US economy grows at 3.3% annual pace in fourth quarter, faster than expected

The trajectory of the national debt of the United States is unsustainable whether inflation is high or low, or zero, or whether deflation is high or low, or zero. The current total is $34.1 trillion. The previous two fiscal year increases in the national debt were $2.5 trillion and $2.2 trillion. Fiscal year 2024 is currently on pace for a $2.8 trillion amount. The United States could very well hit a national debt of $40 trillion before the end of 2026 or the first half of 2027. This is NOT sustainable.

And Donald Trump is not a solution to the issue. In just 4 years when he was president, $7.4 trillion was added to the national debt. And no one should try to use the pandemic as an excuse. If the economy was not shut down, there would have been no need to go that humongous amount into further debt. And when the initial 15 day shutdown was about to expire, Trump extended it for another 30 days. So the problem was not just on the state level.

 

I totally disagree.

Peter C. Earle wrote a very good article on this subject earlier this month. The article can be found here: $34 Trillion and Climbing | AIER

Some excerpts:

"In a year where geopolitical hotspots are on the rise – Russia-Ukraine recently being joined by the Israel-Hamas war which is currently expanding across multiple fronts – of particular note is the ratio of the current US debt pile to annual economic output. At $34 trillion that ratio is 1.2, whereas the debt-to-GDP ratio at the end of World War II was 1.1 in an era of a managed gold standard with few international competitors. If a war footing were suddenly called for, only the colossal monetization of debt (if not the outright printing of money, and vastly higher taxes) would suffice."


"Perhaps a better tack to take regarding warnings about borrowing into oblivion is to ignore numerical benchmarks in lieu of expressing the following. First, the US government will never, ever, voluntarily cut spending. When at some point the issuance of Treasury bonds is no longer an option for some reason or another, some combination of the destruction of the dollar’s value and increasingly confiscatory levels of taxation will follow. For our self-preservation, American citizens will need to find a means of arresting the Beltway’s profligate instinct. Second, although only one-quarter of US government debt is currently owned by foreign creditors, the prospect of having our fates controlled by outside powers with interests that diverge vastly (and often in opposition) from ours should be menacing. At the very least, US citizens should consider what they are willing to live without or see others live without. Medicare? The US Coast Guard? Pension backstops? The Food and Drug Administration? Subsidies for just about everything?

At this point, $35 trillion in US debt is baked in. Forty trillion, too, may only be a handful of insincere political diatribes away.

Too much credibility has been squandered on the futile endeavor of predicting fiscal tipping points. Making the consequences of runaway debt clear – unprecedented levels of taxation, a browbeaten dollar, and unwelcome yet unavoidable foreign influence in domestic affairs – is likely a more effective, and more scientifically defensible, warning."

 

Yes, Mike is in worse shape.

As a way to wrap up(unless there is some different angle someone wants to address) my contribution to this discussion, I will quote from the Bible:

Proverbs 22:7 The borrower is servant to the lender.

 

And how is that "intragovernmental debt" being paid as it comes due, day by day, month by month, year by year?

 

Frankly, @JonC, I am surprised that you treat the national debt so seemingly cavalierly. Your other posts on government policies have come across to me as being much more sensible.

 

Who is it that you are saying wants to ban public investments in government debt?

 

Okay. I will explain it as I understand it. When Social Security was paying out less in benefits than it received in revenues, that excess was invested in government securities and spent on other government programs. Now that Social Security benefit payments exceed its revenues, Social Security is cashing in those government securities to keep benefits at 100% and the federal government is borrowing money to have the cash to give to Social Security. Thus in about 9 years or so when the excess that Social Security had accumulated is gone, either benefits will have to be cut, or taxes raised specifically for Social Security, or more money borrowed specifically for Social Security, or some combination of these actions, if full benefits are to continue being paid.

 

Well, if I could snap my fingers and get what I want, it would be to phase out Social Security over a period of decades. But, as I am not likely to be granted such dictatorial powers, I think it will require something along the lines of the Diamond-Orszag Plan from 2005(updated, of course, due to the passage of time in failing to have already dealt with the issue):

https://www.brookings.edu/wp-content/uploads/2016/06/200504security.pdf

 

Oh, I have no expectations of the federal government eliminating its debt. I just want the federal budget balanced and the national debt to stop being increased.