The United States federal debt has soared to $35.3 trillion. In less than a year, the federal government has increased its debt by $1.9 trillion. This occurred during years of record tax revenues and economic growth.
If the current administration remains in power, the Treasury’s own estimates predict an additional $16 trillion increase in debt by 2034, without accounting for any recession or slowdown in tax receipts. According to the CBO, the Kamala Harris economic plan would add another $1.9 to $2,2 trillion to the national debt.
The Harris campaign has not even bothered to discuss a plan to balance the budget. She just said that “efficiency” and the old fallacy of taxes to the rich would pay for the increase in spending—two things that have proven to do nothing to the ballooning debt and that do not even start to scratch the already unsustainable $2 trillion deficit.
This reckless increase in debt is happening in a growth period. However, if we adjust for government debt accumulation, 2021 to 2024 were the worst years of growth adjusted for debt since the thirties.
In a recent article, Claudia Sahm stated that you should not worry about debt. “Debt is neither inherently good nor bad. As such, the question is not what’s the right level of borrowing, but rather what’s the economic return on the borrowing or the societal goals it advances.” She continues to say that “the government can easily service its debt because of its unlimited taxing authority and ability to issue more U.S. Treasury securities to repay maturing securities” (“The US debt is now $34 trillion. Don’t worry. Seriously”. January16, 2024). Now you must worry. A lot.
It is a massive transfer of wealth from the productive sector to the bloated bureaucratic state. Furthermore, the societal goals cannot be unlimited. The government must administer and not just add expenditures to previous expenditures, particularly when there is no realistic analysis of the success or failure of government programs. The idea that a particular government program is beneficial is not enough to add it to the budget without reducing other expenses. Not even a benign view of government spending as Sahm’s can justify that every government expenditure item today is essential. Furthermore, we must always understand that governments do not give money for free. They tax the productive sector and borrow, which means printing a currency that is constantly losing purchasing power. Therefore, the government is not advancing societal goals by borrowing without control; it is implementing a profoundly regressive policy that creates a dependent subclass and makes it increasingly difficult for the middle class to thrive.
It is false that the government has “unlimited” taxing authority and the ability to issue more debt, i.e., print money. The government has economic, fiscal, and inflationary limits. Economic because constantly increasing taxation leads to stagnation and more debt; fiscal because expenditures are consolidated and annualized, while tax receipts are cyclical; and inflationary because the constant issuance of new currency, which is what happens when more debt is issued, leads to the loss of confidence in the currency and the erosion of its purchasing power. If what Sahm and Kelton state were true, the euro area and Japan would be examples of high growth and economic strength, but they are examples of stagnation, high debt, and rising social discontent.
When someone tells you not to worry about record debt, you should be extremely concerned. When they say that the government has unlimited resources, they mean that you will pay by becoming poorer with more taxes, more inflation, lower growth, or all three at the same time.
US ‘going bankrupt extremely quickly’ – Musk
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