Financial FAQs
WASHINGTON (AP) — The U.S. government’s gross national debt has surpassed $37 trillion, a record number that highlights the accelerating debt on America’s balance sheet and increased cost pressures on taxpayers. AP
Trump and his Republicans’ trade war and big, beautiful tax bill resemble a giant Ponzi scheme in several ways that has created the greatest wealth and income inequality in the developed world.
It is in essence robbing Peter to pay Paul, by using the revenues from the highest tariff rates since the Great Depression, cutting $billions from Medicare, Medicare and Obamacare benefits, Doge-slashing important health and climate research departments as well as foreign aid spending, because Trump must pay down the record national debt that he has declared is a national emergency.
Yet it was generated by generations of mostly Republican tax cuts. President Reagan created the first major national debt in fighting the cold war and Central American contra wars, GW Bush created the first $trillion deficit with his war on terror largely based on fabricated intelligence, and Donald Trump will manage to add some $ 9 trillion to what is now a record $37 trillion from his trade war with almost no understanding or knowledge of foreign trade, as Nobelist Paul Krugman has pointed out several times.
And President Trump just fired the head of the Bureau of Labor Statistics so that he could replace her with someone who will cook the books on inflation and real job numbers.
The history of deficits is portrayed in the above graph of U.S. national debt calculated as a percentage of GDP.
Tump’s original Tax Cuts and Jobs Act (TCJA) had already added $5 trillion to the national debt that peaked at 132.8% as a percentage of GDP in Q1 2020 during the COVID-19 pandemic and it has since dropped to 120% because of the aid bills that the Trump and Biden administrations signed into law boosting economic growth to almost 3% annually.
The White House appeal to the foreign trade court to leave Trump’s tariff war in place is his attempt to keep the Ponzi scheme from imploding, rather than negotiating with congress that has the actual power to make foreign trade agreements.
Executive orders without congressional approval are illegal, unless there is a national emergency. And the soaring national debt could become one, if Trump succeeds in destroying the good faith and credit of the U.S. in renewing the TCJA.
On May 16, Moody’s Ratings downgraded the U.S. credit rating, citing an “inability of the nation to address large and growing deficits.” This downgrade means that for the first time ever, all three major credit ratings agencies have downgraded U.S. credit below their top AAA rating.
Trump is therefore begging an appeals court to allow the tariffs. It could lead to a “GREAT DEPRESSION” Trump said on social media, with Americans “forced from their homes” that will threaten social security and Medicare.
Yet the financial markets aren’t panicking this time, maybe for the wrong reasons, as I said in an earlier column. This is while the Final Demand Producer Price Index has jumped to 3.3% annually, the highest in three years since the COVID-19 induced supply shortages, lessening the chances of Federal Reserve rate cuts.
Wall Street’s over enthusiasm, which was first termed irrational exuberance by Fed Chair Alan Greenspan in the mid-1990s as a warning that stocks were overpriced, has created a new asset bubble much like the dot-com asset bubble, and housing bubble that led to the Great Recession.
And it has led to the greatest income inequality in the developed world which has impoverished Republican-led red states above all, whose citizens are most easily cowed by their policies.
And what will happen when foreign investors, mainly governments, realize a $37 trillion national debt isn’t sustainable indefinitely?
Harlan Green © 2025
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen
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