Statistic used to highlight debt crisis

As pointed out by several publications, as of yesterday Apple -- the world's most valuable technology company -- has more cash and marketable securities on hand than the federal government does, according to the U.S. Treasury's own daily statement. At the end of June, the iPad and Mac maker had $76.2 billion on hand, while the government currently has $73.8 billion in operating cash balance.

Business Insider's pithy addition to the disturbing statistic, meant to highlight the ongoing debt-ceiling crisis, explains that Apple has more money on hand because it "collects more than it spends, while the U.S. government does not." Of course, this ignores the reality that governments are not encouraged to hoard capital, and that companies are generally not allowed to operate at a deficit for prolonged periods.

The potential downgrading of the government's credit rating, one of several possible outcomes if the crisis is not resolved before August 2nd, would make borrowing more difficult for the government, its agencies, and drive up interest rates on consumer loans as well as tax burdens on most individuals -- further damaging an already-struggling economy. Just as when consumers miss credit payments, the government would be forced to re-allocate resources to pay a significantly increased interest rate on the public debt, which could trigger another Wall Street-led financial collapse and throw the country further back into recession.

The effect of an increased interest rate on the debt -- which is a different issue than the year-to-year deficits -- would increase tax burdens on all Americans for many years to come.

In its most recent financial reports from its fiscal third quarter, Apple reported that it paid a tax rate of 23.5 percent. Apple is one of several large companies calling for a one-time "tax holiday" on overseas profits that would offer corporations a reduction (from 35 percent to just five percent) on the amount of taxes paid when re-patriating profits back into the United States that were made on foreign sales.

The argument is that infusing the U.S. economy with the billions currently kept overseas would result in both stimulative and job-creation effects on the economy; however, opponents, who have occasionally targeted Apple with protests over its membership in the anti-tax coalition, argue that it would cheat the U.S. government of rightful revenue and would further cripple the government during the current budgetary crisis. [via BusinessInsider, photo by Jeff Sandquist via Flickr]

by MacNN Staff