Big Issue #1 – Dealing with our Debt

A topic that was discussed very little during the campaign and debates is our ticking time bomb problem of US debt. At almost $20 trillion and growing, it deserves its ranking as Big Issue #1 as it will impact everything we do as interest cost becomes an even greater part of our annual budget.

Let’s start with a few quick numbers in our 2015-16 fiscal year for context:

Current Debt = $19.8 trillion
Annual Revenue = $3.267 trillion
Annual Expenses = $3.854 trillion
Annual Deficit = $0.587 trillion
Annual Interest Cost = $0.284 trillion

Note, the annual interest cost is included in the expenses. If we did not spend one cent outside of paying the interest cost, it would take almost seven years to pay down the debt. But, we do have major and minor expenses, so it will take a concerted effort that will need to include some revenue increases, as cost cutting will not get us there unless we are prepared to make significant cuts to defense and major programs like Social Security and Medicare, the top three cost items.

What is troubling is our President Elect’s economic and tax plan has been measured by two non-partisan groups – The Committee for a Responsible Federal Budget and The Tax Foundation – to increase our debt by $5.3 trillion over the next ten years. Quite simply, we cannot afford to do that.

So, we must be smart about what we do it or we will make the problem much worse. The President Elect has said we will make it up in an expanded economy, but several  economic modeling firms, such as UK based Oxford Economics and US based Moody Analytics, project his plans as creating from malaise to recession in our economy.

We are at the point where we must set campaign rhetoric aside and govern off real data and analytics. There are things we can do to decrease the debt. Two non-partisan organizations – The Concord Coalition (www.concordcoalition.org) and Fix the Debt (www.fixthedebt.org) – have good exercises where you can value the impact of certain changes on the expense side and revenue side.

It should be noted, like Corporations, there are areas where we need to increase spending such as on infrastructure investment, while we make cuts in others. Also, as we are an aging country that is the most obese country in the world per the World Health Organization, there will be upward cost pressures on health related programs.

This is not an easy exercise, but one we must do. Cutting revenue through less taxes is an easy thing to promise during the campaign season, but we are at the point where we must make tough decisions and decreasing revenue is one we probably should avoid. And, the longer we wait, it will become even tougher to solve this problem.

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22 thoughts on “Big Issue #1 – Dealing with our Debt

  1. Dear Keith,

    You know all too well that both sides of the aisle claim to take the U.S debt seriously but do not have the courage to act. If DT were on the up n up, he would work on the Simpson-Boles plan to reduce the U.S.deficit.

    Unfortunately, I am personally convinced that DT is the same before and post the election.

    Hugs, Gronda

    • Gronda, I know a couple of folks with The Concord Coalition. They can get meetings with Republicans because of the subject, but when the representatives find out that we may have to increase some taxes, they shut down. As for Democrats, they need to come to the table. This issue needs a good head and heart, as you want to use a scalpel not a hacksaw to cut. Yet, if we wait too long or pass more tax cuts, then all bets are off and we will need to get an axe to cut.

      Keith

  2. I wish that our politics were connected to the real world and the problems of everyday people. While Trump’s election is touted as the revolt of a semi-underclass of impoverished whites the truth of the matter is that the outcome was rigged by a relentless propaganda campaign that demonized all areas of government. Economically our biggest problem is the debt, but politically our biggest problem is that our system of government has been and still is under attack by a well coordinated disinformation campaign. The people cannot make sound choices because the national debate is sullied with lies. Trump is a symptom. The face of America is a man who does not really know how to run a successful business and who is not qualified to hold political office. Trump is in the White House because our press refused to help the people to sort out fact from fiction. Therefore I think that a more immediate concern is to demand that the press turn away from the spectacle of Trump and get down to the business of asking him to answer precise questions about governing and how he intends to run the nation’s economy.

    • Agreed. I have a post in the works on information. Many who voted for this man, saw a plane with his name on it and gave him far more credit than he deserved as a business person. They also were never made aware that he screwed people over recurringly to make it where he did, many just like those who voted for him.

      • Keith, I can’t count the number of reports I saw regarding Trump’s business failures, his refusal to pay contractors, his years of not paying taxes and on top of that we had the tapes of him boasting of sexual assault. We watched Trump lie and defame his opponent. We saw him whip his supporters into violence, we heard them chant ‘lock her up!’ and none of that swayed the people who either voted for him or chose not to vote at all.

        The public even knew that the Kremlin was actively spreading disinformation.

        Something is wrong.

        Either the people used our political system to express a death wish or the voter fraud cuts deeper than we know.

      • Little surprises me anymore. The wrong and weird happens with too much regularity. A few months back, a security expert said, if the Russians can hack emails, they can also change them. And, since they wanted America to be disrupted by Trump and lessen our position in the world, it would not be a stretch they would hack voting systems.

  3. I would like to find a list of all the things DT promised to do (build wall with money from Mexico, drain the “swamp,” senate term limits, make Social Security and Medicare stronger by taxing the rich, etc.) and keep track of what he actually does. It would probably be an eye-opener for his minions when he comes around for reelection in four years.

    • Hugh, cutting taxes is like a call from the Sirens to all legislators, but especially our Republican friends. At some point, we have to pay the check. Keith

  4. Note to Readers: I watched the interview with Trump on “60 Minutes” last night. Congress loves the idea of cutting taxes, which will largely benefit the higher incomes. I want folks to think Kansas as these measures pass, as trickle down economics has failed there and caused budget shortfalls. If we do it on the national stage with any curtailment in global trade, we will be looking like Kansas and even the Good Witch of the North won’t be able to save us from our worsening debt. Keith

  5. Keith, I wish you were the president at the moment because your post indicated to me that you are far more aware of the current debt situation. I am not heavily plugged into the finances of the U.S but just loosely aware of the debt- of which Trump has not expressed much about. It will be interesting to see how things pan out….

    • You are so very kind. To me, any Tom, Dick or Harry can get elected saying they will reduce taxes. This is not good stewardship and makes a big problem worse. Thanks for your endorsement. Keith

  6. Thanks for a clear and thoughtful analysis of the grim topic of fiscal reality.

    In ancient times, I was a Republican. There were extenuating circumstances. One of them was that Democrats tended to be casual about deficits and Republicans tended to try to balance the budget (not necessarily in every single year). Nowadays, Republicans believe in voodoo like “dynamic scoring” to justify cutting taxes on rich people as a panacea.

    • Mellow, I was a Republican at one time as well. While Independent now, I remain fiscally conservative, even though I am progressive on civil rights and social issues. Our former party continued this trickle down economics philosophy when it has been proven to fail in at least four studies and has left Kansas in bad shape. I have written about Paul O’Neill, the Secretary of the Treasury, being fired as he was adamantly against the Bush tax cuts after Bush was handed a balanced budget by Bill Clinton. As with climate change, we cannot let our debt get away from us. Thanks for your comments, Keith

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