Country’s debt level is risky business
Re: Letter, “Our country’s invisible problem (Part 2)”, T&V Oct. 20
To the Editor,
The number one issue in our country is the amount of our national debt, as candidate Robert Ardini has written in your paper. The current low interest rates have hidden this problem from the people.
Usually, when there is a major increase in the amount of the national debt, there is also a major increase in the total interest cost of that debt. This increased interest cost pushes other expenditures out the federal budget, which hurts our economy and our quality of life.
The latest data readily available (through 2014 on Wikipedia) shows how lower interest rates have enabled the Obama Administration to escape this usual penalty for issuing more debt. For fiscal 2007, our national debt was $9 trillion, and the interest cost of that debt was $430 billion. In the next seven years (through 2014), our national debt nearly doubled to $17.8 trillion. During this period of sharply rising debt, interest rates declined. The debt nearly doubled, but the interest cost only increased 0.2 percent (from $430 billion to $430.8 billion). This was possible, because the average interest cost of the national debt fell from 4.77 percent in 2007 to 2.42 percent in 2014.
Our country’s invisible problem
Three common clichés come to mind in regard to this election season: 1. The emperor has no clothes. 2. The elephant in the room. 3. You can’t see the forest from the trees. Why? Because the number one campaign issue for every presidential and congressional race should be our national debt! It’s somewhat of an invisible problem, so perhaps that’s why it doesn’t get more attention. Or, maybe it doesn’t rate because most politicians incorrectly associate it only with cutting programs and services – which is never popular with their voters.
Let’s consider just some of the ramifications of our 19 trillion dollar national debt:
A. In order to fund the national debt, the U.S. needs to print money or borrow from other countries. If we continue to print money, that devalues our existing dollars, resulting in inflation. If we continue to borrow from other countries such as China and Japan, our credit risk will eventually rise; this will require us to pay even higher interest rates until the inevitable day comes when we can’t.
B. Taxes will have to increase to service the national debt.
C. Government services – such as the maintenance of bridges and roads and other infrastructure – will have to be curtailed or eliminated as the national debt grows and becomes a greater percentage of the overall budget. Worse yet, should we need to defend ourselves against a foreign enemy, or recover from a natural disaster such as a major earthquake, we might not be able to afford to do so.