Does Each New Administration Kick The Debt Can Down The Road?

24 12 2019

  By Timothy D. Naegele[1]

That is the lesson I learned when I came to Washington, and began working at the Pentagon.  When the Congress was breathing down its neck, it simply reorganized—and hid the ball some more—and when the Congress was catching up again, it would repeat the process.

Pat Buchanan—an adviser to Presidents Richard Nixon, Ronald Reagan and Gerald Ford, and a former GOP presidential aspirant himself—has written an article entitled “Today France, Tomorrow the USA?”:

As that rail and subway strike continued to paralyze travel in Paris and across France into the third week, President Emmanuel Macron made a Christmas appeal to his dissatisfied countrymen:

“Strike action is justifiable and protected by the constitution, but I think there are moments in a nation’s life when it is good to observe a truce out of respect for families and family life.”

Macron’s appeal has gone largely unheeded.

“The public be damned!” seems to be the attitude of many of the workers who are tying up transit to protest Macron’s plan to reform a pension system that consumes 14% of GDP.

Macron wants to raise to 64 the age of eligibility for full retirement benefits. Not terribly high. And to set an example, he is surrendering his lifetime pension that is to begin when he becomes an ex-president.

Yet, it is worth looking more closely at France because she appears to be at a place where the rest of Europe and America are headed.

In France, the government collects 46% of the GDP in taxes and spends 56% of GDP, the highest figures in the Western world.

And Paris appears to be bumping up against the limits of what democratic voters will tolerate in higher taxes, or reductions in benefits, from the postwar welfare states the West has created.

A year ago, when Macron sought to raise fuel taxes to cut carbon emissions, the “yellow vests” came out in protests that degenerated into rioting, looting, arson, desecration of monuments and attacks on police.

Paris capitulated and canceled the tax.

How do we compare?

The U.S. national debt is now larger than the GDP. Only in 1946, the year after World War II, was U.S. debt a larger share of GDP than today.

In 2019, the U.S. ran a deficit just shy of $1 trillion, and the U.S. government projects trillion-dollar deficits through the decade, which begins next week. And we will be running these deficits not to stimulate an economy in recession, as President Obama did, but to pile them on top of an economy at full employment.

In short, we are beginning to run historic deficits in a time of prosperity. Whatever the economic theory behind this, it bears no resemblance to the limited government-balanced budget philosophy of the party of Ronald Reagan.

The questions the U.S. will inevitably face are the ones France faces: At what point does government consumption of the national wealth become too great a burden for the private sector to bear? At what point must cuts be made in government spending that will be seen by the people, as they are seen in France today, as intolerable?

While a Republican Congress ran surpluses in the 1990s, when defense spending fell following our Cold War victory, Dwight Eisenhower was the last Republican president to run surpluses.

Opposition to new or higher taxes appears to be the one piece of ground today on which Republicans will not yield. But if so, where are the cuts going to come from that will be virtually mandated if U.S. debt is not to grow beyond any sustainable level?

America’s long-term problem:

Deficits are projected to run regularly in the coming decade at nearly 5% of GDP while economic growth has fallen back to 2%.

With taxes off the table, where, when and how do we cut spending?

Or does each new administration kick the can down the road?

The five principal items in the federal budget are these:

Social Security, which consumes 25% of that budget. Yet, Social Security outlays will reach the point this year where payroll taxes no longer cover them. The “trust fund” will have to be raided. Translation: The feds will have to borrow money to cover the Social Security deficit.

Medicare, Medicaid, Obamacare and other health programs account for another fourth of the budget. All will need more money to stay solvent.

Defense, which used to take 9% of GDP in JFK’s time and 6% in Ronald Reagan’s buildup, is now down to 3.2% of GDP.

Yet, while defense’s share of GDP is among the smallest since before World War II, U.S. commitments are as great as they were during the Cold War. We are now defending 28 NATO nations, containing Russia, and maintaining strategic parity. We have commitments in Iraq, Syria, Afghanistan and the global war on terror. We defend South Korea and Japan from a nuclear-armed North Korea and China.

Yet another major item in the budget is interest on the debt.

And as that U.S. debt surges with all the new deficits this decade, and interest rates inevitably begin to rise, interest on the debt will rise both in real terms and as a share of the budget.

Again, is France the future of the West?[2] 

At what point do the chickens come home to roost?  Or do they?



© 2019, Timothy D. Naegele

[1]  Timothy D. Naegele was counsel to the United States Senate’s Committee on Banking, Housing, and Urban Affairs, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass). He and his firm, Timothy D. Naegele & Associates, specialize in Banking and Financial Institutions Law, Internet Law, Litigation and other matters (see and He has an undergraduate degree in economics from the University of California, Los Angeles (UCLA), as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University. He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal (see, e.g., Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years (see, e.g.,, and can be contacted directly at

[2]  See



5 responses

24 12 2019
H. Craig Bradley


Political Gridlock and the recent impeachment of President Trump right down party lines suggests the system is broken and can not fix itself. Thus, one could conclude Democracy is paralyzed into factions where its you vs. them. Little (common) interest in solving real problems, only political promises to give more stuff to voters to get elected. We like slogans. Most residents don’t even want to talk about issues because there is little if any common ground. So, the old style political rhetoric lives-on for awhile longer.

When the inevitable political, economic and financial crisis start to be felt by the average citizen or Joe, it will be a bit chaotic. Its probably coming. France is a good example of what to expect and so far, Macron has no solution for them. Its a glide path back to reality and unfortunately for the French, a much more austere one for them and maybe us, as well.

Post-war socialism throughout the West is dying a slow, but increasingly painful death in the West. Asia is not near as decrepit in the way their society is organized and funded. The real future economic growth is bound to be primarily in Asia, not Europe or America, as things stand. We will just become broke at this rate of govt. spending and debt formation.

We can hope to work it out, but for that we need informed and involved citizens & voters and real political leaders at multiple levels. So far, we are coming-up short on both these essential human resources. We may choose a dictator of sorts in the end in desperation to revive the Good Old Days (nostalgia as a future theme). I predict any attempt to do so using current methods and approaches will probably prove to be very elusive indeed !


24 12 2019
Timothy D. Naegele

Thank you, Craig, for your comments; and a Merry Christmas and a Happy New Year to you and your family.

As always, I do not see things as dire as you do, or as Pat does in his article above, at least for the United States. However, like a giant aircraft carrier, it cannot be turned on a dime.

By January of 2025 when the second term of the Trump presidency ends, or so I believe, major changes will have been made. For openers, the U.S. Supreme Court ‘s direction wiil have been changed, perhaps for a generation or more, which will be true for our lower federal courts as well.

We will have the strongest military in the world, by far. It is likely that the economy will be roaring along too, the strongest in the world. The Putin reign may be coming to an end; China’s economy will still be shaky; and North Korea will have reached an agreement with us.


24 12 2019
H. Craig Bradley

While I too Wish You a Merry Christmas, I believe there will be future crisis that we just can not yet recognize. In addition, there has to be some turbulence along the way. A repeat of the roaring nineties is not what I expect or plan on, but to an extent, we are still perceived as #1 but we are a bit too complacent in an increasingly dangerous world. That could contribute to our eventual undoing in future years. We need to be more alert to the situation.

Keep in-mind there are numerous uprisings and urban riots in many countries all around the world in Asia (Hong Kong), South America (Chile, Venezuela, Bolivia, Argentina, Columbia), Europe (France), Africa and the Middle East (Syria, Iran, Iraq, Yemen). Its all over wealth inequality and the fact the top 10% are hogging most of the money & political power at the expense of everyone else. This is going to continue to destabilize Democratic countries unless badly needed reforms can be enacted.

We need to shore-up our national balance sheet or we will not be able to continue to fund and afford the world’s biggest and most expensive military for 10 more years. Basic economics. Putin is not going away any time soon either. Who can possibly take-out the Vlad? Political upstarts in Russia seem to have a short lifespan so far.


25 12 2019
Timothy D. Naegele

Echoing your first paragraph, I have written in a new law review article about the future of banking, which will be published on or about January 1, 2020:

The tragedy is that history often repeats itself, not in precisely the same forms but in ways that are “close enough.” Be it wars, or a failure to be vigilant against the spread of diseases globally—which were seemingly conquered or eradicated in the past—Mankind seems ignorant of vital lessons. Obviously, this is never more evident than in the case of economic calamities, such as depressions, deep recessions and the like.

And I cited the following in the footnote accompanying this quotation:

See, e.g., (“Great Depression”); (“Wall Street Crash of 1929”); (“Panic of 1893”); (“Black Friday (1869”); (“List of stock market crashes and bear markets”); (“List of banking crises”).

Thus, I do not belittle the attendant risks at all.

Regarding Russia’s killer Putin, I made my position crystal clear more than four years ago. The precise timing of his “exit” is yet to be determined.

See (“The Death Of Putin And Russia: The Final Chapter Of The Cold War”)


13 03 2023
Timothy D. Naegele

Kick The Can Down The Road Even Farther?

See, e.g., (“No Escape From Wild Stock Swings Amid SVB, Fed Outlook”)

At some point, the chickens will come home to roost, bigtime!

We have been weakened by China’s Covid, and its efforts to systematically undermine us at every turn strategically. Our support of Ukraine’s efforts to turn the tide against Putin’s barbarism has weakened us too, and cost plenty.

The banking and debt crisis may be the coup de grâce, short of a nuclear or EMP Attack.

See (“$100BN wiped off US banking market in SINGLE DAY as former White House adviser calls it ‘tip of the iceberg’: Bloodbath on Wall Street saw regional banks fall by up to 60% and the Big Four drawn into SVB’s collapse contagion”) and (“Biden’s $4TRILLION COVID stimulus package helped create a tech investment bubble – that was punctured by interest rate rises, leaving banks with multibillion dollar shortfalls (but CEO of SVB sold $4M in shares BEFORE the crash)”) and (“‘If everybody keeps cool we’ll be right’: Americans rush to bank branches to withdraw their life savings or demand answers amid fears of financial contagion after SVB collapse”) and (“Credit Suisse shares fall to all-time low as bank announces it has found ‘material weakness’ – just hours after Wall Street expert predicted that it would be the next to fall after SVB”) and (“Credit Suisse shares slide after Saudi backer rules out further assistance”)


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