How Our National Debt Jeopardizes Families’ Futures

Contrary to what some on the right might believe, there are times when being in a red state is neither conservative nor positive. A recent Wall Street Journal column, titled “America Is in a Red State,” explains why.

By the end of the last quarter, the federal debt topped 100 percent of GDP. And this rising debt, fueled by persistent deficits, will harm the country’s economic prospects for generations in ways that today’s politicians seem not to care much about.

An article in the Journal noted, “As of March 31, the country’s publicly held debt was $31.265 trillion, while GDP over the preceding year was $31.216 trillion.” It isn’t the first time federal debt exceeded the size of the nation’s economy; our debt set a record (at least for now) of 106 percent of GDP in 1946, just after World War II. Federal debt also exceeded GDP for a short time in 2020 during the coronavirus panic, as the economy shrank under widespread lockdowns and Washington engaged in a gusher of “stimulus” spending. . .

In the absence of a financial crisis like those the Greek government faced over a decade ago, many families might wonder why they should care about abstract concepts like federal deficits and debt. The Journal article lists some of the reasons why decades of fiscal profligacy will make current and future generations poorer.

For starters, interest rates will rise. The growing debt burden requires the Treasury to issue more notes and bonds; getting the market to soak up that demand will lead to higher interest rates. As it is, the past several years have seen mortgage rates rise as the Federal Reserve (finally) stopped its money-printing policies. (Read more from “How Our National Debt Jeopardizes Families’ Futures” HERE)

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