(7-minute read)
This will not be a light read.
In the past when people I knew were having financial difficulties, I would recommend that before they did anything they should consult with Consumer Credit Counseling. The counselors would give them an honest appraisal of their finances and tell them what their best course of action was. Sometimes the advice was to take out bankruptcy because budgeting with the income they had wouldn’t work. They were in too deep.
Professionals that deal exclusively with this kind of stuff will undoubtedly say that I was off a few billion here or stated something incorrectly there but the bottom line to all of this is that our country has really fucked ourselves with all the debt that we’ve accumulated and have no reasonable way to repay other than truly draconian cuts that would also lead to a financial meltdown. Bankruptcy is, of course, out of the question.
What happens to the United States will have a serious global impact due to the worldwide connectivity of finances. We live in a global economy.
Charted
The chart at the top of this post is one of the best representations of our national debt that I have seen. I did a screen shot of the graph taken from an opinion article that was in the AZCentral publication.[1] It is an excellent visual presentation of our national debt over the years.
Do you see the pattern? I do. No matter which party has been in control of our government our national debt has risen. Democrats blame Republicans. Republicans blame Democrats. The MAGA Republican party blames everyone.
What’s the fix?
Lots of questions.
The annual budget of the United States consists of 3 areas.[2] Mandatory spending. Discretionary spending. Interest on debt. Mandatory spending makes up approximately half the budget. That’s things like Social Security, Veterans benefits, and Medicare.
The most obvious answer is that as a nation we need to live within our means. That’s easier said than done for a lot of reasons. Every solution offered will have a direct negative impact on our society. It’s along the lines of the saying, “For every action, there is an equal and opposite reaction.”[3] (That’s Newton’s third law of motion.) Regarding fixing our national debt I would say that for every action there is a negative reaction.
Some examples. Keep in mind the size of the scale of reductions necessary to have a discernable impact on the debt and they will have to last for decades. It took decades to get here.
- Reduce the size of government. That would put tens of thousands of people out of work. The reality is that people expect things to work. People don’t like potholes in roads or bridges that collapse. When people call the police they expect the police to show up. Same thing with firefighters. When they turn on the tap, they want drinkable safe water to come out. When the toilet is flushed … let’s just stop there.
- Reduce Social Security. ALL that millions of people have to live on is their Social Security check. And rent has become unaffordable for a millions of people. Eating is expensive. Hell, living is expensive. Typically, politicians, like companies, look for ways to not hurt current citizens/employees and screw the generations that will come after.
- Increase the retirement age to receive Social Security or reduce payments. Too many working people lived long enough to make it to retirement. A huge number don’t. My older brother died before making it to retirement. He paid into Social Security all his life. The average number of retirement checks issued at one per month from the multinational company that I retired from was 18. That’s how long their average retiree lived.
- Reduce the number of people eligible for Medicaid. In other words, kill more poor people that already can’t afford health insurance. Poverty kills.
- Reduce the military budget. Yeah, that’ll go over like a lead balloon. Reducing the size of the military will also put thousands of people out of work and make us more vulnerable on the increasingly hostile world stage. Pay for current and retired military personnel is around 25% of the budget and that doesn’t include benefits like health care.[4] The Veterans Administration is separate from that percentage.
- Increase taxes. How much, for whom, and for how long? What would it take taxwise to put a dent in the deficit? (The big red area on the graph.)
- Do away with foreign aid. Like aid to Israel? When the United States doesn’t help other hostile foreign interests step in. China is doing that in Africa. Why is that? Well, Africa is a huge repository of minerals among other raw materials needed by the world. How about Ukraine? What have they done for us lately? Well, they did what people thought was impossible they stopped Russian aggression. Russia was on a quest to bring Europe to its knees with energy blackmail. Ukraine happens to be a major exporter of food to the very countries that the Russians and Chinese want to dominate.
What all of these solutions and others not even mentioned have in common is that the people most dramatically affected by budget cuts will NOT be the rich or those with well-funded pensions. That includes most of Congress. The people making the “hard” decisions will be the least affected by them. Putting people out of work always impacts the communities that they live in. People will have less discretionary money available to spend and will find it more difficult to pay for mandatory household expenses.
Do you know what one of the larger National Debt expenses is? Did you guess servicing the debt? If you did, you’d be right.[5] In 2022 the interest on the National Debt was $475 billion dollars. That’s over a billion dollars a day in interest. Pew research put together a report on the National Debt. You can view it here. The estimate for 2023 is 640 billion.[6] Within a few more years we’ll be spending over a trillion dollars a year just on interest.[7] Money for nothing.
This is where the Federal Reserve comes into play and I won’t even attempt to explain that other Federal Reserve banks are independent from the government.[8] Mostly. The Fed can’t fix this.
Foreign nations own significant amounts of our national debt.[9] I suppose significant depends on what you think of 7.4 trillion dollars.[10] Just a side note. During the pandemic foreign countries sold off debt to raise capital.[11] What foreign country holds the most of that debt? Japan, followed by China.[12] (As of Jan 2023.) The year before China was in first place. China has economic problems of their own.[13]
The cuts being proposed won’t make anything but a small sliver of color on that chart showing all the red ink. Now, my math is going to be a little off here but by my calculations 475 billion dollars is just 1.6% of 30 trillion dollars. So that equivalent of a budget cut would pay for the interest for 1 year but not reduce the principle. (A trillion dollars is 12 zeros.) These aren’t sums that I can even comprehend. When the numbers get this large it’s like they’re play math and money.
Like Monopoly.
Point of no return.
There is a finite point mathematically that can be reached where it simply isn’t possible for the United States to pay back the debt that we have without crashing the country. We may have already passed that point. Perhaps they could put artificial intelligence to work on that problem because real intelligence isn’t cutting it.
So far Biden’s economic metrics are looking good.[14] It is worth noting that that what is being called Bidenomics did put us on the right path to recovery from 2020 and benefitted the majority of the country by putting people first rather than the rich and corporations. (MAGA Republicans squealed and complained mightily but they took the money and some of them even took credit for what they voted against.) But Bidenomics required massive borrowing just as MAGAnomics did. The main difference is MAGA prioritized taking care of the rich.
In order to fix the National Debt problem some revolutionary thinking outside the box is needed.
We need a new kind of nomics.
https://yadayadayadablahblah.blogspot.com/
[2] https://www.usa.gov/federal-budget-process
[6] https://www.pgpf.org/blog/2023/02/interest-costs-on-the-national-debt-are-on-track-to-reach-a-record-high
[7] Ibid.
[10] Ibid.
[12] Ibid.
[13] https://www.bbc.com/news/business-66840367
[14] https://www.npr.org/2023/09/17/1200026174/an-economist-explains-what-the-data-says-about-the-strength-of-the-u-s-economy