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The most remarkable thing about our highly polarized political environment, in which there is allegedly no agreement or compromise possible between the sides on any significant issue, is that on the single issue that dwarfs all others in importance, there is broad agreement. So much agreement, in fact, that no one even talks about it.
I am referring, of course, to our national debt, which just crossed $35 trillion and is increasing at something like a trillion dollars every hundred days. Interest payments alone on the debt will shortly surpass national defense spending. The big ticket items are Social Security and Medicare, which account for about $3 trillion dollars in annual spending all by themselves. It's not just the amount that is the problem. It's that the rate at which we are accumulating debt is itself increasing.
The average person has become immune to these numbers because they have been mind-bogglingly large for decades. There were warnings when the debt was 5 and 10 trillion. Now it's 35 trillion and the warnings continue. Why not 50 or 100 trillion? Why can't it go on forever?
What the average person doesn't get is that this debt was accumulated in a falling interest-rate environment. From 15-20% in the early 1980s to 0% recently. That 40-year debt bull market has now run its course and the machine is going in reverse. Yes, the Federal Reserve can "print money" and buy up all that debt to keep interest rates low, but at the cost of destroying the value of the currency. Either way, the debt will get unwound, which means massive destruction and transfer of wealth.
There is really nothing that can be done about it. That's why no one talks about it, Democrat or Republican, Trump or Kamala. Some, like Kamala, are too dumb to understand the (simple) math, many others understand the dire nature of the situation but understand that any realistic plan to manage the debt must involve cuts to Social Security and Medicare, which are political suicide. So everyone tacitly agrees to never mention it, because they all know there is no stopping this train, no matter who is driving it.
The biggest reason to vote for Trump is that in the financial/economic meltdown that may happen in the next few years, we are less likely to get an authoritarian response from him. He's not a "never let a crisis go to waste" type.
Discussion (85)
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Yeah, unfortunately I've given up hope on the government and American electorate at large doing anything to really solve this problem. You can talk about the massive amount of debt and cutting spending in general and I think most people would nod their heads, but when you get down to brass tacks almost nobody is actually willing to sacrifice their piece of the pie. And so the nuttiness must go on until it finally just can't.
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Indeed. Crazy large numbers.
That means you have to present the national debt in units that are understandable. See my post: How much is that per household?
The reason the debt is so high is that there is a ton of incentive for Congress to spend money ("wheee!") as they get to pocket a percentage of it, and there is no incentive to be thrifty.
So an incentive is needed. Warren Buffet (and I) have a solution here: Warren Buffet Agrees with Me on Balancing the Budget
The biggest issue, I think, is how terrible the debt is going to be for future generations. Dwarfs climate change.
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I guess that was something I was getting at. There is a lot of talk about climate change and how polarized the different parties are, and debate back and forth about how serious it is. As though this is an issue that really matters, when the debt is a financial tsunami that threatens to drown us all, and not in 20 or 50 years. I'm starting to have more sympathy for the theory that the border crisis, all the transgender nonsense, etc., are in place as distractions so voters won't notice or think about the debt. Of course they are real problems. But it's almost like both Republicans and Democrats are happy to have a border crisis to fight over so they can both ignore the debt.
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When we enter the trillions, my mind can't absorb it. All I know is that I'm willing to take the cuts, including Medicare and Social Security, but I don't see it ever happening.
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I highly recommend this episode of The Political Orphanage on this topic.
Most voters want to be told there is an easy, painless solution. "Make the rich pay their fair share" or "Cut off foreign aid," depending on if one is on the left or the right. It would be interesting to know how much the federal government spent per citizen in 1996 vs 2022, adjusted for inflation. I suspect it is grossly more, yet few people would say that they feel like they are getting a lot better federal services than they did in the 1990s. But we're going to keep going down this track until it all blows up, then people on both sides of the political divide will pour hatred on their political enemies and say it's all their fault, even though few on either side tried very hard to fix it.
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