The Federal Debt Is $30 Trillion!


Or, more precisely, $30,642,820,000,000…Actually, it’s changing so fast that any number I put down will be too low.  Search for “the national debt clock”.

The federal debt has grown from $20 trillion to $30 trillion in just five years!


It was $20 trillion in 2017.  $22.7 trillion at the end of 2019.  Then the covid-19 spending started.  The first stimulus was arguably a good thing.  The economy rebounded almost-immediately from a very deep and very short recession, and continued to grow rapidly.  But that fall the President and the Speaker of the House bickered openly about which party would get the privilege of buying votes with the second stimulus program, and the answer was nobody.  It was a smaller package, “just” $900 billion and it happened well after the election was over.

How big is $900 billion?  It’s about the size of our annual spending on Medicare, and a bit smaller than our biggest spending program, Social Security.  In 2019 the nation collected just $3.5 trillion in taxes;  $3.7 trillion in 2020, and $3.9 trillion in 2021.

Just three months after those $600 second-package checks were mailed to voters, $1,400 checks were mailed to every person in any household earning less than $150,000–even if there were 10 children in the household.  Smaller checks were sent to voters earning more than $150,000 but less than $160,000 … Giddy recipients didn’t realize that this was only $410 billion of the $1,900 billion blow-out.  The legislation raised so little tax revenue that a voter in the younger half of the population (the people who will have to pay back the debt in the future) received $1,400 and took on more than $11,400 in debt each.

The really bad news is that, if you’re in that younger half of the population, your share of the $10 trillion that Congress has borrowed in your name in the last five years is …  $59,171.  No, you won’t have to actually pay the debt back.  But you’ll be paying interest on it for the rest of your life.

And that’s the rest of the story.  When interest rates were at all-time lows, politicians were able to delude themselves into forgetting about the interest that Congress has to pay each year on the debt.  In 2020 Congress only had to pay $371 billion in debt, plus another $156 billion in pretend interest to the bonds “held in the vaults” of Social Security and Medicare (both programs will run out of money soon, if you choose to believe in the vault idea).  So that was just half a trillion in interest, because interest rates were at all-time lows.  

Since then interest rates have been rising, and today’s inflation rates suggest that they could double.  The debt is up 50% and still growing, so we’re fast approaching the day when the interest on the debt will be $1,000,000,000,000.  Every year.  If we don’t balance the budget, the magic of compound interest will become an evil curse.

Free Gas!


Willie Wilson, a candidate for Mayor of Chicago, has spent $2.2 million giving out free gasoline to voters in three events which spanned 26 gas stations.  The Economist says that current mayor Lori Lightfoot responded to the threat on April 27 by persuading her city council to distribute 50,000 prepaid cards for gasoline and public transportation, at a cost of $12.5 million.  ‘“She’s using the city’s money, he’s using his own money,” notes Derrick Orr, a school principal waiting [for gasoline] in his Range Rover.”

Milton Friedman said that there are four ways to spend money:

  1. Spend your own money on yourself.
  2. Spend your own money on somebody else.
  3. Spend somebody else’s money on yourself.
  4. Spend somebody else’s money on somebody else.

Politicians seem to be in category 4, but there is clear personal benefit to a pol who promises to shower constituents with gas, food, or lodging.  Note that Lori Lightfoot spent six times as much money buying votes—er, gasoline cards—as Willie Wilson.  The dollars are bigger when politicians spend money that isn’t their own.


Real wages are falling.

The inflation rate is eight percent;   so high that wage increases haven’t been able to keep up despite a significant shortage of labor in many industries. Workers are actually getting poorer.  Inequality is rising.

There are times when policymakers are unlucky.  This is not one of those times.  All-time low interest rates, unprecedented monetary stimulus, and unprecedented fiscal stimulus would have caused objections from the children on the TV show “Are You Smarter Than A 5th Grader?”    The economy was roaring;  The day before the third (third!) stimulus legislation was signed into law, GDP was running at 8.4%, as measured by GDP Now.

“But, but, there’s a war on—and inflation is almost as bad in Europe as it is here!”  Are you talking about the Europe that still has some negative interest rates?   Our own inflation rate was already running at 7.9% before Russia attacked Ukraine.

To get inflation under control the Fed will have to inflict more pain, especially on the housing market and bondholders.  Bonds have already been crushed, and they will be bludgeoned again and again.  The pain has spread to the stock market.  Everybody outside the Beltway knows that a recession is coming.

Inside the Beltway, nobody even bothers asking why politicians boast about compassion and then do things that cause pain.  But the Governors of the Federal Reserve System, a bit farther down Constitution Avenue, are supposed to be above all that.  Perhaps they forgot that the car they’re driving has no steering wheel.  They pressed the gas pedal too hard, for too long, and the only thing they can do now is jump on the brakes.

Nota Bene:  During the pandemic consumers, fueled by the cash that Congress had stuffed into their pockets, had an insatiable demand for goods.  So much so that corporations were able to raise prices even faster than their costs and expenses.  Wages went up rapidly, but real wages declined 2.6% from April 2021 to April 2022.    The Economist says that this wasn’t true in Europe, because European consumers weren’t flooded with government checks.  Corporate profits actually fell in Great Britain, while they rose in the ‘States;  and these rising profits turbocharged our stock market and enriched the rich.

Excessive federal spending and loose monetary policy caused inequality to increase.





When people talk about the injustice of our tax system they’re generally thinking about corporations that pay no tax, or wealthy individuals whose tax rate is lower than that of a middle class taxpayer.  They call for higher rates; but higher rates are not going to fix the problems they have in mind.

Tax deductions, and the complexity that they’ve introduced into our tax system, are a significant cause of injustice.  Complexity is an invitation to tax lawyers to devise creative ways to cut a client’s tax bill, and of course it’s the wealthy who can afford to pay the large legal bills that result.

Total federal tax deductions, as calculated by the OMB and the Joint Committee on Taxation, are worth more than a trillion dollars a year to a government that only received $3.5 trillion in taxes in 2019.  IRS Commissioner Chuck Rettig says that another trillion could be harvested if we got all taxpayers to simply pay what they owe, under the current crazy rules.

Wealthy people who do pay what they owe and don’t maneuver for tax deductions are leaving New York and California, where their total tax brackets can exceed 50%, and moving to Florida, Texas, and other low-tax states.  The wealthiest can move all the way to New Zealand (a 33% top tax rate) or the Cayman Islands (a zero, that is 0%, income tax).

The same is true for corporations.  Before the 2017 tax reform we were losing corporations to Ireland (where the corporate tax rate is 12.5%) and Switzerland (as low as 11.9%, depending on canton).  134 countries, including Ireland (and maybe/probably Switzerland) just agreed to a 15% rate.  15% is still quite a bit lower than the U.S. rate, but most of our corporations will stay here if they think they’re being treated fairly.

As you study proposals for tax reform ask yourself whether they will actually cause the tax rates of billionaires such as Jeff Bezos and Mike Bloomberg to rise significantly.  Congressmen protect the beloved tax breaks of their campaign donors.  And they play to the voters;   why, you might ask, are American gasoline taxes still a tiny fraction of those charged by other developed countries?

Returning to our main point:  Charging higher tax rates to compliant taxpayers, while letting the schemers get off tax free, isn’t just stupid;  it’s mean.  Taxes can’t be fair unless they are simple.  John McCain liked to say that the tax code is the foundation for the corruption of American politics.


Pork Is Back!

 The Congressional Research Service, April 8, 2021:

“The House Committee on Appropriations and Committee on Transportation and Infrastructure have separately announced that individual Members may request funding for specific transportation projects. This ends an effective ban on earmarks that has been in force in the House since 2011.”

Forbes, May 6:  “This week, the U.S. House posted online 3,309 earmarks.”

Financial Crisis Ahead

It happened in New Zealand in 1984, in Sweden in 1994, and in Canada in 1995.  Each of these nations suffered a painful financial crisis, slashed the size of its overgrown welfare state, and returned to health. That’s where we’re headed in the next decade.  We’re running trillion-dollar deficits, and Medicare runs out of … [read more]

Jefferson Says

“The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” (Thomas Jefferson, 1816) Our federal deficit is larger than a trillion dollars a year, so each year the debt our children will carry grows by more … [read more]

Competing For Tax Revenue

Wealthy Brits are buying homes on the island of Guernsey, says The Economist,  so they can easily move there if Jeremy Corbyn is elected.  Corbyn wants to apply the 45% tax rate to those making just $105,000, and establish a new 50% rate.  And create a wealth tax, and raise … [read more]

Bipartisanship Blooms!

The President, the Speaker of the House, and the Senate Minority leader shared a celebration of goodwill and harmony recently, in agreeing to spend TWO TRILLION DOLLARS on infrastructure. Yes! Let’s pick a gigantic round number first, and then come up with a list of ways to get the biggest political impact!  So far … [read more]

Swindling Children

Yale, a bastion of privilege with an endowment that exceeds $25 billion, has proudly announced that tuition for the coming school year will cost $55,500. If you want room and board you’ll have to cough up a total of $72,100. The price of education has soared to ridiculous levels because … [read more]

Another Year, Another Trillion

The federal debt has crossed $22 trillion. That’s $67,278 per American, including babies—and a rapidly-growing population of elderly citizens who receive checks from the government but no longer pay FICA. Their lifelong contributions to Social Security and Medicare were spent during their working years, and all that’s left … [read more]

A Balanced Budget Amendment to the Constitution

If we were to  pass a balanced-budget amendment to the Constitution (“BBA”), the federal debt would still go up each year.  Congress has a bagful of tricks that it uses to skirt any form of discipline, from “off-budget” spending to the cleverness of the  “Unified Budget” (which effectively seized the … [read more]