July 23, 2019

Sadly, My Predictions are Coming True

I have written dozens of articles over the past few years on the amount of debt we, as Americans, are accumulating in Washington called the “National Debt.” And I am sure that many of my readers laughed and said “why worry about it, we will never pay it off anyway.” But there is something magical happening now in Washington. Twenty trillion dollars has kind of a ring to it besides having 12 zeros after the number 20 — $20,557,279,072,690 — as of November 29, 2017. The annual interest as of 9/30/2017 was $458,542,287,311. For most of us at some point in our life, we have had credit card debt. What makes the credit card debt so difficult to pay off is the high interest being charged to carry the debt each month. Our beloved Senators and Congressmen and women seem to have ignored this interest charge until now. Suddenly it has become a number to be reckoned with in our annual budget.

Picture a young couple making say a combined family income of $100,000 a year. Not only have they overspent but their combined mortgage, taxes, utilities, food, tuition, auto payments exceed their earnings. They carry a debt of over say $127,000 a year. But what makes their situation even worse is their mortgage and auto debt is $102,000 a year which exceeds their annual earnings by $2,000. Short of selling their house and moving into a smaller residence and/or selling their automobiles and driving less expensive cars, there is no way they can bring just their housing and transportation in line with what they make. In other words, they are in a fiscal hole leading to a catastrophic ending. Our situation in Washington makes this looks like nothing. We have a continuing annual deficit added to an accumulated debt with a rising interest rate.

Numerous times I have written about the costs being incurred by Washington that are fixed like Social Security, Medicare, and Medicaid. These costs now comprise 67% of the spending by Congress. The solution is to cut these critical items or cut spending elsewhere or raise taxes or do both.

For some reason, nobody cared until we reached this point in our fiscal life as a country. I heard a Congressman state the other day that this bill will drive our deficit up to $30 trillion dollars by some date down the road like 2027 or 10 years from now. A light bulb has gone on in the head of some of these liberal spenders. One Senator said that “if we don’t do something about our deficit, in a very few years, 50% of every dollar we receive in taxes will be used to pay the interest on the debt.” I can’t believe that I am finally hearing this. The stark realization that we have reached the limits of our fiscal credit card!

Working without a fixed budget, our Congress uses spending authorizations to cover short-term periods which we are facing now to keep the offices of the government open. Congress has until midnight on December 8, 2017 to pass a spending bill or the federal government will run out of money. What makes this all so ludicrous is that first, the annual government spending each year is short approximately $500,000,000,000 (that’s billion!) and secondly, Congress is considering a tax bill that will add $1.5 trillion dollars to our annual deficit! Only in Washington could something like this happen! I firmly believe that most legislators realize the gravity of the situation but hope they will not be in office when the debt situation explodes.

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Written by
Donald Wittmer

DONALD WITTMER is a retired business executive who held key roles in the automotive and banking sectors. For a time, he also served as a Fiscal Agency Manager for the Detroit branch of the Federal Reserve Bank of Chicago. He received his undergraduate degree from Cincinnati's Xavier University, an M.A. in business management from Central Michigan University, and earned certification in bank operations from the School of Banking at the University of Wisconsin-Madison. A husband, father, and grandfather, he teaches part-time at the Kent Place School for Girls in Summit, New Jersey.

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Written by Donald Wittmer