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Where Do National Debt Reduction Donations Go?

With President Downgrade's $15 Trillion debt milestone as a backdrop, the Los Angeles Times published a worthwhile human interest story this weekend about an octogenarian who's devoted his retirement to helping pay down the national debt, one recycled soda can at a time: 


Atanacio Garcia isn't waiting for Washington to reduce the national debt. The 84-year-old retired postal worker from San Antonio, a man of simple means and a simple credo, donates $50 a month from his pension, plus whatever he makes from collecting aluminum cans in his neighborhood, to reduce Uncle Sam's IOU.  "I'm a believer in our country," said Garcia, an Army veteran who has promised that he will contribute "until the debt is paid off or until I die."

Garcia, a father of five who has lived in the same two-bedroom home for decades, is among hundreds of public-spirited Americans who have sent money, from pocket change to million-dollar checks, to the federal Bureau of Public Debt at P.O. Box 2188 in Parkersburg, W.Va.  Since President Kennedy signed legislation 50 years ago setting up the little-known program that accepts donations to pay down the debt, about $83 million has been collected, including $2,440.80 from Garcia.

As that $83 million figure indicates, Garcia isn't alone:

Donations have come from school bake sales and an Ohio woman who left $1.1 million from her estate. One note with a $300 gift said: "In completing my 1040 federal tax forms for 2010, I determined that I did not need to pay any federal income tax this year. I did not make very much money in 2010, but I still feel I should pay at least something to offset some of the benefits I receive as a citizen."

Eskimo Pie Corp. in the 1990s, when the debt was a piddling $4 trillion, pledged to donate toward debt reduction a nickel for every box of ice cream bars sold in a month; it offered the Treasury Department $71,894. The department, facing the prospect of counting all those nickels, told the company to send a check. President Reagan donated $1 million in leftover private funds from his second inaugural in 1985.  For years, one man sent a check equal in dollars to his age. A veteran who wanted to express his gratitude for successful surgery at a VA hospital sent $17,500.


Honorable as these gestures may be, they amount to a fraction of a drop in Uncle Sam's ocean of red ink:

It doesn't seem to matter to the donors that five decades' worth of contributions does not even cover one day of interest on the [national debt]. In fact, the debt is so high that it would take roughly a $48,000 contribution from every American to retire it.

At first blush, the piece paints an endearing -- almost cute -- picture of a patriotic elderly gentleman doing his small part to help keep the country he loves fiscally solvent.  But is Mr. Garcia, a veteran of modest means, being had?  The Bureau of the Public Debt encourages citizens to make "Contributions to Reduce the Debt," yet a Washington Post report over the summer told a different story:

But the contributions don’t specifically go to pay off existing debt. The government deposits them in the Treasury Department’s general fund, in essence the government’s main checking account. “The gifts go toward funding the federal government, not to pay off the debt,” said Mckayla Braden, a spokeswoman for the Bureau of the Public Debt.

I called the Bureau of the Public Debt to confirm this account.  The bureau's Director of Public and Legislative Affairs, Joyce Harris, disputed the Post's July report.  "[That reporting] was not accurate," she said, "all of that money goes into a general fund, yes, but it's channeled to a gifts account. By law, that money must be used to pay down the principle, and we follow the law." She conceded that some "debt reduction" funds, such as monies brought in from government auctions and asset sales, are used to fund the federal government. 


Harris' assertions directly contradict Ms. Braden's comments.  Was Braden mistaken when she went on record with the Post (the story has never been corrected or updated, as far as I can tell), or has the Bureau of Public Debt public relations team tightened up its messaging after her...unhelpful admission?  Harris was polite and attentive throughout our conversation; she passed along this chart, which shows debt-reduction gifts exceeding $28 million since 1996.  (She said she couldn't confirm the LA Times' $83 million statistic because "some of the records [dating before 1988] just aren't there.")   I have no reason to believe the bureau isn't operating within the letter of the law, as Harris insisted it is, but I also wouldn't be surprised if the money was a bit more fungible than she lets on.  To wit, she compared the federal gifts account to a subset of an individual's personal banking account.  Sure, money can be specifically allocated for various specific purposes, but it's ultimately drawn from one larger, single pot.

If debt-retirement gifts are being funneled directly and efficiently to execuite their intended purpose, all the more reason for "patiotic millionaires" to pony up.  Do it for America.

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