This is how America is proceeding on the path to national bankruptcy. Americans and politicians we elect seem to believe we can just keep spending however much we want on every vote-buying, constituency-guarding scheme, regardless of our revenues and without consequence — until we suddenly fall off a cliff.
Right now, the national debt stands at a ridiculously irresponsible $34.6 trillion. That comes in at 123 percent of the nation’s GDP. That means our debt alone, money already borrowed and spent but still needing to be paid back, comes to more than every dollar that every U.S. person, company and organization makes in more than a year.
That puts it on par with what we were spending in World War II. We were fighting a war on two fronts and the entire government was geared toward winning it, and we were still spending less as a percentage of our economy than we are now when we are at peace and in a time of supposed economic plenty.
Interest alone on the national debt has now surpassed $1 trillion, according to a Bloomberg analysis and backed up by the U.S. Bureau of Economic Analysis. That puts it at about 14 percent of federal spending, surpassing all of America’s defense spending at 13 percent.
But that is only part of the approaching cliff picture. The debt when considering unfunded liabilities — the promises Congress has made to Americans in the retirement and entitlement programs — is closer to $158 trillion over the coming decades. While that number can change based on the laws changing, the odds of that happening point to the most pernicious problem plaguing any solution: political reality. Neither party has any interest in touching the giant portions of the budget that need to be more aligned with revenues to prevent our debt from smothering us. Those portions are Social Security, Medicare and Medicaid.
Twice this century Republicans have taken a run at adjusting these programs by nudging up the age when seniors qualify for the benefits. And both times Democrats went full demagogue with Paul Ryan pushing grandma off a cliff and grandma being forced to eat dog food. It was all a media-aided lie, of course, but what isn’t? So Republicans have, for all practical purposes, given up.
Social Security and Medicare are the biggest and thorniest drivers of the debt. They were a problem before the Baby Boomers began leaving the taxpaying workforce for tax-taking retirement. But their swelling numbers, combined with people living longer is a demographic bomb that everyone has seen coming for a very long time. Right now, Social Security costs $1.4 billion annually and Medicare costs $848 billion. Defense rolls in at $820 billion.
Social Security has always been a generational pyramid scheme and pyramid schemes always collapse at some point. Always. It could have been fixed and kept going many years ago with minimal pain, but the Nancy Pelosis and Harry Reids of the world only saw a momentary political opportunity to score points against Republicans — zero thought being given to what was actually right for Americans. That’s their legacy.
The huge bubble of Boomer Americans that was paying for previous generations’ Social Security now expects theirs to be paid. But about 10,000 of them are turning 65 every day and will through 2030, just blowing up the costs for Medicare and Social Security for decades to come. That’s a real problem, because not only are there a lot of Boomers, there are far fewer GenXers before getting to Millennials — the people who will be paying the bills.
It is a similar story with Medicare, because it covers essentially the same people, who vote in very high percentages. The number of people enrolled in Medicare has tripled since 1972, climbing from 21 million to nearly 66 million in 2022. Further, this is going to continue, just like with Social Security, and it is projected to reach 88 million in 30 years.
So at this point, it is much more painful to make Social Security financially whole over the generations. Democrats don’t want to. They see it as a political cudgel, waiting for Republicans to try something responsible at which point they will club them to death. Therefore, Republicans are not interested. President Trump, who spent his life using debt to build a global real estate empire, does not see any real issues. Debt is a leverage for greater things. It’s just that national debt is not exactly the same as corporate debt.
While there are several truly existential threats barrelling toward America — a wide open border, transforming a former melting pot into dozens of conflicting tribes, dumping meritocracy, appeasing or outright aiding our enemies — the boring old national debt is probably the most intractable and inevitable. And it could happen quickly when it does.
Rod Thomson is a former daily newspaper reporter and columnist, Salem radio host and ABC TV commentator, and current Founder of The Thomson Group, a Florida-based political consulting firm. He has eight children and seven grandchildren and a rapacious hunger to fight for America for them. Follow him on Twitter at @Rod_Thomson. Email him at [email protected].
