$50 Trillion, and the Machine Rages

What You Need to Know

The current national debt is $31.5 trillion.
Net interest payments on the debt are $395.5 billion.
One implication: Clients need to think hard about inflation when planning for retirement.

While this may appear on the surface as a partisan political article, it truly is not. What I say about our politicians, regardless of party affiliation, is this:  Once elected, the machine grabs them, and they all change; their election promises are rarely kept, and the machine eats them alive.

This editorial is about $50 trillion dollars.

Our current national debt is $31.5 trillion; we owe this money and are paying interest on it.

A recent report from the Congressional Budget Office reassessed debt projections for the next 10 years and increased their estimate of our additional debt – on top of our current debt. Please add another $19 trillion in deficit funding, bringing our total as a nation to $50 trillion.

$50 trillion and then this: The nation’s debt has been bigger than its gross domestic product for several years.

This is more than a mortgage on our future; it signifies a rope our politicians put around the neck of all of us, especially our children, and their children, and their children, et al.

The increased and growing debt is no longer an issue. We are beyond that. The problem is what will happen to us citizens and our nation due to this debt. We have one topic we must hit head-on if we as individuals will survive the national debt and retirement. I won’t speak to health care quality, social security, and the need for government support; in this discussion, I will stick to money, primarily debt, and what it will bring.

Inflation

In the past, our government has tracked inflation and used the Consumer Price Index as the barometer of measurement. Mr. Reagan changed that policy when he eliminated energy, and Mr. Clinton removed more of the barometer by removing food from the calculation. This was done to make the analysis more manageable for the budget balancers. How can we adjust income when food and energy are removed from the standard?

Then, one of our presidents allowed the annual budget deficit to be lowered by transferring money from the Social Security fund to the U.S. budget. How could that be justified? Simple, the government guarantees the payment of Social Security benefits, so it could be part of lowering the budget—another machine rage.

This accounts for 21.8% of the public debt, or $6.87 trillion, owned by another arm of the federal government. Plus, the Federal Reserve System is the single largest holder of U.S. government debt. This is called “intragovernmental holdings” in special non-traded Treasury securities.

Servicing the debt is one of the federal government’s most significant expenses. Net interest payments on the debt are estimated to total $395.5 billion this fiscal year.

Inflation is our enemy; over time, it will become our “mortal” enemy. As the cost of living increases and our income doesn’t, we are placed between a rock and a hard place. We are quickly running out of options. The machine rages on.