Living Within Our Means Part 1
In the above title, what does “Means” really. . . mean?
As a whole, it reflects the fact that we live day to day doing what’s required as long as funds are readily available. If the money is not there, yet the situation justifies itself, such as a home or car, we borrow, and when that has to happen there is an interest rate to adhere to, and a loan to repay. The ideal solution is to obtain a loan, make monthly principal and interest payments, as well as pay credit card balances in full each month. Often, this principle of ‘living within our means’ is difficult to follow year in and year out.
Especially for our federal government.
The Constitution requires the federal government “. . .to establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare and secure the Blessings of Liberty to ourselves and our posterity.” Thus, our federal government is what pays for social security, Medicare, education, military equipment, highway maintenance, infrastructure construction, transportation and so many other necessities. Otherwise known as ‘promises’, which also includes. . . climate disaster relief, mitigation and adaptation funding.
Our nation’s government spends dollars to support our economy and people. And if more money goes out than comes in, America must borrow to pay the bills, furthering a national debt - mostly to other nations. For 20 straight years now, said debt has been uncontrollable. This debt is the total of what our nation owes - what it borrowed to cover the most recent year’s deficit, and all the prior year’s debt combined. The “debt ceiling” is established by Congress to keep the national debt in check. . .which fails each year due to the unexpected.
Gross domestic product (GDP) is the sum of product and services produced within our nation, and the national debt should not exceed about 60% of the GDP in order to be a solid indicator of our economy’s financial leverage. Unfortunately, for fiscal year 2023, the national debt represented 97% of that year’s GDP!
In the spring of 2024, the U.S. national debt of $35+ trillion exceeded our national economy value of $28 trillion! And during the short period of February, 2024 through March 24, 2024, our national debt rose by a quarter of a trillion dollars. Finally, during the first seven months of the current fiscal year, the U.S. spent $514 billion to cover just the interest on its debt - more than it had spent on Medicare and the national defense combined. This indicates a very concerning unhealthy balance between federal tax revenue and expenditures. According to more than one economist, the skyrocketing national debt is on a trajectory to match the GDP in 2024, and surpass it by 116% by 2034.
This essay concentrates on another very strong reason why green sustainable energy must take out polluting energy ASAP. In fact, I place the debt penalty of fossil fuel addiction second only to fresh water scarcity. And not for just the USA, but for all countries.
The present $35+ trillion amount of U.S. national debt is scary, to say the least. That unfathomable amount of money, as well as the current cost of climate change, are low compared to what is in store. Interest payments are the fastest growing piece of our federal budget. I shudder to think what would happen if that scenario filtered down to state, corporate and individual levels.
According to the National Oceanic and Atmospheric Administration, climate disaster records have been steadily recorded since the early 1980s, and since that time there have been 376 such destruction events costing our country $2.7 trillion. 2023’s record breaking 28 climate severe weather price tag was $93 billion and rising, since not all the numbers are yet finalized. For this post, please remember there are 1,000 billion in a trillion.
Last year was the fourth consecutive year of 18 or more billion-dollar U.S. climate related disasters. What’s even more alarming is the fact that there were an average of 8.5 such events since 1980, or for a duration of around 40 years. But since 2019, the figure has increased 2.5 times to a 20.4 average per year. Since 2017, 137 billion dollar climate disasters cost $1,000,000,000, and took 5,000 American lives. Finally, note that the above numbers do not include weather disasters costing LESS than $1 billion.
After writing that, I had to take a deep breath. Maybe you did as well - so much money and where does it come from?
Let’s go back to the early last century. Even though our nation’s debt has increased from $403 billion to $35 trillion over the last 100 years, for the majority of that period our country had the ability to significantly pay down those enormous numbers. That was due to the fact that during the majority of that time span, the borrowing rose by a controllable percent margin. The ability to carefully borrow funds to help pay for our citizen’s health, welfare, security programs, and services, has been a hallmark achievement for a land so populated.
To understand the concept of our national debt, think of a credit card you use on a regular basis and then suddenly the inability to pay it off 100% each month comes into play, and a deficit results. A small one is understandable, it happens. Yet, you are in a deficit spending mode and it takes great discipline to permanently halt the practice. Uncurtailed, the interest payments alone will soon erode away your financial comfort zone.
Deficit spending occurs for the U.S. when far too many unpredicted worldly events occur requiring our government to assist with a financial rescue. Billions in expenditures result which cannot be funded by the routine government revenues: namely individual, small business and corporate taxes. Adequate emergency funds have not been immediately available causing the deficit to grow and grow, for two decades now.
The system worked well, however, until the early 1980s when our nation’s debt grew from about $3 trillion to ten times that 40 years later. That is when our current age of overpopulation began to bring forth a litany of unexpected burdens that could not be ignored such as Middle East wars, 911, 2008 Great Recession and Covid-19. Add in the tax cuts, the tax loopholes where tax obligations are forgiven, the unemployment effects on tax revenue, and our national debt must rise because realistic budget reductions are nearly impossible to achieve. The Constitution made a promise that must be kept, overpopulation or not.
It is rarely possible to reverse spending trends once they have been granted year after year. Overspending on causes that cannot be denied is not a failure. When and how does one say ‘No’ when survival is at stake? Almost never, and won’t most of the time, until there is nowhere left to borrow from. In my opinion, America is approaching its destiny in history when it can’t keep saying, “Yes.” No different in concept than a married couple that is earning $80,000 per year and spending $135,000 per year after year by borrowing - it must stop now. In principle, a country is no different.
Join me for the next post to learn why America’s national debt is another front and center motivation for transitioning to sustainable energy. To date, continents have been dependent on debt in order to function, and therefore nations will continue to pay each other the debt interest until who-knows-when.