Soaring debt is bucket of ice water America needs

The recent news that our national debt has swollen to $40 trillion should be the “bucket of ice water” America needs to finally address our financial woes. Our nation is on an unsustainable borrowing trajectory, and it is getting much worse! If left unattended, we will drown in red ink.

The federal debt is larger than the entire value of the goods and services produced in our country. Our economy, as measured by gross domestic product, was valued at over $32 trillion in the second quarter of this year, according to the Bureau of Economic Analysis.

For comparison, the World Bank reports the five largest economies after the United States are China, Germany, Japan, the United Kingdom and India. Combined, their GDPs are $37 trillion.

According to fiscal watchdog the Peter G. Peterson Foundation, it is a grim milestone in the history of the nation’s fiscal health. “At $40 trillion, if the United States were to pay down $1 billion of debt each day, it would take nearly 110 years to pay it all off.

The debt clock website shows in 2024 Americans paid nearly $1.2 trillion in gross interest on the national debt — making interest the single fastest-growing category of federal spending. The national debt keeps rising, adding nearly $7 billion each day, according to Peterson.

For context, in 2024 the Congressional Budget Office (CBO) reported that is more than the entire defense budget ($886 billion), more than Medicare ($874 billion), and more than the government spends on veterans, education, transportation, and science combined.

The CBO projects that net interest will grow to $1.7 trillion by 2034, assuming no new recessions or pandemics, wars, or other fiscal shocks.

Today, each of America’s 131 million households pay federal income tax, and if our debt repayment was to be called by lenders, they would owe over $306,000 each. Keep in mind an estimated of 40% citizens pay no income tax.

Debt is a problem for households as well. Total US household debt, including mortgages, auto loans, credit card debt and student loans, was almost $19 trillion in the second quarter, according to the Federal Reserve Bank of New York. That’s about half the US government’s total debt burden.

And if you keep adding the rest of the world’s richest people, you don’t get much closer. The total net worth of all 500 richest people on the Bloomberg Billionaires Index comes out to almost $13 trillion.

The American Institute for Economic Research reports data from the IRS and economic studies show that the top 10% of U.S. taxpayers earn nearly half of all income but pay 72% of federal income taxes.

To believe that the 10 “world’s super rich” would pay off our debt is a “pipe dream.” They have a combined net worth of $2.7 trillion, according to Bloomberg. The national debt is 15 times larger.

The longer elected officials push debt under the carpet, the larger the problem becomes. Our federal finance crisis calls for bipartisan solutions.

The last real bipartisan attempt to put our government of a sustainable path came in 2010 when former Sen. Alan Simpson (R-Wyoming) and Erskine Bowles, former White House Chief of Staff under Bill Clinton, were assigned to develop solutions.

Everything was on the table, including a combination of taxes, economic growth and spending policies; however, they learned quickly there are “no silver bullets.” While taxpayers and politicians supported the approach, they balked at the painfulness of the recommendations.

Simply, this election voters need to ask candidates how they will pay for what they promise. There will be push back, but dodging the financial impacts is an injustice to our grandchildren who will ultimately pay the bill.

It is time for another bucket of ice water!

Don C. Brunell is a business analyst, writer and columnist. He retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at theBrunells@msn.com.