Victor Davis Hanson warns at National Review Online about the danger of mounting government debt.
The current U.S. budget deficit could soon exceed a record $4 trillion. The massive borrowing is being driven both by prior budget profligacy and by a hurried effort by the Donald Trump administration to pump liquidity into a quarantined America.
The shutdown has left the country on the cusp of a self-inflicted economic collapse not seen since the Great Depression.
Americans may soon have to service a staggering national debt of about $30 trillion — nearly $100,000 of debt for every American.
Democrats and Republicans can blame each other, either for spending too much or for too little taxation or both. But both sides will agree that managing such an astronomical debt requires several frightening choices.
One, Americans would be forced to live with permanent near-zero interest rates, or perhaps even negative interest rates.
We are already seeing how the current low interest rates punish those who were thrifty and put away money in savings accounts. Negligible interest rewards those who borrow but forces savers to look for returns in volatile real estate or the risky stock market.
In other words, there would be little interest paid out on the federal debt. The selling point for investors would be that the U.S. at least honors its bonds and debts and is safer than alternative global investments.
America would become a permanent debtor that avoids paying much interest to anyone who lends it ever more money — on the cynical rationale that investors have no other safe place to put their money.
Two, Americans, who are already taxed heavily at the local, state, and federal levels, would simply have to pay even more. Top earners might pay a real tax rate of 60 percent to 70 percent of their incomes to government, with deleterious effects on incentives to create or earn further wealth.
