Mathematically Impossible To Pay off National Debt

[Zippyjuan]

In January the Fed turned over $77 billion dollars to the US Treasury.
http://www.nytimes.com/2012/01/11/bu...-treasury.html

WASHINGTON — The Federal Reserve said on Tuesday that it contributed $76.9 billion in profits to the Treasury Department last year, slightly less than its record 2010 transfer but much more than in any other previous year.

The Fed is required by law to turn over its profits to the Treasury each year, a highly lucrative byproduct of the central bank’s continuing campaign to stimulate economic growth.

Almost 97 percent of the Fed’s income was generated by interest payments on its investment portfolio, including $2.5 trillion in Treasury securities and mortgage-backed securities, which it has amassed in an effort to decrease borrowing costs for businesses and consumers by reducing long-term interest rates.

Through those purchases, the central bank has become the largest single investor in federal debt and securities issued by the government-owned mortgage finance companies Fannie Mae and Freddie Mac. As a consequence, most of the money flowing into the Fed’s coffers comes from taxpayers.

But Fed officials note that this cycle — payments flowing from Treasury to the Fed and then back to the Treasury — still saves money for taxpayers because those interest payments otherwise would be made to other investors.

“It’s interest that the Treasury didn’t have to pay to the Chinese,” the Fed’s chairman, Ben S. Bernanke, half-jokingly told Congress last year.

[The Free Hornet]

Create an "Excess Spending Tax" it is applied to every government payroll check (including congress), social security check, medicare/medicaid payment, grants, earmark, contractor payment, every pension check, and just about every Uncle Sam purchase. The size of this tax is the exact estimated amount to not be in debt (must balance budget and knock down some of the debt principle). This would be about a 40% haircut on all government spending and maybe TPTB just might start to control their spending instead.

This would pit pensioners and the retired against the MIC for spending money. The MIC could raise prices to compensate (budget projections are known years in adavance), but the fixed benefit people would be SOL unless they elect the right people.

Liberals should love it because it's a tax.

Conservatives should love it because it balances the budget.

LOL! I know they would all hate it.