On Monday, Democratic convention-goers lauded Biden for his policies on crime, climate change and the economy. Most of all, they praised him for stepping down and giving Kamala Harris the job of fighting Republican Party candidate Donald Trump in November’s presidential election.
Yet they continued to ignore an elephant in the room that has grown so large it will one day squash them all, and us.
Biden’s big dirty secret isn’t a sex scandal. It’s not about drugs, either. Or his wayward son Hunter.
It’s about money. Big money. Some $35trillion at last count, and climbing by the second.
That’s the size of the US national debt, and nobody wants to tackle it. Not Biden. Not Harris. Not Trump.
Instead, both parties act as if the US owns a huge magic money tree, and in a way, it does.
But not for much longer.
The US is on the brink of a recession. We’ll soon find out if it faces a hard or soft economic landing.
Either way, it’s in a mess.
Biden has left the US with a huge 8% budget deficit. The government is spending $500billion (£393billion) more than it takes in taxes each year. And this is after years of economic expansion.
This follows years of profligacy on both sides of the political fence. The problem is that neither side wants to ‘fess up to the error – instead they blame each other.
Bill Clinton was the last US president to take debt seriously. He slashed the country’s debt from 49.5% of GDP in 1990 to 34.5% when he stepped down in 1998.
It has climbed relentlessly since as successive presidents fought wars, slashed taxes, unleashed stimulus and tossed out entitlements.
Today, the US debt-to-GDP ratio is nearly 125% and still rising. The country owes more money than its economy generates in a year. This isn’t sustainable.
The UK can’t preach. Our debt-to-GDP ratio is around 100%. That’s roughly the same size as our economy and it’s a real worry.
But we have nothing on the States.
I’ve called it Biden’s dirty secret because while Democrats praise his handling of the economy, in truth “Bidenomics” been a disaster.
His bizarrely named Inflation Reduction Act has thrown trillions of dollars at green businesses. In just four years, Biden has added a staggering $7.9trillion to the US debt pile.
Instead of reducing inflation Biden has whipped it up, forcing the US Federal Reserve to keep interest rates above 5% to stop the economy overheating.
Trump was no better during his four-year stint at The White House. He racked up $6.5trillion of debt.
All the Democrats and Republicans do is point fingers at each other. In a sharply divided country, neither side dares to face the truth.
The US is going broke.
It’s got away with it so far because the US dollar is the world’s reserve currency. The country’s government bonds, known as US Treasuries, are the ultimate safe haven investment.
Everybody buys them in stormy times. This allows the US to borrow all the money it likes. It’s the magic money tree I mentioned earlier.
But what happens when the economic storm is triggered by the US itself?
Then there will be no hiding place.
And the storm is surely coming. If Harris win the election, the spending spree will continue. If Trump wins, he’ll slash taxes. Either way, the US deficit and national debt will rise.
So far, the US has banked on an unlimited pool of buyers for its government bonds, but now countries like China and Japan are stepping back.
They can see what’s coming, even if the US can’t.
The entire international currency and credit system rests on the mighty US dollar. That foundation is about to crack, whoever wins in November. Then we’ll all pay the price for US profligacy.
