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The United States Is Maxed Out On Borrowing, And It's Bad

Austin Smith

Published: May 17, 2024 8:45 am

Last Updated: May 17, 2024 8:44 pm

The United States faces concerns about excessive borrowing, raising worries about declining demand for sovereign paper and rising yields. Debt service now exceeds the entire Defense Department budget, prompting alarm. Efforts to control inflation are hindered by ongoing massive spending, such as a trillion dollars every 100 days, sustaining inflationary pressures. Plans to refill the SPR add to concerns, alongside dissatisfaction with a recent 1.2 trillion omnibus bill and increased spending on Ukraine. Younger lawmakers from both parties express concerns about the long-term financial implications, fearing the nation is mortgaging its future.

Transcript: 

The United States has now borrowed enough money. So there’s actually worry that we borrowed too much money. And that the demand for our sovereign paper will start to drop off some and the yields that we will have to pay will start to go up.

There’s been conversations about this before, but I think we’ve now crossed the threshold where paying the debt service is more than the entire Defense Department budget. And that’s scary.

That’s scary. I mean, where does that put us?

Well, everything that comes out of Washington is awfully convoluted, not unlike Wall Street. But the one thing we do know for sure is they’re never going to really be able to temper and tamp down inflation to the levels they want. Because remember, inflation, after it kind of plateaued last October, at the three and a half level, it stayed the same or drifted up since then. And until they stop spending a trillion dollars every 100 days, that inflation will not come down because it’s a vicious cycle feeding back into the economy. And, you know, lower oil prices are only going to marginally help that. And they go up and down. And plus, now they’re talking about filling up the SPR again. So they better start taking care of it soon.

And I think there was a lot of dissatisfaction with this huge omnibus bill that was 1.2 trillion, more spending on Ukraine. And I think there’s a bunch of younger Republicans and perhaps younger Democrats coming into office that are going, we’re mortgaging the future of this nation.