FY2012 Budget Considerations (correction)

When I was a young man there was at least as much attention paid to sinking funds as there was to loan amortization. (How much do I need to save each year for the next five years so that I can buy a car?) Why cannot local, state, and federal governments practice that sort of conservatism?

Enough of that introduction. I have just completed an exercise addressing the elimination of the federal debt. I made the following, simplifying, assumptions:

1. Interest on the national debt to remain fixed at 3% for the duration of the analysis.
2. Start FY2012 with a national debt of $15,000,000,000,000.
3. FY2012 budget to have a surplus that will result in the elimination of the federal debt in 25 years.
4. The only change in the government expenditures will be the reduction of the cost of debt service.
5. There will be no change in government revenues from the FY2012 budget.

Question: What is the dollar amount of the FY2012 surplus required to eliminate the debt in 25 years?

The answer is $600,000,000,000, i.e. $0.6 trillion.

I will not be around in 25 years (at least I hope not) but unless the idiots in Washington are talking about something in this neighborhood I think we should dump the whole lot!