You didn’t hear a boom or see flashes in the sky, but on January 31, America’s national debt broke through the $30 trillion threshold. And there is no end in sight to government borrowing. This debt is owed by every American man, woman, and child. Each of us currently owes over $90,000. An average American household owes over $231,000. Let’s look at what this means to you personally.
Let’s imagine a man with the American average annual income of $53,000. This man has run up credit card debts totaling $69,000. He has been paying only interest on the debt for years with nothing going to principal. He has not even slowed his pace of borrowing for about anything he desires. He has no plans to get out of debt or even to reduce his balance. In fact, his plans are to make some extravagant purchases this year that will add more to his credit card than ever before.
This financial idiocy is precisely analogous to the American national fiscal situation. Our debt of $30 trillion is now 1.3 times our annual income (GDP) of $23 trillion. Since March 2020, the national debt has surged by 27% or $6.5 trillion. It has doubled in the last ten years. A basic macro-economic principle has long been that, when any nation’s debt exceeds its GDP, that nation’s economy is in trouble. Yet our congress and our presidential administration has ignored the debt for decades. As the chart above indicates, congress frequently legislates debt ceilings to curb spending. But their discipline lasts only a few months until they vote for the next item on their wish list that will require lifting the ceiling.
A trillion is an incomprehensible number. A trillion seconds is over 31,000 years ago. A trillion pennies stacked on top of each other would reach the moon and back and to the moon again. A trillion one-dollar bills laid side by side like floor tile would cover the states of Rhode Island and Delaware. If you spent $40 per second around the clock, it would take 23,775 years to spend the $30 trillion Americans collectively owe. Remember, the government has no money. It is our money…and our debt.
Recently President Biden’s $5 trillion Build Back Better Act passed in the House with all republicans voting no, and all democrats, except one, voting yes. It would have passed in the Senate had it not been for two democratic senators with some semblance of sanity. Now, the democrats are frantically breaking the bill into smaller pieces to get at least some of the excessive liberal spending passed before they lose their majority in the 2022 elections. Congressional democrats are determined to increase the debt even further.
The only answer to eventual national bankruptcy is to stop federal deficit spending. Contact your congressional representative and senators immediately. Tell them to stop dragging you into more debt. Tell them to vote “no” on any spending bill that exceeds tax revenues. Then tell them you want to see a strategy for reducing the current debt.
I welcome your comments.