So, what about the $1.9 trillion that our leaders are contemplating; can we afford it? Let’s see if I can answer the question.
Just for fun, go to the US Debt Clock website at usdebtclock.org that shows our real-time debt numbers. A scary sight to see just how fast we’re increasing our debt. It did unwind, once, for a short while, with Bill Clinton.
Might want to note also that the clock movement accelerated every time we had a tax cut. The tax cuts just don’t seem to work like they promise. Supposedly, we get to keep more money to spend. Then our increased spending will increase business income, which will cause businesses to pay more taxes which they, in fact, collect from us.
So, the tax cut, supposedly, gets paid back with business taxes, which we pay. Remember businesses don’t pay taxes, they just raise their prices and collect what they need, from us, to pay their taxes. Seems kind of stupid to me and not surprising that it doesn’t work. What’s wrong with us simply paying our way?
Some, not so surprising, tax cut facts:
• Tax cut by Kennedy and made law by LBJ — 1963 debt was $306 billion; 1969 debt was $354 billion
• Tax cut by Reagan — 1981 debt was $998 billion; 1989 debt was $2.9 trillion
• Tax cut by first Bush — 1989 debt was $2.9 trillion; 1993 debt was $4.4 trillion
• Tax cut by second Bush — 2001 debt was $5.8 trillion; 2009 debt was $11.9 trillion
• Tax cut by Obama — 2009 debt was $11.9 trillion; 2017 debt was $20.2 trillion (Most of this, though, was bailout money for the crisis depression left by second Bush.)
• Tax cut by Trump — 2017 debt was $20.2 trillion; 2021 debt is $27.1 trillion (Of course, about $2 trillion was the COVID-19 problem; the rest was his tax cut.)
So, $1.9 trillion; just how bad is it and can we afford it?
Today our national debt is $28 trillion, about $280,000 per household.
Typical house loans are about $300,000. Two car loans are about $50,000. So, one might conclude that the average homeowner has about $350,000 in debt.
Yes, I know that not everyone lives in a new house with two new cars but I also know that a lot do live in very expensive houses (New York, California, Florida) and drive very expensive cars.
So, $1.9 trillion will add about $19,000 to each of our household debts.
So, then our total household debt (our own loans) plus our part of the national debt will go up from $630,000 to $649,000.
Not much of an increase actually. So yes, we can afford the increase. Question is can we afford our total debt (like each household owing for two houses and four cars).
Remember we’re keeping our personal debts about constant by making monthly payments; the United States isn’t; just borrowing more. Next stock market crash? Watch out.