The following charts are taken from figures in the U.S. Treasury’s final Monthly Report for fiscal 2006; “Summary of Receipts and Outlays of the U.S. Government:”

Unless you follow the government’s budgets and expenditures year by year you might not notice that Corporate Income taxes have increased by about fifty percent under the Bush administration. This is a significant increase over the roughly ten percent they averaged before Bush II (see 1999 chart) and is consistent with the favors granted large companies and monopolies in what amounts to the old “trickle-down” republican policy.

Think about this. If the above was a description of your market or customers, if it described the people that keep you in business, provide your livelihood and whose satisfaction was crucial to keeping you on the job, to which segments would you pay the most attention?

One of the most ridiculous and childish ideas or excuses invented by the government and endorsed by most of the loyal news media and think tanks is that 43 percent of the $8.5 trillion national debt is merely a matter of the government "owing itself" or that Congress and the administration will somehow take care of this debt. Can you see anywhere in the above receipts where that is possible, where the payoff money would come from?

In fiscal 2006, the expenditures went beyond the budget or the revenue that the federal government received. In broad terms, here’s the way the U.S. Treasury says spending broke down:

The difference between “receipts” and “outlays” is a reported $247 billion deficit for the year, but we know that it was actually more like the $485 billion I detailed for you last week.

And where did the government get this extra $247 billion? They borrowed it of course. They borrowed it from foreign countries like China and Japan as well as pension houses and individual investors who still believe treasuries are the “safest investment in the world.”

And they are the safest because they’re backed by every taxpayer in the country. The government, which has no income other than taxes, would not dare to back down on its contracted promise to pay annual interest and full payback at maturity.

Notice that “interest” was almost as much as “Discretionary” spending other than Military. Paid against the amount of investor debt at the end of fiscal 2005, this annual and ever increasing interest was $405.9 billion last year, well over a billion a day weekends and holidays included.

This annual interest is not “small potatoes” when you consider the fact that discretionary spending is the last place Congress has much choice in terms of how much is spent by the Agriculture, Education, Labor, Energy, Health & Human Services, Interior, Justice, Transportation, State, Veteran’s Affairs, Corps of Engineers, NASA, and other departments of civil activity.

All else, along with interest, is considered “mandatory” spending mostly because American workers and the general public pay specific taxes for goods and services like the Social Security supplemental retirement system and Medicare (see “payroll taxes” in the first chart), although the Beltway Bandits have done their damndest to “reform” these and have had their greedy fingers in these parts of the pie for years.

Last year, Military spending reached an all time high of $499.4 billion. Adding the three percent of total spending for Homeland Security (the sliver within Military), what in the old days was called "civil defense," brings the Military total to $568.5 billion. With the debacles in Iraq and Afghanistan, an estimated 734 bases throughout the world to staff and maintain, New Orleans and other Gulf Coast cities to rebuild, is it any wonder this category has exceeded the half-trillion mark? It’s also interesting to note that this “military” category does not include the modest spending by the Army Corps of Engineers that’s listed with the civilian activities of “discretionary” spending.

Bush and company have done their best to throw enough scraps into the hopper, and the new Secretary of the Treasury has done his best to hold down borrowing before the midterm elections such as the $416 billion increase to the national debt in fiscal 2006 plus a day, but the real question is how long will foreign countries like China and Japan continue to finance us when they hold us by the shorthairs and our aggressive nature wears thin?

For more than a year now, Treasury’s securities “auctioned” have been lucky if half were “accepted.” And these can be “cashed-in” at any time the investor/lender decides to forego the annual interest and invest elsewhere.

With a dollar falling in value worldwide, a negative balance of trade well over $800 billion a year, outsourcing of jobs and industry (even the Pentagon says that if they had to “buy American” their budget would double), and with George W. Bush’s crusade against the “axis of evil” it seems just a matter of time before the rest of the world recognizes our bankruptcy and inability to stand behind large monetary commitments.

On October 19, 2006, the Information Clearing House reported that the Australian Treasurer, Peter Costello, “called on East Asia’s central bankers to ‘telegraph’ their intentions to diversify out of American investments.” Although Australia has been one of our staunchest allies, and doesn’t hold a great deal in U.S. securities, Mr. Costello claims his country should prepare for the inevitable.

If you’re going for domination, don’t borrow from the competition.