The Fiscal Folly of Free Stuff
Mountain of Debt
Michael Ramirez, Substack
Our national debt is $32,604,452,931,788.00. Have a great week!
…Okay, you probably need a little more from my Substack… So, the White House was surprised this week when Fitch Ratings downgraded the U.S. credit rating from AAA to AA+.
Why would anyone be surprised?
As I mentioned before, the U.S. National debt is currently more than $32.6 TRILLION… which breaks down to about $97,521 per person. The debt is bad enough. We have added $12.25 TRILLION Value of debt in just the last six years.
To put it in perspective, our combined additional debt in six years is larger than the 2022 GDP of all countries in the world except the United States and China. Our national debt is almost twice the size of the GDP of all the countries in the European Union combined.
The GDP forecast for the United States in 2023 is $26.854 trillion. So even if we took the complete value of all the goods and services produced in the United States in 2023 and used it to pay off our gross national debt, we would be short by $5.75 trillion, which, again, to put that in perspective, is higher than the GDP of every country in the world, except the United States and China.
Now the U.S. economy is a goliath. Our economic output alone constitutes about a quarter of the global economy. Our problem is the failure of our political leadership to rein in spending.
Democrats like to blame the debt on the Trump tax cuts and COVID, but mostly, Trump and the Republicans. The truth is that we have been taking in record amounts of federal revenue every single year. We are just spending at historic levels… every single year.
You can’t read the news without finding another government giveaway, another entitlement program added by this administration to the burgeoning debt load we already have. Student Loan forgiveness in every pot is the latest election bribe.
This administration has lost its mind. But so has Congress. This has probably been more of a factor in the credit downgrade than anything else, combined with an acceleration of government spending. The ability of the US government to be a guarantor of its debt plays a larger role in each debt ceiling debate. Political gamesmanship has superseded common sense. Playing chicken with the debt ceiling has raised the specter of a U.S. default.
The last time we had a credit downgrade was when Standard & Poor dropped our rating because of our debt during the Obama administration in 2011. As the Wall Street Journal points out, the ratio of U.S. debt held by the public to GDP in 2011 was 65.5%. The CBO projects it to be 98.2% this year.
The gross national debt is the combined publicly held debt and intragovernmental debt. The intragovernmental debt is the money the government owes itself, like government trust funds invested in Treasury securities, i.e., the Social Security trust fund, etc.
Fortunately for us, U.S. treasuries are still the gold standard for securities. What else are investors going to turn to? The Yuan? Not likely.
The top ten countries which hold our debt are Japan, China, The U.K., Belgium, Luxembourg, Switzerland, The Cayman Islands, Canada, Ireland, and Taiwan. And the dollar is still the global reserve currency… for now.
But with the possible rematch of the two knuckleheads looking more likely every day, the dumbing down of Congress, and a rapidly aging population putting more demands on the budget, America’s fiscal health is looking more uncertain.
Any Americans who managed their fiscal house like our politicians would end up homeless or in jail.
What is the legacy of the debt we leave future generations of Americans? The answer lies in this cartoon from 2009, except that mountain is now almost three times larger...
In just the time it took to write this, America accrued $7 million more in debt.
Have a great week… And I mean it this time.
