Each Saturday, I co-host a radio show that focuses on the personal finances of American families. We talk about real estate, how to get loans that best fit an individual’s needs, how to save for college, retirement, and a “rainy day.” I know from callers that families are eager to better their financial prospects and protect their families’ futures.
Unfortunately, some factors critical to families’ financial health are largely out of their control. Most notably, our federal government has run up a mammoth debt that will burden us all. Americans who want to protect themselves need to pay attention to what’s going on in Washington and urge our elected representatives to stop recklessly overspending. In short, we must return our government to its proper size.
Currently, our national debt stands at $13 trillion. That’s a number hard for most people to wrap their minds around: There are so many zeros — twelve, for those counting — they simply start running together.
Here’s an easier way to understand our national debt and the irresponsible path we’re on. In 2000, each family’s share of the federal debt was $68,000. In the last ten years, that debt burden has grown to $115,000 per family. Unbelievably, in another ten years, our national debt is expected to explode even more, so that each American family will owe $194,000 on behalf of the government.
Think of it this way: the median home price in the South is just over $150,000. That means the government is close to taking out a whole mortgage under your name, but without giving you a house.
The numbers are far worse when you consider that our official national debt is dwarfed by the unfunded liabilities of other government programs, such as Social Security and Medicare.
I know families who are focusing on paying their mortgages and making ends meet don’t want to think about how our national debt will affect them. It’s easier to assume someone else will pay your share and that we’ll personally avoid any consequences.
Unfortunately, that’s just not the case. Government overspending is already affecting our economic prospects, and unless something changes, it’s going to get much worse. This year alone, the government will borrow over $1.3 trillion. That money is being taken out of the private sector, which means less money is available for private loans. That makes it harder for entrepreneurs to get start-up funds and for young couples to get that first mortgage. The result is fewer jobs throughout the economy.
Renowned credit-rating agencies warn that if the United States continues on its present path, its debt rating will be downgraded. Such a national disgrace would send interest rates climbing. Government will end up having to spend even more of our tax dollars just to service its debt, and everyone will see the costs of borrowing rise.
Business people and politically aware individuals know politicians will use the massive debt as an excuse to raise taxes. In fact, this argument already is being used to justify allowing tax cuts to expire at the end of this year. Concern about the potential for higher taxes discourages businesses from using their money to hire more workers or buy new equipment, which is resulting in the unemployment and slower economic growth we see today.
Families have enough to worry about without focusing on the growing national fiscal fiasco, but Americans must get involved and tell politicians enough is enough. We can’t let Washington bury us under a mountain of debt.
David Lukas, a mortgage banker in Little Rock, Arkansas, hosts “The Family Home Show” Saturdays on KARN 102.9FM (Central Arkansas). He lives in Sherwood, Arkansas, with his wife and two children.