Government bookkeeping is, like most else controlled by politicians, misleading. Presently, it says that the government’s debt (to be repaid by taxpayers) stands around $19 trillion. It also says that the U.S. economy is growing, if slowly, thanks to government (and Federal Reserve) stimulus. That is very dishonest. It is plain false. But the government is in charge, and few dare to argue these days.
Consider: If you borrow the money to buy a car or a house, you do not own the car or the house until you have repaid that debt, plus interest. In fact, if you fail to pay, your lender may take the car or the house from you to satisfy your obligation. Because it was the lender who actually paid for it, so long as the debt remains outstanding.
So, when the government borrows from taxpayers to spend money, that portion of the Gross National Product funded by debt to taxpayers is a false gain when it is included in economic growth. It will truly be included in growth only when the debt that financed it is repaid, but government bookkeeping doesn’t show it that way. That would be inconvenient for politicians. Very inconvenient today, it would convert sluggish economic growth into real economic decline. That would be too disturbing for taxpayers who are also voters. It could confirm their vague impression that they aren’t doing so well as they are supposed to believe.
In short, if you had to borrow $19 trillion in order to show GDP growth, then you should subtract $19 trillion from that growth to arrive at your true accomplishment. You can’t own your new car if the lender still owns it. So, current sluggish economic “growth,” since it includes government spending of borrowed money, is overstated, a hoax. Though carefully unpublished, the GDP net of borrowings would show not growth, but stasis at best. A detailed explanation is here.
No one, not Trump and not Clinton, can make this mountain of debt vanish. It will either be taken from the assets of future taxpayers, with interest, or it will reduce the market value of existing wealth in an equivalent of bankruptcy. We face what accountants might call “sunk costs.” They won’t go away by themselves. Given their magnitude, they will burden the children and the grandchildren of present taxpayers, who seem to have thought that they were receiving goodies at the expense of someone else.
Reality sucks, but no one has found a replacement for it.