by James A. Bacon
by James A. Bacon
I call it “Boomergeddon.” Blogger-columnist-law school prof Glenn Harlan Reynolds calls it “Debt Doom.” Whatever you call it, the fiscal meltdown of U.S. government finances is nearly inevitable. The only meaningful questions are how long it takes to happen and how to survive it.
Reynolds and I are hardly the only people worried about the impending deficit-induced crash. There’s a vast community of gold-bugs and crypto-jockeys who believe the same thing. But Reynolds is the first I’ve seen (other than yours truly) to explore the implications for state governments. He, like I, says it’s time now for states and businesses to prepare themselves for a collapse in federal finances and capacity.
First a quick refresher. Uncle Sam posted a $1.8 trillion deficit in fiscal 2024 — not during a recession, not during a time of war, but during a period of peacetime economic expansion. Most of the deficit is structural, in that spending consists increasingly of entitlements and interest payments on $35 trillion in debt. The Congressional Budget Office projects that the deficit will exceed $2.8 trillion within 10 years — and that doesn’t take into account all the spending that both Kamala Harris and Donald Trump have promised to enact if they get elected president. A likely trigger for crisis will come by 2033 at the latest, when the Social Security Trust Fund runs dry, payments will be cut roughly 25%, and Congress has to figure out what to do about it.
