FedEx Founder Delivers Urgent Warning Regarding the Unsustainable Nature of Government Debt
The founder of FedEx, Fred Smith, has joined a growing chorus of business leaders expressing concern about the escalating government debt in the United States. In an interview on Fox News, Smith highlighted projections from the Congressional Budget Office (CBO) that show the U.S. federal debt held by the public is expected to reach record levels, surpassing 170 percent of gross domestic product (GDP) by midcentury.
Smith emphasized the seriousness of the situation and warned that the current level of government spending is unsustainable. His comments echo those made by other prominent figures, including JPMorgan Chase CEO Jamie Dimon and billionaire investor Ken Griffin, who have also voiced their concerns about the consequences of out-of-control spending in Washington.
The ballooning national debt has surged by over $6.3 trillion during President Joe Biden’s term in office, following a $7.8 trillion increase under former President Donald Trump. Smith stressed that America’s ability to print money is contingent on the dollar remaining the world’s foremost reserve currency. However, he warned that this status is increasingly at risk, citing the deliberate efforts of countries like Brazil, Russia, India, and China to dethrone the dollar. If these countries succeed in diminishing the dollar’s role, it would severely impact America’s ability to sell its bonds and could lead to a significant decline in living standards.
Smith’s remarks align with his previous statements in December, where he urged political leaders in Washington to recognize the “unprecedented dangers” posed by political and financial instability. However, when asked if he believes today’s political leaders have the wisdom to avert a catastrophe, Smith responded negatively.
While several business leaders have called for fiscal responsibility and financial stability, Treasury Secretary Janet Yellen recently expressed a different view. Yellen stated that she does not believe the federal government needs to cut deficit spending or balance the budget to ensure fiscal sustainability. Her comments came amid a 16 percent increase in the budget deficit compared to the previous year, pushing the federal budget shortfall to $532 billion in the first four months of the fiscal year.
The warnings from business leaders and the rising interest payments on America’s public debt, which have exceeded $1 trillion annually, coincide with the national debt surpassing $34 trillion. Projections from the CBO indicate that federal debt held by the public is expected to reach 172 percent of GDP by 2054, with interest payments on government debt projected to rise to $1.6 trillion within a decade.
While some members of the executive branch downplay the dangers of budget deficits, Congress appears to be taking steps to address the issue. The Republican-led House Budget Committee has voted in favor of creating a 16-member commission tasked with submitting fiscal policy recommendations. The goal of the commission is to assess ways to balance the federal budget promptly and propose measures to enhance the long-term solvency of government programs like Medicare and Social Security.
Analysts at the University of Pennsylvania have warned that when the debt-to-GDP ratio reaches around 200 percent, it will reach a point of no return. At this stage, no amount of tax increases or spending cuts would prevent a government default on its debt, which could have significant repercussions for both the U.S. and global economies. The analysts estimate that the United States has approximately 20 years to take corrective action before the debt spiral becomes uncontrollable.
The concerns raised by Fred Smith and other business leaders highlight the urgent need for fiscal responsibility and sustainable economic policies. As the national debt continues to grow, it is crucial for political leaders to address this issue effectively to avoid a potential catastrophic fiscal crisis.
