THE BIGGEST STORY OF THE DECADE
I think I'm on to the biggest story of the decade. Who am I to judge, and considering that the decade is so young, how could I label a single story as "the biggest"? Well, this one has to be the biggest. Short of little green men landing from Mars, this is the nation's news that is least expected.
I'm talking about the possibility of completely paying off the national debt. This is such an unbelievable concept to me; I honestly never thought I would be thinking about it much less writing about it in this serious tone. But, as information continues to flow out of Washington (if you can believe Washington), paying off the national debt really seems to be a possibility, if not a probability.
Recently, the Congressional Budget Office boosted its estimate of the surplus for the fiscal year ending September 30th to 200 billion dollars. The Congressional Budget Office said, "Unexpectedly strong tax receipts in April and May contributed to higher surplus expectations for the year 2000." The Budget Office also said it would more precisely update budget surpluses for this decade later this summer.
To say that these budget surpluses are unexpected would be the understatement of the year. Last year's surplus was the first, you recall, since 1969. For those of us who have lived for three decades with mounting budget deficits, this is almost unbelievable. That's why I think it is the story of the decade.
The Treasury Department, in the meantime, is now buying back long-term Treasury bonds. In other words, it is paying off the national debt. The last estimate from the Congressional Budget Office was that sometime between 2007 and 2009, if the budget surpluses keep rolling in as they are now, there will be no national debt at all. If someone had said that to me just a couple of years ago, I would have laughed in their face. But now it seems to be at least a reasonable possibility.
As the Federal Reserve continues to seemingly wage war against jobs, profits, and the stock market, it's interesting to look at the Congressional Budget Office's comments. They say, "Most of the larger receipts stem from stronger economic growth reflected in especially large capital gains tax payments." It also says that "it is highly probable that total tax receipts will continue to exceed projections for the rest of this fiscal year, since it is very unlikely that wage growth will slow quickly enough to offset earlier gains." In other words, it is our present good times that so many professional economists worry about, that are fueling the budget surpluses that in fact have the potential of curing one of the biggest and longest -term economic ills in our economy.
To state the obvious, with more people working, tax receipts are higher. Considering the stock market gains of the last couple of decades, lots of people have lots of profits, and they are taking some of them, which creates still further tax receipts. Business is good, businesses are making money, and they too are paying taxes on their profits, and it all adds up to a pretty wonderful picture. Unless if, apparently, you're at the Federal Reserve worrying about all this prosperity all day long, trying to figure out ways to control if not kill it. It almost doesn't make sense, does it?
In the meantime, back to that national debt. Do you recall that there is a National Debt Clock? Yes, for more than a decade, a green electronic sign has flashed in Time's Square in New York, chronicling the growth of the national debt. But they're going to stop that clock. Today, they concede the numbers barely budge-in fact, the numbers are going backward because of the surpluses and the Treasury's buy-back of long-term bonds! The date set for turning off the National Debt Clock and taking it down is September 7th; the fellow who originally came up with the idea (September 7th is his birthday) chose the "arbitrary" date. The significance here is that the people who have paid for this sign for more than a decade realize it is no longer necessary.
By the way, as of now, the national debt stands at roughly 5.7 trillion dollars. If we can pay that off over this decade, then I contend, as I said at the top, it will be the story of the decade.
(Tom Butenhoff is a First Vice President with J. E.
Liss & Company in Milwaukee. The views are his and not necessarily
those of Liss Financial Services or the Job Connection/Hiring
Network.)