to whether the government should limit its ability to
borrow. Some consider deficit spending to be a hindrance to the
government and the economy, arguing that a deficit only shifts the burden to
future generations because it must be paid for eventually, just like any other
loan.
Others
see deficits as a crucial way for the government to stimulate the economy
during an economic downturn. Proponents of this view believe that the role of
government is not only to provide services that the private sector won't, but
also to stimulate the economy during economic crises. They argue that deficits
are necessary in times of economic hardship, but that during economic booms,
budget surpluses should be used to pay down the debt.
In
some ways, deficits and debt are actually less controversial than you would
think from listening to the rhetoric - with deficits in 45 out of the last 50
years, our government has chosen policies that lead to slight deficits more
often than not, regardless of who controls Congress or the White House. And in
times of surplus, lawmakers across the political spectrum have argued to use
some of the surplus not just to pay down the debt, but for other priorities
like government services or tax cuts.
Endnotes
1.
U.S.
Department of Treasury, "Major Foreign Holders of Treasury
Securities." April 2015 <http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt>
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