Your Share of the National Debt is More Than Twice the Size of Your Student Loans

Debt

by Kitty Testa

According to analysts at Bloomberg, the per capita share of the $19.7 trillion national debt is now about $60,679 per person, and is expected to be $66,000 per person in ten years. Compare that to the average student loan debt upon graduation of just under $30,000, and you would be right to be alarmed.

Four years ago Ron Paul declared, “We’re broke and already over the fiscal cliff.”

We’ve been able to stave off a free fall because the Federal Reserve has kept interest rates artificially low for the past eight years, purportedly to stimulate the economy into a recovery. But if there has been a recovery, it has been weak, and the Fed has run out of tricks to cure our economic ills.

Some economists believe we can outgrow our debt by reducing it to a smaller percentage of GDP. Yet after years of low interest rates and quantitative easing, our economic growth is still anemic, and this idea is like telling David he ought to wait until he grows up a little more before attempting to slay Goliath.

In 2014, the folks at the Congressional Budget Office sharpened their pencils and made a slew of proposals to eliminate half of the debt within ten years. They recommended about $1.5 trillion in additional annual revenue and only $178 billion in annual spending cuts. And their numbers do not include money that may be spent on upcoming military adventures the U.S. may undertake.

The bulk of the revenue increases come from refinements that affect personal income and payroll tax. Given that 80% of the federal government’s revenue comes from individuals, this is the low-hanging fruit.

US Revenue Sources

The CBO fails to address the most important question: how did it get this bad?

The federal government does too much. It gets involved with all matters great and small, from nation building to thousands of pet projects every year. Add to this the myriad campaign promises of both Donald Trump and Hillary Clinton, and the debt becomes so enormous that it will take generations to pay it down.

Trying to tax ourselves out of debt will divert billions of dollars out of the private sector, and could result in slower economic growth, or even economic contraction, and likely won’t achieve a reduction significant enough to stave off calamity.

If we can’t outgrow our debt and we can tax away the debt, the only answer is to reduce federal spending—drastically. The only way to achieve this is for Congress to reevaluate its mission. That will only happen if spending cuts become the voters’ priority.

Instead of demanding more from government, we need to start demanding less—insisting upon less. Free college, loan forgiveness, universal health insurance—these programs all come with high price tags. Someone has to pay for them, and that includes you. There isn’t enough potential tax revenue to implement these programs, and they would only grow the national debt further. Interest rates will have to rise eventually, and the interest on the debt could become crushing without vigorous economic growth.

Our nation needs a rational course correction to survive and thrive. Candidates are emotionally seductive. They tell you what you want to hear, but you will pay for whatever they deliver—well, you and your children, and your grandchildren. The bills come due someday.

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