What if we managed personal debt as the government manages the national debt? The federal government can continue to incur debt by Congressional approval of raising the debt ceiling. Imagine if we could borrow as much money as we wanted by just increasing our borrowing limits, with little concern, accountability or timetable for repaying them. Not only would we be digging ourselves into a super-deep interest hole, but we would likely be indebted for a life time. So it is with the continuing saga of the fiscal cliff, as Congress must make another decision to increase the debt ceiling.
Currently, the total U.S. national debt is around $19.8 trillion, or around 104% of GDP. Any debt-to-GDP ratio beyond 77% for a developed country sends a signal that the borrowing nation cannot generate enough revenue to pay its debt. The US debt ceiling has been raised 74 times since 1962, and has never been reduced. While the concept of raising the debt ceiling has become somewhat of a farce, the reality of defaulting on its obligations would have serious consequences on the country’s ability to repay its debt, federal services, employee pensions, Social Security & Medicare, interest rate increases, and currency devaluation.
The December 8th time limit for raising the debt ceiling will likely be extended through a loophole called, ‘extraordinary measures’ – in tandem with the approval of the 2018 federal budget, which alone will add $440 billion to the federal deficit.
Lastly, consider how the current tax reform proposal — that will add $1.5 trillion of tax cuts over the next ten years — will impact the national debt.
Pray for our legislators. Stay tuned.
“The earth is the Lord’s and the fullness thereof, the world and those who dwell therein,” Psalm 24:1
In all you do, B. Lifted…