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Home[1] | Wire[2] | The Feds Spend More on National-Debt Interest Than You Think

Recently, the Treasury Department reported a 26% increase in the federal budget deficit [3] with a 2019 deficit of $984 billion. The reported data on the budget can be misleading. You might think that a budget deficit is the amount of spending that exceeds budget revenue, in other words, the amount of borrowing needed to make up for this shortfall. However, in the world of Washington D.C., not all spending is counted as spending and it’s possible for the government to borrow money from itself. Let’s look at the actual Treasury Department budget numbers.

The Treasury reports[4] the Total Public Debt Outstanding of almost $23 trillion, which is the sum of the Intragovernmental Holdings and the Debt Held by the Public.

There is roughly $6 trillion of Intragovernmental Holdings. This is money that the federal government says that it owes to itself. Over the years, the government has earmarked tax revenues for one use, say Social Security spending, and spent those revenues on some other category of spending. So now they owe themselves this money. However, this is not truly debt. No business or household is concerned about being in debt to itself. If you promise to spend $100 of your income on a car payment and instead you buy $100 of food, you don’t pretend that you owe yourself $100. However, in the feds’ budget this is called Intragovernmental Holdings. When looking at the debt numbers we should ignore these Intragovernmental Holdings.

That leaves us with the Debt Held by the Public, what I consider to be the true amount of federal government debt.

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