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The Problem No One in DC Wants to Talk About
While the Beltway class hyperventilates over the latest political gaffe and jockeys for position in the 2018 midterms, there’s one subject they studiously avoid: our nearly $20 trillion debt. I wrote about it for USA Today, but my chart above shows the facts better than any op-ed can.
Because most graphs look like this, I created my own user-friendly debt chart focused on three big numbers: deficit, revenue, and debt.
It’s an imperfect analogy, but imagine the green is your salary, the yellow is the amount you’re spending over your salary, and the red is your credit card statement. Then tell your spouse, “Don’t worry, dear, I just increased our debt ceiling with a new Visa card!”
The chart is brutally bipartisan. Debt increased under Republican presidents and Democratic presidents. It increased under Democratic congresses and Republican congresses. In war and in peace, in boom times and in busts, after tax hikes and tax cuts, the Potomac flowed ever deeper with red ink.
Our leaders like to talk about sustainability. Forget sustainable — how is this sane?
I first created the chart in 2014 and update it every couple of years. And, every time, some on the right criticize it as being too harsh on the GOP while most on the left insist that debt doesn’t matter because … well, it just doesn’t, ok?
If anything, my chart is far too optimistic; I don’t mention future projections due to exploding entitlements. Instead of mocking cruel conservatives for cutting Big Bird’s budget, we should be yelling at them to cut more. Much, much more.
Published in Economics
This chart is inconvenient for the goal of flinging expensive missiles at people who aren’t attacking us.
Stop it.
So the last time we reduced the debt was during Jim Brown’s rookie season. What a mess.
It’s more accurate. The debt is in nominal dollars. Inflation rates can be fudged as can GDP. What matters is how many dollars are held by foreigners because we can sustain this forever unless foreigners have more dollars than they want for their reserves and for trade.
We don’t have to pay back most of it, just see it begin to shrink. The world needs our debt as do we, but at some point the world will hold more dollars than they want, the dollar must crash and inflation wipes out everyone owning financial assets and with it most of the debt burden and if we’re still around and functioning it starts all over again. What we must do is raise our savings rate, which means fix taxes so they fall less on work, savings and investment and more on consumption, and of course cut Federal Spending which is mostly dead weight loss. Federal spending on infrastructure is not different as it tends to be political and distorting, i.e. local politician get the goodies to inaugurate and hand out, but stick out of state tax payers for most of it. We won’t have much to show for it unless local tax payers fund their own infrastructure.
The reason no one is talking about the national debt is that the average American citizen doesn’t give a rat’s ass about it. Most people know absolutely nothing about the national debt, and when a Republican talks about it, they just tune out. If it does not directly affect their daily lives, the national debt is not any kind of issue. Discussing the debt is an intellectual pursuit which the average Joe pays no attention to, and cares nothing about. Until you hand him a bill for his portion of the debt, your neighbor will ignore it and get on with his life.
This is key. We’re not explaining to people the inherent ‘risk’ of asking government to be this big. It won’t end well, or easy.
This always gets me! The incessant talk of “sustainability” by those advocating for and participating in a system that is anything but.
I have a serious proposal that would painlessly reduce the 20 T USD figure (called “debt” by the OP), by about 40%!
Treasury would retire the “bonds” recorded in the Social Security Account, by reversing the internal accounting procedures that led to, and continue to lead to, their creation.
The public purpose* of the “bonds” could be fulfilled by new, simpler-to-understand and -administer annual report.
*Which is to report the net present value of the cumulative excess of SS taxes over outlays.
I think a big part of the racking up of debt, like you said, was adding more big entitlements like Obamacare. Plus every agency is top heavy. I think they said the government created more jobs because they kept adding government employees. Plus can you imagine all the expensive attorneys, just to do the Obamacare language, the website, and all the new regulations that needed to be reviewed? At least Trump is asking each department where cuts can be made. Big Bird will survive via private donations, but it is truly obscene how its escalated so quickly with no questions – especially from the “fiscally responsible Republicans”. Getting American companies to reinvest here will help. Also welfare and free benefits are completely taken advantage of by people who can work, but won’t. There isn’t enough pressure or screening here.
Press control shift plus to biggify
Control shift minus to smallify
It works on all browsers I know.
You mean as we start paying interest on that debt and watch the interest payments swallow the federal budget?
Remember the 2010 census? And the tens of thousands of “census workers” the Obama administration hired? Many of whom remained “employed” long after the count concluded. I remember thinking it was welfare-by-other-means and a way to pad Obama’s pathetic jobs record.
I thought the Social Security trust fund debt was excluded from these numbers?
There is an easy solution: 75% top marginal tax rate on extractive or rent-seeking professions: law, finance, real estate etc. President Sanders will do it in 2021.
Yep.
At some point servicing the debt will be the largest part of the budget.
Just to play devils advocate here, but by some estimates the Fed govt owns over 128T in land/mineral rights. Even if that’s off by an order of magnitude I think it perhaps puts some of the more apocalyptic scenarios in perspective.
We can all be glad Hillary didn’t win and start selling them to the Chinese.
https://motherboard.vice.com/en_us/article/trump-transition-nasa-foia-moon
Cool. As it stands now it’s just a useless rock. ’bout time it started generating cash flow.
I recommend you read “The Mandibles” by Lionel Shriver. It illustrates the truth of Hemingway’s answer in “The Sun Also Rises” to the question, How did you go bankrupt?
“Two ways. Gradually, then suddenly.”
Bernie Sanders just saw your graph and tweeted his solution:
“@SenSanders: Raise taxes by $20 trillion next year and eliminate the debt once and for all!”
FIFY
That link to Craig Steiner was incredibly eye-opening! I have been trying to get a handle on macroeconomics for years and this put things in really clear perspective, though it looks pretty grim, almost financially apocalyptic. Thanks.
Yes, that makes it bigger in screen space, but it doesn’t biggify the resolution. Compare doing it that way with the link that the OP posted for us, and you’ll see what I mean.
How to pay down the debt. Sell The West. Sell all federal grazing lands in the West to the ranchers whose cattle graze on it now. Sell half the national forests to timber companies on the condition that they not clear-cut but thin the forests as needed, and maintain the rest (also this could reduce forest fires and diseases).
I very much agree with this, but if we don’t also substantially cut spending so that the budgets are balanced, we’ll find ourselves back in the same place.
This. I agree with RushBabe too, but Congress would immediately start looking for things to spend the “new money” on, like a kid who just found a dollar.
The only thing that you and I, and the Federal Government, can do to cut their debt is to stop spending. They need to do what I do when things are tight: I pretend I am flat broke and just don’t buy anything outside of the necessities.
There are a lot of good ideas to get rid of the debt but even if you sell the house, the car and the kids but don’t curb your spending this is just a shell game.