The current debt level is more than $14 Trillion. This is a very…very large number. That’s fourteen followed by 12 zeros. But, let’s add a little more perspective. $14 Trillion is more than $47,000 dollars for every man, woman and child in the country, based on the most recent U.S Census data. According to numbers from the U. S. Treasury, this would be more than $131,000 for every US taxpayer. If the government stopped spending any other money, and put $100 Million-a-day toward paying off the debt, it would take more than 384 years. This doesn't even consider interest payments...You do the math.
In 2010, The US government spent more than $413 Billion on interest payments alone. This is more than was spent on The Department of Health and Human Services…The Departments of Transportation, Energy, Veterans Affairs, Housing and Urban Development, Justice, Homeland Security, Agriculture, Commerce…hold on, I’m almost done…The Department of Treasury, Department of Labor and the Small Business Administration …COMBINED. Just to service current debt. And, according to the non-partisan Congressional Budget Office, the interest payments on the debt are projected to be $1.1 Trillion a year by 2021, a mere 10 years from now.
If the government stopped spending any other money, and put $100 Million-a-day toward paying off the debt, it would take more than 384 years.Many people say that the amount of debt, in dollars, is not what’s important, but rather what percentage of the over-all economy, or Gross Domestic Product (GDP), it represents. Even from this perspective, though, the debt is high. At nearly 70% of the US GDP, the debt is at its highest level since World War II. Some current projections have the debt exceeding 100% GDP by around 2025.
Regardless of your view on the seriousness of the debt...or whether you believe that the it is necessary or not...the root cause is simply that the government is spending more money than it is receiving. The difference between revenues and outlays is known as the deficit. To make up for this deficit, the US borrows money every year from many different sources, including foreign countries like China. As historian and economist, Dr. Thomas E. Woods, Jr. says in his book Rollback, "Every year $250 billion is borrowed from China so the U.S. government can play superpower."
Many different solutions to the debt problem have been proposed. Some say that we need to attack the problem from a revenue perspective. But, there is disagreement on how this should be done. Some say that taxes should be raised…but which taxes…and who should pay these taxes? Others say that lowering taxes will actually increase the revenues by boosting the economy. They point to previous tax rate cuts such as those championed by President Kennedy and President Reagan as proof.
"Every year $250 billion is borrowed from China so the U.S. government can play superpower."Other people believe we should attack the problem from a spending standpoint. The largest block of spending is on what is generally known as Entitlements, including Social Security, Medicare and Medicaid. Entitlements together make up approximately 58% of the budget. National Defense makes up about 19%. These areas of the budget are very politically sensitive. Any proposed cuts in these areas meet with strong opposition from one group or another.
There are even those who believe that the government should spend more, believing that increased government spending will stimulate the economy and therefore increase revenues. This is the basis of the so-called Stimulus packages that have been enacted and proposed.
And, many believe that some balance between revenue and spending solutions are necessary due to the scale of the problem.
There are consequences of a large national debt. As the debt grows, so does the interest payments required to service that debt. As I mentioned before, interest payments last year alone were more than $413 Billion. When the budget continues to be in deficit, it becomes more and more difficult to pay this growing interest. In effect, the government is borrowing money to pay the interest of previous loans…never getting a chance to pay down the loans. When Congress proposes new spending, it is actually calling for more borrowing...since we don't have enough revenues to pay for our current spending.
If the lenders’ faith that the United States can pay back the loans and interest diminishes as the debt grows, the country’s credit rating can be downgraded, as recently happened when Standard & Poor’s changed their rating of the US from triple A (AAA) to Double A plus (AA+). This can, as with individuals, effect interest rates the government has to pay and its ability to borrow. Ultimately, if the problem gets too large, the country can fail to make necessary payments and default on its loans. This can have even worse consequences to the economy.
When Congress proposes new spending, it is actually calling for more borrowing...since we don't have enough revenues to pay for our current spending.The scale of the debt issue is very large…almost too large to understand. There is very little agreement on what should be done, but it is a problem that must be addressed. This debt can affect all of our futures and the future of our country. I hope I have been able to offer just a little perspective to a complex issue.
