Jim’s Mailbox

Posted at 12:58 PM (CST) by & filed under Jim's Mailbox.


Here’s a fun way to cap off your week.

The Congressional Budget Office has just released three very telling infographics which, unintentionally, spell out a pretty dreary picture of US government finances.

The first graphic shows US federal revenue, both in raw numbers ($2.3 trillion in 2011) and expressed as a percentage of GDP (15.4%).

There are a lot of interesting things about this graphic. Check out the massive downward swing of payroll tax receipts starting in 2009… coinciding not only with the dismal rate of employment in the country, but also the demographic trend of having fewer and fewer baby boomers paying in to the system.

It’s also interesting to note that, by comparison, 2011 US tax revenue is roughly twice what is was 20-years prior. Yet over the same period, the federal debt has ballooned nearly five-fold.

The next graphic is mandatory spending– essentially Social Security, Medicare, federal unemployment, and federal retirement programs. Note: this doesn’t include things like defense, interest on the debt, etc.

At $2.0 trillion, these mandatory entitlements comprise a massive 87% of all taxes collected. Put another way, they constitute 13.6% of America’s 2011 GDP. Incredible.

The last graphic shows ‘discretionary’ spending– another $1.3 trillion. The bulk of this is defense ($699 billion), itself nearly 5% of GDP. The rest of it goes to the TSA agents, government-administered education, and all the legions of three letter agencies.

At the very bottom corner is a most disingenuous statement that says "Net Interest not included." In other words, they didn’t bother to include the $454,393,280,417.03 (nearly half a trillion dollars) that the US government spent on interest last year.

To put this number in perspective, the US paid more in interest last year than the entire GDP of Saudi Arabia, or the combined GDPs of the smallest 82 economies in the world. Not exactly a trivial number… unless you’re Tim Geithner.

A few days ago, Geithner quipped on NBC’s Meet the Press that there is "no risk" of the US turning into Greece over the next few years due to such extraordinary fiscal imbalances. This is the same guy who said there was no risk of the US losing its AAA credit rating, and that inflation on a global level is "not high on the list of concerns…"

Whether it’s lies, ignorance, or arrogance is irrelevant at this point. The situation is what it is. It’s not going to go away just because the political leadership denies it.

CIGA Rusty Bayonet

New Infographics About the Federal Budget
April 17, 2012

How much did the federal government collect in individual income taxes in fiscal year 2011? How much did it spend on health care programs or on defense? To provide ready answers to those questions, CBO has prepared three infographics examining the following components of the federal budget:

Federal revenues,

Mandatory Spending, and

Discretionary spending.

These infographics provide a more detailed look at the material presented in CBO’s infographic on the federal budget—released last December—which provided an overview of some key elements of the budget and a visual history of the budget deficit and federal debt over the past 40 years.

Today’s releases are the latest installments in CBO’s effort to make budgetary information more accessible. Over the last several months, CBO has published:

An infographic on the Troubled Asset Relief Program, which summarizes the most pertinent details about the program since its inception.

A set of slides on the outlook for the budget and economy as of January 2012. (Those budget projections have since been updated to reflect more recent information.)

An infographic on Social Security, which provides historical statistics and projections regarding the program’s financial status and its beneficiaries. (CBO’s updated long-term projections for Social Security will be released early this summer.)

Jonathan Schwabish of CBO’s Health and Human Resources Division and Courtney Griffith of
CBO’s communications team prepared today’s infographics.



I am sure you are seeing these as well, also this week there was the issuance of Dim Sum bonds by Indian toll road operator IL & FT, the first Dim Sum bonds issued by a non-financial India corporation.

VTB Group, Russia’s second-largest bank, is planning to move a third of its debt into currencies
other than the dollar by 2015 by issuing bonds in Asia and Brazil.

VTB Considers Debt Sales in China, Indonesia in Move From Dollar
By Ksenia Galouchko – Apr 19, 2012 9:18 PM ET

VTB Group, Russia’s second-largest bank, is planning to move a third of its debt into currencies other than the dollar by 2015 by issuing bonds in Asia and Brazil, according to the deputy chairman.

VTB will sell about S$400 million of notes in Singapore this quarter and is “definitely” looking at issuing Dim Sum debt, bonds denominated in Chinese yuan and sold in Hong Kong, Deputy Chairman Herbert Moos said in an interview yesterday at Bloomberg’s headquarters in New York. VTB is also looking at selling Islamic bonds, or sukuk, in Indonesia, he said.

“The philosophy in all those issuances is not to issue into size but to issue into demand,” Moos said. “It also relieves the pressure on our Eurobonds when you route supply into a new investor base.”

The Moscow-based bank, controlled by Russia’s government, sold S$400 million of bonds due this August in Singapore in 2010, and another S$300 million of 2014 notes in May last year. It also has debt denominated in Belarusian rubles, Ukrainian hryvnia, yuan, Kazakh tenge, Turkish lira, British pounds and Swiss francs, as well as in dollars, euros and rubles, data compiled by Bloomberg show.