Post-Truth
During World War II there was a huge influx of young, rural American men into New York City. They were there enroute to the battlefields of Europe, and they marveled at the miles of skyscrapers in “Gotham”. Kids from places like Outville (really, just down the road from here in Pataskala) or Ottumwa (the birthplace of Radar O’Reilly of MASH fame) or Ouray (above 10,000 feet in Colorado) wandered Times Square. And while they knew a lot about farming and hunting and fishing, some were a little bit naïve about “Big City” ways. The joke was, there were so gullible that you could sell them the Brooklyn Bridge.
Today we are, maybe, more sophisticated. The amount of information Americans get: from television, social media, online searches and unending texts and emails; is more than the old firehose versus garden hose analogy. There’s a massive Niagara river flowing to us of so-called facts. We learn to select our sources because in this “post-truth” era, just because we hear it doesn’t make it true. (One of my Facebook friends can detail the design and construction of an alien spaceship, just passing the sun’s orbit and headed towards earth – “the end is near!!”).
Tariffs
Last night President Donald Trump proclaimed that his “magnum opus”, the tariff plan, was directly changing the American economy. In fact, he said the following:
“Tariff revenues SMASH records – slashing the U.S. deficit by over 25%! Shrinking government spending, downsizing bloated bureaucracy and unleashing a wave of American jobs” (Twitter/X).
Another of my Facebook buddies praised him for this wonderful work. In fact, he said, “…that give us another two years, and the US deficit would be completely gone – what a marvelous job Trump is doing for the American people.”
Deficit
So here are some other “facts”, maybe sourced a little better. The true annual deficit of the United States Government is $1.78 Trillion. That’s how much more the government is spending than bringing in. So the common definition of “deficit” is in our current annual budget. To cut that “deficit” by 25%, would require the government to either cut $445 Billion from expenditures, or raise that same amount in revenues.
According to the Committee for a Responsible Federal Budget, tariffs have raised $195 Billion this year, about $140 Billion more than last year. So the Trump Administration should get credit for raising $140 Billion to reduce the deficit (CRFFB). And there was a $200 Billion one-time student loan savings, putting Trump nearer to his magic number. But there were also increases in the budget spending, that in the end, leaves the 2025 deficit about the same – $1.8 Trillion (US Treasury).
Fancy book keeping, what we used to call “lyin’ and figurin’ by politicians”, ain’t nothing new. It’s easy to claim the savings, without owning the expenditures. Maybe your household made more money than last year. But if costs went up more than the additional income, it doesn’t make your personal “deficit” status any better. You might brag about how much you made, but you probably don’t talk about how much you spent.
Debt
Then there’s the Federal government “language problem”. That’s because there is a reasonable confusion between two terms: deficit and debt. The deficit is how much more the government spends annually then they bring in. The debt is the total accumulation of annual deficits that the government is responsible for. So, add this year’s $1.8 trillion, to all of the other years of spending more than was brought in, and you get the debt. Deep breath – the US owes $38.2 Trillion (Debt Clock).
Who do we owe it to? Close to two-thirds of the debt is owned by us, payable to us (Pew). Government bonds are a source of financing, raising money to cover the debt and, like any loan, paying interest to the bondholders (US Treasury). And about 20% of that money is actually borrowed from other government funds. The Government writes an “IOU” to itself, borrowing from social security, Medicare, and retirement funds. The US Government also owes money to folks in other countries and to banks and institutions in those nations. But it’s not as much as you think: about 30% of the debt is “overseas” (Congress).
Real Numbers
What does having that much debt do? Well, first it reduces how much the government can spend on other stuff. Paying interest on a $38 Trillion debt costs a lot, even if the rate is low. Last year the US budget included about $1 Trillion to pay interest on the debt. And second, it has the effect of increasing the overall supply of money. More money in supply means that “getting” money is easier, but it also means that the purchasing power of that money is lower. In “plain language”, the debt is a major influence towards rising prices – inflation.
With all the “language”, it’s easy to get confused. Some of my Facebook buddies truly believe that Donald Trump’s tariffs are paying off the US debt at an amazing rate – but the numbers show that’s not really true. In fact, he’s not even reducing the debt. But he has had one visible effect: the cost of purchasing tariffed items is going up: coffee, cars, electronic equipment, and imported foods are notable examples. And, American consumers are paying for the tariffs.
That increases our own personal spending, pushing some into a bigger personal deficit. And that’s a problem that even Facebook can’t solve.
