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Mounting Debt Accumulation Can’t Go on Forever. And It won’t.
Joe Biden loves to give away money, especially if it’s not his own. He has spent trillions of dollars for political benefit that didn’t need otherwise to be spent. The recipients laud his compassion and generosity. Common Americans though are trapped in an inflationary spiral while our grandchildren face an unpayable bill.
Thus, in a recent presentation about his second attempt to forgive student loan debt, he actually bragged about the hundreds of billions it would cost. He twice mentioned the fact that many blacks would receive benefits. He became so consumed in self congratulation, he apparently lost awareness of how blatant his political pandering was. We know black voters are a key demographic in play in the upcoming election.
Biden’s sheer enthusiasm for spending again evidenced itself in his response to the Baltimore bridge collapse. His first reaction was to guarantee that the federal government would underwrite the entire cost of reconstruction. What a guy!
Neither offer made sense. Regarding the student loan debt, the Supreme Court had affirmed that the Constitution means what it says, that the power to initiate spending lies solely with the Congress. Most public criticism focused on the obvious unfairness of the policy, how it would disadvantage those who had been responsible in favor of those who wished to renounce their legal obligations.
Biden’s bridge proposal was also nonsense. The bridge isn’t owned by the United States. There is no conceivable reason for the federal government to be deemed responsible for its repair. The bridge was demolished by a cargo ship, in an industry which insures heavily against such misfortunes. Other jurisdictions have also acknowledged partial responsibility.
Here’s the problem with the mindset that it’s okay to get involved with all these giveaways: we don’t have the money. We’re seriously in debt, with expenses vastly exceeding our income and no plan in place for repayment or even deficit reduction.
Biden is hardly the only politician who has deduced that spending other peoples money (OPM) can win elections. Even many Republicans, to their shame, support the spending juggernaut. The spenders are the moral equivalent of a wastrel with no money and no job, with bankruptcy looming, who continues to pick up tabs and buy pricey gifts with credit cards he has no intention of paying off.
Still, the spenders know that Americans have mostly normalized excessive spending even when unnecessary. So Biden was able to propose a whopping $7.3 trillion budget for next year (up $500 billion in the last year alone) without provoking much outrage.
The $2 trillion spent on Covid relief accomplished nothing. It was mainly an excuse to push more money out the door. At least it was supposed to be temporary. Biden’s budget though would pocket the Covid bump and add yet more permanent spending, mostly on programs for “climate change” and other boondoggles. A $10 trillion budget by 2033 is projected.
What can’t go on forever won’t. Our present course is unsustainable. Income tax revenues are soaring yet the debt continues to grow. We are using borrowed money to pay the debt interest, which has surpassed all budget items except entitlement programs.
How do we get out of this death spiral? The left’s favorite solution is to raise taxes. That doesn’t work. The historical record shows that tax increases put us further in the hole.
For example, the Obamacare tax increases raised $1.4 trillion but so hindered economic growth, according to the Congressional Budget Office, that the feds lost $3.8 trillion in revenues. In contrast, President Clinton signed the 1997 Republican tax and spending cuts. Four years of budget surpluses ensued.
It’s well known that reform of Medicare, Medicaid and Social Security is necessary for a balanced budget. Yet both parties are interested only in demagoguing the other if they catch them even considering the issue. If the politicians, including Donald Trump, continue to insist on prioritizing incumbent reelection, the only way out may be for the people to take matters into their own hands.
Anybody else interested in seriously revisiting the notion of amending the Constitution to mandate a balanced budget? Sure it may (or may not) be difficult but the consequence of doing nothing is surely worse.
Published in General
This has my biggest issue for last 20 years – most Americans do not care to address it until it is too late
The spending continues because the people want it that way. Social Security and Medicare together require 65% of Federal tax revenue to support them, and there is no political will at all to reform them. The last President to seriously attempt entitlement reform was GW Bush, and he got nowhere. The one thing Biden and Trump agree on is that Social Security and Medicare can’t be touched.
We are now adding roughly one trillion dollars every hundred days to the national debt, and this year interest on that debt will itself top a trillion dollars – more than we spend on defense and the various wars we are funding.
How do we get out of this death spiral? There is no getting out of it. The debt binge will continue until a currency/financial crisis occurs, and the system is reset. It’s only in the crisis that the people will consent to drastic action, and only because they are faced with a frozen financial system and ATMs that don’t dispense any more cash. Then we boomers will wake up one morning and discover that Social Security and Medicare are either gone or are a small part of what they once were.
I kind of see why people don’t care about the spending and debt. We’ve been hearing for the last 30 years that the deficit and deficit spending will get us in trouble, but we’ve accumulated debt far beyond what the doomsayers predicted was sustainable. So people just don’t believe that the debt matters. It hasn’t mattered when the debt was $5 trillion, $10 trillion or $20 trillion. So why not $34 trillion or $50 trillion?
There are a lot of reasons why the debt has gotten to this point without bringing on an existential crisis, which I won’t go into here. But ultimately it’s no different than someone taking out new credit cards to pay off old ones, something that can go on far longer than one would think possible. For some reason people think that at a national level, there is some magic that goes on that can make the financially impossible possible. Like ever-increasing debt to the end of time. But of course there will come a day when the whole thing implodes.
…and then he passed Medicare Part D so he could get reelected to finish off Iraq. It was a $9 trillion instant unfunded liability.
They should have switched the system to deflation the second the Soviet Union fell. The natural, non-government interfered economy is constantly producing deflation, and the Fed pretends it’s bad. That is the way God intended man to live.
I agree with this 100%! You are one of the few who realize the gravity of the situation (as well as the post’s author). Republican used to be fiscally responsible but now both republican leaders and republican voters have mostly thrown fiscal responsibility out the window, especially the MAGA people. Trump himself does not even consider reducing the Federal Deficit or getting spending under control to be part of his platform or ideology. Though I think this post is extremely important, I don’t expect it to get many comments or likes.
In the analogy, whom does the credit card company represent? And what is its source of reserves?
The answers leads a key difference.
Then supply the answer and make your point if you have one.