The House Financial Services Committee held a hearing asking “Why debt matters?”
Here are the top six takeaways from Tuesday’s meeting about how the nation’s over $17 trillion debt impacts the average American.
1. It means lower growth, fewer Jobs, and lower salaries.
It hurts everyone, especially future generations as they face years of stifled growth and must take on extra tax burdens to pay off the debt and support unsustainable entitlement programs.
2. It threatens our national security.
As former Secretary of Defense Robert Gates said, “At some point, financial insolvency at home will turn into strategic insolvency abroad.”
And Mike Mullen, a retired admiral who served as chairman of the Joint Chiefs of Staff, warned that “the single biggest threat to our national security is our debt.”
3. It makes us more vulnerable to the next economic crisis.
Douglas W. Elmendorf, the director of the Congressional Budget Office, recently said in a congressional hearing, “Such large and growing federal debt could have serious consequences. Including, restraining economic growth in the long term, giving policy makers less flexibility to respond to unexpected challenges, and eventually increasing the risk of a fiscal crisis.”
4. We do not want to end up like Greece…
The bankrupt European country has a 57 percent youth (15-24) unemployment rate.
5. Or Detroit.
“We do not need to look much further than Detroit or Greece to see how harmful a debt crisis can be,” Douglas Holtz-Eakin, president of American Action Forum, told The Daily Caller News Foundation shortly after he testified before the committee. “Forty percent of Detroit’s street lights were not functioning. Only a third of the cities ambulances were working. There were approximately 78,000 thousand buildings that were vacant.”
6. As the debt grows, Americans will eventually have to pay more for less.
If America’s credit rating is reduced, foreign investors will become less confident that the U.S. can repay its debt and will charge higher interest rates for loans.
So what can be done to help curve the U.S. government from spending the country into a fiscal disaster? Holtz-Eakin explained to TheDCNF that Congress and the White House must begin by reforming costly entitlement programs.
“The policies that need to be reformed are real simple. They are Medicare, Medicaid, the Affordable Care Act, and Social Security. If you change the big four you can get the spending problem under control,” he said.
House Financial Services Committee, Chairman Jeb Hensarling elaborated on the gravity of the country’s spending habits during opening remarks before the committee.
He noted that, “In the last six years we accumulated more national debt than our nation did in its first 200 years,”
Hensarling asked, “Will our nation as a whole every face a debt crisis comparable to Detroit or Greece? I do not think so, but I do not know so.”
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