National-debt crisis – It’s time for a permanent fix

This blog is put together in reaction to an article written by Mr. Jack Phillips of the Epoch Times, published on January 13, 2023. It is entitled, “Treasury Secretary warns Congress U.S. will hit debt ceiling within a week.” Talk about “Déjà vu all over again,” which seems to happen every year!

Mr. Phillips’ full article is attached here. Each section, below, starts out with a portion(s) of the article, followed by my commentary.

The Epoch Times:

“Treasury Security Janet Yellen warned the United States is projected to hit its $31.4 trillion debt borrowing limit by next week, according to a letter she sent to congressional leaders on Friday (January 13).

“In a letter (pdf) to House Speaker Kevin McCarthy (R-Calif.), Yellen wrote that according to projections, the country will hit the debt ceiling by January 19. If that deadline passes without Congressional action to raise the borrowing limit, the Treasury would have to take “certain extraordinary measures” to avoid a default on its obligations.

“Measures that could be implemented by the Treasury Department include temporarily redeeming existing and suspending new investments of the Postal Service Retiree Health Benefits Fund as well as the Civil Service, Retirement, and Disability Fund. The Department would also suspend investment into the Government Securities Investment Fund of the Federal Employees Retirement System Thrift Savings Plan, she said.”

My commentary:

1. Something is amiss about Ms. Yellen’s warning. If this were being proposed by common folks, like you and me, who are about to hit our borrowing limit, most banks would likely laugh at us and reject extending further loans.
2. “Raise the borrowing limit – to avoid a default on its obligations.” Hmm. It sounds to me like kicking the proverbial can down the road – in worse shape than it is now, no less – and making it someone else’s problem to be solved. Again, if an ordinary household were approaching a default on its obligations, what rational bank would allow its borrowing limit to be raised? Yet, the head of the U.S. Treasury Department – an overseer of all banks – is proposing to do just that. What is wrong with this picture?
3. Measures (i.e., solutions to the debt-payment issue) that could be implemented all impact negatively the federal employees’ retirement funds. Clearly, those in a previous administration(s) that proposed and approved these retirement benefits were not paying attention to whether the government could afford them. (This is exactly what happened within automotive companies and their unions. The executives that approved them knew that they were not going to be around to have to deal with the consequences of extending unsustainable benefits.) I’m sure it felt good to be a Santa Claus to federal employees – 2.2 million of them – especially when none of the funds came out of their own pockets. We need to find out who the President(s) was/were that ratified such benefits and, more importantly, make sure that no future Presidents would ever play the role of the supposed “good guy” to federal employees at the expense of taxpayers down the road.
4. To be a true hero to all taxpayers, the President of the U.S.A. must be committed to:
   • Cut the size of the government and the budgets at least in half to start out. Remember: We cannot afford not to!
   • Start paying down the principal of the national debt, not just the interest.
   • Close the southern border and stop illegal aliens from entering our country. We cannot afford the additional expenses required to pay for feeding, clothing, housing, and sending their children to school. If members of Congress are truly concerned about them, I suggest they adopt and provide for them out of their own pockets – not at taxpayer expense. (Note: I was a legal alien who waited to become a naturalized citizen until I knew, for sure, that I would not be an economic burden to the country of my childhood dreams.)
   • Any members of Congress who sneak in pork-barrel legislation should be publicly shamed and expelled, without further pay or benefits and, as additional penalties, required to pay triple the original budget out of their own pockets. They should be reminded that they were not elected to take advantage of taxpayer funds.
   • Any President who refuses to address the national-debt issue from Day 1 in office should be impeached.

The Epoch Times:

1. “Failure to meet the government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability,” she (Ms. Yellen) wrote in a letter that will trigger discussions and new proposals in Congress on whether to pass a debt limit increase. Some Republican members of Congress have said they would agree to a bill to raise the debt limit to pass additional spending cuts.

My commentary:

1. Let me see if I understand what I just read. I’m going to pretend to be the borrower, who has maxed out my debt limit and come to the bank. The bank, in turn, raises my loan limit so that I, the borrower, can agree to spend less. Hmm. What logical sense does that make?
2. Regardless, Ms. Yellen’s proposal sounds like a threat – “raise the debt limit or else” – rather than a logical solution to an enormous and ongoing debt problem in trillions of dollars that would ultimately impact every taxpayer.
   • The current level is at $31.4 trillion.
   • There are roughly 350 million people in the U.S.A. Of those, not everybody pays taxes but, for the sake of argument, let’s assume that every single individual does. Simple math reveals that this equates to a debt carried by every individual, even a baby, of roughly $900,000.
   • Is this sustainable? Absolutely not. Is this insane? Absolutely yes.
3. I acknowledge the fact that Ms. Yellen did not create the problem but was merely put in a position of having to deal with it. That said, I expect more from someone who was appointed as Treasury Secretary. Ms. Yellen has been involved with the U.S. government, starting at the Fed, in executive positions for nearly 30 years since 1994 during the Clinton Administration. Back then, the national debt stood at $4.69 trillion – much more manageable than what it is today.
   • Adjusting for the then population of roughly 260 million, the per-capita debt obligation was roughly $181,000; not $900,000 as it is today. While it was already still too high, back then, it would have been easier to nip the problem in the bud by stemming the tide of the ballooning national debt.
   • It is hard to believe that, as a distinguished scholar with an impressive career in academia and government, she did not think to propose a permanent solution before the national debt got out of hand.
   • Even today, all she proposes is to “raise the debt limit,” which is nothing more than a band-aid solution to a very serious national issue.

Postscript – Additional comments:

To help with this blog, I checked the national debt level starting with the founding of the country through President Donald J. Trump. (Note: For the incumbent President Joseph R. Biden, it is too soon to make any meaningful observations.) What follows are some interesting facts I found out.

• 1. For 153 years from the founding of the country in 1776 to 1929, including the 30^th President Calvin Coolidge, 13 Presidents were mindful of REDUCING the national debt during their total term in office.  Clearly, they took their responsibility as President of the U.S.A. very seriously.
  2. In contrast, for the last 94 years, starting in 1929 with the 31^st President Herbert Hoover, every President increased the net national debt during their term(s). It is as if they forgot how to be the true Executive in charge of running this great nation. U.S. government is of the people, by the people, and for the people. The U.S. government was NOT created to be a charity for those who cheat and milk the system.
  3. During his two terms, which ended in 2001, President William J. Clinton added $1.57 trillion to the cumulative national debt. In retrospect, as compared to his successors, he took his job of keeping the debt under control very seriously.
  4. During the two terms, which ended in 2009, President George W. Bush added $4.4 trillion to the cumulative debt, nearly doubling what he had inherited from President Clinton.
  5. During the two terms, which ended in 2017, President Barack H. Obama added over $9.5 trillion to the national debt, the highest amount of all the Presidents from the founding of the nation. It appears that the community leader did not know or care about keeping the national debt to a manageable level – to the chagrin of the rest of us, taxpayers.
  6. During the one term, which ended in 2021, President Donald J. Trump added $7 trillion to the national debt, the highest of any President during a four-year period.
  7. In summary, of the $31.4 trillion cumulative national debt, the bulk of it – $20.9 trillion (= $4.4 trillion + $9.5 trillion + $7.0 trillion) – was added during the two decades (2001 – 2021) prior to President Biden assuming the office.