August, 2014, By The Numbers, Part 1: Skyrocketing National Debt, Economic Ignorance, and More

On a semi-irregular basis we put together the latest numbers, trends, statistics, and realities of life in America to get a feel of how things really are, what is the daily reality for most Americans. I once worked for a boss in the corporate world who had a favroite saying: ‘;there is nothing more devastating to an opinion than the correct number.” 

Rather than listen to what the politicians want us to believe, let’s see what the numbers say and what is reality, not what they say reality is. These types of exercises in numbers and reality will be more and more important over the coming months as the political class starts putting up their various smoke screens prior to the November elections to mask and distort their failures as leaders and government employees.

1) The national debt of the Federal government is fast approaching an amazing $18 TRILLION. This breaks down to a mind boggling $57,000 or so for every man, woman, and child in this country. Unless drastic steps taken soon, the ever rising debt will cripple the economic growth and lifestyles of future Americans as they are forced to pay off this onerous debt.

However, according to the latest analysis from the Congressional Budget Office (CBO), the current set of politicians in Washington apparently do not have a plan or intention to do just that and head off future financial disaster. On July 15, CBO published its Long-Term Budget Outlook for 2014. 

This annual report is a forecast of the Federal government’s budget deficits and debt relative to GDP over the next 25 years. The report predicts that federal spending deficits over the next decade will total $7.6 trillion, an average of $760 billion per year. Amazing and scary out of control spending by the Washington political class despite the well established economic downsides of such high deficit spending.

Let’s look at some simple numbers related to that increased national debt load of $7.6 TRILLION:

• That $7.6 TRILLION is a 42% increase over our soon to be $18 TRILLION national debt, i.e. in just ten years, the Washington political class will incur 42% of the total national debt than every single Presidential administration incurred prior to today.
• The $7.6 TRILLION means that the Federal government will annually over spend its revenue stream by an average of $760 billion a year. This means that for every single minute in those ten years, the Federal government will spend, on average, about $14.5 million dollars that it does not have revenue to cover, i.e. every minute the debt goes up over $14 million.
• That will theoretically add over $24,000 to the debt load of every man, woman, and child living in the country today.
• The total individual debt load will increase to over $80,000.

Again, mind boggling. These levels are likely never to be reached since the economy and financial integrity of the Federal government has a good chance of collapsing well before we reach the incremental $7.6 TRILLION of national debt. But until, then enjoy this satirical, humorous, and yet sad look at what $7.6 TRILLION could buy you today, courtesy of the Bankrupting America folks:

• Book The Suite At The Four Seasons, George V Hotel In Paris, France Every Night For 895,677 Years Straight at a cost of almost $2,400 per night. 
• Purchase The World’s Most Expensive Home, The Antilia in India, At Least 760 Times Over. The home features twenty-seven floors, six underground parking levels, and is valued at over $1 billion.
• Purchase 168,888 Lamborghini Veneno Roadsters, The World’s Most Expensive Car at $4.5 million per car.
• Dine At The Worlds Most Expensive Restaurant. Sublimotion, With 11 Of Your Friends 31.6 Million Times. 

These numbers would be funny if they did not describe the most devastating number of all: a national debt of about $18 TRILLION that will increase by over 42% in the next ten years unless the politicians in Washington finally start taking our dire economic viability seriously.

2) We have often made the case that the political class in Washington are woefully ignorant when it comes to economics. Their lack of basic economic knowledge results in economic programs that waste a lot of money (e.g. Obama’s Economic Stimulus Program), increases red tape and bureaucracy that stunt business growth, or introduces so much confusion and fear into the economy that businesses shrink away from innovating and growing (e.g. Obama care). 

Eventually their ignorance and idiocy in economic matters start to take their toll on the economy and the economic opportunities of Americans, as recent government data point out:

• A whopping 11.4 million Americans age 16 and over have left the workforce since President Obama took office in January 2009, according to recent data from the Bureau of Labor Statistics (BLS).
• In July 2014, there were an amazing 92,001,000 Americans, 16 and over, who were classified as “not in the labor force,” meaning they not only did not have a job, but they didn’t actively seek one in the last four weeks. 
• This number has increased by 11,472,000 since January 2009, when the number of Americans not in the labor force was 80,529,000. 
• Another way to look at it is that the number of unemployed Adult Americans has grown over 14% in just five years despite massive government spending, massive Federal Reserve stimulus, and a supposedly improving economic conditions.

Amazingly pathetic economic performance by those pushing the economic buttons and pulling the economic levers in Washington. While some of that increase is likely due to baby boomers retiring form the workforce in the past five years, it cannot be all of them since 11 million people would represent 15% of all baby boomers and we know that did not happen.

The bottom line is that the most inept set of politicians in the history of the country lorded over the most tepid and inept economic recovery in the history of this country, despite al of the factors that were in place to provide a robust economic recovery.

3) Still think that the Washington political class has a clue to what it is doing from an economic policy perspective? Consider the following chart:






This is the historical picture of the long term unemployment rate in this country, the percentage of workers that have been out of a job for more than six months. Although it has improved over the past few years, it’s current level at about 3%, excluding the past few years, it is currently much higher than any year since 1948.

Through the past nine Presidential administrations up until 2009, about 30 different versions of Congress up until 2009, and any number of recessions, the long term unemployment rate has been nowhere to close to being this high for this long. Still want to believe that this set of Washington politicians has any clue how to run an economy, given these historical numbers?

That is enough numbers for today. The main point to take away form today’s discussion is that despite a record high economic stimulus program, record low interest rates for a record long time from the Federal Reserve, an energy boom, and record deficit spending by Washington, the current set of Federal politicians could not muster even a mediocre economic recovery from the Great Recession. 

And their excessive and out of control spending trends guarantee that future economic recoveries will also be anemic, given the national debt burden that all future Americans will be faced with. The numbers don’t lie even if this President and his Congressional cohorts do, especially in an election year. More depressing numbers tomorrow.

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