"What is our future with this never ending debt. Greece - or something like it. Whenever you spend more than you make, be it a family or a government, nothing good comes out of it."
Holy smokes Bird! What a morbid topic for a Sunday morning! Yes, I am afraid it is. But debt is becoming a big part of our lives in this country. The old "pay as you go" is about to also go - go the way of the Dodo Bird. Even though most households do a much better job in controlling their debt than the government does, easy credit today has led families down a road which will be very difficult to come back on.
Why has debt become so accepted today and the word itself not looked upon as an invective? To start with, look at our leaders. Speaking of becoming extinct just like the Dodo Bird, what the hey has happened to this nation's deficit hawks? Either they have all become deaf, dumb and blind, or they simply don't care anymore.
There was just an article in the paper last week that the deficit for GFY 17 is now estimated to be $666B. And that is with a Republican President, Republican House and Republican Senate. No blaming the free spending Democrats for this one. But this number is only a harbinger of things to come. How so, you might ask?
- Healthcare - ICYMI, ObamaCare is still alive and well - okay, maybe not well, and barely alive. There is no fix in sight in either the House or Congress. Here is the bottom line - to keep citizens from being skewered by out of control premiums, Uncle Sugar might have to stand in the gap. And if the government does that with any temporary or permanent fix, our chubby debt will become even more obese.
- Infrastructure - This was probably Donald Trump's only campaign promise which was cheered by the Democrats as well as the Republicans. Of course, that one pesky question was never asked - how in the world are we going to pay for this? We will hear some gobblety gook about how in the long term, this will be a good investment for the country. And then the bill for doing this necessary upgrade will land squarely on our debt.
- Emergency Spending - Oh my. What a year! Harvey followed by Irma followed by Maria followed by the firestorms in California. Big price tag. And after the debacle of Katrina, the federal government is going overboard to promise two chickens in every pot for those who were affected by these natural disasters. Ever wonder where the money comes from to fund emergency spending? Take a peek at the debt clock.
- Tax Cuts - This one hurts. The tax plan which is being rolled out, is also part of the GFY 18 budget. To pay for these tax cuts, the new budget has a $1.5T projected deficit. Only have one word to say about this one - WOW!
A shrinking few might ask, "When are we ever going to get out of debt?" The answer to that questions might be very unpopular, because it is "never". Never that is, until something really bad happens and everything collapses - and we start all over again. Debt is tied to our nation's finances like peanut butter is to jelly. We are stuck with it. It has become part of our national culture.
What is our future with this never ending debt. Greece - or something like it. Whenever you spend more than you make, be it a family or a government, nothing good ever comes out of it.
Some observations:
ReplyDeleteWe owe most of the money to ourselves.
We owe a big chunk of the money — about $5 trillion — to the Federal government. So if there ever were a default (hopefully there won't be) the government would also be stiffing itself.
We owe about $5 trillion to other countries, including China.
The total debt to China is only $1.3 trillion. So we're not in hock to China as much as some people think we are.
Yes, it's a boatload of debt. But the experience of Japan, the U.S. after World War 2, and other countries, suggests that it's a manageable amount, as long as we eventually get our long-term entitlement spending under control.
Effective proposals include........
1 Raise the Social Security eligibility age to match increases in longevity.
2 Correct the cost-of-living adjustment (COLA).
3 Raise the Medicare eligibility age to agree with Social Security.
4 Reduce the Medicare subsidy for upper-income beneficiaries.
5 Phase out Social Security benefits for upper-income retirees.
6 Consolidate Medicare's elements and collect a single higher premium.
Alas, no member of congress has the cajones to tackle these issues, then go home to face their constituents.
So, nothing will be done.
The debt will increase.
Some future generation will witness the collapse of America due to fiscal instability and we will roll over in our graves in shame. Because we didn't fix this mess.
Dave Gjerdingen
Wow! Another rare agreement (on most - not all!)
DeleteGovernment 'debt' is non-government savings of the government's liabilities. When T-Bills mature, the government simply moves numbers in ledger columns from Treasuries accounts to Reserve accounts. The reverse of when they were purchased.
ReplyDeleteYou can stop panicking.