American Billionaire Reveals Simple Secret to Save America from $40 Trillion Debt!

The United States is facing a $40 trillion debt crisis, and a well-known billionaire knows how to solve it. But is there political will in Congress? Carol Roth – Fox News

America witnessed a major event this summer that dominated headlines. Unfortunately, it wasn’t our celebration of the 250th anniversary of America’s founding, but rather our national debt surpassing $40 trillion. The figure is mind-boggling. It exceeds 120% of GDP, a ratio that looks more like that of a developing market economy in crisis than the world’s largest economy.

While the debt itself is a problem, two related issues are especially critical. The first is the rapid pace of debt accumulation. In 2017, we crossed $20 trillion; less than 10 years later, that number doubled to $40 trillion.

This leads to the second issue: the cost of financing all this debt. We no longer have the luxury of countries blindly increasing their holdings of U.S. dollars regardless of conditions. This means investors in our debt—should they exist—are now sensitive to interest rates. In other words, they demand higher premiums to lend to the U.S. government.

We’re not just dealing with an enormous deficit—$2 trillion annually, both in absolute terms and as a share of GDP—that requires financing. In recent years, the U.S. Treasury has consistently financed our debt through short-term instruments. While this financing is relatively cheaper, it requires constant refinancing (not to mention that this type of financing tends to increase inflation).

In fact, the interest we pay on the debt—the money we spend to finance what we’ve already purchased—already exceeds our military spending. If current trends continue, it may one day become the largest line item in government expenditures.

What can we do? Is there any way out of this situation at all?

The answer is yes. Clearly, we have the tools necessary to control our debt. But the problem lies in our lack of political will to do so. This is a problem affecting both parties, because federal government revenues exceed $5 trillion annually. To clarify, this amount surpasses the GDP of every country in the world except the United States and China, and approaches Germany’s entire GDP. Yet our government still spends $2 trillion more than it should.

Despite this, many government officials refuse to address the rampant waste, fraud, and abuse within the system, which is estimated to cost between $250 billion and $1 trillion annually. Meanwhile, Congress refuses to take steps to responsibly review our entitlement system due to long-standing failure to fulfill its duty. Americans will pay the price regardless of what happens—or doesn’t happen. But for politicians, it’s easier to blame others for ongoing inflation than to face political consequences of real reform with short-term pain and long-term benefits.

This brings us to the absence of political will. Nothing will change until Congress changes. And if Congress isn’t accountable, it has no incentive to act—only to evade responsibility and blame others.

Warren Buffett once said: "I could eliminate the deficit in five minutes; all it would take is passing a law stating that if the deficit exceeds 3% of GDP, all current members of Congress are barred from re-election." I propose two modifications to this plan. First, change the deficit target from 3% of GDP to "in the case of an unbalanced budget," and second, require cost reductions, not tax increases.

Incentives drive outcomes. Right now, Congress is incentivized in ways that lead to poor results for Americans. If we want to be able to afford important priorities—like defending our nation—stop the erosion of purchasing power, and restore the U.S.’s fiscal and national strength, we must change political will, or align political incentives better with outcomes that benefit Americans rather than politicians themselves.

Source: Fox News