The Runback: Debt of Dishonor

The National Debt is Unsustainable

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The Monday Thought

This article is alarming:

The Bipartisan Policy Center said Thursday it's facing uncertainty in predicting how long the Treasury Department will be able to continue paying the nation’s bills after the current debt limit suspension expires at the end of the month.

Shai Akabas, economic policy director of the public policy think tank, said the "X Date," the day on which the country could no longer meet all its financial obligations, would likely arrive in the fall, “a broader range than normal for this point in the forecasting process.”

COVID-19 relief disbursements and the pace of economic recovery are hampering the organization's usual, more specific predictions.

This goes back to the entire problem with Congress and the two political parties as we know them.

Prior to 2016 we knew exactly where the two parties stood on the national debt: Democrats didn’t care about the debt and Republicans professed to wish to reduce the national deficit. The truth of course was a little murkier than that, but it was Republican and conservative canon.

After Donald Trump came along and Washington Republicans became more in lockstep with the New York’s Democrats fiscal policies, even Republicans stopped pretending to care about the deficit.

The deficit of course has exploded in the 21st Century. Something I have pointed out before.

Yes, the deficit is nearly five times larger now than it was at twenty years ago. Still surreal to see that a “Republican” President increased the national debt by nearly as much as Obama did but in half the time. A 39% total debt increase under Trump.

The deficit of course remains a national security issue, as China continues to hold massive amounts of our debt. Which is why the ambiguity regarding the debt ceiling is so strange and concerning. It is partially understandable due to the fact that the debt ceiling has been suspended for nearly two years. Not the first time that the ceiling has been suspended, either, though this seems to be an invention of the last ten years, though the efficacy and the necessity of the debt ceiling itself has often been question.

What the debt ceiling really does is highlight the need to do something about the damn national debt. The two major national parties philosophy on taxes, spending, and the debt right now are:

  • Democrats: tax everything and spend as much as humanly possible;

  • Republicans: tax less and spend as much as humanly possible.

Neither model is sustainable, particularly the Trump-inspired new Republican philosophy of raising suspending while cutting taxes. It takes some next level financial jiujitsu to come up with nonsense like that.

There’s nothing positive about raising the national debt. Mind you, the debt serves some sort of purpose. But the fact that the US still has existing bond debt issued in 1790 that remains unpaid goes to show you how hard it is to get the balance sheet down to zero. There is nothing honorable about how massive the U.S. national debt is, even if it is only 35th among nations of the world in the amount in debt-to-GDP ratio. The problem here is that politicians of both parties continue to spend us dry without coming up with any plan to as much as control the rate of increase in the deficit, much less try to actually reduce it.

Just look at the 2021 Federal Budget. About $6.8 trillion in spending, with revenues of only $3.8 trillion? That extra $3 trillion came out of thin air thanks to new debt.

The first step of course is passing a Balanced Budget Amendment to get spending under control. The second step is figuring out how to pare down the budget so that at least some of the debt can be serviced. Otherwise, we are creating an economy that at some point will crash.

We can’t just keep kicking the can down the road like this.