February 2025 – Ecological Era

Bonds and Surplus Value. Rates of Interest and Capital.

With the focus on the debts of the state, the question in the bourgeois press seems to only be what to do with the money. The 2022 state’s whole budget was 6.27 trillion dollars. “In FY 2022, the federal government spent $6.27 trillion and collected $4.90 trillion in revenue, resulting in a deficit.” more about this below.

“The federal government spends money on a variety of goods, programs, and services to support the American public and pay interest incurred from borrowing. In fiscal year (FY) 2022, the government spent $6.27 trillion, which was more than it collected (revenue), resulting in a deficit.”

“The U.S. Constitution gives Congress the ability to create a federal budget – in other words, to determine how much money the government can spend over the course of the upcoming fiscal year. Congress’s budget is then approved by the President. Every year, Congress decides the amount and the type of discretionary spending, as well as provides resources for mandatory spending.”

“Money for federal spending primarily comes from government tax collection and borrowing. In FY 2022 government spending equated to roughly $3 out of every $10 of the goods produced and services provided in the United States..”

Fiscal data treasury.com

https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/

“A budget deficit occurs when the money going out exceeds the money coming in for a given period. On this page, we calculate the deficit by the government’s fiscal year.”

“In the last 50 years, the federal government budget has run a surplus five times, most recently in 2001.”

“To pay for government programs while operating under a deficit, the federal government borrows money by selling U.S. Treasury bonds, bills, and other securities. The national debt is the accumulation of this borrowing along with associated interest owed to investors who purchased these securities.”

“A budget deficit occurs when money going out (spending) exceeds money coming in (revenue) during a defined period. In FY 2022, the federal government spent $6.27 trillion and collected $4.90 trillion in revenue, resulting in a deficit. The amount by which spending exceeds revenue, $1.38 trillion in 2022, is referred to as deficit spending.”

Ibid. Treasury.com

Here at least we finally start to cut to the chase. “To pay for government programs while operating under a deficit, the federal government borrows money by selling U.S. Treasury bonds, bills, and other securities. The national debt is the accumulation of this borrowing along with associated interest owed to investors who purchased these securities.”

There is the discussion we should be having. It is not what to spend the debt on, social welfare, the military, etc. It is the debt itself.

The bond market is where the money that pays the deficit comes from. The state issues paper on its debts, payable at a later date, with surplus value, interest, attached to the money. The money ultimately comes from taxes, which are a subdivision of profits.

It doesn’t mean your boss has suddenly become generous; the repressive function of the state is also present, and he funds this through the taxes on the paycheck, for instance. His ownership of this money is shown in times of crisis by bailouts of banks, the clergy, business owners. Generally under capitalism the only time the state owns something is if it is being bailed out.

“At $4 trillion, the assortment of grants, loans and tax breaks (paid out for Covid) exceeded the cost of the Afghanistan war. More than half, or $2.3 trillion, went to businesses which in many cases were not required to show they were impacted by the pandemic or keep workers employed.

Oct 5, 2020

Google search size of govt bailout during covid usa

Which is where the taxes go in times of crisis, to keep the investors making a profit. If you have ever tried to retire, you know the money you were taxed all those years of working did not go into your bank account.

The bonds that are sold are paid for by taxes. The commodity they are speculating on has yet to exist, materially.

Any assets of the capitalist state that are capable of creating a profit are always sold off when deemed able to create surplus value.

As I stated earlier taxes are not the property of the worker, any more than the surplus value, profit, is. Regardless of the fact a dollar amount is printed on every paycheck with the word taxes on it, it is no more the workers property than the other section of the workday worked without pay, the surplus labour. In the latter case it is obvious the division of paid and unpaid labour is in the hands of the employer.

The bonds carry a rate of profit. For example:

“The 10 Year Treasury Rate is at 3.70%, compared to 3.72% the previous market day and 2.86% last year. This is lower than the long term average of 4.25%. The 10 Year Treasury Rate is the yield received for investing in a US government issued treasury security that has a maturity of 10 years.

Google search 10 year bond rate

“What Is a 10-Year Treasury Note?

“The 10-year Treasury note is a debt obligation issued by the United States government with a maturity of 10 years upon initial issuance. A 10-year Treasury note pays interest at a fixed rate once every six months and pays the face value to the holder at maturity. The U.S. government partially funds itself by issuing 10-year Treasury notes.

“Understanding 10-Year Treasury Notes

“The U.S. government issues three different types of debt securities to fund its obligations: Treasury bills, Treasury notes, and Treasury bonds. Bills, bonds, and notes are distinguished by their length of maturity.

“Treasury bills (T-bills) have the shortest maturities, with durations only up to a year. The Treasury offers T-bills with maturities of four, eight, 13, 26, and 52 weeks. Treasury notes have maturities ranging from a year to 10 years, while bonds are Treasury securities with maturities longer than 10 years.

Investopedia

https://www.investopedia.com/terms/1/10-yeartreasury.asp

The idea is the money paid for the bond will return with a profit to the buyer; with interest. Whether this is paid in small portions or in a lump sum really makes little difference; it pays out the surplus value. In the end the value of the $100 bond is 3.7%, or a profit of $3.70 every 6 months.

So we see what is really being discussed as regards the debt limit. It is how much of the capitalist’s money will be raised this year from taxes, with interest, what will be indebted at 3.70% interest every 6 months in 10 years.

In attempting to make it an issue of bread and butter to the worker, we see no mention of bonds in the bourgeois press. Yet this is exactly what we are talking about.

This money, the 1.38 trillion dollar deficit, is all surplus value. The whole state budget of 6.27 trillion dollars, is all from the unpaid section of the workday. And this is not the average rate of profit the capitalists are bringing in, the average rate of profit is probably higher than 3.7%. There is a general knowledge among capitalists what the average rate of profit is, but they are like a freemasonry and will not provide this for the worker to digress upon.

Nevertheless we see the real issue of what the debt really represents is more difficult to get at than simply how the money is going to be divided up. The mechanism of bond markets is the interest is paid for by taxes. The whole discussion comes back to speculation on the tax dollars, the bond market. It seems unlikely the Republican bourgeoisie will upset the apple cart, so to speak. How much more likely are you to find yourself investing in 10 year bonds if you are a member of this group? They stand to benefit most from the debt. Look there they are speculating on it. Their following believes this money to be theirs, that the taxes are their property. They appear to be legitimate, at least if you accept capitalism.

The state is used primarily for security. Two thirds of the money spent goes for this. We know interest payments on the 32 trillion dollar debt take a trillion dollars a year, paid to bond owners. There is no “National Debt factory” somewhere in Wisconsin producing commodities. Rather we know the debt is all speculation on tax money,

Trump and Musk may be able to save a little by making government smaller, by removing bureaucrats. But it is nowhere near what is being paid out every year as interest on the national debt. Have they even saved a trillion dollars yet?

The bonds are still being sold. The Treasury’s papers are still being circulated. Until you approach the real source of the national debt, the bond market, you will never be able to contain it.

Nicholas Jay Boyes

Milwaukee Wisconsin

American Democratic Republic

So now that the Republicans finally, after 20 years, gained the sanction of universal suffrage, they have been active. One of their main projects has been to shake up the federal bureaucracy. They have Elon Musk in charge of a semi official post to make government more efficient.

They have sent most all federal employees notice they can quit and receive 6 months pay, without having to work the 6 months.

It seems to have resulted in tens of thousands of federal employees deciding to quit their posts. It is not clear if they plan on replacing them, and how this would make the government more efficient if they do. It may be cheaper for a little while, as a younger person, a Trump supporter, gets a job. But in the long term, it is difficult to see how this could result in a large savings of money, as in time they would receive a similar paycheck.

To save money they are removing the “soft power”, the aid that small countries receive to make them support Washington. This type of thing would seem to be something they would not be so apt to do, as these small countries receiving aid sometimes prove strategically important.

Nevertheless the national debt is now 36.2 trillion dollars, Musk has suggested he can make government save trillions of dollars by making it smaller. Thus the logic behind allowing a billionaire to run roughshod over Washington’s bureaucracy.

I don’t think anyone would not agree Washington”s is bloated; we remember the 100 dollar toilet seats, the two hundred dollar screws of the Pentagon budgets we periodically hear about. Or workers in the bureaucracy receiving 6 digits a year, and not doing any lifting, or producing a commodity.

Many of the people Musk has removed may not be essential, and the government getting smaller to pay off the debt may work. But we have overlooked something, a thing about the national debt Musk is not attempting to tame.

That national debt is sunk into the bond market, and someone is drawing interest from it. The money, the state’s debts, are being speculated on. There are investors who have bought ten year bonds, and are speculating on tax money being collected and spent ten years from now.

Figure 5 percent on a trillion dollars of bonds, that’s 50 billion dollars every 6 months. The bond’s interest rates are currently at 4,45%, paid every 6 months, known as a “coupon payment”. It is easier for me to use 5%, so bear with me.

So figure half (which is absurd I know, the total is probably much larger) of the national debt was in these 10 year bonds, that’s about 16 trillion dollars. Every 6 months our money creates 5%, that’s 16 50 billion dollars. That’s 800 billion dollars, and in ten years, at every 6 months, a total of $16 trillion has been paid as interest on our bonds that have matured, over a period of 10 years.

So if you figure the whole 36.2 trillion dollars the debt really is, is in 5% bonds, that’s 32 trillion dollars in interest that has to be paid on the debt in ten years with “coupon payments”.

According to Google , in 2024, the interest payments on the national debt totaled $882 billion. Our calculation is more than double this, but even if it were half, and in this case half the national debt was not in bonds, rather it was simply paid for by taxes, $882 billion every year for ten years is 8 trillion 82 billion dollars.

Which when you think about it is probably for more money than Musk can save by gutting the bureaucracy.

But if it was twice this, which we calculated first, on a 6 month interest payment (coupon payment), we get a total of about 17.64 trillion dollars in ten years.

The point of this is to suggest you are going to pay off the debt just by making government smaller, without attending to the source of funding for the government, which is often in bonds, you may not get too far. Clearly the national debt is speculation on tax dollars being paid to the Treasury, paying interest to investors.

If they want to lower or remove the national debt, the first thing that would have to be done would be to stop issuing bonds. Straight taxes carry no interest rate. If you just did that you would save trillions of dollars, and in ten years you would have paid off a large amount of debt, even if you consider Google’s number for the interest on the debt.

Just what they are speculating on is a real question. The state does not produce commodities that can be sold and make profit, they are not speculating on GM auto production, or Union Pacific railways, which as a joint stock company would pay dividends.

Rather this is speculation on the debts of the state, paid for by taxes. The surplus value flows in every 6 months as interest on the 10 year note, keeping our bourgeoisie in power.

It would be a remarkable turn of events if Elon Musk reduced the size of the bond issues. This would result in less surplus value accruing to the bourgeois who buy these bonds, something which would seem the opposite of Musk’s set of prerogatives. It is just too attractive to speculate on tax money being paid; I mean, they very rarely default. They could not pay in 2009, and their credit rating fell. But other than that, it just never happens. They paid it back eventually, but the bourgeoisie does not like their credit rating being downgraded. They basically always pay the interest, bonds are pretty much a safe speculation.

Without looking at the source of funding for the state, bonds, reducing the expenditure of the state looks more like a doctrinaire experiment than reality. These billionaires like Musk are just too sunk into speculating, on the tax money, to give up their cash cow, even to satisfy Elon’s desire for thrift.

Nicholas Jay Boyes

Milwaukee Wisconsin

American Democratic Republic

2 19 2022

edit 9 19 2025