by Jeff Lukens, American Thinker:
It has become a speculative game in the blogosphere to predict what black swan calamities could lead to a breakdown in civil order and the imposition of some form of martial law. Wars and rumors of war abound. We have already seen a container ship mysteriously knocking down a bridge and closing a key port. Other such scenarios include massive cyber-attacks that shut down the grid and block communication and transportation networks nationwide. The speculation on the variations of such events is virtually endless.
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However, one crisis is no black swan and is entirely expected, already happening, and growing in scale by the day. That would be the ballooning debt crisis. If Washington does not change its free-spending ways, the debt will become a catastrophe of devastating proportions that will tear the nation apart. So long as Congress continues its multi-trillion-dollar deficit spending, we will have a financial death spiral, similar to events a century ago in the Weimar Republic of Germany.
The total discretionary spending for the U.S. government in Fiscal Year 2024 is approximately $1.70 trillion. This amount is split between $886 billion for defense and $688 billion for non-defense programs. In the fiscal year, the U.S. government is also projected to spend approximately $4.19 trillion on mandatory programs. These programs include interest on the debt, Social Security, Medicare, Medicaid, VA, and other programs. We have an annual structural deficit in excess of $2 trillion that will soon grow exponentially.
Congress needs to get serious about reducing spending. For starters, they should outright eliminate the Departments of Commerce, Education, and Energy. All other departments will need cuts as well. But that is not happening, and instead, they waste money on frivolous services benefiting illegal immigrants and abortion facilities. Notable allocations include funds for an LGBTQ+ community facility, scholarships for Egyptian students, educational programs for elementary school children by an LGBTQ+ activist group, diversity initiatives at a zoo, and an organization providing clothing and counseling services to teenagers without parental consent. Not surprisingly, they do not allocate funds to the truly essential need of building a southern border wall.
As a result of their incompetence, the debt is now growing at an accelerating rate. The $1 trillion move from $31 to $32 trillion took about eight months, and the increase from $33 trillion to $34 trillion took about 100 days. While these numbers are bad enough, it becomes alarming knowing that another trillion dollars of debt will be added every 90 days, then 80, then 70, and in ever smaller time frames into the future.
Currently, gross interest on the debt is roughly $1 trillion annually. But in three years, annual interest could surpass $2 trillion. In 10 years, interest on the debt could reach $5 trillion yearly.
Ten years ago, the U.S. government issued $264 billion in 10-year Treasury notes, which means that $264 billion worth of 10-year notes are due and payable this year. Altogether, the Treasury will have to settle $6 trillion of existing debt this year, which includes financing new debt for this year and the rollover of old debt from prior years. The Treasury financing debt this way is similar to using one credit card to pay off another.
The problem with rolling over old debt is compounded by borrowing at vastly higher interest rates than when those Treasuries were first issued. So, the old debt will be rolled over this year at about 4.2% to 5.5%, depending on the term. That’s troubling when most of the debt being rolled over was issued around 2%. They are doubling the cost to service that debt. As more of this old, cheap debt comes due and is reissued at higher rates, the cost of servicing the debt will grow exponentially. That additional expense adds to the deficit, and the vicious cycle feeds on itself.
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