Business Solutions

When you ride any of the scariest rides at amusement parks across the U.S. and world, there is a “point of no return” where you suddenly realize there is “no way out” and the reality of the situation starts to sink in, well that is what has happened in the reality of the ride we are on called “America’s National Debt,” the exception being there is no amusement to it.

Congress continues to raise the national debt ceiling currently set at $12.1 trillion, and it will continue to increase on a regular basis, evidenced by President Obama requesting a higher debt ceiling as the U.S. continues to borrow money to fund its many programs.

Like the scary amusement park rides, the ceiling keeps rising and rising, and whether there is “no way out” is a matter of economic and policy debate, and political will. Either way, the prospect of runaway deficits and debt are a good bit scarier for the American people and their nation’s future.

A true statement attributed to a recent U.S. President and repeated over and over by concerned citizens across the country is that “Future generations shouldn’t be forced to pay back money that we have borrowed,” and continue to borrow.

Nice sentiment, but the reality is that on our current course of adding spending without cutting costs, if you add in deficits that will skyrocket as baby boomers continue to retire and the long-term unfunded commitments to entitlement programs such as Medicare and Social Security, every man, woman and child is saddled with debt approaching $200,000, and that is roughly four times the average American household’s net worth.

One can rail against the fiscal irresponsibility of an administration and Congress that have let federal spending grow by well over 5 to 10 percent a year in real terms, the fastest in 40 years, while raising taxes amid reduced revenues to levels that haven’t been seen since cars had hand cranks.

One can also rail about the hypocrisy of policymakers agonizing over budget cuts that amount to one-tenth of 1 percent of federal spending while designing and approving huge spending bills and new supplemental appropriations for the wars in Iraq and Afghanistan that dwarf the Lilliputian budget cuts.

But as some might say, it’s all mind-numbing numbers, and that we’ve worked our way out of deficits before, as we did as recently as the Clinton administration, or, as the really cynical, that might think — and not care — that the Chinese, Japanese and Saudis will bail us out by continue to lend us more money, as they have been doing at new unprecedented rates in the last few years.

However, deficits have a way of hitting home in much more personal terms.

As the deficits continue to march towards higher levels, they will crowd out investment, further slowing economic growth and reduce the average family’s annual income by several hundred dollars in just a few short years.

At some near future point, the U.S. Government Debt will likely drive up interest rates, making the typical $250,000 mortgage, plus the interest that Americans pay on other purchases, cost about several more thousand per year.

Moreover, if we keep our current promises to the elderly, without reforming and controlling the costs of entitlements, the average family would have to pay at least $7,000 a year more in taxes by 2030.

And, like the scariest of amusement park rides, deficits ultimately might spook the paying customers so much that they go running to the exits, and foreign investors who have been so willing to-date to finance our debt could decide to pull out, especially when the point is reach where they can get more in return for their investment somewhere else, throwing the financial markets and the economy into even greater turmoil.

Deficits are such a large and growing problem that we need to come up with additional tax revenues and well-targeted cuts in spending, and the big entitlement programs need to be fundamentally reformed, especially so that ever-rising health care costs, in particular, can be contained, before contemplating a new health-care plan.

Developing such policies that produce meaningful reductions in the deficit requires both political will and bipartisan compromise, something that does not exist today, but at some point the people should and will demand such noble bravery from their government, a true “look at yourself in the mirror” moment.

Unlike the scary amusement park rides though, our country cannot just “get off” the scary ride, but instead, our children and grandchildren, and generations to come will face the horrors wrought by deficits every day.