The Money Compass: Where Your Money Went and How to Get It Back

Chapter 10

The Federal Debt Bomb

Hold Your Breath (at least try)

Over the course of our deliberations, the urgency of our mission has become all the more apparent. The contagion of debt that began in Greece and continues to sweep through Europe shows us clearly that no economy will be immune. If the U.S. does not put its house in order, the reckoning will be sure and the devastation severe.

—National Commission on Fiscal Responsibility and Reform, “The Moment of Truth,” Debt Commission Report, The White House, December 2010

Blessed are the young for they shall inherit the national debt.

—Herbert Hoover Address to the Nebraska Republican Conference, Lincoln, Nebraska, January 16, 1936

I once asked my economics professor if the United States could go bankrupt. He said, “No, because the government can tax you for everything you have.” The answer has remained in my mind for 40 years. As I consider the question again, I know the government would create a political upheaval if they taxed away everyone’s wealth to pay off the nation’s debt. But maybe we can just take it away from the rich, those that make over $400,000. One question: Who pays if the rich don’t have enough wealth to pay off the debt?

Today, federal debt is out of control because of continual annual overspending by the federal government. Everyone knows it. The nation’s enormous debt is the single most serious security threat to the United States, and consequently it is a financial threat to every U.S. citizen who holds ...