Op-ed views and opinions expressed are solely those of the author and do not necessarily represent the views of BizPac Review.
Today’s commentary is mostly for all our fine Millennial readers. Gen X, too.
Here’s my question for you: Do you have any idea about the political messes you will inherit? Do you know about the financial grave-hole that the American Political Class has dug for you?
As if you don’t have enough concerns already, here for you is the Mother of All Financial Concerns: You live in The United States of Debt.
Over the past few decades, too many federal politicians and government bureaucrats have been more concerned about winning their next election, seeking political power or getting their next political promotion, than about exercising fiscal discipline. They have created a national financial black hole, by borrowing outrageous amounts of money and spending unprecedented amounts of taxpayer money that will not produce much economic gain or healthy growth for the nation. Future generations are stuck with paying back both the piled-up debt along with paying the nation’s normal bills.
U.S. national debt is almost $20 trillion. To provide a sense of how immense this is, $20 trillion in $100-dollar bills would fill an entire football field, goal post to goal post, in stacks 140 feet high. And, government spending still adds more to the national debt every year—the U.S. debt increases by $2.4 billion each day!
But a greater worry than a $20 trillion debt is: what will happen when interest rates head back up? Well, Heritage Foundation chief economist Stephen Moore says, “This is the economic equivalent of the nuclear option.” Every percentage point increase in interest rates by the Federal Reserve will cause another $1 trillion cost over ten years. A three-percentage-point increase in rates, which is a return to normalcy, means another $5 trillion added to the federal debt.
And it’s not just the national debt that is owed. Social Security, Medicare, federal pensions, and other unfunded federal government liabilities now exceed $100 trillion. State and local debt is another $3 trillion. That puts the total owed at about $123 trillion, or six football fields of money! The total net worth of our entire U.S. population is only about $75 trillion. Where will the money come from? Well, just eliminating $20 trillion of the debt would require about a permanent 70% increase in all federal taxes, plus cutting all federal purchases and Social Security/Medicare benefits by 40%. There goes your financial future and your children’s future, down the drain.
The really slick politicians will tell you, “We can get it under control. There’s no need to pay off the national debt, because we owe it to ourselves.” But this is probably the biggest lie of all, because 1) the current debt now exceeds the entire national economy, 2) over 1/3 of the national debt is owed to foreign investors like China and India, 3) another 13% is owed to state and local governments and 4) 15% is owed to U.S. private investors. A failure to pay the debt would wreck America’s global credibility and our ability to borrow any more money.
Further, the rest of the debt is not something we owe to ourselves. It’s something we owe to future recipients who are entitled to Social Security and Medicare, which must be paid to those people because they have paid money into the system all their lives. And some of them will be you and your children, as well as generations of people not yet born.
The fault is a failure of leadership at the national level. Most of the blame goes to leftist politicians who used Other People’s Money to pile on social welfare programs, entitlement giveaways, and “free stuff”. While the nation has been in the red in all but four of the last 40 years, the serious culprits are more recent: the national debt doubled during Obama’s eight years, from $10.4 trillion to nearly $20 trillion. Be careful who you vote for.
This is a bubble that, when it bursts, will be one of the more destructive events in human history. And Millennials and Gen Xers might be there as front-line victims to see it happen.
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