Worrisome National Debt: What We Need To Do

Worrisome National Debt
by JBS President Emeritus John F. McManus

Close to 50 years ago, a fairly widespread put-down of worries about the national debt included the ridiculous claim that federal indebtedness was nothing to worry about because “we owe it to ourselves.” Anyone trying to get his portion would find how ridiculous that claim was. And 50 years ago, the national debt was less than five percent of the astronomical total that has been reached today.

The United States has become the greatest debtor nation in all history. This is a situation that ought to be front-page news every day – but it isn’t (Photo from Flickr by Chris Potter www.ccPixs.com, CC BY 2.0).

At the end of the first week in May 2017, the admitted national debt stood at $19.9 trillion. That’s $19,900,000,000,000, an amount hard even to imagine. Before the current month passes into history, the $20 trillion plateau will be reached. Can a nation spend itself into extinction? The answer is yes. And our nation is doing exactly that. Let’s look at some figures.

When the U.S. government spends more than it takes in, it borrows. It might seem a bit unbelievable, but one of the two greatest holders of U.S. government debt is Communist China. The Beijing regime and Japan each hold more than $1 trillion in IOUs signed by U.S. officials. This means that our government is in hock to China, not only for the amount the Chinese Reds provided, but also for interest on the trillion dollars they have provided.

China happens to be a country whose leaders have declared America to be an enemy they seek to destroy. Beyond what is sent to China annually, interest payments go to Japan, Britain, Ireland, Switzerland, and numerous other countries holding U.S. bonds. And, of course, many American citizens have loaned money to the government, and they have to be paid interest as well.

Interest payments to other countries – and to any private individual who holds a U.S. bond – total $442 billion per year. That’s not too far from the current annual deficit. If there were no need to send interest payments to existing creditors, Congress and the president might be able to balance the budget. But interest has to be paid.

The situation described above isn’t the whole story. The $19.9 trillion admitted indebtedness happens to be a grossly incomplete amount because unfunded future obligations aren’t considered. The two largest and unfunded federal programs are Medicare/Medicaid and Social Security. These two currently spend more that $2 trillion per year and the money to keep them going has to be borrowed. The noose around our country’s neck is getting tighter every day.

The United States has become the greatest debtor nation in all history. This is a situation that ought to be front-page news every day – but it isn’t. It ought to be the lead item on the daily newscasts on television and radio – but it isn’t. It ought to be a topic for serious examination in economics classes at colleges and even high schools – but it isn’t.

The accumulated national debt of the United States arrived at the $1 trillion figure during the Reagan administration. Each succeeding president (Bush I, Clinton, Bush II, and Obama) has presided over steadily worsening increases. Annual deficit spending and borrowing to cover it reached new highs during the Obama years. The George W. Bush years weren’t much better.

Just a brief glimpse at all of this red ink is frightening. So, the question arises: What to do about it? How about terminating foreign aid? America, drowning in debt, actually gives away money. How about getting the federal government out of education, energy, medical care, and other areas where it has no constitutional authorization to be involved? How about putting an end to the U.S. military being the policeman of the world?

In other words, how about a real change at the top that would see our leaders standing solidly behind their oath to abide by the Constitution? If they would honor their oath, deficit spending would cease, paying off creditors would begin, and America would soon cease being in hock to other nations – especially to any that are sworn enemies.

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McManus_2Mr. McManus served in the U.S. Marine Corps in the late 1950s and joined the staff of The John Birch Society in August 1966. He has served various roles for the organization including Field Coordinator, Director of Public Affairs, and President. Mr. McManus has appeared on hundreds of radio and television programs and is also author of a number of educational DVDs and books. Now President Emeritus, he continues his involvement with the Society through public speaking and writing for this blog, the JBS Bulletin, and The New American.


An Opponent of the IMF

An Opponent of the IMF
by JBS President Emeritus John F. McManus

The 1944 creation of the International Monetary Fund occurred even before the formation of the United Nations in 1945. But the IMF has long appeared on the organizational chart published by the UN and is without doubt one of the many UN divisions.

The International Monetary Fund is among one of the many UN divisions (image from Flickr by Mike Licht, NotionsCapital.com, some rights reserved).

Tasks of this money lending UN agency include keeping tyrannical and profligate nations afloat while financing questionable business ventures. Its chief creator, American Communist Harry Dexter White, didn’t have the best interests of U.S. taxpayers in mind. Neither has the UN. Over the years, IMF funds have bailed out Poland, Mexico, Brazil, Venezuela, Colombia, and others. There is hardly a deadbeat nation that hasn’t received IMF funds to keep it going.

Maybe some of this is about to change. President Trump has nominated Adam Lerrick for an undersecretary post within the Treasury Department. The post oversees U.S. involvement in international finance. His credentials as an opponent of bailouts for countries, banks, and investors are well known. In recent years while holding down a post at the American Enterprise Institute, he has sharply criticized the IMF for throwing money at the likes of South Korea, Brazil, Argentina, and Greece.

According to a report in The New York Times, Lerrick’s outspokenness endeared him to Reagan administration economist Allan Metzger. The two even coauthored a study in 2000 which critiqued the IMF and World Bank. They want countries to suffer the consequences of disastrous monetary policies. Metzger, now a professor at Carnegie Mellon’s business school, expressed the following welcome view of flawed IMF policy, an opinion obviously shared by his friend and fellow IMF critic.

It’s corrupting to give money to countries like Greece that never reform; those are taxpayer monies…. If we bail out countries that do things that are not in the interests of their citizens, then we just get more of the same. Adam [Lerrick] is the right man for this job.

At a Senate hearing in 2000, however, Lerrick was asked if there is any need for an IMF. His answer was guardedly positive. He believed then that the IMF is useful as a lender to emerging markets. “But reforms must be instituted to make sure costs are minimized, if not eliminated.”

Lerrick registered his somewhat positive attitude about IMF almost two decades ago. Have the more recent outrageous bailouts of European nations sharpened his view? Time will tell, of course. But there appears to be hope that American taxpayers will be paying less – and maybe nothing – to rescue deadbeat governments. Credit President Trump for reaching out to find someone who believes that America’s financing of reckless policies among some countries has to stop.

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McManus_2Mr. McManus served in the U.S. Marine Corps in the late 1950s and joined the staff of The John Birch Society in August 1966. He has served various roles for the organization including Field Coordinator, Director of Public Affairs, and President. Mr. McManus has appeared on hundreds of radio and television programs and is also author of a number of educational DVDs and books. Now President Emeritus, he continues his involvement with the Society through public speaking and writing for this blog, the JBS Bulletin, and The New American.


Our Threatening National Debt

Our Threatening National Debt
by JBS President Emeritus John F. McManus

When a new president takes office, he is saddled with a budget agreed to by his predecessor for the first nine months of his term. This procedure occurs because the federal fiscal year begins on the first day of October every year. Therefore the additions to the national debt attributable to Barack Obama’s eight years in office are not complete. But we can get an idea of the increase under his watch by looking at what is rightfully attributable to his leadership.

National Debt Increases from 2001 to 2016 (Image from Wikimedia Commons).

National Debt Increases from 2001 to 2016 (image from Farcaster at English Wikipedia [CC BY-SA 3.0 or GFDL], via Wikimedia Commons).

Author/commentator Terence Jeffrey claims the red ink accumulated by Mr. Obama totaled $9,335,000,000,000 on the day he left office. That’s $9.3 trillion. The previous deficit accumulated by a two-term president was $4.9 trillion for the George W. Bush years (2201-2009). That’s a little bit above half of what his successor, Barack Obama, piled up.

Congress produces a federal budget. A president can veto what he is given but presidents rarely use that constitutional power because no occupant of the White House wants the blame for government shutdown. So the planned deficit wins approval and the nation proceeds down a path to extinction. Extinction? Yes, the indebtedness cannot continue. As the old saying goes, “The piper will be paid.” Who might that “piper” be? Probably world government with total power.

A review of past decades and the indebtedness amassed by a succession of president indicates ascending guilt for each of the past 13 chief executives. They have all contributed to placing our nation’s neck in a noose, the most recent being the worst culprits. Here are some debt figures supplied by the Treasury Department.

Roosevelt (1933-1945) $.236 trillion, up 1,048% from Hoover

Truman (1945-1953) $.007 trillion, up 3% from Roosevelt

Eisenhower (1953-1961) $.023 trillion, up 9% from Truman

Kennedy (1961-1963) $.023 trillion, up 8% from Eisenhower

Johnson (1963-1969) $.042 trillion, up 13% from Kennedy

Nixon (1969-1974) $.121 trillion, up 34% from Johnson

Ford (1974-1977) $.224 trillion, up 47% from Nixon

Carter (1977-1981) $.299 trillion, up 43% from Ford

Reagan (1981-1989) $1.860 trillion, up 186% from Carter

Bush I (1989-1993) $1.554 trillion, up 54% from Reagan

Clinton (1993-2001) $1.396 trillion, up 32 % from Bush

Bush II (2001-2009) $5.849 trillion, up 101% from Clinton

Obama (2009-2017) $7.917 trillion, up 68% from Bush II

(The figure for the Obama years is not complete.)

The largest percentage increase (186%) occurred during the Reagan years when the debt total flew through the $1 trillion plateau. The largest dollar increase occurred during the Obama years (not yet complete).

What does all this mean? It means the U.S. government is spending the nation into bankruptcy. As economic guru Doug Casey states: “Giving politicians the ability to borrow is like giving a teenager a bottle of whiskey and the keys to a Corvette. The debt is an albatross around the necks of the next several generations: it’s criminal to make indentured servants out of people who aren’t even born yet.”

Congress is the key to either fiscal sanity or fiscal suicide. If you value freedom and love your children, let your representative and your two senators hear from you.

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McManus_2Mr. McManus served in the U.S. Marine Corps in the late 1950s and joined the staff of The John Birch Society in August 1966. He has served various roles for the organization including Field Coordinator, Director of Public Affairs, and President. Mr. McManus has appeared on hundreds of radio and television programs and is also author of a number of educational DVDs and books. Now President Emeritus, he continues his involvement with the Society through public speaking and writing for this blog, the JBS Bulletin, and The New American.


National Debt Shouldn’t Be Ignored

National Debt Shouldn’t Be Ignored
by JBS President Emeritus John F. McManus

We hear a lot about the National Debt. But we hear very little about addressing the threat it poses. So, let’s take a hard look at Uncle Sam’s profligacy. While doing so, think of the children of today who will have to bear the burden of national indebtedness – the mortgaging of their future that they had no part in creating.

As of May 5, 2016, the admitted national debt is $19.176 trillion. The estimated U.S. population is 323 million. This means that the share of debt for every citizen in our nation (man, woman and child) is $59,388. And the national debt increases by approximately $2.37 billion every day.

These figures address only the admitted national debt. The federal government also has unfunded liabilities not shown in the above figures. These include promises to pay for Social Security and Medicare and other government programs that must be funded with borrowed money. These add at least another $100 trillion to the already staggering debt total. Some estimates place that figure as high at $200 trillion.

Expectations given by competent analysts predict that the national debt will rise to $25 trillion by the end of the current decade. In other words, those who manage America’s affairs (the President and the Congress) are knowingly steering the ship of state toward catastrophic shipwreck.

Annual interest on the money borrowed to keep the government functioning has risen to approximately $242 billion. But the largest yearly federal expenditures, “the big three,” are Medicare-Medicaid ($1 trillion), Social Security ($898 billion), and Defense ($586 billion). Numerous other smaller but still significant expenditures, many funding totally unconstitutional agencies and bureaus, add to the debt total. A large portion of the government’s expenditures is considered on “auto pilot,” meaning those agencies can’t be decreased.

Awareness of this situation doesn’t stop Uncle Sam for maintaining a foreign aid program. Ask a fourth grader, “If you’re heavily in debt, should you give away money?” The ten-year-old would look at you quizzically and say, “No, you shouldn’t.” We would be better off if we allowed a ten-year-old’s wisdom to prevail.

One question about the debt receives little attention. It is: to whom does the U.S. government pay interest on its indebtedness? The answer is everyone who holds government securities. Leading possessors of these securities (bonds) are China ($1.252 trillion), Japan ($1.133 trillion), and lesser but still large amounts held by Belgium, Ireland, Brazil, the United Kingdom, Switzerland, and Taiwan. Our nation has been placed in a situation where China, Japan, or some other countries could dump their holdings, even knowingly take a loss in the process, but also knowing that they have impacted America’s credit rating and lowered the value of the dollar. A sudden drop in the dollar’s worth (it drops slowly all the time as more money is created by the Federal Reserve) would certainly affect every person within our borders.

Despite what everyone knows about the national debt, deficit spending continues. U.S. Comptroller General Gene Dodaro recently told the Senate Budget Committee that the government will soon owe more than the entire U.S. economy produces. He also stated that several agencies of the federal government (e.g., Defense, Housing and Urban Development, and Agriculture) couldn’t be audited either because their books are in disarray or they refuse to cooperate with the government’s fiscal watchdog agency.

In short, the fiscal condition of the United States is bleak – and getting bleaker each year as government continues to borrow. Some may consider this a peculiar sort of wisdom. Realists consider it national suicide.

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McManus_2Mr. McManus served in the U.S. Marine Corps in the late 1950s and joined the staff of The John Birch Society in August 1966. He has served various roles for the organization including Field Coordinator, Director of Public Affairs, and President. Mr. McManus has appeared on hundreds of radio and television programs and is also author of a number of educational DVDs and books. Now President Emeritus, he continues his involvement with the Society through public speaking and writing for this blog, the JBS Bulletin, and The New American.