The United States is considered the most powerful country in the world. But it faces the threat of running out of money to run the federal government and is in danger of breaking through the statutory debt ceiling.
Our debt is over $31.4 trillion, with thousands added every minute. US fiscal policy is not sustainable. In just over 10 years, Interest on government bonds will be the third largest federal program..
The Congressional Budget Office defines national debt as the amount of debt owed by the federal government. This includes over $25 trillion of public debt (mainly US Treasury bonds) and intergovernmental accounts, primarily Social Security and Medicare (over $6.5 trillion).
According to the Center on Budget and Policy Priority, the breakdown of federal spending is:: 23% are social security. Medicare, 14%. Medicaid and Health, 12%. Other required programs, 14%. Defense spending, 30%. And interest on government bonds, 8%. For the latter, that equates him to $1 billion a day.
A default could have a hugely dismal impact on the American economy, hurting Social Security and Medicare, devaluing the US dollar, and even pushing us into a recession.
US Treasury Secretary Janet Yellen is doing her best to prevent such disasters. On Jan. 13, she wrote to new House Speaker Kevin McCarthy saying the US hit its debt ceiling last Thursday and must resort to “special measures” to keep the government funded. rice field. that We may run out of money by June.
Defaulting on government bonds is irresponsible. It undermines the US government’s creditworthiness and ability to borrow later, resulting in higher borrowing costs.
2011 was the last time Congress failed to raise the debt ceiling in a timely manner. This is what happened. Republican Congress and President Barack Obama have faced off over debt. However, it was resolved at the 11th hour to avoid hitting the limit.
Shaken investors, consumers, and business owners have endured the consequences. Stocks plummeted, volatile markets surged, the economy hasn’t recovered in six months, and consumer confidence and small business optimism plummeted.
Economists warn that the actual breach at this time could be much worse due to the unstable economic conditions. That would force the Federal Reserve to raise the prime interest rate even significantly, impacting borrowing costs for both individuals and businesses.
Researchers at The Third Way, a center-right public policy think tank based in Washington, D.C., estimate that by December 2022, this year’s debt ceiling violations will result in the loss of up to 3 million jobs at an average cost of $300,000. estimated that $130,000 could be added to Add another $850 billion a year to mortgages and national debt.
America’s growing debt is the result of a simple calculation.
Every fiscal year there is a mismatch between expenses and revenues. And every year our spending increases, creating a deficit. Perennial deficits increase the national debt.
Why do we run deficits? Part of that is due to the enormous cost of the economy, exacerbated by predictable structural factors such as an aging baby boomer population, rising health care costs, rising defense spending, and a tax system that does not bring in enough money for the government to pay. Having fixed costs. made a promise to the public.
Here are some frightening numbers and facts that will keep you up at night.
Our national debt is bigger than the economies of China, Japan, Germany and the UK Combined.
Quantifying what 1 trillion means requires a surprising approach.
1 million x 1 million. Also, 1 trillion ($1,000,000,000,000).
It would take 31,688 years to pay off $1 trillion at a rate of $1 per second.
The amount of national debt can cover the tuition fees of every four-year college degree graduated from a U.S. high school over 73 years.
1 billion seconds back to 1987, 1 trillion seconds back to around 30,000 BC
How many people really understand why the U.S. debt continues to rise, setting shameful records every time? Do people just not care? Do they see reducing debt as a cause for despair?
Check out these equally amazing stats.
National debt financed for both public and internal government needs is a staggering 137% of gross domestic product, which is primarily the value of all goods and services produced in a financial year.
The debt per US citizen is over $94,000. The debt per taxpayer exceeds $236,000. If every U.S. household contributed $1,000 a month to pay off the national debt, it would take more than 19 years.
From 2000 to 2022, federal government debt increased by more than 350%.
The pandemic and ensuing inflationary spiral have heightened concerns about how large and likely the US debt is to grow.
We kicked the can by putting our kids in the difficult position of having to work out their debt problems.
With inflation high and interest rates rising, the federal government will soon be spending more on Treasury bonds than we are on our children.
Many experts argue that: Ungovernable, unable to address key issues, and may be on the brink of complete destabilization. ”
In this 118th Congress, it is important for both Democrats and Republicans to stop acting childish and work together to solve this huge problem and prevent economic Armageddon.
Jim Martin can be reached at jimmartinesq@gmail.com.
