To understand the ways the mammoth national debt harms our economy, it is helpful to have a grasp on the sheer scope of the debt problem.
You may have read recently that the debt now exceeds $15.5 trillion -- a record for our country. It is on track to hit $16.4 trillion under an increase in the ludicrously misnamed "debt limit" -- an increase requested by President Barack Obama and approved by Congress. So the debt will soon have increased almost $6 trillion on this president's watch -- from $10.6 trillion to $16.4 trillion.
And that's not the worst of it. The spending made possible by the debt limit increase was supposed to get us through spring of next year without need for another increase. But the Bipartisan Policy Center notes that our big-spending nation may instead hit the new supposed "limit" by late November of this year.
What do such big debt numbers portend? For one thing, they mean less economic growth as government must pull more money out of the free market in order to pay the rapidly growing interest on the debt. Annual interest payments to sustain our endless spending spree are already in the hundreds of billions of dollars.
As the debt becomes an ever-larger percentage of the gross domestic product -- or everything our country produces in a year -- it becomes harder and harder to generate significant growth. That is part of why the unemployment rate has been stuck painfully at higher than 8 percent for virtually the entire time Obama has been in office -- despite the administration's claim early on that the Democrat-approved $862 billion "stimulus" would keep unemployment from reaching the 8 percent mark at all.
Today, our national debt no longer is merely a substantial share of our GDP. It has actually risen so much that we collectively owe more than the value of all the goods and services that the vast economic engine of the United States generates in a year.
Underscoring the damage of the colossal debt, our country's credit rating was downgraded last year for the first time in history. Humiliating as that was for the United States, we cannot say it was undeserved. Standard & Poor's made it clear that the downgrade from the top rating was directly related to Washington's unwillingness to offer meaningful deficit reductions.
And that unwillingness to get real persists. The deficit for the current fiscal year alone, which ends in September, is expected to hit $1.3 trillion. This will be the fourth straight year of trillion-dollar-plus deficits. And the best we can hope for from Congress is not real, overall spending reductions but only reductions in the rate at which spending is growing. That's a charade.
We would say that such recklessness cannot go on without serious consequences, but that would imply that the consequences are off in the future. In fact, they are here, now, in the form of economic growth that isn't happening and in the Obama administration's quest to gut the U.S. military in order to sustain other spending -- much of it unconstitutional.
So the debt is both an economic and a national security threat. Yet too few people in Washington -- and too few Americans as a whole -- are taking that threat seriously.
We may not want to deal with the debt problem. But it's going to deal with us.
Yes, we have exceeded a digestible amount of debt, but because debt has always been able to revive the economy in the past, we are determined to try again. This time an enormous amount of debt has only been able to produce a small bump up in our economy. The moment the debt spending is reduced the economy will slump back into recession and toward depression. Both political parties created this mess and neither party has a clue how to end the deficit spending.
Greece is a microcasm of the debt problems that infect the entire developed world. Globalization has spread the same deadly financial debt products to us all. The defaults started with Iceland and Greece, but are now working their way up the food chain with no country immune to the pain of austerity and economic hardship. America's turn will come, maybe not for another year or two, but it is coming.
The coming hard times will be our opportunity to make the hard decisions that are not politically possible now while we are pretending that one party or another has an easy answer and can avoid the pain. Neither can. We will either face our shortcomings as a nation or we will prolong them into the future.
Can we come together and make the hard choices together or is this the end of the America we have all known? This is that serious and that is what is at stake.
Reality check: the debt will only get reduced when spending is reduced and/or taxes are increased. Cutting spending corresponds to cutting jobs, which won't happen until private employers are willing and able to absorb the unemployed. Hello higher taxes.
Takers not makers haved created our massive debt. Takers by definition are selfish people and given the opportunity will always vote to take from the producers for it is the easy way out,easier than work.
Over the years these takers have only increased in number and their greed and coveteousness will only be curtailed by spending that is Constitutional as this side of the paper has preached for many years.
conservative...most people would agree with you, somewhat. Even FDR recognized that public assistance included public work, thus we had public parks and such built across the country. It would be a big task, but we should implement public works instead of welfare or unemployment. Even single moms should work in public childcare facilities which would take care of moms that worked elsewhere. This would soon put a stop to making kids for welfare. If our good state and national representatives can't do anything else, they could put their shoulder to the wheel and implement this type program.
Or login with:
New Account