Treasury Secretary Janet Yellen Claims the U.S. Can Afford to Support Ukraine and Israel

However, the argument that the U.S. economy is in a solid position to financially support Ukraine in its fight against Russia and Israel against Iranian-backed Hamas is predicated on the illusion that the economy is on the mend. Touting cooled inflation and job numbers, Secretary Yellen attempts to paint a picture of a strong, stable U.S. dollar, all while disregarding the national deficit and debt.

While we all can agree that the valiant efforts of the Ukrainian people to maintain their sovereignty and the Israel fight to defend their very existence deserve our support, our ability to support them is the question of the hour.

JANET YELLEN: US TREASURY SECRETARY SAYS ‘WE CAN CERTAINLY AFFORD TWO WARS’.

Endless enthusiasm

In the interview with Sky News, Treasury Secretary Janet Yellen was asked if the United States can afford to financially support two wars – ones the U.S. is not even fighting – simultaneously.

The Secretary’s answer overflowed with positivity:

“America can certainly afford to stand with Israel and to support Israel’s military needs, and we also can and must support Ukraine in its struggle against Russia.”

However, in the same interview, Secretary Yellen dropped hints that finding the funds to pay for a two-front war does have its challenges, particularly with a divided and tumultuous Congress:

“We do need to come up with funds, both for Israel and for Ukraine. This is a priority.”

The argument that the lack of a Speaker of the House is the obstacle to providing aid to Israel and Ukraine is merely a red herring, a distraction from the true looming boulder on the shoulders of every American. The reality is that the United States of America is broke as a joke. 

Janet Yellen: We can certainly afford two wars.
Everyone Else: Who wanted even one war?

Is it the debt or the deficit?

The national debt and the national deficit are often confused. Not just by everyday citizens who didn’t study economics, but even for legislators and actual titans of finance. The national debt and deficit are two different entities, although one feeds directly into the other. 

The national deficit is when the government spends more money than it makes in a fiscal year. Currently, the federal deficit is $1.5 trillion. 

When the government is in a deficit, it still must find a way to operate, and how the government pays for programs while in a deficit is by borrowing money by selling treasury bonds, bills, and other securities – either to foreign countries like China or to itself through the Federal Reserve. This process is what feeds into the national debt.

Currently, the national debt is just shy of $33 trillion.

This amount includes what the government owes other governments and what it ‘owes’ itself. To put that dollar amount into perspective, our national debt is roughly the size of the combined economies of China, Japan, Germany, India, and the United Kingdom. 

A $33 trillion national debt divvies out to $252,000 per household or $99,000 per American. But it’s not the debt amount that should’ve caused Secretary Yellen to exercise caution with her statements.

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Killer interest

Just as with most debt, the U.S. government has to pay interest on the debt it accumulates as the cost of borrowing. In ten years, the government will spend more on interest payments than it allocates for research, development, infrastructure, and education.

The federal government pays $2 billion daily on interest payments on the national debt alone. The outlook for the future doesn’t look much brighter.

In Fiscal Year 2020, interest payments were $475 billion and are expected to triple to $1.4 trillion by 2032. Fast forward to 2053, and those same interest payments are expected to surpass $5.4 trillion.

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That amount will be more than what the government spends on Social Security, Medicaid, Medicare, and defense. The Committee for a Responsible Federal Budget (CRFB) explains the gravity of these rising interest payments:

“By 2051, spending on interest will be the single largest line item in the federal budget…”

The CRFB continues:

“High and rising national debt will mean that more of the budget will go towards servicing that debt with interest payments instead of going towards other priorities. Importantly, a high interest burden also makes it more difficult for lawmakers to borrow more in times of emergency or during a war without significant consequences.”

Consequences that the American taxpayer will feel, assuming a nation that much in debt even makes it to 2053.

The U.S. is currently spending more to pay interest on the national debt than it does on national defence … over $1 trillion per year.

And the amount is growing fast as more than $7 trillion in cheap debt matures this year and must be refinanced at the new higher rates.

Bringing it home

Secretary Yellen claimed that there is plenty of evidence that the Biden administration’s work to improve our economy should assuage any fears that the U.S. can’t afford to fund the proxy wars in Ukraine and Israel.

Touching on the pain felt in taxpayer wallets at grocery stores and the gas pump, Ms. Yellen said:

“Inflation has been high and it’s been a concern to households, it’s come down considerably.”

Yes, the inflation rate has come down from previous highs, but the damage is done with the prices of necessities already way up compared to just a few years ago. That’s the part people care about.

The Secretary also touched on jobs, stating:

“At the same time, we have about the strongest labor market we’ve seen in 50 years with 3.8% unemployment.”

Finally, the Secretary said:

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But these arguments neglect the big rocks – national debt, national deficit, and rising interest payments. It’s as if to say that an American family that has maxed out their credit cards – but can pay the minimum payments on their credit debt, mortgage, and car payment thanks to their job, which pulls in just enough money for the interest payments and necessities – is in an excellent financial position.

However, this same family will find themselves in economic calamity when faced with an emergency like a totaled car, a debilitating disease, or worse…war.