Math is not a partisan issue—and right now the numbers just do not add up. Whether you are a Republican, a Democrat, or an independent, it’s plain to see that we are quickly running out of time to patch the fiscal black hole we have dug for ourselves.
This week we are on track to hit $16 trillion in national debt. That’s $16,000,000,000,000—or about $53,333 for every man, woman, and child in the United States. Worse, that debt is growing larger every day. By 2016 it may well hit $20 trillion, or $66,667 per person. Therefore, in four short years my family of five will owe $333,333. Friends, that’s a ton of money—especially when you consider that the national debt was “only” a tad over $10 trillion four years ago, or $33,333 per person and $166,667 for a family of five.
(Actually, it’s a lot more than a ton. If a dollar bill weighs about a gram, and it takes 28.3 grams to make an ounce, then it takes 4,528 bills to equal one pound. This means that $16 trillion in dollar bills weighs 3,533 pounds—or nearly two tons.)
So on top of all the other financial responsibilities that families have—paying the monthly bills, saving for college, setting up a rainy-day fund, caring for aging parents, supporting churches and charities, perhaps saving for a car or other expenses—we can add this ever-growing share of the national debt.
Some will be quick to counsel that there is nothing to worry about. They will say that the U.S. has always carried a debt load and that no country is richer, more stable, and better prepared to meet its obligations. They will add that if the debt were a real problem, then people around the world wouldn’t be purchasing our debt through the bond markets.
And while there is an element of truth in these assurances, they don’t tell the complete story. The numbers indicate that the financial foundation of the economy appears to be cracking.
Only just over half of adults pay any federal income taxes.
More than 107 million Americans are receiving some form of government assistance—not counting those millions of seniors who have Medicare, Medicaid, and Social Security, nor those additional millions who work for government on the local, county, state, and federal levels.
The average American household’s net worth has dropped by 40 percent between 2007 and 2010, and the median household income has fallen from $55,470 in 2000 to $50,964 this year—and nearly 5 percent during the current “recovery.”
Spending as a percentage of Gross Domestic Product is averaging 24 percent, comparable to spending during the height of the Second World War.
The Congressional Budget Office predicts that the economy will go into another recession next year—the last one technically ended three years ago—if $500 billion in federal tax hikes and spending cuts go into effect on January 1.
In the last four years, the debt has grown by 60 percent, while GDP has grown by only 7.7 percent.
The annual budget deficit has exploded, with the last three years averaging $1.34 trillion, compared with the previous highest single-year deficit, of $459 billion.
Yet the naysayers will say that all this debt, deficit spending, and dependency don’t really matter, because we are America. Yet many experts are skeptical of this kind of “What, me worry?” attitude. They point to the ongoing debt crisis in Europe.
Writes Scott Powell in The Detroit News, “This out-of-control spending and debt is the primary reason why all three credit rating agencies—Moody's, Fitch and S&P—now have negative outlooks on the U.S. government debt, all but assuring downgrades and the loss of remaining AAA ratings for the United States in the near future.
“If credit rating downgrades are too abstract, the riots and near collapse in Greece, Spain and the Eurozone should have infused Washington with a sense of urgency to undertake structural reform of taxes and entitlements and make deeper cuts in government spending.”
The U.S. economy is operating on a knife’s edge. Should our credit rating drop or an international crisis occur, the resulting rise in interest rates could set off a chain of events that could debilitate our economy.
“Recession or war would further blow out the deficit and accelerate debt rating downgrades,” Powell notes. “Either crisis could cause U.S. debt service costs to sharply rise and potentially trigger a downward-spiral ending in a failed U.S. Treasury auction and a subsequent liquidity crisis. As happened in Greece and now recently in Spain, the U.S. could face funding shortfalls only solved by money printing that would likely trigger unacceptable inflation.”
Whatever candidates you support this November, make sure they can do the math on the current fiscal crisis. This may well entail personal sacrifice from the rest of us, as Americans have received more benefits than we are willing or able to pay for.
If we don’t rein in spending and get the economy growing again, soon it won’t matter which party you support, because, the numbers unmistakably say, the American party will be over.
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