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In a recent email discussion about the U.S. national debt, I mentioned to Oxford Club Chief Investment Strategist Alexander Green, CEO Todd Skousen, and former CEO Julia Guth that I haven’t heard Donald Trump, Joe Biden, or Kamala Harris mention the words “debt” or “deficit” once.

In fact, I don’t recall the subject being brought up in at least the last three elections.

It’s easy to understand why. Tackling the debt problem in the United States would require big spending cuts. No candidate who wants to get elected is going to tell the public, “To address the budget deficit, I’m going to make sure there is less of the stuff you like.” And why would they? It’s much easier to just let their successor deal with it.

Our leaders’ irresponsible actions don’t stop there. Not only are both presidential candidates ignoring the national debt, they’re also making all kinds of promises – many of which they can’t keep – in order to attract votes.

Trump, trying to appeal to young people, said the U.S. should buy 1 million Bitcoin and never sell it.

Of course, he didn’t say where we’d get the $60 billion to pay for it.

He also recently vowed to eliminate the tax on Social Security, pandering to older voters.

According to the Committee for a Responsible Federal Budget, eliminating the tax on Social Security would add $1.8 trillion to the debt over 10 years, bankrupt Social Security a year and a half earlier than expected (2032), and make Medicare insolvent six years earlier than expected (2030).

Not surprisingly, the Biden administration has also ignored the debt. Biden’s ironically named “Inflation Reduction Act” has added between $780 billion and $1.2 trillion to our debt load.

How’s this for fiscal responsibility?

Source: Committee for a Responsible Federal Budget

From 1948 to 1982, the national debt stayed relatively stable, remaining in the $3 trillion range (adjusted for inflation). But over the next 40 years, it exploded by more than 11-fold. It currently sits at over $35 trillion.

Source: Treasury.gov

Why should we care?

Now that we’re no longer in a zero interest rate environment, annual interest payments on the national debt have ballooned to $908 billion, which is just about equal to our annual spending on defense alone. It is estimated that our annual interest payments will be a staggering $1.7 trillion within 10 years. That’s money that won’t be available for border protection, energy initiatives, veterans affairs, and a wide range of other necessary services.

The worse the situation becomes, the more expensive it gets.

A person with bad credit has to pay higher interest rates on their credit cards, mortgages, and car loans. The same goes for countries.

Argentina, a notoriously high-risk borrower, pays 40% interest to borrow money for one year.

As the U.S.’s debt situation worsens, lenders will demand higher interest rates in exchange for the elevated risk. That enlarges interest payments, which in turn increases the credit risk even further… It can turn into a vicious cycle.

Eventually, if the cycle continues unchecked, the whole thing will come crashing down like a house of cards. Will it happen in the next year? Probably not. In the next decade? Possibly. In our lifetime or our children’s lifetimes? Probably.

What would cause that crisis? It’d likely be some kind of black swan event like the COVID pandemic. The difference is during the pandemic, the U.S. was able to print dollars at low interest rates in order to keep some people afloat (and allow others to avoid returning to work). The next time we have some unusual event, it may not be as easy, especially with the world trying to move away from the dollar as the reserve currency.

Here are a few steps to take to protect yourself:

• Own metals. I’m no gold bug, but when the spit hits the fan, people turn to gold as a store of value. Precious metals like gold and silver are an important part of a well-balanced portfolio.
• Own rental real estate. No matter what happens, people need a place to live – and there’s nothing like the passive income and tax breaks that rental real estate provides.
• Own international assets. You’ll want exposure to stocks, bonds, and real estate from other countries that won’t trade in tandem with the U.S.

It’s always a good idea to have cash available too – to be able to pay for things, of course, but also to be able to scoop up assets that are being liquidated in a fire sale.

There are a lot of differences between Donald Trump and Kamala Harris. But when you’re deciding who to vote for in November, keep in mind that their approach to the debt unfortunately isn’t one of them.

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