The US Is Now Spending 26% Of Available Tax Revenue To Pay Interest

Tyler Durden's picture


Submitted by Simon Black of Sovereign Man blog,

By the 19th century, the Ottoman Empire had become a has-been power whose glory days as the world’s superpower were well behind them.

They had been supplanted the French, the British, and the Russian empires in all matters of economic, military, and diplomatic strength. Much of this was due to the Ottoman Empire’s massive debt burden.

In 1868, the Ottoman government spent 17% of its entire tax revenue just to pay interest on the debt.

And they were well past the point of no return where they had to borrow money just to pay interest on the money they had already borrowed.

The increased debt meant the interest payments also increased. And three years later in 1871, the government was spending 32% of its tax revenue just to pay interest.

By 1877, the Ottoman government was spending 52% of its tax revenue just to pay interest. And at that point they were finished. They defaulted that year.

This is a common story throughout history.

The French government saw a meteoric rise in their debt throughout the late 1700s. By 1788, on the eve of the French Revolution, they spent 62% of their tax revenue to pay interest on the debt.

Charles I of Spain had so much debt that by 1559, interest payments exceeded ordinary revenue of the Habsburg monarchy. Spain defaulted four times on its debt before the end of the century.

It doesn’t take a rocket scientist to figure out that an unsustainable debt burden soundly tolls the death knell of a nation’s economy, and its government.

Unfortunately, it can sometimes take a rocket scientist to figure out what the real numbers are; governments have a vested interest in not being transparent about their debts and interest payments.

In the Land of the Free, for example, the government routinely doesn’t count interest payments that they make to the Social Security Trust Fund.

They’ve managed to convince people that those debts don’t matter ‘because we owe it to ourselves.’

Apparently in their minds, solemn promises made to retirees simply don’t count.

It’s like a person who is in debt up to his eyeballs with both credit card companies and family members has no compunction about stiffing Grandpa.

Obligations are obligations, no matter who they’re owed to.

Taking this into account, total US interest payments in Fiscal Year 2013 were a whopping $415 billion, roughly 17% of total tax revenue. Just like the Ottoman Empire was at in 1868.

Here’s the thing, though– it’s inappropriate to look at total tax revenue when we’re talking about making interest payments.

The IRS collected $2.49 trillion in taxes last year (net of refunds). But of this amount, $891 billion was from payroll tax.

According to FICA and the Social Security Act of 1935, however, this amount is tied directly to funding Social Security and Medicare. It is not to be used for interest payments.

Based on this data, the amount of tax revenue that the US government had available to pay for its operations was $1.599 trillion in FY2013.

This means they actually spent approximately 26% of their available tax revenue just to pay interest last year… a much higher number than 17%.

This is an unbelievable figure. The only thing more unbelievable is how masterfully they understate reality… and the level of deception they employ to conceal the truth.

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Tue, 03/25/2014 - 19:11 | 4592134 Independent
Independent's picture

Nice to know my tax money is paying for the good life for some dual citizens

Didnt Nuland get a 5 billion dollar allowance, and that is only one dual citizens spending money

Tue, 03/25/2014 - 19:12 | 4592139 fonestar
fonestar's picture

Targeted 2% inflation, year over year will lead to...

Tue, 03/25/2014 - 19:13 | 4592143 quintago
quintago's picture

Compound interest is one hell of a drug

Tue, 03/25/2014 - 19:23 | 4592176 HelluvaEngineer
HelluvaEngineer's picture

So what you're saying is that we have 74% more to go?

Tue, 03/25/2014 - 19:37 | 4592214 zaphod
zaphod's picture

26% of tax revenues going towards interest is nothing, because the government can simply print or default it away.

However, we are closing on on 100% of tax revenues going towards all the various entitlement programs. That is much much worse because the free shit voting bloc won't allow entitlements to be defaulted or inflated away without a fight.

Tue, 03/25/2014 - 19:40 | 4592229 BlindMonkey
BlindMonkey's picture

The knockout game is just the fat lady tuning up behind the curtain.  Just wait 'till the .gov cheese stops flowing.  

Tue, 03/25/2014 - 19:52 | 4592262 Xibalba
Xibalba's picture

You don't think this whole thing has been thought out already?  


.gov will replace cheese with lead


Tue, 03/25/2014 - 19:55 | 4592273 knukles
knukles's picture

The New Progressive Happy Way Forward.

So what if we spend 75% on interest?
We can just print the rest!

That's the new meme with Progressive out here in LooneyLand!

Tue, 03/25/2014 - 20:08 | 4592299 hobopants
hobopants's picture

Sooooooo tell me again how the Fed is suppose to ever raise rates or stop printing cash when a quarter of revenue is going to service existing debt? We can't even afford to borrow at the zero bound... 

Tue, 03/25/2014 - 21:37 | 4592540 wintermute
wintermute's picture

Japan is at 40% tax revenues paying debt interest, so there is a little more stretch in the elastic, but it's going to hurt a hell of a lot when it finally snaps.


Wed, 03/26/2014 - 03:08 | 4593010 CCanuck
CCanuck's picture

Japan is a Nuclear Zombie, could go to 60-70-100%, what the fuck do they care....none of them gonna be around to pay it all off....

last one out turn off the lights.

Wed, 03/26/2014 - 06:38 | 4593095 johnQpublic
johnQpublic's picture

already out, but thanks for playing

Wed, 03/26/2014 - 03:10 | 4593015 free_lunch
free_lunch's picture

The hilarious thing is it is mathematically impossible to pay back the debt, no matter how much taxes you pay or how fast the economy grows. The debt will ALWAYS continue to grow because the money system is designed that way.


VIDEO: Why is there so much debt:



Tue, 03/25/2014 - 20:49 | 4592411 yogibear
yogibear's picture

Riots all over. Mulltiply the LA riots all over.

Wed, 03/26/2014 - 09:34 | 4593380 giggler321
giggler321's picture

and David Camron says "They are putting the public's lives at risk so we can use live rounds".  Last time it was when they stopped, if they don't next time. umm

Tue, 03/25/2014 - 20:10 | 4592301 DFCtomm
DFCtomm's picture

You're just now figuring out that this will all be settled the old fashion way? The way things like this have always settled in the end. Make some time to have a drink and sit by the pool. Take the kids to Disney Land. Winter is coming.

Tue, 03/25/2014 - 21:04 | 4592455 OceanX
OceanX's picture

" government can simply print or default it away."

Obviously, you have no clue how money is created and by whom.  A good start is the "Moneychangers"  Yes, it is long and tedious but, it explains 300 years of banking history.

When the default comes, the money changers will take real assests...

Wed, 03/26/2014 - 01:10 | 4592909 Kirk2NCC1701
Kirk2NCC1701's picture

Uh-huh. Them and whose army?

Wed, 03/26/2014 - 08:02 | 4593163 topspinslicer
topspinslicer's picture

Kirk -- whose army was needed recently to take away the homes?

Tue, 03/25/2014 - 21:04 | 4592456 OceanX
OceanX's picture

" government can simply print or default it away."

Obviously, you have no clue how money is created and by whom.  A good start is the "Moneychangers"  Yes, it is long and tedious but, it explains 300 years of banking history.

When the default comes, the money changers will take real assests...

Wed, 03/26/2014 - 03:25 | 4593028 free_lunch
free_lunch's picture

You sir, are a victim of the left/right paradigm propaganda, designed to keep people distracted.  Divide and rule, even after thousands of years it still works to control the common people.


While two dogs are fighting for a bone, a third runs away with it ( Ed Griffin explaining )

3 Simple Changes that Fix the Economy

Watch the video to find out how money is at the root of high debt, inequality and unaffordable house prices, and how we can fix it:

Wed, 03/26/2014 - 08:10 | 4593174 tarsubil
tarsubil's picture

If New Yorkers fool themselves into thinking they are rich because of a number they receive every two weeks before they go home to their tiny crappy roach infested flat, then the free shit army will fool themselves when they get giant checks on their way to the grocery store to buy moldy bread.

Tue, 03/25/2014 - 20:16 | 4592320 TahoeBilly2012
TahoeBilly2012's picture

Don't forget late fees!

Tue, 03/25/2014 - 21:32 | 4592531 rbg81
rbg81's picture

Not a problem.  Negative interest rates will soon mean that people will PAY the Government to hold its debt.  

It's genius I tell ya.

Tue, 03/25/2014 - 19:30 | 4592196 cynicalskeptic
cynicalskeptic's picture

 That 'targeted inflation' rate of 2% is closer to 8% in reality.  When the genie gets out of the bottle and all those overseas dollars that are currently pushing up inflation far higher overseas come home to roost, you're looking at Weimar Germany.

The 'good thing' is that TRILLIONS of dollars in debt are MUCH easier to pay off with hyperinflated dollars. $20 TRILLION in debt isn't much at all when a loaf of bread costs $500 Billion. Of course you're screwed if you depend on a fixed payment, interest payments or have any savings.

Banks used to HATE inflation when they were the lenders.  Now that they're the debtors..... not so much.

Tue, 03/25/2014 - 19:39 | 4592218 fonestar
fonestar's picture

One wonders about the underhanded men on Jekyll Island one-hundred years ago.  Did they not see themselves planting the seeds of their own destruction?  Or were they just that confident in their great grandchildren maintaining control no matter what?

Tue, 03/25/2014 - 19:51 | 4592259 XitSam
XitSam's picture

It isn't control of the economy but control of people they are after.  And that will be solidified, not destroyed, in a collapse.

Tue, 03/25/2014 - 20:35 | 4592371 Mad Muppet
Mad Muppet's picture're suprisingly cogent today. Is everything ok?

Wed, 03/26/2014 - 11:00 | 4593742 effendi
effendi's picture

Bankers loved inflation when they were lenders. It wasn't bank money being inflated away but depostors. The inflation causes asset prices to rise which encourages buyers to borrow money to beat inflation (buy now before you get priced out mentality) and the banks make their cut on all that borrowed money.

Tue, 03/25/2014 - 19:35 | 4592211 DIgnified
DIgnified's picture

You with up-votes is disturbing.  Say something to fix this. 

Tue, 03/25/2014 - 19:40 | 4592228 fonestar
fonestar's picture



Tue, 03/25/2014 - 21:11 | 4592474 DFCtomm
DFCtomm's picture

He's being tricky. He's found a way to say buy bitcoins and get up votes.

Tue, 03/25/2014 - 21:12 | 4592479 post turtle saver
post turtle saver's picture

... your money having half its value in 36 years

Tue, 03/25/2014 - 22:21 | 4592666 Big Brother
Big Brother's picture

Your money being worth half as much (1st order linear approximation for those keeping score) in 36 years.

Tue, 03/25/2014 - 23:53 | 4592820 MontgomeryScott
MontgomeryScott's picture

Why, 'fonestar', you are back to a base of normalcy!

Good to see rational thinking again!

Don't you just LOVE the concept of 'compound interest'? The 'rule of sevens'?

10% per year, per year?

Initial loan amount is not counted, and starts at 'zero count'. each consecutive amount is counted as one, and continues until 7.

Initial = 100.

110, 121, 133.1, 146.41, 161.051, 177.1561, 194.87471. SEE? SEVEN counts, 10% compound interest, and the owed money effectively DOUBLES. THIS is the 'rule of sevens', that is taught in the boiler-rooms of the 'finance companies'.

You've heard the term 'grow your money'?

THIS is how it's done, and any so-called 'financial planner' who tells you otherwise is full of shit. You 'invest', but are charged for it. THEY skim a percentage for themselves. YOU see numbers rising, and THINK your 'money' is supposedly 'growing', as they lent it to people who are tied in to 10% compounding interest rates (some higer, some lower, but overall, a good average). YOUR money is devalued, and their bank statements never seem to dwindle; but increase expotentially, seemingly defying all rules of logic.

A TWO percent 'inflation rate' is really nonsensical and not even CLOSE to the REAL numbers.

You DO know that 'Bitcoin' is another way to scam and 'pump-dump' your money, your wealth, and your very life. Sell me your computer and let me datamine. I will reward you with, um, a 'virtual currency'. Of course, you have to give me full access to all your files. Download here at cloudhashing.WTF. WE PROMISE that it is ANONYMOUS (heh, heh, heh, YEAH! THAT will get those plebes! A SINGLE WORD that describes a co-opted and lost concept, like 'OCCUPY' or 'ANONYMOUS', in terms that engratiate our subjects...)

It's fucking EVIL.


Shake it off, 'fonestar'! It's good to see you again.



Wed, 03/26/2014 - 11:17 | 4593838 painlord-2k
painlord-2k's picture

....Bitcoin adoption.

Wed, 03/26/2014 - 11:17 | 4593839 painlord-2k
painlord-2k's picture

....Bitcoin adoption.

Tue, 03/25/2014 - 19:16 | 4592151 Mr Pink
Tue, 03/25/2014 - 19:19 | 4592161 holmes
holmes's picture

Some people shouldn't be allowed to vote.

Tue, 03/25/2014 - 19:58 | 4592276 knukles
knukles's picture

Like felons, illegal immigrants, liberals, Progressives, registered Democrats, RINOs and people of whom I have not personally approved.

Wed, 03/26/2014 - 03:09 | 4593013 Offthebeach
Offthebeach's picture

If voting mattered, it would be made illegal.

Tue, 03/25/2014 - 19:25 | 4592180 HelluvaEngineer
HelluvaEngineer's picture

I'll forgive her.  Just this once.  Next time - spankings.

Tue, 03/25/2014 - 20:45 | 4592395 Blano
Blano's picture

Dayum I would so hit that....nice profile and barely keeping your top up honey.

Tue, 03/25/2014 - 22:25 | 4592672 Big Brother
Big Brother's picture

Let's see here, probably 18 when she first voted for Obama; so that's puts her at about 23-24 years old.  Nope, not too young for me.

Wed, 03/26/2014 - 00:27 | 4592865 MontgomeryScott
MontgomeryScott's picture

It's just not fair.

Every year, the good-looking girls seem to get younger.

This one's not bad overall, but with a mentality that could actually cast a vote for Soetoro, she was a little too stupid by the age of 18. Besides, her titties are too small.

Waking up the next morning, and desiring a kiss, I look over at this child, who seems to be texting on her Iphone and waving like a three-year-old. I rise from bed, and wash, and make my way to the kitchen to see what this pretty thing can do on a stove. Seeing nothing, I smile inwardly (she's probably too overcome, and exited), and proceed to make eggs, bacon, toast, and slice some fruit up while the coffee is brewing.

I hear harsh banging sounds from the bathroom, and assume that she is in a hurried rush to make herself look good for me.

As I greet her in the kitchen, she is fully dressed, and texting again, as she blows by the table on the way out the door. She stops momentarialy, smiling sweetly, as she continues tweaking her right thumb, and I watch her skinny ass as the screen door hits it on the way out. I check my wallet, and find that it is several hundred dollars lighter, but find a note inside, which states (in stylized children's handwriting) that it was fun, but she has better things to do. The big swooshes and the little heart-shaped circles over the smaller-case letter 'I''s make me laugh, as I realize that I just fucked a girl with the mentality of a 7-year-old (with an I.D. that stated that she was 23). Chiding myself, I throw her plate of food in the garbage, and reflect back at the night's festivities. She was scrawny, selfish, greedy, and not a very good lay, after all.

The next time I saw her, ten years hence, she looked stressed. Her titties hadn't grown, but they had managed to sag a little, and her maturity rate had grown to that of a 13-year-old, as she described how she had become a 'single mother', and wanted to rekindle our relationship...


SO, 'Big Brother', is THIS what you REALLY want?

Tue, 03/25/2014 - 20:29 | 4592357 lordbyroniv
lordbyroniv's picture

seems we have more runaway than I thought........


Keep Dancing !!!

Tue, 03/25/2014 - 19:11 | 4592138 holmes
holmes's picture

The Great Re-Set can't come soon enough

Tue, 03/25/2014 - 19:18 | 4592154 Hero Protagonist
Hero Protagonist's picture

As long as Debt Service is LESS THAN Tax revenue, [insert FED, Politician, Lobbyist, CNBC pundit, etc] can say, "we can grow our way out of this".  Therefore, we have a long way to go....debt can increase almost 200%.  Sucks but whose going to be the counter-party to change anything.

Tue, 03/25/2014 - 20:02 | 4592289 NihilistZero
NihilistZero's picture

The FED is probably at least a 3rd of treasury ownership right?

So aren't we paying a thrid plus of that 26% to ourselves?

Accounting gimmicks and all...

Tue, 03/25/2014 - 21:21 | 4592504 post turtle saver
post turtle saver's picture

fed and intra-governmental holdings in recent history are usually around 50%... of the remainder, around 28% is foreign / international holdings... the rest goes to mutual funds, pensions, insurance and the like, much of which itself is domestic by nature...

so yeah, we kind of print for ourselves to pay ourselves... the trick here is having first access to the printing so you can make money on the paying... *inflation ALWAYS benefits those with first access to money*

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