The Bankruptcy of Uncle Sam

In the land of Washington, there lives a man named Samuel Wilson. Most people call him Uncle Sam. In his younger days, he was a successful soldier, inventor and industrialist. Today, in his old age, he is still feared, respected and rich—but not as much as he was, and not as much as he thinks.

One of his weaknesses—a fatal one—is his budget.

Sam adds a giant sum to his bank account every year: $492,000. But he also spends huge amounts: $178,600 on medical bills and insurance for his ailing health; $146,000 on retirement; $119,900 on his home security system; $67,100 on the unemployed and others he wants to help; $44,200 on his lifestyle, housing, transportation, education and such; and $31,100 on other things he thinks he needs.

Sam is spending all $492,000 that he is receiving this year, and charging another $183,000 to his credit cards. He’s been doing this for years. Sam is $3.7 million in debt.

Thus, he also spends $88,200 on interest every year—18 percent of his take-home pay. This does not reduce his debt by a single penny; it simply pays interest to his credit card companies. And now, because of his poor financial situation, they are raising their rates.

Uncle Sam’s income grows by about $14,000 each year, but he adds $15,000 in new credit card debt each month.

It’s a mathematical fact that Uncle Sam is facing financial disaster—and all the personal, relationship, health and safety crises that come with it.

Sam’s nephew Elon suggested that he cut $200,000 from his spending. This would stop him from adding new debt and give him $17,000 in savings per year. Then, Elon said, they could figure out what could possibly be done about the $3.7 million debt.

Sam smiled and said this was impossible. Ever the optimist, Elon suggested at least a $100,000 cut. That would still add huge amounts to Sam’s debt, but it might convince the credit card companies to keep their interest rates low, and it would keep his total debt crisis from worsening further.

Sam’s other nephew, Donald, disagreed. He argued that Sam could continue spending $675,000 a year if he just makes more money.

Sam liked Donald’s optimism and ignored his math. Sam’s debt is growing by $235,000 every year—if the credit card companies don’t raise interest rates. Optimistically Sam’s income can grow by only 4 percent—$20,000.

But Sam keeps spending.

Money Problems

The real Sam Wilson was a meatpacker who supplied American troops in the War of 1812. His name is purportedly the source of personifying the United States as “Uncle Sam.” As you have probably guessed, the scenario is a parable about the imminent bankruptcy of the U.S. federal government.

America’s debt is now a major national security threat, and many people, like Elon Musk, are sounding the alarm. Along with other successful billionaires like Berkshire Hathaway ceo Warren Buffet and JPMorgan Chase ceo Jamie Dimon, Musk believes the federal government must cut its borrowing to below 3 percent of gross domestic product as soon as possible. President Donald Trump has decided that such budget deficits can exceed 6 percent. His focus is on “growing” the nation out of debt by increasing the size of the U.S. economy.

The number to watch is the debt-to-gdp ratio. That’s the ratio between the total amount that the federal government owes and the total value of goods and services the entire nation produces in one year. In 1981, the debt was 31 percent of gdp. Now it’s 124 percent and rising. Hundreds of millions of Americans could work all year, spend nothing, save nothing, eat nothing, send $30 trillion to our creditors, and we still wouldn’t pay off our debt.

The Congressional Budget Office estimates that Trump’s tax cuts will drive the debt-to-gdp up to 214 percent by 2054. Uncle Sam will be spending more than 30 percent of his paycheck on his credit card interest—assuming his creditors don’t raise their rates. But they absolutely will raise their rates, and then, as Musk pointed out, “all tax revenue will go to paying interest on the national debt with nothing left for anything else.”

This isn’t just a financial problem. This is an economic, security and societal crisis!

Individuals often go bankrupt when their debt-to-income ratio exceeds 50 percent. Uncle Sam could hit this point tomorrow if the interest rate on his credit card tripled, and he will almost assuredly hit it within the next 30 years unless he takes drastic action to cut his wasteful spending.

We must understand what this means. When individuals go bankrupt, banks stop lending them money. This forces them to reduce their standard of living overnight, no matter how painful. It is the same with nations. When Uncle Sam is finally forced to file his Chapter 7 bankruptcy form, he will no longer be able to borrow money. He will either have to reduce his spending, start taking more money from his employees, or start running a counterfeiting operation. The last option is the most likely to happen.

The socialist politician down the road, Crazy Bernie, has told Sam that governments can’t be in debt because they can print the money. He is likely to just start printing dollars out of thin air once people stop lending him cash. This will create a hyperinflation crisis. But by that point, Sam will be out of options!

National Curses

Uncle Sam has been living far beyond his considerable means for decades. He can no longer escape the debt death spiral. The onset of such a death spiral may not mean the immediate end of the U.S. as a nation, but it will mean the end of the U.S. as a superpower.

As the late Herbert W. Armstrong taught for decades, the peoples who settled the United States and Britain largely descended from the ancient Israelites. In Deuteronomy 28, God specifically warned that debt problems are one of the many curses that come from disobedience: “But it shall come to pass, if thou wilt not hearken unto the voice of the Lord thy God, to observe to do all his commandments and his statutes which I command thee this day; that all these curses shall come upon thee, and overtake thee …. The stranger that is within thee shall get up above thee very high; and thou shalt come down very low. He shall lend to thee, and thou shalt not lend to him: he shall be the head, and thou shalt be the tail” (verses 15, 43-44).

This passage shows that God disagrees with President Trump. Borrowing money from others without a plan to pay it pack is sinful. “The wicked borroweth, and payeth not again: but the righteous sheweth mercy, and giveth” (Psalm 37:21). This means that America’s national debt is a nation-destroying curse.

Another end-time Bible prophecy says that God will suddenly break the power of Israel because of its sins, including materialism. The people worship the work of their hands more than they worship God: “And it shall come to pass in that day, saith the Lord, that I will cut off thy horses out of the midst of thee, and I will destroy thy chariots: And I will cut off the cities of thy land, and throw down all thy strong holds: And I will cut off witchcrafts out of thine hand; and thou shalt have no more soothsayers: Thy graven images also will I cut off, and thy standing images out of the midst of thee; and thou shalt no more worship the work of thine hands. And I will pluck up thy groves out of the midst of thee: so will I destroy thy cities” (Micah 5:10-14).

What will cause this sudden collapse of U.S. power? Mr. Armstrong predicted that a financial crisis in America would likely prompt Europe to unite into a superpower even stronger than America. He warned in 1984 that a massive banking crisis in America “could suddenly result in triggering European nations to unite as a new world power larger than either the Soviet Union or the U.S.” (co-worker letter, July 22, 1984).

Such a financial crisis is closer than people think. And as interest payments on Uncle Sam’s national debt consume an ever increasing portion of his budget, he will no longer be able to keep his foreign enemies at bay.