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With the Fourth of July coming up, I've been thinking that the Founding Fathers would roll over in their graves if they knew the kind of debt America is in.
Time magazine recently reported that "Most critics of the (national) debt cite the fact that at $19 trillion, the national debt represents about 102% of the U.S. gross domestic product, the sum total of all the economic activity in this country each year."
Consider me a critic! It's amazing to me that our country can owe more than the economy makes. What advice would you have for Uncle Sam? Is America in financial trouble?
Praying God will Bless America
I saw that story in Time which noted that with the debt load the U.S. carries, it amounts to $42,998.12 owed per man, woman and child. I find that tragic and ridiculous considering the decreasing number of Americans in the workforce. Add this amount to every household budget in our country and we have a serious problem. The math for repayment simply does not work.
The best piece of advice I can first offer you is found in your letter. We Christians — especially on America's birthday — need to be praying for our country and for the election coming up. America needs God's help for all the issues we face, and certainly a leader that can rein in the out of control federal spending should be among our prayer requests.
When it comes to debt, it's important to understand the tension between having some debt and balancing a budget. The country's debt has been allowed to increase, in part, because the government can manipulate the currency, interest rates and a number of factors to force the math to look good … on paper.
Time also wrote: "Last year, Washington's total interest payments to service the national debt were just under $225 billion. At the same time, the federal government pulled in nearly $3.2 trillion in total revenues last year. So the federal government's debt obligations represented just 7% of its income last year, down from 17% in 1995."
But the problem with minimizing the impact of debt with this reasoning is that just because it is possible to cover a debt payment today, that doesn't mean it will be possible to handle it tomorrow. For one, the debt continues to grow year after year and our government cannot even agree on a balanced budget to stop increasing the debt!
Second, our federal interest rates are at historic lows. Imagine the cost of the debt if interest rates were to suddenly double or triple!
No one knows what the future holds, and the greatest care should be given to choices that will not burden our children's future.
Our 31st president, Herbert Hoover, once observed, "Blessed are the young, for they shall inherit the national debt."
Obviously this was meant to be humorous at the time, but it is no longer a joke; rather, it is a sad reality for generations to come.
The government, like many people, has rationalized debt by arguing that we can make the payments, while failing to consider whether we should take on new obligations without re-ordering current priorities. With an economy slowing down, it will become more difficult to ignore the impact of debt payments, especially when your debt piles up in billions.
Most people, when presented with a new goal or a desired purchase, must look at everything on the table and make choices. Government should as well. It is not wise to justify spending based on assumptions that you probably can make the payments.
I have no doubt that the Founding Fathers would be horrified by the level of debt dragging down the American economy – money that cannot be invested in growth but rather that just keeps our proverbial heads above water.
I've written about what our first leaders believed about debt.
Consider that John Adams, our nation's second president, once observed: "There are two ways to enslave a nation. One is by the sword. The other is by debt."
George Washington once cautioned, "To contract new debts is not the way to pay old ones."
I would encourage everyone looking at this year's elections to ask the candidates how they would attempt to reduce our nation's debt; what programs might they be willing to cut; and what specific proposals they recommend for strengthening the economy.
It's popular at election time for politicians to promise to buy voters the moon in order to get their support. But eventually, campaign promises can become ruinous debt that taxpayers must pay back in the cold light of day.
If you are having problems with debt, Crown has resources that can help, and we also have some valued partners like Christian Credit Counselors who can assist you in making good decisions with the debt you may have. But I also hope that as we get our own houses in order that our leaders take on that responsibility for the nation. Please join me in praying for God to bless, to guide and to protect America as we celebrate another American birthday on the Fourth of July.
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