“Debt crisis”

Carmel Pine Cone—Sept. 13, 2024

Once again, The Pine Cone has identified an issue (editorial, Sept. 6) that should concern us all. Tomorrow’s problem, where our national debt is concerned, has become today’s problem. Our national debt increased by $1 trillion every 100 days and is growing in excess of 10 percent annually. Interest on the national debt will be more than $1 trillion this year, representing almost 20 percent of government tax and other receipts. This will begin to crowd out other desirable government expenditures.

Gold at $2,500 an ounce, a historical high, reflects concerns over our debt, and there are plans being put in place to develop a new regional currency to compete with the U.S. dollar. If we don’t do something about our debt problem, the U.S. dollar might loses it status as the world’s reserve currency. This would be catastrophic for our citizen’s income, assets and overall economic well being.

It is instructive to look at our own federal debt profile, beginning in 1950, just after World War II. Because of large expenditures to finance the war, debt/GDP was 1.0 that year, meaning GDP and national debt were equal. From 1950 to 1980, economic activity boomed in the United States and even though our national debt was increasing, our GDP, and tax receipts were growing at a faster rate. By 1980, the debt/GDP figure had fallen to 0.40.

Unfortunately, 1980-2024 paints a different picture. Debt has grown faster than GDP and we have established a new record for debt/GDP of about 1.25, even greater than the old high in 1945.

What should be done? The only approach that makes any sense is to grow our way out of the problem over the next 20-30 years. This will require pro-growth economic policies focused on the private sector, while at the same time limiting the growth rate of government expenditures.

Some believe we can inflate our way out of our debt problem, and others suggest large tax increases. Both of these would do irreparable harm to our economy. Creative long-term thinking about our economy and its pressing debt problem needs to make a return visit to Congress and the political process in Washington D.C.

John G. Goode, Carmel