America’s Debt Addicts Are Careening Toward Fiscal Disaster – Inside Sources

The majority of elected officials who spend our tax dollars are debt addicts. Their reckless policies, if continued, will destroy the nation.

Very few politicians will tell you this, though many of them seem neither to care about it nor understand it. Can you recall any of them calling a news conference to announce that overspending must end for the good of the country or that it will be enslaved by overspending?

In a few decades, at the current reckless spending levels under Democratic and Republican governments, the biggest item in the federal budget will not be paying off the debt or paying for welfare or military programs but paying the interest on the debt. It is now either the second- or third-biggest item in the federal budget. This rarely makes it into the news.

Here is what responsible observers should be asking and telling us about the relentless interest on the red ink, now running at about $1 trillion a year and likely to keep growing as career politicians spend, tax and depreciate the currency with reckless monetary policies that worsen with each budget.

Is interest on the debt now bigger than Medicaid expenditures? Yes.

Is interest on the debt bigger than military spending? Yes.

Is interest on the debt bigger than Social Security spending? Not yet. But in a few decades, at the current bipartisan spending levels, it will be.

How did this happen? How did we get so far down the road to an American Weimar Republic, with most politicians saying little about the problem?

“Neither of our political parties seems the slightest bit interested,” economist Tom Giovanetti writes in “Careening Toward Fiscal Disaster,” a paper for the Institute for Policy Innovation.

Just as the blame for this reckless, fund-everything-and-don’t-cut-a-thing policy can be assessed against both major parties, the gap problem has persisted across decades and administrations. The relentless red ink isn’t because we’re in a recession or depression or even because we’re at war again.

In good times and bad, governments of the right and left have been adding to the debt for decades. So the business cycle, even when it is moving in the right direction, isn’t making things better. For example, last year, the U.S. economy grew at an annual rate of 2.1 percent, in part because of tax cuts. That’s good. Most advanced industrial countries with sluggish growth rates would be delighted to have that number. They hope they can grow their way out of their red ink. It’s usually an unrealized hope.

While the U.S. economy grew last year, the government still ran a $1.8 trillion deficit, according to the Congressional Budget Office.

The latest fiscal-year deficit was added to the fictitious national debt of $39.89 trillion as of Aug. 7, according to U.S. government figures. Many economists believe this is inaccurate.

Truth in Accounting, an independent group monitoring public spending and taxation, puts the federal government’s total shortfall at $170.3 trillion. The disparity exists because the government engages in dicey accounting practices, TIA says. The government doesn’t count some obligations because they won’t come due for years, even though they’re real. The government isn’t using the accounting standards it forces on publicly held corporations.

Why?

The government is self-reporting and telling us everything is fine. That’s never a good idea for any government, James Madison warned. “No man is allowed to be a judge in his own cause, because his interest would certainly bias his judgment, and, not improbably, corrupt his integrity,” Madison wrote in Federalist No. 10.

Besides integrity, bad times are inevitable — recessions or periods of sluggish growth. No government can outlaw the business cycle, much as many of our career politicians, backed by their central bankers using loose monetary policies, think they can. There will be a down period.

If the deficit is $1.8 trillion during a period of expansion, what will the deficit be during the next recession or depression, which often follows the end of wars, periods of fiscal or monetary overexpansion, or another COVID-19 emergency, when politicians feel justified in going on bipartisan spending sprees?

Then, even the official government deficit numbers will be more than $1.8 trillion. Recent painful inflation under big-spending presidents Biden and Trump should be painful for the majority of our career politicians, who have never eliminated a government department.

The problem with growing, perpetual debt isn’t the economy. It usually grows at healthy rates, especially when taxes are cut. The problem with American Weimar economics — of a public sector run amok — is overspending over generations.

“The government,” notes Judi Willard of Truth in Accounting, “is a rotten money manager.”