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Now let's ask the uncomfortable question: How much time does the United States Government and our society generally have left?
Let's figure it out as a process of elimination:
- Can we pay eight times as much interest as we pay now? (Today it's ~$450 billion/year on federal debt, so this is $3.6 trillion dollars.) The obvious answer is no as the total federal revenues are somewhat over $2 trillion at the present time. This is the 12.5% "coverage point", so we cannot withstand three more "doublings."
- Can we pay four times as much interest as we pay now? That's about $1.8 trillion, leaving about $400 billion for all programs ex-interest. To put this in perspective that would cover about half of the Defense Department and nothing else, meaning no Medicare, no Social Security, no Welfare in general, not even the guy to sweep the Capitol Building. That's the 25% coverage point, so we cannot withstand two more doublings.
- Can we pay twice as much interest as we pay now? That's about $900 billion, leaving roughly $1.5 trillion for all programs ex-interest. To put this in perspective we could fund Defense and one of Social Security, Medicare, or the combined Medicaid/Welfare/etc social programs. We could not, however, fund more than one or pay for any other programs at all. That's the 50% coverage point, so we cannot withstand one more doubling.
Now how long do we have? That is, how much is a "doubling time"? That's easy too. We open up The Fed Z1 spreadsheet and Look at column Z1/Z1/LA314104005.Q, which is the Federal Government quarterly. Over the last decade that went from $3.284 trillion to $9.77 trillion, or 297%. This is roughly a 12% rate of increase annually.
The Rule of 72 tells us that this means that the debt at the government level, given what we're doing today, will double every six years. Don't believe me -- get out your calculator and check it.
This means that Paul Ryan's plan is a public fraud as it is mathematically impossible for the republic to survive long enough for his "40 years" to pass, as just one example of many. You are challenged to run any of the so-called "Tea Party" or "Fiscal Conservative" plans against this metric: Six years to a full stop in deficits or we're all dead and see if you can make your plan work recognizing that no Congress can bind the next one and there are elections every two years for the House.
Want to run the game for all debt? That works too. All Debt was about $27 trillion 10 years ago. Today it is $52.7 trillion. That's 195% of the starting value (and note it understates things slightly as "social security and medicare" are not counted as debts because legally they are not.) This is roughly a seven percent annual growth rate. The Rule of 72 tells us that this means it will double in approximately every ten years, and we won't survive in the private economy paying twice as much interest as we pay today either.
So take your pick: We stop this or we economically die in less than six years or less than ten years. In no case can we continue to add to the debt at a rate that exceeds economic growth. That was a Ponzi scheme, it is a Ponzi scheme, and we are now in the last doubling time available to us before the surface of the pond is entirely consumed by lilies and we all suffocate. If we continue to add to the debt at a rate that exceeds the change in GDP, either systemically or at the government (or both) we may extend the time before we are all screwed but the government and/or our economic and monetary system will fail with mathematical certainty.
Got it yet folks? This is the debate at hand -- the only debate. Everything else is bull**** because if we do not stop this absolutely no other debate you wish to have matters.
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