The National Debt Crisis

With so much in the news these days about our massive national debt and what politicians of all stripes are saying, I feel I need to take a shot at suggesting a new course of action in hopes of eventually solving this entire mess.

First of all, this problem is real.  The debt is very large, $14 trillion +, growing rapidly, and the American taxpayers must pay the interest on that debt.  The debt currently amounts to about $45,000 for every man, woman and child in the country.  If we theoretically divide the U.S. population into families of four, each family owes about $180,000.  At an interest rate of just 3%, that amounts to about $5,400/yr.  Since approximately half the population pays no income tax, you can effectively double those figures for those families who do pay taxes.  When it’s stated that a rapidly increasing debt load of this magnitude is unsustainable, one can understand why.  How many U.S. families can afford to include national debt interest payments of $10,000 a year in their family budgets?

The second point is that the politicians are running around in circles, blaming one another, criticizing budget plans and the like, claiming one party or the other is out to kill off sick people, old people, babies or some other group.  Their approach to solving the problem is to toss out vague plans, primarily aimed at gaining political points and advancing their own particular ideology.  In my view, we need a non-political process to establish guidelines that the politicians would be obliged to follow in formulating a budget.  It would not be difficult for a non-partisan panel of professional financial planners and economists to formulate guidelines that would require the politicians to deal with budgeting in a rational manner.  The first guideline should be one that all responsible families follow in their own affairs.  Every budget must be balanced.  Responsible families don’t engage in deficit spending and neither should our government.

The only thing that will indicate that our runaway fiscal problem has been rectified is when we see the debt clock stop advancing and begin to fall back.  That will signify that we have stopped accumulating debt, that we have balanced our budget, and we are beginning to pay down the principal of the debt.

Once qualitative goals that conform to the guidelines are established, the difficult work of prioritizing actions and developing spending plans can be tackled, hopefully by using a form of probabilistic rationalism in a politically neutral setting.  However, in the final analysis, the government must begin to chip away at that obscene $14 trillion accumulated debt that is on the verge of paralyzing our nation.

Let’s not pass that debt on to our children, our grandchildren and unborn generations.  We need to be responsible now and set a realistic course for solving the problem.