We have managed to kick the can so far down the road that we have lost sight of the can. Remember July of 2011 when there was an uproar over the National Debt and Congress had to raise the statutory limit of $14.3 trillion dollars for the United States Government to keep operating? Well, somehow through political maneuvering, shifting numbers, and smoke and mirrors, our National Debt now stands at $16,742,743,945,596.24 and still going up by $2.5 billion dollars per day. Each citizen in the United States now owes $52,959.34 against this $16.8 trillion dollars.
Washington and the President continue the game of promises, promises, and more promises. The Federal budget for 2014 submitted by President Obama has a revenue of $3.03 trillion dollars while spending stands at $3.78 trillion. Maybe, this is what Washington considers “balanced.” The problem is that the government has now pushed the balancing of revenue with spending down the road 10 years Not only will the President not be in office 10 years from now, but many of the Senators and legislators will not be in office either. But you can bet that many American taxpayers will still be around when the “bill comes due.”
What the government doesn’t tell us is that during the next 10 years, the interest on the National Debt will double. For 2012, the interest alone was $359,796,008,919.49. Projected for 2013, the interest will go up to roughly $380 billion dollars. For this $380 billion dollars, the American taxpayer gets nothing. Nothing my friend, nothing! This is somewhat close to a person with an outstanding MasterCard debt planning on paying his or her balance off in 10 years but not considering how much interest they will pay over that 10 year period.
The second and most troubling aspect of a rising National Debt is the interest rates could change dramatically over the next 24 months. The glut of cheap money has allowed the government to keep its annual deficits much smaller that it had expected, holding down the growth of the federal debt. So as our enlightened leaders plan to balance the federal budget within 10 years, forces are at work that will drive interest rates up. If rates increase just 1% percentage point, the deficit will grow by $13 billion dollars. If the same higher trajectory holds over ten years, the additional interest payments would approach $1 trillion dollars.
As I pointed out in an article I wrote in May of 2011, if the United States does not address its growing debt, we will eventually be in for a period of depression of unbelievable magnitude. We have lived for years on money that we did not have. Our whole debt structure is predicated upon shifting forward a debt that was well beyond our means of ever paying off. Our future standard of living is in jeopardy. We have lived so long on borrowed money that we have lost the ability to balance our budget matching revenue with spending. I guess the motto on our coins is now more appropriate than ever – “In God we trust.”