The 4 Horsemen of the US Debt Apocalypse: 80 percent of federal government operation costs go to four areas in Health and Human Services, Social Security Administration, Veterans Affairs, and Dep…

Here is a question you probably won’t find on Jeopardy: what is the actual risk of a U. S. default on its debt? The answer to that is none because the Federal Reserve has the magical power to create new debt to pay off old maturing debt. Must be nice to operate beyond the normal rules of accounting. Yet there is a problem where the debt to GDP ratio is now at a level only surpassed by that brought on by World War II where the industrial powers were literally in full scale war. It is probably worth noting that we have mountains of debt and a large portion of this is being held by China, a nation that is being politically unsettled by words of the incoming administration. We are essentially in a situation where our tax receipts are not keeping up with our spending. So the debt only grows. And four departments eat up 80 percent of all federal government spending: The Department of Health and Human Services, the Social Security Administration, Veterans Affairs, and the Department of Defense.
Spending will only grow
We have an addiction to spending and debt is our crack. The U. S. is in an enviable position where we can spend as much as we want courtesy of the Federal Reserve. Debt is fine to a certain level and you must have enough revenue coming in from the real economy to support this deficit spending. The new administration has already alluded to big spending with tax cuts – which will only balloon the deficit.

This post was published at MyBudget360 on January 22, 2017.