If you haven’t heard, the national debt recently climbed past $20 trillion. Some pundits claim the national debt is irrelevant, and some say it’s the end of the world. What’s to believe? After all, in the past two decades we’ve hit milestone after milestone and nothing has happened. Is it just a big boring number or will it actually affect our future? Important questions we hope to answer.
First, debt isn’t always a bad thing. Responsible borrowing such as home mortgages or vehicle loans can provide societal benefits. Businesses borrowing money for an investment that will yield them a larger return is the cornerstone of the American economy. The federal government is no different in this regard. Borrowing money to fund productive investments that will grow the economy (think infrastructure or research) or in times of crisis is good and necessary. For example, the highest level of debt to GDP in United States history occurred during World War II, which was quickly paid down following the war. Thomas Jefferson also had to take out a loan to fund the Louisiana Purchase.
On the flipside, if not used wisely debt can be a bad thing. Think massive credit card debt or a homeowner that is underwater on his or her mortgage after a minimal downpayment. Because governments can tax and print money to cover those debts, many believe that the government is immune to the same detriments associated with personal debts. A tried and true excuse by Congress to spend more or tax less. They are right that no one can foreclose on the federal government, but there are consequences when a government borrows more than it can afford. And those will primarily fall on the incoming generations.
Since the early 1930s, the federal government has substantially gained more responsibility in the lives of the American public. That responsibility, whether one believes is right or wrong, costs money. When the government can’t bring in enough revenues to cover its spending, it issues debt. For most of American history, the United States government was bound to an ethic of borrowing only in times of need and immediately paying back that debt. But that changed in the 1960s, and the U.S. government has run a deficit in 43 of the last 47 years. More significantly, our debt, which has skyrocketed in the past 15 years, is growing faster than our economy. And due to the pending baby boomer retirement wave, the outlook is even worse.
The United States is currently over $20 trillion in debt. A national debt that took just over 220 years to accumulate, is expected to see another $10 trillion tacked onto it over the next ten years, and double in the next 30 years. To put simply, federal spending is out-of-control and will dramatically affect future generations and young Americans today.
While some economists argue that short term deficit spending, or stimulus, can provide a boost to the economy during a recession, we are currently eight years out of the Great Recession and at full employment. Yet we had to borrow $666 billion last year to pay the bills. This is different. This is a generational deficit that limits economic growth and crowds out opportunity. Long term deficits could lead to economic disasters if buyers of U.S. debt no longer trust the ability of the U.S. government to pay them back. Even absent an economic crisis, there are still massive risks of inflation or high interest rates that will punish economic opportunities and send more tax dollars to pay off bonds than go to budget items such as defense, research, or infrastructure.
Although the national debt is accumulating rapidly, Congress has the ability to fix its major drivers. Programs on autopilot like Social Security, that just topped $1 trillion in spending for the first time, and Medicare, which will top that mark in less than ten years, need to be reformed for current and future beneficiaries’ sake. The Pentagon hasn’t passed an audit for over a decade. Duplicative federal programs that work at cross purposes squander valuable resources.
Laying every agency, program, and expenditure on the table gives Congress and the American public transparency, and allows us to decide what is a priority, and what is not. Just 10 years ago the ability to see what the federal government spends your tax dollars on was almost impossible. Now there are numerous websites, including our research library, dedicated to sifting through all of the government’s expenditures.
Exactly like you would in your personal budget, if fly fishing is a priority to you, you may decide the funds used in your budget for fishing are more important than Netflix. Since budgets are not unlimited, we must choose what is important to us. That especially applies to Congress.
Every dollar spent over the revenue is taken at the expense of future generations. Its a tax on the future economy. Our economy. Currently, there are only five Members of Congress from the millennial generation. That doesn’t give the generation poised to inherit this mess many seats at the table. When the history books are written about the past few generations in Congress, they will conclude that no other generations before had borrowed at such great cost from their their kids and grandkids. Every American generation has some task thrust upon it, and we believe this generation’s is preserving our country’s economic future.
Pursuit’s mission is to halt the status quo in Washington of stealing from the future to pay for the present, and stopping an economic disaster from happening in our country. No matter your race, religion, or creed, the national debt will affect you, your family, and your community. No other issue in American politics affects everyone as equally as the national debt. With your help, and our guidance, we can begin to make our country a better place to live and follow the ultimate dream, the American Dream.
Here’s to the pursuit of a better future.