Maggie's Farm

When Ronald Reagan was elected in 1980 on a call to bring the nation’s inflationary budget under control, the public debt was $930 billion and about 30 percent of GDP.

By the time Donald Trump was elected the first time it had erupted to $20 trillion, which has now become $36 trillion and 125 percent of GDP. Moreover, by the end of this decade the Federal fiscal equation will be going supercritical without sweeping budget reductions at the level of the DOGE target. Thus, by FY 2034 the annual baseline deficit according to CBO will total $2.9 trillion and 7 percent of GDP.

. . . CBO inexplicably projects that 7 percent of GDP deficits and annual interest expense of $1.7 trillion or 4.1 percent of GDP by 2034 would be compatible with a weighted average yield on nearly $60 trillion of public debt of just 3.4 percent.

. . . Give the average yield just another 250 basis points, however, and now you have $3.1 trillion of annual debt service expense and a $4 trillion annual deficit by 2034. In short, there is a doom-loop building inside the Federal fiscal equation

. . . If sweeping budget retrenchment does not occur soon, in fact, soaring interest expense will ignite a veritable fiscal wildfire. On paper, the public debt would power upward unabated to $150 trillion or 166 percent of GDP by mid-century (2054) under CBO’s current Rosy Scenario projections. Of course, long before the debt actually hits this staggering figure, the whole system would implode. Every remnant of America as we now know it would go down the tubes.