You might have noticed all the hand-wringing among billionaires these days as to when the U.S. debt crisis will peak. You ask yourself: Why should I care?
Here’s a hint: Perhaps it’s time to telephone Chicken Little and get the little guy to hit the road to invoke his best Paul Revere impersonation and warn all of us far and wide that the sky indeed is falling.
Listen to Congressional Budget Office director Keith Hall. He told a U.S. Senate committee this week that the federal government’s publicly held debt is well on its way to reaching a level seen only once in U.S. history (at the end of World War II in 1945). By the end of this year, that debt easily could equate to 74 percent of the nation’s Gross Domestic Product. That is, the federal government every year is borrowing $3 to fund its spending for every $4 worth of goods and services generated within the USA’s private sector.
Clear as mud? OK … try to understand this: For every $2,000 I earn each month, the federal government needs me to pony up $1,500 just to keep its debt from expanding beyond $18.2 trillion. That would leave me $500 a month to buy food, pay the rent (or mortgage), purchase fuel for my car, make the car payment, pay my health-insurance premium, pay my homeowner’s or renter’s insurance, purchase a little life insurance, pay my federal and state income taxes, cover repairs to my domicile and my vehicle(s), buy clothes for the wife, me and the kids – well, you get the idea.
Now, to pay off that federal debt, every U.S. household today would have to contribute about $154,100. Who’s got that kind of money – well, beyond the likes of George Soros, Donald Trump and Samuel L. Jackson?
Keith Hall pointed out that to freeze the federal debt where it stands today will require either significant increases in federal tax revenue, or significant decreases in non-interest federal spending – or a combination of the two. That’s what President Barack Obama’s drawdown on the U.S. armed forces is all about – it’s part of the federal sequestration act that kicks in by computer in the face of lawmakers and bureaucratic leaders who are too timid to act on their own when it comes to spending less of everybody’s else’s money. That’s why there’s such a hue and cry to winnow down entitlements such as Medicare, Medicaid, various welfare programs and ObamaCare subsidies.
Now, here’s what’s really scary: Hall projects that if we continue to allow the federal government to go hog-wild and not start balancing the books, the nation will go broke. By 2039 – a mere 24 years from now, when a baby born today might be collecting his college masters degree – government debt as a percentage of GDP will hit 101 percent.
That’s when our young masters graduate will toss his or her mortar board into the air, will not pass “Go,” will not collect $200 and will immediately go to the end of the bread line behind the rest of us seeking charity handouts. Moreover, with our luck, that bread line likely will be operated by the Chinese, and they’ll be serving fish heads and rice.
The American people have sacrificed before. We can do it again. We just have to summon the will to do it. Unfortunately, as in the past, the willingness likely will surface only as the result of a major crisis.
The sky is falling. The sky IS DEFINITELY falling.