Why Should The Number 98 Scare You?
On Tuesday February 11th the House voted to increase the debt limit. The general consensus is that the Senate will pass the measure without any strings for deficit reduction. The latest numbers from the Federal Reserve show that the gross federal debt currently stands at roughly 98% of the Gross Domestic Product. By all accounts everyone will agree that this is unsustainable.
A simple truth that everyone knows on a personal level is that debt increases your current standard of living and diminishes your future standard of living. Of course, if debt is used in a responsible fashion, paying the debt isn’t burdensome. Our Congress has been anything but responsible. This huge mountain of debt has to be dealt with eventually. This means that our standard of living is going to be diminished in some form or fashion. More than likely it will be accomplished with a combination of higher taxes and lower expenditures. Whether you are a net producer for the government or a net expense to the government, you will have to get by with less. We will all share in some form of misery.
Unfortunately, there are very few people in Washington who want to create a proposal to deal with this sad fact, but let’s look at what is at stake. If we don’t deal with the debt in a responsible manner our status as a world super power will continue to erode. This will make the world more dangerous.
Our borrowing cost will go up because we will lose our status as the world’s reserve currency. This alone will erode our standard of living.
Our children and grandchildren will not have the same opportunities that we enjoyed. In other words, the America that we know is at risk.
Is it too late? I don’t believe so but each year our Congress pays politics with our future. We are steadily marching to a point of no return. As we enter into a new election cycle, we all need to ask our candidates for their plan of debt reduction. Our future depends upon it.