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100% of Income Tax Going to Interest on DEBT - What? Allison Bricker Show 09-25-2013 @7pm EST

Please join me this evening as we discuss the latest developments on Adam Kokesh, the nightmare scenarios fast approaching where 100% of Income tax will be used just to service interest on the National Debt, the Cruz faux-filibuster, your calls and more.

- Allie

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This is exactly what Reagan's Grace Commission concluded

It was a 2-year study which Reagan ordered to see where the income tax went.

And that's right - it goes to pay the Federal Reserve the interest they charge us on the money print.

If the founders knew about this they would be livid.

There was NEVER supposed to be a central bank controlling America's money and charging us usury fees on top of it.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

Reagan showed this years ago with the Grace Commission.

It was designed specifically to explain how the federal income tax is spent.

Their findings:

1/3 goes uncollected
1/3 lost to waste and inefficiancy of the government
1/3 to pay interest on the national debt (Meaning the Federal Reserve mostly I believe)

More specifically:
The report said that one-third of all income taxes are consumed by waste and inefficiency in the federal government, and another one-third escapes collection owing to the underground economy.

“With two thirds of everyone’s personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments.

In other words, all individual income tax revenues are gone before one nickel is spent on the services [that] taxpayers expect from their government."

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

Uh did anyone bother to listen to this guy???


Jim Willie with the hat trick letter?

Apparently the FED is buying over 103% of the USDebt as of a month ago I believe.

Don't believe what they tell you just what you see. Obummer called a special closed door meeting two weeks ago with the FED and everyone else who matters to discuss the money.

Buy stuff worth value now while you can. Food, water, gold, silver ammo etc.


Interest in 2012 is $223 billion.
U.S. Federal Spending - FY 2011.png

During FY2012, the federal government collected approximately $2.45 trillion in tax revenue, or $1.374 trillion in income tax revenue.
U.S. Federal Receipts - FY 2007.png


I see net interest. What is gross interest?


Free includes debt-free!

I know one thing

You can take 100% of "Discretionary" and probably about 50% or more of the "Mandatory" and just add it as "Defense" spending.

If I disappear from a discussion please forgive me. My 24-7 business requires me to split mid-sentence to serve them. I am not ducking out, I will be back later to catch up.

Ross Perot called out government for their faulty accounting.

It's one big cover-up.

Free includes debt-free!

Debt service and rollover risk

75% of US Debt must be refinanced in the next 5 years
Bond market: Something Rick Santelli said yesterday that got no traction at all, but should not be over looked.

The point he makes starts about 2:10 on this video, He says the “The duration of the entire US portfolio is close to that 5 year maturity and then points out the “Fed doesn’t want to talk about it because of the cost to service the debt is going higher.”


sorry thats the best i could do with that, if you have trouble go to CNBC....look for closing bell exchange 3:00 pm 7-9-13

By my calculations a 5 year duration equals 75% of 17 Trillion dollars’ worth of bond are either going to have to be rolled over…..or new money raised……..this is a huge risk to our bond market, the dollar and our country.

Couple points here, even if we are able to rollover this amount of debt( and this doesn’t include the new money that must be raised to cover the deficit) the cost of servicing is going up and it’s going to break our backs.

Portfolio duration…..There are two different measures for duration
• Macaulay duration is the name given to the weighted average time until cash flows are received, and is measured in years.
• Modified duration is the name given to the price sensitivity and is the percentage change in price for a unit change in yield.
Rick is referring to the former when he states that the cost of servicing the debt is going higher. On an annualized basis that 46 basis points turn in to 78 billion dollars. So in just over a month the burden to tax payers have increased by quite a bit. We lets extrapolate this information out and see what kind of effect this could really have.

Everyone now talks about rate normalization because everyone knows that we cannot live on zero interest rates forever. So what does rate normalization look like. According to John Williams of shadowstats, the official CPI is about 1.5% and the pre 1990 measurement is about 5%. So we will split the difference and call it 3.5%. So the gets us just to what called a real interest rate of zero (real rates are neither positive nor negative on a real after inflation basis). Under normalization there then needs to be a risk premium added to the real rates of 3.5%. Typically this risk premium might be somewhere around whatever the real GDP growth rate is at the time, So let’s call it 2.5% to get to a nice around number of 6%.( so this would be the ten year rate……the 5 year rate would be about 2/3 of the ten year or 4%) Stated another way I could have told you that the 10 year rate normalization could be about the same as nominal, GDP growth but I wanted to give you some basis on how I came up with these numbers. Current 5 year rates are about 1.5%, but added 78 billion dollars to debt service for a 50 basis point move. Another 250 basis point move could add close to another 400 billion dollars to our debt service. So all the phony accounting tricks Washington is using right now will only make things worse, because they are doing these things to make it appear that things are getting better…….it not…..and it’s not going to.

Do you know what the weighting of a 17 trillion dollar portfolio would have to look like under the current interest rate environment to have a 5 year duration? 13 trillion of the 17 trillion of debt has to have less than 5 years maturity.

If for no other reason all of them in Washington should be impeached for this. Why in the world would any financial entity capitalize itself with so much short term debt while the interest rate structure across the board is so low? Why wouldn’t they stretch out the terms of their debt structure to as far as possible…..well in this case because they can’t…… no one would buy the debt……….This is how banks get in trouble……borrowing short and lending long…. This thing could get so ugly so fast because of this “rollover risk”. I have always said the turning point will be when we can no longer service our debt…..and it may be upon us with rate normalization

That gives some credibility to the claim some have made

that the bankers drain 35% of the wealth produced each year by collecting interest on the "money" they create out of thin air.

Now consider that the interest rate is being kept at unbelievably low rates, ostensibly to stimulate the economy; I think the reality is that they are keeping the interest rates low to keep the federal government afloat for a little longer, hoping for some miracle or just plain too stupid to comprehend where we are headed. Imagine when the rate on the 10 Year Treasury bounces up to 10% from the insane 3.6% level where it is today what the take by the bankers will increase to; the income tax would need to go up proportionately just for the federal government to stand still.

Debt compounds when it can't be paid currently. Compound rates of growth eventually approach infinity so they can be sustained. This means that creditors of the federal government will sooner or later be left holding an empty bag. The real economy, on the other hand, has limits on its growth in terms of resources, particularly energy resources. When debt compounds, and the economy stagnates or contracts, then these debt claims on future production become impossible to be met. Now consider that if you hold federal bonded debt, or receive any payment from the federal government like Social Security, Medicare, Medicaid, Obamacare, or a federal pension, you are a creditor of the federal government. Bend over and grab your ankles.

"Bend over and grab your ankles" should be etched in stone at the entrance to every government building and every government office.

8 Years Ago, This WAS News..........

..to Me!!!

Currently 20% of the remaining 1/3 goes towards interest

Based on analysis from the Grace Commission Report published in 1984, 20% of Income Tax revenue goes towards interest payments to the 3rd Central Bank.

The issue i here is that once interest rates return to their 20yr average 5.2% 100% of Income Tax will then go just to service the interest on the debt.

Thus eight years ago, 100% was not going towards the interest, so I am not sure how it could have been news to you, unless you are from the future. ;)


Are they loaning it to us on a 20yr basis? Or is it less?

If I disappear from a discussion please forgive me. My 24-7 business requires me to split mid-sentence to serve them. I am not ducking out, I will be back later to catch up.

Interest on Debt = Wealth to Bankers

Let's be honest and change the wording to 100% of the income tax will be transferred to bankers.

scawarren's picture

I've figured that this was

I've figured that this was the case ever since I read
'The Creature From Jekyll Island'.

It is easier to fool people than to convince them that they have been fooled. – Mark Twain

Great book, isn't it?

Great book, isn't it?

Simple Facts and Plain Arguments
A common sense take on politics and current events.


Dear Allison

I've tried multiple sites (DP and radio smargus) and different browsers (ie. Explorer and Firefox) to tune in, yet nothing has worked.

Could you please advise how to do so?


Hi MG1234

Thank you for so diligently attmepting to tune into the show, and sorry that it has been met with repeated difficulty. Sort of makes it hard to grow an audience, if said audience cannot even hear the broadcast. :)

So let us try to track down the problem. If not too much trouble could you let me know the Operating System and if you are attmepting to listen via desktop or mobile?

Some other things to try:

  • Make sure you have the latest version of the Adobe Flash plugin for your browser of choice.
  • I have not implemented an HTML 5 player due to HTML5 not capable processing a live stream and keeping the stream in real time.
  • I specifically coded the player not to autostart so you may have to click the 'Play" button and see if the light on the button changes from red to green.
  • If you use extensions for Chrome or FireFox like AdBlocker plus, Ghostery, HTTPsEverywhere, or DoNotTrackMe, you might need to finangle these by whitelisting Radio.smargus.com or the DailyPaul.com
  • The stream stays active after the conclusion of the show and broadcasts the news at the top and bottom of every hour {xx:00 and xx:30 respectively}
  • An episode of "The Scott Horton Show" will be broadcasting tonight through to midnight

Hopefully, one of these ideas will lead us to uncovering a solution, but one way or another we will figure out whatever obstacle is preventing you from hearing the stream.

Good news

Transmission received fine here on Tuesday 10/8, and enjoyed your show.



Thanks for your consideration, Allison since mostly I've been trying to hear the show on my Android Mobile Samsung Exhibit, as well as on what I believe is the latest PC OS.

Hope this helps :)


100% income tax to debt

I've tried a few times to track down any analysis to support this claim. It's not very straightforward, because the total income tax revenue is 1.3 trillion, but only about 260 billion goes to interest payments on the national debt. So I've often wondered what exactly people are counting when they say that 100% goes to debt interest.

I see citations to the Grace Commission, but if that's the source then what they actually claimed has been simplified until what is left is no longer true. What they actually said was that a third of the income tax is spent on things they categorize as waste, and a third is uncollected due to the underground economy. And everything that's collected that isn't wasted goes to interest on the debt AND transfer payments, i.e., welfare, social security, etc.

So in 1982 interest on the debt PLUS transfer payments added up to about half the income tax revenue, and the other half was in categories they classified as waste (they gave an example of wasted spending as spending on unnecessary military bases, i.e., things that could be cut without being missed).

Now? Interest on the debt is about 20% of income tax revenue and transfer payments ... get ready for this ... at 2.29 trillion total are 176% of income tax revenue. Or put another way, interest on the debt is about 10% of *all* tax revenue, not just income tax, and transfer payments -- Social Security, Medicare, Medicaid, unemployment compensation -- are 85% of it. Those are pre-Obamacare numbers of course.


Most of what the government does is write checks to, or on behalf of, its citizens. In budgetary parlance, these are referred to as “transfer payments.” They include Social Security, Medicare, Medicaid, unemployment compensation and a host of smaller programs. Some are based on need; most aren’t.

These transfer payments are at the core of the difficult assignment facing the new bipartisan supercommittee of lawmakers as it works to find at least $1.5 trillion in deficit reduction over the next decade.

In 1940, the year Social Security started making regular monthly payments to retirees, only 18 percent of the federal budget consisted of transfer payments.

By 1970, transfer payments claimed a third of the budget. Last year, with the economy struggling and millions of baby boomers retiring, such payments amounted to $2.29 trillion — almost two-thirds of all government spending and more than all government revenue ($2.16 trillion).


If my original source is mistaken, then I will update my statement.

Can you clarify a couple of points. What year?

Total income tax revenue is $1.3 trillion.

$260 billion goes to interest payments on the national debt. (year & percentage rate?)

How much goes to paying Social Security, Medicare, Medicaid etc benefits that year? (are unfunded liabilities so-called transfer payments?)

How much does it cost to collect the $1.3 trillion?

A $4 Trillion budget for the next FY still exceeds revenues.

Free includes debt-free!

Definitely check my numbers

I cited the sources I used, just trying to do a sanity check on the claim, but if I were going to try to make it more precise I'd go look for better sources. I used to have a much better page than http://www.usdebtclock.org/ that I used for current breakdown of the budget, revenue, debt, unfunded mandates but at the moment I can't seem to find it. I expect their numbers are current though. The total for transfer payments was from 2011, but in line with the current numbers on the usdebtclock.org.

There's no question that the budget exceeds total revenues!

How much does it cost to collect the 1.3 trillion? The IRS budget is a fraction of a percent of what they collect, but maybe that's not what you're asking.

And no, unfunded liabilities (expected future payments) wouldn't be included, but then the expected future revenues aren't either, so I'm probably missing your point here as well.

(Found the page I was looking for earlier: http://www.justfacts.com/nationaldebt.asp)

Bump for later review.

Thanks doggydog!

Free includes debt-free!

OASDI, Medicare/MedicAid are separate & not part of Income Tx

Income Tax Revenue is divided currently 80/20 with 80% going towards Transfer payments {read: food stamps, Section 8, veteran benefits)

~20% going to interest on the debt.

Social Security (OASDI) MediCare and MedicAid are all separate taxes and as such are not part of the transfer payments funded via Income Tax.

Hello Allison. I tried to listen but was thwarted by something.

Windows 7, using Chrome.

I had to switch to IE to listen to Tom Woods.

Thanks for the clarifications. I'll think about this and probably have more questions.

Free includes debt-free!

I believe

she is referring to nightmarish future scenarios.

We are only 20% there right now, but 10 year treasury rates were 7.5% as recently as 1995, which with today's debt would mean roughly $1.3T in interest payments.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.


Also author of Stick it to the Man!