[Editors note: Mr. Luddy will be giving the Henry Hazlitt lecture at this year’s Austrian Economics Research Conference. Click here to learn more.]
The most important issue facing America today is the national debt and increasing federal deficits. Our national debt now exceeds yearly gross domestic product (GDP).
The U.S is the wealthiest country in the world, but our government has the largest spending deficits and national debt in recorded history.
The budget deficit in FY 2018 was $800 billion, but the debt increased by $1,300 trillion, and is now $21,500 trillion dollars. Government accounting (oxymoron) allows for spending and loans outside of the budget. The practice of underreporting deficits is fraud and is not legal in the private market.
Note the US Debt Clock (here).
In simple terms, the national debt consistently increases more than the federal deficit, which will cause a devaluation of the dollar and eventually, a major financial crisis.
In FY 2019, the federal budget projects the following:
- Total revenue $3,422 trillion or 17% of GDP
- Total spending $4,407 trillion or 21% of GDP
In the best of times, regardless of tax rates, the federal revenue rarely exceeds 18% of GDP. This means based on projected spending, we cannot grow or tax our way out of the deficit because spending is projected at 22% of GDP.
To balance the federal budget in FY 2019, it would be necessary to cut all spending by 22%.
Read the full article at The American Spectator
