The national debt increased $47 billion in December, but that isn’t the entire story. Secretary of the Treasury Henry Paulson has many tricks up his sleeve.

Entitlements like Social Security, Medicare, and the Federal Employees Retirement System received half of the interest due against their September 30th, end of fiscal 2006 closing balance.  Through the magic of the Pay-It-Again Sam scam, this “interest” increased the taxpaying public’s obligation in this category by $75.5 billion this same month, considerably more than the overall December debt increase.

To soften the blow, the Treasury “paid off” $28.5 billion on the honest “Investor” side of the debt. They did this in the only way any part of the national debt can be reduced; by paying off maturing obligations and not immediately renewing them by selling more securities on the bond market as usual. Don’t fret. They’ll make up for it in January and February.

On Thursday, December 28th, one day before the last working day of the month, our national debt looked like this: (Snatched directly from the U.S. Treasury's Bureau of Public Debt web page)

Notice that one day before closing the entire national debt was down $40 billion. What the government calls “Debt Held by the Public” (debt to Investors) was down $29 billion and IH (the scam) was down $11.2 billion. Isn’t that wonderful?

One day later, on Friday, December 29th, when the books were closed on the month, the debt looked like this:

In one day, the IH holdings went up $86.7 billion over its position on 12/28 and $75.5 billion over November. This huge addition on the last working day in December was due mostly to the interest that was simply dumped into the account at no expense to the government and as predicted in my December 14th article titled “Dumping Interest on the tab” and, secondly, to the amount of Social Security payroll taxes absconded by the Beltway Bandits during December. The latter is done every month simply to carry on the fiction that they merely “borrowed” our supplemental retirement money, an excuse that any burglar would like to use. Hey, I just borrowed your car. Sorry about the missing parts.

The difference between the Beltway Bandits and a common burglar is that the government tells us we must now buy our car back for its original price plus the interest they’ve added.

That's the "Pay-It-Again Sam plan," now standing at more than $2 trillion for Social Security alone and not to be confused with trusts like the Federal Employees Life & Health system that never has any receipts and where, every month, hundreds of millions are taken from taxpayers to cover expenses or the Federal Employees Retirement System (FERS) where "receipts" are always short by billions per month and, if it were a private sector insurance plan, would have been defunct years ago.

The national debt now stands at $8.7 trillion, only $285 billion from the current debt limit. We’ve already added $173.2 billion to the tab in the first three months of fiscal 2007 and at this rate, the borroholics will be asking for another trillion dollar ceiling increase by the end of March. Raising the restriction has become an annual event.

Last year, we borrowed approximately $200 billion in the January thru March second quarter and with the need to make up for Paulson’s tricky reduction in investor borrowing last month, we’re going to be ahead of last year’s figures.

Add all this to the troubles we’ve got with a falling dollar, nations abandoning our currency, treasuries becoming more difficult to sell without increasing interest rates, plus our ridiculously escalating war and occupation costs and plans to add to our 734 military base empire spread across the globe – and you’ve got the conditions for financial disaster.

By the standards of common sense, the United States of America has been bankrupt for some time now and operating on borrowed money. Even a child would call this "unsustainable."

Again, I ask; what happened to the Paulson and Chairman of the Federal Reserve Bernard Bernanke trip to the Orient after both China and Japan, our largest creditors, announced their intentions to invest elsewhere? Where’s the report? The silence is deafening.

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