National debt forgotten, but not gone

Here’s something you probably missed in this crazy year: The pandemic and previous years’ deficits have taken the nation’s debt to more than $27 trillion, a record. ( https:/ /www.usdebtclock.org/)

Our national debt is larger than the economies of China, Japan, Germany, and United Kingdom combined.

It’s hard to quantify what $1 trillion means. Let me help:

It’s $1 million multiplied by $1 million. It’s also $1,000 billion

(1,000,000,000,000).

To pay back $1 trillion, at a rate of $1 per second, would take you 31,688 years.

The amount of national debt could cover tuition for a four-year college degree for every U.S. high school graduate for more than 60 years.

If you go back 1 billion seconds, you’d be in 1987. If you go back 1 trillion seconds, you’d land around 30,000 B.C.

The Congressional Budget Office defines national debt as the amount of the debt that the federal government owes. This includes public debt of more than $21 trillion (mostly U.S Treasury bonds) and intra-government accounts (more than $6 trillion), primarily Social Security and Medicare.

How many people truly understand why the United States’ debt keeps rising, setting a shameful record every time? Do people just not care? Do they see reducing debt as a hopeless cause?

Take a look at these stunning statistics. The national debt, both public and intra-government, is a staggering 137 percent of the gross domestic product, which is the value of all goods and services produced in a fiscal year.

Each U.S citizen’s share of the debt is $81,846. The debt per taxpayer is $216,771.

From 2000 to 2019, the federal debt increased more than 297 percent.

The pandemic has boosted concerns about how large the United States’ debt is and how much more it could grow.

We’re approaching a dangerous tipping point: Once the public debt exceeds our GDP, there could be a chilling effect on foreign investors. This is predicted to happen by the end of 2020.

The nation’s GDP was more than $22.32 trillion for fiscal year 2020, which ran from Oct. 1, 2019 to Sept. 30, 2020.

The federal government spent $6.5 trillion in FY 2020. Through tax revenue, it brought in just a little more than $3.2 trillion. The pandemic fallout raised our FY 2020 budget deficit to $3.13 trillion.

So why would anyone, particularly China (which we owe $1.08 trillion) and Japan ($1.26 trillion), still want to invest in us? The dollar still remains the preferred currency to store wealth from other nations. That could change quickly if it looks like we’re in a possible default.

Also, interest rates are low, making it easier for the federal government to borrow money cheaply. But when they go up, the interest payments will reduce the amount of money we can spend on social safety nets.

We can temporarily justify the massive debt increases in the short term because of the pandemic’s economic effect on the nation.

But this cannot continue indefinitely, because the federal government eventually will be competing with the private sector to borrow money available in the financial markets. This will cause interest rates to rise, which will make it more expensive to borrow money, further exacerbating the debt problem.

Here’s another reason why we should be concerned about the national debt: There’s a large number of aging baby boomers who are reliant on Social Security and Medicare, which will further raise the U.S. debt.

The Congressional Budget Office’s long-term budget outlook describes other consequences of a large and growing federal debt. The major ones are lower national savings and income; higher interest payments, which lead to large tax hikes and spending cuts; and decreased ability to respond to future economic problems. In essence, a greater risk of a fiscal crisis.

There’s a small threat that the U.S. economy could fall into a prolonged economic malaise. That could cause foreign investors to see the U.S. as a less-attractive haven to store wealth.

The best ways to reduce the debt are to cut government spending and/or raise taxes, drive economic growth at a faster rate to take in more tax dollars, and to shift spending to the areas that create the most jobs.

“The U.S. federal budget is on an unsustainable path, and has been for some time,” Jerome Powell, Federal Reserve chairman, said recently. But, he added: “This is not the time to give our complete priority to those concerns.”

However, when the country eventually pulls out of its current health and economic crisis, Americans will be left with a debt hangover. That, in turn, could push creditors to call us on our debt.

We’ve kicked the can down the road long enough, putting our children in the difficult position of having to solve this problem.

Jim Martin is a past statewide member of the University of Colorado Board of Regents who has lived in Boulder since 1961, was a small business owner for 40 years, an adjunct law professor, and a public trustee. You can reach him via email at jimmartinesq@gmail.com.