Government deficits are amounts of money by which government revenues fall short of spending. Debt, on the other hand, is simply an amount owed to a creditor, like another country or the taxpayer. In recent decades—and especially during the past two years—the federal government has consistently spent more money than it has received in tax revenues. Because of this, the national debt will likely exceed $15 trillion by the end of 2011. That amounts to 100% of the total value of what the American economy produces in a year (gross domestic product, or GDP). To make matters even worse, recent budget proposals project rising deficits for years to come.
This is simply unsustainable and it imposes a disproportionately large burden on our younger generations. The debt the government accumulates today has to be paid eventually, and much of that obligation will fall on the shoulders of millennials. Young adults also understand that our debt endangers our national security. Generation Opportunity polled 18–29-year-olds through the polling company inc./WomanTrend (April 16–22, 2011, +/– 4% margin of error) and found that 62% of respondents believe that the national debt is the top threat to our national security and 50% believe that indebtedness to foreign powers is among the top three national security threats.
While younger generations will certainly have to pay off the debt, so do current taxpayers, and with deficit spending and high debt usually comes talk of tax hikes. This all means more sacrifices by the American people in a difficult economic climate. Furthermore, the government will owe the full amount it borrows, in addition to interest payments, to its creditors. These creditors include foreign competitors like China that are openly competing with the United States on the world stage. Paying off this debt will directly impede the ability of the private sector to invest and create jobs, which is critical for sustainable economic growth.
This is why we must reduce and control federal spending. Entitlement programs like Social Security, Medicaid, and Medicare, national defense, and interest on the debt account for 65% of our national spending. Federal spending is also marked by improper payments, fraud, waste, and abuse, which have been documented by Congress, the Government Accountability Office (GAO), and various Offices of Inspector General. For example, a recent GAO report estimated the level of improper payments in Medicare alone at $48 billion in taxpayer funds. By reducing spending, we will improve our national security and global standing, keep more money in our pockets, improve the business climate, and make future generations more financially secure.
KEY QUESTIONS TO ASK – NATIONAL DEBT POLICY:
Here are some fundamental questions about the national debt to keep in mind as you read news articles, blogs, and Facebook posts, listen to speeches, or watch a commentator on television. These are also important questions to ask at an event or to pose to elected officials as they zero in on the core of an issue and whether or not what is being talked about or proposed will result in more economic opportunity and individual freedom for Americans.
Does what is being talked about or proposed:
- Effectively address the rising national debt over both the short and long terms?
- Seek to reduce American indebtedness to foreign countries and competitors, such as China?
- Address the need to reform entitlements so that they will be fiscally sound for future generations that are already paying into them?
- Factor in GDP and the ratio to future tax, inflation, and savings rates?
RELATED POSTS ON FACEBOOK AT “BEING AMERICAN” – NATIONAL DEBT POLICY:
Our “Being American” Facebook page has over a million fans! Take a minute to check out what we have posted on the national debt and read what fans from around the country—and even the world—think about the issue. If you would like to join the conversation but have not done so yet, do so now by becoming a fan of “Being American.”
Since 2009, America’s national debt has increased by $5,258,977,706,438.39, according to the U.S. Treasury. If each American taxpayer had to pay an equal portion of this new debt, each American would owe more than $64,000. This would take Americans more than one whole year to pay it off with a median annual income of $49,777. LIKE this if you are upset that the national debt has grown by more than $64,000 for each taxpayer since 2009. (July 13, 2012)
The American families’ median wealth fell to its lowest level since 1992, falling from $126,400 in 2007 to only $77,300 in 2010, a 39% drop, according to a report released by the Federal Reserve. Because household debt remained steady, the drop in net worth for the average American family means that many families are even further in the hole. Are you concerned that more American families are losing out in the tough economy? What do you think needs to be done to help get America back on track? (June 12, 2012)
Foreign holding of U.S. debt rose to the highest level ever in March, with China, the largest buyer of Treasury debt, increasing its holdings for the third month in a row by 1.3%. Total foreign holdings rose to $5.12 trillion, marking the 8th consecutive overall monthly increase. The federal deficit will total $1.17 trillion for this budget year, according to the Congressional Budget Office, which would mark 4 consecutive years of deficits topping $1 trillion. Does the amount of US debt held by foreign powers such as China concern you? (May 15, 2012)
The federal government ran a $777 billion deficit for the first six months of fiscal year 2012, including a $196 billion hole just in March, the Congressional Budget Office estimated today. The new data marks 40 straight months of budget deficits, and means the government has never run a surplus in any month during President Obama’s tenure. The longest previous deficit streak on record was 11 months. LIKE this if you think the President needs to work with Congress to cut spending and get budget deficits under control. (April 6, 2012)
The national debt has now increased by $4.939 trillion since President Obama was inaugurated, a larger increase than during the entire presidency of George W. Bush, according to the Bureau of Public Debt at the Treasury Department. The federal budget sent to Congress last month by the President projects the National Debt will continue to rise to $16.3 trillion in 2012, $17.5 trillion in 2013 and $25.9 trillion in 2022. Are you concerned about how quickly the national debt is projected to rise? (March 20, 2012)
LINKS TO THINK TANK PAPERS AND OTHER DOCUMENTS:
Below are several links from a variety of perspectives on the national debt gathered from think tanks and/or official sources. While not exhaustive, they provide even more detail on the issue and the different perspectives in the debate about the next steps in addressing the national debt for the future.
Rethinking Social Insurance
This white paper, developed by experts from the Heritage Foundation and the New America Foundation, provides thought-provoking perspectives from both the right and left on the underlying assumptions about Medicare and Social Security. The basis of the paper is the increasing long-term cost and portion of America’s GDP that both of these programs are expected to consume. If nothing is done to restrain costs in these social insurance programs, federal spending will increase from about 20 percent to almost 30 percent of the overall U.S. economy over the next 30 years. (Heritage Foundation, New America Foundation, February 2008) Read the entire article here.
An Analysis of the President’s Budgetary Proposals for Fiscal Year 2012
Provides projections of revenue and expenditures under the President’s proposal. (Congressional Budget Office, April 2011) Read the entire article here.
Bankrupt: Entitlements and the Federal Budget
The trajectory of entitlement spending will cause the government’s share of GDP to grow considerably in the next 40 years. Entitlement programs must be reformed to avert serious economic damage. (Cato Institute, March 2011) Read the entire article here.
Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue
This report is an example of the substantive work America’s primary accountability agency does on your behalf to showcase duplicative federal programs, redundancies, and inefficiencies. The 345-page document highlights billions of dollars in taxpayer funds that have been spent inefficiently or needlessly by the Transportation Security Administration, the Department of Health and Human Services, Medicare, and other agencies and provides valuable insight into the complexities involved in implementing or managing the federal bureaucracy. (Government Accountability Office, March 2011) Read the entire article here.
Taking Back Our Fiscal Future
This document, the product of experts from the Brookings Institution, Heritage Foundation, Urban Institute, American Enterprise Institute, and other policy think tanks, identifies a series of issues aimed at America’s fiscal future. The ideas expressed are those of the individual experts and not their respective organizations. The report focuses on several areas, including the need to end the favorable treatment that long-term entitlement programs like Medicare, Medicaid, and Social Security receive in comparison to other elements of the federal budget and the unchecked level of spending in these programs. (Brookings Institution, Heritage Foundation, April 2008) Read the entire article here.