Two weeks ago, President Trump signed the largest stimulus bill in U.S. history: more than $2 trillion.
For once, both Republicans and Democrats agreed. The Senate voted 96-0. The House didn’t even bother with a formal vote.
At the White House, a reporter asked the president, pointing out that the bill includes $25 million for the Kennedy Center, “Shouldn’t that money be going to masks?”
“The Kennedy Center has suffered greatly because nobody can go there,” Trump responded. “They do need some funding. And look — that was a Democrat request. That was not my request. But you got to give them something.”
“Something” they got. The bill includes $50 million for an Institute of Museum and Library Services and lots of other wasteful things.
Rep. Alex Mooney asked: “How do you pay for it? Borrow it from China, borrow it from Russia? Are we going to print the money?”
Those are good questions.
Our national debt is already $24 trillion. Now it will jump, percentage-wise, to where Greece’s debt was shortly before unemployment there hit 27%.
Greece was bailed out by the European Union. But the United States can’t be bailed out by others.
How will we pay off our debt?
There are really three options:
1. Raise taxes.
2. Print money.
3. Default.
Let’s consider each:
1. Raising taxes on rich people is popular. Even Michael Bloomberg wants “higher taxes on billionaires” like him.
But raising taxes on the rich often kills the wealth and jobs some rich people create. And it won’t solve our debt problem. Even if we took all the billionaires’ wealth — reducing their net worth to zero — it would cover only an eighth of our debt.
2. Some on the left now say, “Don’t worry about debt, just print money!”
This belief, called Modern Monetary Theory, destroys lives.
Zimbabwe’s dictator tried it. Eager to spend more money on wars, higher salaries for government officials and luxury for himself, he had his government print more money. But that meant more money pursued the same goods. That caused explosive inflation. Soon, a $2 bag of onions cost 30 million Zimbabwean dollars.
The more money the government printed, the more inflation there was. They eventually even issued 100 trillion dollar bills. Today those 100 trillion bills are worth about 40 cents.
3. America could simply refuse to pay our debt. But that would betray everyone who invested in America, and bankrupt Americans who bought Treasury Bonds.
Defaulting on your debt wrecks economies, too. When Argentina defaulted, unemployment rose to 21%.
Once you’re deep in debt, no option is good.
How did we get to this point?
Presidents have talked about the dangers of debt for decades. But they didn’t deal with it; they just talked about it.
“We have piled deficit upon deficit, mortgaging our future and our children’s future,” warned Ronald Reagan. “We must act today to preserve tomorrow.”
Barack Obama called driving up the national debt “irresponsible” and then proceeded to do exactly that.
Donald Trump complained that Obama “doubled” the nation’s debt. But now, under Trump’s presidency and the new CARES Act, our debt will grow even faster.
This will not end well.
So far, the deficit spending hasn’t done enormous harm. But it will. You can stretch a rubber band only so far until it breaks.
Our debt will wreck our children’s lives.
