The Treasury Department reports that the national debt is a growing problem. That's not news. What is news: $1 trillion in new debt is added to the total every 100 days.
For a nation in which the economy is growing, employment (by official measures) is high, and inflation (via different official measures) is slowing, this cascade of debt seems utterly inexplicable.
Oh wait. Of course, it can be explained: the political class has willfully ignored discussing reforms of the biggest drivers of federal spending – entitlements like Social Security and Medicare – in favor of…budgetary grandstanding.
While such behavior is very on-brand for the careerists in Congress, even the most addled among them understands that this will all end in (taxpayer) tears:
Wharton Business School finance professor Joao Gomes has warned that spiraling U.S. debt could plunge the country into a financial crisis as soon as next year.
“It could derail the next administration, frankly,” Gomes told Fortune. “If they come up with plans for large tax cuts or another big fiscal stimulus, the markets could rebel, interest rates could just spike right there and we would have a crisis in 2025. It could very well happen. I'm very confident by the end of the decade one way or another, we will be there.”
Last month, The Black Swan author Nassim Taleb said he believes the U.S. economy is in a “death spiral … as long as you have Congress keep extending the debt limit and doing deals because they're afraid of the consequences of doing the right thing, that's the political structure of the political system, eventually you're going to have a debt spiral,” Taleb said at an event, it was reported by Bloomberg. “And a debt spiral is like a death spiral.”
Prof. Gomes also noted that restraining the spending driving the debt could lead to broad social problems”
“Responsible budget proposals” may suffice to stave off any market upset, Gomes said, while “imposing major cuts on some programs … opens a Pandora's box of social unrest that I don't think anybody wants to think about.”
This is likely true, given what we witness abroad when governments facing fiscal crises withdraw or simply reduce long-standing, popular subsidies for food, fuel, and other items.
Or, as I've noted before, there's the specter of the late Rep. Dan Rostenkowski's confrontation with elderly protestors, who were upset over a program requiring Medicare recipients to pay a surtax to cover the costs of extended care.
The protestors didn't understand the program and most certainly didn't want to pay for anything. Rosty, despite his power in the House, was forced to gut the program.
Good times that we may get to relive all over again.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
