Once upon a time, the United States led the world in solving momentous problems. From saving the world in World War II, to getting a manned mission to the moon, to providing high-quality and accessible higher education, to winning the Cold War, this nation was once the pinnacle of determination and resolve.
As leaders, we were respected and admired. But today, amid our new political divide, we are incapable and unwilling to even begin addressing serious national problems.
Today, the United States faces a Social Security regime in crisis, failing public schools, a higher education system that is astronomically expensive and saddles our graduates with loans that cannot be repaid, a health care system that produces poor results at a massive cost and a Federal Reserve that rewards the elites at the expense of the working class. It’s clear that we have lost our way as a nation.
It is possible to fix many of these problems. There are policy solutions, for example, that could lower college tuition, such as more strict regulation of the student loans that have inflated tuition costs.
There is one issue, however, so overarching and unassailable that it defies any solution that we can call normal: our national debt.
Imagine you have a friend who makes $100,000 a year and seems well off. He confides in you that he has over $680,000 in credit card debt, allowing him to live his extravagant lifestyle. The only responsible advice you can give him is to declare bankruptcy. Now apply this ratio to the American government. Our federal taxes raise $5 trillion a year, but the national debt is $34 trillion.
Our government has wastefully borrowed trillions upon trillions, and unlike many forward-thinking Americans, who refinanced their homes with low 30-year fixed rates, it has borrowed so short that over the next three years, it will have to refinance trillions in debt at higher interest rates. Our government will soon spend more than a trillion dollars a year just to keep up with interest payments.
This is the best-case scenario, assuming no recession is on the way. When one arrives, and the United States faces a fall in tax income and a rise in interest rates, all hell will break out in our financial system.
We can expect the cost of interest on our debt to become the biggest line item in the national budget, larger than defense, Medicaid and Medicare. It’s no wonder polls show Americans say we’re headed in the wrong direction even with unemployment near a record low. Seeing the freight train of economic destruction headed toward them and knowing their leaders will do nothing to stop it, the dwindling middle class feels helpless and alone.
You might think Congress would be in a panic to find solutions to this problem, or that the presidential candidates would at least discuss it. But no, they seem content to watch our country meet financial catastrophe. Our choice in the 2024 election is between a former president, who believes tariffs can replace the tax system, and the current president, who runs $2 trillion annual budget deficits.
When 25% of the budget is spent on interest on the debt, creditors will no longer want the U.S. dollar, or our bonds. As a result, the real rate of interest will rise precipitously.
How will our panicked leaders react to this sudden exigency? Among the ugly options are: 1) Stop paying foreign debt-holders, which would save $8 trillion. 2) Set a fixed interest rate on the outstanding debt. 3) Continue to run up inflation while repressing rates and gutting entitlement programs.
Sound like fun to you? A choice between destroying pension funds and living in a new Venezuela?
Instead of uniting the country and restoring the middle class, our political leaders have divided and destroyed it. There is no longer a cohesive middle class to hold this country together and save it from its fate.
In America today, as in “The Emperor’s New Clothes,” we can all see what is happening even as our leaders pretend otherwise. But this isn’t a folktale. It’s real, and the consequences of this charade will change our lives, for the worse, forever.
Steve Laffey ([email protected]) is an author and former mayor of Cranston, R.I., who ran in the Republican presidential primary in 2023.
