What goes on in Lansing is nearly irrelevant if our national finances crater.

There’s a lot of talk right now about Department of Government Efficiency cuts and “unelected” bureaucrats (DOGE workers) making life miserable for other unelected bureaucrats that have been around a lot longer. That said, federal spending during February 2025 was about $40 billion higher than it was in February 2024, which tells me that much of the talk of DOGE indiscriminately cutting is an exaggeration.

For Fiscal Year 2024-25 (which ends Sept. 30, 2025), total federal revenue will be $4.92 trillion and total federal spending will be $6.75 trillion. That’s a deficit, or negative balance, of $1.83 trillion. President Trump says he wants to pass a balanced budget. Well, to do that for this fiscal year, you’d have to cut all Social Security payments, eliminate all Medicare and Medicaid spending, and completely ignore interest on the national debt. Not exactly easy-peasy.

The federal government is obviously not going to eliminate Social Security, Medicare, Medicaid, or default on the debt. So what is the federal government going to do? Borrow more money. And that’s a problem.

During the Biden administration, Treasury Secretary Janet Yellen funded annual federal spending deficits with Treasury Bills – with a maximum of one-year maturity – and two-year Treasury Notes instead of 10- or 30-year Treasury Bonds. As a result, $9.2 trillion of short-term Treasury Bills and Notes will need to be refinanced during 2025. Add another $2 trillion in expected new deficit spending, and that’s $11.2 trillion of debt that will need to be borrowed this calendar year. To make matters worse, some of the largest buyers of U.S. debt instruments – Japan, Saudi Arabia, and China – are SELLING their U.S. T-Bills, Notes, and Bonds. If you want to stay awake nights worrying about what’s going on in D.C., this is the issue.

If there are too few buyers willing to purchase new U.S. debt T-Bills, Notes, and Bonds, how will the federal government cover its debt? It can raise interest payments on U.S. Treasury debt instruments until enough buyers become interested, or the Federal Reserve Bank can simply print (electronically create) new money. That’s known as Quantitative Easing. We’ve been down this road before and are still dealing with the inflationary results.

You see, in the United States, we’ve all agreed to believe that the currency, printed by the federal government, has, or represents, value. According to the late George Mason University Professor of Economics, Walter Williams, our currency is a kind of “certificate of performance,” or proof that the holder has provided something of value to his/her fellow citizens. “You mow my lawn, I give you this certificate of performance.” Here’s the problem: When the federal government just starts printing more of these “certificates of performance” without the actual performance part, the value of the currency is diminished. These certificates are now just pieces of paper or electronic credits issued by the Federal Reserve out of thin air.

This is the rock-and-a-hard-place where President Trump is standing. He promised to lower costs. He promised to increase jobs in the US. He’s talked about eliminating taxes on tips, overtime, and Social Security. Meanwhile, he’ll have to find buyers for $11.2 trillion of debt or turn on the federal printing presses and restart the inflationary process.

This will be no easy task. It will take years to resolve. The eventual actions may not be easy to endure. 

State Rep. Mark Tisdel, R-Rochester Hills represents Michigan House District 55, which includes the cities of Rochester and Rochester Hills, and part of Oakland Township. You can reach him by calling 517-373-1792 or by sending an email to marktisdel@house.mi.gov