71 percent of Americans agree that the national debt should be a top three priority for the United States. As I write this post, the United States is in nearly 22 trillion dollars of debt. If someone told me they were in more debt than their yearly income, it would not be hard to identify that as an issue, but for some reason, it’s not apparent what’s wrong with that if the government is the player involved. Right, they are the United States government? Their intent is to stimulate the economy and help their citizens? No- Despite the intention of economic stimulus, these budget deficits must be done away with and the debt payed off, because if not payed off the United States steals from future generations, risks financial crisis, and ignores the lessons of history. The solution to the problem will be to build a small surplus, and begin to pay off the interest.
In the past, it was more widely recognized that the government had to be more fiscally responsible. President Woodrow Wilson insisted that we would have to pay for World War 1 as we go (pdf at bottom). The largest players to be affected negatively by the United States debt are future retirees. Social Security and trust funds are the largest holders of U.S. debt. Social Security has been borrowing money, and so have entitlements, this can’t continue to happen. Eventually the social security fund will run completely dry. When the United States reaches a point where it has to deal with the debt, it will have to make a value judgement between it’s warfare and welfare state- both will likely have to shrink.
George W. Bush’s treasury secretary is quoted as saying, “If we don’t ask act, (the deficit issue) is the most certain fiscal and economic crisis we will have.” Yet, like Obama and Trump, Bush increased the deficit drastically. The major problem with United States debt is that there will some day be less demand, because people will lose trust in the fact that it can be payed back. According to The Balance report, “Diminished Demand for U.S. treasurys would further slow interest rates. That would further slow the economy.” What’s even more freaky is that the value of the U.S. of dollar is connected to the value of U.S. treasury’s. Running ginormous deficits now, well the economy is booming, also leaves the U.S. with less flexibility to actually respond in a crisis situation. With growing debt the CBO estimates that the average income of a 4 person family will be reduced by $16,000 over the next 30 years. Even without a crisis, this debt will harm Americans and when a crisis comes, the government will be to far overstretched to respond.
How common it is, but very true, “Those who don’t remember the past are doomed to repeat it.” I might make a separate post with more historical observations, but for now applying history to our current situation demonstrates how dangerous debt can be for a great nation. The most recent economic crisis caused by an overburden of debt was the Greek sovereign debt crisis. Perhaps the biggest empire of all history, The British empire fell almost at once due to large war debts, the disorganized decolonization lead to still-existing problems in many former colonies. The war debt accumulated was mainly due to world war 2. In 1949 the British Debt/GD ratio was over 250%. Most of the other large economies to fail, failed because of inflation, or the over-printing of money. Even in those cases, the need for fiscal responsibility is shown.
The United States deficits steal from future generations, will hurt Americans through both wage decreases and financial crisis, and most clearly ignores the lessons of the British empire. One president may begin paying off the debt, but it will likely be difficult to again elect another president who will be fiscally responsible. Few presidents have run surpluses, but than their replacements have run deficits. However, it is worth it for the nation to be pulled back into fiscal responsibility, and maybe the people of the United States will find it important enough to vote in a president who will be fiscally responsible.