Debt and Demographics
“For the Lord God of hosts has a day of tumult and trampling and confusion in the valley of vision, a battering down of walls and a shouting to the mountains” (Isaiah 22:5 ESV).
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On January 8, 1835, politicians in Washington gathered to celebrate what then-President Andrew Jackson had just accomplished. A senator rose to make the big announcement: “Gentlemen … the national debt … is PAID.” That was the one time in U.S. history when the country was debt free. It lasted exactly one year.
This past February, the U.S. national debt reached $22 trillion, according to figures released by the Treasury Department. The Congressional Budget Office (CBO) projects annual interest on that debt will rise to $914 billion over the next ten years from the current $389 billion in the current fiscal year, a total of
nearly $7 trillion over the next decade. In order to fund those payments, the government will need to rely on tax revenues, since it will pay out far more in interest than it receives. If tax revenues are not large enough to pay the interest and fund all government-sponsored programs, additional borrowing will be
necessary. That will mean even higher interest costs when current debt is rolled over for more expensive debt in a future environment of rising interest rates.
The Foundation for Economic Education (FEE), a moderately conservative organization with a high rating for factual reporting, says that debt payment outlays for the federal government will soon rival those of Medicare, Defense spending, and Social Security obligations. In order to avoid a future crisis driven by debt financing, FEE says, we will require a decade of sustained economic growth without recessions. That scenario would be a first, as the longest modern period without a recession took place from the early 1990s to the early 2000s, prior to the collapse of the dot-com bubble.
However, an additional problem is that despite a period of sustained economic growth, the government continues to spend more each year than its annual revenue (deficit spending). This at a time when the opportunity to pay down the debt is at its highest. Indeed, proposals for new or enhanced programs such as government-sponsored health care for all will require additional funding.
Already, changes in the workforce, aging of the population, and program enhancements have resulted in a growing part of the U.S. budget allocated to so-called entitlement programs. In the 1980s, 30 percent of households in the U.S. received some type of government benefit; in 2016 (the last year with data available), that had risen to 52 percent of households. These program enhancements included changes to Medicaid, Medicare, Social Security, Unemployment and Welfare Programs. CBO projections, based on current programs, indicate that within eighteen years, spending for these programs will absorb all US federal tax revenues — leaving nothing for paying interest on debt or supporting the military. This will bring about a situation suggested in a law of economics developed by award-winning economist Herbert Stein: Things that can’t go on forever, don’t. A day of reckoning will force difficult decisions which could bring something worse than recession.1 As financial
writer John Mauldin wrote in a Forbes essay last November, “the yawning government debt chasm will have to be rationalized.”
A Global Problem
The world’s debt pile is hovering near a record at $244 trillion, which is more than three times the size of the global economy, according to an analysis by the Institute of International Finance (IIF). Total government debt exceeded $65 trillion in 2018, up from $37 trillion a decade ago, and rose faster in mature markets. According to the International Monetary Fund, the biggest borrowers in the world are the U.S., China, and Japan, the world’s three biggest economies. The remainder was divided between nonfinancial corporate debt at $72 trillion, now near an all-time high of 92 percent of GDP; household debt, up 30 percent to $46 trillion, notably from China; and financial sector debt, which rose to about $60 trillion, up 10 percent from a decade earlier. Even in Germany, where a pay-as-you-go system has been in operation for years, Deutsche Bank estimates income tax rates of 80% (total, not marginal
rates) will be needed within 25 years to fund its government-sponsored health care and retirement systems due to the aging of the population and fewer workers to support them.
(1) A number of Bible Students believe that the 6th plague
of Revelation 16:12, which precedes Armageddon, will be a
severe global depression that will severely weaken all aspects
of the world’s religious, social, financial, and political systems.
Public social spending has remained at approximately 21% of GDP on average since 2009 across 34 member nations of the Organization for Economic Cooperation and Development. According to the October 2016 update, “Social spending stays at historically high levels in many OECD countries.” France leads the world with annual public social expenditure equivalent to 31.5% of its GDP. Old-age and health expenditures make up
the majority, about two-thirds, of public social spending in OECD countries.
Mauldin calls the world’s current path, “extend and pretend (that it isn’t a problem).” He wrote, “It is very difficult to predict the path The Great Reset will take.” To be sure, many aspects of society have contributed to this problem. It is not merely the number of those receiving the benefits. Many of those survive
in a harsh world. Leaders with the power and influence to shape society may have little interest in assuring the permanence of benefits past the next election.
The Day of Shaking All Things
“On earth anguish among the nations in their bewilderment at the roaring of the sea and its billows; while men’s hearts are fainting for fear, and for anxious expectation of what is coming on the world. For the forces which control the heavens will be disordered” (Luke 21:25,26, Weymouth).
Our outlook for the financial world and the world, in general, would be devastating without the Word of God assuring us of a glorious outcome. At present we are surrounded by angry waves of human passions, requiring all the calmness and fortitude the Christian can muster. This will increase as people lose more confidence in their governments to support promises made. The tremendous agitation in the social order requires sober watchfulness over words and acts, with constant communion with our Heavenly Father for the spiritual fortitude we require to stand independent of the world.
“The end of all things is at hand: be ye therefore sober, and watch unto prayer. And above all things have fervent love among yourselves” (1 Peter 4:7,8).
We can have full courage as we note the condition of earth’s
present society because behind this dark cloud, hidden from human sight, is the glad sunrise of a new day — the Day of Messiah. With such a glorious hope — the hope of the Church’s
glorification in the First Resurrection power, and the hope of the world’s Millennial blessing — God’s people everywhere can lift up their heads and rejoice as our great Teacher exhorted us to do (Luke 21:28).
This long night of sorrow and strife teaches mankind the consequence of disobedience to divine law. In the new Day, righteousness will be enforced throughout the earth by Christ and his divine power.
Haggai describes Messiah’s Kingdom as the “desire of all nations” (Haggai 2:7). But this Kingdom is prophesied to be established at a time of great commotion. Other Scriptures show that the time of trouble, a great “shaking” period (see Hebrews 12:26), will be such a terrible storm of strife that the world will have its fill and be nauseated. Thenceforth, under the
guidance of the new administration of Messiah, the spirit of a sound mind will gradually come to mankind as a whole; and proportionately they will turn to Messiah’s Kingdom in loyal obedience.
The Apostle admonishes us to be sober and to watch, with prayer. In this lies our strength. Our Master warned: “But take heed to yourselves, lest your hearts be weighed down with carousing, drunkenness, and cares of this life, and that Day come on you unexpectedly. For it will come as a snare on all those who dwell on the face of the whole earth. Watch therefore, and pray always that you may be counted worthy to escape all these things that will come to pass, and to stand
before the Son of Man.” (Luke 21:34-36 NKJV).
We may not know the full significance of the words “escape all these things,” but they bring to us all the realization that Jehovah will never leave us nor forsake us (Hebrews 13:5). It is part of the great lesson of faith and trust that we should be able to recognize the hand of the Lord in all our difficulties, to see the silver lining in every cloud of trouble, and to realize that all
about us are the protecting powers of our God.