Forget December 21, 2012; forget Nostradamus, forget the Hopi prophecies. We face a greater calamity: August 2, 2011!

The Obama regime has predicted the end of America if we let that date go by without raising the debt limit! The deficit is now the biggest threat we face as a nation — bigger than global warming, bigger than the 19 million Americans out of work or underemployed, more dangerous than Iran’s nuclear armament and obviously more of a threat to the nation’s future than the coming hyperinflation caused by the Federal Reserve’s profligate printing of dollars.

Let’s take a critical look at what all this bloviating means. The first piece of this financial puzzle is, what is the “federal debt,” officially known as the United States Public Debt? It is a measure of the obligations of the U.S. federal government and has two components.

One is the debt held by institutions and individuals outside the government, such as the Treasury notes and bonds that some folks and businesses hold in their bank safety deposit boxes.

The other is the intragovernmental holdings such as Treasury securities held in accounts administered by the government, such as the mythical “lockbox” where our Social Security monies are stored.

These two forms of debt are referred to as the Total Public Debt Outstanding; and it is outstanding! As of June 29, 2011, the TPDO was approximately 98.6 percent of 2010’s GDP. GDP is Gross Domestic Product and represents the total fiscal product of the nation for the year. It used to be called Gross National Product. I guess the government in its wisdom felt this made more sense!

OK, we know what the government represents as the debt but what are they not telling us? In order to fabricate that debt of $14.3 trillion they had to do a little fuzzy math.

For instance Fannie Mae and Freddie Mac were provided over $110 billion to support the housing crisis; that’s not included! Our government is guaranteeing billions of dollars to mutual funds, banks and corporations to cover losses through 2011; that’s not included! Also excluded in this exercise in new math are unfunded obligations such as Social Security, Medicare, Medicaid and the Civil Service retirement funds. These are the most costly of the new math numbers and even fuzzy math can’t hide the reality of nearly $62 trillion in total debt.

Now back in 2007 this total debt number stood at $9 trillion. As you can see, the debt spiral is out of control. Back then it was 65.5 percent of GDP; today it exceeds GDP. But just using the public debt (the feds’ favorite method — it looks better on the spreadsheet) the CBO calculates that we will exceed GDP by 2020 assuming the economy straightens out tomorrow. That’s a big assumption!

Article 1, Section 8 of our Constitution gives Congress the sole power to borrow money on the credit of the U.S. Up till 1917, each debt issuance was authorized separately. In 1917, to ease Liberty Bond sales, a ceiling was established. In 1939 an aggregate limit was authorized. Congress allowed the Treasury to issue debt as long as that ceiling was not passed.

The most recent increase in the debt ceiling (to $14.294 trillion) was on February 12, 2010, less than 18 months ago. I guess that’s understandable when Obama’s last budget ran almost a $2 trillion deficit and he has added $5 trillion to the public debt in 2.5 years.

I began this essay satirizing the cataclysmic predictions about the Armageddon we face as a nation if we do not consent to another $2 trillion-plus addition to our debt. We have an adamant president who would rather watch the debt ceiling talks collapse than agree to not raise taxes. According to the supposedly non-partisan, CBO we could confiscate all the money of all those greedy millionaires and not be able to cover one year’s deficit of the Obama budget. But then what about the next year?

The solution: The government takes in approximately $720 billion in fees, excise taxes and quarterly payments every year. The debt service is about $430 billion. If there is a default; it will be a political choice.



Larry Tradlener lives down McElmo Canyon.