Everybody and his dog seems to be howling about the massive increase in governmental debt in America these days. Some analysts even predict an imminent bankruptcy and collapse of the United States. But don’t worry; after all, the federal government does not seem worried. Even Vice President Dick Cheney said that debts and “deficits don’t matter.”

If you are concerned about paying the national debt, which now averages over $27,000 per person, you are right to be worried. The government knows just how to pay off the debt—and it is the craftiest, yet oldest, trick in the book.

In an amazing debt development, the U.S. Treasury Department website is openly stating that as of January 24, the national debt has surpassed $8.1853 trillion. But here’s the kicker: The national debt “ceiling” mandated by congress is only $8.184 trillion. A whole billion dollars less! As of January 24, the government of the United States has actually been operating in technical default.

Back in November 2004, the last time the debt ceiling was about to be breached, the Treasury Department did everything it could (and then some) to avoid breaking through it. Congress quickly decided to pass the necessary legislation allowing for an additional $800 billion more debt and thus the debt ceiling was not breached. A short year and two months later, the new borrowing limit has already been surpassed.

This time around, the debt ceiling was openly exceeded, yet hardly a peep was heard from politicians or the media. This is surprising, especially since the amount and rate of debt increase is unprecedented. Government debt no longer seems to carry any stigma for politicians. According to Texas Congressman Ron Paul, “The original idea behind the debt limit law was to shine a light on government spending, by forcing lawmakers to vote publicly for debt increases.”

However, over time the increases have become so commonplace (over the past 40 years, the debt ceiling has been raised 50 times) that the media scarcely reports them and there are no political consequences for those who vote for more debt.

Responding to President George W. Bush’s Fiscal Year 2007 speech, House Budget Committee Chairman Jim Nussle stated, “As we continue our efforts to control spending and reduce the deficit, the president’s proposal provides a solid starting point for this year’s budget by focusing on our most pressing needs: sustaining our strong economy and job creation, and ensuring the strength of our national defense and homeland security.”

However, when examined, the 2007 budget proposal actually doesn’t do anything to cut the debt! That is right: It doesn’t cut the debt at all. It actually creates more debt. Not only that, but it also underreports the official deficit numbers in the budget and does not account for underfunded Medicare and Social Security obligations.

For example, under the plan, the $423 billion deficit (the amount the U.S. is expected to go further into debt this year) would eventually be whittled down to $183 billion by 2010 (ibid.). Superficially this sounds positive, but the accumulative effect of having a deficit each year means that we are still sinking further into debt. America’s overall indebtedness will still grow.

On top of the reported deficit is the cost of the wars in Iraq and Afghanistan, which are not even accounted for in the budget. In fact, over $100 billion in war money is included in “off budget” funds (Texas Straight Talk, February 13). So if the government was to report the actual yearly deficit, it would be approximately 25 percent higher.

But a measly 25 percent increase in the deficit is nothing compared to the government’s unfunded Medicare, Social Security and government pension obligations which, according to USA Today, total $53 trillion (Oct. 5, 2004).

Make no mistake, even the reported national debt is soaring. It has soared so much that 1957 was the last time the federal government actually paid off some of its debt! Even then, the U.S. paid less than 2 billion of the over $276 billion it owed in 1956. It has soared so much that the $1 trillion in federal debt that President Ronald Regan declared “incomprehensible” in 1981 when elected to office has grown 800 percent, to more than $8 trillion today. It has soared so much that the federal government has borrowed more money from foreign governments and banks during the past two presidential terms alone than during all other American administrations put together. Furthermore, more debt will have been added during these last two presidential terms than in the previous 200 years (Daily Reckoning, January 20).

So, just what is this “crafty trick” that the government has for paying off the debt?

Based on the Federal Reserve’s past proclivity to expand the money supply every time there is a crisis, politicians will probably take the seemingly easy way out: simply create the additional money needed to repay debts and promised entitlements under Medicare, Social Security, Medicaid and government pensions—the $53 trillion worth. This way, the government can prolong the facade of a healthy fiscal business model a little longer—paying debt and promised benefits with devalued dollars.

But this is only a short-term fix, because eventually the resulting government-induced inflation will lead to a continual and catastrophic erosion of the value of the dollar (and any cash savings you might have) and, subsequently, the nation’s wealth.

In other words, the government will still pay you your benefits, but instead of being able to purchase 10 loaves of bread with devalued dollars, you will only be able to purchase five loaves, or even fewer.

Don’t be fooled. America is in serious financial trouble.