When President Obama took office in January 2009, the debt stood at $10.6 trillion. It is now over $18 trillion — a 70 percent increase in just 6 years. The Congressional Budget Office has predicted that, by the time President Obama leaves office, the national debt may accumulate as high as $19.1 trillion. President Obama has racked up more national debt in 6 years than any of his predecessors, dating back all the way to 1789, but he’s not stopping there. Just this year, the president called for a 7% increase in spending, saying that the U.S. can afford to toss aside automatic spending caps because the annual budget deficit has fallen by a total of $468 billion.
President Obama’s calls for increased spending defy common sense. Pretend your family was in way over its head with all credit cards maxed out, then received a small bonus or extra payment from work. Rather than paying off any debt that they have on the credit cards, your parents instead spend it on a vacation. This is essentially what President Obama has done with our national debt crisis.
His administration continues to applaud itself because the deficit has very slightly gone down, yet the government is still borrowing money and the national debt is constantly accumulating.
The Price of Big Spending
It seems that this administration continues to have little regard for this soaring debt, and this is directly impacting the middle class and those who aspire to join its ranks. The issue of debt is typically ignored by the public so as long as the proceeds are used to stimulate the growth of the economy for But this debt won’t do that: instead, it will make it more difficult for people and businesses to borrow as it reduces the amount of money available for loans. Those who hope to start small businesses or buy homes are simply out of luck. To give credit where credit is due, back in 2006 as a Senator out of Illinois, Obama expressed that “America has a debt problem and a failure of leadership.” Yet as we stand here today in 2015, those same comments can be said about his own administration.
Democrats believe that the national debt is not an issue at this current moment, and it shows by their continual raising of the debt ceiling. However, we don’t just need to look at how much the national debt is rising: we also have to think about the interest on the national debt. It’s simple: when you buy things on a credit card, you pay more for what you purchased because you also have to pay interest. The CBO has warned us that interest payments are poised to rise because of the national debt and its continuing growth. Just on interest payments, we are expected to hit $233 billion, or a 1.3% share of the economy. By 2024, that figure will hit 880 billion, or 3.3%. Projections continue to show increases over the years for as long as our debt continues to rise.
Our growing amount of debt and our increasing interest payments are also going to restrict policymakers’ ability to use tax and spending policies to respond to unexpected future challenges. Large interest payments consume tax revenue that could otherwise be spent on the country’s priorities. Debt increases pose a greater risk of precipitating a fiscal crises, as the government would have fewer resources available to respond, and investors would likely lose so much confidence in the government’s ability to manage a budget that the government would be unable to borrow at affordable rates.
Without future policy changes that align spending with income revenue, the debt and the interest to it will continue to grow faster than the economy in subsequent decades.
Foreign ownership of the national debt also creates problems. China, for example, is our largest debt holder at $1.2 trillion. The Chinese are not concerned about the United States defaulting. They want to keep the value of a dollar high so that the yuan can be relatively cheap by comparison. This helps China’s exports to the United States seem more affordable, and actually helps their economy grow. China is happy that it is the largest foreign owner of the U.S. national debt, and that number will only continue to increase unless something is done to change our spending policies.
Digging Ourselves Out
If anyone will start the process of solving this problem, it will be our next president in 2016. President Obama’s spending habits, coupled with his lack of care about our rising national debt, show that there will be no changes until he leaves office. President Obama no longer needs to be worried about another campaign since his second term is nearly finished, now his concern is his legacy. How he finishes off his remaining second term will largely depend on how he leaves the economic condition of this country. The Democrat Party’s foot is staying on the gas pedal, however, and will continue to drive us faster and faster into debt.
For better or worse, candidates will need to bring the national debt into spotlight for the 2016 presidential primaries and offer a real plan. We know how much elected officials love to talk about good news, but they are far less interested about the harsh issues on the horizon. But whoever steps into office will inherit a lot of blame for a tanked economy that is unable to support this level of debt. Much will be asked of our new president in a very short time to clean up this disaster before it gets worse. Blunt talk will need to make a comeback this campaign cycle, and it starts with the candidates of 2016 that have unique ideas to fixing this.
Senator Marco Rubio of Florida took a stance on this $18 trillion dollar debt, calling it an unsustainable path for our future. Since taking office, he has vowed to Floridians that he will tackle this debt by reallocating the bank bailout program, ending the stimulus program, and reforming entitlement programs like Social Security, Medicare, and Medicaid. These proposals are on-point. By 2023, the share of total spending by entitlements is going to be more than our defense, and entitlements will continue to act as drivers to our debt and deficit over time. It’s also important to note that nothing substantial will change for those who receive benefits now or are close to receiving benefits. For these programs to survive and serve the next generation, however, they need to change.
Senator Ted Cruz, who recently announced his bid for president, wants a Cut-Cap-And-Balance Pledge to limit government spending which fix the national debt issue. In simpler terms, he wants substantial cuts in spending that will lower the debt, enforceable spending caps that will put federal spending on a path to a balanced budget and a congressional passage of a balanced budget amendment to the U.S. Constitution. This pledge would also put us on the right track, and hopefully lead us to a point where increases in the debt limit are no longer even necessary.
Governor Scott Walker of Wisconsin is also familiar with debt issues . When elected, the Governor took on a $3.6 billion dollar deficit and managed to turn it into a $911 million dollar surplus. Cutting income taxes, lowering property taxes, and reforming collective bargaining greatly improved the state of the Wisconsin’s economy. Simply put, he took the power out of the hands of government and special interests groups and gave it back to the common taxpayer. In a region that has consistently lost jobs and wealth over the past decades, Governor Walker watched unemployment drop from 7.7% to 5.5% and increased per capita income from $38,755 to $43,149.
The Republican Party has leaders looking to tackle the national debt once in office in 2016. This is a good thing: if our next President goes towards the idea of spending more and more, our debt will rise to a point where it can’t be fixed, putting stress on the middle class and creating huge problems for future generations to come. We need somebody in office that will stop bankrupting our country, and will instead move us towards growth and prosperity.