by Robert Carbery
Something has been going on this past month that has as usual been lost in the shuffle of other mainstream media prioritized news. Lost in the hysteria around the Vegas shooting (of which we still have many unanswered questions) and Harvey Weinstein and Mueller indicting Manafort and the wacky World Series is the rapid rate of growth of the U.S. national debt during the early months of the Trump administration.
In October alone, America’s debt has soared by almost a quarter of a trillion dollars. This is on top of already well over $20 trillion. A monumental story. Lost again to other such less significant stories since we always kick the can down the road. Well, eventually we are going to run out of road. We are bankrupt and no one seems to care.
And we are doubling down.
Historic levels of debt for the world’s largest economy matters little to the masses. They are too busy being divided by the useless R v. D debate in DC. Both parties’ politicians are getting rich. The public will be left with the bill. The consequences will come. The party will end.
The U.S. government spends all of the tax revenue it takes in on Social Security, Medicare, and Interest on the Debt. Sound sustainable?
Add in our ridiculous spending on national defense and the lopsided budget and you have more than a mess on your hands. You have a calamity.
Spending cuts are impossible these days because once you start a government program it cannot be stopped. And tax increases doesn’t make things much better either.
We’ve tried the top tax individual rate at 92% in 1953 and 28% by 1988. The corporate tax rate has similarly fluctuated from 34% to 53% in the post-World War II years, getting as low as 15%. Yet, total tax revenue as a percentage of GDP has budged little. This reveals how our unsustainable trajectory is a cost problem. We simply spend far too much, way more than we take in. We can not afford it and things that cannot continue will invariably end.
There is no happy ending to this conflict. There is only disaster and and decline for the world’s greatest nation. If we do not make drastic changes now, we will trigger a financial crisis in the future.
Simon Black, an international investor, entrepreneur, and founder of Sovereign Man recently pointed out that the “Social Security Board of Trustees (which includes the US Treasury Secretary), estimates that its key trust funds will be depleted in 2034, at which point the program will be fully dependent on government tax revenue to pay monthly benefits.” This will come sooner than you think. Less than 17 years is not that far. But if we continue on this path, those projections could be updated and the date we run out could come even sooner.
More people need to pay attention to this real ticking time bomb. This is a greater threat to us than Russia or North Korea or Iran or terrorism. This is a real crisis in the making. And we are barreling straight toward it.
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