One of the things that caught my attention this morning was that the US government’s debt level has soared to just a hair under $19.7 trillion.
To give it some context, that’s up over $170 billion in just eight business days.
It’s almost as if Barack Obama is intentionally and desperately trying to breach the $20 trillion mark before he leaves office in January.
The election is merely a fight over who gets to be the band conductor while the Titanic sinks. And the debt is precisely the reason for this.
Total US public debt has skyrocketed over the last eight years by $9 trillion, from $10.6 trillion to $19.7 trillion.
And in the 2016 fiscal year that just closed two weeks ago, the government added a whopping $1.4 trillion to the debt, the third highest amount on record.
Plus, they managed to accumulate that much debt at a time when they weren’t even really doing anything.
It’s not like the government spent the last year vanquishing ISIS or rebuilding US infrastructure. They just… squandered it.
Stiglitz claims that we wouldn’t judge a private company like Apple based solely on its debt.
We’d look at other factors like assets, income, and growth before making an assessment of the company’s financial health.
And he’s right.
Singapore, for example, is a country with an extremely high level of debt. At first glance, it looks dangerous.
But if you dive deeper into the government’s balance sheet, you see an enormous abundance of cash reserves.
So taking into account just its cash assets, Singapore has absolutely ZERO net debt.
The US, on the other hand, is not in this position.
The Treasury Department publishes regular financial statements detailing its income, expenses, assets, and liabilities.
You already know the income numbers– the government loses billions of dollars per year, and the trend is negative.
As for its balance sheet, the government reports just $3.2 trillion in assets against $21.4 trillion in liabilities, for a NET position of NEGATIVE $18.2 trillion.
Now, when we’re dealing with trillions, it’s clearly not an exact science.
There are many economists who argue that the federal highway system, military, and federal tax authority should count as “assets” that are worth trillions of dollars.
Maybe so. But to be fair, one should also count the trillions of dollars of repairs needed on the highway system as liabilities.
Or the trillions more in cost of wars. Or the $40+ trillion in unfunded liabilities from Medicare, Social Security, etc.
It’s also important to note that America’s debt is growing at a far quicker rate than its economy.
When President Obama took office, US public debt was about 73% of GDP. Today it’s 105%. So even as the economy has grown, the debt has grown much faster.
Any way you look at it, the US government is already insolvent, and its situation is becoming worse.
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