Editors’ Note: We think the author is spot on – that our political elites, the media, and the public at large are currently living a delusional life. They simply do not recognize the serious nature of our financial situation. The markets however are starting to see the problem. Not only have we had the worst bear market in equities since the crash of 2008, but the US ten-year treasury has also turned in its worst performance in history. The standard portfolio recommended by financial planners of 60% stocks, and 40% bonds, has posted the worst performance in 100 years. Mortgage rates are now over 7% and a housing slump has begun. Real wages have fallen for 18 months. Bidenomics have made all of us poorer very rapidly, yet the Democrats continues to focus attention on January 6th and abortion. But you can’t have a government destroy that much wealth in the private sector without further serious consequences. In a social welfare state like ours, when the economy slows, more people will qualify for benefits, and fewer people will be employed paying taxes. Deficits will rise as social spending increases and tax receipts decline. The interest paid on existing debt and new debt will soar because the debt is both larger and the costs to finance it are higher. That will add to the deficit. The baby boom is hitting Social Security hard and the system has gone cash flow negative, i.e. more benefits are being paid out compared to Social Security taxes paid in. Medicare and Social Security will need a bailout and that will add to the deficit. The author is correct – we are headed for a doom loop. As voters, we must punish any of our Senators and Representatives that voted for the Democrat’s wild spending and we must insist Republicans also return to their roots of fiscal responsibility. No more going along to get along. We need some adults in the room and we need them now.

America’s political class can no longer put off the inevitable. They soon will have to pay for their insanely reckless fiscal practices.

It’s not going to be pretty. America’s debt has reached an appalling $31 trillion. Annual interest payments will exceed $1 trillion this year. Debt service is well on its way to crowding out other priorities, a trend that will only accelerate.

Unfortunately, a steep rise in interest rates occurred near the end of the biggest spending binge ever. Economists are warning we are nearing the dreaded “doom loop“ in which interest costs can be covered only by more borrowing which further drives up interest expense, creating a vicious cycle.

There is a weird, almost preternatural calm about our dire fiscal future during this campaign season. There is much consternation about inflation, public safety, the border, and other critical issues. Yet politicians and the media hardly mentioned the debt crisis, so the public seems to assume everything is under control.

It isn’t, not by a long shot. Uncle Sam issued $7 trillion in new debt to finance the recovery from the Covid pandemic and our panicked overreaction to the disease. It’s too bad we can’t take back that $7 trillion.

Much of it was stolen by fraud and bureaucratic bumbling. Funds went to school districts that haven’t spent them so far, to finance the indolence of those who preferred not to work, and to Democrat pet projects like “climate change“. Millions of voters in no distress whatsoever got checks, as did some illegal immigrants.

Many economists predicted that injecting that much cash into the economy would cause inflation, especially since supply was limited by weakness in the labor market, fuel shortages, and supply chain problems, They were mostly ignored but turned out to be absolutely correct. After decades of relative price stability, we are now experiencing 8% inflation, with no end in sight.

Millions of non-economists are experiencing what that does to your standard of living. Suddenly, food, fuel, and shelter have become existential concerns to millions of Americans and the economic future looks dim.

Inflation also increases government spending. Social Security benefits are inflation-adjusted, resulting in an 8%, $100 billion increase. Total government healthcare costs will grow from $710 billion last year to $915 billion.

Financial markets cannot ignore the cloud of government debt hanging over our economy. A serious recession will almost certainly soon be upon us. Already, declining stock and bond values over the past nine months assure a steep decline in capital gains tax revenue, another contributing factor to the deficit.

The Federal Reserve Board is doing the only thing it can to address inflation, which is to raise core interest rates. That also directly adds to the national deficit, increasing the interest cost and driving up the balance, since no other source of funds is available.

So, to summarize, unnecessary Covid related spending of $7 trillion has combined with chronic overspending. which caused inflation, which increased borrowing costs, which drove up the deficit, thus precipitating a recession that will deprive the government of revenues to pay down the surging debt load. Way to go, guys.

The response of the Biden administration has been denial. Our president claims the economy is thriving. A monthly .1% drop in the inflation rate was the pretext for claiming inflation was in decline. The national debt is never mentioned, nor are the untold trillions in future promises we have made to senior citizens and others.

Instead, Biden issued a probably unconstitutional executive order “ canceling” unpaid college loans – i.e., transferring the liability to taxpayers. It was terrible public policy, penalizing those who had behaved responsibly and incentivizing student indebtedness in the future. It spent yet more money in a desperate attempt to bribe some votes for the midterm elections.

Yet there seems to be little taxpayer resentment. Why should they care? Their taxes aren’t going to increase. The obligation will be added to the great river of debt passed on to future generations -you know, those little people who don’t vote yet

They will inherit an America feeble and impoverished, that will have forfeited its greatness because of our greed and selfishness. STOP THE SPENDING!

*****

Thomas C. Patterson, MD is a retired Emergency Medicine physician, Arizona state Senator and Arizona Senate Majority Leader in the ’90s. He is a former Chairman, Goldwater Institute.