Courtesy of wikiipedia.org
My college calculus teacher called me his “touchstone.” If I understood the lesson, he knew everyone in the class understood. Math has never been my strong suit, but I have learned a thing or two about budgets, having served as an elected official with oversight on 300 million dollars.
As a result, I took notice when I read that the U.S. government is insolvent; that the Treasury pays $3 billion a day in interest on the national debt, and that Fitch, S&P, and Moody, the three top financial services companies, have downgraded the nation’s credit rating. In addition, Saudi Arabia has quietly chosen not to renew its petrodollar agreement with the United States, a decision that has weakened the value of our currency.
As I wrote in an earlier blog, the petrodollar emerged when Richard Nixon, our 37th President, took the U.S. off the gold standard and convinced the Saudis that their oil customers should pay in dollars, with the money secured by the purchase of U.S. Treasury bonds. In exchange, Washington would provide them with military aid, equipment, and security guarantees.
With the petrodollar no longer assured and our currency weakened, America’s insolvency is a concern. Senator Elizabeth Warren advises that we address the problem by increasing taxes on the rich. Jamie Dimon, CEO of JPMorgan Chase, objects. Why send more money to Congress when it only feeds the political swamp, he asks.
There’s some justification for Dimon’s complaint. Pete Hegseth, the Secretary of Defense, dines on crabs and steak dinners while ordinary Americans struggle to pay for the price of eggs.
No one should be surprised by the injustice. Corruption has risen to excess during the Donald Trump’s administration. Mafia bosses could learn a thing or two from this government’s shenanigans. Nonetheless, corruption isn’t what’s driving the country into bankruptcy. Spending is.
The Iran war is part of the overdraft. Trump’s response to the mounting debt is to levy tariffs. Tariffs are taxes not imposed by Congress, but those that consumers pay at the grocery store and the gas pump. Trump may say tariffs cost us nothing, but he also says he’s the greatest President in American history. Nonetheless, there is some method in his tariff madness. Those taxes are defraying some of the cost of his war of choice.
If that conflict were to end tomorrow, however, the country could remain in a financial slide. Accountants who wear green eye shades see the root of the problem. As our financial condition worsens, we must pay higher interest on our borrowing, and the more we must pay, the deeper the debt. But the core of the problem, one that continues to grow, war or not, lies in our social spending.
Social Security is running out of money. Medicare is facing a shortfall. These obligations have become so large, they aren’t listed as a liability against assets but kept “off the books.” Even so, the obligation is real and If added to the bottom line, would exceed 136.2 trillion dollars or roughly 5 times US GDP.
Of necessity, Trump will continue to impose tariffs despite court rulings. These are the taxes helping to keep the country afloat. We must give the devil his due on his strategy. The question is, if Democrats win the House and the Senate in 2026, will they eliminate Trump’s tariffs? I doubt it. They can read a ledger, too.
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