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A Nation in Hock

Posted on Wednesday, March 15, 2023
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by AMAC, Robert B. Charles
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36 Comments

In April 1985 – and I encourage you to listen – President Reagan gave a powerful speech, encouraging America to get control of federal debt, spending, and deficits. He led a bipartisan effort – and it worked. Today, a strange wind blows – federal debt is not one trillion, as in Reagan’s day, but $31 trillion. Federal spending is wild, deficits endless. We are a nation in hock – but there is hope.

Do not look to President Biden for leadership – you will not find it. Do not look to Democrats in the Senate, or half of in either chamber, as they do not appreciate how dangerous debt, overspending, and deficits are to the future.

Still, there is a new wind blowing, shivering the mainsail, clanking the mast, and getting attention at last. Oddly, those who pay attention to the relationship between debt, spending, deficits, inflation, interest, jobs, growth, and what it takes to sustain the US economy, are speaking – and being heard.

On the Republican side, perhaps half a dozen Republican Senators are fiscally restrained, including Rand Paul, Mike Lee, Marsha Blackburn, Ron Johnson, Rick Scott, Ted Cruz and a few others. Too many shrug, imagining – to paraphrase Churchill – the “consequence crocodile” will eat them last.

On the Democrat side, irresponsibility is higher, with what you might call compounding disinterest in the connection between overspending, debt, and economic collapse. Senators Manchin and Sinema have, although not consistently, spoken up.

On the House side, as debt and spending ballooned, Democrats chose to ignore the warnings, pretend nothing mattered, spend like crazy, whistle by the graveyard. The leading offender – not missed – was Speaker Pelosi, who advocated mass spending, mass taxes, demagoguery.

Sadly, the once influential, fiscally responsible “Blue Dog Democrats,” have nearly vanished. With 64 members in 2008, they have seven. The idea of “centrist” Democrats is all but dead.

Still, reality is hard to ignore. Beyond the debt ceiling, a major fork in the road lies ahead. Choices this year and beyond will decide if America remains the world’s dominant reserve currency, or cedes that role to China; whether inflation will be contained or go “hyper,” wiping out savings; whether responsible action will be taken to cut spending – or not.

We are at the tipping point. Most economists, those willing to speak truth to politics, know this. We are at a point where interest on the federal debt will shortly consume federal revenue, crimping Social Security, Medicare, Medicaid, and discretionary spending.

Arguing about how we got here is just wasted breath, as all hands are unclean. The time has come to stop admiring the problem, talk solutions. This is where, surprisingly, there is hope.

As the 2024 election season sneaks on us, leading voices are talking debt. Republican Nikki Haley, running for the nation’s highest office, is talking about Reagan’s message, showing fiscal discipline, getting debt and spending down, responsibility up – as are Mike Pompeo, Ron DeSantis, at times President Trump. Interestingly, so is Democrat Joe Manchin.

Said Manchin last week: “President Washington warned of the dangers of putting the will of a political party ahead of the will of the nation. He warned against the accumulation of debt…Yet, here we are today, watching party politics and out of control spending threaten the very foundation of our great nation.”

“This is exactly what George Washington was talking about. If you love your children, if you love this country, you’ll stop the madness and start acting reasonably and responsibly to get our government’s financial house in order. The partisan politics can wait. But the looming debt crisis cannot.”

Manchin was blunt: “In 2013, federal spending was less than $3.5 trillion. Today, it’s more than $6.2 trillion. In ten short years, that’s an 80 percent increase” or “over $94,000 for every man, woman and child” in America. Right he is, and well served his party would be to listen. 

He zeroed on President Biden: “We need to pass the budget on time. The President’s already over a month behind schedule. His budget was due on February 6th.” Right again.

So this may be the moment, perhaps the last clear moment, when men and women of sound mind, good heart, and love of nation might unite to get the federal debt monster under control. 

Republicans speaking out on this are right, and so is Manchin. This is not academic, not pretend, not political, not partisan, and not something we can put off. Needed is a real plan to contain and reduce the debt, deeply cut federal spending, reduce taxes, interest rates, regulations, and drag on the economy, to encourage growth and then use that growth to reduce debt. If not now, when?

That was Reagan’s basic point when the nation labored with $1 trillion in debt. It must be everyone’s focus as we labor under $31 trillion in debt. We are a nation in hock. To get out of hock, assure the future, keep the currency strong, investment, and growth stable, we must act. That wind you hear blowing is Reagan’s reminder to us all. This is on us, no one else.

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.

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johnh
johnh
11 months ago

Both Democrats & Republicans are responsible for this increasing debt. Debt increased $1 Trillion per ye for 12-years straight thru Obama & Trump terms. Last balanced budget was when Bill Clinton was in office.

GTPatriot
GTPatriot
11 months ago

I appreciate and respect the balanced budget concept but our nation, sadly, does not have the
determination to get it done. We don’t. DC will never require a balanced budget and we, the
voters, will always allow DC to deficit spend. We as voters either ( sadly): 1. don’t care
or 2. Are not willing to demand a change. A balanced budget is nothing but a hot air, blowhard,
concept. Yes, we need it but are not willing to demand it. And DC knows it.

NewDay
NewDay
11 months ago

Politicians for many, many years have discovered that giving free stuff works in getting votes. They don’t have to work hard and do what’s right, they just promise the moon and smile. Human nature can’t resist free stuff even when they are paying for it. Bombs won’t kill us but laziness and greed will.

John Bredfeldt
John Bredfeldt
11 months ago

As with President Reagan in 1984, I began pounding the Republican Senate to work on lowering the annual federal budget deficit. But, to no avail, as annual budget deficits of around $200 billion each year began to arise each year from the early 1980s on. The democrats blamed the deficits on the Reagan Defense Department annual increases. In April of 1987 as my paper for the National Defense University Senior Service School as a newly promoted Air Force Lt Col, I produced a paper that translated the entire federal actual annual costs from Fiscal Year 1960 to Fiscal Year 1985 (the last year of actual data available) to 1985 dollars in order to determine the amount of annual expenditures due to program changes by washing inflation from the dollars spent. This provided a real growth analysis in each major program, meaning the dollar growth from year to year was due to program growth appropriated by the Congress. I had an idea that much of the annual federal budget deficits arose in what were in 1987 called, “welfare programs”. These welfare programs were all the programs that were direct payments to people or “in kind” payments people for such items as federal rent free or low rent housing or school lunch programs for K-12 children in poverty. I expected to see a bit of annual increases in “welfare” programs, but the annual expenditure increases were enormous when compared to annual defense spending. One of the major causes of this phenomenon was the creation of the democratic Congress as requested by President Lyndon Johnson of the creation of Medicare and Medicaid and a general expansion of all existing welfare programs as part of LBJ’s War on Poverty. Today, the title of these programs are payments to individuals with my definition of payments to all other government programs including the annual interest on the debt, I call the operations side of the federal government. For Fiscal Year (FY) 2020 the payments to individuals were $4.218 trillion, in FY 2021 it were $4.631 trillion, and in FY 2022 were $4.527 trillion all in current year dollars.. The operations expenses in FY 2020 were 2.332 trillion, in FY 2021 were 2.192 trillion, and in 2022 were 1.745 trillion all in current year dollars. Gross federal debt at the end of FY 2020 was 26.902 trillion, at the end of FY 2021 was 28.385 trillion, and at the end of FY 2022 was 30.839 trillion all in current year dollars. One final thought, as the current interest rates gradually catch up with just our most current debt of $30.839 trillion, the annual interest at a mere 5% will be slightly over $1.500 trillion each year. The total interest paid by the U. S. in FY 2022 was $543.6 billion.

It is the Congress of the United States who appropriates the money for expenditure by all federal government agencies. It is only the Congress who can bring our annual federal spending back in line with some semblance of reality.

John Bredfeldt, MA economics, Phd Public Administration and Economic Public Policy

Chuck Gades
Chuck Gades
11 months ago

Did I miss the “HOPE” point? Manchin telling Biden he was a month overdue? Joe probably called his dental hygienist. Reagan’s eulogy is not much help either. To wit:200,000 more govt workers; overall govt spending increased more than Carter’s; medicare and S.S. nearly doubled; farm programs, foreign aid, federal entitlements all at least doubled. Lower taxes increased govt couffers but he also spent it.
I’m sorry but America is hooked on freebee socialism and its going to take more than hope to change that.

Casey C Matt
Casey C Matt
11 months ago

Time to stop worrying. Its over. This country has tired the rest of the world with its never ending bullying.America can no longer expect the countries it deals with to merely submit to the often onerous demands of this country. Most of the world has grown tired of the literal genocide the US uses as means of diplomacy. America is now a laughing stock of much of the world and is feared by only the most weak nations.
There are now alternatives. Powerful nation states whose name is backed by something other than the false promise of worthless paper. Countries that would never allow the entirety of their manufacturing base to merely dissolve from the effects of taxation and regulatory burdens.
The United States is a bloated old cow swirling down the toilet bowl of history. But then someone flushed as far back as 1861 so why is anyone surprised?

phoenix
phoenix
11 months ago

Best thing to do is get your wealth out of the USD. and into tangibles. You can bring it back once sanity and a new (eventually) commodity cased currency is created.

The country was screwed in 1913 with the creation of the FED our fate was written then and they ruined in very little time generations of Americans built. They need to hang for what they have done.

The USD as it was conceived by our founding fathers died in 1913 for the people with the creation of the FED
Screwed buy FDR when he tool thier money (gold)
Screwed again when in 64 when silver was taken from our money
Screwed the world in 1971 (closed the gold window when Nixon got his bluff called.)
Screwed us again when the sold off all our silver. (we used to have more than anyone)
totally went on life support in 2008 (huge bailouts and the fed buying our US bonds)
We’ve been on borrowed time since
ZIRP for a decade.

Time is pretty much up. There is something like 600 TRILLION in derivatives out there no one is sure and as we can see counter party risk is off the charts gobally.

This is no situation for the “little guy”, who is just the perfect size to be big enough to fail to be in.

Sooner or later something will pop up the cannot paper over.

RUN. Take your wealth that you have worked for sacrificed for and earned get out of the USD and run.
You can always come back, but to do that you have to have something to come back with.

This is where we are.

Morbious
Morbious
11 months ago

There are zero dem leaders on board with this. Manchin and Sinema caved when their price was met. The demon party knows it can and will blame any collapse, depression or recession on the Rs. Dem robot voters will go along. I dont see the footing on the narrow path to fiscal reform.

joe mchugh
joe mchugh
11 months ago

31-trillion dollars of national debt? No big deal.
This is the thing, the Congress critters are undoubtedly thinking about a way to spend borrowed money without shocking the economy into oblivion.

Let’s say that our national debt climbs to 62-trillion dollars in a decade. Will that change the world as we know it? Nope. As long as the people continue to have full faith and credit in the dollar, our “trusted” representatives in Washington, D.C. will be able to play fast and loose with our money system.

The trick that Congress already knows about would be to de link the interest paid on Treasury Notes and Government Savings Bonds, from ALL other interest rates. This could be accomplished by passing a law. Repercussions, like resistance of the buyers for the government notes and bonds? None. The reason is that many countries already apply NEGATIVE interest rates on their government securities.

Here is the action that I wouldn’t put past the Congress critters. By decreasing the interest rate to
.0001% the national debt servicing would be minuscule. More debt resulting in serious interest liability? No problem, just cut the .0001% interest rate in half to .00005%, and so on. The foreign buyers will still flock to American government securities because their governments charge a negative 5.0% interest rate on their government securities. Buy French government bonds for 10,000.00 euros and get 9.000.00 euros back after ten years. The choice is a no brainer. The American national debt could climb and climb with no consequence beyond the hand wringing of those who have been warning us about the Pied Piper for decades.

Oh, and about that full faith and credit that the American people afford the dollar. What can we, as a people, do about finding an alternative? If you are thinking about buying gold coins today you could purchase a one ounce coin for just over $2,000.00. This might prove to be a very low price after another ten years of deficit spending by the Congress.

Stephen Russell
Stephen Russell
11 months ago

Been in debt since Joes 2021 budget to date

Ann S
Ann S
11 months ago

Those that are fighting us are the WEF and the BIZ elite that run every country’s economy.
Until Americans are made aware of this the dems will stay in
power and keep on spending till America is a third world communist country and Xi sits in the White House.
Unrealistic? Did you ever expect a virus being distributed over the whole world and create a fake lockdown and a fake vaccin that is still killing people left and right.
Alas this reality.

Jeri
Jeri
11 months ago

The more the government gets into people’s wallets, purses and bank accounts the more attentive the public becomes including members of Congress, not all, but enough.

Rich
Rich
11 months ago

As long as democrats continue to live in la-la land, nothing will change. The good news is however, even the democrat “regulars” are actually waking up. When the bank account is affected, many people start to realize there just might be a problem. If the socialist/democrats continue down this road, the democrat party, that was in times past, just might cease to exist.

Letts Brandon
Letts Brandon
11 months ago

The Great Depression of the ’30s was a planed event just like this one will be to give government more control.

Michael J
Michael J
11 months ago

While the good ol days were just that, I don’t hold much hope for this future. We don’t have a revenue problem, we have a spending one. Both sides writing checks with your grandchildren and great grandchildren’s check book and printing inflationary insult for any shortfalls will be our ultimate demise. Two banks have failed, how many more are likely to follow?

William Marcy
William Marcy
11 months ago

Republicans have got to prepare the ground before we propose anything on Social Security. We need to use the talking point that Clinton developed to an art. It has been very beneficial to the them for years. I’m NOT recommending we do the lying part. 

Social Security is estimated to be insolvent within about ten years. Fact. Then there will be an automatic across the board reduction of 20-25 % in monthly payments. Fact. 

If any Republican says anything about dealing with these facts, they will be pilloried by the Democrats with persistent massive media propaganda. Fact.

What to do? May I suggest a talking point which is also a fact? It must be repeated by as many Republicans as possible with no adornment. Prepare the ground. It is, in fact, the Democrats’ current plan to do nothing which will lead to an over 20% cut.

Talking point:
The Democrats plan to cut Social Security by over 20%…. We must resist the temptation to elaborate. Nothing but the talking point. Keep it simple. That’s their talking point technique, and we know it works.

Rob citizenship
Rob citizenship
11 months ago

In order to deal with the debt situation, understanding it will be aided through knowledge of history, and understanding the application of responsibility . Men and women of good character in positions of influence with the economy will advocate the benefits of responsibility.
This is a very good article.
Remembering what someone who had true leadership qualities , and was a true American patriot like Ronald Reagan had to say on the debt situation is a positive approach to proceeding on the right course.
.

David Millikan
David Millikan
11 months ago

Excellent article.
And now biden wants to put Americans more in Debt by messing with our Water by INCREASING COST of having Water from MORE REGULATIONS.
Don’t forget biden Bailing out their democrats ATM bank that FAILED because of Loser WOKE garbage and Obama with HILLDOG Clinton on their boards with Tax Payers Money.

PaulE
PaulE
11 months ago

With the national debt scheduled to balloon to $50 trillion dollars in 10 years under the current spending regime Biden, the Democrats and yes, some Senate sell-outs led by Mitch McConnell signed onto, we must act now. Every single day we defer action is another nail in the coffin of the United States economy and the Americans who rely on it.

bert33
bert33
11 months ago

Devaluation follows inflation sixty bucks for a cheeseburger no one is stopping the politicians from their doings so we will pay astronomical prices for our gooderservices in the future but they dont care as long as they get what they want

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