We cannot solve US debt by charging more on our national VISA

The math problem is large. We have $23 trillion plus in US debt today, per the US debt clock. It is projected to increase by $10 trillion by 2027 FYE (September 30, 2027) before the tax cut in December, 2017. The tax cut added $1.5 trillion to the debt projection over ten years. A later budget change added $500 billion over ten years.

The budget bill just signed last week will add $500 billion over ten years per the Committee for a Responsible Federal Budget, yet they note all laws passed in 2019 have added $2.2 trillion over ten years. That would make it at least $37 trillion. So, a good working number is $37 trillion sans any action by the end of 2029 FYE.

Tax increases will not solve this problem, nor will spending cuts. Both are needed. Once the interest cost approaches the defense cost, we have a serious problem. At $37 trillion in debt, the interest cost to maintain it inches closer. So, it truly matters not what Democrats or Republicans like, some poor souls in charge will take the heat for trying to solve a problem passed along by poor financial stewards. It will be akin to the Greek people not liking the EU or responsible Greek leaders when they said Greece was in debt trouble.

What frustrates me is the GOP Freedom Caucus who got elected on debt reduction is the biggest bunch of hypocrites. They screamed bloody murder when the debt was $8 trillion, then $13 trillion, but are passing debt increases misleading the public that the tax reduction would pay for itself – no tax bill has ever done that and this one did not. But, Dems are not without fault. What should scare us all, we should be reducing the deficit with a pretty good economy, yet the deficit is growing and will exceed $1 trillion next FYE. What happens when the economic growth softens even more than it has over the past year.

So, my plea to all is dust off the Simpson-Bowles Deficit Reduction Plan and do even more. I am trying to tell folks what they need to hear, not what they want to hear. If I was a young person, I would be screaming bloody murder at inaction on climate change, guns and debt. Debt is not as frightening as guns and climate change, but it is a huge problem.

9 thoughts on “We cannot solve US debt by charging more on our national VISA

  1. It will be interesting to see if the debt is brought up during the presidential debates. I’m pretty sure trump wouldn’t be able to talk about it in an intelligent (even comprehensible) manner, but it really needs to be addressed by both sides. Probably a lot of blah, blah, blah.

    • Janis, if it is not brought up, it would be a deriliction of duty by the questioners. Remember, Trump said he would eliminate the debt, which was not believable since he had no plan.

      Dems need to raise the pressure as Trump will not. Keith

  2. Freedom Caucus? I would suggest with my 19th Century hat on that any one who makes such a noise about belonging to an organisation which proports ‘Freedom’ so loudly is a scoundrel masking behind humbug.
    And here’s one from Walpole Prime Minster 3 April 1721 – 11 February 1742 on those who make much of being a patriot
    “Patriots! I could raise fifty of them within four and twenty hours. I have raised many of them in one night. ’Tis but to refuse an unreasonable demand, and up springs a patriot.” -1741

    • Roger, the Freedom Caucus is the rebranded Tea Party of the start of this decade. Their hypocrisy on the debt is heightened, because in the past, they remained strident to their views.

      Your quote reveals the hard truth, once in power, those who oppose are evil. This is the Donald Trump playbook. A GOP legislator, who chose to be unnamed, saw a list of twenty GOP names who voted against his bill sitting on Trump’s desk. I could see him crossing each name as he gets his revenge.

      Keith

      • When you analyse him against other political operators of good, mixed or downright evil characters he comes up as a small, deluded creature who will be barely worth a mention in history books except in derisive tones.

      • Roger, let’s hope he becomes more of a footnote. Please feel free to share your perspective with as many Americans as possible. They need to hear what non-Americans think of him. Keith

  3. Note: The interest cost on the debt is budgeted to be $479 billion this fiscal year. While that is over 10% of the budget cost, it is about 15% of the budgeted revenue.

  4. Hello Keith. I was never a supporter of the Simpson-Bowles Deficit Reduction Plan. However I would support a new study with the idea of using progressive policies and a reduction over time for reducing the debt. We did not get this debt in a short time frame, we can not realistically wipe it out in a short time frame. The ones who will pay the most are the poorest among us and that simply is not acceptable. Having millionaires tell poor lower incomes and working poor they need to tighten their bests and slash their house hold budgets wont do any more. I heard all this year about wealthy people complaining about young people having fancy coffee and avocado toast which is not the problem with our wealth inequality at all. Until we address the root cause of the reason the lower incomes do not have disposable money to spend such as college loan costs, housing costs, food costs, and healthcare costs along with a GIG economy they idea of spending cuts is going to cause far more problems than it will solve. Hugs

    • Scottie, the Simpson-Bowles plan is a good start of a longer discussion. It was done nine years ago. To me, shelving this document and not discussing it was Obama’s biggest mistake.

      I hear what you are saying, but we are past the point of tax increases paying for this. We must do both and be smart about it. I have this conversation with Republicans and Democrats often – each set of legislators like to talk about debt reduction, until the hard work of doing both is discussed.

      I encourage you to check out the two nonpartisan sources I mentioned on your post. I would add what I said loudly then, the Tax Law change in late 2017 was malfeasance in my mind. I have said this to legislators. With that said, we need to make some cuts – defense being one place. Yet, we have infrastructure needs, as well.

      One of the sad things we fail to heed – borrowing to build or improve an asset is different than borrowing to pay for operations. We are borrowing to pay operations. That is not good. While I heard from you, I received response from a banker I know who shares this concern. He said watch what happens to Japan. A key I shared back is the countries who have the greater number of retirees to workers are at most risk. Here it is hitting our cities and states first for that very reason.

      I wish I had better news for you. But, we have a problem we are making worse. Keith

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