The Debt
Let’s get one thing straight up front. The Government of the United States of America owes $36 Trillion. That’s a lot of money, and the “blame” for that debt is shared all around. Republicans and Democrats, Presidents and Congresses, Conservatives, Neo-Conservatives, Moderates and Progressives; all have contributed to the “debt”.
How big is it? If every person in the United States “donated” $100,000; it would shrink the debt to $3.5 Trillion. That’s what it was back in 1990. And since the vast majority of Americans don’t have a “spare” $100,000 to donate (or pay in tax), that’s not likely to happen.
No Limits
And what does the “debt” do? Well first, just like that credit card debt we carry month-to-month, owing a debt requires paying interest on it. The US Government pays about $1 Trillion to “service” the debt annually. To put that in some perspective, the Government spent a little less than $7 Trillion in the 2024 total budget, so about 14% of that budget goes to the debt. And while we’re talking about credit cards, there is one big difference between the US Debt and our personal credit debt. All of our cards have some limit, some top number that “max’s out” the card. So there is a real limit (a really big limit) to how far in debt we can personally go.
But there is no hard limit to the Government debt. As long as we/they can borrow the money, the can increase the debt. Last year the United States had a $6.75 Trillion budget, and an income of $4.92 Trillion. So last year, the National Debt “only” increased by $1.77 Trillion.
And one last factoid: the only way for the government to “not” increase the debt is to spend less than it brings in. When politicians today say “we need to cut Federal spending by $2 Trillion”, what they are trying to do is balance the budget. The last time that happened was in the 2001 budget (though the reality of 2001 was that spending exceeded income – remember 9-11?).
Priorities
And that’s the point. Our government makes choices to spend more and create more debt. Those choices are the priorities of those differing governments. Donald Trump’s first term as President increased the national debt by around $8 Trillion (that’s the dubious “record”). A little less than half of that was for Covid relief, to stabilize the American economy. The majority of the other half was because of Trump’s sponsored tax cut, mostly for the highest tax payers (the rich). That was his priority.
On the other hand, Joe Biden, increased the debt of $4.3 Trillion. $2.2 Trillion of that was for Covid relief. The rest help finance the Infrastructure Act, the Chips Act, and the Inflation Reduction Act. Those were his priorities.
The Budget
So what’s happening with the budget argument in Congress today? Republicans want to slash the budget, cutting $2 Trillion (the magic number) to balance. Except for one little issue. They also want to continue Trump’s tax cut for the highest tax payers (the rich). So the $2 Trillion cut, will be closely matched by a $2 Trillion loss in government income. If that happens, then, while the budget will be smaller, it will still contribute to the debt. They’re “giving away” the savings. That’s their priority.
A side note: while there is a huge argument about the relative percentage the “rich” pay versus the “regular folks”, the reality is that 20% of my income is still a whole lot less than 05% of Warren Buffet’s . What most Progressive tax reformers argue, is that Buffet ought to pay 20% equal to me or more. But he doesn’t, and in Trump World, he will pay even less.
Savings?
And what about Elon Musk and the DOGE boys? Aren’t they finding millions, even billions of dollars of savings? If we cut USAID, a lot of our foreign spending, that’s $60 Billion a year, less than 1%. If we cut the Department of Education, that would “save” $238 Billion a year, 4%. (Of course, a lot of that spending would have to be replaced by state and local money. So a Federal cut will likely be made up in increased local taxes). If we fired Musk’s SpaceX, that would save another $6 Billion a year.
Add all of that up, and even if the DOGE boys find some real cuts – they are focused more on “re-prioritizing” government rather than saving money. They are going after the “woke” programs; like USAID (hopefully not because it has letters “AIDS” in it) and Education (because of Title IX and the transgendered). It’s supposed to be about money, but it’s more about “getting the Libs”.
Real Money
The real money is in “entitlements”, promises the US Government made to citizens over the years. The big three are Medicare, Medicaid and Social Security. Medicare costs about $1 Trillion a year. And yes, Medicare was supposed to be paid by individuals in payments throughout their work careers. But inflation, and “alternative uses” by Congress, means that fund isn’t near enough to cover the cost. The same is true about Social Security ($1.5 Trillion). Medicaid is a little less, about $560 Billion to the US Government.
And what about the Defense Department? Well that’s around $1.3 Trillion a year. So there’s that, ripe for cuts, though Defense is a major “priority” to the Trump Administration.
It’s not an easy conversation. It’s about balancing priorities. But one thing needs to be clear. The President and the Congress right now, are not cutting the debt. They are simply shifting priorities away from most American citizens, and to the rich.
Surprised?
