Drowning in debt? Expert becomes real
Caleb Hammer, host of “Financial Audit,” offers blunt advice on credit card debt and spending habits, urging Americans to take responsibility for “America Reports.”
The United States just passed a staggering milestone: a national debt of $39 trillion.
Let that sink in for a moment. That’s not a typo. That’s not projection. That’s the real number. And here’s the headline. My prediction is that we will reach $50 trillion before the year 2030.
And yet, if you turned on the television or listened to politicians on both sides of the aisle, you might think we were debating policy preferences. Tax this. Cut that. Encourage here. Invest there.
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We no longer debate policy.
We debate math. And mathematics doesn’t interest you politically. America has a serious promise problem and is writing checks it can’t cash.
The $1 trillion line item that no one wants to talk about
There’s one number that should terrify every American household.
More than $1 trillion per year in interest payments on the national debt.
- No defense.
- Not social security.
- Not Medicare.
Interest.
We have now reached the point where America is essentially putting its future on a credit card and can barely cover the minimum payment. We risk investing in the future in order to fulfill the promises of the past.
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If you were running your household this way, I wouldn’t recommend a new strategy. I would recommend a reality check that you just had a financial heart attack and you need to change now or you will face irreparable consequences.
Is it possible that the United States will go bankrupt?
Some worry that the United States will no longer be able to pay off its debt if the national debt becomes too large. Default is the wrong question.
The real question is: does the US have a debt sustainability problem?
- And the answer is: yes, but over time.
- Debt to GDP already above 100%
- Interest costs are rising rapidly
No credible long-term plan to reduce deficits
This is how countries get into trouble. It does not happen overnight, but gradually, as we have seen with countries like Argentina and Greece. However, there is a significant risk that Americans will not see coming if our credit rating is downgraded again. We are already approaching $1 trillion a year in interest and soon the annual items could surpass Defense, Medicare and Social Security.
The US dollar has been the gold standard as the world’s reserve currency, and we are beginning to see a real risk of a loss of global confidence. This means that if debt levels spiral out of control, foreign buyers may reduce purchases of government bonds, and the US will have to offer higher interest rates to attract buyers.
In the end, math always wins. To stabilize our debt, taxes will increase, some deductions will disappear, and other forms of taxation will emerge, such as Social Security becoming an unlimited payroll tax, like Medicare. This actually has a trickle-down effect on first high earners, then small business owners, and ultimately America’s middle class.
The real risk isn’t debt reaching $50 trillion. That’s what happens when interest costs crowd out everything else and America starts borrowing to stay afloat.
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Our politicians Three favorite myths
Let’s call it what it is. Both parties sell us stories that are not true.
Myth #1: ‘We can grow from this’
Economic growth helps, but it cannot close a structural deficit that exceeds $2 trillion annually. You would need historic, sustained, war-level growth to even address this problem. That’s not a strategy. That’s wishful thinking.
Myth No. 2: ‘Tax Only the Rich’
Even if you took a large portion of the income of high earners, it still wouldn’t close the gap. You can’t close a multi-trillion dollar hole with a politically convenient talk like taxing billionaires, that will solve our misery.
Myth #3: “We can reduce waste and fix it”
Of course there is waste. DOGE has already tried to solve the problem. But eliminating it doesn’t come close to solving the problem. The real money is in rights and interest and that is the third rail of American politics.
The real problem: America has a promising addiction
Here’s the uncomfortable truth: We promised the Americans this.
- Pension benefits that we have not fully funded
- Healthcare benefits without cost control
- Defense commitments around the world
- Subsidies, programs and incentives have been stacked on top of each other for decades
And here’s the kicker to boot. Nobody wants to give up anything.
Not the voters. Not the politicians. And not the markets.
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Why this should matter to you now
This is not some abstract macroeconomic debate with a reading point of $39 trillion.
It must be personal. If you are personally saving for retirement, running a business, investing in markets, or planning your family’s financial future, you are directly exposed to the consequences of this debt journey.
Because here’s the bottom line. When governments get into trouble, they don’t go bankrupt. They dilute. They dilute your dollar. They dilute your returns. They dilute your purchasing power.
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Crossing $39 trillion should have been a wake-up call. Instead, it’s just today’s headline until we reach $40 trillion. To me, this is the most dangerous part of all. Because the longer we pretend this isn’t urgent, the fewer options we will have when it becomes unavoidable.
Houston, we have a problem, and when can we get an adult in the room to solve it?
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