Remember Perot?

In 1992 Perot wrote:

Today we have a $4-trillion debt. By 2000 we could well have an $8-trillion debt. Today all the income taxes collected from the states west of the Mississippi go to pay the interest on that debt. By 2000 we will have to add to that all the income tax revenues from Ohio, Pennsylvania, Virginia, North Carolina, New York, and six other states just to pay the interest on the $8-trillion.

If you live in one of those states, take a look at the IRS payroll deduction that reduces your next week's take-home pay. Your money is going just to pay interest on this debt, which in 1993 will amount to $214 billion. During the first 152 years of our nation's existence, we spent less than $214 billion to operate the entire government of the United States!

Remember how Perot said government interest costs were gonna go thru the roof? Perot was right. But take a look at this graph:

The graph shows government interest payments as a portion of total interest payments in the U.S.A. It shows interest paid by government (federal, state, and local together) as a portion of total interest paid. It shows government interest going down!

I'm not saying the cost of government interest is small. I'm pointing out that the total interest cost in our economy is so big it makes the government portion look small.

ADDITIONAL NOTES

Interest costs of the federal government as a portion of total (federal, state, and local) government interest costs have been fairly constant at around 80% of total.

Another view of federal interest costs as a portion of federal plus state plus local: The table at left verifies Perot's observation of the $4 trillion federal debt in 1992. But the debt didn't reach $8 trillion in 2000. Didn't even reach $8 trillion by 2005. But we are beyond it now.

Federal Debt and the GDP  Year  U.S. GDP Federal Debt 1990 5803.1 3233.31 1991 5995.9 3665.30 1992 6337.7 4064.62 1993 6667.4 4411.49 1994 7085.2 4692.75 1995 7397.7 4973.98 1996 7816.9 5224.81 1997 8304.3 5413.15 1998 8679.66 5526.19 1999 9353.5 5656.27 2000 9951.5 5674.18 2001 10286.2 5807.46 2002 10642.3 6228.24 2003 10886.2 6783.23 2004 11867.8 7379.05 2005 12339 7932.71 2006 13398.9 8506.97 2007 14077.6 9007.65 2008 14441.4 9986.08 2009 14237.2 11875.90 2010 14623.9 13786.60 2011 15299 15144.00 2012 16203.3 16335.70 2013 17182.2 17453.50 2014 18192.6 18532.30

This graph shows the federal debt in red, and for comparison the GDP (in blue). It's not really a long-term graph, but since 1990 the two lines run parallel -- until the Paulson crisis of 2008, and the Obama response.

It is worth noting that the last few years of this chart are projections. Predictions. Not realities. Not yet.

It also may be of interest to some, that the federal debt is expected to reach the level of GDP and climb above it in the year 2012. (Maybe that's what the Mayans were worried about.)