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A Road Map to Address the National Debt Crisis

Posted on Thursday, October 21, 2021
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The United States will soon pass a foreboding milestone: $29 trillion in national debt. In 2021, the federal debt alone is projected to be 102% of the country’s GDP. Even more concerningly, that figure does not include the $1.9 trillion “American Rescue Plan” that President Biden signed into law earlier this year, nor the $1.2 trillion so-called “bipartisan infrastructure bill” or the $3.5 trillion reconciliation package currently being debated in Congress. The disastrous economic consequences of such runaway spending are clear, and Americans are already starting to feel the pain with runaway inflation and worker shortages. But despite how bleak the situation may currently seem, history suggests that there is a path forward that can lead the country out of this crisis.

The scope of the country’s current debt problem is truly historic. The only two times the debt-to-GDP ratio has exceeded its current level were in 1945 and 1946 (103.9% and 106.1% respectively) at the height of government spending as a result of World War II. Typically, a country incurs a large amount of debt during war time and works to pay it off during peace time.

But now we find ourselves facing historic debt without being involved in any major wars. Moreover, far from a tool to ensure our national security, the debt itself has become a major liability for our national security. As the amount of debt increases, so too does the percentage of the budget required to pay down the interest on that debt.

For example, every dollar spent on interest is one dollar not spent on military readiness. During the recent crisis over raising the debt ceiling, multiple former Secretaries of Defense signed a letter warning Congress that unless the ceiling was raised, there would be “catastrophic consequences for the Defense Department…and our position of leadership in the world.” What’s more, our chief adversary, China, owns more of the national debt than any other single country except Japan – a terrifying prospect as great power competition increasingly becomes more based around economic pressure rather than military intervention. And as situations in places like Greece and South Africa have shown in recent years, economic turmoil – which unmanageable debt usually creates – has a tendency to threaten domestic tranquility.

Fiscal mismanagement by politicians also needlessly threatens vital domestic programs. Prior to the pandemic, the U.S. Treasury issued a report in 2019 that was already warning that both Medicare and Social Security would go “bankrupt” (meaning they would pay less to beneficiaries than they promised) much earlier than previous estimates. Social Security is predicted to be insolvent by 2035, and Medicare by 2026.

Once again, this was the status quo even before COVID-19 and all the unprecedented spending it brought about. Today, the situation is even worse. Add to that the reality of rising inflation, supply chain issues, and a new CBO estimate that the annual economic growth rate is expected to fall to 1.8% over the next three decades after staying around 3.1% since 1951, and the outlook is not good.

So how can this be solved? At the moment, the radical Democrats in Washington are only interested in raising taxes and spending vast amounts of money. Democrats dubiously claim that their proposed tax increases would only target the very wealthy. But even if that were true, and most conventional wisdom suggests it’s not, their new taxes on businesses would further hamper economic growth and force companies to cut jobs, doing nothing to help an economy still struggling to recover from the pandemic-induced recession.

There is a better way – and our own legislative history proves that it can work. It was pioneered by Newt Gingrich and the “Contract with America” Republican Congress what won majority control of the U.S. House of Representatives in 1994. 

When Newt Gingrich became the Speaker of the House in January 1995, the Congressional Budget Office (CBO) was predicting that by 2004, our national debt would equal 56.1% of GDP, and we were on track to accumulate nearly $3 trillion more debt over that same decade. The debt was expected to stay around 51-52% of GDP over the next 3-4 years, rising to 56.1% in ten years.

However, when Gingrich left office in January 1999 (just five years later), the CBO projected $2.3 trillion in surpluses over the next decade—a $5 trillion turnaround, what would be the equivalent of a $9.6 trillion turnaround in today’s dollars.

Likewise, by the end of Gingrich’s tenure, the ten-year CBO outlook was that the national debt would only be 12.2% of GDP, a staggering 80% improvement from where that same outlook had been when he took the Speaker’s gavel. Everyone expected the debt would be well over 50% of GDP by 1999, but under Gingrich’s leadership it had fallen to 39.4%.

Gingrich and Congressional Republicans accomplished this astonishing turnaround through simple pro-growth, fiscally prudent economic policies – many of the very same policies that brought about the economic resurgence of the Reagan and Trump years. Low taxes, controlled spending, and less government intervention in business resulted in 11 million new jobs, an unemployment rate that fell from 5.6% to 4.2%, and four balanced budgets in a row for the first time since the early 1950’s.

Thanks to the policies of that Republican Congress, the country also achieved bipartisan welfare reform, which decreased child poverty by 25%, and nearly two thirds of those who left welfare were gainfully employed. In addition, these policies helped further spur entrepreneurship and investment. Venture capital spending grew by 500% in just three years, and the manufacturing sector grew to nearly 17.5 million jobs. Instead of adding to our national debt, we paid off $400 billion of it.

The kicker? Gingrich and Congressional Republicans accomplished all of this with a Democrat in the White House. By negotiating tough deals with the Clinton administration, Gingrich was able to bring the country back from the brink of financial disaster. President Clinton is today largely remembered fondly by fiscal conservatives for declaring that “the era of big government is over” and thereafter presiding over four balanced budgets in a row and a growing economy. But it was Gingrich and the Contract with America Congress that created and passed the policies that catalyzed the country’s turnaround from a looming debt crisis.

It is true that the current fiscal situation in the United States is horrendous. However, with the midterm elections just over a year away, history suggests that there is reason for optimism. As in 1994, the American people once again have the opportunity to recognize the dangerous path being tread by Congressional Democrats and send a new Republican majority to Congress to make it right.

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PaulE
PaulE
2 years ago

The author writes “But now we find ourselves facing historic debt without being involved in any major wars.” I would disagree with that basic premise of that statement. We are indeed involved in a war and have been for decades to one degree or another. A war for the future of what this country will ultimately become over time.

We currently face an opposition that is h*ll bent on completing the transformation of this country from its original representative republic form to one of a so-called socialist democracy. Institutions are being systematically undermined on a daily basis. History is being re-written based on unsupported political dogma. Indoctrination of the masses is being performed openly in our public education system and basic human rights and freedoms are being undermined at every turn in the name of so-called “social and economic justice”. A key phrase that has been utilized by all socialist regimes around the world over the last century to lull the masses into adopting socialism.

Legislation is actively being promoted by this administration and Congress, that will fundamentally alter all aspects what “living in the United States” means. That is what both the so-called Infrastructure Bill and its companion Reconciliation Bill are all about. Daily life will fundamentally change for the worse for almost all Americans should this legislation become law. Which is why the Democrat Party, America’s Socialist Party, are feverishly working to get both enacted well before the mid terms. Thus rendering the mid terms and all subsequent elections largely a moot exercise.

So I would argue that yes, we are indeed involved in a war. We’re just not standing on a battle field, openly shooting at each other. War can take many forms aside from the limited view of two sides simply facing off against each other on a battle field and openly shooting at each other. We’re in a war for what many might describe as the heart and soul of what the American experiment means going forward. Do we end up preserving some semblance of the representative republic we originally were or do we simply throw it all away and become another bankrupt socialist democracy where everyone exists only to serve the State?

BAE
BAE
2 years ago

Joe Biden is doing a terrible job for the American people. He has no knowledge of finances, since he was on the take from the tax payers for over 45 years. He’s self-serving and a dope!

Chris
Chris
2 years ago

The Demoncrats have an alternative solution — inflate the debt away. By the time the bonds come due they’ll be worth a small fraction of their original value. Problem solved! Of course that destroys savers and ruins everything else, but hey, they got to spend the money they wanted to spend.

Stephen Russell
Stephen Russell
2 years ago

Map to Depression 2 ??

heil biden
heil biden
2 years ago

cant pick up a history book the a…..holes are banning them

Myrna
Myrna
2 years ago

2022 election could save the nation. I am praying for it.

Jesse Tiede
Jesse Tiede
2 years ago

Mid-term optimism? Well, maybe, if we still had Newt Gingrich and Trump was President! But, really, how likely is THAT to happen? There are just too many with the “Gimee! Gimee!” attitude and don’t forget all the “Pay my student loans! Free College! Livable Wage For Everyone With No Work!”, and those who think Communism and Socialism are the way to go, even though those systems consistently fail, everywhere they are applied! God Help the USA! Please…

Paul W
Paul W
2 years ago

Until the America hating, power craving communists, as well as their RINO abettors, are replaced in DC, a fiscal road map is about as useful to those goons as an actual road map is to a brain-damaged bullfrog. To return to fiscal responsibility in Congress, nearly every one of those idiots must go (with very, very few exceptions)…as well as the vast majority of bureaucrats and their bloated, redundant and completely unnecessary bureaucracies. Highly doubtful that’ll ever happen. Other than the tax cuts, pretty much every positive fiscal/regulatory achievement during Trump’s presidency was solely due to DJT…on his own. “GO BRANDON!”

Steven
Steven
2 years ago

The problem is the American people have a very short memory. Everytime the Dems are voted out, their put back in. Each time they get back in, they do more damage to the country.

This time around it’s different. Let’s hope all the dimwits that keep putting them back in office wake up. Because IF there is a next time…it will definitely be our last.

Also any Republican that is elected to office in 2022 and beyond, needs to grow a spine. After reversing the damage that’s been done they need to go after the people responsible, and have them put away for Treason. Every last one of them!

anna hubert
anna hubert
2 years ago

solution is simplerer than we think cut the unnecessary spending,cut down unnecessary beurocracy dismantle UN and plug the sinkhole called the aid to developing nations who started to develop the same time I did and are still at the stage of infancy and all domestic programs that promote dependency and the list goes on .I know it’s a fantasy but that is the only solution unfortunately there are not men in DC not even one

Gerald G.
Gerald G.
2 years ago

I think term limits and deficit spending go hand and hand. As many people in congress have said
to much power in one hand upsets the balance of power.

CLIFFORD F GERACI
CLIFFORD F GERACI
2 years ago

Unfortunately there is a very different constituent to deal with. Rather than “the Greatest Generation” and the strong work ethic ” Baby Boomers” we now have lazy, entitled, socialism indoctrinated “woke” voters who value freebies over freedom, welfare over work, equity over equality and anarchy over law and order. This is how America will fall in only a few hundred years……definitely ….no Roman empire.

Willy E
Willy E
2 years ago

IMHO: We just came out of the Afghan war, which was a total waste of American lives and finances, thanks to Joe Biden and his CCP/DeepState/Establishment puppet masters. We went right into their new CoVid-19 biowar that completely terrified the world population to the point of insanity over the flu through manipulative and psychological deep state marketing methods, which may end up being classified WW3. Their goal is to depopulate the planet by 90% and rule the surviving 10% by tyrannical socialism. The “kill shot” booster jab is the next stage, and the sheeple will follow obediently. I would expect surges of invalids and dead people this next decade. Just follow the money.

If we can’t resolve our governments’ infighting between the Democrats and the Republicans we will follow the Titanic to the bottom. The Chinese Communist Party (CCP) has taken over the US Corporation Commander-In-Cheat Biden, the Democrat party, the RINOs have infiltrated and severely weakened the Republican party, and the resultant clusterFxxx won’t be easily stopped; but it can be. However, if we continue to sit on our collective butts, talking to ourselves, remaining silent in public as instructed, and waiting for some invisible entity to intervene and resolve our problems we will continue to move toward full socialism and tyranny, and the United States Corporation will rejuvenate its bankrupt self and finally destroy the real United States of America (unincorporated and asleep since around 1860) and we will no longer be a sovereign nation, just another dependent third world colony of the NWO, totally unable to think for ourselves and totally dependent on the government just to work and exist.

Wait until you see what they replace the “de-funded” law enforcement system with. We’ve suffered through millions of miles of “government red tape.” Just wait until you see “government blue tape” fully implemented; Washington D.C.,the Mexican border, Seattle, Portland, and most Democratically run large cities come to mind. Another ClusterFxxx.

Most rational people, when they get sick (and if you believe Mainstream Media, Big Insurance, Big Medical, Big Agriculture, Big Bankers, and Big Pharma, we are the stupidest, sickest, people in the world), go to see their M.D. or D.O. and/or just duke it out themselves. They don’t go to their Career Politician or their Bureaucrat to treat a cold or the flu. Unvaccinated Lives Matter, even though they don’t want to talk about it.

Humans are wired to control things, some are satisfied with dogs, horses, sheep, and cattle, but there is an “Elite” cult that insanely believes they are superior to all others and they must control the entire world population of humans; these insane people put on their pants one leg at a time just like everyone else and they must be stopped if humanity is to survive. Democrats can’t win an election without cheating and Republicans don’t know how to fight to win; what a farce it causes. Under our current election procedures, it appears that those who count the votes wins! Mass mailings of ballots, arbitrary deadlines for stopping the voting and counting the votes, a single party running the election, a lack of standards, and no photo IDs, are the cheaters best friend; these flaws must be remedied before the 2022 elections are held if election integrity and honesty is to be accomplished.

Rik
Rik
2 years ago

When was the last time you heard ANY Republican just outright refer to ANY DEMOCRAT to what they ACTUALLY ARE? . . . and that is THAT THEY ARE COMMUNISTS!!!

Joanne 4 justice
Joanne 4 justice
2 years ago

Folks US CANNOT AFFORD ANY MORE DEBT Contrary to Biden Peelosi propaganda RICH MILLIONARE ; AND BILLIONARE BUSINESSMEN ARE NOT GOING TO PAY INFLATED TAXES THEY SAVE THEIR MONEY TO INVEST AND MAKE MORE $$$$$$

Ralph S
Ralph S
2 years ago

Sorry to burst your bubble! The “Greatest Generation” created the “Baby Boomers” and the mess we’re in today… and tomorrow… and TOMORROW…!!!
The Greatest Generation survived the Great Depression and developed the mindset that said “I don’t want my kids to have it as bad as I did growing up…” Hence, they decided to never say “NO”
to their kids. They created a generation of selfish self-absorbed egotists. Now, instead of red-blooded Americans, only certain colors matter, and Dr. King’s desire for equality based on CHARACTER is ridiculed. Any politician who votes to increase spending and increase our national debt needs to be granted an immediate UNPAID vacation. Vote all INCUMBENTS O-U-T!

Hal
Hal
2 years ago

Term limits for Senators and House Representatives … anyone? I have come t believe this is the only way we can nip the trend of making politicos rich or richer and non-politico and their supporters poor or poorer. And it should begin with TERM LIMITS.

Becky
Becky
2 years ago

The quickest way to fix this would be to tie congressional pay to the debt. Get us out of debt or make $20,000 a year.
And END ALL WELFARE!
No more aid to illegals, ‘refugees’, or the lazy and useless.
Work. Or starve.

Larry Pierson
Larry Pierson
2 years ago

This is the wrong way to approach the problem!!! The author completely missed the boat, and in failing to do so, continues to give allegiance to the massive theft that is continuing today with the Federal Reserve System (the fed). Every dollar we “borrow” from the fed comes from nothingness. The fed never possessed said dollar or the intrinsic value it represents until we ask for it to fund our “deficit”. Then, miraculously, the produce a dollar to borrow. Where did the value of that dollar come from? The fed never possessed it until it was asked for.
 
The obvious answer is simple. The newly printed dollar to help fund our deficit gets its intrinsic value from the value of all the existing dollars out there right now. This weakens the dollar in my wallet and is called “inflation”. By what authority does the fed have the right to take a portion of the value of all other dollars and suddenly call it their own without earning it? And then to add insult to injury, they demand we pay interest on what they took from us and then “loaned” back to us. And even if we paid back every penny “borrowed” from them, they are under no obligation to destroy said dollar and thus return its intrinsic value back to the rest of us. They get to keep it and thus own most of America.
 
Until enough Americans understand this concept, the greatest theft in the history of humanity will continue.

So how do we deal with the national debt? By declaring every dollar borrowed from the Fed, plus all the interest paid to them, belongs not to the fed but to the American people (which it rightfully does). The fed is nothing more than a very complex system whereby Congress can raise tax revenue without it actually appearing to be raising taxes using inflation is the mechanism to tax us.

Robert
Robert
2 years ago

So we know we have a big problem. There are so many reasons we got here. I was appalled that Ryan and MaConnell did not do a thing but make it worse. It is not all about tax cuts. It is about growing an economy while reducing spending. My proposal is limit every branch of federal government to one percent less than INFLATION growth for the next 10 years. We know we can’t grow our way out because the conditions needed for that plan to work NEVER develop. Stop trying the Same failed plans. They don’t work. Make a plan to valence the budget in 10 years and get rid of the FED.

Joanne 4 justice
Joanne 4 justice
2 years ago

when you do not have $$$$$ do not spend it on stupid unsure schemes and I have been said it already ..
WEALTHY MILLIONAIRE AND TRILLIONAIRE BUSINESSMEN ARE NOT GOING TO PAY INFLATED TAXES !
THEY SAVE THEIR $$$$$$$ TO INVEST IT AND MAKE MORE MONEY!

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