Intragovernmental debt should not be include in the National Debt of the United States
Reason: Intragovernmental debt is money the Govt borrows from themselves. It would be no different then you giving yourself money and saying you will pay yourself back later.
My opponent must represent the con and provide reasons why intragovernmental debt should be included in the national debt.
Lets assume there was a non profit A preforming a service.
A has a endowment from which it draws $X dollars
A gets $Y dollars in donations.
The total spending by A is clearly $X+Y.
Now let B be exactly like A but I'll specify that the endowment is entirely invested in government bonds. Further B receives subsidies for its work from the government and not donations.
B has a endowment of government debt from which it draws $X dollars
The total spending by B is clearly $X+Y.
Note however that if the subsidy for B were to fall to zero government spending on B would still be $X not $0. Debt and subsidy are distinguished.
That is debt is not a budget item in the same way.
Now let C be government agency directly. spending $X+Y dollars:
C has a endowment of government debt from which it draws $X dollars (note X can be negative here representing a flow into the endowment).
The whole reason the government is creating this structure is to indicate in a public way that C will be more stable than a general government program. It is a sign or a symbol of stability in trying to treat the situation of C like the situation of B.
In both cases the government would be breaking a promise. But that's all they would be doing. In the end because we have a fiat currency, a government with an unlimited ability to tax and spend its all the government's money. Stability of wealth is nothing more than promises about future policy.
To understand how intragovernmental debt works in our system requires viewing it through the eyes of our balance sheets. Basic accounting principles will show you that intragovernmental debt is nothing like public debt and should not be considered a debt to the nation.
Intragovernmental debt is an allowance not a debt.
Debt: the condition of being under such an obligation:
Allowance: a sum of money allotted or granted for a particular purpose, as for expenses:
Now let's go through the accounting of intragovernmental debt and you will see why it s really an allowance and not a debt. We will use Social Security (SS) in our example.
The Govt receives $1000 in SS taxes (This means they debt $1000 out of our bank accounts)
The Govt spends $800 on SS expenditures (This means they credit $800 in to our bank accounts)
This leaves the Government with a $200 surplus and us with a $200 deficit.
So now the Govt has $200. The Government wants to invest this money so that it retains it's value by accumulating interest.
BUT, the key part is the Government is also in control of issuing debt. This is no different than you taking a $20 bill in your right hand and paying your left hand.
The Government takes that $200 surplus and gives it to it's left hand (aka the Treasury). The Treasury in return gives them a piece of paper (aka a security) saying that they will pay the Govt back $200 + interest.
Now the Treasury takes that $200 they were given and they go out and credit our accounts by $200.
Where does that leave us? It leaves us with a wash.
$1000 debit (SS taxes)
$800 credit (SS expenditures)
$200 credit (Treasury spending)
$1000 debt / $1000 credit
Now the only thing created out of this process is a piece of paper that says the Government owes themselves $200 + interest.
Now what does this mean? This means that the Government can spend "x" amount on it's Government programs... it is not a debt, it is an allowance. They don't owe themselves money, when social security expenditures exceed receipts, then they will issue public debt, get that money, pay themselves to eliminate intragvernmental debt and then credit people's accounts.
The debt occurs when SS expenditures exceed receipts, the debt is not how much money the Government owes themselves.
Therefore, intragovernmental debt should not be considered part of the overall national debt. They should have a separate category for Government Programs Allowance. Then when they have a shortfall of receipts for their Government programs, they decrease this allowance and then increase the actual National Debt of America.
I don't disagree with my opponent that intra-government debt is an allowance I argued as much in my first post. The point raised was that a mandatory allowance i.e. mandatory spending is essentially debt. Debt interments given to a government agency is a promise that agency will have a certain amount of spending regardless of the budget.
That is if agency X is holding debt, even if the budget is zeroed out for X.
The debt represents mandatory, non discretionary spending that will have the same impact as if the debt were held by a private entity. Sure in theory the government can order agency X to return the money to general revenue, the same way the government can tax unearned income from treasuries at 100%. I fail to see how an obligation of the general account, isn't debt.
But the point is, intragovernmental debt is not "debt". The Government can not be in debt to themselves, that is illogical. Debt is something you owe, we do not owe intragovernmental debt. It represents possible future debt, but it in itself is not debt. We do not owe the Government $4.5 trillion to pay themselves off.
The debt will occur when expenditures exceed receipts. And then the Govt will issue real debt and reduce their allowance. But intragovernmental debt does not have to be repaid. People who need SS/Medicare checks need to be paid. Intragovernmental debt is just a marker/allowance telling the Govt how much they have to fulfill those checks.
For example. To pay off intragovernmental debt the Govt will issue public debt...
Say the Govt receives $900 in SS taxes
The Govt has $1000 in SS expenditures
They now have a $100 deficit.
The Govt will then issue debt for $100. Someone will lend $100 to the Govt.
Now the Govt will give itself that $100 to pay off it's debt. Then it will credit the SS recipients account.
The debt here is the $100 someone lends to the Govt to pay the SS expense. The debt is not the intragovernmental debt. That will simply decrease by the Govt issuing real debt where someone other than the Govt themselves has to front the money.
This is why intragovernmental debt should not be included in the National Debt. You can have an allowance or some other mechanism that lets people know how much we have in SS/Medicare to spend if in fact we need to. But intragovemental debt itself, is not actual debt that the American people will have to pay off.
My opponent shifted the argument from not listing the debt at all, to instead arguing we should create a new category called "allowances" to list this special type of (non-)debt. Thus I am forced to rebut in the last round.
First lets consider again 3 entities like I started this debate with:
A is a non profit with $1000 in expenditures and an endowment in treasuries.
B is a government agency with $1000 in expenditures and no endowment.
C is a government agency with $1000 in expenditures and a trust fund in treasuries.
I'm not sure how one can argue the case of C is more like the case of B than the case of A. And this is the key to this debate. It is the point I've been making every step that "allowances" still act exactly like debt.
And this can be clearly shown by noting that most of the arguments made against counting the SS trust fund as debt would count equally for any private borrower investing in treasuries. For example, VFITX Vanguard Intermediate Term Treasury Fund, takes all its money and plows it back into treasures. The government could think of this as allowance and that it only has to come up with money for VFITX expenses when outflows are greater than inflows. The situation with the Social Security trust fund is exactly the same as the situation with this private debtor. That is what we mean by "paying off" VFITX is exactly what we mean by paying off the Social Security trust fund. Both represent a claim against general revenues payable in the future.
Most importantly, is the problem with balance of power. Under the current definition a government agency selling off its treasury bonds does not create a new general obligation, because the bonds are already considered debt. Under the revised proposal any government agency selling its treasury bonds would be creating a new general obligation. That means the executive branch now has authority to create debt by itself the most important power held by the congress. Which severely damages the balance of power.
Under this accounting a president could order a government agency to borrow money from a bank to buy treasuries and the treasuries to sell additional treasuries.
Also we haven't addressed the issue of quasi governmental institutions. For example Fannie Mae held huge quantities of treasuries was subject to congressional management but had private ownership. Does their bonds count as allowance or debt? What about treasuries held by state governments particular as part of futures, allowance or debt? What he has failed to do is show one benefit of distinguishing allowance debt from other forms of debt nor even provide a consistent definition for it.
a) He hasn't presented any disadvantages of the current system.
The argument boils down to: intra-government debt shouldn't be counted as debt even though it exactly like debt because Pro doesn't like calling it debt. We need better reasons to change government accounting standards than that.
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