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.