Newsweek: The U.S. Is Already Facing a Debt Crisis
Article by Michael Doorley in Newsweek
The U.S. economy is hooked on debt. It requires lots of it—crisis levels of it—just to maintain the economy.
As a CPA and a well-informed, patriotic American, I was concerned about our rapidly increasing national debt before the pandemic struck. Too many individuals, particularly those inside the Beltway, are constrained in what they say about our debt either because they caused it through their mismanagement, aided and abetted its pernicious growth, or worry about their own employment.
They use politically correct terms to describe our massive debt as "a dilemma," "an unsustainable trajectory" or "not a today problem." No elected politician wants the debt to blow up, or have their voters think it will blow up, on his or her watch. Too many of them avoid being honest and transparent. They will continue to kick the can down the road so as not to face reality and suffer the political consequences. As a non-D.C. based, informed and unconstrained American, I call our massive and growing debt what it is—a crisis already at our doorstep.
To be sure, I certainly agree we need to borrow during the pandemic to keep the economy alive while awaiting a vaccine and nationwide rollout. But we do not need to borrow to support multinational corporations, congressional pet projects and well-connected individuals. The COVID-19 crisis led to our economic crisis, which is now exacerbating our debt crisis. In addition to our massive outstanding debt and escalating annual budget deficits, every major trust fund is racing toward insolvency with tens of trillions of dollars of unfunded future obligations for Social Security and Medicare. Congress is aware, yet it has no plan, or revenue, to remedy the situation.
The world knows the U.S. is addicted to debt. It has been especially more so over the past two decades. The nation cannot maintain itself without increasing levels of debt. On September 30, 2020—the U.S. government's fiscal year-end—GDP did not increase during the year, yet debt increased by over $4 trillion. For every $1.00 of GDP, we had $1.27 of debt. At that time, the Congressional Budget Office projected GDP growth over the next 10 years to slow significantly, and annual budget deficits to rapidly increase by over $1 trillion annually. COVID-19 related stimulus and other proposed programs such as climate, infrastructure, and so forth will require trillions more of debt. They, and others, publicly called our debt unsustainable while some senior administration officials called it a threat to our economic and/or national security, and President Trump stated we are in a debt crisis in his budget submission to Congress.
Even prior to the pandemic, debt was at an irresponsible and dangerous level. The pandemic is causing additional borrowing at truly epic proportions—likely over $5 trillion. It has made an already-bad national debt situation worse.
When traditional, unaffiliated purchasers cannot, or will not, step up with the needed funds to buy our debt, and the Fed becomes the buyer of last resort and then cannot sell or redeem the debt without causing incalculable economic damage, we are in a debt crisis whether we admit it or not.
The U.S. is in a debt crisis. It is overdosing on debt, and Congress has no plan other than to keep borrowing. It must stop the borrowing and spending binges— or the U.S. house of cards will fall with .....
To read this article in Newsweek in its entirety, click here.