By Kel Wilson / Herald Forum
Government debt is one of the gravest threats Americans face. It sounds an existential alarm that may supersede risk from climate change, a nuclear-capable Iran, Russian aggression, war in the Middle East, China’s threat to Taiwan, or a wiped-out Southern border. Our national debt could be a central crisis for the next generation of Americans, affecting their spending power, ability to purchase homes and national security.
U.S. debt has soared to historic levels. Debt is the amount of money the government has had to borrow to pay its bills. According to the Congressional Budget Office, mounting debt will slow economic growth and can raise interest rates, continuing a pattern of inflation. Many economists say debt soon will restrict government spending on important programs including Medicare, Medicaid and Social Security and raise the likelihood of a financial crisis. Being far in the red could make it impossible to borrow our way out of a crisis.
The federal government raises money to fund our budget by selling bonds. Economist Raghuram Rajan believes if the debt gets much higher, people could think: “The U.S. owes a lot of money. If I lend them money, will they be able to pay me back?” If that sentiment becomes a contagion among investors, they will demand higher interest on their money due to perceived risk in lending to the United States. That would elevate our interest payments and ignite a budgetary spiral.
Some financial experts argue the rising debt is not a crisis. They say the government has unlimited power to raise taxes, print money, and issue securities. For now, the government can borrow needed funds at a much lower interest rate than consumers. However, our worsening debt to ratio to gross domestic product is concerning. A nation’s GDP is the yearly value of all the goods and services it produces. In 2023, the U.S.’s GDP was $27.36 trillion. It’s the best measure of a nation’s economic health, but it must be considered in conjunction with debt. The current U.S. debt to GDP ratio is 123 percent. Our debt is significantly greater than our GDP. In 1980 it was 26 percent.
Many will ask, “When will this occur?” and “What exactly will happen?” The truth is none of the experts know. Rajan says, “Is there a level of debt-to-GDP ratio we should worry about? Yes. What is that level? We don’t know.”
A deficit occurs when the government spends more money than it generates in tax collection and selling bonds. We overspent by $1.7 trillion in 2023. That money is piled on to our debt total. The deficit is annual, and debt is what gets larger every year we overspend.
As of this writing according to US Debt Clock.org we owe $34,758,613,164,726. That’s $34.76 trillion. Currently, our debt grows by $1 trillion every 100 days.
If you have no personal debt, and $267,000 in assets you’re probably feeling ahead of the game. In truth, you’re penniless. That’s because each U.S. taxpayer owes a $267,000 piece of our debt pie.
Just paying interest on the debt is the fourth largest federal government obligation, behind mammoth expenses for Medicare, Medicaid, Social Security and defense in that order. When you only pay interest on a credit card balance you never make a dent in the principal. It’s the same with the government; we never pay down the principal. Interest-only payments are consuming 40 percent of all personal income tax, and it’s on a trajectory to get worse. Imagine how we could improve lives of Americans with that money.
Responsible citizens must pressure our leaders to treat our debt addiction with reverence. We should not trust politicians’ excuses for overspending, even during national financial emergencies.
We could have the best health care, schools, infrastructure, transportation systems and give the military all they need, if we were not burning tax money on interest-only payments.
The next time someone says the United States is rich, and should pay for this or that, remind them we are broke.
A stable future depends on lawmakers’ courage to act on our debt crisis. If we do not course correct there will be less investment and slower growth. Inflation will continue to rise and there will be an erosion of confidence in the dollar. Ultimately, we will pass down a shell of a nation to our children.
Kel Wilson, who lives in Everett, is employed as a counselor for youths on parole and plans to study for a master’s degree in professional writing.
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