While Americans are tightening their belts, the government is a pig feeding at the trough

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With inflation rampant, it’s been an incredibly tough couple of years for Americans. Their real disposable personal income is down, their personal savings (as measured by the personal saving rate) is down, and they have record household debt.

With that reality, Americans are having to tighten their belts. Whether it is cutting back on entertainment, making substitutions in how and what they eat, or otherwise, when financial times are tight, many Americans are forced to make tough decisions and trade-offs.

The government is not doing any of that. With a real deficit of $2 trillion for the 2023 fiscal year (after an accounting adjustment), the U.S. Treasury Department recently announced that it would need to borrow $776 billion this quarter and another $816 billion next quarter to keep the government functioning.

For those who aren’t quick with the math, that’s just about a whopping $1.6 trillion in the next six months.

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And, of course, the interest rates to finance that debt keep rising, making all of that funding increasingly expensive.

It doesn’t take an economist or financial analyst to know this is unsustainable. The International Monetary Fund has said America’s financial position is unsustainable. The Treasury Department and the Congressional Budget Office have said the same in recent years. The crisis is clear to just about everyone — everyone except for the people in charge.

While Americans are looking for places to cut back, the government continues to feed like a pig at a trough.

In a recent interview, investor Stanley Druckenmiller recounted that this father once told him, “If you’re in a hole, stop digging,” while criticizing reckless government spending policies. Yet the government keeps passing around the picks and shovels.

Of course, Druckenmiller is spot-on — and he is far from the only financial expert sounding alarms. U.S. government deficits hover around 8% of GDP, a crazy level at any time but more so now, given that we are in a period of economic “expansion” (that is, deficits should be shrinking as the economy grows).

The national debt is headed toward $34 trillion, which on a debt-to-GDP basis is more than 120%. The IMF has previously noted that U.S. debt becomes too much for a country to handle at around 70% to 80% of gross domestic product. If the United States didn’t have the world’s reserve currency — a status and privilege that other countries are attacking as you read this — we would likely be in a full-blown currency crisis.

Are the Fed, the Treasury, and Congress all in denial? Are they more incompetent than 10 people that you could pick at random off the street? Are they intentionally trying to destroy the U.S. economy? Or are they hoping they can patch everything together just long enough to reap as many rewards for themselves as possible and blame the next guy when it all falls apart?

It was time to get serious years ago. Now, it’s imperative. Call your representatives. Organize peaceful marches on the Fed, the Treasury, and Congress. Make this a top priority in all of your discussions. Americans have had to make sacrifices, but those in charge are making none. That needs to change immediately.

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