President Obama has done little in the past two years to encourage business growth, concentrating instead on regulatory issues. While doing this, he has done nothing to hold down the debt load.
White House advisors have quietly indicated they believe the growing debt load and a host of other problems will be left to President Obama’s successor.
The winning candidate is Donald Trump and he has a whole basketful of problems to be dealt with in the first 90 days. Perhaps the most important and little discussed is the national debt.
As he prepares to leave the White House, among the many time bombs President Obama is leaving Donald Trump is the nation’s debt.
This burden was exasperated during the outgoing President’s terms in office despite efforts by Congress to build-in balanced budgets. Our nation’s debt will have doubled, from $10 trillion to $20 trillion during Obama’s administration.
Soon, it may become one of the most dominant issues facing the President-elect.
Few Americans realize the depth of the nation’s obligation. Put simply, they are enormous and growing each day. If not addressed they could undermine many of Trump’s economic objectives.
According to the September, 2016 issue of the Treasury Bulletin the National Public Debt was $19.4 Trillion in June of 2016. It is increasing at the rate of approximately $3.0 billion each day or about $100 billion every month. At this rate, the nation’s IOUs will reach $20 trillion by the time Trump is sworn-in as President.
While little reported in the popular media, this economic overhang represents a real threat to any effort by President-elect Trump to jumpstart the nation’s businesses.
National debt is over 100% of one year’s Gross Domestic Product (GDP). According to the International Monetary Fund (IMF) such debt to GDP ratio should be no more than 60% for a developed nation.
Throughout the past year, President Obama and his bureaucratic underlings have argued the economy was improving. Yet, the debt continued to expand fueled mainly by entitlement programs such as Social Security, Medicare, Medicaid, Food Stamps, and others outside the control of Congress to limit.
What worries economists such as Houston-based Dr. Kenneth E. Lehrer is that growth in total debt is not positive when a nation is supposedly in good times. “You are not supposed to grow your national debt by any large amounts when times are good. Growth of the national debt is reserved for bad times to get us out of bad times. You spend to grow out of a recession or depression. We are growing today in supposedly good times at $3.0 billion each day?”
As Lehrer and others point out by the time the next President-elect Trump takes office, the country will own more than $20 trillion. This is not a positive outlook and worries many economists and other futurists.
Many thoughtful experts often cite the book IOUSA: One Nation. Under Stress. In Debt. written by Addison Wiggin and Kate Incontrera with a forward by former U.S. Comptroller General David Walker who predicted how the future debt scenario will play out. If growth continues at its current pace, when the nation’s debt passes $26.0 TRILLION in 5 years and interest rates are “normal” at about 4%, then to service the national debt it will cost $1.0 TRILLION each year. (4% of $26.0 TRILLION is over $1.04 TRILLION).
In this scenario, if too much money is going to debt service, etc. and if you cannot cut overall expenses as well as the debt – Social Security or Medicare or the military or the debt or the costs of running the government, than the alternative may be runaway inflation.
Despite what some experts say, some economists believe runaway inflation can hit developed countries as well as Third World nations. They point to such countries as Argentina in the recent past as examples.
The Treasury designate Steven Mnuchin has indicated he identifies the need for restraint and prudence vis-à-vis the Federal budget, but clearly agrees on Trump’s ideas to jumpstart the nation’s business climate.
President Obama is leaving office just as the national debt problem is coming to a head. Perhaps it is best that a businessman like Trump will be in office to deal with it. President Obama certainly did not, he made it worse by doubling our nation’s debt.