According to usdebtclock.org (which is an Internet spectacle worth looking at), federal tax revenue amounts to around $3.3 trillion. The amount of federal expenditures is over $4.1 trillion. That means that almost another trillion dollars will be added to the government’s debt load, making it $23 trillion.
The share of the debt for a U.S. citizen amounts to more than $219,000. For a U.S. family, its share of the debt is more than $856,000.
This is what is occurring year after year, thanks to the massive welfare-state, warfare-state way of life that conservatives and liberals have foisted upon our nation.
Some statists argue that it’s all no big deal. They say that since we are all Americans, we owe all that debt to ourselves. That ignores the fact that there are individual and institutional creditors who have loaned money and expect to be paid back. The fact that some them are Americans is irrelevant. They expect their money, which means that the federal government will have to tax American citizens to get it. Thus, we don’t owe all that money to ourselves. One group is owed the money and American taxpayers are on the hook for repaying it.
Moreover, the debt is also held by foreigners, all of whom expect to be repaid in full the money they loaned to the federal government. One of the principal creditors is Communist China, whose regime was one of the big lenders for President George W. Bush’s invasion and occupation of Iraq. Since it loaned the money, China expects repayment in full. American taxpayers are on the hook.
Other statists say that the U.S. economy is so strong that it doesn’t really matter how much debt the U.S. government accumulates. But no economy is so strong that it can keep adding to its massive debt load. There is always a limit, which is the point where people are reluctant to lend because of fear that their loan will not be repaid in full. At that point, the fiscal crisis strikes.
We saw this phenomenon a few years ago with Greece. The Greek government had incurred so much debt that, combined with its massive welfare state, it simply could not cover all its expenditures with the tax revenues that were coming in. And it could not borrow any more money because no one would lend it any more money.
The European Union came to Greek’s assistance and bailed it out with EU funds, which only delayed the problem to some point in the future. No one is going to bail out the United States when the federal government reaches that point with its debt load.
Other statists, both conservatives and liberals, understand the potentially grave fiscal dangers associated with out-of-control spending and debt. But they simply cannot bring themselves to slash federal spending to such an extent to where tax revenues exceed federal expenditures. Thus, U.S. officials are never in a fiscal position of being able to pay down any portion of the principal on the debt. They are always only paying off interest, while incessantly adding to the amount of the overall principal.
The biggest items of federal expenditures are Social Security, Medicare, and the national-security establishment.
Social Security and Medicare recipients are simply too powerful politically. They are not about to let anyone reduce their dole, much less end it. The national-security establishment — i.e., the Pentagon, CIA, and NSA — is even more powerful. There is no chance that it would ever permit any significant reduction in its dole.
What about the smaller aspects of the welfare state, like the old Cold War relic Radio Marti? Whenever someone proposes its elimination, the response is always something along these lines: “That program’s expenditure is so tiny that it would have no noticeable effect on the overall level of spending. Leave it be.”
Even long-failed, destructive programs like the drug war are considered off limits. There are simply too many judges, prosecutors, clerks, and law-enforcement officers who have become dependent on this particular racket.
Consider the federal government’s “shutdown.” I use quote marks because actually a very small percentage of the federal government was actually shut down. But here was a perfect opportunity to save money through a permanent layoff of all those programs, agencies, and personnel that even U.S. officials say are non-essential. Not a chance. All we heard was how harmful it was to the economy that these non-essential workers weren’t getting paid. Well, they will all end up getting paid the amount of money they would have been paid during the shutdown.
Fully understanding this spending/debt problem, President Trump and his anti-immigrant cohorts and his fellow interventionists want to spend even more billions of dollars on their infamous Berlin Wall and are now threatening Venezuela with a war, which would cost even more billions of dollars, on top of their forever wars in the Middle East and Afghanistan.
Statist economists say all that needs to be done is to lower taxes in hopes that people will work harder and thereby pay more taxes. If that were the case, all a regime would have to do is lower taxes to 1 one percent and keep spending and borrowing to its heart’s content. If only someone had told Greece about that idea.
What most likely will happen is that the Federal Reserve will end up accommodating the debt by continuing to debase the currency. That’s been its job ever since the advent of the welfare state in the 1930s and the warfare state in the 1940s. Essentially, it simply “prints the money” to pay off the federal government’s debt, which thereby devalues everyone else’s money.
That process has always proven tremendously successful from the government’s standpoint because people blame the rising price level on bankers, Big Oil, greedy capitalists, rapacious profiteers, and the like. People inevitably fail to realize that the rising prices are the result of Federal Reserve monetary debasement. What the Fed is essentially doing by inflating the currency is taxing people indirectly, surreptitiously, and fraudulently.
This fiscal and monetary debauchery cannot have a happy ending. When the day of reckoning does come at some point in the future, expect both conservatives and liberals to support dictatorial action to keep them “safe” and “secure.”
This article was published by The Future of Freedom Foundation.
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