AMAC Magazine Exclusive: America’s Debt Calamity

The nation’s debt is now an existential threat, totaling $34 trillion, with an additional $20 trillion expected by 2034. Annual interest is a trillion dollars – more than defense spending, 200 times more than border spending. By 2034, our debt will be 116 percent of GDP. No nation has ever carried that kind of government-driven debt and escaped calamity – default, hyperinflation, internal instability. How then do we avoid those calamities – and get safely home? 

Looked at differently, our nation’s current federal debt per capita—that is, the amount resting on each citizen’s shoulders, and after each on their children’s, and on theirs—in 2022 was $92,000. That number continues to grow each year. 

How far we have drifted from Thomas Jefferson’s warning, “never spend your money before you have earned it,” and even Alexander Hamilton’s condition for debt, that it not be “excessive.”

To this, add state and local debt, now over $3 trillion, with states like California carrying half a trillion and New York, $380 billion, much of that potentially shifting to the federal government.

Finally, consider that 99 percent of that debt—federal and state overspending—is carried by the American public and foreign nations. Even before crippling new taxes, Americans wrestle with high personal debt due to demographic shifts, inflation, and high interest, which rises with inflation.

The average working American now carries a personal debt of over $103,000, with mortgages, auto loans, credit cards, and other instruments. Overloaded taxpayers have little ability to shoulder more taxes, even as federal leaders keep borrowing and spending what is not theirs, with no limits.

As troublesome as sky-high federal, state, and personal debt is, the government’s reflex to raise personal taxes is no answer. Nor is overtaxing the 99 percent of small businesses, since those taxes are passed through to consumers, if the businesses do not go under. Higher taxes, at a time of staggering federal, state, and personal debt, cannot be the solution.

Notably, much of our debt is also held by foreigners. This raises other issues—like national security. If the debts are suddenly “called,” America has to pay up, or the nation’s credit, currency, trade, and supply chains, from semiconductors to pharmaceuticals, will vanish.

It’s not a good position to be in, but that is where we are. What does that mean? It means a foreign national—for example, Communist China, with $769 billion in US debt—could leverage concessions from a weak US leader; they have us over a barrel.

Likewise, Brazil holds $219 billion of US debt, Saudi Arabia $117 billion, and so it goes, with $8 trillion in US debt now held by foreign countries. Beyond economic instability and the political instability that presages, the debt issue is now one of national security. 

Most frustrating, this excessive $34 trillion federal debt was just a trillion dollars under President Ronald Reagan, who used debt to collapse the Soviet Union and seed 18 million new jobs.

Under President Obama, federal debt exploded by 74 percent. Under Biden, the nation has added a stunning $6.4 trillion in debt—over three years. The CBO notes that in January 2021, the projected ten-year outlays were $61 trillion; they are now $80 trillion and climbing. Biden’s overspending, overregulation, and tax hikes are not sustainable.

Against that grim backdrop—noting that nations in similar debt have not made it home, like Germany’s Weimar Republic and countless Third-World economies—what is to be done?

This question is especially poignant now, since free markets seeking sustained growth need predictability—predictable pricing for capital and labor, a sound currency, and, on the federal side, programs that hold up, like Social Security, Medicare, and defense recapitalization.

Without such stability—which massive debt undermines—the pillars of our free economy and free republic will falter. Without predictability, there is no economic stability. Without economic stability, no investment, no new jobs, income, consumption, reinvestment, or sense of security.

If the economy shakes too much, confidence is lost, and the dominos fall. They fall first in the business community—lending, investing, hiring, and spending dry up, even without rogue judges hammering high-end real estate investors for political reasons—and then the other shoe drops.

The other shoe? Yes, when a national economy goes soft, so soft it folds, average citizens suffer. Political stability—the sense that things will work out, that tomorrow will be as good as today or better—slips. Fear sets in, and with fear a vicious cycle, one harder and harder to correct.

When this happens, societies start to unravel, with mutual trust and interdependence devolving into mutual recrimination, property crime, survivalism, political violence, or worse—ideologies that promise secular salvation, utopianism, anything to right the sinking ship. Look to the Weimar Republic, post-WWII Hungary, mid-2000s Zimbabwe, Bolshevik Russia, or Maoist China.

To those who say, “Never here,” “Look the other way,” “Forget this debt worry,” or “Make hay while the sun shines,” consider Hamilton’s worry about “excessive” debt, not about low debt.

Out-of-control debt begets more debt, eroding all the good that came before, no matter how grand, inspired, or prosperous. It undermines not just the free economy but free society—all freedoms.

Jefferson, just like us, knew a solemn truth: “To preserve… independence, we must not let our rulers load us with perpetual debt; we must make our election…between economy and liberty or profusion and servitude.” The fastest way to lose all we have is to spend what we do not have.

So, what is the answer? With stakes this high, what is the solution? Simple: Elect responsible leaders, those who understand free markets and respect freedom’s power and fragility, who will show the courage to cut federal spending and break this debilitating debt cycle, who care more about America—its ideals, you, and me—than themselves. That is how we escape calamity and get home.

The use of “See” looked like Bluebook; it was not standard for this kind of publication. Journalism usually just puts links in parentheses.

Robert Charles is a former Assistant Secretary of State under Colin Powell, former Reagan and Bush 41 White House staffer, attorney, and naval intelligence officer (USNR). He wrote “Narcotics and Terrorism” (2003), “Eagles and Evergreens” (2018), and is National Spokesman for AMAC.