As I scroll social media this morning reading heated arguments from both sides of the political aisle about where government money should be spent, who it should or shouldn’t be dispersed to- I can’t help but wonder if anyone realizes that for all intents and purposes we are rearranging chairs on a sinking ship. Sorry to be such a Debbie Downer, but are we just all going to pretend that the government isn’t already broke? Here is the truth- The US is ALREADY bankrupt it just hasn’t been officially announced yet. We are on borrowed time, basically at the mercy of the foreign countries we are indebted to.
On January 29th our debt topped 19 trillion. It’s like we’ve been so far in debt for so long that everyone has begun to think it can just go on forever. I assure you- it can’t and it won’t. The US has spent more money every single year than it brings in for DECADES. We the People do not force the government to reign it in. Obama ran annual budget deficits in excess of $1 trillion from 2009-2012, which is the largest expansion of debt in history. Obviously, I’m not blaming this entire mess on Obama- this has been accumulating for decades- but he didn’t lift a finger to help either. In October of 2015, Obama and Congress agreed to suspend the debt ceiling until March 15, 2017. In the meantime, the government had NO LIMIT to their spending. Convenient that Obama would leave this for another President to deal with, but that’s nothing new- our government always prefers to rig something up with duct tape rather than fix it.
What does this mean? Well, it means Trump will have to raise the debt ceiling so that we don’t default on our debt to all those foreign countries we owe. What is the debt ceiling? It’s the limit Congress sets on how much debt the US can hold before we have to stop borrowing. Congress has to agree to raise it- the President can’t do it on his own. It’s easier said than done, because obviously no one ever wants to be THAT president who has to preside over yet another increase in the debt ceiling. (It’s been raised a whopping 74 times since 1962.) The public doesn’t like to be reminded that we are spiraling into debt at break neck speeds.
What happens if we just don’t raise it? We would default on the loans that we owe to those foreign countries that keep us afloat. Our credit rating would drop- again. It has already decreased once under Obama’s watch because of our out of control budget deficits and looming debt. All that and mass pandemonium: no one would receive their social security checks, doctors wouldn’t receive their Medicare checks, and basically any other group that relies on payments from the government would get zilch. And since all our financial markets run on confidence, the stock-market will dive, consumer spending will stall, and interest rates will head for the moon. Sounds like fun.
So, yeah, whether or not the government wants to raise it- they WILL raise it. There really is no choice. The problem is, a whole lot of “We the People” seem to think that we can continue to raise the ceiling forever and ever amen. I can only assume these are the same people who were raised getting everything they wanted and told that life was fair.
Thank the good Lord some of us were raised poor and realize money runs out. For those that may not understand what I could possibly be referring to, I’ll lend you my life lessons:
1. Money does run out.
2. When the money runs out, you will NOT get things you want or even need- even if it isn’t fair.
3. When you are living by using someone else’s money (loans) that individual has way more control over you than you would like for them to have and they don’t always give a rats tail if you fall into financial devastation or any other kind of devastation for that matter.
Because our government doesn’t want We the People to be aware of exactly how far up a certain creek we already are, they lie about misrepresent the percentage our debt is of the GDP. The GDP is the total dollar value of all goods and services produced over a certain time. It is also used as a gauge of the health of the economy. For example, in 2015 when the national debt was $17.9 trillion, the government told us that the debt was only 75.6% of GDP (obviously they want to keep it under 100%). This gives the illusion that we have time to balance our debt before we surpass that ominous 100% of GDP and we may be past the point of no return. They speculate and “warn” that we need to work out a balanced budget by 2040. The only problem is, this debt figure doesn’t even include ALL of our debt.
The government conveniently doesn’t include our intra-governmental debt in that figure. What is intra-governmental debt? It’s the debt that the US owes ourselves. Yeah, don’t you remember how when we couldn’t balance our individual family budgets, the government gave us the option to loan ourselves money to get us out of the hole? No? That’s right- because it’s an absolutely ridiculous concept- but here we are in the US, doing it on a national scale. Where was this money stolen borrowed from? Well the largest source is the money they forced you to put into Social Security for your own retirement so that it would be “safe” and you wouldn’t spend it. Of course, it’s not just from Social Security, the government dips into other federal trusts as well.
Since, that is technically money that we “owe ourselves” the government just doesn’t include it when making their debt calculations. Back to our 2015 example, debt held by the public was “only” $13.5 trillion- so the government came up with the figure of 75.6% of the GDP. However, when you add in our total REAL debt, we were already at 106% of GDP. So, as you can see, we have already entered the no go zone where, historically, bad things start to happen. (In case you haven’t noticed- lots of bad things are already happening.)
Currently, for some reason, foreign entities still have confidence that the US has the ability to pay our debt. But they aren’t blind or stupid. They can see that our national debt is currently higher than it has historically been for any country in the entire world- ever. Not only that- they can see that we are no where near operating on anything resembling a balanced budget in any foreseeable future. So the real question is NOT how long will WE continue to raise our debt ceilings or allow ourselves to operate at ridiculous deficits. The question is: How long will foreigners continue finance it?
This is what you call a “house of cards.” The reality is, it doesn’t matter who you think deserves help to buy their groceries, or pay their bills, or receive medical care. When the money is gone and the time is up no one will get ANYTHING no matter how “fair” or “unfair” it is and no matter how much they “deserve” it. We trusted a government that we should have never trusted and now we have to deal in reality- not “what’s right or fair”. We can either buckle down, suck it up, and balance the budget- which means there are going to be lots of people who don’t get things they were supposed to get and probably some people that have horrendous things happen because the government will not be able to assist them in meeting their needs. Bad things will happen to good people that don’t deserve it. These things may happen personally to us. If not- you can be assured that these things will happen to people in our families, people we know, and people we love. One thing is certain- the longer we put it off- the worse it will be. Or, we can continue on and pretend that belt tightening time isn’t already here and leave it for our children to deal with- for however long our foreign debt holders allow it.
Sources:
https://www.advisorperspectives.com/commentaries/2016/03/10/the-national-debt-tops-19-trillion-106-of-gdp