…The U.S. national debt has soared to over $22 trillion – up $16 trillion since 2000, $11 trillion since 2008, and $2 trillion in the past three years alone. The Congressional Budget Office believes that the national debt will rise to $30 trillion by 2030. Should we be worried? Well, it depends on who you ask.
1. One opinion is that our economy is growing, which means it can support the large debt. The economy and national debt are viewed along parallel lines. If the economy grows more than the debt, we can pay off more of what we owe. Therefore, there would be no reason to be concerned.
2. Then there are interest rates. Interest rates, for the most part, have been declining since the 1980s, while at the same time, the national debt has risen…With lower interest rates, payments are lower and make up a lower percentage of the overall economy. Sure, we keep borrowing, but it costs less. A good sign is that interest rates are slowly rising. This may put an end to the spending free-for-all.
If the economy and national debt were to continue to grow along parallel lines, it might be manageable, especially if interest rates are kept. These scenarios are unlikely to happen, however.
1. Economic growth is bound to slow, as it already has. Some experts are talking about a recession in 2020.
2. If the trend in rising interest rates continues, the national debt-to-economic growth ratio will become unbalanced. The debt will become more expensive to pay off – and that’s when the national debt will turn into a serious national problem.
…Revenues are down as a result of President Trump’s tax cut while government programs are rapidly adding to the debt. Spending for the fiscal year 2019 has increased by 9%. The U.S. deficit…was up 8.7% from the first quarter of 2018…Unfortunately, the trend of higher spending and lower revenues shows no sign of reversing…
Should we be concerned? Most definitely.