I've been thinking about our country's ever-growing national debt of more than $12 trillion, and have wondered just how our politicians planned to deal with it. The obvious would be to balance the budget year after year, while collecting additional revenue with which to gradually pay down the accumulated debt--> painful but simple, right? Have you done the math?
Based upon the size of your average pocket calculator, most of which don't allow enough digits to enter the trillion category, I doubt many of you have. But my iPhone has a calculator which, when turned horizontally, transforms itself from a simple basic layout of simple math into an advanced powerhouse of trigonometry and calculus.... and many more digits. Like our economy, my iPhone can just barely hold 12 trillion. It looks like this: 12,000,000,000,000. That's right, twelve zeros in a trillion.
The next step is to figure out how much our Congress thinks they can raise, on average year after year above a balanced budget, in the amount of surplus revenue to start paying down the debt. One must factor the likely boom years as well as the bust years, along with any wars, recessions, depressions, or big bull markets. Most might say $10 billion. I was feeling generous and chose $100 billion, which is an awful lot of money and therefore not very realistic considering the very nature of Washington politics and recent history. So we will look at both figures just for argument's sake.
First, if you take $12,000,000,000,000 (12 trillion) and pay it down in increments of $100,000,000,000 (100 billion) each and every year, it will take us 120 years to pay off the national debt!
But if you only pay an average of $10,000,000,000 (10 billion) year after year, which is much more realistic but still high, it will take 1,200 years to pay it off! And you know that if the budget is balanced and Congress manages to pay down the national debt by 50 Million, they'll be slapping themselves on the back and claiming the crisis is over. Not so.
Paying off the national debt requires long term commitments and sacrifice. And considering that long term thinking doesn't get anyone re-elected, only short term remedies on the path of least resistance do (IMHO), paying off the national debt will never come to pass.
What then will be done?
President Obama has signed a bill into law increasing the debt ceiling to just over $14 trillion, and by doing so has suggested that more borrowing is on the way. He has done this in spite of the "
pay-as-you-go" provision, which, of course, is nothing but a gimmick. Money has to be spent, but first borrowed, in order to boost our economy and get more tax revenue pouring in
(so the liberal theory goes...).
Just how high will we go before we either go belly-up or run out of things to bail-out? Considering the health care bill (which will be passed, unfortunately), future medicaid and medicare bail-outs, and the looming social security crisis (the biggest bail-out yet to come), I would estimate (wildly guess) that total national debt figure to be around $20,000,000,000,000 (20 trillion).
It is at the $20 trillion point that President Obama would suddenly jump aboard the constitutional amendment to balance the federal budget to save the nation from itself (I mean himself), and require the government to spend an amount each year no more than it takes in each year (a more draconian and much less gimmicky version of "pay-as-you-go"). The national debt would then be frozen at $20 trillion. And it would stay that way for many years, requiring a huge percentage of our annual tax revenue for interest payments each year that are unavoidable. It will stay that way until the GDP (gross domestic product) hopefully grows so large that the $20 trillion debt looks miniscule by comparison. It would most likely take several decades for this to happen, if at all, during which we would suffer through rampant inflation, a crashing dollar, high taxes, putting up with China bossing us around (they own $4 trillion of our debt in the form of bonds), and the rise of an Islamic super-state (Muslim nations joined together by force or "anschluss") which we would be powerless to stop (no money, no muscle).
There is only one problem with this plan. It won't work. It is all contingent on the hope that we will continue to be an economic powerhouse with an ever-increasing GDP, and that without muscle our nation would still be able to leverage in foreign affairs in order to protect our economic interests abroad. It would be contingent on China NOT getting fed up with us and cashing in the $4 trillion in bonds we sold them, or for that matter not attacking Taiwan during our condition of weakness. It would be based on interest rates not going up and causing the interest on the debt we pay each year to be unmanageable. To put it simply,...it would have to defy gravity. And it won't.
Now get off your butt and get involved.
Read more
HERE and especially
HERE.
