My Uncle Rudy, who died in 2015 at the age of 98, once told me in 2011 three sad stories about the Great Depression.
He said that if his father or a neighbor had the equivalent of just one day’s worth of work a week from Bethlehem Steel or another employer, he was considered lucky.
Then he told me that most of his neighbors were so broke that they drove their cars on the white threaded cord of their tires after the black rubber tread had completely disappeared. And mercifully the police did not ticket them.
Lastly, Uncle Rudy, who graduated in 1934 from Swatara High School in Oberlin, Pennsylvania, told me that his high school was so impoverished that there was no money for yearbooks from 1930 to 1934 (grades 8-12). That was also true for the rest of the 1930s.
These were stories, which I will never forget.
Uncle Rudy especially feared that another Depression might occur in the 2020s before the centennial anniversary of the 1929 Wall Street crash, which was followed by the rise of fascist Japan, Nazi Germany and World War II. His rational fear was based on the fact that his generation, who experienced the hardship of the Depression and suffering of World War II, would all be “dead and gone” by 2020.
That is when he feared that “all hell could break loose” with very few people having a living memory of the 1930s and 1940s.
Donald Trump stated on February 20 in a Fox News interview in Greenville, South Carolina that the U.S. collected $450 billion from Communist China in protective tariffs from 2017 to 2021. That equals a savings of $112.5 billion for each of the last four years of his presidency excluding January 2021.
I congratulate him, but our national debt has increased significantly from $20.2 trillion in 2017 (end of fiscal year) to $34 trillion on December 29 while our present GDP is only $27.36 trillion.
Today, Trump’s “paltry” savings of $450 billion represents the amount of money our national debt increased from December 29 to approximately February 26. That is a huge amount of interest on our national credit card.
Our national debt at the present interest rate will easily reach $35 trillion in mid-May and then $36 trillion by Halloween if not earlier. At this rate, the national debt will be over $46 trillion in 2028.
What is especially depressing is that the interest on our national debt is set to exceed defense spending of $841.4 billion this fiscal year.
The Congressional Budget Office also estimates that “interest costs in 2024 will total $870 billion” which is an increase of 32% from 2023.” At the present rate of borrowing, the U.S. is expected to spend $10.6 trillion on interest alone by 2034.
That amount of interest is staggering and pure profligacy.
Even more depressing is that our national debt is expected to reach $54 trillion in the next ten years.
In my opinion, Congress is living in a financial fiscal fools’ paradise, and so may be the average overspending American. More depressing is that the U.S. has not had a surplus since 2001.
If the U.S. started paying today’s national debt off at a trillion dollars per year even with an incremental increase in our GDP, it would take well beyond 2060 to reduce the balance to less than $5 trillion dollars.
I truly feel sorry for the late Millennials (1981-96), Generation Z (1997-2012 and Generation Alpha (2013-2025) because their standard of living may be much lower than the spendthrift Baby Boomers (1946-1964).
I am highly skeptical that Congress in the next four years will start paying down our national debt. I especially doubt that either House Speaker Mike Johnson (LA-04) or Senate Majority Leader Chuck Schumer (NY-D) care very much about reducing our debt any time soon.
Congress essentially has four options to avoid a debt default: expand the economy, print more money (inflation), introduce austerity or use a combination of these three options.
I highly suspect that the millionaire-billionaire class, who has benefited greatly since the late 1990s from our national debt through lucrative dividends, may encourage Capitol Hill either to pay down the debt with inflated dollars or indifferently default on it.
It a debt default occurs, then the dollar would cease to be the world’s reserve currency, interest rates at banks would double, taxes would greatly increase, unemployment could reach 20% or higher, pensions would be in jeopardy, credit card and student loan holders could default and the average middle-class American’s standard of living could easily plummet by 30% or more.
As my uncle Rudy feared, the top 5% or the millionaire-billionaire class could likely become much wealthier by taking advantage of the ensuing economic chaos, inexpensive stock prices, high unemployment and foreclosed properties like in 1929.
However, there may be one pragmatic solution to paying off the national debt and creating some Congressional urgency.
Warren Buffett proposed in 2011 that Congress enact “a law stipulating that if the deficit exceeds 3% of gross domestic product (GDP), all incumbent members of Congress [would] become ineligible for reelection.”
I wholeheartedly endorse his proposal.
I also propose that Congress should have a highly visible national debt clock similar to the one in New York City displayed on the west side of the U.S. Capitol facing the National Mall as a reminder of the federal government’s financial obligations.
If Congress and the millionaire-billionaire class ever think that they can default on the national debt, and watch the middle class drastically and permanently contract, there could be a true insurrection unlike January 6, 2021. The question is would be peaceful or violent or perhaps both.
Let us hope that we never find out.
– Robert L. Maronic
