Uncle Sam has a big debt problem, which means that every American taxpayer also has a big debt problem.
While the U.S. federal treasury had $316 billion in its account on April 30, with a tentative reserve of $41 billion, that money is due to run out by June 1, according to U.S. Treasury Secretary Janet Yellen. That technically means the U.S. will be unable to pay its bills when the clock runs out on May 31.
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With financial D-Day looming for the U.S. and the margin for error closing fast, Texas GOP Senator Ted Cruz appeared on CNBC’s Squawk Box on May 23. On the program, he pointed a finger at young Washington, D.C., insiders as a big reason the unthinkable will happen in early June.
“The young extreme staffers in the White House have no appreciation for just how damaging a default would be,” Cruz stated. “They are quite willing to force a default because they think the media will blame it on Republicans. I would think that would be wildly irresponsible.”
Debt Failure Blame
Cruz appeared vexed that the blame for the debt failure would fall on the GOP side of the political aisle.
“The White House believes that whatever happens the media will blame it on Republicans,” he told Squawk Box.
There’s a relatively easy fix the White House could put into play right now, he said.
“A responsible president would say ‘under no circumstances will we ever default on our debt no matter what . . . the US honors its commitments,” Cruz said.
President Biden could do so in a simple way, Cruz added.
Dent Ceiling Solution
“Every month federal taxes come in that significantly exceed the interest on our debt,” he noted. “He could say ‘We’ll pay interest on the debt, which is known as prioritization.”
With total U.S. spending growing from $4 trillion in 2017 to $6.4 trillion in 2022, and federal taxes standing at $4.8 trillion right now, Uncle Sam is falling behind on its budget-balancing efforts – and the clock is running out fast.
“To be clear, everyone agrees the debt ceiling needs to be raised,” Cruz said. But “overspending” has to be addressed. “Historically, it’s the only thing that works to bring down the federal debt,” Cruz noted.
“The problem isn’t tax revenues,” he added. “The problem is a spending binge that’s taken the federal debt from $20 trillion to $32 trillion in four years.”