A former Defense Secretary said that America’s national debt is a national security risk. That owning money to foreign governments—such as China—harms our ability to make independent decisions. It also means the interest on the debt goes to bankers and foreign government, not the needs of the citizens of our nation.
“American citizens. If the citizen is qualified to receive money, he gets it.
Most of the federal budget goes for the support of entitlements. The biggest entitlements are Social Security and Medicare. Lumped in with Medicare — called Medi-Cal in California — is Medicaid, which provides health care for low-income Americans.
Another entitlement is the Affordable Care Act of 2010. The act is often called Obamacare because President Barack Obama signed the enabling legislation. In recent years, Obamacare has been under attack and may not now be a complete entitlement.
In the case of Medicare, all an American has to do is reach age 65. When that age is attained, the federal government pays for most — but not all — healthcare-related expenses, including physician’s fees, hospitalization costs, and the costs associated with many prescription drugs.”
I would hope that the second term of Trump, this becomes his big policy issue. He can, using regulations, stricter criteria and ending duplicate agencies, get a handle on this—but first as Dr. Coleman notes, Trump has to get a handle on “entitlements.
GOVERNMENT DEBT THREATENS LIBERTY
By Richard Colman, Exclusive to the California Political News and Views, 2/4/20
Argentina is broke. So is Venezuela. Who’s next? Answer: Probably the United States of America.
Now one dares to admit it, but the United States is essentially bankrupt.
When a nation is bankrupt, liberties are threatened. The federal government can close the banks or limit withdrawals to so many dollars per day. Also, the federal government can limit how much money a person can take out of the country.
The Bank Holiday of 1933 is an example of government stomping on liberty. Upon assuming office on March 4, 1933, President Franklin Roosevelt closed all American banks from March 6 to March 13. Bank depositors has no access to their money. When the banks reopened, long lines appeared as depositors desperately needed cash.
The American national debt is now $23 trillion dollars. This money is owned to people, businesses, and foreigners (including foreign governments like China and Japan), who have bought U.S. Treasuries, which are loans to the American government. The loans are generally called U.S. Treasury bonds, bills, or notes. In short, all of these types of loans, when lumped together, are called “U.S. Treasuries.”
When budget deficits from individually different years are combined, the sum is known as the national debt.
The United States was not always broke. In 1837, when President Andrew Jackson left office, the U.S. had no national debt. By 1981, the nation’s debt reached $1 trillion. Thirty-nine years later, the debt has escalated to $23 trillion.
The debt comes from overspending, and that overspending comes largely from what are called “entitlements.” An entitlement refers to money owed to American citizens. If the citizen is qualified to receive money, he gets it.
Most of the federal budget goes for the support of entitlements. The biggest entitlements are Social Security and Medicare. Lumped in with Medicare — called Medi-Cal in California — is Medicaid, which provides health care for low-income Americans.
Another entitlement is the Affordable Care Act of 2010. The act is often called Obamacare because President Barack Obama signed the enabling legislation. In recent years, Obamacare has been under attack and may not now be a complete entitlement.
In the case of Medicare, all an American has to do is reach age 65. When that age is attained, the federal government pays for most — but not all — healthcare-related expenses, including physician’s fees, hospitalization costs, and the costs associated with many prescription drugs.
In 2019, according to the federal Office of Management and Budget, 38 percent of federal spending went for Social Security and Medicare. Eighteen percent went for antipoverty programs, 15 percent for defense (including wars), and nine percent went for interest payments on the national debt. The remaining 20 percent went for other government programs, such as crime control, housing programs, and food assistance.
America’s financial system is heavily dependent on the sale of U.S. Treasuries. Without these Treasuries (really loans), the U.S. government would run out of money.
Why would anyone lend money to the American government? The answer lies in the faith that lenders will be paid back. The U.S. to date has had a good record of paying back loans.
During World War II, the U.S. was not able to fund the war effort through taxation alone. To prevent taxes from becoming too burdensome, Americans were asked to buy war bonds. Often Hollywood celebrities like Humphrey Bogart appeared in short movie clips asking citizens to buy war bonds. During the war years, 1941-45, Americans went to the movies in great numbers, so promoting war bonds in movie theaters was an effective way of raising money. The money from war bonds helped America beat Germany, Japan, and Italy.
During his eight years as president (1981-89), Ronald Reagan never balanced a federal budget. He spent heavily on a U.S. military build-up. Under Reagan’s successor, President George H.W. Bush, commander in chief from 1989 to 1993, more deficit spending occurred. In 1993, President Bill Clinton raised taxes to help reduce each year’s deficit. During Clinton’s administration (1993-2001), the federal government ran budget surpluses from 1996 to 2000
Once the surpluses emerged, Clinton talked about paying off the national debt in 15 years.
But after Clinton left office, government spending exploded. After the terrorist attacks of Sept. 11, 2001, which occurred under the administration of George W. Bush, America became engaged in a war in Afghanistan. In 2003, America invaded Iraq. The two wars are still going on.
In 2008, there was a financial crisis in which American banks and other institutions (like insurance companies) needed an injection of federal spending to keep the economy from collapsing. The wars in Afghanistan and Iraq, and the 2008 financial crisis all occurred under Bush, who was president from 2001 to 2009.
Then, in 2009, President Obama took over, and the spending continued during his two terms (2009-2017). Additional spending continued under Obama’s successor, President Donald Trump, who became president in 2017 and is still in office. Currently, Trump, in 2020 and beyond, plans deficits of $1 trillion a year. These deficits add to the national debt.
So here we are. The 1981 national debt of $1 trillion has become, in 2020, an amount equal to $23 trillion.
Presumably, this escalation of debt cannot continue forever. At some future time, there is likely to be a day of reckoning.
Whoever is elected president in November 2020, ought to have a plan to pay off some of the national debt.
Also, the next president may have to cut entitlement benefits, raise taxes, or do both.
Another option is to fail to pay lenders back. The process is called default. Such an action would cause lenders to lose confidence in the American economic system.
The 2020 Democrats for president have not addressed the debt issue. Most, perhaps all, of these candidates, want more government spending, especially for pre-school, child care and national health insurance (in effect, Medicare for all). Most of these Democrats want to increase taxes.
Furthermore, Trump just keeps on spending and has not announced any plans to control debt. If Trump is re-elected, he may face a financial crisis just as President Herbert Hoover did in 1929.
Hoover, who was president from 1929 to 1933, was in office when the New York Stock Exchange crashed in October 1929. Between 1929 and 1932, the Dow Jones Industrial Average went from 300 points to 30 — a 90 percent loss. Unemployment went from essentially zero to 25 to 40 percent.
There may soon come a day when buyers of American Treasuries don’t want to buy American debt. The consequences are likely to be higher interest rates to draw debt-buyers back into the Treasury market. But if interest rates rise, loans for homes and cars will become more expensive, possibly bringing America into recession or depression.
Another approach is to induce massive inflation, which means that debt will be paid back in cheaper and cheaper dollars.
America is on the verge of becoming another Argentina or Venezuela.
And yet, no 2020 presidential candidate is willing or able to discuss the debt problem.
It’s time that a candidate for president said what he or she would do to address America’s huge debt.
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