When The National Debt Bubble Bursts Nothing Else Matters, Part 1

Americans are worried and upset about a lot of issues these days. Politicians, lousy job opportunities, stagnant household income growth, who is allowed in what bathrooms, terrorism, high taxes, bad schools, crumbling infrastructure, etc. But all of these issues, while seemingly important, are trivial vs. the only big issue that matters: a Federal government (and many local and state governments) that is hurtling towards fiscal disaster and insolvency. 

If and when the fiscal integrity of the United States crumbles, and that possibility grows larger and larger every day, no one is going to care what the local bathroom policy is, why little Johnny is not getting educated, etc. because it will be a matter of basic survival in a collapsed economy that is the only concern.

Given that the Obama administration and legacy has almost doubled the national Federal debt from about $10 TRILLION to almost $20 TRILLION, this is the current Federal debt burden in the United States:

• Debt per household - just under $159,000
• Debt per every man, woman and child - abut $62,500
• In other words to wipe out just the Federal government debt, every household, on average, would have to write a check for about $159,000. 
• Every person, including kids and infants, would have to pony up about $62,500 to wipe out just the Federal government debt. 
• A family of four would have to write a check for about a quarter of a million dollars.

Given that we have previously written on studies that show over 40% of American households would have a hardship paying off an unexpected household expense of $400, it is obvious that American households and individuals cannot pay out $159,000 or $62,500 to help bail out the incredibly deep spending hole that Washington has dug.

Now, some liberal readers I know are thinking, tax the rich, let them pay off the debt. Let me give one example why that is such an ignorant thing to say. Bill Gates has a net worth of $86.4 billion as of February 24, 2017 according to Forbes. 

For this example, rather than just raise Mr. Gates taxes on his annual income, let’s confiscate everything he owns, liquidate his assets, and apply that $86.4 billion to the national debt. In this case, his entire fortune would pay off .4% of the current national debt. Not 4%, only .4%. Since we are not going to confiscate his entire fortune, just having a higher tax on his income, in reality not even this paltry .4% would ever be attained by "taxing the rich."

Let’s take this theoretical example one step further. Since the government spends about $10.4 billion a DAY, Bill Gates entire fortune would operate the Federal government for a little over eight days, just over a week, never mind paying off a $20 TRILLION national debt.

Hopefully these examples, numbers and realities give you an idea of how bad the debt and fiscal situation is in this country. But if you want to be scared even more, consider some debt realities in an article written by Peter Suderman in the April, 2017 issue of Reason magazine (and some simple population and household calculations we added):

• Within 10 years, on the current spending and budget path of the Federal government, the Federal government debt will increase by about 64%.
• Last year the interest on the debt was $241 billion or about $1,900 for every U.S. household.
• This is $1,900 that cannot be spent on a new car, vacations, movie tickets, dinner out, and other healthy economic activities to help grow the economy.
• This is $1,900 that cannot be spent on better schools, fixing crumbling infrastructure, or helping the less fortunate. 
• Interest payments on the debt, under Federal government current spending paths, will grow 196% in the next ten years, the fastest growing component of the Federal budget.
• This growth translates to an annual interest payments of $712 billion a year in ten years, up from $241 billion in 2016. 
• This $712 billion translates to a debt burden of about $5,600 a year per household.
• And this assumes that interest rates do not jump higher than expected since every percentage point above the current government projections would add another $1.5 TRILLION in debt.

A number of things to take away from all of these numbers:

• The Federal government debt hole is gigantic and getting deeper every day by the out of control spending by the Washington political class.
• Taxes diverted to pay for debt is wealth that cannot be spent by those that earned it or by government to fix what needs to be fixed in this country, it is a dead weight expense.
• You cannot come close to paying off this debt by increasing everyone’s taxes since that amount of wealth that would need to be taxed to pay off the debt simply does not exist.
• You cannot come close to paying for this debt by taxing the rich, only significant drops in government spending can help tame the debt burden.
• And the situation could get worse if interest rates go higher than expected.

One more debt fact to scare you. A recent Businessweek blurb announced that the entire net worth of every company, in the the S&P 500 stock index, if added together would be just over $20 TRILLION. In other words, the Federal government national debt is now roughly equivalent to the TOTAL worth of the 500 companies listed in the index. If this does not say government is out of control, nothing does.

So as the political class divides us up and pits citizen against citizen on a whole slew of issues, they continue to spend like there is no debt crisis at all. But when the debt bubble bursts, when your savings and assets crash, when your Social Security and Medicare benefits are slashed or evaporate, and possibly the need to survive and eat is a day to day struggle (see current day Venezuela), who uses what bathroom, why is Johnny not getting educated and other issues will become unimportant and trivial. 

This whole mess reminds me of an old Peanuts Sunday comic from long ago. Snoopy goes out for a jog on a very cold morning and before you know it every part of his body is complaining. His knees hurt and complain, his feet hurt and complain, his ears are getting frost bite and complain, his stomach is hungry and complains when his brain questions why they are out jogging on a cold day when all of the body parts are complaining and do not want to be out. 

At which part the heart speaks up and says the reason they are out jogging on a cold morning is to keep the heart healthy because if the heart goes, everything else is secondary. When the ever inflating debt bursts, everything else is secondary.

Tomorrow, to add to the horror, we will discuss bad situation at the local and state government level.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:


http://www.reason.com
http://www.cato.org
http://www.bankruptingamerica.org
http://www.conventionofstates.com
http://www.youtube.com/watch?v=08j0sYUOb5w

Snoopy And The Fiscal Downfall Of America, Part 2: The Whole Federal Government Debt Bomb

This is our second post in a three part series that is supposed to scare the daylights out of you regarding our dire financial situation, relative to debt and out of control government spending. Last Friday we focused only on the impending collapse of just the Social Security system and how even if that was the sole financial problem facing this country, if we stay on the current trend line even this one problem will bankrupt the country and destroy our freedoms and liberty. 

Today, we will look at the whole Federal government financial picture, leaning heavily on the recent dismal analysis from the nonpartisan Congressional Budget Office. Before we get into today’s discussion of fiscal doom, let’s review the Snoopy analogy we used to start off yesterday’s post since it still applies to the overall government financial malaise:

Many years ago there was a Sunday Snoopy comic that sets up today’s post. Seems Snoopy was going out for job on a cold, dark winter morning. Before long his knees started complaining because they were taking all of the pressure form the jog steps. The feet chimed in to complain that the knees did not know what they were talking about since the feet got the initial shock of each step. Before long the lungs started to complain from sucking in the cold winter air.

This went on for a while, with each body part complaining that they did not want to be out on an early morning winter jog. Finally one of them asks, “Whose idea was this anyway, to go jogging on this early and on this very cold morning?” At that point, the heart spoke up and said: “It was my idea because jogging is good for me and if I go, you all go.”

There are many serious issues facing America today. Failing public schools, a lost war on drugs, a leaky border, inept and lazy politicians, the constant battle for gay rights, etc. these are all important and need to be worked. However, relative to the Snoopy story, these are just body parts that need attention on a cold, dark winter morning relative to the basic fact: the United states Federal government is on a dangerous and fast track to fiscal ruin and collapse. 

And if that fiscal and financial integrity collapses, much like the heart, every other issue becomes secondary in face of an economic collapse, a collapse that trashes all of our freedom and liberty. We are going to take a few days to look at how dangerous that track is and how close we are to having a fatal financial heart attack that will make the other body parts, i.e. national issues, wilt in comparison to the dire consequences.

Okay, so from Friday we know that 1) Social Security alone will bankrupt the country if nothing is done and 2) that story of financial doom is likely to be present in other major government spending programs. Today we will prove the second point using the research and analysis of the Congressional Budget Office (CBO).

The specific basis of this discussion is the recently released CBO’s annual Long-Term Budget Outlook. which had some sober news for the American people. The basic bottom line from the report is the following graph:



The gruesome details from the graph include the following:

• Federal debt held by the public almost doubled in the first five and a half years of the Obama administration, rendering his 2008 campaign promise of cutting the annual Federal deficits in half either economic ignorance or another Obama Care-like deception.
• While the debt percentage will level off for a few years, the advancing aging and retirement of the baby boomer generation will cause it to start skyrocketing with the next five to six years. 
• At no point in the current trend of Federal government spending is there EVER a budget surplus, a surplus that could be used to start reining in the runaway debt.
• Within 25 years, the public debt will be about five times as large as the annual Federal government tax revenue stream, making any delays in paying down this debt harder and harder to do as time goes by.
• And this is just current public debt. The debt that one part of the government owes to another part of the government will eventually turn into public debt also so this is an underestimation of how bad things are.

The CBO went from this graph and the underlying analysis to predict how things might turn out if nothing is done, as summarized by the Minority Report website:

1. Federal Debt Is Soaring: The debt has doubled since the onset of the financial crisis, and CBO concludes the growth in the debt is “unsustainable.”
2. Now Is the Time to Act: CBO says that prompt decisions to rein in future deficits would expand employment and economic growth.
3. The Economy Is Slowing Down: CBO has again lowered its projection of GDP growth, and the average number of hours worked by Americans is shrinking.
4. Spending Is Still the Problem: Major entitlements and interest on a growing stock of debt will cause real spending to soar by 27 percent over the next two decades.
5. Raising Taxes Will Cost Jobs: Taxes will exceed their historic average level this year, and they are on pace to rise even further. Yet these tax increases still never match the pace of spending, even while they discourage work, saving, and investment.
6. Entitlement Reform Is Key: We run the risk of breaking our promise to seniors and future generations if we don’t reform our entitlement programs soon. 
7. The Debt Threatens Our National Security: CBO warns that our growing national debt could compromise national security by constraining defense spending and limiting the country’s ability to prepare for future challenges.

As we discussed yesterday, many issues that concern many of us today wilt in comparison to how far into debt the American political class has gotten us. If we do not take care of our debt like Snoopy was trying to take care of his heart, the other body parts (e.g. failing public schools, gay rights, climate change, lost war on drugs, etc.) do not matter at all once the heart gives out.

Our total national debt is currently around $18 TRILLION. Unless something changes and the politicians in Washington find some courage, abilities, and creativity to change the trend we are on, almost another $10 TRILLION will be added to that debt load within the next ten years. This will theoretically put a person debt load onto every American of over $100,000 each. Or, the whole financial system collapses before we add another $10 TRILLION and Snoopy and the United States die of a heart attack of epic proportions.

If you care about other issues, then your first action item is to help find a way to convince the politicians and out of control spenders in Washington to grow a pair and start acting fiscally responsible. Otherwise, your favorite causes are just a moot point in our country’s now fiscally endangered history.

A good place to start your efforts to help fix the debt issue is to visit our website for term limits, 

www.howmuchworsecoulditget.com

Because really, how much worse could new people be in Congress and the White House do if the current ones are running up a debt load that will quite quickly exceed the annual GDP level? These are the same incompetents that got us into this fix, I doubt they are the same that can get us out. And so far, despite the dire warnings of the CBO and other rational Americans, I know of no one in Washington who has put forth any kind of plan to resolve the growing debt bomb in this country, do you?

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

Term Limits Now: http://www.howmuchworsecoulditget.com
http://www.reason.com
http://www.cato.org
http://www.robertringer.com/
http://www.youtube.com/watch?v=08j0sYUOb5w