If you follow the business news, you’re probably aware that, officially, the U.S. debt now exceeds $37 trillion, a number so humongous that it is impossible to grasp what that means. But before you try to, take a deep breath and brace yourself for a hard landing. According to one very recent analysis, the real amount of debt is actually much more than that. In this view, the real number is more than $151 trillion.
Back in 1959, then–Republican Senate Minority Leader Everett Dirksen made a comment about federal spending that is still remembered and repeated: “A billion here, and a billion there and pretty soon you’re talking about real money.” Dirksen’s comment was a warning that government spending was getting out of control and that it needed to be reined in. Decades later, his opinion is still right on target, but these days it needs to be updated. It should be “A trillion here and there.” Actually, even “trillion” is a huge underestimate.
Everyone has a tough time trying to make sense of the federal debt and deficit. And it’s no wonder, as both have reached unprecedented levels. The official figure of debt – now over $37 trillion – is not even a quarter of the latest estimate, which is more than $151 trillion! The incredible discrepancy between these two numbers needs to be explained. Brian McGlinchey, writing in “Stark Realities,” attempts to do exactly that. Stark Realities is a Substack newsletter that challenges “official narratives” and “exposes fundamental myths.”
So what is the explanation? In McGlinchey’s opinion, the discrepancy is “due to the fact that the federal government does not hold itself to the same accounting standards it imposes on businesses.” Rather than using accounting that recognizes expenses when they’re incurred, Washington “self-servingly uses simple cash accounting, only recognizing expenses when they’re paid.”
Clicking On Refresh
Once a year, the Treasury is required to update Congress about the government’s financial condition. That update is also supposed to reflect programs that don’t have sufficient assets or income streams to ensure they’ll be paid.
The two largest examples are Social Security and Medicare. McGlinchey believes that both of these programs for seniors “are now well within sight of a crisis that’s been warned about for a generation.” The most recent update on these is not at all encouraging, as it’s estimated that both are just seven years from insolvency.
“Contrary to the mythology that payroll taxes are placed in individual ‘accounts’ held for our future benefit, that money is immediately being dished out to other people who’ve already reached the benefit-receiving phase – which is why Social Security can be reasonably compared to a Ponzi scheme,” he says.
There are other worrisome facts about Social Security. One is that the ratio of people paying into the system to those claiming benefits is declining steadily. Back in 1960, it was 5.1; fast forward to 2023 and it was down to 2.7 – a huge difference! Here’s another troubling statistic: Social Security payouts have topped revenues for the last 15 years. If this trend continues, both of these programs will be pressured to somehow maintain regular payments to recipients without making any reductions in them.
In the last number of years, we’ve been hearing the words “debt” and “deficit” more frequently. And more recently, we’ve begun hearing the word “interest.” You can be sure that, going forward, we will be hearing even more of this – particularly the word “interest,” because in this case it refers to the payments the government has to make on debt for past and current spending.
According to McGlinchey, payments for interest represent a steadily growing share of total federal outlays and will total almost $1 trillion this year. Within 10 years, it’s projected that interest on debt will reach $2 trillion, roughly equal to the entire 2025 deficit. 2024 saw a grim milestone as interest expenses surpassed spending on both defense and Medicare – an ominous sign of how serious this issue has become.
More Troubling
But an even more worrisome situation would be if interest payments stay at their current projections. Some economists anticipate they will surpass Social Security to become the largest single expenditure by 2042. McGlinchey cautions that no one should be surprised if that “milestone” happens even sooner.
“The government is already descending into a vicious cycle in which mounting U.S. debt has the buyers of that debt demanding higher interest rates in compensation for the growing risk of inflation and/or default – with those higher rates creating larger interest payouts and even more debt.”
And, he adds, in a worst-case scenario, interest costs could eventually consume between half and all tax revenues. By the way, it’s estimated that the average U.S. household’s share of federal debt translates to a mind-boggling $1,085,022!
So how does this play out? McGlinchey suggests, “This will end with a government default. In the United States that will likely occur not via an explicit repudiation of the debt, but through rampant price inflation as the Treasury and the Federal Reserve conspire to create new money out of thin air to make debt payments.”
McGlinchey may be the latest voice to warn about excessive government spending, but he certainly is not the only one. Former Texas Congressman Ron Paul famously has been warning about this problem for years, as have other politicians, economists, and market observers. What makes things different now is that it appears the economy is rapidly reaching a point where it’s impossible to kick interest payments down the road anymore.
It’s unlikely that the government will make any cuts to Social Security or Medicare. Several months ago, when Elon Musk headed DOGE and advised that the government should cut payments to people long dead, it raised an unprecedented furor. Making cuts to programs and battling a lobby of tens of millions dependent on those benefits is one fight the government does not want to get involved in!
So what’s the answer? Experts in and out of government are up late trying to figure this out. So far, they have not come up with a solution. When this question was presented to AI Overview, it replied that a solution could include a combination of spending cuts, raising revenues, and better debt management strategies – whatever that means. It may also include revaluing gold, cryptocurrencies, and possibly linking paper money to an index of currencies and commodities.
Meanwhile, as noted in this column on various occasions, individuals would do well to review their own budgets and, when possible, pay down debt and tighten their spending. We are living in uncertain times, and preparing for a rainy day makes more sense now than ever.
Sources: AI Overview; senate.gov; starkrealities.substack.com; zerohedge.com
Gerald Harris is a financial and feature writer. Gerald can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.