Throughout this election, Donald Trump and Joe Biden have had to answer many problems our country faces, namely COVID-19, racial tensions, and economic recovery. Another issue that the US is doomed to face in the future is our mounting national debt, which, at the time of writing, sits at $27.2 trillion. Many administrations of years prior are to blame for this situation. Barack Obama raised it by $9 trillion, while President Donald Trump added about $7 trillion to the national debt, which resulted from tax cuts and increased military spending, along with handling the COVID-19 pandemic.
What does this debt mean? Firstly, the federal deficit is the difference between how much money the federal government spends versus how much money is made in revenue. Each year the government runs a budget deficit, it adds to the national debt or the total amount of money the federal government owes to various international banks and creditors. The federal government has been spending more than it can afford for many years, with the greatest expenditures being social security and medicare.
Oftentimes the argument gets presented that since most of the debt belongs to the American people, there is no need to worry. This assertion is incorrect because while we do own the debt, a national debt that becomes too high can curb income growth and exert more pressure on interest rates for cars and mortgages. Our credit rating will also worsen, scaring off investors, domestic and foreign, and creating more difficulties for a future recession. Adding onto the national debt has often been a quick fix used by politicians for the current challenges of the United States, but what we forget is that our generation will be the one that faces the consequences.
The only way to fix the national debt is to control the federal government’s spending. It’s always easier said than done, with many conservative politicians making that promise on the campaign trail. What we need is a law that requires the federal government to pass a balanced budget and to not operate at a deficit. The benefits of this law would be that the federal government’s spending would become more efficient and effective, as there would be no room for waste. Economic growth would ensue because interest rates would become more stable, in turn solidifying the nation’s credit rating. Lastly, by having no more deficit spending, the government would not be able to add any more debt, stopping the bleeding at its source and fixing the problem.
I do recognize that there are some issues with this proposed law. In the event of this legislation being passed, the role of the federal government would be severely minimized. The only way we could have social services, such as healthcare, or continue to provide social security would be by increasing taxes, which would inevitably hurt the economy. The counterpoint to this problem is that with a healthier economy, citizens of the United States could afford to use the private sector with services like healthcare. Exceptions would also have to be included – especially after this year. National emergencies, like wars or health crises, would fall under the exceptions to which the federal government can operate at a deficit. However, this creates another issue: the parameters must be well-defined since the president in office can declare anything a state of emergency to get the necessary funding for their agenda.
Through passing a law or not, the national debt is a bipartisan problem that the United States must get under control. If we do not, this generation will face an unimaginable financial crisis.
Thanks for reading,