The National Debt is the total amount of money the U.S. government owes. It’s what you get from adding up all of the federal deficits accumulated from year to year. Big deficits mean a growing federal debt.
No one in Washington has come up with a solid plan to address the nation’s rising national debt, and many question if it’s even necessary. Former Vice President Dick Cheney famously said, “Reagan proved deficits don’t matter.”
American families that run high levels of debt risk bankruptcy or economic catastrophe, should an emergency arise. The National Debt operates pretty much the same way. High levels of debt and deficit spending at the household level are not sustainable. At some point, household debt has to be paid back. The debt is on an unsustainable course and has been for years. A large debt limits the government’s ability to continue to fight the economic downturns. It also makes us potentially beholden to countries, such as China, that we borrow from. Tax cuts, as well as deficit spending, increase the national debt.
Unfortunately, many members of Congress use the national debt as a political prop. Addressing the national debt isn’t just about cutting spending. That tactic may work in American households, but it has seldom worked in a more complex system such as the government. Presidents who have run on cutting taxes and followed through end up having to raise them again. We cannot cut our way out of the crisis, no more than we can spend our way out of it. It takes politicians in Washington who are not looking to score political points but, instead, are willing to sit down at the table to create a smart, effective government – one which can operate within a budget that doesn’t leave anyone behind.
There are three drivers of growth in spending, which leads to an increase in the national debt:
- Rising healthcare costs per capita
- Our aging population
- The cost of servicing our national debt (interest cost).
Original source can be found here.
