Default? Under Obama, Tax Revenues Have Exceeded Combined Costs of Interest, Entitlements and Federal Wages

July 8, 2011 - 5:27 PM

President Barack Obama and House Speaker John Boehner

President Barack Obama speaks at a meeting with the congressional leadership at the White House, July 7, 2011. (AP photo)

(CNSNews.com) - Federal tax revenues have exceeded federal interest payments on the national debt by more than 10-fold during the presidency of Barack Obama, according to the daily accounting statements published by the U.S. Treasury Department.

There is no way the U.S. government would need to default on its interest payments on the federal debt if the debt limit were not increased and the government allowed to borrow more money than it already has.

Also, with the current revenue stream, the federal government can afford to pay entitlement and veterans benefits and wages and insurance payments for federal workers--without having to borrow new money.

Specifically, during the Obama presidency, total interest on the federal debt has equaled $426.988 billion while total federal tax revenues have equaled $5.009005 trillion—or 10.8 times what was needed to simply pay the interest that the federal government owes on the money it has already borrowed.

Additionally, the $5.009005 trillion in tax revenue that the federal government has taken in since Obama was inaugurated on Jan. 20, 2009 has been more than ample to pay the combined $4.517179 trillion the federal government has spent on interest, plus Medicare, Medicaid, Social Security, Veterans Affairs, federal workers salaries and insurance payments for federal workers.

In fact, since Obama has been president, after the government paid the interest on the debt, plus Medicare, Medicaid, Social Security, Veterans Affairs, and federal workers’ salaries and insurance, it still had $491.826 billion in tax revenue left to spend on discretionary items.

In fact, the government has increased the total national debt by $3.716145 trillion since Obama has been president (from $10.626877 trillion on Jan. 20, 2009 to $14.343022 trillion on July 6, 2011) because all federal spending--above and beyond interest payments, entitlement payments and federal workers' wages--has outstripped federal revenue by that much while Obama has been president. 

This pattern of federal tax revenues bringing in more than the federal government has to pay out for interest, plus Medicare, Medicaid, Social Security, Veterans Affairs, and federal workers’ salaries and insurance has persisted through the current fiscal year, which began on Oct. 1, 2010 and will end on Sept. 30, 2011.

Thus far in fiscal 2011, according to the Daily Treasury Statement for July 6, federal tax revenues have been $1.622312 trillion while the combined expenditures for interest, plus Medicare, Medicaid, Social Security, Veterans Affairs and federal workers’ salaries and insurance have been 1.467127 trillion. That has left $155.185 billion in additional tax revenue to spend on other things.

Payments to defense vendors—as opposed to salaries for military personnel—are the single biggest non-entitlement expenditure on the Daily Treasury Statement. Thus far this fiscal year, these payments have equaled $298.221 billion. So, maintaining the current level of payments to defense venders on top of paying the interest on the debt and Medicare, Medicaid, Social Security, Veterans Affairs, and federal workers’ salaries and insurance, would in fact put the government in the red for the year—and force new borrowing.

But it also a fact that the government could pay for the interest on the debt, plus Medicare, Medicaid, Social Security, Veterans Affairs and federal workers salaries and insurance out of the current level of federal tax revenues without having to borrow new money.

However, in a press availability yesterday after meeting with congressional leaders to discuss a deal to raise the debt limit, President Obama suggested that the federal government would “default” on “its obligations” if the debt ceiling was not raised by Aug. 2.

“Everybody reconfirmed the importance of completing our work and raising the debt limit ceiling so that the full faith and credit of the United States of America is not impaired,” Obama said.

“[E]verybody acknowledged that we have to get this done before the hard deadline of August 2nd, to make sure that America does not default for the first time on its obligations,” he said.

The numbers and calculations published in this article were derived from the revenue and spending levels reported in the U.S. Treasury Department’s Daily Treasury Reports for Jan. 20, 2009, which was the day Obama was inaugurated; Sept. 30, 2009, the last day of fiscal 2009; Sept. 30, 2010, the last day of fiscal 2010; and July 6, 2011.