America needs to confront its unsustainable debt problem that is threatening to collapse the economy of the world.
By Neville Berman
In 1858 Abraham Lincoln gave his famous speech in which he stated “a house divided cannot stand.” At the time the issue was slavery. Fast forward 168 years, and the prophecy of Lincoln is very pertinent today.
Today there are approximately 8.4 billion people in the world, of which approximately 342 million live in the United States of America. Statistically less than 4.2% of the world’s population live in the United States. Clearly American influence across the world is out of all proportion to its population size. America is a technological, financial and military powerhouse unmatched by any other country. The annual American gross domestic product is by far the largest in the world. America is clearly the greatest creative, inventive, progressive, and influential society in history. It has more intellectual property and patents than any other country. American innovation and daring put a man on the moon. The American way of life has lifted millions of people out of poverty to personal prosperity.
The Second World War ended in 1945 with the unconditional surrender of Nazi Germany and Imperial Japan. The revelations of the horrors of the Holocaust, shocked the world. With Europe in ruins, the world was facing a pivotal moment that would determine the future of Western civilization. US president, Harry Truman introduced a policy the likes of which the world had never seen before. It was called the Marshall Plan. Under the plan, the victorious Americans offered to pay for the cost of rebuilding West Germany, the very country that had just waged war against America, and to pay for the resuscitation of countries in Europe that were devastated by the war. It did the same for Japan. No reparations for damages were demanded from any of the defeated parties. When the Soviet Union attempted to starve West Berlin into submission, America flew 189, 000 flights that carried 2.3 million tons of aid into West Berlin. The airlift started in June 1948 and lasted for 15 months. It saved the people of West Berlin. America became the indispensable superpower whose generosity and foresight ushered in decades of prosperity to the world. No burden was too great for America.
After the end of the Second World War, America and their previous ally, the Soviet Union, began what was called the “Cold War.” In order to oppose the spread of communism, America got involved in wars of choice in Korea and in Vietnam. Following the attack on America on 9/11, America decided to retaliate by waging a war against terrorism by attacking both Iraq and Afghanistan. America is now involved in a costly war against Iran. All the above wars were initially seen as justified and in America’s interest. However, all of the above inflicted an enormous cost on America in terms of blood and treasure. Americans have now grown tired of paying the price of forever wars in far off countries.
America is the greatest consumer society in history. Slick advertising and promotions, coupled with easy credit, resulted in a demand for products and services that in many cases are neither needed nor affordable. Garages across America are filled with items that were hardly used. Millions of people are now maxed out on credit, and live from day to day. Materialism has created a society living in debt. A loss of income for even a short period can be catastrophic for millions of ordinary working-class Americans. Bank foreclosures on home mortgages are increasing. Tens of thousands of people are homeless. Millions have insufficient savings for their retirement. Capitalism made America great, but poverty still persists. Americans used to envisage a better future for their children. For millions of Americans, this no longer seems to be the case.
The demand for illicit drugs in America is staggering. The Office of National Drug Control estimates that over $150 billion worth of illegal drugs are sold annually in the US. Instead of trying to do something meaningful with their lives, more and more Americans are seeking short term happiness by resorting to drugs. As long as this demand persists, the illicit trade in drugs will continue. Drug addiction is now a major problem all across America. There are over 2 million people in prison in America. Many are imprisoned because they turned to crime to finance the cost of their drug addiction, and others are imprisoned for selling drugs illegally. America now has proportionately three times the prison population of Britain. Black prisoners account for 38% of the prison population, but make up only 13% of the population.
Materialism and greed have replaced morality and ethics. Americans are buying guns, overdosing on drugs, getting divorced, and getting into debt as never before. Racism continues to plague the country. Millions of Americans feel that they are not sharing in the wealth of the country. They are angry and full of hate. Anarchy is now common in many of its cities and the political divide is unbreachable. The radical left has embarked on a socialist ideology that is against everything that made America great. Some American cities have become sanctuary cities for those who entered the country without going through the correct procedures. Some cities have experienced blackouts, followed by looting in certain areas. The looters believe that they are entitled to take whatever they can. They resent all forms of authority. The social cohesion of society is in danger. There is a very thin line between anarchy and law and order. The radical left is demanding the defunding of the police. This is the surest way to promote lawlessness and ensure a breakdown of society.
In 2025, over $5 billion was spent on hiring lobbyists to influence lawmakers in Washington. The lobbyists promote the interests of the health industry, the oil industry, the military industrial complex, the national rifle association, big business, the farmers or whatever they are paid to promote. Even if it is against the interests of the American society at large, lobbyists promote whatever they are very well paid to do. Undoubtedly, powerful lobbyists have ensured that the tax system favors the wealthy.
In January 1981, Ronald Reagan was sworn in as the 40th American president. He promised to lower taxes, increase defense spending, and balance the budget. When asked how he was going to do this, he laughed and went to play golf. He lowered taxes and increased defense spending and ten months later, for the first time in American history, the federal deficit exceeded $1 trillion. It had taken nearly 200 years to reach a deficit of this magnitude. Fifty-five years later the federal deficit now stands at a staggering $40 trillion. The last American president to balance the budget was Bill Clinton between 1998 to 2001. Under President Trump, the federal deficit has increased by over $2 trillion in one year. This is unprecedented. What this means is that on average, the American government is now spending over $151 billion more than the revenue it collects every month. Clearly this is unsustainable.
The US defense budget for 2026 is over $960 billion. Interest on the federal debt is now even greater than the defense budget and will exceed $1 trillion for 2026. The implications are staggering. If we divide the present Federal debt by the population of the country, we get a debt of over $117,000 per person. This is just the federal debt. If we add state debt, mortgage debt, credit card debt, corporate and individual debt, we are looking at a debt of well over $200,000 per person. Clearly Americans are living on borrowed money.
Compounding the debt problem is the fact that life expectancy has increased. The result is that social security, Medicaid and government pension funds are all actuarially bankrupt, and will require huge additional funding to sustain them in the future. America is locked into a system of entitlements that are unaffordable and unsustainable. The rising cost of living and especially health insurance costs, are causing even working families to be unable to save enough for retirement. This does not augur well for the future. Clearly Americans are living in debt, and the gap between the rich and the poor is widening at an alarming rate. Corporate and individual greed has become a way of life. Today, the top 1% of the richest people in America own 30% of the nation’s wealth, while the bottom 50% own 2.5% of the nation’s wealth.
For years, scientists have sounded the alarm about the rise of greenhouse gases and climate change. In the past year, record high temperatures have led to wildfires that have devastated tens of thousands of acres of forests, and caused billions of dollars in damage across the world. In Greenland, the ice is melting, and in Europe, glaciers are shrinking at an alarming rate. The temperature of the oceans is increasing. The American population is less than 4.2% of the world’s population, yet it produces between 11 to 12% of global greenhouse gas emissions. Per capita, Americans are the world’s worst climate offenders. President Trump is in denial that human behavior has contributed to climate change. He has withdrawn America from the Paris Climate Agreement and has promoted policies that adversely affect the environment. Global warming is a global problem that requires a global solution. America needs to be part of the solution to climate change.
Unfortunately, there is very little common ground between Republicans and Democrats at the moment. The fact that America needs to raise the federal debt ceiling over and over again, contradicts President Trump’s claim that the American economy is in great shape. The American economy is facing a mountain of entitlements and debt that every serious economist should be warning about. The big question is how much longer will the world continue to place its trust in the value of the dollar? If this trust falls, investors are unlikely to buy US government bonds. This could lead to a situation in which America defaults on a debt payment. The repercussions of such a move will be catastrophic. The world’s financial system will collapse on a scale that will make the financial crash of 1929 seem like child’s play. There is an old adage that states “when America sneezes the world catches a cold.”
America needs to confront the unsustainable debt burden that threatens to devastate the country, and plunge the world into a depression. At a minimum, the American government needs to raise taxes, reduce expenses, and balance the budget. America cannot continue on its present path without bringing upon itself and the world a catastrophic situation. The writing is now on the wall. America needs responsible leadership that will retain the world’s trust in the dollar. One thing that appears inevitable is that “a house divided cannot stand.”
About the writer:
Accountant Neville Berman had an illustrious sporting career in South Africa, being twice awarded the South African State Presidents Award for Sport and was a three times winner of the South African Maccabi Sportsman of the Year Award. In 1978 he immigrated to the USA to coach the United States men’s field hockey team, whereafter, in 1981 he immigrated to Israel where he practiced as an accountant and then for 20 years was the Admin Manager at the American International School in Even Yehuda, Israel. He is married with two children and one granddaughter.
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