While the US jobs report is released on friday, it underlines many structural problems in the US including debt financing which is rampant in federal and state governments.
Looking at this wikipedia reference that 'In 2008, $242 billion was spent on interest payments servicing the debt, out of a total tax revenue of $2.5 trillion, or 9.6%. Including non-cash interest accrued primarily for Social Security, interest was $454 billion or 18% of tax revenue.
Its also nice to note that Interest on the debt was $383 billion in Fiscal Year 2009, down from its peak of $451 billion in Fiscal Year 2008, thanks to lower interest rates. (Source: U.S. Treasury)
So taking a look at the 242 Billion figure in 2008 excluding Social Security it is important to note the comparisons to the costs of the stimulus- American Recovery and Reinvestment Act of 2009 (which billions havent been fully paid out yet) and increased costs in healthcare from 2014 pale in comparison to the staggering yearly debt that is due by taxpayers.
When US politicians talk about keeping debt under control, how about a plan instead to get it back closer to 0%? How many more jobs would that create with billions going to taxpayers and infrastructure spending.
Imagine how much services and infrastructure spending you could get for $242 billion a year. The stimulus only spent 105.3 billion on infrastructure (over 2 years), although most projects are still progressing, this infrastructure spending is only a one off cost and it did drag over 2 years.
So while thinking of offering tax cuts for both middle and upper classes, a thought perhaps should be given to getting the public debt under control. Imagine what $242 billion in one year could do to the economy and jobs.
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
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