Kitchen Table Economics

National Debt Continues to Grow and Crowd Out Spending

The U.S. national debt is a concerning liability. Currently amounting to $28 trillion, of which the public holds about $22 trillion, it’s a massive financial weight hanging over the heads of the American people. While a cataclysmic tipping point that plunges the country into a death spiral is unlikely, growing interest payments required to service the debt will slowly crowd out other spending priorities.

Just like the interest you pay on credit cards, the U.S. must continually shell out cash to foreign countries to service the national debt. For example, last year, the U.S. paid more than $370 billion in interest payments. That’s more than one billion dollars of taxpayer funds spent daily on stuff which provides no value to the American people.

Consider a situation in which you rack-up $2,000 in debt on a credit card in one month that you are not in a financial position to pay-off immediately. Therefore, you make the minimum payment. As the debt grows and interest amasses, the minimum payment required to service your credit card debt will continue to grow. And the amount of interest owed will take-up a larger portion of your monthly income.

Money that would otherwise be used, for example, to purchase a new laptop down the road is now needed to service your debt. The U.S. is in a similar situation.

Washington has a spending addiction. Slowly, but surely, out-of-control spending will catch up to us. If only politicians in either party cared enough to slow it down.