The world’s richest man couldn’t hold a candle to the United States government’s dues.
On Thursday evening, Tesla and SpaceX CEO Elon Musk noted that the national debt — which hit a record high of $30 trillion last week — is not sustainable. Commenting on a headline from The Babylon Bee — “Biden Goes Double Or Nothing On National Debt By Placing $30 Trillion On The Bengals” — Musk pointed out that the financial implications of the debt is no laughing matter.
“True national debt, including unfunded entitlements, is at least $60 trillion — roughly three times the size of the entire US economy,” he said. “Something has got to give.”
True national debt, including unfunded entitlements, is at least $60 trillion – roughly three times the size of the entire US economy. Something has got to give.
— Elon Musk (@elonmusk) February 11, 2022
Indeed, the national debt is severely understated because the federal government does not acknowledge increases in future obligations. As Columbia Business School accounting professor Shiva Rajgopal explained for The Hill in 2018:
Washington’s cash-based accounting system records revenues when money is received and records expenses when they are paid. This method produces a highly inaccurate budget number that doesn’t acknowledge bills that we know we must pay in the future like tax cuts, increases in benefits payable to federal employees or new obligations incurred due to promised Social Security, Medicare and Medicaid.
If the federal government was honest with the public and followed accrual accounting in its annual budget, which would recognize the increase in future obligations, there is little doubt that politicians would have found a way to deal with the looming financial crisis on our hands…
The unrecorded debt — about $60 trillion — works out to roughly $240,000 for every adult living in the United States, but the country’s median wealth is a mere $44,900 per adult.
President Joe Biden has pushed his massive social spending agenda despite its fiscal consequences. According to the Penn Wharton Budget Model — a nonpartisan public policy research initiative at the University of Pennsylvania’s Wharton School — if the $1.75 trillion Build Back Better Act had passed through Congress and received an extension on its provisions, the national debt would have ballooned by 24% within three decades.
A select few lawmakers, however, are raising the alarm. Sen. Rand Paul (R-KY) blasted his colleagues last year as the United States approached $30 trillion in debt.
“People are saying we’re going to give you free college, free cars, free cell phones, free this, free that,” Paul said. “Everything in life will be free; you won’t have to work anymore. The problem is there are ramifications. Money doesn’t grow on trees; money’s got to come from somewhere.”
Paul added that the government’s options include borrowing money, raising taxes, or printing more dollars — the latter of which creates “the insidious tax of inflation.”
“Right now, we’re facing 5% inflation because of the massive borrowing that both parties instituted in the last year,” he explained. “They decided that the result of the pandemic would be to close everything down, destroy the economy, and then give everyone free money … Both parties have a certain responsibility to this. At least some members of both parties.”