Introduction

We need economic and financial sustainability.

Sustainability is a concept much in the news these days. Sustainable fishing, energy and wood products, to name a few. We were told, without complete consensus among scientists, that we have 12 years, now a bit less than that, to live on earth without experiencing a complete climate disaster--announced to be an existential threat--a threat to our very existence. Unless, we are told, we immediately find radically different and sustainable ways to live. 

What about economic and financial stability? All of the Green New Deal remedies start in the trillions of dollars. Add in the cost of social new deals like Medicare for All, All being defined as everyone currently residing in the US along with free college and many more trillions in spending are proposed. And that’s with a current federal budget of less than $5 trillion. How can that be financially sustainable? How is that not a clear and convincing threat to life as we know it?

That is the subject of today’s 10-minute blog/podcast

Continuing

I believe that America is a unique and exceptional place, and that you--you and I--have an equally unique and exceptional role to play in it. Yes, you have heard that from me before, and you will hear it again. That’s what drives this podcast.

Your role, our role, includes knowing the debt and deficit numbers, how they are likely to grow, and what they mean for us, for America. And for our children and grandchildren.

As of today, the 330M people in the US owe $22 trillion, money we have borrowed to keep going. That’s $67K owed by every man, woman or child in our country. If you add in what the federal government has promised in things like government worker pensions, Medicare and Social security, we are over $90 trillion in debt. 

Pause for definitions: The deficit is the difference between what the feds receive in taxes, and what they spend. The deficit is covered by borrowing. Just like a credit card; if you spend more than you make, you need to borrow to make things work. The debt is the total amount the feds, that’s the taxpayers, owe. Again like a credit card, the debt is the total amount owed, while the deficit is the amount you just borrowed. The total debt is accumulated deficits. Our national debt is $22 trillion, with an average annual deficit of $1 trillion. At the risk of making your eyes roll back in your head, let’s bring up another comparison between the feds and a person or family. Fair? The annual federal budget is about $4.7 trillion. An annual deficit of $1 trillion, means that our government is borrowing over 20% of its budget each and every year. If a household spent the US annual average, $60K a year, it would have to borrow $12K, 20%, each and every year to match the feds in borrowing compared to budget. How long could a household sustain, there’s that word again, that percentage of borrowing before it collapsed? After 10 years, the household would owe $120K, and that’s not counting interest, which could easily double that amount. With no end in sight. Here’s a better question; how long can we, the US, sustain that kind of borrowing?

We cannot and should not tax our way out of this mess. We do not have a revenue problem; we have a spending problem. Said differently our golden goose is healthy and producing ever more golden eggs. If we continue to threaten the national golden goose by increasing taxes and regulations, we will kill the American goose. 

For those of you who were actually paying attention in school, and not reading Aesop’s fables, Aesop wrote of a farmer who had a magical goose; one that would lay golden eggs every day. The farmer lived quite well selling the gold, but he got impatient; in his ignorance of how things worked, he cut the goose open to get all the eggs at once.