Nicholas Seidl
When we hear numbers in the trillions it is hard to imagine that anything on earth that can be so numerous that it reaches such an amount. Unfortunately as Americans, we have a very relevant example of something so large that it can be measured by the trillion. Our country’s national debt is the largest of any country in the world, and is currently around 28 trillion dollars, and isn’t expected to stop growing. Since the year 2000, the national debt has increased by over 20 trillion dollars. The amount of money our country ows is often used as an argument for changes to our tax policy or used as evidence for reduced government spending. Additionally, it may be difficult to understand the national debt because we do not owe all of our money to the same people. However it is important to realize the gravity of the problem of our national debt because it will very likely be a problem that affects us in everyday life in the future.
National Debt by Year
https://datalab.usaspending.gov/
The sheer size of the national debt can be terrifying, but why is our country in debt in the first place? While some may think that taxation is thought to be used to pay for all of the government’s many programs, the government doesn’t generate enough money to pay for everything it spends money on. When the country cannot generate enough funds to pay for its expenditures, it borrows from investors or foreign governments in the form of bonds or similar methods. It also borrows money from other US government departments.
The two simplest ways that the national debt can begin to be reduced is through raises to taxes or by reducing the amount of money the government spends. Raising taxes gives the government more funds to operate with so won’t have to borrow and governments can reduce their expenditures by cutting programs or spending money more efficiently to reduce costs. Either way, the government needs to bring in more tax revenue than all of the money it spends in a year to begin to reduce the national debt. Of course, both of these methods to reduce debt may be unpopular.
So what caused the debt to rise to such a large amount? Increases in national debt often follow financial hardships. The rate at which our national debt increased began to rise as government policies that were intended to ease the pain from the recession were put into place during the 2008 economic recession. Similar actions were taken during the Great Depression which also raised the debt. More recently, stimulus packages during the pandemic have also raised the national debt.
As our national debt only increases, many are wondering if the amount of debt that America has taken on is sustainable. While the effects of our debt haven’t had a noticeable impact on everyday life for Americans yet, the debt may become a larger problem. As mentioned earlier, the government borrows money from itself. One of the ways it does this is by borrowing money from the Social Security Trust Fund to pay for other government expenditures. As the elderly population grows from generation to generation, the government will no longer be able to borrow from this fund because the fund itself may no longer be able to pay for the social security program.
Additionally, we may start to owe foreign investors and governments even more money than we already do. Generally, the country has low interest rates on the money it was loaned because our investors have faith in our economy and expect that they will eventually be paid back. However, if countries were to lose faith in their investments, they may demand larger interest on their loans, or be less willing to invest in the country. This could cause a problem because our country is already dependent on investments from other countries to pay for everything it spends. We rely on good faith from our investors as well as low interest rates; we may no longer be able to count on either of these factors if investors lose faith based upon the ballooning national debt.
The national debt has ballooned to such heights that we would not be able to pay all of it off even if we paid all the capital that we produce in a year. The money that we borrow will need to be paid back eventually, and the way we borrow may not be sustainable in our future. Our country may have to raise its taxes or cut spending; both of these options could potentially have negative effects on the economy as a result anyways especially in the goal of economic security if social benefits suffer due to the debt or if taxes have to be raised to pay for all of our programs. The national debt is a complicated problem that can no longer be ignored as the problems that it will cause in the future can already be predicted.
Works Cited
Amadeo, Kimberly. “US Debt and How It Affects the Economy.” The Balance, 13 Feb. 2021, www.thebalance.com/the-u-s-debt-and-how-it-got-so-big-3305778.
Amadeo, Kimberly. “What Is the Public Debt?” The Balance, 30 Apr. 2021, www.thebalance.com/what-is-the-public-debt-3306294.
Amadeo, Kimberly. “Why You Should Care About the Nation's Debt.” The Balance, 27 Mar. 2021, www.thebalance.com/what-is-the-national-debt-4031393.
“Federal Debt Trends Over Time.” U.S. Treasury Data Lab, datalab.usaspending.gov/americas-finance-guide/debt/trends/.
“What You Should Know about America's Deficit and Its Debt.” Debt.org, www.debt.org/government/what-to-know-about-deficit-and-debt/.
Before reading this, I wasn't aware that some of our national debt was in fact to ourselves, through different departments of the government. I find that worrying, especially the prospect of borrowing so much money from the Social Security fund that we no longer have Social Security. The graph really illustrates just how in debt we are, though I wonder if it would be better if it had monthly intervals rather than yearly, as the increase from 2019 to 2020 is drawn in a straight line from point to point, when the actual increase was likely more exponential in nature due to the pandemic.
ReplyDeleteI agree that the rising national debt is a problem which is often overlooked and thought of as normal. A lot of people don't think about the long term affects it could have on everyone across the nation. As we continue to hold back paying off the debt, it will be that much harder to pay back and it will have that much of a bigger affect on working class families. It's also not a problem that can be solved with a snap of the finger. It would take some time to come up with an effective solution to paying off the rising debt and to stop the debt from rising in the first place, but it's something that can no longer be glossed over.
ReplyDeleteAgreeably, national debt is a huge problem that many people face all over the world. Particularly, our country because of financial issues that the government faces. However, there may be some controversy between raising or keeping taxes the same. As it may help the government with stabilizing the government's economy, it may cause those who are less fortunate or poor to go into poverty. On the other hand, it can be really beneficial to the United States as you have mentioned. Either way, it would take much effort from the government to eventually reach the perfect stability.
ReplyDeleteThe National Debt is an extremely complex problem. The amount of debt that the US is in seems insurmountable. I highly doubt that our national debt will ever be erased. The US has spent too much money too fast to be able to pay back their investors and their own systems like social security that they borrowed from. But sometimes people will want their money back. What happens then? This is the biggest problem. If people start to have very little faith in the US they could ask for their money back or increase their interest rates putting us in even more debt. The national debt will loom over the US for many years to come.
ReplyDeleteThe fact that our national debt is continually growing, I think, is pretty scary. The graph you had is really compelling because it clearly illustrates how the debt has not decreased, only increased. One thing I am considering is, how much time from now will countries lose interest and faith in the United States to pay them back? Since this may be something upcoming, what are some programs or taxes we could put in place to lower the national debt like you noted above. Maybe Americans would be more open to options like raising taxes if we convinced them how it would benefit them in the long run. I think researching what benefits in lowering the national debt Americans would receive would convince others to allow taxes to rise just a little in the future.
ReplyDeleteYou were really descriptive when talking about the size of the National Debt. The fact that America couldn't pay it off even if it unified all of the capital it produces in a year surprised me, it’s like the government doesn’t even acknowledge it. They are nonchalant when facing so much debt. You proposed the 2 main directions the government would have to take to pay it off, reduction in spending and increased taxes, but can you think of any more solutions? Perhaps changing the framework of America’s government discretely would improve the economy’s reliability without public backlash.
ReplyDeleteBefore reading this I felt that I had a basic understanding of what the national debt was and how it was working. But the specifics of how the debt can be created like the government borrowing money from itself and how the debt could become a real problem due to investment issues, were things I was unaware of. It was also interesting to learn how much of a debt we are in, compared to the capital produced in a year. As now the problem can only be reworked not completely fix. Something that didn’t come up in this post, is just what it would take to pay back the national debt, while solutions were mentioned, I feel that adding a part of just how severe the debt is in comparison to the country’s yearly income. Also, something else that could’ve been brought up is the reasons as to why the US is in this debt to other countries, like specific deals that they have made over the years, that have caused. It was acknowledged that countries invest in America, but finding out why would have also been interesting to know just the reasons why. Additionally, having comparisons to other countries that have the same problems in terms of debt could help prove how much trouble the US is in. Finally, this post does very well at identifying what the national debt is and why it is such a complicated issue. Using examples like how solutions of higher taxes and lower spending could help this problem but create many others, and using the graphic to show that the debt has only ever been consistently increasing, helps realize the true gravity of this issue.
ReplyDeleteI've known that our national debt is insane and in the trillions but I didn't know it was that high. It is also scary seeing that each year it is growing and even when taxes have gotten higher that the debt still started raising. You mentioned that soon the national debt could become a bigger problem, I was wondering when do you think this would happen or what things would need to happen for it to really affect us because as of right now it seems horrible? Then the other question I have is when will people stop loaning us money seeing how much we are getting in debt? If that were to happen that would lead to many bad outcomes. Overall I found your piece very interesting and liked how straightforward and organized your writing was.
ReplyDeleteIf it did get to the point where the government began using money that is set aside for people going into retirement that would just be nonsense. There is just no way that that would be okay, but that doesn't mean they might not.
ReplyDeleteNow that we are so high up in numbers I wonder if countries just give up the idea that we will every pay them back.
When or if this debt becomes a problem even in our daily lives what do you think would happen? Would anything be taken away from us? Definitely something to think about.