The Debt Ceiling and Where Do You Hide $238 BILLION?

If you followed the USA's debt-ceiling debate, you may remember that U.S. Treasury Secretary Timothy Geithner said that the U.S. Government would reach the Congress-imposed debt ceiling on 16-MAY-2011.

As Congress did little to act on the debt ceiling up to that point, the debt-ceiling debate was delayed until a 1-AUG-2011 drop-dead date. The Treasury admitted to delaying payments to certain federal retirement and disability funds to postpone the date beyond 16-MAY-2011. Using the ever-popular "everybody-does-it" defense, Secretary Geithner claims, "Each of these actions has been taken in the past by my predecessors during previous debt limit impasses."

After tortuous debate and political wrangling, the U.S. Congress agreed to increase the debt ceiling. Immediately afterward, the U.S. Treasury borrowed a record $238.3 BILLION in a single day!

(click to enlarge)

The chart above uses data directly from the U.S. Treasury and shows the accumulated total public debt from 1-JAN-2011 until 3-AUG-2011. The red line shows the TOTAL public debt. Not all of the debt is subject to the debt ceiling (as described here and here), so the line seemingly crosses the official debt ceiling limit. However, the red line flattens out on 16-MAY-2011, the day that Treasury Secretary Timothy Geithner says that the U.S. hit the official debt limit.

At first glance, it would appear that the U.S. debt did not increase from 16-MAY-2011 until 2-AUG-2011 and then suddenly the debt increases by $238.3 BILLION. However, from the historical "burn-rate", the U.S. Government was in reality still borrowing an average of $2.72 BILLION per day! The blue dashed line shows extrapolated borrowing even during the period where the official total debt flat-lines.

In essence, the Government merely stopped borrowing on the open market and instead borrowed from federal employees and retirees--many whom where likely unknowing and unwilling U.S. creditors.

So, where did the U.S. Treasury "hide" this $238.3 BILLION? If a public company acted this way, these actions would likely trigger an SEC investigation (and shareholder lawsuits). But, as we sadly know, the U.S. government isn't constrained by the same rules that it mandates for everybody else.

In a side note, the total USA public debt is rapidly reaching the size of the U.S. gross domestic product (GDP). In 2010, the U.S. GDP was $14.658 TRILLION.

QUESTIONS:

• Where did the U.S. Treasury "hide" this $238.3 BILLION?
• Were their actions legal?
• Were their action ethical?
• The Congress delayed action on handling the debt crisis well beyond the original 16-MAY-2011 date. How much did Congress' inaction cost the nation?

See also ...

• "Growth in USA Public Debt (2001 to 2021)"
  http://soquelbythecreek.blogspot.com/2011/07/usa-public-debt-january-2001-to-june.html
  
• "IDEA: Government Efficiency Standards Modeled on Fuel Standards"
  http://soquelbythecreek.blogspot.com/2011/07/idea-government-efficiency-standards.html

Useful Information for Under-taxed Individuals

Despite ample evidence (here, here, and here) that wealthier taxpayers already pay the bulk of U.S. taxes, a number of supposedly wealthy commentators and bloggers believe that they are under-taxed and should be forced to pay more taxes. I say, why wait for Congress to take action? If you truly believe that the government is the best and most-prudent investment of your hard-earned income, you can make additional voluntary contributions now.

1. Decide not to declare any deductions and not take any exemptions or credits on your federal income tax return. This will immediately boost your adjusted gross income (AGI) and increase the amount of taxes owed. For example, if you have a large mortgage on your home, do not take the deduction allowed on mortgage interest. Do not write off other taxes that you might have already paid. WARNING: Your accountant may question your sanity.

2. Give directly to the United States Government. Here's how, courtesy of the United States Treasury web site. Okay, in full disclosure, you are not actually paying additional income tax but you are helping to reduce the tremendous $13 TRILLION+ national debt, which reduces current and future interest payments paid by the government. Reducing interest payments frees those funds so that the government can spend on other programs.

How do you make a contribution to reduce the debt?

There are two ways for you to make a contribution to reduce the debt:

1. You can make a contribution online either by credit card, checking or savings account at Pay.gov
   
2. You can write a check payable to the Bureau of the Public Debt, and in the memo section, notate that it's a Gift to reduce the Debt Held by the Public. Mail your check to:

Attn Dept GBureau of the Public DebtP. O. Box 2188Parkersburg, WV 26106-2188

Alternatively, you can provide your money as a gift to the United States Government.

Gifts to the United States Government

How do I make a contribution to the U.S. government?

Citizens who wish to make a general donation to the U.S. government may send contributions to a specific account called "Gifts to the United States." This account was established in 1843 to accept gifts, such as bequests, from individuals wishing to express their patriotism to the United States. Money deposited into this account is for general use by the federal government and can be available for budget needs. These contributions are considered an unconditional gift to the government. Financial gifts can be made by check or money order payable to the United States Treasury and mailed to the address below.

Gifts to the United States
U.S. Department of the Treasury
Credit Accounting Branch
3700 East-West Highway, Room 622D
Hyattsville, MD 20782

Any tax-related questions regarding these contributions should be directed to the Internal Revenue Service at (800) 829-1040.

If you do decide to donate or provide a gift to the United States Government, please let me know via the comment section or send me an E-mail. Any donation larger than $250 will receive a personal "Thank You!" from me, another average citizen. Also, please let me know if you would like your name added to the Honor Roll below.

HONOR ROLL

[updated 3-AUGUST-2011]

The following individuals have contributed $250 or more to reduce the national debt and to help reduce the cost burden of the United States Government for all Americans. On behalf of all Americans, you have our thanks and gratitude!

[NONE REPORTED TO DATE]

See Also ...

• "Who Pays Their "Fair Share' in California?"
  
• http://soquelbythecreek.blogspot.com/2011/10/who-pays-their-fair-share-in-california.html
  
• "Is Warren Buffett Paying His 'Fair Share'?"
  
• http://soquelbythecreek.blogspot.com/2011/08/is-warren-buffet-paying-his-fair-share.html
  
• "Pretty Pictures and a Political Rorschach Test: A History of the U.S. Income Tax System"
• http://soquelbythecreek.blogspot.com/2011/03/tax-infographic-is-political-rorschach.html
  
• "The Rich Don't Pay Taxes" Lie: Purposely Deceptive or Backed Up by Data?
  http://soquelbythecreek.blogspot.com/2010/02/rich-dont-pay-taxes-lie-purposely.html
  
• The Oppressive Progressive Income Tax: California Edition
  http://soquelbythecreek.blogspot.com/2009/07/oppressive-progressive-income-tax.html