The United States of America has a tremendous advantage over other countries and much of her* populace—our money and debt are both incredibly popular, and so we actually are getting an incredible deal on our national debt. Overall, we pay negative real interest rates on our $23 trillion of debt—”real” meaning having adjusted for diminished purchasing power due to inflation, which is about 2% per year as of late. This means that our real debt would actually diminish, albeit slowly, if we had a balanced federal budget. Of course, that’s a big “if.”
A more optimistic estimation of the national debt deducts $6 trillion of U.S. Treasury instruments owned by other parts of the federal government—chiefly the Social Security Trust Fund—leaving only $17 trillion. China and Japan are high on the list of foreign owners of U.S. debt, with foreign governments and investors accounting for about 40% of the $17 trillion, with the remaining 60% being held by domestic private investors (39%), the Federal Reserve itself (15%), and state governments (6%). This should be somewhat reassuring. An example of state government ownership is the Florida Retirement System pension plan, which I examined as part of my Ph.D. dissertation—it has assets of $163 billion and 20% of this is in fixed-income and liquid investments, including corporate debt, mortgage-backed securities, municipal bonds, and U.S. Treasury debt.
The United States is distinct from her constituent state and local governments in her capacity for unrestrained deficit spending. The State of Florida has a $91 billion budget this year. If Florida decided to spend $116 billion instead, that would be a crisis. However, this is the same ratio of the U.S. budget deficit, which is revenue minus spending and adds on to the national debt each year. For the year of 10/01/2019–9/30/2020, the U.S. government is projected to take in $3.6 billion but spend 28% more at $4.6 trillion, which is another $1 trillion annual deficit like the prior year. With Federal Reserve interest rates already being around 1.5% per year, this leaves little wiggle room to cut rates or increase spending if a recession hits.
Ultimately, the deficit represents twin failures of the U.S. Congress and government (a) to capture an appropriate share of the engine of prosperity that is the U.S. economy and (b) foolish spending decisions that are not in the public’s interest. The Tax Cuts and Jobs Act of 2017 was a robbery of epic proportions by Republicans on behalf of the wealthy and top corporations. The idea of trickle-down economics—already debunked—is that big giveaways to the top 1% will result in them throwing scraps to the pheasants. Instead, Jeff Bezos, founder/CEO of Amazon, is focusing on owning more mansions than anyone else, private jets, and getting him and his rich buddies off this planet while spewing out tremendous amounts of greenhouse gases on the little people in the process. His philanthropic operations have begun in earnest only recently, and shockingly involve large cash gifts to nonprofits with little vetting and no stipulations.
The Tax Cuts and Jobs Act of 2017 lowered the federal corporate income tax rate from 35% to 21%. In reality, top profitable corporations are paying only 11.3%, and a large number of technically unprofitable corporations pay 0%—including Amazon, which perpetually expands in order to evade taxation. Compare this to the 15.3% payroll tax on typical American schmucks for Social Security and Medicare—plus federal income tax (if not offset by credits), state sales and income taxes, and myriad other taxes. The GOP—which is now a different party having been co-opted by Lyin’ Donald Trump—endorses the narrative that so-called “socialism” and welfare for the disadvantaged are what we should fear. Research shows, however, that welfare spending actually funnels back into economies resulting in little impact on national debt.
Massive corporate giveaways and tax breaks and lack of enforcement for the rich have resulted in grotesque wealth inequality in the United States, which is getting tacked right onto the national debt without the economic benefits one would see with welfare spending on Medicaid, education, food and housing subsidies, infrastructure, or even a universal basic income. A $700 billion war budget per year is outrageous with manifest destiny having been realized and few if any threats from our northern and southern neighbors. Lyin’ Donald Trump’s insane budgets increase only war spending while slashing education, diplomacy, labor and health funding. Americans who are most injured by this insanity are paradoxically Trump’s greatest cheerleaders.
I’m not a believer in modern monetary theory (MMT), but I will say this—if we pretend it is a sound theory, the only nation on earth it would apply to is the United States. The basic idea of MMT is that nations can take on more debt than generally believed by creating money. Nations that have experienced runaway inflation such as Brazil, Germany, and Zimbabwe are cautionary tales, but the United States is exceptional because of her linchpin status as a worldwide financial safe haven and economic juggernaut. Nonetheless, one can conceive of a much more sensible budget that helps 99% of Americans and has a much smaller deficit. We just have to get our priorities straight. It isn’t easy when you’re up against an enormous engine of propaganda, lobbying, bribes, and revolving doors among politicians and their puppet masters. We didn’t arrive at a plutocratic oligarchy by accident, but rather by relentless, deliberate, mendacious actions by its beneficiaries—at the expense of the United States of American and the bulk of her populace.
As a candidate for U.S. Congress, I am unusual for having endorsed a great expansion of the Internal Revenue Service (IRS) and its technological systems. We’re getting robbed blind. The IRS has fewer employees now than 10 years ago, despite more burdens with Obamacare, more Americans working, greater corporate trickery, countless share buybacks and mergers and acquisitions, and ever-larger armies of attorneys, accountants, and consultants employed by wealthy individuals and firms. Millionaires are now 80% less likely to be audited than they were in 2011, and Lyin’ Donald Trump’s insane 35-day 2018–2019 government shutdown compounded the issues and disenfranchised many taxpayers as enforcement actions continued unabated. Although it should be repealed and replaced, even while the Tax Cuts and Jobs Act of 2017 stands, we could do a much better job of collecting taxes owed to the United States of America.
We can fund healthcare for more, abatement of student loan interest, excellent K–12 and higher education, remediation of the climate crisis, Social Security and Medicare, and more without increasing the deficit. We just need to raise enforcement and taxes on those who are benefitting from American opportunity while robbing us blind, and take a sledgehammer to War Dogs-level military graft and lunacy that President Eisenhower warned us of so long ago. Please donate and vote to send representatives such as I to Washington to end the insanity.
– Richard Thripp, Ph.D.
Democratic candidate for U.S. House of Representatives in Florida’s 6th district
(Daytona Beach, Deltona, Palm Coast, & More)
* My use of “her” was deliberate to personify the USA, and I will not make a regular habit of it.