The most depressing thing about the partisan political gridlock in Washington D.C. at present isn't the one-upmanship being practiced by both parties against each other. It isn't the competing policies and positions. It isn't the posturing for the news media, or the intolerance of others' opinions, or the openly voiced contempt so many politicians display towards each other.
It's the avoidance of reality.
There is one single issue confronting the USA today that dwarfs all others. Unless and until it is solved, all other issues will be essentially sideshows, because this one issue can bring them all down and destroy them all in a heartbeat.
That issue is our national debt - federal, state, local, corporate and private.
- At the time of writing, according to the US Treasury, the federal government debt - money it's borrowed to pay for its programs and policies, but not yet repaid - stands at $19,846,009,616,285.34.
- At the time of writing, according to the National Debt Clock, the total debt of the fifty US states - what state governments have borrowed to pay for their programs and policies - amounts to $1,206,071,409,000.
- At the time of writing, according to the National Debt Clock, the total debt of US cities and towns - what local governments have borrowed to pay for their programs and policies - amounts to $1,925,789,975,000.
- At the time of writing, according to the National Debt Clock, total US debt - which "includes Household, Business, State and Local Governments, Financial Institutions, and the Federal Government" - amounts to $68,392,662,000,000. That averages out to over $210,000 per citizen. That's what every single one of us - you and I - owes, per capita, to repay this sum.
- It's not just government or commercial debt that's the problem. At the time of writing, according to the National Debt Clock, total personal debt in the USA - which "includes all personal obligations: Mortgage Debt and (Consumer Debt), which includes Car Loans and short term revolving Credit Card Debt" - amounts to $18,204,074,000,000. That averages out to over $56,000 per citizen.
Let those numbers sink in for a moment. The big ones are in trillions of dollars. That's a big 'T'. Add to them the unfunded liabilities of the US government. "Unfunded" means that there is currently no money available to pay for these future financial commitments. At the time of writing, according to the National Debt Clock, total US unfunded liability - including "Social Security, Medicare Parts A, B and D, Federal Debt held by the Public, plus Federal Employee and Veteran Benefits" - amounts to approximately $105,513,454,000,000. That averages out to over $879,000 per taxpayer.
What's more, every one of those numbers is increasing, second by second, minute by minute, hour by hour, day by day. Go to the National Debt Clock and watch the numbers grow.
It doesn't matter what policies, proposals, budgets, etc. are worked out in Washington if they don't begin by taking into account this fiscal disaster in the making. It's all very well for President Trump to say he wants an additional $54 billion in defense spending, which he'll pay for by cutting other federal expenditure by the same amount. That's chump change. The real problem is the federal government debt as a whole, which is approximately 367 times greater than the proposed increase in defense spending. Unless the latter is addressed, it will eventually swamp any and all federal programs. It's simply unsustainable.
We've spoken of this problem many times before, so I won't go into all the sad, sordid details yet again. Suffice it to say that if we had to pay a realistic rate of interest on our national debt, instead of the artificially low rates imposed by the Federal Reserve through its monetary policy, our current annual budget would be simply wiped out by interest costs. Non-discretionary spending would be entirely consumed by interest on our national debt, and entitlement programs - including Social Security and Medicare - would be next on the list. There would be no alternative. It's all very well to say that "We paid into Social Security, and we want our money back!" The money is gone. There is no such thing as a Social Security trust fund. That money was invested in US government bonds, and spent by previous generations of politicians. All that's left is a handful of IOU's, payable by the US government - which will be bankrupt by the time it has to pay them.
There are only four ways in which this situation can be resolved.
- We can stagger along, ignoring the problem, until it overwhelms us during the next financial crisis, and all our government programs collapse into bankruptcy.
- We can "print money" to pay for all the programs we want - but that will destabilize and undermine the US dollar, and inflation will rapidly erode its purchasing power until it's no more than a shadow of what it is now. The latter is, of course, already no more than a shadow of what it was, thanks to past inflation and other factors, as this graphic illustrates, courtesy of visual.ly. (Click the image for a larger view.)
This is how we've been coping with the situation up until now. I fear we'll continue to do so, because no-one in authority appears to be willing to consider any other alternative.
- We can declare bankruptcy; effectively, refuse to honor our debts (i.e. US Treasury bonds and other instruments that have been sold to other countries, corporations and individual investors to fund our national debt). However, this would utterly trash the USA's credit rating, and result in other nations refusing to extend credit to us for trade and other purposes.
- We can cut our coat according to our cloth; in other words, set aside money in our annual budget to pay down the debt, and use what's left over to fund government programs we can actually afford. This is the fiscally responsible thing to do, just as most families must do in similar circumstances, but it's the least likely to happen. That's because politicians have made promises to the American people that they can no longer afford to keep; but, if they break those promises, they'll be voted out of office by their aggrieved electorate. Rather than risk that, they'll 'kick the can down the road', hoping they'll be out of office by the time someone else has to deal with it.
As Peggy Noonan noted in a 2005 article:
Do people fear the wheels are coming off the trolley? Is this fear widespread? A few weeks ago I was reading Christopher Lawford's lovely, candid and affectionate remembrance of growing up in a particular time and place with a particular family, the Kennedys, circa roughly 1950-2000. It's called "Symptoms of Withdrawal". At the end he quotes his Uncle Teddy. Christopher, Ted Kennedy and a few family members had gathered one night and were having a drink in Mr. Lawford's mother's apartment in Manhattan. Teddy was expansive. If he hadn't gone into politics he would have been an opera singer, he told them, and visited small Italian villages and had pasta every day for lunch. "Singing at la Scala in front of three thousand people throwing flowers at you. Then going out for dinner and having more pasta." Everyone was laughing. Then, writes Mr. Lawford, Teddy "took a long, slow gulp of his vodka and tonic, thought for a moment, and changed tack. 'I'm glad I'm not going to be around when you guys are my age.' I asked him why, and he said, 'Because when you guys are my age, the whole thing is going to fall apart.' "
Mr. Lawford continued, "The statement hung there, suspended in the realm of 'maybe we shouldn't go there.' Nobody wanted to touch it. After a few moments of heavy silence, my uncle moved on."
Lawford thought his uncle might be referring to their family--that it might "fall apart." But reading, one gets the strong impression Teddy Kennedy was not talking about his family but about . . . the whole ball of wax, the impossible nature of everything, the realities so daunting it seems the very system is off the tracks.
There's more at the link.
I continue to fear that, thanks to the fecklessness of our politicians and the refusal of US voters to elect better ones, "the whole thing is going to fall apart," just as Teddy Kennedy suggested. I don't believe anyone in Washington can see a practical, feasible way out of this mess. There are undoubtedly those who recognize the danger - President Trump not least among them - but their hands are tied by the far greater number of politicians who are living for the moment, not for the future, and who won't dare do anything constructive for the long term for fear that their careers will suffer in the short term.
Keep your eye on the fiscal ball. It's almost lost its ability to bounce. When that finally happens, we're all going to feel it. I already know that every dollar in my pocket today buys about half - sometimes less than half - of what it did in the year 2000. I can go out right now, and go shopping, and compare what I get for my money today with what I got for it seventeen years ago. Forget the "official" rate of inflation, and look at actual expenditure. You'll find the same thing I do - your money today is worth less than half what it was then. What's going to happen if that continues, and gets worse?
It's going to be very, very painful, folks. That's the reality we're all facing. I can only hope and pray we'll be able to withstand the pain, and survive it, and come out on the other side of this crisis with renewed hope for the future.