I had never heard of “Pink Day” until Alyssa, my 13 year old granddaughter, said we had to absolutely go on Friday for back to school shopping.
After I paid the bill for her “loot”, I looked her in the eye and said “my credit card is now in DEEP FREEZE!
That didn’t keep her from trying, again, on Saturday to see if she could get me to use it, again.
No dice, sweetie. Unlike our government I need to live within my budget.
Once a month, I have to gather all the bills, including that credit card, check my bank balance, pay all the bills, subtract the payments, and put some of the remainder into savings. What is left is so-called “discretionary revenue”.
National Debt will Reach 110 Percent of GDP by 2036
If we impose that kind of prudent thinking on the American economy — that means no more “pink days” for Congress and the American people.
We can’t pay the bill!
The Congressional Budget Office (CBO) projects, based on current law, the National Debt will rise to 86 percent of Gross Domestic Product (GDP) by 2026 and will exceed 110 percent of GDP by 2036. (The 2016 LONG-TERM BUDGET OUTLOOK Table 1.1)
That’s the rosy scenario.
As debt grows, interest on the debt grows, squeezing out private investment and with it economic growth. As the economy shrinks, the ratio of debt to GDP accelerates.
Before the United States reaches the 100 percent Debt to GDP threshold, no investor, foreign or domestic, will be willing or able to purchase our debt at any interest rate.
The largest economy in the world — the collapse of the USA’s economic system would lead to a worldwide cataclysm.
The military superiority the world has depended on to bring order and stability since the 1940s would disappear – in fact, we wouldn’t be able to maintain an army or navy to defend the homeland.
Prepare to Lose Your IRA Savings!
Not planning on Social Security — believe your retirement savings will secure your old age? Think again.
On our current course, you are likely to live to see the United States unable to meet its financial obligations either domestically (Social Security, Medicare, Education) or internationally.
The combination of political and social instability and the collapse of our financial system will swallow everything – including your savings.
President Obama Couldn’t Defuse Debt Bomb
During his 2008 Presidential campaign Barack Obama excoriated President George W. Bush and the GOP Congress for increasing the National Debt (credit card) from 33 percent of GDP in 2001 to 35 percent of GDP in 2007.
Three big, unexpected events drove the Bush-era increase in the National Debt:
- Cost of tax rate reductions following the 2001 recession
- Unprecedented spending for Homeland Security after 9/11
- Wars in Afghanistan and Iraq.
When President Obama came into office in January 2009, “Job 1” was stabilizing the economy – that meant spending more money to get the country moving forward, again. The only way to do that was to borrow still more money – the National Debt quickly rose to 62 percent of GDP.
During his tenure in the White House the first of the Baby Boomer Generation would retire – putting more pressure on an already stressed Social Security System.
The President faced a steep challenge — balancing the budget would require shared sacrifice across the American population and the American economy.
Every special interest served by the Federal Budget would resist. He needed a Bi-Partisan PLAN.
To lead the effort he invited former Republican Senator Alan Simpson and former Clinton Chief of Staff Erskine Bowles. Both of these men have strong reputations as citizens before they are partisans.
Among others, he appointed Alice Rivlin, who had served as Clinton-era Director of the CBO. She warned about debt in general and the need to reform Social Security in particular.
The Commission membership included Republican and Democratic House and Senate leaders and others from the Administration and outside government.
Their findings were published in December 2010 — to significant fanfare — subtitled The Moment of Truth:
But the Moment of Truth never reached Congress for an up or down vote.
Instead the National Debt rose from 62 percent of GDP in 2009 to 75 percent of GDP in 2016.
The striking rise in debt is the result of unrestrained government spending, Congressional reluctance to raise or reform taxes, natural disasters, and continued military operations.
Next President Has Last Chance to Defuse the Bomb
And yet, unlike Barack Obama, neither Hillary Clinton nor Donald Trump have focused on the rising ratio of Debt to GDP or the risk it presents to every aspect of our national life and government.
Libertarian Gary Johnson (former Governor of New Mexico), has made debt reduction and balancing the budget a priority in his campaign but the limited press exposure he receives has allowed Ms. Clinton and Mr. Trump to “skate” on the issue.
In fact, both promise more discretionary spending, expanded Social Security and lower taxes.
They are either lying or they can’t do basic math?? I’ll let you decide.
Every American Must Make the Hard Choices
One thing is certain, as citizens, taxpayers, parents, and grandparents it is our solemn duty to elect a President and a Congress willing to confront debt, deficit, and balancing the national budget honestly and courageously.
No one wants to pay more in taxes, but the fairly small sacrifices required of each of us in this decade pale in comparison to the consequences that could face our children in the next decade.
Photo by author